The ban comes as Biyani and his flagship Future Retail are embroiled in a battle with Amazon.com Inc. over Biyani's attempt to sell his retail assets to Reliance Industries Ltd.to alleviate a cash crunch.
A Future group representative claimed the Sebi order wouldn't affect the Rs 24,713- crore Future-RIL deal which "will progress as planned". Future has said its retail unit faces insolvency if the deal fails. Further, Future Corporate Resources and the two Biyani brothers will each need need to pay a penalty of Rs 1 crore within 45 days, Sebi noted.
In its order, the Securities and Exchange Board of India (Sebi) said, "Debarment/restraint/freeze imposed under this order shall not apply to those existing holding of securities of such debarred entities, in respect of which any scheme of arrangement under Section 230-232 of the Companies Act, 2013, is approved by NCLT, requiring extinguishment of such securities and/or receipt of other securities in lieu of such securities".
In a regulatory filing, Future Retail said that it will challenge the order as on merits, the SEBI order is untenable "since it treats a well-anticipated and publicly well-known impending reorganization of the home furnishing businesses that the Future Group effected in 2017 to be unpublished information". A probe by Sebi found that this arrangement had come into existence on March 10, 2017, and Kishore Biyani and others traded in the shares of Future Retail between March 10 and April 20, when they had knowledge of the demerger.
The investigation observed that the Biyanis opened a trading account for FCRL, which then traded in Future Retail's shares before a demerger decision of FRL was publicly announced. And that it does not constitute unpublished price-sensitive information.