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TMI Blog2011 (11) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that since the price of the scrip of FCGL had gone up, the decision of FCGL to dispose of the investment in the Coke company was price sensitive. The adjudicating officer has missed the real point. The price of the scrip of FCGL had gone up not because it decided to dispose of its investment in the Coke company but because of the fact that it acquired coal mines in Australia which information was price sensitive and had been disclosed to the market. We cannot, therefore, uphold the findings of the adjudicating officer. X X X X Extracts X X X X X X X X Extracts X X X X ..... red into an agreement to acquire the coal mining leases comprising the whole of old Avondale colliery and part of Huntley Colliery in the Southern Coalfields of New South Wales, Australia. The mining leases being transferred comprise of - • Approximately 5,500 ha within the Illawara Coal Measures of the Sydney basin. • Wangawilli and Tongarra seams both of which have been mined previously in the adjoining leases, producing high fluidity low phos good quality hard coking coal. • Indicated recoverable reserves totaling approximately 96 million tones. The work has commenced on preparation of the development application so that it can proceed to mining in the shortest possible time frame. The acquisition and development of the mine will cost about 80 million Australian Dollars. He also informed that the Company needs to take steps to arrange funds to finance the aforesaid mine and considering that substantial funds could be arranged from sale of investment made in shares of Gujarat NRE Coke Ltd, it is proposed that the said investment may be disposed. Board discussed the matter including other options to raise funds in this regard and it was decided to disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reserves totaling approximately 96 million tones • In December, 2004, Gujarat NRE Coke completed the acquisition of the NRE No.1 Colliery which is located in close proximity to the proposed NRE No.2 colliery. The Vice Chairman & Managing Director of Gujarat NRE Coke, Mr Arun Jagatramka said "this strategic investment further strengthens the position of our company in the Southern Coalfields of New South Wales. The Southern Coalfields is renowned for producing high quality hard coking coal and the investment makes sense given its vicinity to our NRE No.1 Colliery and the potential benefits of ownership in two nearby collieries." The Company has commenced work on preparation of the development application so that it can proceed to mining in the shortest possible timeframe. The acquisition and development of the mine will cost about 80 million AUD. Gujarat NRE Coke was advised by Ernst & Young Mergers & Acquisitions Division as lead corporate finance advisors and Corrs Chambers Westgarth as legal advisors." 3. Sebi carried out investigations in the scrip of FCGL during the period from September 5, 2005 to September 24, 2005 and found that Matangi Traders and Investors Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the information regarding the decision of FCGL to dispose of its investment in the Coke company was price sensitive. The answer to this question depends upon the interpretation of the term "price sensitive information" as given in the regulations. We may now refer to the relevant provisions of the regulations which have a bearing on the allegations made against the appellants. "Price sensitive information" has been defined in regulation 2(ha) and the words 'insider' and 'unpublished' in clauses (e) and (k) of regulation 2. Regulations 3 and 4 prohibit insider trading and all these provisions are reproduced hereunder for facility of reference: "2. In these regulations, unless the context otherwise requires:- (e) "insider" means any person who, (i) is or was connected with the company or is deemed to have been connected with the company and who is reasonably expected to have access to unpublished price sensitive information in respect of securities of a company, or (ii) has received or has had access to such unpublished price sensitive information; (ha) "price sensitive information" means any information which relates directly or indirectly to a company and which if publish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to sell a part of its investment in the Coke company and actually sold 84,79,709 shares of the Coke company to raise funds for the aforesaid acquisition. It is also the admitted case of the parties that both Shri G. L. Jagatramka and Shri A. K. Jagatramka attended the board meeting. These two directors of FCGL are also the directors of Matangi and Marley who traded in the scrip of FCGL during the quarter ending September, 2005. The fact that FCGL had decided to dispose of its investment in the Coke company had not been intimated to BSE and therefore this information remained unpublished and the two Jagatramkas being common directors made Matangi and Marley insiders which traded in the scrip of FCGL. In other words, Matangi and Marley when in possession of unpublished information traded in the scrip. Regulation 3 of the regulations would stand violated only if the unpublished information was price sensitive in nature. A reading of the definition of "price sensitive information" as reproduced above would make it clear that the information which relates to a company and which when published is likely to materially affect the price of its securities would be price sensitive. FCGL is ..... 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