9911796707
TMI Blog2011 (12) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation into the trading of the scrip of Hindustan Dorr Oliver Limited (the company) for the period from February 2 , 2009 to March 25 , 2009 and found that Mr. E. Sudhir Reddy, the appellant before us, who was also the non executive Vice Chairman and Director of the company, traded in the scrip of the company while he was in possession of unpublished price sensitive information. Investigations also revealed that the appellant traded through CIL Securities Ltd and bought 40,000 shares during the investigation period. The company bagged a contract for uranium ore processing plant from Uranium Corporation of India Limited (UCIL) worth Rs. 441 crores and informed about the same to the stock exchanges on February 25 , 2009. However, before providing this information to the stock exchanges, the appellant bought 19,721 shares of the company on February 9/10 , 2009 when information regarding award of the contract was still unpublished. Being an insider and being in possession of unpublished price sensitive information, the appellant dealt with the shares of the company and hence allegedly violated section 12 A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sensitive information in respect of securities of a company or has received or had access to such unpublished price sensitive information. 5. When we look at the facts of the present case with reference to the legal provisions discussed above, we find that the appellant being the Vice-Chairman and also on the Board of Directors of the company was a person who is deemed to be a connected person and falls within the definition of insider under Regulation 2( e) of the Regulations. It is also not in dispute that the appellant purchased 19,721 shares of the company on February 9/10 , 2009 i.e. before the intimation of award of contract was furnished to the stock exchanges on February 25 , 2009. It was argued by the learned senior counsel for the appellant that the contract was awarded to the company after a long drawn process of inviting tenders, submission of technical bids, submission of financial bids, issue of LOI etc and, therefore, it was already in public domain and hence the information was not price sensitive. The price sensitive information was the award of contract on February 24 , 2009 and this information was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company while possessing/holding unpublished price sensitive information. It was submitted by the learned counsel for the respondent that the order passed by the adjudicating officer calls for no interference. 7. We have given our thoughtful consideration to the submissions made by learned counsel for the parties and have also considered the material placed on record. A shareholder becomes an owner of the company to the extent of the value of shares held by him. He is therefore, entitled to his share in the profits earned by the company. Therefore, performance of a company is of primary importance to the investors as well as to the general public who might be interested in investing in the company. The shareholders and general public get information about the company either through the annual report or during the annual general meeting. However, persons in the company or otherwise concerned with the affairs of the company are in possession of such information before it is actually made public. The directors of the company or for that matter even professionals like Chartered Accountants and Advocates advising the company on its business related activities a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation was still unpublished from the point of view of ordinary shareholders. The term unpublished has a definite connotation under the Insider Trading Regulations and it has to be interpreted in the way as stated in the said regulations. Regulation 2( k) defines unpublished to mean information which is not published by the company or its agents and is not specific in nature. Admittedly, such publication took place only when the information of award of contract was disseminated to the public through stock exchanges on February 25 , 2009. There is no doubt that the appellant was privy to the information even before it was put in public domain by way of the above publication. That being so, we do not find any infirmity in the order passed by the adjudicating officer holding the appellant guilty of violating Section 12 A (d) and (e) of the Sebi Act read with regulation 3( i) and ( 4) of the Insider Trading Regulations. In Appeal no. 107 of 2011 in the case of the company involving same transactions and decided by us on October 19 , 2011 , the charge against the company was different. In that case the charge against the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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