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TMI Blog2019 (11) TMI 1598X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation in the same and found that on the date of sale of the shares by the appellant he had unpublished information with him of cancellation of two shareholders agreement of GIPL with one Simplex Infrastructure Limited (hereinafter referred to as 'Simplex'). The announcement of the cancellation was made by GIPL with the stock exchanges on 3rd September, 2013. It disclosed the said information on BSE website at 1.05 p.m. and NSE website at 2.40 p.m. After investigation and after hearing the appellant he was held guilty for insider trading and vide the impugned order was directed to disgorge an amount of Rs. 1.09 crores already deposited by the appellant in an escrow account as per the earlier direction under the provisions of Section 19 read with Section 11 and 11B of the Securities and Exchange Board of India Act, 1992 (referred to hereinafter as 'SEBI Act') read with Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 (referred to hereinafter as 'PIT Regulations'). Hence the present appeal. 2. GIPL, during the relevant period was an infrastructural project development company. Appellant was the Chairman and Managing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore alleged that CICPL and the promoters had information about the termination of agreement from appellant Abhijit Rajan and, therefore, the enquiry was conducted against them also. Ultimately however SEBI found that no case is made out against CICPL or its promoters. Therefore, the proceedings came to be dropped against them but order came to be passed against the appellant as detailed supra. 3. The appellant before SEBI as well as before us explained as under:- 4. That the information in question was not material to impact the price of the securities of GIPL. It was for the respondent SEBI to establish the materiality of the same for the above context. As the appellant had sold the shares the SEBI should be able to show that the information would have an adverse impact on the price of the security upon publication of the same and the same was the motive for selling the shares while holding the information. The respondent has simply assumed that termination of the agreement involved significant change in the policies, plans or operation of the Company and, therefore, it would be UPSI. Infact realignment of the projects were done in ordinary course of business. The termination of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der:- Name of Entity Date of Amount Infusion Amount (` in Crores) Abhijit Rajan 24.06.2013 5.00 Pacific Energy Pvt. Ltd. 28.06.2013 6.00 Abhijit Rajan 13.07.2013 5.00 Abhijit Rajan 02.08.2013 5.00 Abhijit Rajan 10.08.2013 7.00 Abhijit Rajan 14.08.2013 0.50 Abhijit Rajan 31.08.2013 10.00 Abhijit Rajan 17.09.2013 8.00 Total 46.50 6. Not only this during the relevant period besides selling the shares the appellant had raised Rs. 5.15 crores from CICPL on 20th August, 2018, by selling his own properties to CICPL in the following manner"- Nature of Property Value Date of Date of (` in Payment Agreement Crores) Agricultural Land-Village Kale, 0.90 28.08.2013 28.08.2013 District-Pune Agricultural Land-Village 1.10 28.08.2013 28.08.2013 Kolgaon, District-Raigad Agricultural Land-Village 2.40 28.08.2013 28.08.2013 Kolgaon, District-Raigad Flat at Four Bungalows, 0.75 28.08.2013 28.08.2013 Andheri Mumbai Total 5.15 7. The respondent SEBI however did not accept any of the defense and the impugned order came to be passed. 8. Before embarking upon the rival submission it is necessary to advert to the relevant provisions. "PIT Regulations, 1992 Regulation 2(c)(ii) (c)"Connected person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation.- The following shall be deemed to be price sensitive information:- (i) periodical financial results of the company; (ii) intended declaration of dividends (both interim and final); (iii) issue of securities or buy-back of securities; (iv) any major expansion plans or execution of new projects; (iv) amalgamation, mergers or takeovers; (v)disposal of the whole or substantial part of the undertaking; and (vi) significant changes in policies, plans or operations of the company; (i) ........................................ (j) ...................................................... (k) "unpublished" means information which is not published by the company or its agents and is not specific in nature. Explanation.- Speculative reports in print or electronic media shall not be considered as published information; (l) ...................................................................." 10. Heard Mr. Somasekhar Sundaresan, Advocate assisted by Mr. Abishek Venkataraman, Mr. Pulkit Sukhramani and Ms. Struti Rajan, Advocates for the Appellant and Mr. Pradeep Sancheti, Senior Advocate assisted by Mr. Abhiraj Arora and Mr. Vivek Shah, Advocates for the Respondent. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuit order in the case of Miller v. Pezzani (1994) U.S. App. LEXIS 25471. In these cases, on facts it was held that the information was not significant/material. 12. On the other hand, Mr. Pradeep Sancheti, learned senior counsel submitted that it is an admitted fact that the appellant was an insider being the Chairman and Managing Director of GIPL when its board had passed a resolution authorizing termination of the agreement. Holding the said information with himself, the appellant had sold the shares and thereafter the information was disclosed to the stock exchanges. He drew attention of the Tribunal to the assessment made by the Adjudicating Officer on the impact of termination of agreement in the order book value of GIPL at 3.1% as detailed in para 5.12 of the impugned order. He submits that whether the price of shares actually decreased upon disclosure is not material. The determination of price by a market at a given day depends on number of facts, information, the trend in the segment etc. In the circumstances, supporting the reasons forwarded by the Adjudicating Officer he wanted that appeal be dismissed. 13. Upon hearing both the sides in our opinion the appeal deser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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