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TMI Blog2021 (10) TMI 1321X X X X Extracts X X X X X X X X Extracts X X X X ..... 11B(2) read with Section 19 of the Securities and Exchange Board of India Act, 1992 ("SEBI Act‟ for short) for violation of SEBI (Prohibition of Insider Trading) Regulations, 2015 ("PIT Regulations‟ for short). Vide the impugned order all the present appellants were restrained from accessing the securities market, in any manner, for a period of one year. All the appellants are also restrained from buying, selling or dealing in the securities of PC Jeweller Limited ("the Company‟ / "PC Jeweller‟ for short) directly or indirectly, in any manner, for a period of two years and to disgorge an amount from Appellants in Appeal no. 376 of 2021 as detailed in the impugned order with a direction to credit the said amount into Investor Protection and Education Fund (IPEF) of the respondent SEBI. 2. In nutshell, the allegations against the appellant Ms. Shivani Gupta and other appellants in Appeal no. 376 of 2021 is that they being insider to two Unpublished Price Sensitive Informations ("UPSI‟ for short) regarding the buy-back of it‟s share by the Company and had traded in the shares while holding theses informations. 3. The informations relate to the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aging Director, Chief Financial Officer, Chairman etc. of the Company on April 25, 2018 which continued till April 20, 2018 as detailed in table-4 of the impugned order. As a result of the same on April 29, 2018 the Company made the announcement as detailed above. Thereafter, the Company and its officials started discussion with merchant bankers, its lending bankers etc. Ultimately, on May 10, 2018 the Company informed Stock Exchanges of the final decision of buy-back of equity shares at a price of Rs. 350/- per equity share. On July 7, 2018 it‟s lending bank- State Bank of India was requested to issue no objection certificate. On the same date State Bank of India communicated it‟s refusal. Thereafter, on July 10, 2018 meeting of the independent directors and officials was held to discuss further course of action. On July 12, 2018 Chief Finance Officer of the Company met State Bank of India officials requesting to reconsider the bank‟s refusal. Ultimately, on July 13, 2018 the board has approved the withdrawal of the buy-back offer and the same was informed to the Stock Exchanges. Thus, the discussion leading to the decision of making a buy-back offer, according t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. The respondent SEBI has alleged that the appellants in Appeal no. 376 of 2021, namely, Ms. Shivani Gupta, Mr. Sachin Gupta, Mr. Amit Garg and Quick Developers Private Limited became the insider as they got the knowledge of both the UPSI from their near and dear one including appellant Mr. Balram Garg. 12. Admitted facts are that Late Padam Chand Gupta - the father of appellant Mr. Sachin Gupta and father-in-law of Ms. Shivani and paternal uncle of appellant Amit - was the Chairman of the Company. Before the show cause notice could be issued to him he died on January 20, 2019. Said Late Padam Chand Gupta, appellant Mr. Balram Gupta and father of appellant Mr. Amit Garg, namely, Mr. Amar Chand Garg were the brothers. While Late Padam Chand Gupta was the Chairman of the Company, appellant Mr. Balram Garg was the Managing Director during the relevant period. Their brother Mr. Amit Garg was the Ex-Vice Chairman of the Company. All of them were the promoters of the Company. Before the decision regarding the buy-back was taken i.e. between April 2, 2018 to April 20, 2018 Late Padam Chand Gupta gifted 1.03 crore shares of the Company to his daughter-in-law i.e. appellant Ms. Shivani G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of the Company. (iv) The allegations that these appellants have common residential address is wrong. All these families are residing in separate houses built on piece of a land and do not share any common dwelling house. (v) It was submitted that due to these two estrangements of the year 2011 and 2015, the joint family was disrupted. Therefore no occasion arose for appellant Mr. Balram Garg to disseminate any information to other appellants. It was further additionally submitted by the appellant Mt Balram Garg that he has not traded in the shares of the Company during this period. 14. The learned counsel for the appellants in Appeal no. 376 of 2021 vehemently submitted that appellant Ms. Shivani Gupta, Mr. Sachin Gupta and appellant Mr. Amit Garg cannot be called as connected persons merely because appellant Mr. Shivani Gupta and Mr. Sachin Gupta were immediate relative of Late Padam Chand Gupta. It should, however, be noted that though in the show cause notice they were termed as connected persons and insider, the Ld. WTM considering the ingredients of the definition of connected person as found in PIT Regulations 2015 ultimately held that they cannot be treated as connec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey were residing together. 17. The Ld. WTM had meticulously appreciated all the facts on record which are as under:- (i) The annual reports of the Company for the year 2015-16 till 2017-18 showed that appellant Mr. Sachin Gupta was receiving rent in different figures. In 2015-16 he received a rent of Rs. 77 lakh while in 2017-18 he received rent of Rs. 78 lakh from the Company. In the year 2016-17 he paid rent of Rs. 66 lakh to the Company. The appellant Mr. Sachin Gupta was nominee of the demat account of Late Padam Chand Gupta even after the separation and till the death of Late Padam Chand Gupta. The Ld. WTM was aware that the appellant was successor of Late Padam Chand Gupta but he pointed out that nomination is a position of a trust and responsibility and in case there is an "estrangement" between the families this trust would not have been reposed by Late Padam Chand Gupta upon appellant Sachin, as he also had an option to nominate his another son Mr. Nitin Gupta or his wife Smt. Krishna Devi. Further, the Ld. WTM took note that all these appellants share same residential address though they reside in separate dwelling units. (ii) The trading pattern of the appellants du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich Rs. 2 crore was remitted from the account of Mr. Amit Garg and his wife Nisha Garg. They were the authorized signatories to the bank account even after they ceased to be Directors of Appellant no. 4 Quick Developers Private Limited. Appellant no. 3 Mr. Amit Garg had placed orders for the trade of Appellant no. 4 Quick Developers Private Limited, including the trading in the scrip of Company. From all these facts the Ld. WTM concluded that Appellant no. 4 Quick Developers Private Limited was nothing but a front entity of Appellant no. 3 Mr. Amit Garg for trading in the securities market including trading in the scrip of the Company. In the circumstances the Ld. WTM found that Appellant no. 4 Quick Developers Private Limited was a wholly owned and controlled by appellant Amit. (v) The Ld. WTM further found that Appellant no. 4 had 100% concentration in the scrip Futures trading of the Company during UPSI - II. He inferred that when this appellant squared-off short positions on July 11, 2018 i.e. during UPSI period II it avoided loss of Rs. 89.82 lakh. Further, during UPSI-II this appellant opened another short position of Rs. 3 lakh futures of the Company ( which trader normall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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