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TMI Blog2022 (5) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... rty to the unlawful gain. Admittedly, the appellant has not traded in the scrip. The two partnership companies have traded in the scrip in which admittedly the appellant is not a partner. Direction to deposit the unlawful gain have already been issued against the two partnership companies. The interest of the securities market is thus safeguarded. The investigation has not yet concluded and, therefore, it would take some time for issuance of a show cause notice. Final orders will come much later. Considering the aforesaid when only prima facie observations are being made which the appellant has sufficiently explained and discharged his burden we are of the opinion that at this stage debarring a person from accessing the securities market is not justified in the facts of the case. We further observe that the investigating party will not be influenced by any observation made by us in the present order which are tentative in nature and will not be utilised to the advantage of either party. The confirmatory order as well as the interim order in so far as it relates to the appellants cannot be sustained and are quashed. The appeals are allowed. In the circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossession of UPSI and, therefore, Mr. Venkata was also an insider. It was alleged that Mr. Venkata has been in frequent communication with the appellant through telephonic communication and, therefore, on a preponderance of probability, being in possession of UPSI, must have communicated the UPSI to the appellant. The examination further revealed that the appellant was closely connected to Mr. Amit Bhutra through frequent telephonic communication and that Mr. Amit Bhutra was a partner in Capital One Partners and Tesora Capital and it was reasonably expected that the appellant had passed on the UPSI to his cousin Mr. Amit Bhutra, who in turn traded in the scrip of the Company prior to the announcement of the financial results. The examination further revealed that the two partnership firms through their trading had generated proceeds of Rs.279.51 lakhs in Capital One Partners and Rs.26.82 lakhs on Tesora Capital. 3. Accordingly, an ex-parte ad-interim order dated 31st May, 2021 was passed against the appellant. 4. The appellants and other entities against whom the interim order was passed filed their replies and contested the matter. The appellant contended that his role i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tafa Doctor, Senior Advocate assisted by Mr. Anirudh Hariani, Mr. Anil Choudhary, Mr. Rahul Das and Ms. Sudarshana Basu, Advocates for the appellant in appeal no.689 of 2021 and Mr. Pramod Nair, Senior Advocate assisted by Ms. Aakansha Luhach and Ms. Payal Saraogi, Advocates for the appellant in appeal no.744 of 2021 and Mr. Shiraz Rustomjee, Senior Advocate assisted by Ms. Nidhi Singh, Ms. Deepti Mohan, Ms. Binjal Samani, Ms. Aditi Palnitkar and Ms. Moksha Kothari, Advocates for the Respondent. 7. Section 2(1)(g) of the PIT Regulations defines Insider as 2.(1) In these regulations, unless the context otherwise requires, the following words, expressions and derivations therefrom shall have the meanings assigned to them as under: .. (g) insider means any person who is: i) a connected person; or ii) in possession of or having access to unpublished price sensitive information; NOTE Since generally available information is defined, it is intended that anyone in possession of or having access to unpublished price sensitive information should be considered an insider regardless of how one came in possession of or had acces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r director thereof; or (d) an investment company, trustee company, asset management company or an employee or director thereof; or (e) an official of a stock exchange or of clearing house or corporation; or (f) a member of board of trustees of a mutual fund or a member of the board of directors of the asset management company of a mutual fund or is an employee thereof; or (g) a member of the board of directors or an employee, of a public financial institution as defined in section 2 (72) of the Companies Act, 2013; or (h) an official or an employee of a self-regulatory organization recognised or authorized by the Board; or (i) a banker of the company; or (j) a concern, firm, trust, Hindu undivided family, company or association of persons wherein a director of a company or his immediate relative or banker of the company, has more than ten per cent of the holding or interest; NOTE: It is intended that a connected person is one who has a connection with the company that is expected to put him in possession of unpublished price sensitive information. Immediate relatives and other categories of persons specified above are also pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss to UPSI. b) WTM further notes that there were 600 odd employees in Infosys who were classified as designated persons and further found that such classification as designated persons itself does not mean per se that such designated persons ipso facto were in possession of UPSI coupled with the fact that Mr. Venkata s name was not found in the SD data base and, therefore, he had no direct access to UPSI. c) Further, telephonic conversation between the appellant and Mr. Venkata alognwith proof of certain emails exchanged between them indicates that the telephone calls were relating to some official matters regarding their respective domain of responsibilities in the Company. The telephone call discussions were relating to maternity benefits through Employees State Insurance Corporation rather than through Infosys and, consequently, the initial burden upon the appellant stood discharged, namely, that he was not having any UPSI nor UPSI was passed on from Mr. Venkata to appellant in this telephonic conversation. d) Burden of proof was wrongly placed upon the appellant that he did not pass on UPSI to Mr. Amit Bhutra. It is settled law that the burden of proof is always ..... X X X X Extracts X X X X X X X X Extracts X X X X
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