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TMI Blog2023 (10) TMI 1393X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant Mr. Gaurav Joshi, Senior Advocate with Mr. Mihir Mody and Mr. Arnav Misra, Advocates i/b K. Ashar & Co. for the Respondent No. 1 (SEBI) Mr. Manish Chhangani, Advocate with Mr. Sumit Yadav, Mr. Abhay Chauhan and Mr. Atul Kumar Agrawal, Advocates i/b The Law Point for the Respondent No. 2 (BSE). None for the Respondent No. 3 (NSE) None for the Respondent No. 4 (Radhika Roy) ORDER Per : Justice Tarun Agarwala, Presiding Officer 1. All these appeals arise from a common investigation. The issues are common and, even though, separate orders have been passed by the Whole Time Member ("WTM" for convenience) of the Securities and Exchange Board of India ("SEBI" for convenience) pursuant to separate show cause notices, the issue involved is common and, consequently, all these appeals are being taken up together. 2. The WTM has found the appellants to be guilty of insider trading under the Prohibition of Insider Trading Regulations, 1992 ("PIT Regulations, 1992" for convenience) and has consequently directed the appellants to disgorge the amount of unlawful gains along with interest and has further restrained them from accessing the securities market for specified period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... November 29, 2006 09:48:38 (NSE) November 29, 2006 13:49:09 (BSE) September 21, 2006 to November 28, 2006 PSI-3: The Company signed an agreement with Com ventures VI, L.P, a venture capital fund, for investment of US$ 20 million from Com ventures in of NDTV Network Plc for funding of its non-news businesses November 22, 2006 March 12, 2007 11:35:08 (NSE) March 12, 2007 11:07:27 (BSE) November 22, 2006 to March 11, 2007 PSI-4: Closure of the Bonds transaction, pursuant to which NDTV Network Plc had issued Step up coupon convertible Bonds and raised an amount of US$ 100 million for funding the operations of its subsidiaries in India March 22, 2007 May 31, 2007 14:21:48 (NSE) May 31, 2007 13:42:56 (BSE) March 22, 2007 to May 30, 2007 PSI - 5: Memorandum of Agreement (MOA) signed with NBC Universal, Inc. (NBCU) with respect to NBCU's proposed acquisition of indirect 26% stake in non- news business of NDTV group. January19, 2008 January 22, 2008 15:41:30 (NSE) January 22, 2008 15:23:54 (BSE) January19, 2008 to January 22, 2008 PSI-6: Board of the Company decided to evaluate options for reorganization of the Company, which could include d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evaluate options for reorganization of the company which could include the de-merger / split of the company into news related businesses / investment in "beyond news businesses" which was then held through its subsidiary, NDTV Networks Plc. The definition of UPSI in Regulation 2(ha) of the PIT Regulations 1992 is as under :- "(ha). "price sensitive information" means any information which relates directly or indirectly to a company and which if published is likely to materially affect the price of securities of company. Explanation - The following shall be deemed to be price sensitive information:- (i) periodical financial result 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; (v) amalgamation, mergers or takeovers; (vi) disposal of the whole or substantial part of the undertaking; (vii) and significant changes in policies, plans or operations of the company," 14. The alleged PSI - 6 would show that the board of the company merely decided to evaluate various options for re-organization of the company on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complaints of NDTV, those complaints are of the year 2013-14. Still the show cause notice was issued after a period of 4-5 years. It was strenuously submitted that as per the relevant rules either of income tax or any other commercial laws, the documents are required to be preserved for not more than 6 years and, therefore, the appellants did not have access to the relevant documents to defend the case. 18. The learned WTM reasoned that SEBI came to know of the insider trading when it received complaints from NDTV. Thereafter, SEBI was required to make investigation. It was further held that no period of limitation is provided. Support of various authorities to show that when the issue is complex and various violators are involved, the delay may not be taken as causing prejudice in every case. It was further found by the learned WTM that after receipt of the complaints, SEBI was required to take steps for investigation and, therefore, the delay has occurred. 19. The issue as to whether the delay has caused prejudice to the person against whom the proceeding is initiated is also required to be considered. This apparently has not been dealt with by the learned WTM though vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uying NDTV shares during the PSI-6. 12. The show cause notice dated August 31, 2018 issued against Prannoy Roy and Radhika Roy alleged:- "3. On the basis of the afore-stated findings from the investigation, a common show cause notice (hereinafter referred to as "SCN") dated August 31, 2018 was issued to Mr. Prannoy Roy and Mrs. Radhika Roy (hereinafter individually referred to by their respective names and collectively referred to as "Noticees"). The salient aspects thereof are as under: (a) That Mr. Prannoy Roy and Mrs. Radhika Roy were insiders in terms of regulation 2(e) of the PIT Regulations, 1992; (b) That Mr. Prannoy Roy and Mrs. Radhika Roy indulged in the act of insider trading by trading in the scrip of NDTV while in possession of UPSI relating to the proposed reorganization of the Company, which included a possible de-merger/ split of the Company into News related businesses and investments in 'Beyond News' businesses with an objective of unlocking shareholder value and to promote focused growth of Company's various businesses and therefore, have violated the provision of sections 12A(d) and (e) of the SEBI Act, 1992 read with regulations 3(i) and 4 of the PIT R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w was closed. 16. In view of the aforesaid, the impugned order passed by the WTM against Prannoy Roy and Radhika Roy cannot be sustained. 17. Appeal No. 51 of 2021 has been filed by Vikramaditya Chandra, Appeal No. 52 of 2021 has been filed by Iswari Bajpai and Appeal No. 53 of 2021 has been filed by Saurav Banerjee. These entities did not buy any shares during the investigation period. They were allotted shares in tranches by the Company NDTV under Employee Stock Option Scheme-ESOP's. The show cause notice alleged that Vikramaditya Chandra and Iswari Prasad Bajpai had traded in the shares of the Company during PSI-3 and that Vikramaditya Chandra and Saurav Banerjee had traded in the shares of the Company during PSI-6. 18. In view of the decision of this Tribunal in Quantum Securities (Supra) holding that PSI-6 is not a price sensitive information, the trades made by Vikramaditya Chandra and Saurav Banerjee during PSI-6 are not violative of the PIT Regulations and, therefore, the order of the WTM to that extent cannot be sustained. 19. However, the trades executed by Vikramaditya Chandra and Ishwari Prasad Bajpai during PSI-3 is required to be reconsidered in the light of the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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