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TMI Blog2023 (10) TMIX X X X Extracts X X X X X X X X Extracts X X X X ..... period. - Non Compliance with NDTV's Code of Conduct - WTM found that Prannoy Roy and Radhika Roy had traded while in possession of price sensitive information and accordingly directed them to disgorge the unlawful gains and also prohibited them from accessing the securities market for a period of 2 years. HELD THAT:- The trades of Prannoy Roy and Radhika Roy is during PSI-6. In Quantum Securities [ 2023 (2) TMI - SECURITIES APPELLATE TRIBUNAL MUMBAI] as already held that PSI-6 was not a price sensitive information and, therefore, the charge of insider trading during that period cannot be sustained. The matter of Prannoy Roy and Radhika Roy is thus squarely covered by the decision of this Tribunal in Quantum Securities (Supra) which fact is not disputed by the learned counsel for the respondent. As we find that Prannoy Roy and Radhika Roy had secured pre-trade clearance from the Compliance Officer of NDTV which is an admitted fact in the show cause notice and, therefore, the trades executed by these two entities was in conformity with the NDTVs Code of Conduct and the PIT Regulations. There is no finding in the impugned order to the effect that the Compliance Office had acted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rip of NDTV. During investigation, it revealed that Mr. Sanjay Dutt and his associated entities had indulged in insider trading in the scrip of NDTV. The investigation also revealed that the promoters of the complainants Prannoy Roy and Radhika Roy also carried out insider trading in the scrip of NDTV during the investigation period. The investigation further revealed that Vikramaditya Chandra, Group Chief Executive Officer and Executive Director in NDTV, Ishwari Prasad Bajpai, Senior Advisor, Editorial and Projects in NDTV and Saurav Banerjee, Director Finance and Group Chief Financial Officer in NDTV had traded during the investigation period while in possession of price sensitive information. The investigation revealed that the Company, namely, NDTV had filed six price sensitive information for disclosure during the investigation period. The details of the price sensitive events and the respective period of the unpublished price sensitive information ( UPSI for convenience) with regard to each of the price sensitive information is depicted hereunder : - Details of PSI(s) PSI Start date of UPSI Date Time when the PSI was disclosed on exchange website UPSI Period PSI-1: Expansion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at except Sanjay Dutt all the other entities had made a wrongful gain of Rs. 2.2 Crores through inside trading in the shares of NDTV. The WTM accordingly directed the said entities to disgorge Rs. 2.2 Crores jointly and severally along with the interest @ 6% per annum. Further, the said entities were restrained from accessing the securities market for a period of 2 years. 8. Against the order of the WTM dated November 27, 2020, Quantum Securities Pvt. Ltd., filed Appeal No. 49 of 2021, Sanjay Dutt filed Appeal No. 103 of 2021, Ms. Prenita Dutt and others filed Appeal No. 104 of 2021. This Tribunal quashed the impugned order and allowed the aforesaid appeals. This Tribunal found that PSI-6 cannot be termed as a price sensitive information and, therefore, the entities who had traded during the PSI-6 period cannot be found guilty of violating the PIT Regulations as they were not insiders. This Tribunal by its order of February 02, 2023 allowed the Appeal No. 49 of 2021 filed by Quantum Securities Pvt. Ltd., Appeal No. 104 of 2021 filed by Ms. Prenita Dutt and Appellant No. 2 SAL Real Estate Private Limited as their trades related to PSI-6 period. 9. This Tribunal, with regard to PSI-6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore cannot be termed as PSI. Taking this into consideration, if we consider trading details of the respective appellants as reproduced hereinabove, it would show that appellant Prenita Dutt and appellant QSPL has traded only during this alleged PSI/UPSI 6. Therefore, their tradings cannot be called as insider trading, leaving aside the issue of delay in issuing the show cause notice or the issue as to whether any of them can be called as insider i.e. having communicated the information by appellant Sanjay Dutt. Similarly, appellant SREPL though traded during all the alleged PSI period except UPSI 5, it has also traded during PSI 6 and, therefore, the charge of insider trading for that period cannot be sustained. The appeals of Prenita Dutt and QSPL, therefore, deserve to be allowed on this short ground while the appeal of SREPL would have to be partly allowed as regards PSI-6. 10. With regard to the trades executed by Quantum Securities Pvt. Ltd. and other connected entities for the PSI-1,2,3 and 4 this Tribunal quashed the directions issued by the WTM and remanded the matter back to the WTM to decide all the issues afresh including the issue of delay. This Tribunal held:- 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether the impugned trades were motivated by the PSI/ PSIs or not. 24. This Tribunal has in number of cases while dealing with this issue had concluded that to penalize an entity for insider trading, it is necessary to find that the trading should be motivated by the PSI in possession of the said entity. In the case of Abhijit Rajan vs. SEBI, Appeal No. 232 of 2016 decided on November 8, 2019, this Tribunal has dealt with the said issue and the Hon ble Supreme Court in the same case of Abhijit Rajan (supra) had also confirmed the said decision. The principle is based on a logic that there must be some relation between the trading and the motivation to encash the PSI. The learned WTM however refused to go into this issue. Since we have no benefit of consideration of issue of delay and the consideration on the issue as to whether the trade was carried by appellant SREPL on the basis of PSI 1, 2, 3 and 4, it would be necessary to remand the matter to the learned WTM to decide all the issues afresh as regards the SREPL, appellant TCPPL and appellant Sanjay Dutt. 11. Appeal No. 557 of 2020 and 558 of 2020 have been filed by Prannoy Roy and Radhika Roy Roy against the order of the WTM da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities (Supra) we have already held that PSI-6 was not a price sensitive information and, therefore, the charge of insider trading during that period cannot be sustained. The matter of Prannoy Roy and Radhika Roy is thus squarely covered by the decision of this Tribunal in Quantum Securities (Supra) which fact is not disputed by the learned counsel for the respondent. 15. It was urged, that Prannoy Roy and Radhika Roy had sold their shares on April 17, 2008 when the trading window was closed and, therefore, have violated NDTV s Code of Conduct and the provisions of Regulation 12(2) read with Regulation 12(1) of the PIT Regulations, 1992. In this regard, we find that since we have already held in Quantum Securities that PSI-6 was not a price sensitive information and that the appellants Prannoy Roy and Radhika Roy are not insiders the question of violating the NDTV s Code of Conduct for trading during the window closure period becomes immaterial. In any case, we find that Prannoy Roy and Radhika Roy had secured pre-trade clearance from the Compliance Officer of NDTV which is an admitted fact in the show cause notice and, therefore, the trades executed by these two entities was in co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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