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2019 (3) TMI 828 - SECURITIES APPELLATE TRIBUNAL, MUMBAIInsider trading - Reported statement of the Chairman of a Company regarding his interest to acquire another Company is sufficient to invoke the provisions of PFUTP Regulations, 2003 - Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control - HELD THAT:- First of all the statement attributed to the appellant is as reported by a news reporter. There is no evidence as to the appellant acquiring any shares of Amrutanjan. On the other hand, what is available on record is that no effort in acquisition has been made. The appellant has clarified to the Stock Exchange immediately on receiving their communication on April 5, 2010 that it was a general statement relating to his business interest. The statement is further emphasized by the clarification provided by Amrutanjan itself which also stated that “the said news item is false and without basis and the promoters of the Company have no intention to sell out and the promoters do not foresee any reason to dilute their stake and exit from the company”. While dealing with a serious issue of fraud the authorities need to ascertain the motive in the absence of any connecting evidence. Is nothing to prove that the quoted statement in the news report is exactly what is stated by the appellant unless the statement is derived from a written communication issued by the Chairman or by his Company which is not the case here. There is no evidence to link to a motive. Neither the appellant nor his Company Emami had / have acquired the shares of Amrutanjan. In any case they were actually interested in acquiring; the Chairman of the acquiring company would not have talked up the prices of the shares of the acquiring company (Target Company). In the absence of any motive or a scheme or any evidence a reported news item alone is not sufficient to prove a serious charge like fraud. If at all the reported statement is correct it could an expansive mood of the person. Silence as a sign of wisdom cannot be stretched to a point of total silence in the world of securities market. Substantial movement in the prices etc. of a profitable company with sufficient liquidity cannot be attributed to such a reported statement alone. Before parting with, the limitations of a comparative static analysis as given in the impugned order also needs to be emphasized. The comparison made in the impugned order is by taking the price / volume data of April 1, 2010 and April 5, 2010. However a look at the data for 30th and 31st March, 2010 also give a different picture. On April 1 the volumes traded in NSE was 308538 shares and in BSE was 144644 shares which is shown to have increased to 887705 shares in NSE and 474050 in BSE on April 5, 2010. But if we take the volume on March 31, 2010 instead of April 1, 2010 the volume in NSE was 834070 and in BSE 393896. So, the volumes on March 31, 2010 and April 5, 2010 are not much different while when one compares the volume of April 5 with that of April 1 the volumes are quite different. This shows that a two day comparison can be misleading and is not sufficient to establish evidence for a serious offence like fraud.
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