TMI Blog2015 (3) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... e Board, which is the competent authority to investigation into the alleged offence. Coming to the facts of the case, the allegations of the petitioners have been vehemently denied by the contesting respondents, and these disputed questions of fact cannot be gone into by this court under the writ jurisdiction. As noted in the preceding paragraph, the Act and the Regulations, provide for complete procedure for investigating the allegations of insider trading. Further the contesting respondents also referred to procedure contemplated under Clause 24(f) of the Listing Agreement, which the listed company has to follow before seeking approval for scheme of amalgamation, during which also the petitioners can file objections. The Act and the Regulations provide for forum for investigating into the alleged offence of insider trading. Therefore, in my considered view, the petitioners are not justified in approaching this court without availing the alternative and efficacious remedy. Further, under Sections 391 to 394 of the Companies Act, 1956, provide the procedure for amalgamation whereunder, the respective High Courts, where the registered head offices of the two companies are loca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nferred under Section 30 of Securities and Exchange Board of India Act, 1992, (for short 'the Act') prohibits a company from dealing in the securities of other company and associates of other company while in possession of any unpublished price sensitive information. The further case of the writ petitioners is that the 7th respondent -firm, which is the subsidiary of the 4th respondent - company, and which is actively involved in the merger negotiations and which allegedly is in possession of price sensitive information, has acquired the shares of the 5th respondent just before the notice of amalgamation was made public on 6.4.2014 and this acquisition of shares by 7th respondent, has benefited the people who were in possession of unpublished price sensitive information to a tune of about ₹ 284.15 crores, since about 3.74 crore shares were transaction between 2nd April 2014 to 4th April, 2014, just three days prior to the date of announcement. This benefit to the persons with prior knowledge of unpublished price sensitive information, was at the expense of retail investors. This dealing of securities by 4th respondent - company, through the 7th respondent, in purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harmaceutical Industries Limited and Ranbaxy Laboratories Limited who are the petitioners in these petitions. It is further pointed out that the petitioners under Sections 391 and 392 of the Companies Act, 1956 are to be filed seeking approval of the Scheme in the High Courts of Gujarat and Punjab and Haryana. However, before filing those petitions, certain other formalities are required which are listed in page 'C' of the list of dates in SLP( C ) No.13714 of 2014 and those steps have been taken/are being taken in the matters. At this stage, respondents 1 2 have filed writ petition in the High Court of Andhra Pradesh alleging insider trading. It is further pointed out that the High Court has granted ex parte ad-interim status quo orders. The contention of the learned counsel for the petitioners is that it is nothing but a forum shopping and gross misuse and abuse of the process of law on the part of the said writ petitioners. The High Court of Andhra Pradesh does not even have territorial jurisdiction to entertain the writ petition. It is further argued that the impugned order is non-speaking. Mr. Giri, leaned Senior Counsel for respondents 1 2 has contested the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ula Venkataramana also reiterated the averments made in the writ affidavit and further contended that Section 12-A of the Act prohibits manipulative and deceptive devices, insider trading and substantial acquisition of securities or control. In the present case, the 7th respondent, which is a subsidiary of the 4th respondent, purchased the shares of the 5th respondent, which is scheduled for amalgamation with 4th respondent and this is in violation of Sections 11 and 12-A of the Act and also contrary to Regulation 3-A. He contended that the respondents 2 and 3, which are stock exchanges, are required to give 'in principle clearance' and in view of the allegations, they may be directed not to process the application for clearance. He contended that any person can bring to the notice of the authorities with regard to the illegalities and in the present case, the petitioners being the share holders, who have purchased the shares at higher price in view of the insider trading, have locus standi to file the writ petition and as the cause of action has arisen within the territorial jurisdiction of the High Court of A.P., present writ petition is filed. With these averments, the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e writ petitioners will have an opportunity, if they so chooses, at different stages to file objections and the appeals and the issue of amalgamation has nothing to do with the issue of inquiring into the alleged offence of insider trading and further the interim order passed in the present writ petition would come in the way of respective High Courts, where the petitions for amalgamation are/or going to be filed. Therefore, he sought to vacate the interim order. 13. The learned Standing Counsel appearing for the 1st respondent - Board submitted that the Board has already initiated proceedings to investigate into the alleged insider trading, which is prohibited under Regulation 3-A and the same would be completed in accordance with law. 14. The tenor of the counter affidavits and submissions of the learned Senior Counsel appearing for the contesting respondents is noted once again. The contesting respondents have denied the allegations made by the writ petitioners with regard to insider trading by the 7th respondent - firm in the shares of the 5th respondent - company and the learned Senior Counsel appearing on their behalf contended that these are disputed questions of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the sake of argument that the allegations of insider trading are found to be correct by the Board, the persons responsible for insider trading, will be liable and not the 5th respondent company and on this ground, the amalgamation cannot be stalled. Further, the interim order passed by this court would come in the way of the respective High Courts, where the registered head offices of respondents 4 and 5 companies are located, in considering the company petitions filed for amalgamation under Sections 391 to 394 of the Companies Act, 1956. It is contended that the registered offices of contesting respondents are not located within the jurisdiction of the High Court of A.P. and the petitioners have not made out clear case for filing the writ petition in the High Court of A.P. and on the aspect of jurisdiction also, the writ petition is not maintainable. With these averments, the interim order of status quo was sought to be vacated. 15. In view of the above rival contentions, the issue that falls for my consideration, is whether in the facts and circumstances, the interim order needs to be continued till the disposal of the writ petition? 16. The main allegation of the writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her company or associate of that other company while in possession of any unpublished price sensitive information. Regulation 4A empowers the Board to enquiry into the violations and provisions of the regulations. The procedure for investigation is contemplated from Regulations 6 to 11-A. Powers and functions of the Board and the Penalties are provided under the provisions of the Act. Therefore, from these provisions it is clear that the Act and the Regulations, provide for forum, procedure and penalty for investigating into the offences prohibited under the Act. In other words, under the above provisions, it is the Board, which is the competent authority to investigation into the alleged offence. While dealing with the duties of the Board, which is Securities Exchange Board of India, the Apex Court, held as under: 42. SEBI, the market regulator, has to deal sternly with companies and their Directors indulging in manipulative and deceptive devices, insider trading etc., or else they will be failing in their duty to promote orderly and healthy growth of the securities market. Economic offence, people of this country should know, in a serious crime which, if not properly dealt wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l affect the amalgamation proceedings and whether they are independent issues effecting persons responsible vis-a-vis companies under amalgamation and the relevant issues are requires to be considered during the process of considering the proceedings for amalgamation. 25. The contesting respondents submitted that the respondents 2 and 3 stock - exchanges have sought for information and these respondents have accordingly submitted the same and they are in the process of due consideration. And as per the submissions of the learned counsel for the petitioners, the petitioners have already made representations to the Board and as per the submissions of the Standing Counsel for the 1st respondent - Board, it has initiated investigation, which will follow due procedure contemplated under the Regulations. 26. Therefore, as the writ petitioners have alternative remedy under the provisions of the Act and the Regulations made thereunder and in according with the said provisions, the Board has already initiated proceedings and seized of the matter and having regard to the above facts and the circumstances, I am of the considered view, that it is not desirable to continue the interim ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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