TMI Blog2012 (6) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... et of facts, they can be disposed of by a common order. 2. The allegation against the appellants is that they have traded in the shares of M/s. Valecha Engineering Ltd. (the company) while in possession of unpublished price sensitive information. Shri Anil Harish, appellant in Appeal no. 217 of 2011 was the chairman of the company at the relevant time and the appellant in Appeal no. 218 of 2011 Mrs. Ratna Harish is the mother of Mr. Anil Harish. It was alleged that Mr. Anil Harish being privy to the unpublished price sensitive information had traded in the scrip of the company and also disseminated the same to the other person before the information was made public by the company and has thereby violated the provisions of the insider trading regulations. 3. The facts of the case, in brief, are that the Board had conducted investigations into the alleged irregularities in the affairs, trading and dealings in the shares of the company based on certain inputs received from the National Stock Exchange of India Ltd. (NSE) regarding price movement in the shares of the company during the period January 1, 2009 to December 31, 2009. The shares of the company were listed on the NSE an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Mihir Mody, Advocate for the respondent Board, at length, who have also taken us through the relevant records. Having heard the counsel for the parties and after perusing the record, we are of the considered view that the appeals must succeed. Regulation 3 of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 prohibits dealing, communicating or counseling on matters relating to insider trading and reads as under: Prohibition on dealing, communicating or counseling on matters relating to insider trading. 3. No insider shall- (i) either on his own behalf or on behalf of any other person, deal in securities of a company listed on any stock exchange when in possession of any unpublished price sensitive information; or (ii) communicate counsel or procure directly or indirectly any unpublished price sensitive information to any person who while in possession of such unpublished price sensitive information shall not deal in securities Provided that nothing contained above shall be applicable to any communication required in the ordinary course of business or profession or employment or under any law. To bring home the char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TARY The above information was disseminated on the website of the NSE on August 25, 2009 and on the website of BSE on August 27, 2009. It is the case of the appellants that the company is in the business of undertaking infrastructure projects. Since it is the business of the company to carry out these projects, the orders bagged by it are in the nature of stock in trade in the business and it is not an unusual occurrence. However, the company has laid down a policy in accordance with the general condition under regulation 36(7) of the Listing Agreement between the company and the stock exchanges that when the company reaches a level of orders of 100 crores, it informs the stock exchanges. This has been the practice of the company for a number of years and is not an exceptional occurrence. The company has followed a constant practice of informing the stock exchange as and when orders of about ₹ 100 crores are received. Such intimations were furnished in the past also to BSE on 18/4/2007, 12/11/2007, 26/3/2008, 22/7/2008 and 11/11/2008. Intimation given to the stock exchanges on August 25, 2009 was one such intimation and was not a price sensitive information as alleged by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pradesh worth ₹ 79 crores only. The other contracts were relating to construction of waste tank farm for Bhabha Atomic Research Centre, Trombay worth ₹ 15 crores, bridge work at Thane worth ₹ 46 crores and bridge work at Indore worth ₹ 32 crores. When a company having contracts worth ₹ 1000 crores pending with it for execution bags a few new projects through the tendering process such information need not necessarily be price sensitive. It needs to be appreciated that the projects relating to Arunachal Pradesh were awarded after a long drawn up tendering process keeping in view the transparency norms to be followed by the government departments/public sector undertakings and the persons participating in the tendering process knew about the developments which took place at each and every stage of the tendering process. Opening of tenders is done in the presence of bidders where the bidders came to know the lowest bidder who is likely to get the award. Usually, there is a long time gap between the date when the lowest bidder is declared and the contract is actually awarded to the lowest bidder. During all this period, the information with regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereas it had received orders only to the extent of ₹ 79 crore from the Government of Arunachal Pradesh. We also noticed that the adjudicating officer has traversed beyond the charge in the show cause notice. In para 4 of the show-cause notice dated May 18, 2011, reference is made only to the transaction entered into by the appellant on August 21, 2009 and August 25, 2009. However, in the impugned order the appellant has been held guilty even in respect of transactions made by him on August 28, 2009. The transactions of August 28, 2009 were not the subject matter of the showcause notice. In any case, since the disclosures were made to the stock exchanges on August 25, 2009 which were disseminated to the public by NSE on August 25, 2009 itself and by BSE on August 27, 2009, the adjudicating officer has erred in taking note of the transactions of August 28, 2009 also. In short, the order cannot be sustained for the reasons that there is no finding recorded by the adjudicating officer that the information with regard to bagging of award from the Government of Arunachal Pradesh was a price sensitive information; the contracts relating to Arunachal Pradesh government were only to ..... 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