9911796707
TMI Blog2012 (1) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... investigations into the rise in price and volume in the scrip of M/s. Rasi Electrodes Ltd. (the Company) during the period from June 8, 2007 to July 20, 2007. The scrip of the company is listed on the Bombay Stock Exchange Ltd. It was noted that certain promoter entities had traded in the scrip during the investigation period. It was further noticed by the Board that the agenda for the board meeting to be held on June 30, 2007 was discussed internally between Mr. B Popatlal Kothari, chairman and managing director and Mr. G Mahavirchand Kochar, whole time director of the company. The agenda was finalized between June 19 to 21, 2007. The rate of dividend was finalized in the meeting held on June 30, 2007. The period of June 19 to 30, 2007 was considered as a period when the information about the financial results and dividend was unpublished price sensitive information. It was further noted by the Board that the agenda for the board meeting regarding bonus issue to be held on July 25, 2007 was discussed internally during the period July 15 to 17, 2007 and the agenda papers were circulated on July 17, 2007. The period July 15 to 17, 2007 was considered to be the period when informati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 284500 56.90 19 19/7/2007 3600 221415 61.50 19/7/2007 9466 591830 62.52 20 20/7/2007 8000 494700 61.84 20/7/2007 1473 91031 61.80 Total 24484 1149329 46.94 30610 1506648 49.22 It was observed that the appellant is wife of Uttam Kumar Kothari who is the promoter of the company and is brother of B Popatlal Kothari, chairman and managing director and Ranjit Kumar Kothari, director of the company. Therefore, according to the Board, the appellant was deemed to be a connected person with the company and its directors who had access to unpublished price sensitive information and hence an insider. The appellant is alleged to have traded in the scrip of the company based on the unpublished price sensitive information relating to financial results, dividend and bonus issue. Hence, it was alleged that the appellant had violated regulation 3(i), (ii) and 4 of the regulations. A show cause notice dated March 11, 2011 was issued calling upon the appellant to show cause as to why an enquiry should not be held against her and penalty imposed for the alleged contravention of the regulations. The appellant denied the allegati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... band and chairman and managing director of the company, it was submitted that the address of the appellant is different from that of the chairman and managing director of the company. They stay in different apartments constructed on the same plot which has been mistaken as same address. It was further submitted that the appellant's trades were independent of the corporate announcements and were never induced / driven by the said corporate announcement. The appellant was trading in the ordinary course according to her own commercial wisdom prior to the corporate announcements, during the said corporate announcements and post corporate announcements. The appellant had not only bought the shares but had also sold the shares which belies the allegation that she was acting on the basis of unpublished price sensitive information. 4. With a view to appreciate the rival contentions, it is necessary to refer to the relevant provisions of the regulations which have a bearing on the allegation against the appellant and these provisions are reproduced hereunder for facility of reference: "2(c) "connected person" means any person who- (i) is a director, as defined in clause (13) of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d persons; (vii) is a banker of the company. (viii) relatives of the connected person; or (ix) is a concern, firm, trust, Hindu undivided family, company or association of persons wherein any of the connected persons mentioned in sub-clause (i) of clause (c), of this regulation or any of the persons mentioned in sub-clause (vi), (vii) or (viii) of this clause have more than 10 per cent of the holding or interest; (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 results 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; and (vii) significant changes in policies, plans or operations of the company; (k) "unpublished" means information which is not published b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant has not traded on the basis of unpublished price sensitive information. The prohibition contained in regulation 3 of the regulations apply only when an insider trades or deals in securities on the basis of any unpublished price sensitive information and not otherwise. It means that the trades executed should be motivated by the information in the possession of the insider. If an insider trades or deals in securities of a listed company, it may be presumed that he / she traded on the basis of unpublished price sensitive information in his / her possession unless contrary to the same is established. The burden of proving a situation contrary to the presumption mentioned above lies on the insider. If an insider shows that he / she did not trade on the basis of unpublished price sensitive information and that he / she traded on some other basis, he / she cannot be said to have violated the provisions of regulation 3 of the regulations. Going by the facts of the present case, we are of the view that appellant in the present case has placed sufficient material on record to show that she has not traded on the basis of unpublished price sensitive information. It is a matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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