TMI Blog2006 (10) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... lished price sensitive information from Shri Dilip Pendse, the managing director of TFL. Name of the seller No. of shares sold Sale Price (Rs.) Dmat transfer of shares to the buyer Dr. Anajali Beke 20,000 90 28.03.01 Anjudi Property Investment (P) Ltd. 1,50,000 80,000 90 90 28.03.01 28.03.01 Total 2,50,000 It was alleged that Dr. Anjali Beke was known to Shri Dilip Pendse, managing director of TFL for the last more than ten years and Shri Pendse had also introduced Anjudi Property and Investment Pvt. Ltd. (API) for opening its account with Canara Bank and Citi bank. It is alleged that the price sensitive information related to the loss of ₹ 79.37 crores for the year ending March, 2001 by Nishkalp Investment and Trading Company Ltd. (NITC) which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of India and payable at Mumbai which may be sent to Shri R.K. Nair, Executive Director, Securities and Exchange Board of India, Mittal Court, B Wing, 224 Nariman Point, Mumbai 400 021. The learned senior counsel for the appellant argued that Shri Pendse was a family friend for the last 15 years and Shri Pendse wanted to form a private limited company himself but he requested Dr. Anjali Beke and her husband to become directors of API which was started with the initial subscribed capital of ₹ 20,000/- only some time in December, 1999. She agreed to be on the Board of API for the sake of her relationship with Shri Pendse. He contended that Shri Pendse himself was administering the said company from his own residence which is confirmed from various records. The records pertaining to API were brought to the house of Dr. Anjali Beke only in July/August 2001. Neither Dr. Anjali Beke nor her husband received any remuneration as directors from the company. He pointed out that the dividend cheques from companies were received at A 5, Seaface Park, 2nd Floor, 50 Bhulabhai Desai Road, Mumbai -26, which was the address of Shri Pendse. He further submitted that the receipts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all involved in transacting and executing the transactions of shares. She had no knowledge of the market as she was a busy medical practitioner. Had she been involved in any of the transactions she could have gained some benefit out of these transactions, but she did not take any benefit from the trading of shares in her name or in the name of API which was registered in her name. It was Shri Dilip Pendse who was doing benami transactions in her name. He, therefore, submitted that his client was totally innocent and she has become the victim of breach of trust and therefore the order of the adjudicating officer was wrong which should be set aside. The learned senior counsel cited a number of cases contending that the appellant could not be penalized merely on the basis of suspicion and conjuncture. The charge of fraud has to be established beyond all reasonable doubts. In this case, the respondent has not been able to prove the charge of insider trading conclusively. There is no evidence to support that appellant at all traded in these shares. All records show that it was Shri Pendse who was transacting and executing trades on behalf of the appellant. We have carefully consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss cannot, therefore, be in doubt. It is because of this closeness that he passed on the unpublished price sensitive information to her on the basis of which she traded in the shares of TFL. She is, therefore, an insider. Shri Pendse was the managing director of TFL of which NITC was a wholly owned subsidiary and, therefore, by virtue of this connection he had access to the unpublished price sensitive information in respect of the securities of TFL. Unpublished price sensitive information was the loss suffered by NITC which had a direct bearing on the price of the shares of TFL. The charge of insider trading is complete when it is established that an insider traded in the scrips of the company. We have already held that the appellant was an insider and it is on record that she and API had sold the shares of TFL before the price sensitive information was made public on 30th April, 2001. The shares were sold on 28th March, 2001 @ of ₹ 90/- per share and the price of the share had fallen to ₹ 30/- after the publication of the information. It may be mentioned that the results of TFL and NITC were published only on April 30, 2001 though Shri Dilip Pendse had this price sensi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions of Anjudi. A. As far as I remember, I used to sign the delivery instruction form blank and keep it with the accountants Ms. Mona, who used to fill it forward it to the broker when asked for. Sometimes brokers also used to fill the signed demat delivery instructions forms forwarded to them. Q. Whether the transactions for sale of 2,30,000 shares of Tata Finance was done on any stock exchange or it was an off-market deal. A. As far as I remember, the transactions was not done on any stock exchange. It was an off-market transactions. Q. How do you decide to purchase or sale certain share. What are the parameters used by you in selecting scrips. What analysis is done before making any purchase or sell decision for any scrip. A. There plenty of reading material, plenty of material in the news items like CNBC, Moneymatters, plenty of magazines, plenty of research reports carried out by big finance firms like Morgan Stanley, CSFB etc of very good repute supplemented by tips circulating in the market on a day to day basis and information from friends. Analysing all this helps one to conclude a decision of sell or purchase in a particu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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