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TMI Blog2006 (10) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 2001 on the receipt of unpublished price sensitive information from Shri Dilip Pendse, the managing director of TFL.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 wholly owned by TFL. This information of loss came to be known to the general public only on 30th April, 2001 when the results were published where as the appellant came to know of this crucial price sensitive information from Shri Dilip Pendse earlier and she alongwith API sold 2.5 lac shares of TFL on 28th March, 2001 at a price of ₹ 90/- whereas the price of the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 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 issued by the courier company Blue Dart in the name of API also contained the same address of Shri Pendse. He strenuously urged that all this was a clear proof that the appellant, Dr. Anjali Beke had nothing to do with the activities of the company of which she and her husband were the directors and that they did not attend to any job pertaining to this company. In support of this argument, the learned senior counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oing 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 considered the various judgments and have kept in mind the principles as laid down in those judgments while dealing with this case. The learned counsel for the respondent argued that it was clearly a case of insider trading in terms of Regulation 2(e) of the Regulations. He referred to the statements made by the appellant before the Board on different dates to contend that she had been carrying on the business herself and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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 sensitive information with him much prior thereto by virtue of his connection with TFL. We are unable to agree with the learned senior counsel for the appellant that it was Shri Dilip Pendse who carried on the business in the name of the appellant and that she was only a name lender and had no knowledge about the operations. It would be relevant to refer to the statements made by her to the Board which would establish that she carried on the business herself and was in full control of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 particular share whether right or wrong. From the answers to the various queries which she has voluntarily given on oath to the Board, it becomes abundantly clear to us that not only was she herself dealing in the shares and executing the transactions through select brokers but she was quite knowledgeable about the market and its functioning. She also seems to be in complete control of the operations of the company registered in her name and also the transactions done by her. It could not, therefore, be accepted that she was totally novice about the market and its functioning and share transactions. Her ..... X X X X Extracts X X X X X X X X Extracts X X X X
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