TMI Blog2019 (11) TMI 1598X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the said information to the stock exchanges. Even if it is assumed that the information was is a price sensitive information, still the appellant cannot be blamed of insider trading for the reasons that he did not trade on the basis of the information . The appellant was able to show his dire need to infuse fund in the entity under the master restructuring agreement to implement a CDR package as detailed supra. He was even required to sell his agricultural land and flat details of which are already given hereinabove. In these circumstances he sold the shares. In the case of Rajiv B. Gandhi [ 2008 (5) TMI 729 - SECURITIES APPELLATE TRIBUNAL, MUMBAI ] on fact this Tribunal held that the appellants therein were able to rebut the presumption that they traded on the basis of UPSI as they had a necessity to sell the shares. Appellant had contended that respondent SEBI had deliberately taken the closing price of September, 2013 when the price were around 30% lower than the closing price as on September 3, 2013. By adding this extra day SEBI had widened the gap between the selling price and the price found on 4 th September, 2013. In fact the share closing price rose on Septem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e an amount of ₹ 1.09 crores already deposited by the appellant in an escrow account as per the earlier direction under the provisions of Section 19 read with Section 11 and 11B of the Securities and Exchange Board of India Act, 1992 (referred to hereinafter as 'SEBI Act') read with Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 (referred to hereinafter as 'PIT Regulations'). Hence the present appeal. 2. GIPL, during the relevant period was an infrastructural project development company. Appellant was the Chairman and Managing Director of GIPL till September 2, 2013. Thereafter he continued to be on the Board of GIPL. GIPL was awarded a road project by National Highways Authority of India ( NHAI ) in Andhra Pradesh. Total cost of the same was ₹ 1648 crores. GIPL has set up a special purpose vehicle ( SPV ) called Vijayawada Gundugolanu Road Project Private Limited. Similarly, another Company- Simplex was awarded a road project by NHAI in Jharkhand and West Bengal. The cost of the same was ₹ 940 crores. Simplex had also a special purpose vehicle called Maa Durga Expressways Private Limited ( MDEPL ) to u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L. It was for the respondent SEBI to establish the materiality of the same for the above context. As the appellant had sold the shares the SEBI should be able to show that the information would have an adverse impact on the price of the security upon publication of the same and the same was the motive for selling the shares while holding the information. The respondent has simply assumed that termination of the agreement involved significant change in the policies, plans or operation of the Company and, therefore, it would be UPSI. Infact realignment of the projects were done in ordinary course of business. The termination of the agreement had two consequences (i) GIPL acquired exclusive control on the larger part of the contract worth ₹ 1640 crore and (ii) exited from relatively small project of ₹ 940 crores in which GIPL had invested only 4.9 crores representing less than 0.05% of GIPL's order book value at end of August, 2013 and only around 0.7% of the turnover of the financial year ending March31, 2013. This cannot be termed as material exposure. GIPL itself did not regard the information as price sensitive and, therefore, trading window was not closed. Green s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner - Nature of Property Value Date of Date of (` in Payment Agreement Crores) Agricultural Land-Village Kale, 0.90 28.08.2013 28.08.2013 District-Pune Agricultural Land-Village 1.10 28.08.2013 28.08.2013 Kolgaon, District-Raigad Agricultural Land-Village 2.40 28.08.2013 28.08.2013 Kolgaon, District-Raigad Flat at Four Bungalows, 0.75 28.08.2013 28.08.2013 Andheri Mumbai Total 5.15 7. The respondent SEBI however did not accept any of the defense and the impugned order came to be passed. 8. Before embarking upon the rival submission it is necessary to advert to the relevant provisions. PIT Regulations, 1992 Regulation 2(c)(ii) (c) Connected person means any person who- ... (ii) occupies the position as an officer or an employee of the company or holds a position involving a professional or business relationship between himself and the company whether temporary or permanent and who may reasonably be expected to have an access to unpublished price sensitive information in relation to that company: Explanation:- For the purpose of clause (c), the words connected person shall mean any person who is a connected person six months prior to an act of insider tradin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company; (i) ........................................ (j) ...................................................... (k) unpublished means information which is not published by the company or its agents and is not specific in nature. Explanation.- Speculative reports in print or electronic media shall not be considered as published information; (l) .................................................................... 10. Heard Mr. Somasekhar Sundaresan, Advocate assisted by Mr. Abishek Venkataraman, Mr. Pulkit Sukhramani and Ms. Struti Rajan, Advocates for the Appellant and Mr. Pradeep Sancheti, Senior Advocate assisted by Mr. Abhiraj Arora and Mr. Vivek Shah, Advocates for the Respondent. 11. Mr. Somasekhar Sundaresan, learned counsel for the appellant submits that considering the miniscule proportion of the effect of termination of the agreement on the total turnover of GIPL and even the fact that the Simplex had not published the information at any point of time the respondent SEBI ought to have concluded that the information was not that much material which would affect the price of GIPL. The information, in fact had not adversely affected the price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation with himself, the appellant had sold the shares and thereafter the information was disclosed to the stock exchanges. He drew attention of the Tribunal to the assessment made by the Adjudicating Officer on the impact of termination of agreement in the order book value of GIPL at 3.1% as detailed in para 5.12 of the impugned order. He submits that whether the price of shares actually decreased upon disclosure is not material. The determination of price by a market at a given day depends on number of facts, information, the trend in the segment etc. In the circumstances, supporting the reasons forwarded by the Adjudicating Officer he wanted that appeal be dismissed. 13. Upon hearing both the sides in our opinion the appeal deserves to be allowed for the following reasons:- Reasons 1. In our view the information itself was not a price sensitive information. The record would show that GIPL had invested only ₹ 4.9 crores in the Simplex project in the said financial year. It represented only 0.05% of the GIPL's order book value at the end of August, 013 and only 0.7% of its turnover for the said financial year. Further due to the termination of the agreement a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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