9911796707
TMI Blog2022 (5) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... further orders. 2. The facts leading to the filing of the present appeal is, that Securities and Exchange Board of India (hereinafter referred to as "SEBI") conducted an examination in respect of the trading activities of two partnership firm, namely, M/s. Capital One Partners and M/s. Tesora Capital in the scrip of M/s. Infosys Ltd. In the preliminary examination, it was prima facie observed that corporate announcement of audited financial results for the quarter ended 30th June, 2020 was made by Infosys on 15th July, 2020. The information relating to the financial results was an Unpublished Price Sensitive Information ("UPSI" for short) which came into existence on 29th June, 2020 and came to an end on 15th July, 2020 when the final results were announced. It was also found that the appellant was a Senior Corporate Counsel of Infosys and, being an officer/employee of Infosys, was reasonably expected to have access to the UPSI and, on a preponderance of probability basis, the appellant was in possession of UPSI and thus, was an insider under Regulation 2(1)(g) of the PIT Regulations. The preliminary examination further revealed that he was in close connection with another employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd issues relating to provident fund contribution, etc. The appellant specifically denied any discussion relating to financial results or relating to the UPSI. It was also contended that as per the structured data base Mr. Venkata did not receive any UPSI nor had any access to UPSI. It was also stated that the conversation which the appellant had with Mr. Venkata on 9th July, 2020 was relating to maternity benefits at the cost of the Company only to those employees who were not eligible to receive maternity benefits from Employees" State Insurance Corporation. The appellant, however, admitted that he was related to Mr. Amit Bhutra who were second cousins but denied passing on any sensitive information relating to Infosys to Mr. Amit Bhutra. The appellant further denied having knowledge of any transactions done by Amit in Infosys or any other Company. 5. The Whole Time Member ("WTM" for short) inspite of noting the stand of the appellant and inspite of observing that the appellant to some extent was successful in making out a case warranting modification in the directions was, however, enamoured by the fact that the appellant was working in a senior position in the Company and was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted hereunder: "2.(1) In these regulations, unless the context otherwise requires, the following words, expressions and derivations therefrom shall have the meanings assigned to them as under:- ........... (d) "connected person" means,- (i) any person who is or has during the six months prior to the concerned act been associated with a company, directly or indirectly, in any capacity including by reason of frequent communication with its officers or by being in any contractual, fiduciary or employment relationship or by being a director, officer or an employee of the company or holds any position including a professional or business relationship between himself and the company whether temporary or permanent, that allows such person, directly or indirectly, access to unpublished price sensitive information or is reasonably expected to allow such access. (ii) Without prejudice to the generality of the foregoing, the persons falling within the following categories shall be deemed to be connected persons unless the contrary is established, (a) an immediate relative of connected persons specified in clause (i); or (b) a holding company or associate company or subsidiary c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t must have access to UPSI from someone and, in any case, from Mr. Venkata and in turn had passed on this information to his cousin Mr. Amit Bhutra who in turn traded in the scrip of the Company in his partnership firm. 10. Whereas, on this basis, it was sufficient for the WTM to pass an ad-interim order but when further evidence comes forward which is taken note of then in our opinion the continuation of the ex-parte ad-interim order in so far as it relates to the appellant cannot continue and, therefore, in our opinion the impugned order confirming the ex-parte ad-interim order cannot be sustained for the following reasons:- a) Under Regulation 3(5) of the PIT Regulations, 2015 all listed companies are mandated to maintain SD data base containing details of all the persons with whom UPSI is exchanged alongwith the date and time stamping and verifiable audit trails. A specific finding has been given by the WTM that the SD data base which captures details of only those designated persons who had direct access to UPSI does not include the name of the appellant or of the designated person Mr. Venkata Subramaniam. Therefore, prima facie appellant no.1 and other noticee Mr. Venkata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rship companies. The interest of the securities market is thus safeguarded. 13. The investigation has not yet concluded and, therefore, it would take some time for issuance of a show cause notice. Final orders will come much later. Considering the aforesaid when only prima facie observations are being made which the appellant has sufficiently explained and discharged his burden we are of the opinion that at this stage debarring a person from accessing the securities market is not justified in the facts of the case. 14. We further observe that the investigating party will not be influenced by any observation made by us in the present order which are tentative in nature and will not be utilised to the advantage of either party. 15. In view of the aforesaid, the confirmatory order as well as the interim order in so far as it relates to the appellants cannot be sustained and are quashed. The appeals are allowed. In the circumstances of the case parties shall bear their own costs. 16. This order will be digitally signed by the Private Secretary on behalf of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Certified copy of this orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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