Reliance Petroinvestments Limited vs Sebi

Date of Decision : 07.12.2015

Reliance Petroinvestments Limited 3rd Floor, Maker Chambers IV, 222, Nariman Point, Mumbai - 400 021. ...Appellant

Versus Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ...Respondent

Mr. Janak Dwarkadas, Senior Advocate with Mr. Rohan Rajadhyaksha, Mr. Rajendra Barot and Mr. Divij Kishore, Advocates i/b AZB & Partners for the Appellant.

Mr. Kevic Setalwad, Senior Advocate with Mr. Mihir Mody, Mr. Saurabh Bachhawat and Ms. Shruti Chiniwar, Advocates i/b K. Ashar & Co. for the Respondent.

CORAM : Justice J.P. Devadhar, Presiding Officer Jog Singh, Member

Per : J.P. Devadhar (Oral)

1.

The appellant is aggrieved by the impugned order passed by the

Adjudicating Officer of Securities and Exchange Board of India ('SEBI' for

short) dated May 2, 2013 whereby penalty of Rs. 11 Crore is imposed on the

Appellant under Section 15G of the Securities and Exchange Board of India

Act, 1992 ('SEBI Act' for short) for the violation of Regulation 3 of the

SEBI (Prohibition of Insider Trading) Regulations, 1992 ('PIT Regulations'

for short).

2. In the impugned order it is held that purchase of 21,32,953 shares of

Indian Petrochemicals Corporation Limited ('IPCL') by the Appellant for 2

Rs. 55,50,86,211/- during the period from February 27, 2007 to March 2,

2007 was in violation of PIT Regulations on the ground that the Appellant

being 'deemed to be connected person' with IPCL in terms of Regulations

2(h) of the PIT Regulations, the Appellant was an 'insider' in terms of

Regulation 2(e) of the PIT Regulations and being an insider, the Appellant

was reasonably expected to have access to Unpublished Price Sensitive

Information ('UPSI' for short) on the basis of which the Appellant had

purchased shares of IPCL and hence the Appellant is liable to penalty under

the SEBI Act.

3. As held by this Tribunal in the case of Rajiv B. Gandhi & Ors. vs

Securities and Exchange Board of India (Appeal No. 50 of 2007), decided

on May 9, 2008, if an insider trades or deals in securities of a listed

company, it would be presumed that he has traded on the basis of the

unpublished price sensitive information in his possession unless he

establishes to the contrary.

4. On perusal of para 9 and 10 of the impugned order it is seen that

apart from denying that the Appellant was an insider, Appellant had placed

on record various documents to rebut the presumption of being in

possession of UPSI at the time of purchasing shares and the Appellant had

also made submission to the effect that the price sensitive information itself

came into existence after the shares were purchased by the Appellant.

Neither the documents furnished have been considered nor the arguments

advanced on behalf of the Appellant have been considered in the impugned

order.

5. Since the impugned order is passed merely on the basis of

presumption without considering the arguments advanced on behalf of the

Appellant to rebut the presumption, the impugned order is quashed and set 3

aside and the matter is restored to the file of Adjudicating Officer of SEBI

for passing fresh order on merits and in accordance with law.

6. Since the Appellant has already deposited the amount of penalty with

SEBI, Adjudicating Officer of SEBI is directed to hear the Appellant and

pass fresh order on merits in accordance with law within 3 months from

today. All contentions are kept open. The amount of penalty deposited will

be subject to the result of the fresh order that is to be passed by SEBI.

7. Appeal is disposed of in the above terms with no order as to costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Jog Singh Member

07.12.2015 Prepared and compared by:

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