Case Law Details
Chekka Guru Murali Mohan & Anr Vs State of Andhra Pradesh (Andhra Pradesh HC)
Conclusion: Insider trading was only made an offence in India under the SEBI Act, 1992 and it essentially deals with the sale and purchase of securities in the field of stock market based on nonpublic material information. No provision akin to Section 12-A and 15-G of the SEBI Act was incorporated in IPC by the Parliament relating to private sale transactions of purchase or sale of land which was an immovable property by invoking the said concept/theory of insider trading.
Held: The main case of prosecution was that assessee who purchased the said lands during the period from June, 2014 to December, 2014 got prior information regarding the exact location of the capital city unauthorisedly from higher officials in the Government and the political leaders and based on the said information they have purchased the said lands from the owners of the said lands and at that time they did not disclose to the owners that the capital city is going to come within the said area and thereby cheated the sellers of the land and they derived monetary benefit on account of increase in the land value subsequently, after location of the capital in that area was officially announced and this had resulted into loss to the owners of the land who sold the same oblivious of the fact that the capital city was going to come in that area. The crucial question that arose for consideration was even if the said version of the prosecution was to be taken as true at its face value, whether it constitute any offences punishable under Sections 420, 409, 406 and 120-B of IPC or not. It was held that insider trading is only made an offence in India under the SEBI Act, 1992 and it essentially deals with the sale and purchase of securities in the field of stock market based on nonpublic material information. It is a special enactment which specifically and exclusively deals with the offences relating to sale of securities in the stock market. Insider trading is not made an offence specifically under the Indian Penal Code. No provision akin to Section 12-A and 15-G of the SEBI Act is incorporated in IPC by the Parliament relating to private sale transactions of purchase or sale of land which is an immovable property by invoking the said concept/theory of insider trading. Assessee had no legal obligation to disclose the information relating to latent advantages in purchasing the land to the sellers at the time of buying the said land. Therefore, it did not amount to dishonest concealment of fact as contemplated under the Explanation appended to Section 415 IPC. It did not amount to any deception under Section 420 IPC read with Section 415 IPC. The sellers did not sustain any loss on account of the said sale transactions. No element of criminality was involved in the sale transaction. Therefore, the offence of insider trading was totally alien to our criminal law under IPC. It was a concept or offence totally unknown to our criminal law under the Indian Penal Code. Andhra Pradesh High Court had quashed criminal cases filed in connection with the alleged ‘insider trading’ in land transactions at Amaravati.
FULL TEXT OF THE JUDGMENT/ORDER OF ANDHRA PRADESH HIGH COURT
This batch of Criminal Petitions, under Section 482 Cr.P.C., are filed, seeking quash of the common F.I.R. in Crime No.49 of 2020 of C.I.D.P.S., A.P., Amaravati of Mangalagiri, registered against the petitioners for the offences punishable under Sections 420, 409, 406 and 120-B of I.P.C.
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