Case Law Details
Pranshu Bhutra Vs SEBI (Securities Appellate Tribunal Mumbai)
1. The present appeal has been filed questioning the confirmatory order dated 15th September, 2021 confirming the ex-parte ad-interim order dated 31st May, 2021 whereby the appellant was restrained from buying or selling any securities, either directly or indirectly, till 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 The information relating to the financial results was an Unpublished Price Sensitive Information (‘UPSI’ for short) which came into existence on 29th June, 2020 and came to an end on 15th July, 2020 when the final results were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 employee Mr. Venkata Subramaniam who was a Senior Principal, Corporate Accounting Group and was a designated person and who was reasonably expected to have access to and be in possession of UPSI and, therefore, Mr. Venkata was also an insider. It was alleged that Mr. Venkata has been in frequent communication with the appellant through telephonic communication and, therefore, on a preponderance of probability, being in possession of UPSI, must have communicated the UPSI to the appellant. The examination further revealed that the appellant was closely connected to Mr. Amit Bhutra through frequent telephonic communication and that Mr. Amit Bhutra was a partner in Capital One Partners and Tesora Capital and it was reasonably expected that the appellant had passed on the UPSI to his cousin Mr. Amit Bhutra, who in turn traded in the scrip of the Company prior to the announcement of the financial results. The examination further revealed that the two partnership firms through their trading had generated proceeds of Rs.279.51 lakhs in Capital One Partners and Rs.26.82 lakhs on Tesora Capital.
3. Accordingly, an ex-parte ad-interim order dated 31st May, 2021 was passed against the appellant.
4. The appellants and other entities against whom the interim order was passed filed their replies and contested the matter. The appellant contended that his role in the Company was to advise the Company and its subsidiaries relating to the issues involving employment law and that he was not required to interact with any team involved in the formulation or tracking of financial results, such that he would be reasonably expected to have access to UPSI related to financial results. The appellant submitted that he did not possess any UPSI nor can in any manner it could be reasonably expected that he had access to UPSI. It was also contended that as per the structured digital data base, his name did not appear amongst the persons who had either shared or received the UPSI during the UPSI period. This fact is based on the structured digital data base which is made under Regulation 3(5) of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (hereinafter referred to as „PIT Regulations‟). The appellant further contended that his conversation with Mr. Venkata Subramainiam was with regard to life insurance and health insurance policies of the group and 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.
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