Samir Arora V SEBI

10/1/24, 4:07 PM sebi.gov.in/sebi_data/docfiles/12241_t.
html
IN THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No: 83/2004

In the matter of: Last Date of Hearing 01/09/2004
Date of Decision 15.10.2004
Appellant – Represented by:
Shri C.A. Sundaram, Sr. Advocate with Shri
Somasekhar Sundaresan, Advocate and Shri H.
Samir C. Arora Chandoke, Advocate
Versus
Securities and Exchange Board of India Respondent- Represented by

Shri Rafique Dada, Sr. Advocate with Shri Kumar
Desai, Advocate
CORAM
Justice Kumar Rajaratnam, Presiding Officer
Dr. B. Samal, Member
N.L. Lakhanpal, Member
Per: N.L. Lakhanpal, Member
1. The appeal is taken up for final disposal with the consent of parties. Heard Mr. C.A.Sundaram,
Senior Advocate for the appellant and Mr. Rafique Dada, Senior Advocate for the respondent.
2. The appellant challenges the impugned order passed by SEBI dated 31/03/2004, the operative
portion of which reads as follows:
“13.1 In the light of the above and in exercise of the powers conferred on me in terms of
Section 19 of the SEBI Act, 1992, read with Section 11(4) and 11B of SEBI Act,
1992, read with Regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade
Practices Relating to Securities Market) Regulations 2003 and Regulation 11 of
SEBI (Prohibition of Insider Trading) Regulations, 1992, I hereby prohibit Shri Samir
C. Arora not to buy, sell or deal in securities, in any manner, directly or indirectly, for
a period of five years. The period of prohibition already undergone by Shri Samir C.
Arora by virtue of the interim order dated August 9, 2003 will be included in the
above period. However, if, in the meantime Shri Samir C. Arora desires to sell the
securities, if any, currently held by him he may do so only after obtaining prior
written permission of SEBI.”
https://www.sebi.gov.in/sebi_data/docfiles/12241_t.html 1/60
10/1/24, 4:07 PM sebi.gov.in/sebi_data/docfiles/12241_t.html
person charged consistent with the presumption of innocence or honesty of the person charged.
Ultimately it depends on the facts of each case. For the purpose of the present case, we shall proceed
to deal with the facts of the case and determine whether SEBI on the evidence has made out a case
on the preponderance of probability. We do not think that in disputes relating to securities market it is
necessary for the respondent to prove the case beyond reasonable doubt. However, it cannot be
forgotten that even in a civil dispute, there must be legally sustainable evidence before a person is
found guilty of violation of Regulations.
58. Just to recapitulate, what we have before us by way of evidence against the appellant are his
own notings on the proposals for selling the stock of DGL during the period May 8, 2003 to May 12,
2003 after his interview to Business Standard defending his holding of this stock. Since everything in
relation to this charge hinges on these notings it would be worthwhile examining these notings
datewise. Thus on May 8, 2003 his notings were as follows:
“Sell 1,25,000
Proportionately for all
Digital Globalsoft Ltd. - funds
Price has rallied nicely – Taking

profits.”
Obviously no objection can be taken about this decision and the reasons underlying this decision
because selling shares for taking profits is a legitimate trading activity of a mutual fund since there is
no other way the unit holders of the fund can be rewarded or more efficient mutual funds differentiated
from the less efficient ones. Thereafter on May 9, 2003 the records read as under:
“Sell Digital Globalsoft - 2,00,000 for all funds

Proportionately
Event risk in Digital is too high

Getting nervous – Reducing
exposure”
It is here that the respondent attributes insider information of course without any proof except that the appellant made a
reference to the event risk.
59. The respondent contends that the only event was only the forthcoming Board meeting which was merely going
to discuss financial results as per the agenda filed with the Stock Exchanges and that since the market expected the
financial results to be good there was no event risk involved prompting any nervousness leading to reduction in
exposure. According to the respondent the nervousness was due to the insider information that the Board was going to
discuss and announce the merger on the basis of a merger ratio which the appellant knew was going to be adverse.
According to the appellant, the event mentioned here was simply the event of Board meeting and that when the Board
meets it can discuss anything on or off the agenda including, possibly the merger issues. On May 12, 2003 the notings
are as follows:
10/1/24, 4:07 PM sebi.gov.in/sebi_data/docfiles/12241_t.html
Member Member
Place: Mumbai
Date: 15.10.2004
*/as//sr

Samir Arora V SEBI

Uploaded by

Copyright:

Available Formats

Samir Arora V SEBI

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Samir Arora V SEBI

Uploaded by

Copyright:

Available Formats

10/1/24, 4:07 PM sebi.gov.in/sebi_data/docfiles/12241_t.

IN THE SECURITIES APPELLATE TRIBUNAL

Appeal No: 83/2004

Securities and Exchange Board of India Respondent- Represented by

Per: N.L. Lakhanpal, Member

portion of which reads as follows:

found guilty of violation of Regulations.

Price has rallied nicely – Taking

“Sell Digital Globalsoft - 2,00,000 for all funds

Event risk in Digital is too high

You might also like