https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=766889 https://www.taxtmi.com/caselaws?id=766889 Insider trading - use of Unpublished Price Sensitive Information - connected persons - restraining the appellants from dealing in the securities market and directing to disgorge an amount and to pay penalties mentioned in the order. Whether the noticees are insiders in terms of Regulation 2(1)(g) of the PIT Regulations, being connected persons ? - HELD THAT:- Undisputedly, the appellant No. 1 was in close association with KMP of Biocon and Mr. Arun Chandawarkar, CEO and joint MD of Biocon and CFO of Biocon Mr. Sidharth Mittal both were directly involved in the negotiations on the Biocon-Sandoz deal as also in CIMAB licensing deal. Appellant No. 1 was undoubtedly in frequent and regular communication with senior managerial persons of Biocon, who had direct knowledge of UPSI. Keeping the twin sensitive assignment being handled by the appellant No. 1 (a) advising on CIMAB licensing deal, which allowed him frequent access to CEO and CFO during the year long deal period while these KMPs were also negotiating the Sandoz deal; and (b) handling trading accounts of the CMD and Joint CMD of the company, we hold that the preponderance of probabilities test was correctly applied by the learned WTM. The appellant nos. 1 is a connected person in terms of Regulation 2(1)(g)(i) of the PIT Regulations by having access to UPSI, and the appellant No. 2 is a connected person in terms of Regulation 2(1)(d)(i) of the PIT Regulations. Possession of Unpublished Price Sensitive Information (UPSI) - Whether the trading behavior of the appellant s shows that they were in possession of UPSI? - Considering the fact that there was a spike in the trading of Biocon within four days of the said UPSI period suggests that such trades were made based on the knowledge of the UPSI. No error in the finding recorded by the learned WTM that there was a strong preponderance of probability that the trades executed by the appellants in Biocon during the UPSI period, were guided by UPSI on account of appellants being insiders . We are also in agreement with the finding of the learned WTM of holding the appellants as connected persons within the meaning of Regulation 2(1)(d)(i) of the PIT Regulations and not on the basis of possession of UPSI under the Regulation 2(1)(g)(ii) of the PIT Regulation, which distinguishes ruling in case of Balram Garg [ 2022 (4) TMI 945 - SUPREME COURT ] In our considered view, in case of insider trading , the evidence cannot be direct but circumstantial, since evidence with respect to communication channel may not be on record. Often such sensitive information in case of connected persons falling under 2(1)(d)(i), need not be necessarily through an email or a letter because, in the instant case, appellant was admittedly working closely with joint CMD CEO and CFO on cross-border licensing deal and was in frequent communication with them for a long period of time, while they were simultaneously working on another cross- border deal (Sandoz-Biocon deal). Appeal dismissed. Case-Laws SEBI Mon, 20 Jan 2025 00:00:00 +0530