TaxTMI 
TaxTMI 
2012 (6) TMI 868
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.... of 2011. Counsel for the parties agree that since the two orders arise out of the common set of facts, they can be disposed of by a common order. 2. The allegation against the appellants is that they have traded in the shares of M/s. Valecha Engineering Ltd. (the company) while in possession of unpublished price sensitive information. Shri Anil Harish, appellant in Appeal no. 217 of 2011 was the chairman of the company at the relevant time and the appellant in Appeal no. 218 of 2011 Mrs. Ratna Harish is the mother of Mr. Anil Harish. It was alleged that Mr. Anil Harish being privy to the unpublished price sensitive information had traded in the scrip of the company and also disseminated the same to the other person before the information was made public by the company and has thereby violated the provisions of the insider trading regulations. 3. The facts of the case, in brief, are that the Board had conducted investigations into the alleged irregularities in the affairs, trading and dealings in the shares of the company based on certain inputs received from the National Stock Exchange of India Ltd. (NSE) regarding price movement in the shares of the company during the perio....
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....1, Mr. Zal Andhyarujina, Advocate for the appellant in Appeal no. 218 of 2011 and Mr. Mihir Mody, Advocate for the respondent Board, at length, who have also taken us through the relevant records. Having heard the counsel for the parties and after perusing the record, we are of the considered view that the appeals must succeed. Regulation 3 of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 prohibits dealing, communicating or counseling on matters relating to insider trading and reads as under: "Prohibition on dealing, communicating or counseling on matters relating to insider trading. 3. No insider shall- (i) either on his own behalf or on behalf of any other person, deal in securities of a company listed on any stock exchange when in possession of any unpublished price sensitive information; or (ii) communicate counsel or procure directly or indirectly any unpublished price sensitive information to any person who while in possession of such unpublished price sensitive information shall not deal in securities" Provided that nothing contained above shall be applicable to any communication req....
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....tention in the economy since the recent past. Thanking you, Yours faithfully, For VALECHA ENGINEERING LIITED Sd/- KAVITA VALECHA SHARMA COMPANY SECRETARY" The above information was disseminated on the website of the NSE on August 25, 2009 and on the website of BSE on August 27, 2009. It is the case of the appellants that the company is in the business of undertaking infrastructure projects. Since it is the business of the company to carry out these projects, the orders bagged by it are in the nature of stock in trade in the business and it is not an unusual occurrence. However, the company has laid down a policy in accordance with the general condition under regulation 36(7) of the Listing Agreement between the company and the stock exchanges that when the company reaches a level of orders of 100 crores, it informs the stock exchanges. This has been the practice of the company for a number of years and is not an exceptional occurrence. The company has followed a constant practice of informing the stock exchange as and when orders of about Rs. 100 crores are received. Such intimations were furnished in the past also to BSE on ....
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....d that the intimation given to the stock exchange on August 25, 2010 was not in respect of one project but was in respect of five different projects out of which two road projects are from Arunachal Pradesh worth Rs. 79 crores only. The other contracts were relating to construction of waste tank farm for Bhabha Atomic Research Centre, Trombay worth Rs. 15 crores, bridge work at Thane worth Rs. 46 crores and bridge work at Indore worth Rs. 32 crores. When a company having contracts worth Rs. 1000 crores pending with it for execution bags a few new projects through the tendering process such information need not necessarily be price sensitive. It needs to be appreciated that the projects relating to Arunachal Pradesh were awarded after a long drawn up tendering process keeping in view the transparency norms to be followed by the government departments/public sector undertakings and the persons participating in the tendering process knew about the developments which took place at each and every stage of the tendering process. Opening of tenders is done in the presence of bidders where the bidders came to know the lowest bidder who is likely to get the award. Usually, there is a long t....