On Monday, the Supreme Court of India directed the Securities and Exchange Board of India (SEBI) to not take any ‘coercive action’ against promoters of NDTV, Prannoy Roy and Radhika Roy in the insider trading case. The duo had moved the apex court against the order of the Securities Appellate Tribunal (SAT) asking them to pay 50% of the wrongful gains made through insider trading 12 years ago.
The case was heard by a 3-Judge Bench of the Supreme Court comprising of Chief Justice of India SA Bobde, Justices AS Bopanna and V Ramasubramanian. The CJI said, “No amount shall be coercively recovered from the appellants(Prannoy Roy and Radhika Roy) for hearing the case.”
Solicitor General Tushar Mehta, representing the SEBI, stated that the order might be treated as a precedent. It was then that the Supreme Court pointed out that the order shall not be treated as a precedent. The Supreme Court directed the SAT to hear appeals without a deposit and halt recovery proceedings against the NDTV promoters.
We have no other money, claims advocate representing Prannoy Roy
During the last hearing of the case on January 28, senior advocate Mukul Rohatgi said that Prannoy and Radhika Roy were ‘willing’ to offer their shares in NDTV as security for the ₹16.97 crore fine imposed by SEBI. Rohtagi argued that the duo held around 50 lac shares in the company, which has been trading at ₹37/share. He argued that the value of the shares was higher than the penalty amount. However, Solicitor General Mehta pointed out that their shares were frozen by SEBI in another case.
CJI Bobde said, “This is a deposit in Court. Not an encumbrance or a pledge. There is a difference.” SG Tushar Mehta asked the Roys to deposit security, other than shares. He pointed out that the appeals before the SAT will be heard on March 6 and that the deposit was a pre-condition for hearing their appeal. Mukul Rohtagi, however, argued that the absence of deposit might lead to attachment of properties and its eventual sale. He added that NDTV is a struggling channel and that the promoters had nothing to offer as ‘deposit’ other than shares.
The background of the insider trading case against NDTV promoters
NDTV founders Prannoy Roy and his wife, Radhika Roy had filed an appeal with SAT against a SEBI order passed on November 27, barring the couple from trading in the securities market for two years. SEBI directed Prannoy and Radhika Roy to shell out ₹16.94 crores, along with 6% interest per year from April 17, 2008, to the date of payment, within a span of 45 days. When they approached the Securities Appellate Tribunal (SAT), it directed the duo to deposit 50% of the penalty for hearing their appeal.
According to an investigation conducted by SEBI, the two had violated the Prohibition of Insider Trading (PIT) Regulations. They are accused of possessing Unpublished Price Sensitive Information (UPSI) during 2007-2008 relating to discussion on the reorganization of New Delhi Television Ltd. Besides the duo, India’s capital market regulator Securities and Exchange Board of India (SEBI) has also found the media network’s CEO Vikramaditya Chandra, senior advisor Ishwari Prasad Bajpai, group CFO Saurav Banerjee guilty of making undue gain from insider trading.