The Supreme Court on Monday exempted NDTV promoters Prannoy Roy and Radhika Roy from making a deposit for hearing their appeals against a penalty imposed by the Securities and Exchange Board of India in a case related to insider trading, reported Live Law. The matter is listed before the Securities Appellate Tribunal for hearing in the first week of March.
In November, the SEBI had directed the NDTV promoters to relinquish illegal gains worth over Rs 16.97 crore for their involvement in insider trading.
“...no amount shall be coercively recovered from the appellants [Prannoy Roy and Radhika Roy] for hearing the case,” a three-judge bench led by Chief Justice SA Bobde said in an order. Solicitor General Tushar Mehta, representing SEBI, argued against the decision, saying that the order will likely be used in other similar pending cases. To this, the bench clarified that the order “will not be taken as a precedent”.
Mehta also opposed the proposal made by Prannoy and Radhika Roy to offer their shares in the news channel as securities. The NDTV promoters had made the offer during the last hearing on January 28. They had informed the court that both of them hold 50 lakh shares in the company, and at 37 paise per share, the amount was more than the penalty.
In Monday’s hearing, the solicitor general told the court that the shares of Prannoy and Radhika Roy were frozen by another order of the SEBI. He said that the NDTV promoters were restrained from creating encumbrances on the shares.
However, the court replied that the deposit of shares in a court proceeding will not amount to creating encumbrance. “This is a deposit in court, not an encumbrance or a pledge,” Bobde said. “There is a difference.”
Mehta argued that deposit of money was a condition precedent for grant of stay on the direction of SEBI. Lawyer Mukul Rohtagi, appearing on behalf of the NDTV promoters, then told the court that his clients do not have any other security, reported India Legal. “If there is no stay, my properties will be attached,” Rohtagi said on behalf of the Roys.
The bench then proceeded to direct the Securities Appellate Tribunal to hear the matter without any security deposit and halt recovery proceedings against the NDTV promoters.
Besides the penalty, the SEBI had barred the NDTV promoters from accessing the securities market for two years. In a statement, the news channel had said that SEBI’s order was based on an “inaccurate assessment of facts” and will not withstand scrutiny in appeal.
SEBI had in 2019 also barred Prannoy Roy and Radhika Roy from the market for a period of two years. It has also stopped them from holding any managerial posts in the news network.
The markets regulator had initiated an investigation after an NDTV shareholder claimed that Prannoy Roy, Radhika Roy and RRPR Holdings (another promoter of the news channel) had not disclosed information about loan agreements they entered into with a company known as Vishvapradhan Commercial. ICICI Bank was also part of this agreement. The SEBI investigated the period from October 14, 2008 to November 22, 2017, to make its assessment.
The promoters had defended their actions, saying that they attributed full knowledge of all their trades to SEBI and the stock exchanges. They argued that none of the law firms, advising them on their transactions, ever alerted them on possible infraction of the Prevention of Insider Trading Regulations, 1992, in respect of any of the transactions concerned.