Case Summaries – SEBI (PIT) (UPSI)
Seria Cases Citation Ratio
l
1. Rakesh Agarwal v. SEBI 2003 Scc there should be a motive to take advantage of
OnLine SAT such UPSI and make undue profits or avoid
38 losses.
2. SEBI v. Abhijit Rajan 2022 SCC “the actual gain or loss is immaterial, but the
OnLine SC motive for making a gain is essential”.
1241
3. Quantum Securities 2021 SCC there must exist a motive to utilize UPSI to derive
Pvt. Ltd. v. Securities OnLine SAT profit for attracting liability in insider trading
and Exchange Board of 139 cases.
India
4. SEBI v. Cabot 2004SCC Intention as an element is irrelevant and stated
International OnLine
Bom that penalty was to be attracted as soon as
Corporation 180 contravention of the statutory obligation was
established.
5. The Chairman, SEBI v. 2006 5 SCC Unless the language of the statute indicates the
Shriram Mutual Fund 361 need to establish the presence of mens rea, it is
wholly unnecessary to ascertain whether such a
violation was intentional or not.”
6. SEBI v. Skdc 2004 SCC mens rea is not required to prove a civil wrong.
Consultants Ltd. OnLine Bom
1318
7. Hindustan Lever Ltd v. 2022 SCC under reg. 3(1), there is no requirement of profit
SEBI OnLine Bom or avoiding loss for establishing the charge of
8493 insider trading, and held the case to be of insider
trading.
8. SEBI Order against DSQ 2003 SCC “Dealing in securities as defined under Reg. 2(d)
Holdings OnLine SEBI i.e. the mere act of buying/ selling or agreeing to
192 buy/ sell or deal in any security by any person as
principal/ agent on the basis of UPSI is covered
and is made an offence under Regulation 3.
Profit motive is therefore not an ingredient of
the offence.”
9. Franklin Templeton SEBI Order In the Franklin Templeton case, it was argued
case WTM/ GM/ that the SEBI may be guilty of regulatory
IMD/ 06/ overreach if it sought to apply in the present
2021-22 case the principles used in prosecuting insider
dated June trading cases since PIT Regulations expressly
07, 2021 excluded MF units from its applicability.
10. SEBI vs. Udayant 2021 1 SCC As witnessed in the Udayant Malhotra case, SEBI
Malhoutra 219 rendered a bona fide transaction of pledging the
securities for the purpose of paying back the
loan within the stipulated time as insider trading,
for mere possession of UPSI while transacting.
However, the said transaction was done on
account of Corporate Debt Restructuring devoid
of any gainful objective on the part of the insider.
11. M/S Daiichi Sankyo 2010 7 SCC In the case of M/S Daiichi Sankyo Company v.
Company vs Jayaram 449 Jayaram Chigurupati & Ors, the SC has observed
Chigurupati that authors of subordinate legislation ought to
articulate what they intended to legislate when
writing regulations. For that matter, if an insider
deals in securities based on the UPSI for no
advantage to him over others, it is not against
the interest of investors which the 1992
Regulation seeks to protect
12. (i) Chintalapati Raju v. that apart from looking into the purpose of the
SEBI; (ii) Rajiv Gandhi transaction, Courts have also taken into account
v. SEBI; other circumstances such as the scale of the
(iii) Miller v. Pezzani ; transaction, pattern of trading and honesty in
and (iv) SEBI v. responses during the proceeding.
Kanaiyalal
Baldevbhai Patel
13. Santa Fe Industries v. U.S. 462, In an insider trading cause this fraud derives
Green 472, (1977). from the “inherent unfairness involved where
one takes advantage” of “information intended
to be available only for a corporate
purposes and not for the personal benefit of any
one”.
14. In re Merrill Lynch, 438 SEC Thus, an insider will be liable for insider trading
Pierce, 933, 936 only where he fails to disclose material non-
Fenner & Smith (1968). public information before trading on it and thus
make “secret profit”. The Supreme Court went
on to observe “Whether disclosure is a breach of
duty depends in large part of the personal
benefit the insider receives as a result of
the disclosure.
15. Dirks v. SEC 406 U.S.
646
