Appeal No. 384 of 2016. Case: Sudha Commercial Company Limited Vs Securities and Exchange Board of India. Securities and Exchange Board of India

Case NumberAppeal No. 384 of 2016
Party NameSudha Commercial Company Limited Vs Securities and Exchange Board of India
CounselFor Appellant: Somasekhar Sundaresan and Niyathi Kalra, Advocates i/b Negandhi Shah & Himayatullah, Advs. and For Respondents: Pradeep Sancheti, Senior Advocate and Tomu Francis, Advocate
JudgesJ.P. Devadhar, J. (Presiding Officer) and Dr. C.K.G. Nair, Member
IssueSecurities And Exchange Board Of India Act, 1992 - Section 11C
Judgement DateJanuary 20, 2017
CourtSecurities and Exchange Board of India

Judgment:

J.P. Devadhar, J. (Presiding Officer)

  1. Appellant is aggrieved by the order passed by the Whole Time Member ("WTM" for short) of the Securities and Exchange Board of India ("SEBI" for short) on September 27, 2016. By the said order complaint filed by the appellant seeking investigation in the abnormal trading in the scrip of Hindustan Petroleum Corporation Limited ("HPCL" for short) on July 11, 2016 and July 12, 2016, under Section 11C of the Securities and Exchange Board of India Act, 1992 ("SEBI Act" for short) has been rejected.

  2. Facts relevant for the present appeal are as follows:-

    "

    1. On May 27, 2016 the Board of Directors of HPCL recommended final dividend of ` 16 per share.

    2. On June 30, 2016 appellant opened long positions in futures contracts in respect of HPCL shares in July series of F&O segment, expiring on July 28, 2016.

    3. Late in the evening on July 11, 2016 HPCL took a decision that the "book closure" date would be from August 01, 2016 to August 06, 2016 and accordingly the "record date" or "ex-dividend date" would be July 28, 2016. Above decision was announced by HPCL during market hours on July 12, 2016 at 10:42 A.M, whereas, the said decision was uploaded on the Bombay Stock Exchange ("BSE" for short) website on July 12, 2016 at 9:47 A.M. and on the National Stock Exchange ("NSE" for short) website at 10:01 A.M.

    4. On July 12, 2016 the appellant requested HPCL to postpone the record date beyond expiry of the July F&O series since those who had bought positions in the contract had done so factoring in the news about the dividend without knowing that the record date would be fixed for end of July and announced in the midst of the month. Appellant also wrote a letter to HPCL that the delay in the announcement of record date has enabled selective leakage of the price sensitive information relating to the record date being made available to certain persons who took short positions on July 12, 2016, i.e. just before the record date was formally announced by HPCL.

    5. On July 21, 2016 appellant addressed a letter to SEBI inter alia stating that consequent upon the announcement made on July 12, 2016 regarding the book closure dates and the corresponding ex-dividend date as July 28, 2016, the trading price of futures contracts in respect of HPCL shares in the F&O segment has seen a downward price correction and as a consequence the appellant is incurring huge financial losses. By the said letter appellant requested...

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