By: Ritika Singh
Bombay HC dismisses the challenge by NDTV promoters Prannoy Roy & Radhika Roy against SEBI notices. Media firm NDTV’s promoters Prannoy Roy and Radhika Roy have received a show-cause notice from the capital markets regulator SEBI for alleged violation for insider trading regulations.
The market regulator SEBI issued a show-cause notice to media firm NDTV’s promoters Prannoy Roy and Radhika Roy alleging that the media firm has violated the insider trading regulations.
NDTV stated in a regulatory filing that “Prannoy Roy and Radhika Roy, the promoters of New Delhi Television Ltd (NDTV)…, have informed the company that on September 10, 2018, they have received a show-cause notice dated August 31, 2018… by the Securities and Exchange Board of India (SEBI),”.
Furthermore, it said, “The promoters of NDTV are in the process of seeking legal advice to take appropriate action in the said matter. Since the company is not a party to the show cause notice, there will not be any financial implications of the show-cause notice on the company”.
The notice has been issued alleging violation of provisions of Section 12A (d) and (e) of SEBI Act read with Regulation 3(i) and Regulation 4 of SEBI (Prohibition of Insider Trading) Regulations, 1992.
CURRENT ISSUE(Bombay HC dismisses challenge):-
A division bench of Justice SC Dharmadhikari and Justice RI Chagla of the Bombay High Court on Monday terminated a writ petition filed by Prannoy Roy and Radhika Roy, promoters of New Delhi Television (NDTV) challenging a show-cause notice issued by Securities and Exchange Board of India (SEBI) for allegations that are already mentioned and also refused to interfere with SEBI’s notice alleging that the petitioners violated insider trading regulations a decade ago. The petitioners had argued that the said notice related to a proposed restructuring of NDTV into news related businesses and investments beyond news businesses in 2008.SEBI issued the notice alleging that the petitioners had traded shares of NDTV while being in possession.
The notice was issued by SEBI alleging that the petitioners had traded stakes of NDTV while being in ownership of “unpublished price sensitive information”. Roys challenged the notice in December which came up for hearing on January 2 and Court had said that orders will be passed on Monday.”Petitioners can participate in the adjudication of SEBI’s notice, it will not cause any prejudice to them. SEBI’s notice is time-barred; we do not wish to interfere with it” Court observed.
Sethna vehemently (advocate on the behalf of petitioner) pursued to amend her petition and remarked that prejudice was being caused to her clients as the market regulator had even refused to hear their applications on condonation of delay for filing settlement applications in the matter. Justice Dharmadhikari observed that no prejudice will be caused if the petitioners face the show cause notice, hence stated- “You see if a regulatory body keeps committing an error, don’t try to stop them. We all know this, if they are wrongly pursuing this then let them, the truth will come out.”
When Advocate Sethna continued to argue, Justice Dharmadhikari retorted and made a statement-“You can make these submissions while challenging the final order passed by them” (SEBI’s adjudicating authority).
CONCLUSION(Bombay HC dismisses challenge):-
The Bombay High Court led by Justice SC Dharmadhikari declined the plea and refused to make any observations on the merits of SEBI notice. Hence he stated, “We see no need to interfere in the show cause notice”. Furthermore, the Court has also directed SEBI to decide the matter in an expedited and judicious manner. Thus, the Bombay HC dismisses challenge by the NDTV promoters Prannoy Roy & Radhika Roy against SEBI notices.