The court ordered the status quo and also served notices on Sebi, BSE Sensex, NSE Nifty
, Sun Pharma, Ranbaxy, Daichii Sankyo and Silver Street Developers. There shall be an interim status quo, as prayed for, Justice P Naveen Rao said in the order.
The petitioners had alleged there was heavy trading of the Ranbaxy stocks before the merger was announced on April 6. The petitioners requested the HC to direct Sebi to investigate the insider trading into Ranbaxy shares and take appropriate action against Sun Pharma and Silver Street.
The petitioners also requested the court to restrain BSE and NSE from giving any clearance to the scheme of amalgamation or merger between the two drug makers.
However, the extensive and sudden rise in the share price of Respondent 5 (Ranbaxy) prior to announcement of merger shows that certain persons had prior information about the said merger. Consequently, the trading amounts to violation of Sebi Insider Trading Regulations, the petitioner alleged.
We have not received any such communication. The matter related to the purchase of the Ranbaxy Laboratories stocks does not violate insider-trading rules. With regards to the petition filed, the matter is subjudice and, hence, we cannot make specific comments, but we would take appropriate action as advised by our legal counsel," a Sun Pharma spokesperson told FE.
According to legal experts, both Sun Pharma and Ranbaxy will have to obtain approvals from BSE and NSE before proceeding for further clearances from various institutions such as Competition Commission of India and respective high courts, over the merger.
Sun Pharma had earlier denied insider-trading charges against Silverstreet Developers LLP, its wholly owned arm, in the acquisition deal. Sun Pharma had also said the matter related to purchase of Ranbaxy Laboratories scrips by Silverstreet Developers LLP does not violate insider-trading rules.
As per the statement submitted to the court, over 7 million Ranbaxy shares were traded before the merger announcement was made, pushing the share price over 25%. Explaining how it has not violated insider trading rules, Sun had further said: Silverstreet Developers LLP has two partners. Both are 100% subsidiaries of Sun Pharma. Hence, all the benefits flowing from the investment in Ranbaxy shall accrue to Sun Pharma.