* On Sebi's juridiction and powers.

"The interpretation placed by the appellate authority on the powers and jurisdiction of Sebi is likely to have a crippling impact on a vast area of regulatory activities for which Sebi is responsible and would severley curtail the powers of Sebi to deal with cases of insider trading under the said regulations".

* On the justification for Sebi's action.

"If the interpretation of the appellate authority is accepted it would mean that in the current case even if Hindustan Lever was held guilty of contravening the prohibition on insider trading and having made an unlawful gain running into crores of rupees, the maximum penalty that could beimposed on HLL would be a mere Rs 5 lakh. The retention of wrongful gains by an insider could never have been the intention of parliament. The Sebi Act ought not to be interpreted in a manner that would reward wrongdoers."

* On Sebi's right to issue directives. "On a harmonious reading of the provisions of the Sebi Act, the power to direct remedial measures is implicit in sections 11 and 11B. Otherwise, an insider who has traded in securities and made unlawful profits and gains would be immune to remedial action. This is because the provisions of section 20A of the Sebi Act bars the jurisdiction of a civil court in respect of any matter in respect of which the board (Sebi) is empowered by or under the Sebi Act to pass any order. The prohibition on insider trading is imposed by the Sebi Act read with the said (insider trading) regulations.

There does not appear to be any common law right in India by which an investor dealing in securities who was at a disadvantage against an insider may sustain a claimagainst the insider. Hence, the savings provision under section 21 of the Sebi Act will not apply and the bar under section 20A would operate to completely insulate and protect the insider from a recovery action. In the circumstances it is absolutely necessary and in the public interest to harmoniously construe the provisions of the Sebi Act in such a manner as would enable Sebi to direct remedial measures."

* On the appellate authority's view that an order of prosecution should be based on "a conclusive determination of all aspects of insider trading".

"The obligation of Sebi is to gather all relavent material that would be needed to establish every necessary ingredient of the offence and place it before the criminal court. The impugned order severely undermines the power of Sebi to launch prosecutions in white collar crimes."

* On whether press speculation can be taken as published information on price-sensitive information.

"The appellate authority misdirected itself on the facts and the law inholding that in view of press reports referred to by HLL the requirements of regulation 2(k) which defines unpublished price sensitive information were not fulfilled. In the first place, the fact that rumours or soft information was floating around in the marketplace about a forthcoming merger between two companies would not permit insiders who know the merger transaction is a certainty to trade in the stock of companies involved. This is a recognised regulatory principle in the field of insider trading.

"The transaction with UTI by HLL was completed on March 25, 1996. All the reports subsequent thereto are irrelevant and could not be considered. It is pertinent to note that that the 21 clippings relied upon by HLL before the appellate authority were not produced before Sebi. HLL had relied upon only newspaper reports in its written submission filed before Sebi. The appellate authority ought, therefore, not to have taken cognisance of such reports."

* On the view that the market had already discounted themerger.

"The finding of the appellate authority that the possibility of merger was discounted by the market is totally belied by the fact that the price of Brooke Bond shares rose sharply on the BSE and NSE after the formal announcement of the merger."

* On forex losses to the country.

"The appellate authority failed to take note of the serious infractions committed by HLL. The purchase of the eight lakh shares of Brooke Bond through HLL caused the country a loss close to Rs 50 crore in terms of foreign exchange which would otherwise have had to be brought in by Unilever. In the circumstances the order is patently erroneous and is liable to be set aside."