SAT, in its order released recently, partially turned the Sebi ruling of imposing penalty on Mr Agrawal. A Sebi source said, We are looking into all the aspects of the order and may consider challenging it in the Supreme Court.
SAT, in its order, which can have wider ramifications, had said that a person indulging in insider trading cannot be punished unless proven that he had unfair advantage over other shareholders. The order was significant, considering that insider trading, by nature, is extremely difficult to prove.
Accepting Mr Agrawals contention that he was acting in the interest of the company, Mr Achuthan, presiding officer, SAT, said that he cannot be considered to have violated regulation 3 (i) that says, No insider shall either on his own behalf or on behalf of any other person deal in securities of a company listed on any stock exchange on the basis of any unpublished price-sensitive information.
Any gain made by Mr Agrawal by buying the share from the market and tendering them in Bayers open offer was incidental to the main objective of enhancing the interest of ABS, the tribunal held.
SAT said it is difficult to accept that the motive or intention of the person indulging in insider trading is irrelevant.
Even though the regulations do not make specific mention, if read with the objective of prohibiting insider trading, it is clear that the motive is built-in and insider trading, without establishing the motive factor, is not punishable.