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Mumbai, Sept. 10 The Securities Appellate Tribunal (SAT) has remitted the impugned SEBI order against Mr Dilip Pendse and two entities alleged to have been involved in insider trading in the shares of Tata Finance Ltd (TFL) between September 2000 and March 2001.

SAT allowed the appeal by Mr Pendse, Ms Anuradha D. Pendse and Nalini Properties and remitted the case back to SEBI’s Adjudicating Officer with a direction to make a fresh inquiry into all the transactions during the period in question, after giving due opportunity to the appellants.

The SEBI order issued in September 2006 had alleged that Ms Pendse and Nalini Properties had sold shares of TFL on March 28, 2001, based on price sensitive information relating to the company provided to them by Mr Pendse, who was then the Managing Director of TFL.

SAT, while entertaining the appeal, observed that the Adjudicating Officer has failed to deal with the material contention raised by the appellant and also failed to verify the correctness or otherwise of the claims made by them in relation to the impugned transactions.

“The appellants are placing strong reliance on the contract notes issued by the brokers, which show that the transactions were between the appellants and the broker on a principal-to-principal basis and that the trades were reported to BSE in September 2000,” said the SAT order.

“Whether these trades were actually executed and whether they were reported to the (stock) exchange, as claimed by the appellants, are issues which the Adjudicating Officer will have to examine in the light of the fact that the shares were delivered in March 2001,” the tribunal observed.

The Adjudicating Officer came to the finding that the impugned transactions took place only in March 2001 (and not in September 2000, as contended) while levying a penalty of Rs 5 lakh each on the three entities for violation of insider trading regulations.

The appellants’ contention was that the impugned transactions took place in September 2000, before they came in possession of the price sensitive information in March 2001.

“The primary question that needs to be decided in these cases is whether the shares were sold by the appellants in September 2000, as claimed by them, or in March 2001, as alleged,” said SAT, while directing SEBI to issue a fresh order expeditiously.

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