Pranoy Roy, wife challenge Sebi notice on decade old trade, before HC

MUMBAI: Pranoy Roy and his wife Radhika approached Bombay high court on January 2 to challenge a show cause notice issued to them in August 2018 by market regulator Securities Exchange Board of India (Sebi) for alleged violations of its insider trading rules while trading in scripts of news channel NDTV as it's promoters. Roys have challenged the validity of the notice dated August 31, 2018, issued by Sebi ten years after the alleged trading activity in violation of the SEBI (Prohibition of Insider Trading) Regulations, of 1992.
The Roys, through their counsel Fereshte Sethna, submitted that the Sebi notice "constitutes a gross abuse of process" and that the allegations levelled by the regulator "are baseless and unfounded." Their case is that there is "no shred of evidence" with Sebi nor have they been furnished any documents to substantiate the allegations.
Their plea before the HC bench headed by Justice SC Dharmadhikari was to quash the notice and to be given documents which the Sebi is relying on.
The nature of allegations leveled against the Roys are grave and serious in nature, and hence require "clinching evidentiary basis" as a "mandatory precursor for the initiation of any such proceedings," is their case. Also, Sethna's argument was that the framework doesn't require record to be maintained for over three years by the company and hence the notice for a ten year old Trade puts them in an unfair position for rebutting.
Their petition says that since Sebi notice is issued after a lapse of ten years from the alleged transactions, relevant records are no longer available with them and hence the notice would, "irretrievably prejudice and jeopardize the right of the to defend themselves".
The Roys said that the Sebi notice relates to proposed restructuring of NDTV into 'News related Businesses' and investments in 'Beyond News' businesses held through NDTV Network Plc, during 2008, a proposal that was eventually not implemented. The Sebi issued the notice saying that they traded in the shares of NDTV, while in possession of 'unpublished price sensitive information' pertaining to such proposed restructuring, and that such alleged wrongful gain is liable to disgorgement. Sebi was represented by counsel JJ Bhatt. The case of Sebi is that whatever documentation was required was shown.
Roys plea is that "in their capacity as promoters" they had ",sought and secured pre-trade clearances in terms of Code of Conduct for Prohibition of Insider Trading adopted" by the channel. The HC bench was not inclined to make any observation or grant any immediate relief on Thursday and placed the matter for orders next Monday.