Search the Internet          Tips  Sites: Finance, Investment

Court summons 5 HLL directors over 'insider trading'

In keeping with a high court directive, a Metropolitan Magistrate in Mumbai has taken cognizance of a criminal complaint filed by Securities and Exchange Board of India against Hindustan Lever Ltd regarding allegations of insider trading and issued summons against the company and its five former directors.

The summons have been made returnable on October 18.

The respondents are the then chairman K B Dadiseth, former chairman S M Datta, the then director (personnel), A Lahiri, the then director (legal) and existing vice chairman M K Sharma and former vice chairman R Gopalkrishnan.

In a statement, HLL alleged that Sebi had not brought to the notice of the court that the appellate authority had on July 14, 1998, quashed the prosecution of the company and its directors. The company said it was aggrieved by the order and would take appropriate legal steps to protect its position.

Allowing a writ petition filed by Sebi, Bombay high court, on September 3, had directed the concerned magistrate to expeditiously hear the complaint filed by the regulatory body in November 1998 against HLL and its directors.

This prosecution was launched for violation of Sebi's (prohibition of insider trading) regulations, 1992 in the course of merger of Brook Bond India Ltd with HLL.

However, the magistrate did not take cognizance of the complaint for more than three years and the matter was adjourned from time to time. Aggrieved by the delay in taking cognizance of the offence against HLL, Sebi filed the petition in the high court on August 14.

Justice S S Parkar directed the concerned Magistrate to expeditiously hear Sebi's complaint. He also rejected the plea of HLL and its former directors to stay the high court order for eight weeks to file an appeal.

The judge noted that the petition was an eye opener and illustrated how a party -- who could afford the luxury of litigation -- could obstruct or delay the course of justice even before it was set in motion.

In this case, even before the Magistrate had applied his mind to the complaint and issued process, the respondents filed an application raising objections to the issue of process against them. Time was granted to the complainant to file a reply and the matter was adjourned from time to time.

Ultimately, the company filed its reply questioning the locus standi of the respondents to be heard in the matter before the process was issued. On the basis of company's reply, the Magistrate was urged to decide preliminary point whether the respondents were entitled to be heard in the matter.

However, the preliminary point was not decided though there is lapse of more than three and a half years since the complaint was filed in a Magistrate's court.

The judge felt that if the delay was allowed further it was not unlikely that the matter would travel right up to the apex court even before the process was issued in the compliant, which had given rise to the controversy.

ALSO READ:
More Money Headlines