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Authored by Padma Akila.

Date(s) of Order: 3rd February 2021

Purported contravention committed: Noticees were involved in trading by Associate Company in shares of Future Retail Limited (“FRL/Company”) on the basis of Unpublished Price Sensitive Information (“UPSI”) before the demerger decision of certain businesses of the company was made public [“Transaction”].

Person charged and who is he: Future Corporate Resources Private Limited (Resultant entity which had emerged on merger of Future Corporate Resource Limited (FCRL) [‘Noticee 1’]), Kishore Biyani (CMD and Promoter of FRL [‘Noticee 2’]), Anil Biyani (brother of Noticee 2- [‘Noticee 3’]), FCRL Employee Welfare Trust (Trust formed by the Future Group [‘Noticee 4’]), Rajesh Pathak (Company Secretary of Noticee 1 [‘Noticee 5’]), Rajkumar Pande (Chief Financial Officer of FCRL [‘Noticee 6’]), Virendra Samani (compliance officer as well as the Deputy Company Secretary of FRL during the investigation period [‘Noticee 7’]), Arpit Maheshwari (Deputy Manager of FRL [‘Noticee 8’])

Companies in which insider trading had been committed: Future Retail Limited


1. Sometime between March and April 2017, FRL started consolidating its offline home retail business (Hometown Business) with its online home retail business (FabFurnish Business) [UPSI]. The merger was finalised on 10th March 2017 and was subsequently announced on the stock exchange on 20th April 2017.

2. Pursuant to investigation by SEBI, it was found that members of the Biyani family as well as other Noticees, had purchased shares of FRL during the period of UPSI i.e., 10th March to 20th April 2017. According to SEBI, these trades were authorised by Noticee 1 & 2.

3. Subsequently it was found that following the announcement of the merger to the stock exchange, FRL’s stock prices had progressed positively.

4. Based on the above SEBI issued Show Cause Notices (SCN) to the Noticees, which lead up to all the Noticees to be penalised for violation of Sections [1]12A(d) and (e) of the SEBI Act, 1992 and [2]Regulation 4 of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations).


The Noticees in response to the SCN inter alia submitted the following:

1. Information about the Transaction was “generally available”, across various media platforms and do not constitute UPSI. Information about the transaction was not price sensitive, even if it was assumed that such information was not “generally available”, because the HomeTown Business and the FabFurnish Business constituted a significantly minuscule portion of FRL’s overall business and was unlikely to contribute significantly to the price movement of the FRL shares and there were other industry-wide factors such as, demonitisation, imposition of GST, D-Mart IPO, which significantly contributed to price movement in the shares of FRL and other retail companies in India during that period.

2. Noticee 3 cannot be construed to be an “insider” just because Noticees 2 and 3 were directors of Noticee 1, as there was nothing on record to suggest any communication between Noticees 3 and 2, either in connection with FRL’s business, or with respect to decisions to trade in shares of FRL. Also, no business of FRL was ever discussed or considered at any board meetings of Noticee 1.

3. Noticee 4 was not a “person” for it to be a `connected person’ for a trust was not a legal entity such as a company, and it was not a body corporate and was merely the name of the relationship between the trustee and the beneficiary in respect of application and use of the trust property.

4. Noticee 5 and Noticee 6 were not connected with FRL in any manner as they were vested with the responsibilities of being part of the company secretarial or finance function at other promoter group companies of the Biyani family and had no association with FRL.

5. The trading window in respect of the transaction was not required to be closed since the information in question was not UPSI. However, as per in the FRL Code of Conduct, designated persons working on the transaction executed undertakings pursuant to which the trading window was deemed to be closed for such persons and such undertakings had been executed by the relevant FRL personnel. Therefore, there was no requirement for the Noticee 7 to have issued a separate notice in relation to the closure of the trading window.


1. In order to contend that a particular PSI was “generally available” and thus, it was not UPSI, it had to be proven that it was generally available in non-discriminatory manner, in the same form along with all material particulars, in which it had been disclosed to stock exchange as UPSI, in terms of either PIT Regulations, 2015 or LODR Regulations, 2015. Interviews or news reports based on such interviews could not be said to be containing the concrete information or disclosed on non-discriminatory basis as the said information on the news reports was very fluid and nebulous as it was bereft of specific details as to how this restructuring/merger was to ultimately be executed.

2. The scrip of FRL did not experience average daily previous day close to trading day variation either during 20 trading days prior to April 20, 2017 or 20 days afterwards. Therefore, it was clear that despite existence of claimed sector specific positive developments, the corporate announcement had its own appreciable impact on the price of the shares of FRL and thus, information was price sensitive.

3. The Noticees were “insiders” and “connected persons” as per Regulation 2(1)(g) and 2 (1)(d) of PIT Regulations 2015 based on their designations, nature of work and their direct or indirect participation in the discussions regarding PSI during the UPSI period.

4. As per clause 5 of FRL-code of conduct, relied upon by the Noticee 7, “deemed closure” became operative against only those designated persons of FRL who were working on the demerger whereas other designated persons of FRL were free to seek pre-clearance of trade, as there was no notice of actual closure of trading window. Further, clause 4 of the Code of Conduct mandates closure of trading window, in respect of all the designated officers of the company when there was UPSI in the company, irrespective of the fact that whether all the designated persons had access to such UPSI or not.


1. Noticees 1, 2, 3, 5, 6 and 8 have been prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market for one year and have been restrained from buying, selling or dealing in the securities of FRL for two years.

2. Ordered disgorgement of profits made by Noticees 1,2, 3, 4 and 8, and to be remitted to Investor Protection and Education Fund (IPEF) referred to in Section 11(5) of the SEBI Act, 1992.

3. Noticee 7 was imposed with penalty.

4. During the period of restraint, the existing holding of securities including the units of mutual funds, of the concerned Noticees, are to remain under freeze. Debarment/restraint/freeze imposed in this order will not apply to those existing holding of securities of such debarred entities, in respect of which any scheme of arrangement under [1]Section 230-232 of the Companies Act, 2013, was approved by NCLT, requiring extinguishment of such securities and/or receipt of other securities in lieu of such securities.

The Securities Appellate Tribunal (SAT) on 15th February 2021, stayed SEBI’s debarment order in this matter and directed the appellants to deposit a sum of 11 crore. We may have to await SAT’s decision on this matter.

[1] 12A requires a person not to:

(a) use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be listed on a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of SEBI Act;

(d) engage in insider trading;

(e) deal in securities while in possession of UPSI or communicate such UPSI to any other person.

[2] Regulation 4 prohibits any insider from trading in securities that are listed or proposed to be listed on a stock exchange while in possession of UPSI

[1] Sections 230- 232 talk about the tribunal’s power to, compromise or make arrangements with creditors and members, enforce compromise or arrangement and the tribunal’s powers and duties over Merger and amalgamation of companies.

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