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6. The statements of Shri Shilotri indicated that Shri Pendse and Shri Shilotri had arranged the sale of the shares through JIP. It was therefore alleged that Shri Shilotri had aided Shri Talaulicar in insider trading through "counselling" the dealings in the shares of TFL and had thereby violated Regulation 3 of SEBI (Insider Trading) Regulations, 1992 (hereinafter referred to as Insider Trading Regulations).

2. Show Cause Notice was issued to Shri Shilotri on 08.08.2002 communicating the findings of the investigations and also advising him to submit his explanations on the said findings. Shri Shilotri submitted his written submissions in respect of findings of investigation through his advocates Federal & Rashmikant vide their letter dated 25.11.2002. The written submissions on behalf of Shri Shilotri are as under:

3. Subsequently upon his request Shri Shilotri was granted an opportunity to be heard before me on 25.8.2003. Shri Shilotri appeared before me along with Shri Dinyar D Madon and S S Kalambi, Advocates. In brief, the following are the submissions made on behalf of Shri Shilotri:

a) NITCL was formed in 1989 and Shri Talaulicar was the Chairman of the Company since inception. He was a member of the Investment Committee of NITCL, which took all decisions relating to investment made by it. In view of the above, there was no necessity for Shilotri to counsel Shri Talaulicar for selling the shareholding of family members and his shareholding in TFL.

5.1.2 In his written and oral submissions, Shri Shilotri has contended that he would not fall within the definition of 'Insider'. His contention is based on the ground that he was not a 'connected person' as defined in Regulation 2(c) of the Insider Trading Regulations nor was he a 'person deemed to be connected' in terms of Regulation 2(h) ibid. It is noted that Shri Shilotri was not a director or "deemed director or an officer or an employee of TFL. He was the Chief Executive of NITCL, which was virtually wholly owned subsidiary of TFL. Shri Shilotri must have been aware of the losses being incurred by NITCL and its likely impact on the parent company. Although NITCL was one of the eight subsidiaries of TFL, it is observed from the past results of NITCL and TFL that NITCL' s performance could impact the profit of TFL. More specifically, the amount of dividend income from the subsidiary would go to augment the earnings of TFL. Thus, as Shri Shilotri had access to the unpublished price sensitive information relating to TFL he has fallen within the definition of insider.

4. It has been argued that due to his hierarchical position, Shri Shilotri had been obliged to his superior Shri Talaulicar and had to follow up the matter regarding sale of his and his family's shareholdings in TFL. It is also stated that Shri Talaulicar pressurised Shri Shilotri in this regard. Shri Shilotri had co-signed the voucher relating to the said transfer of funds by NITCL to JHP, which, as per circumstantial evidence, was for the purpose of enabling the broker to pay to Shri Talaulicar and his family the amount f consideration for sale of their shareholdings in TFL, on unpublished price sensitive information. Shri Shilotri's argument that the voucher had already been signed/ initialled by Shri Karyekar and Shri D.S. Pendse and that his own signature was secured only "as a matter of convenience" so as to comply with the signature requirement seems somewhat specious. As the Chief Executive of NITCL, Shri Shilotri cannot abdicate his accountability for the transfer of company's funds to a broker entity for the personal benefit of Shri Talaulicar. Shri Shilotri claims ignorance of the real purpose for which the amount was transferred till the receipt of complaint in this regard. It is claimed that only after hearing the complaint Shri Shilotri learnt about the real purpose of the transfer of funds by NITCL to JHP and advised Shri Talaulicar to return the money. It is also stated that Shri Talaulicar, thereupon pressurised Shri Shilotri to organise repayment of the monies to NITCL. While that the positional delicateness did not permit Shri Shilotri to defy his superior in the matter of following up the sale of shares is understandable to an extent, Shri Shiltori's co-signing the voucher concerned for diversion of the Company's funds for the personal benefit of Shri Talaulicar, trivialised by his statement that it was only as a matter of convenience that his signature was obtained on the voucher and his plea of ignorance of the real purpose of the fund-transfer is somewhat intriguing. The complicity (which is more than mere counselling) of Shri Shilotri (with hand in glove with Shri D.S. Pendse) in the matter of the insider trading indulged in by Shri J.E. Talaulicar, emerges visibly through the fog of specious arguments put forward in self defence.