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6. Shri C.U. Singh, learned senior counsel appearing on behalf of the SEBI, countered each of these allegations and took us through the Whole Time Member’s judgment as well as the majority judgment of the Appellate Tribunal, and stated that they appreciated the law as well as the facts absolutely correctly. He referred to Section 21 of the Securities Contracts (Regulation) Act, 1956 in order to show that where securities are listed in any recognized stock exchange, the conditions of the Listing Agreement with that stock exchange have to be complied with. He then took us to Clause 35 of a standard form of the Listing Agreement, in which it is stated that the company has to file, with the stock exchange, the shareholding pattern on a quarterly basis in a form which contains the promoters’ holding. “Promoter” is defined in Regulation 2(1)(h)(i) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as the “1997 Regulations”), which definition is incorporated in the Listing Agreement. This definition clearly shows that a promoter means a person who is in control of the company, directly or indirectly, whether as shareholder, director or otherwise. According to Shri Singh, the appellant, by virtue of being an executive director from 1993, was, therefore, clearly a promoter within the meaning of the aforesaid definition. He also referred to and relied upon Section 159 of the Companies Act, 1956, which requires certain particulars to be furnished by companies in their annual return. What is conspicuous by its absence is the fact that there is no requirement to disclose who the promoters of a company are. This has since been changed, for in the Companies Act, 2013, Section 92(1)(e) now requires disclosures in the annual return as to who the promoters of the company are. This being the case, according to the learned senior counsel, the annual returns filed by the company did not, in law, need to disclose who were the promoters of the company and for this reason, SCSL did not disclose the appellant as a promoter. According to Shri Singh, this aspect is adverted to in the majority judgment of the Appellate Tribunal, even though the majority judgment, according to Shri Singh, does not ultimately decide on the basis that the appellant is a promoter. He also relied upon the annual reports of the company, which show the appellant as a director on and from 2000 to 2003, but not as an independent director thereof. He referred to the averments of the appellant himself to argue that until a suitable replacement was found, the appellant would continue as a non-executive director, meaning thereby that he would continue to do what he had done as an executive director. This being the case, the majority judgment of the Appellant Tribunal was right in saying that insofar as the appellant was concerned, there was no distinction between being an executive and a non-executive director. According to the learned senior counsel, when it comes to the definition of “insider”, Regulation 2(e)(i) must be contrasted with Regulation 2(e)(ii) of the 1992 Regulations, whereas sub-clause (i) requires a connected person only to be reasonably expected to have insider information, under sub-clause (ii), persons who are not connected persons need to have actual knowledge of insider information. According to the learned senior counsel, the majority judgment of the Appellate Tribunal was correct in considering five important factors in ultimately holding that the appellant was an insider, namely, (i) that he was a promoter; (ii) that he promoted two joint venture companies which were closely linked with SCSL; (iii) that one of these companies ultimately merged with SCSL; (iv) that he would continue as a director till he was replaced; and (v) that he was co-brother of B. Ramalinga Raju. These factors, according to Shri Singh, were foundational facts from which it was reasonable to draw an inference that the appellant could be expected to have knowledge of UPSI. He relied upon certain judgments of this Court in order to show that penalty proceedings and criminal proceedings are different and independent of each other, and that, therefore, what is held by a Special Court would not have any real bearing on SEBI’s penalty proceeding.

(ii) If consequent upon change in control of the target company in accordance with regulation 3, the control acquired is equal to or less than the control exercised by person(s) prior to such acquisition of control, such control shall not be deemed to be a change in control.” Even though the definition of “control” in the 1997 Regulations is an inclusive one, yet the definition shows that control must mean a right to appoint majority of directors as a shareholder or to control management or policy decisions exercisable by persons in any manner. It may be pointed out, as has been correctly argued by Shri Viswanathan in rejoinder, that the appellant was an executive director on a fixed monthly salary, which was roughly in the range of Rs.1,00,000/- per month, when he stepped down as an executive director in 2000. After stepping down, it was pointed out to us that the salary was stopped, and he was paid only for board meetings which he attended.