Supreme Court of India· 11 August 2026
How does the 2015 PIT Regulations’ treatment of insider trading differ from the 1992 Regulations considered in SEBI v. Abhijit Rajan?
SECURITIES AND EXCHANGE BOARD OF INDIA v. RAJEEV VASANT SHETH & ORS
2026 INSC 826 · CIVIL APPEAL NO. 4905 OF 2022
Coram: Sanjay Karol; Nongmeikapam Kotiswar Singh
Answer
The 2015 PIT Regulations, unlike the 1992 Regulations, contain a note to Regulation 4(1) barring consideration of the purposes to which the proceeds of an insider trade are applied; the absence of any such note in the 1992 Regulations left scope, in Abhijit Rajan, for the tribunal and the court to consider why a person undertook the transaction, a consideration unavailable under the 2015 Regulations.
Headnote
Securities and Exchange Board of India Act, 1992 — s.12A — s.15G — s.15J — s.11B — SEBI (Prohibition of Insider Trading) Regulations, 2015 — Regulation 4(1) — Insider trading — Disgorgement —
SEBI (Prohibition of Insider Trading) Regulations, 2015 — Regulation 4(1) — Purpose of trade proceeds irrelevant —
Held: Under the note appended to Regulation 4(1) of the PIT Regulations 2015, once a person is shown to have traded in securities while in possession of unpublished price sensitive information, the purposes to which the proceeds of the transaction are applied are irrelevant to establishing insider trading. (¶9, 11)
SEBI (Prohibition of Insider Trading) Regulations, 2015 — Regulation 4(1) — 'Including' does not attract ejusdem generis —
Held further: The word 'including' preceding the listed defences in Regulation 4(1) does not attract the rule of ejusdem generis, since that rule applies to general words following specific words and not the reverse; it nonetheless signals that the enumerated defences are not exhaustive and other defences of a similar nature may be available. (¶13)
Securities and Exchange Board of India Act, 1992 — s.11B — Disgorgement order restored —
Held further: Since the transactions here are governed by the 2015 PIT Regulations, which unlike the 1992 Regulations considered in SEBI v. Abhijit Rajan contain the note barring consideration of the use of sale proceeds, the disgorgement ordered by the Whole Time Member is restored. (¶14, 15, 16)
Securities and Exchange Board of India Act, 1992 — s.15G — Penalty reduced to statutory minimum —
Held further: The penalty of Rs.25 Lakhs imposed on Respondent No.1 under Section 15G is excessive and is reduced to Rs.10 Lakhs, the minimum penalty as imposed on Respondent Nos.2 and 3; the appeal is allowed and the penalty modified to this extent. (¶18, 20)
In the Court's own words
Paragraph 14In regard to Abhijit Rajan (supra), it may be observed that in that case the persons accused of insider trading had sold of the shares while in possession of UPSI apparently for the purposes of funding the Corporate Debt Restructuring Package. It was observed in the facts of that case that one of the companies involved stood to gain “hugely” from the cancellation of the shareholders' agreements but had still proceeded with the selling of the shares since if the restructuring had not gone through, the parent company Gammon Infrastructure Projects Limited, Gammon India Limited could have gone into bankruptcy. In other circumstances, it was held that no ordinary man of prudence would expect an increase of value and would sell shares with the intent to commit insider trading before the relevant information became public. From a perusal of the judgment, it is clear that the transactions subject matter of the dispute took place in the year 2013 and accordingly were governed by the predecessor regulations i.e., Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992[^12].
Paragraph 15Having gone through the above-said 1992 Regulations, Regulation 3B appears to deal with defences, in similar terms to what is provided in Regulation 4(1) in the 2015 PIT Regulations. The most obvious difference that appears plain C.A.NO. 4905/2022 17 to us, is that there is no such ‘note’ as there is in the latter. In other words, there was no specific bar against the consideration of the issue of where the proceeds of such insider trading transactions are used. As such, apart from the fact that in Abhijit Rajan the shares were sold before the increase in price shares, as opposed to a fall in the prices in the present case, there was scope available for the Tribunal and the Court to consider why a particular person undertook the transactions in question. Had it been that there was a fall in the shares of the company in that case, their intent to scrounge up the money for the CDR process for the parent company could have been considered. If the same transactions were after the 2015 PIT Regulations, that could not have been considered.
Acts & Sections
s.15Z Securities and Exchange Board of India Act, 1992s.12A Securities and Exchange Board of India Act, 1992s.11B Securities and Exchange Board of India Act, 1992s.15G Securities and Exchange Board of India Act, 1992s.15J Securities and Exchange Board of India Act, 1992s.15T Securities and Exchange Board of India Act, 1992Regulation 3 SEBI (Prohibition of Insider Trading) Regulations, 2015Regulation 4 SEBI (Prohibition of Insider Trading) Regulations, 2015One judgment a day. That's the whole habit.
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