The Andhra Pradesh High Court while quashing the FIRs filed in connection with the alleged ‘insider trading’ inland transactions at Amaravati held that private sale transactions cannot be criminalized.
The State has filed cases alleging that it had purchased lands in Amaravati after being privy to the information from the then Chandrababu Naidu government that the area was being developed as state capital.
The Single judge bench of Justice Cheekati Manavendranath Roy clarified that the concept of the offence of insider trading which is essentially an offence in the field of stock market relating to selling and buying the securities and bonds cannot be applied to the offences under Indian Penal Code and cannot be read into Section 420 IPC or into any provisions in the scheme of Indian Penal Code.
The Court observed that the land buyers had no legal obligation to disclose the information relating to latent advantages in purchasing the land to the sellers at the time of buying the said land.
The court also said, “information about Amaravati being made a Capital was very much in the public domain and when even the sellers were aware of the same.”
“Therefore, insider trading is only made an offence in India under the SEBI Act, 1992 and it essentially deals with the sale and purchase of securities in the field of stock market based on nonpublic material information. It is a special enactment which specifically and exclusively deals with the offences relating to sale of securities in the stock market. Insider trading is not made an offence specifically under the Indian Penal Code. No provision akin to Section 12-A and 15-G of the SEBI Act is incorporated in IPC by the Parliament relating to private sale transactions of purchase or sale of land which is an immovable property by invoking the said concept/theory of insider trading. Therefore, the offence of insider trading is totally alien to our criminal law under IPC. It is a concept or offence totally unknown to our criminal law under the Indian Penal Code,” the court said.
Therefore, the decision came as a big blow to Andhra Pradesh Chief Minister Jagan Mohan Reddy, the Andhra Pradesh High Court has quashed criminal cases filed in connection with the alleged ‘insider trading’ in land transactions at Amaravati.
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