Following orders from the Mumbai High Court, the Metropolitan Magistrate Court on Monday has issued summons to multinational Hindustan Lever Ltd (HLL) and its five directors for insider trading as alleged by the market regulator Sebi. The court’s summons came after the Mumbai HC asked it to expedite the decision making process in the matter of criminal complaint filed against HLL and directors in 1998.Sebi had launched criminal prosecution against the company and its directors in violation of the Sebi (prohibition of insider trading) regulations, 1992 in the course of the merger of Brooke Bond India Ltd (BBLIL) with HLL.The High Court judgment would speed up the process in the case which has been dragging in the court for over three years. According to a Sebi press release, “aggrieved by the inordinate and abnormal delay in taking cognisance of the offense against the accused by the magistrate, the Sebi filed a criminal writ petition in the Bombay High Court on August 14, 2002. The Bombay High Court allowed the writ petition filed by Sebi and directed the magistrate to proceed in the matter without any further delay.”The Magistrate, before whom the complaint was filed by Sebi, had not taken a decision in the matter for the last more than three years, the release stated, adding that the matter continued to be adjourned for the last three years. The five HLL directors are the then HLL chairman S. M. Datta, former vice chairman Keki Dadiseth, director M. K. Sharma, R Gopalakrishnan and A Lahiri.It may be recalled that Sebi had levelled insider trading allegations against HLL and five of its directors in August 1997, on the context that the company was privy to price sensitive information regarding the impending merger of BBLIL with it, and had purchased eight lakh shares of BBLIL from the Unit Trust of India (UTI) just before the merger, with the intention to maintain the shareholding of common parent Unilever plc, at over 51 per cent.HLL had refuted these allegations stating, that a company cannot be an insider unto itself, and that the information about the merger was “generally known” in the market at the time when it purchased BBLIL shares from UTI. HLL further argued that it bought these shares at a price of Rs 350, which was a substantial premium to the then prevailing market price of Rs 318.
