SAT Stays SEBI Order Against Kishore Biyani, Future Group Entity

The Securities Appellate Tribunal has stayed the market regulator’s order that restricted Future Group founder Kishore Biyani, his brother Anil Biyani and Future Corporate Resources Pvt., along with other individuals from accessing the securities market for a year.

A three-member bench led by Justice Tarun Agarwala, who heard the matter through video conferencing, stayed the effect and operation of Securities and Exchange Board of India’s order. It has directed the entities to deposit an amount of Rs 11 crore and will hear the matter in April, as per the media release by Future Corporate Resources.

The SAT order is yet to be made public.

The case emanates from trading in Future Retail Ltd. shares prior to the announcement of a scheme of arrangement on April 20, 2017. The scheme of arrangement was between Future Retail, Bluerock eServices, Praxis Home Retail and their respective shareholders. It resulted in demerger of certain business from Future Retail and was expected to have a positive impact of Future Retail’s share price, according to the SEBI’s order.

SEBI had noted that Future Corporate Resources and FCRL Employee Welfare Trust purchased Future Retail’s shares prior to the public announcement of the scheme of arrangement. The trades were done by entities that were aware of the scheme and hence found to have traded while in possession of unpublished price sensitive information. The market regulator said in its order that the trades were authorised by Kishore and Anil Biyani and hence penalised the two.

At the hearing, Somasekhar Sundaresan, counsel for Kishore Biyani, cited an order in the Bharti Airtel case where the market regulator had exonerated the company saying that information published in newspapers is considered generally available information.

According to Future Corporate Resources’ media statement, he argued that:

• The home furnishing business formed a miniscule part of the entire business of Future Retail and was thus hardly material for price discovery for shares of the retailer.

• The actual terms of restructuring were initiated only in April 2017 while the purchase by the Biyanis were made in March to avail the creeping acquisition limits under the takeover regulations.

• A generic reference to the term “information” is vague as the information about the transaction was in public domain and actual terms of the transaction were discussed and initiated only in April 2017, while the purchases were made in March that year.

But Ravi Kadam, senior counsel for SEBI, argued that the proximity of purchases by the entities pointed out an intent to benefit from information about the restructuring. Future Group in February 2017 had informed the stock exchanges that actual terms of the transaction had not been finalised, he said.

The stay granted by the tribunal will remain effective till the matter id decided. The case will now come up for hearing on April 12, 2021.

(Updates an earlier version to include details from Future Corporate Resources’ media statement.)