MOOT PROBLEM - NO. 2 (FOR QUARTER - FINAL ROUND) Fortune India Ltd.

, a Company incorporated under the Indian Companies Act, 1956, having its registered office at No.5, Avenue road, Bazaar Street, Mumbai was engaged in the business of Cotton ,yarn, manufacturing and trading. It was a listed Company, and its equity was listed in the Bombay Stock Exchange. The Company has been declaring dividend from the last ten years. One of the independent directors, Mr. Sanjay Bansal was a nominee of a Central Co-operative Bank. The Board of Directors of Fortune in its September 2012 meeting discussed about a business proposal of either acquiring or merging with a Company engaged in the forward trading so as to effectively control over the periodical supply of high quality long staple cotton for the plant of the Company and to effectively meet demand for the garment industry engaged in supply of quality product for US / EU market. Delta Future Trading Co. Ltd., also a listed Company with NSE having its registered office at No. 25, Avenue road, Bazaar Street, Mumbai was engaged in the business of forward trading of cotton, wheat and maize. The company has Mr. Mahesh Agarwal and Mr. Suresh Agarwal in its Board of Directors. The Board in its September meeting in 2012 also decided to acquire shares of a company engaged in business of manufacturing yarn. While the two Agarwal brothers were discussing the pros and cons of the proposal while driving the car back home, the driver of the car overheard the proposal. Thereafter, next day, Mr. Suresh used his wifes cell to talk to one Mrs. Susma, a sharebroker asking for the price of Fortune for the last about a month. There was no further discussion. The driver of Agarwal brothers had acquaintance with the driver of Mrs. Susma. They in between their discussion, in the drivers club about Fortunes idea of sale or buy were loud enough to be heard by the driver of Mr. Bansal of Fortune. Mrs Susma and Bansal got this scoop from their respective drivers. Susma started acquiring shares of those two companies and Bansal started buying Deltas shares. There was significant price rise in Deltas share though Fortunes share was not very significantly altered. After about two months, Fortune went for giving an advertisement for public auction for acquiring 60% shares of Delta. Mrs. Susma by the time held 30% shares and Bansal another 20%. Naturally they made a fall through. SEBI, on an anonymous complaint issued notice to Fortune, its directors, Delta, its directors and Mrs. Susma. SEBI after enquiry found that charge of insider trading was established against Sanjay Bansal, Agarwal brothers and Mrs. Susma and imposed penalty equal to double of the gains made by the parties. Being aggrieved by the orders of SEBI, Agarwal brothers, Bansal and Susma in separate appeals went to the Appellate Security Tribunal. The Tribunal found charges against Agarwal brothers not justified and exonerated them but upheld the order of the SEBI against Bansal and Susma. Susma and Bansal submitted an SLP to the Supreme Court of India. The points for determination are broadly as under: 1. Whether the Petition is maintainable? 2. Whether the telephonic conversation amounted to inside

information? 3. Whether Suresh Agarwal acted on the said information and made profit thereof?