Mr. Nitin Kumar Garg vs SEBI
- Court
- Securities Appellate Tribunal
IN THE SECURITIES APPELLATE TRIBUNAL
AT MUMBAI
TH
DATED THIS THE 8 DAY OF JULY, 2026
CORAM: Justice P.S. Dinesh Kumar, Presiding Officer
Ms. Meera Swarup, Technical Member
Dr. Dheeraj Bhatnagar, Technical Member
Appeal No.531 of 2025
[Along with Misc. Application No.166
of 2026]
Mr. Nitin Kumar Garg
1107, Patel Nagar,
Railway Road, Hapur,
Uttar Pradesh 245101.
…..Appellant
(By Mr. Adil Sharfuddin, Advocate for the Appellant.)
Securities and Exchange Board of India
SEBI Bhavan, Plot No.C-4A,
G-Block, Bandra-Kurla Complex,
Bandra (East), Mumbai-400051.
…..Respondent
(By Ms. Prapti Kedia, Advocate with Mr. Sagar Dhakane,
Advocates i/b. Agama Law Associates for the Respondent . )
2
With
Appeal No.532 of 2025
[Along with Misc. Application No.167
of 2026]
Mr. Anupam Gupta
1E-601, AWHO Township,
Gurjinder Vihar, Pocket P-5,
Sector-CHI-1, Greater Noida,
Gautam Budh Nagar,
Uttar Pradesh-201310.
…..Appellant
(By Mr. Adil Sharfuddin, Advocate for the Appellant.)
Securities and Exchange Board of India
SEBI Bhavan, Plot No.C-4A,
G-Block, Bandra-Kurla Complex,
Bandra (East), Mumbai-400051.
…..Respondent
(By Ms. Prapti Kedia, Advocate with Mr. Sagar Dhakane,
Advocates i/b. Agama Law Associates for the Respondent . )
THIS APPEAL IS FILED UNDER SECTION 15T OF THE
SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 TO
SET ASIDE THE ORDER DATED SEPTEMBER 23, 2025 PASSED BY
THE AO, SEBI.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
ORDERS ON JUNE 10, 2026 COMING ON FOR PRONOUNCEMENT
OF ORDER THIS DAY, THE TRIBUNAL MADE THE FOLLOWING:
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ORDER
Per: Justice P.S. Dinesh Kumar, Presiding Officer
These two appeals are directed against order dated
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23.09.2025 passed by the AO , SEBI imposing penalty against
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the appellants for violation for the SEBI (PIT) Regulations, 2015 .
2. Appeal No.531 of 2015 is filed by Nitin Kumar Garg (‘Nitin’
for short) and Appeal No.532 of 2025 is by Anupam Gupta
(‘Anupam’ for short). We have heard both appeals together and
disposing of by this common order.
3. We have heard Mr. Adil Sharfuddin, learned Advocate for
the appellants and Ms. Prapti Kedia, learned Advocate for the
SEBI.
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4. Brief facts of the case are, Nitin was an employee with
Nucleus Software Exports Limited (‘Company’ for short). The
Company disclosed its financial results for the quarter and year
ended 31.03.2023 to the stock exchanges on 26.05.2023 during
the trading hours. The net profit of the Company on a
standalone basis for the quarter ending March, 2023 had
increased by 76.45% and on year on year basis increased by
1
Adjudicating Officer
2
Securities and Exchange Board of India
3
SEBI (Prohibition of Insider Trading) Regulations, 2015
4
Appellant in Appeal No.531 of 2025
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209.66% respectively from March, 2022 to March, 2023. After
declaration of financial results on 26.05.2023, Company’s scrip
closed at ₹809.30 witnessing a rise of 19.99%. Thus, the
financial results had a positive impact on the share price. SEBI
conducted an investigation to ascertain whether noticee No.1,
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Anupam had traded on the basis of UPSI . It was observed that
Anupam had purchased 300 shares of the Company on
13.04.2023, 720 shares on 17.04.2023 and 2000 shares on
25.05.2023 and in all 3,020 shares at an average price of
₹629.73. He sold 1,020 shares on the date of announcement
i.e.26.05.2023 and 980 shares on 29.05.2023 and 1,020 shares
on 30.05.2023 and made a profit of ₹8.98 Lakhs. The
investigation conducted by SEBI revealed that Anupam was
Nitin’s cousin, who was working with the Company. They had
conversation with regard to the financial performance of the
Company.
5. A show cause notice was issued alleging inter alia that
Nitin was in possession of UPSI regarding the financial results of
the Company for the quarter ended 31.03.2020 which he
communicated to Anupam who had traded in the scrip, while
being in possession of the UPSI. Both appellants submitted their
respective replies. After adjudication, the impugned order
imposing penalty of ₹10 Lakhs on Anupam Gupta and ₹15 Lakhs
5
Appellant in Appeal No.532 of 2025
6
Unpublished Price Sensitive Information
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on Nitin Kumar Garg under Section 15G of the SEBI Act, 1992
for violation of PIT Regulations has been passed.
6. Mr. Adil Sharfuddin, learned Advocate for the appellants
submitted that:
Anupam had traded in his normal course of business;
Nitin did not possess any UPSI. He had only mentioned
that the Company was going to make good profit;
There is no proof of communication of UPSI. Call records
and WhatsApp data establish the existence of
communication, not its content. No transcript or forensic
report has been produced to show that the contents of the
any communication was price sensitive;
Based on the family relation, it cannot be concluded that
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UPSI was communicated as held in Balram Garg v. SEBI ;
Statements recorded during the investigation are not
conclusive proof. The statements only reflect general
discussions about the Company's business performance
and prospects;
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Securities and Exchange Board of India Act,1992
8
2022 SCC OnLine SC 472
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The alleged UPSI was already anticipated and discussed in
the public domain. The 50% price rise in Company’s share
proves that the market already had the information; and
The penalty imposed on the appellants is disproportionate
and contrary to law.
7. In reply, Ms. Prapti Kedia for the SEBI submitted that
appellants in their statements recorded by SEBI have admitted
that Nitin had conveyed to Anupam that the Company was going
to declare huge profit in the upcoming announcement of financial
results. Nitin had asked Anupam to purchase Company’s shares
in April, 2023 and he had also given money to invest in the scrip.
She further submitted that the WhatsApp chats extracted in the
order show that the appellants were in conversation with regard
to the purchase and sale of Company’s shares. She adverted to
various portions of the order and argued that the case is
evidenced on the admission of parties.
8. We have carefully considered rival contentions and
perused the records.
9. Admitted facts are, Nitin is an employee with Nucleus
Software Exports Limited. Anupam is his cousin (maternal Aunt’s
son). Anupam’s statement recorded on 07.08.2024 reads thus
:
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“I myself placed these trades. I received money from Shri
Nitin Garg for the purpose of investment into shares of
Nucleus. Some money was added by me too in the total
amount to be invested. The money was returned in the
proportion of his investment to the total amount invested by us
together. I had roughly invested 2-3 lakhs and he invested
around 9-10 lakhs. I returned around 18 lakhs to him.
It was done in conjunction with Nitin because of the
confidence shown by him in the performance and prospects of
his company. Later, I solely invested in all other scrips
without any investment being received from Mr. Nitin Garg.
No, he did not share any financial information. However, he
did say that the company was going to do very well and the
scrip is going to do well. He showed confidence in the
performance of his company and was himself putting in 9-10
lakhs and because of this confidence I also invested 2-3 lakhs.
No other scrip. Now, in retrospect, I feel that my trading
account was used as a mule account by Mr. Nitin Garg to
invest in the scrip of Nucleus.
I invested in the scrip of Nucleus during April and May 2023
after being asked by my cousin Mr. Nitin Garg. He showed
confidence for the future performance of his company and its
scrip. Therefore, I invested in the scrip and returned the
amount invested by Nitin proportionate to his investment. At
that time, I did not realise that this could be treated as mala
fide.”
10 . Nitin’s statement recorded on the same day reads thus:
“I gave money to Mr. Anupam Gupta who is my cousin for
investing in the scrip of Nucleus Software Exports Ltd. through
my bank account and father's bank account.
I knew that the company was going to make very good profit
before the announcement as it was commonly discussed at the
office that the company is going to declare huge profit in the
upcoming announcement regarding financial results. I
additionally knew that the company had increased AMC cost
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for all the customers multifold. I was confident that the
company's scrip is going to do well. Therefore, I asked Mr.
Anupam Gupta to purchase the shares of Nucleus in April- May
2023 and I also sent him money to invest in the scrip.
We regularly communicate via mobile calls and meet during
family gatherings, where we discuss family matters and other
topics. In March/April 2023, we talked about job opportunities
at Nucleus. During this conversation, I mentioned about the
company's strong future growth, some customer names, and the
appraisal I received. I informed him that I received an
approximate 25% appraisal for the year 2022-23 and also
expecting a favorable appraisal for the year 2023-24 as well. I
told him to not worry and invest in the scrip of Nucleus and
mentioned that the company is going to do very well.
I did not use my own trading account because of fear of being
caught of trading in my own company's scrip prior to
announcement.
Through all this I learnt that if we do something illegal then it
gets highlighted in the end anyhow and so it should not be done
thinking that it will not be caught. I am only responsible for all
this and I used my father's bank account to transfer funds to Mr.
Anupam Gupta. My father is not responsible for any of this and
I am solely responsible for it.”
(Emphasis Supplied)
11. Appellants have not denied or retraced the above
statements. A careful analysis of the statements shows that:
Nitin had given money to Anupam to invest. Anupam also
had invested some money. Anupam returned around
₹18 Lakhs to Nitin in proportion of his investment;
Anupam did not realise that such transactions could be
illegal;
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Nitin had gathered information from the common
discussion in the office that the Company was going to
declare huge profit in the upcoming announcement of
financial results. He also had additional information about
increased AMC cost. Therefore, he sent money to
Anupam and asked him to invest in Company’s shares;
and
He did not use his own trading account because of fear of
being caught while trading in his own Company’s scrip
prior to announcement.
12. Nitin’s statement also shows that he regretted for having
indulged in this activity and he has stated that he was solely
responsible for the act and not his father as he had transferred
some money from his father’s account also. Thus, it is
established that Nitin being an employee, had traded in his own
Company’s shares through his cousin Anupam based on the
information that the Company was going to declare profit in the
ensuing financial announcement.
13. The information that Nucleus Software was going to
declare huge profit in the ensuing financial results was not
generally available to investors in the securities market.
‘generally available information’ is defined as follows in
Regulation 2(1)(e) of PIT Regulations:
2. (1) (e) “generally available information" means information
that is accessible to the public on a non-discriminatory basis;”
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14 . Regulation 2(1)(g) of PIT Regulations defines an ‘Insider’
as a person who is ‘connected person’ or ‘in possession of having
access to UPSI’.
15. Regulation 2(1)(n) of PIT Regulations defines ‘UPSI’ as
follows :
“2. (1) (n) “unpublished price sensitive information" means any
information, relating to a company or its securities, directly or
indirectly, that is not generally available which upon becoming
generally available, is likely to materially affect the price of the
securities and shall, ordinarily including but not restricted to,
information relating to the following: –
(i) financial results;
(ii) dividends;
(iii) change in capital structure;
(iv) mergers, de-mergers, acquisitions, delistings,
disposals and expansion of business
(v) and such other transactions;
(vi) changes in key managerial personnel.”
16. The ‘note’ appended to Regulation 2(1)(n) of PIT
Regulations is relevant and it reads as follows:
“NOTE: It is intended that information relating to a company or
securities, that is not generally available would be unpublished
price sensitive information if it is likely to materially affect the
price upon coming into the public domain. The types of matters
that would ordinarily give rise to unpublished price sensitive
information have been listed above to give illustrative guidance
of unpublished price sensitive information.”
17. A combined reading of the Regulations extracted above
lead to an irresistible inference that the information that the
Company was going to announce huge profit in the ensuing
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financial result was not ‘generally available information’, which
was accessible to the public on a non-discriminatory basis.
Admitted position is, Nitin was an employee with the Company.
In his statement recorded by the SEBI, he has admitted that he
knew that it was commonly discussed in the office that the
Company was going to declare huge profits in the next financial
results. He has further admitted that in addition to the
declaration of profit, he also knew that the Company had
increased the AMC for all the customers multifold and he was
confident that Company’s scrip was going to do well; and
therefore, he had asked Anupam to purchase the shares in April
and May, 2023. It is relevant and important to note that while
replying to a question as to ‘why he did not invest by using his
own account, he has stated that he did not do so because of fear
of being caught’.
18. We have perused the WhatsApp chats and the sale and
details of trades tabulated in Table-4 at paragraph 59 of the
impugned order. The screenshots of WhatsApp conversation
extracted in paragraph 32 of the impugned order match with the
transactions shown in Table-4. In any event, as noted
hereinabove, appellants have not denied the transactions. Thus,
Nitin, an insider in possession of UPSI had communicated it to
Anupam and both invested in Company’s scrip and made a profit
of about ₹8.98 Lakh.
19. The AO has considered the mitigating factors contained in
Section 15J of the SEBI Act and imposed a penalty of ₹15 Lakhs
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on Nitin and ₹10 Lakhs on Anupam. During the hearing, we were
informed that Nitin was removed from service. The AO has also
recorded that there is no material on record to hold that
appellants had repeatedly violated the Securities law. In the
circumstances, in our considered view, imposing minimum
penalty on Nitin would be just and appropriate.
20. Hence, the following:
ORDER
i. Appeal No.531 of 2025 is allowed in part .
ii. While confirming the findings, the penalty under Section
15G of the SEBI Act, 1992 is reduced to ₹10 Lakhs.
iii. Appeal No.532 of 2025 is dismissed .
iv. Pending interlocutory application(s), if any, stand disposed
of.
v. No costs.
Justice P.S. Dinesh Kumar
Presiding Officer
Ms. Meera Swarup
Technical Member
Dr. Dheeraj Bhatnagar
Technical Member
08.07.2026
RHN
RAJALA
KSHMI
H NAIR
Digitally signed
by
RAJALAKSHMI H
NAIR
Date: 2026.07.08
11:46:22 +05'30'