AP capital land deals insider trading:HC quashes proceedings

Amaravati, Jan 19 (PTI): In a setback to the Y S JaganMohan Reddy government, the Andhra Pradesh High Court onTuesday quashed all proceedings in a criminal case what hascome to be referred to as ''insider trading in capital landdeals'' prosecuted by the Crime Investigation Departmentagainst some private persons.

The entire prosecution case bristles with severalfatal legal infirmities and cuts the case of the prosecutionat its roots, the court observed.

''It is really beyond the comprehension of this Courtas to how the said private sale transactions can becriminalised on the said flimsy grounds and criminal liabilitycan be attributed to the buyers of the lands to prosecute themunder criminal law,'' a single judge bench remarked.

The judgment delivered by Justice CheekatiManavendranath Roy is expected to have far-reachingconsequences as the state government has been pursuing someother cases on similar charges, in which some bigwigs wereallegedly involved.

The judge debunked the ''insider trading'' theory thatthe YSR Congress had been harping on since 2016, when it wasin the opposition, in respect of land transactions inAmaravati capital region.

The ruling YSRC has accused former Chief Minister NChandrababu Naidu, his kin and some Telugu Desam Party leadersof being involved in insider trading.

A Cabinet sub-committee constituted by the incumbentgovernment named Chandrababu and several others as beinginvolved in insider trading and carrying out land transactionsin Amaravati region for monetary gains.

The state government, which is a respondent in thecase, alleged that there has been a conspiracy between thepetitioners who purchased the lands and the top governmentofficials working in the government at that time and thepolitical leaders relating to unauthorised disclosure of theinformation relating to location of capital.

''Viewed from any angle, even if the petitionersreally got any information regarding location of the capitalin the said area where the lands are purchased, the mere non-disclosure of the said information to the sellers at the timeof purchasing the said lands cannot be construed as adishonest concealment of fact for the purpose of fasteningcriminal liability to the petitioners for the offence underSection 420 IPC,'' Justice Roy noted.

''Insider trading is essentially an offence relatingto trading of public company stocks or other securities suchas bonds or stock options based on material, non-publicinformation about the company.'' ''Absolutely, it has nothing to do with the sale andpurchase of land which is an immovable property which areprivate sale transactions wholly unrelated to the affairs ofstock market business,'' the judge noted, referring to therelevant law.

''This Court has absolutely no hesitation to holdthat the said concept/theory of the offence of insider tradingwhich is essentially an offence dealing with illegal sale ofsecurities and bonds of the company cannot be applied to theprivate sale transactions relating to sale and purchase oflands to criminalise the said transactions under any of theprovisions of the IPC, much less under Section 420 of IPC,''Justice Roy said.

The judge said it was legally impermissible toprosecute the petitioners for the offences under Sections 420,406, 409 and 120-B of IPC by applying the said concept ofinsider trading and in the guise of the said concept ofinsider trading.

''When the petitioners have acquired the propertylawfully by paying valid sale consideration to the sellersunder registered sale deeds, it cannot be said that anyelement of fraud or deception is involved in the transaction,''he pointed out.

''A meticulous perusal of the recitals of theregistered sale deeds executed by the sellers in favour of thepetitioners selling their lands to them clearly proves that itis not the petitioners as buyers who have approached thesellers to sell the property to them.'' ''The recitals of the sale deed show that it is thesellers who offered to sell their lands to the petitioners tomeet their legal necessities,'' the judge added.

''.. the facts of the case absolutely do not admit commissionof any offence whatsoever much less the offence punishableunder Sections 420, 406, 409 and 120-B of IPC, which areregistered against the petitioners,'' Justice Roy said.

Section 420 deals with cheating,406, (criminal breach oftrust),409 (criminal breach of trust by public servant or bybanker,merchant or agent) and 120-B (criminal conspiracy).

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