SAT Dismisses Former IndusInd Bank Director's Plea For Full SEBI Probe Records In Insider Trading Case

The Securities Appellate Tribunal (SAT) on Thursday dismissed an appeal filed by former IndusInd Bank Whole Time Director Arun Khurana challenging communications issued by the Securities and Exchange Board of India refusing complete inspection of investigation material in an ongoing insider trading probe.

A coram of Presiding Officer Justice P.S. Dinesh Kumar and Technical Members Meera Swarup and Dr. Dheeraj Bhatnagar held that since the matter had not yet reached the adjudication stage, the request for the entire email data did not merit consideration.

SEBI had initiated a suo motu preliminary examination into the fall in the share price of IndusInd Bank Limited after the bank, on March 10, 2025, disclosed to stock exchanges that its internal review had estimated an adverse impact of around 2.35% of its net worth due to discrepancies in its derivatives portfolio.

During the examination, SEBI found that Arun Khurana, former Whole Time Director of the bank, and four others were “insiders” under the SEBI (Prohibition of Insider Trading) Regulations and had traded while in possession of unpublished price sensitive information.

In May 2025, SEBI passed an ex parte interim order impounding Rs.14.39 crore and restraining the noticees from accessing the securities market.

Khurana's earlier appeal before the tribunal was disposed of with a direction to deposit 50% of the impounded amount.

The present appeal was filed by Khurana challenging SEBI's communications fixing a personal hearing and refusing complete inspection of documents, including a large email dump.

Khurana argued that SEBI rejected his request for full inspection on the grounds that the material was confidential, voluminous, and part of an ongoing investigation, and that emails had been reviewed only through keyword searches. He contended that the denial of inspection of documents violated the principles of natural justice.

SEBI, on the other hand, contended that the email dump comprised approximately 1.7 TB of data and was therefore searched on a keyword basis while passing the interim order. It stated that all emails relied upon, along with their trailing mails, had been shared with Khurana.

The tribunal observed that the investigation was still in progress and the regulator had not yet decided whether to issue a show cause notice.

“Thus, as on date there is no sight of SCN which sets the adjudication proceedings in motion,” it noted.

The tribunal further recorded that Khurana had been supplied with all emails and other materials relied upon by SEBI.

“As noted above, all those documents have been made available to the appellant and appellant has an opportunity to explain that those relied upon documents did not warrant issuance of ex parte interim order,” it said.

The tribunal added, “In our view, the settled position is a noticee shall be entitled for the relevant material at the stage of adjudication. Since the matter has not reached the adjudication stage, in our opinion, appellant's prayer for the entire data does not merit consideration.”

Accordingly, the appeal was dismissed.

For Appellant: Senior Advocate Pesi Modi and Advocates Kyrus Modi, Vishesh Malviya, Anuja Bhansali, Aanchal Maheshwari and Jai Sanyal

For Respondent: Advocates Sumit Rai, Manish Chhangani, Sumit Yadav, Abhay Chauhan and Atul Agrawal