The authority, which concluded its hearings in the case on May 30, will deliver its verdict in due course. According to highly-placed sources present at the recent hearing, the appellate authority, comprising finance secretary Montek Singh Ahluwalia and special secretary banking CM Vasudev, questioned the rationale behind UTI suddenly seeking a higher compensation when it had not sought any relief or lodged any complaint with SEBI in this regard.

UTI had remained silent after SEBI's initial communications of findings that indicted HLL for insider trading. Subsequently, SEBI followed this up with an order against HLL charging it with indulging in insider trading. The order directed HLL to compensate UTI towards the losses incurred by it as well asinitiated prosecution against five of the company's directors.

Even after the SEBI order, UTI had not expressed any intention to seek a hike in the compensation amount, but following the HLL appeal before the appellate authority, UTI moved the authority seeking Rs 7.04 crore as compensation -- more than twice the amount granted to it by SEBI.

Sources said that the appellate authority directed UTI to first explain why it had come up to seek compensation suddenly after having remained quiet for so long.

The appellate authority heard out HLL over three hearings spread across nearly a month. It then heard out UTI and finally heard the SEBI point of view last week.

HLL had strongly contested the decision of UTI to claim a compensation higher than what was prescribed by SEBI in its order in the insider trading case.

UTI had moved the appellate authority in the Union finance ministry seeking a higher compensation than the Rs 3.04 crore damages SEBI had awarded it. UTI had sold eight lakh shares of BrookeBond Lipton to HLL before the merger of the two companies was announced. It was apparently unaware that HLL had already decided on a merger with Brooke Bond. This is the crux of SEBI's insider trading allegations against HLL.

Highly-placed HLL sources question the bonafides of UTI in "suddenly" seeking compensation after failing to raise the issue all these years or even after SEBI gave its order in the case last month.

SEBI had, in its order of March 11, outlined the manner in which the compensation had been calculated. The lowest of four calculations, Rs 3.04 crore, was what was finally awarded to UTI. This calculation was based on the difference between the sale price to HLL in March 1996 and again in December 1996 (excluding the premium), when HLL bought another lot to UTI. The difference between the purchase prices of the two deals was Rs 38 per share, which worked out to Rs 3.04 crore for eight lakh shares.

SEBI had, in its order, come out strongly in support of UTI by saying that it had been putto distinct disadvantage by being kept in the dark about the impending merger.