An attempt to commit an unlawful act is liable for punishment. In R. Vs. Rushbrooke. Rushbrooke, a former executive in subsidiary of Midland Radio knew that Picadilly Radio was due to merge with Midland Radio. He bought shares two days before the public announcement of planned merger. The dealing misfired and Rushbrooke expecting to make a profit actually made a loss in the transaction. He was found guilty and was fined pound sterling 2000.

The standard of proof required in criminal prosecution has been classically expressed in one of two ways. In Woolmington Vs DPP (1935) AC 462 it was said to be "proof beyond reasonable doubt". In R. Vs. Summers (1952) All ER 1059 it was said to be proof which satisfies the jury or magistrate so that they feel sure when return a verdict of guilty. In case of Miller vs.

Minister of Pensions (1947) 2 ALL ER 372 Lord Denning saidproof beyond reasonable doubt, It need not reach certainty but it must carry a high degree of probability. Proof beyond reasonable doubt does not mean proof beyond shadow of doubt. The law would fail to protect the community if it admitted fanciful possibilities to deflect the course of justice. If the evidences so strong against a man as to leave only remote possibility in his favour which can be dismissed with the sentence, Of course, it is possible but not the least probable, the case is proved beyond reasonable doubt, but nothing short of that will suffice. Knowledge is an essential ingredient to be proved in insider trading case which under criminal law must seem more than constructive knowledge "in a sense of shutting ones eyes to the obvious". However in R Vs Grange 1974 ALL ER 928 it is shown that there must be actual knowledge and the test is subjective ingredient for successful prosecution in economic legislation. In UK it is common experience that in contested trading cases the prosecution hasnotable lack of success.

Members of the core committee consisted of common directors of HLL and BBLIL. There was no non-executive director of either companies on the core committee. Though not legally, for all practical purposes they must be considered as nominees of Unilever. Hence it was duty to protect, preserve and promote interest of Unilever. It is arguable whether shareholders funds could be utilised solely to safeguard and perpetuate interest of the promoter. HLL bought about 12,73,000 shares of BBLIL from UTI at cost of Rs 45 crore so that after merger these shares will get cancelled and Unilever will be able to hold 51 per cent of share capital of the company after merger. If these shares of BBLIL were not bought by HLL the share capital of HLL after merger would have increased in respect of above shares by 5,72,850 equity shares. To have 51 per cent of share capital after merger Unilever in respect of above shares would have to acquire 2,92,153 equity shares either from market or by issue ofpreferential shares. Even assuming preferential issue in favour of Unilever was made at premium say Rs 1,290 per share (being average price for 6 months period), Unilever would have to bring funds equivalent to Rs 37.99 crore. In such a case share capital would have increased by 8,65,003 equity shares of which 5,72,850 equity shares would have been held by UTI in lieu of shares of BBLIL and 2,92,153 equity shares by Unilever on preferential allotment. Total additional resources available to the company would be Rs 37.99 crore plus Rs 45 crore used for buying UTI's shares of BBLIL. One believes that a professionally managed company like HLL would have gainfully utilised resources to the extent of Rs 83 crore to increase shareholder value. It needs to be pointed out that bulk of the fund brought by Unilever would be with company as share premium reserve.

It will be seen that the main beneficiary namely Unilever has gone scot free. Shareholders of HLL have lost Rs 45 crore used for purchase of BBLIL sharesfrom UTI and also compensation of Rs 3.04 crore payable to UTI if Sebi order is finally upheld. Sebi insider trading rules need to be amended to specifically provide for disgorging of profits made by insider trader or ultimate beneficiary of the transaction and penalty be linked with total value of transaction involved if need be on a sliding scale with a fixed minimum. It should clearly state when information is made public as in UK subject to modifications to suit our requirements.

The HLL incident reveals that promoters use company's funds to feather their nests; professionally managed companies are no exception rather they do it in subtle and sophisticated manner. Sebi needs to be congratulated for the action taken so far. We hope they will be vigilant and strengthen their detection and investigation cell to bring to book insider trader.