The Securities Appellate Tribunal (SAT) has dismissed an appeal filed by Arun Khurana, former executive director and deputy chief executive officer of IndusInd Bank, challenging communications issued by Securities and Exchange Board of India (SEBI) in connection with an ongoing insider trading investigation involving trading in the bank’s shares.
In an order on Thursday, the tribunal held that Mr Khurana is not entitled at this stage of the proceedings to access the entire set of documents and data sought by him, including a massive email backup collected by SEBI during the investigation.
The bench comprising justice PS Dinesh Kumar (presiding officer) and technical members Meera Swarup and Dr Dheeraj Bhatnagar ruled that the investigation by SEBI is still underway and that broader disclosure of materials would arise only at the adjudication stage after a show cause notice (SCN) is issued.
"Mr Khurana has been supplied with all the emails and other material relied upon by the SEBI...he has an opportunity to explain that those relied upon documents did not warrant issuance of ex-parte interim order... 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, Mr Khurana’s prayer for the entire data does not merit consideration," the bench says in the order.
The case arises from SEBI’s suo motu preliminary examination into a fall in the share price of IndusInd Bank following a corporate announcement made by the bank on the stock exchange’s website on 10 March 2025. In that announcement, the bank said its internal review had detected discrepancies in the accounting of derivative trades that could have an adverse impact of about 2.35% of the bank’s net worth as of December 2024. The estimated financial impact of the discrepancy was around ₹1,529 crore.
Following these findings, Kamlesh C Varshney, SEBI’s whole-time member (WTM) passed an ex-parte interim order on 28 May 2025 against five noticees, including Mr Khurana. Others named in the order are: the head of treasury operations, Sushant Sourav; the head of GMG operations, Rohan Jathanna; and the chief administrative officer, Anil Marco Rao.
The regulator issued several directions, including the impounding of alleged unlawful gains of about ₹14.39 crore and the restraining of the noticees from accessing the securities market.
Mr Khurana had earlier challenged the interim order before SAT. In that proceeding, the tribunal directed him to deposit 50% of the impounded amount by way of a fixed deposit, with a lien in favour of SEBI, pending the matter.
In the present appeal, Mr Khurana challenged communications issued by SEBI on 17 December 2025 calling upon him to appear for a personal hearing on 30 December 2025. He also sought directions requiring SEBI to grant inspection and copies of several documents and materials relied upon during the investigation, along with six weeks’ time to file his reply.
Senior counsel Pesi Modi, appearing for Mr Khurana, argued that SEBI had incorrectly assumed that the UPSI came into existence on 4 December 2023. According to Mr Khurana, the alleged UPSI had arisen only on 4 March 2025, prior to the bank’s public disclosure on 10 March 2025.
Mr Khurana also argued that the trades in question were linked to an employee stock option plan (ESOP) that he received every year as part of his remuneration. He submitted that he had purchased 91,520 shares under the bank’s ESOP scheme at an average price of ₹1,539 per share, which was higher than the market price before and after the public announcement. According to him, if he had been in possession of price-sensitive information, he would not have exercised the stock options at such a price.
He further sought access to a wide range of documents collected by SEBI, including the complete email backup obtained from the bank during the investigation. According to the submissions before the tribunal, the data comprised about 1.7TB (terabytes) of emails covering 26 officials and 14 generic email addresses.
Mr Khurana contended that SEBI had relied on selective emails to reach its conclusions, and that access to the entire dataset was necessary for him to demonstrate that the interim order was based on an incorrect interpretation of the facts.
Opposing the plea, SEBI argued that the email backup consisted of extremely large volumes of confidential information obtained in a fiduciary capacity and could not be disclosed at the investigation stage. The regulator says the emails were analysed using keyword searches due to their size, and that all emails relied upon in the interim order had already been supplied to the appellant.
SEBI also informed the tribunal that several documents had already been provided for inspection and that the relevant material had been shared with the appellant on multiple occasions, including on a CD.
After considering the submissions, SAT held that the legal position on disclosure of documents had been clarified by the Supreme Court in the case of T Takano vs SEBI. The tribunal observed that a noticee has the right to obtain all relevant information during adjudication proceedings but that disclosure obligations are more limited during the investigation stage.
The tribunal noted that SEBI has not yet issued a SCN in the matter and therefore the proceedings have not entered the adjudication stage. It also recorded that all documents relied upon by SEBI while passing the interim order had already been supplied to Mr Khurana.
SAT says Mr Khurana still had the opportunity to explain why the documents relied upon by SEBI did not justify the interim order passed against him.
Holding that the request for the entire email dataset and other materials was premature, the tribunal concluded that the appeal did not merit consideration. It accordingly dismissed the appeal and disposed of all pending applications without any order as to costs.
The insider trading investigation by SEBI in connection with trading in IndusInd Bank shares is continuing.
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