SEBI v. Mehul Chinubhai Choksi and another (insider trading, Gitanjali Gems, 2022)

Judgment entered

✓ Checked against the primary document on October 8, 2026. The library's summary, tags and figures for this record were compared with the regulator's own document by an AI model (Claude) following written instructions, in a single reading of the order; an independent second reading of 60 SEBI records agreed on every field for 56, the four misses being penalty amounts; a later sample of 50 of the SEBI records added on 9 October agreed on every field for 46. No lawyer has reviewed them. A checked record can still contain errors, and checked does not mean endorsed. See how we check records or report a correction.

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A SEBI whole-time member found that Mehul Choksi, promoter and managing director of Gitanjali Gems, passed on knowledge of the looming Punjab National Bank letter-of-undertaking fraud to a Belgian-citizen associate, who sold his shares before the news broke in February 2018. The January 2022 order directed disgorgement of Rs 15.82 crore, one- and two-year restraints, and penalties totalling Rs 2.5 crore.

The record

What was ordered

Civil penalty

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Disgorgement

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Prejudgment interest

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Total relief

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Alleged gain

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Penalty as published

25m INR

A dash means the release did not state a figure we could extract, not that the figure is zero. Penalty and disgorgement are stored separately so aggregates across the library do not double-count the same dollars. This regulator states penalties in INR. The figure is recorded as published and is not converted, so it does not appear in the USD totals or medians used elsewhere on this site.

What is alleged to have happened

The final order of 31 January 2022 was passed by a SEBI whole-time member under Sections 11 and 11B of the SEBI Act and the Insider Trading Regulations, 2015. It concerns Mehul Chinubhai Choksi, promoter and managing director of Gitanjali Gems Limited, which was listed on BSE and NSE, and a second noticee identified in the order's heading as Rakesh Girdharlal Gajera (the penalty table calls him Rajendra Girdharlal Gajera).

The show-cause notice of 15 July 2021 followed an investigation of trading between 31 May 2017 and 5 February 2018. SEBI's case was that fraudulent letters of undertaking had been issued by Punjab National Bank for the Gitanjali Group and were maturing in February 2018; that the likelihood of detection rose when the bank employee who had assisted the scheme retired on 31 May 2017; and that the unpublished price-sensitive information existed from that date until 5 February 2018, when the bank's fraud announcement and press reports naming Mr Choksi appeared. SEBI alleged that Mr Choksi, as an insider, communicated this information to the second noticee, and that both traded on it.

The second noticee, a Belgian citizen, disputed that he was an insider or connected person and said the claim rested on the statement of an unrelated third party, among other defences. The order held that the information was price sensitive and not generally available, that the second noticee was an insider who traded while holding it, and that Mr Choksi had passed it on without a legitimate purpose. It treats the loss avoided by the sales in the UPSI period as the unlawful gain.

The directions were disgorgement of Rs 15,82,42,010 by the second noticee into the Investor Protection and Education Fund, a one-year restraint from the securities market and a two-year restraint from dealing in Gitanjali Gems shares for both noticees, and penalties of Rs 1.5 crore on Mr Choksi (Rs 1 crore under Section 15G(ii) and Rs 50 lakh under Section 15A(a) for not furnishing information sought by investigators) and Rs 1 crore on the second noticee under Section 15G(i), Rs 2.5 crore in all.

The notice also alleged that the second noticee failed to make a substantial-shareholding disclosure, which this account does not cover. The record does not show whether either noticee appealed or paid, or how the information was physically communicated beyond the inference SEBI drew. The order describes no criminal case.

This library tags the matter as insider trading. The tagging is ours, not the regulator's.

For the regulator's own account of the facts, read the primary document linked above. This page deliberately summarises the structured record rather than reproducing the order.

What technique is this, and how does it work?

This action is tagged with one technique in our taxonomy. The tagging is ours: regulators charge statutory provisions, not technique names, so the mapping is an editorial judgement described in our editorial policy.

• Insider trading — see how it works, what statute it engages, and every other action tagged the same way.

Timeline

1. 2022-01-31 SEBI whole-time member final order

Primary documents

Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.

• SEBI order
• Order (PDF)

The linked release is published by the issuing regulator under its own terms. Our summary and narrative above are our own writing.

Related actions

Other actions in the library sharing at least one technique tag with this one.

Record added October 8, 2026. submit a correction.