Securities Appellate Tribunal
Sil Leasing & Industrial Finance Pvt. ... vs Sebi on 2 July, 2013
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No.99 of 2013
Date of decision:02/07/2013
Sil Leasing & Industrial Finance Pvt. Ltd.
Daruwala Building,
90, Chandanwadi Cross Lane,
Marine Lines, 4th Floor,
Mumbai - 400 002. ... Appellant
Versus
Securities and Exchange Board of India
SEBI Bhavan, Plot No.C4-A, G-Block,
Bandra Kurla Complex,
Mumbai - 400 051. ... Respondent
Dr. S. K. Jain, Practicing Company Secretary for the Appellant. Mr. Mihir Mody, Advocate & Solicitor with Mr. Akhilesh Singh, Advocate for the Respondent CORAM : Jog Singh, Member & Presiding Officer (Offg.) A.S. Lamba, Member Per : Jog Singh (Oral) With the consent of the parties, the matter is taken up for final hearing at the admission stage. Since a short question is involved in the Appeal, the same is being disposed of by the present order.
2. The Appeal has been filed against the impugned Order dated March 14, 2013 passed by the adjudicating officer of the Securities and Exchange Board of India (Respondent-SEBI), under Section 15HA of the Securities and Exchange Board of India Act, 1992, hereinafter referred to as "the SEBI Act, 1992", holding the appellant guilty of violating regulations 3 (a), (b), (c), (d), 4(1), 4 (2) (a) & (e) of the Securities and Exchange Board of India (Prohibition of Fraudulent and -2- Unfair Trade Practices relating to Securities Market) Regulations, 2003, and imposing a penalty of Rs.2.5 lac each on the Appellant along with others.
4. Facts of the case, in brief, are that the Respondent-SEBI conducted an investigation into the buying, selling or dealing in the shares of T. Spiritual World Ltd. (for short the Company) listed on Bombay Stock Exchange (BSE) and Calcutta Stock Exchange, for the period from 12th July, 2004 to 4th February, 2005. The investigation revealed that on BSE the scrip of the company opened at Rs.27.85 on 12/7/2004 and closed at Rs.5.06 on 4/2/2005. During the investigation period, total 2,07,94,921 shares got traded with an average daily volume of 1,59,961 shares. Price of the scrip on BSE was Rs.1.65 on 6/11/2008. Investigation further revealed that a group of entities including, (i) Ms. Manjula Jain (Appellant in Appeal No.101/2013), (ii) Mr. Umesh Kumar Thaker (Appellant in Appeal No.98/2013), (iii) Jinprabhu Securities Pvt. Ltd. (Appellant in Appeal No.100/2013, and (iv) SIL Leasing & Industrial Finance Pvt. Ltd. (Appellant in Appeal No.99/2013) connected to the Company and to each other, in one way or the other, had dealt in the scrip of the company in a fraudulent and manipulative manner during the period under investigation. It created false and misleading appearance of trading, artificial volume, price increase and offloaded their shareholding in the market. The Respondent therefore initiated adjudication proceedings under the SEBI Act, 1992 and issued show-cause notice dated 31st January, 2012 to the Appellant, requiring him to show cause as to why an inquiry should not be held against the Appellant for the alleged violations. Thereafter an opportunity of personal hearing was also given to the Appellant on -3- April 17, 2012. However, the Appellant submitted that he was desirous of availing of the consent process and was to submit consent application in the matter. Subsequently, another opportunity of personal hearing was granted to the Appellant on May 15, 2012. After considering the submissions made by the Appellant, the adjudicating officer passed the impugned order holding the Appellant guilty of violating the Regulations in question and imposing penalty as stated above. It is against this order that the present Appeal has been preferred.
5. It is the case of the Appellant that he did not belong to any group of entity as alleged in the show cause notice which was involved in the alleged synchronized and incremental trades and order manipulations in the scrip of the company. It is further the case of the Appellant that he was not connected to any other alleged entities in one way or the other, as the Appellant did not have common telephone number, address etc. with any alleged entities. The Appellant further submitted that the transfer of shares in off-market was beyond the investigation period and therefore could not result in any synchronized and incremental trades and order book manipulation in the scrip of the company during the investigation period.
6. We have perused the Appeal and looked into the show-cause notice and the order passed by the adjudicating officer. We have also considered the oral submissions made by the learned counsel for the parties. It has been clearly brought out in the show-cause notice as well as in the impugned order that the Appellant, along with others, were a part of the same group which was involved in the synchronized and incremental trades and order book manipulation in the scrip. It has been established that the entities connected to the Appellants had executed -4- fraudulent trades in the scrip of the Company which created false and misleading appearance of trading by creation of artificial volumes in the scrip. This has facilitated the Appellant and others to sell large quantities of shares of the company in the market.
7. Having heard the learned counsel for the parties and keeping in view the totality of facts and circumstances of the matter, the impugned order is hereby upheld. However, the monetary penalty imposed by the Order, appears to be slightly on the higher side, commensurate with the violation in question. Therefore, we uphold the impugned order by reducing the penalty from Rs.2.5 lac to Rs.1 lac
8. With the aforesaid modification of the impugned order, the Appeal stands dismissed with a direction to the Appellant to pay Rs.1 lac to the Respondent within a period of two months from the date of receipt of this order. No costs.
Sd/-
Jog Singh Member & Presiding Officer (Offg.) Sd/-
A.S. Lamba Member 02/07/2013 Prepared & compared by-ddg