Securities Appellate Tribunal
Reena Pandey vs Sebi on 30 September, 2015
Author: J. P. Devadhar
Bench: J. P. Devadhar
BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
DATE : 30.09.2015
Appeal No. 347 of 2014
Reena Pandey
133/142-A 'Ó' Block,
Kidwai Nagar,
Kanpur 208 023. ..... Appellant
Versus
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051. ...... Respondent
With
Appeal No. 348 of 2014
Arun Kumar Bajpai
133/142-A 'O' Block,
Kidwai Nagar, Kanpur,
Uttar Pradesh 208023. ..... Appellant
Versus
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051. ...... Respondent
With
Appeal No. 349 of 2014
Uma Shankar Gupta
105/663,
Dupty Ka Parav,
Kanpur 208 003. ..... Appellant
Versus
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051. ...... Respondent
With
Appeal No. 350 of 2014
2
Kanchan Gupta
105/663,
Dupty Ka Parav,
Kanpur 208 003. ..... Appellant
Versus
Securities and Exchange Board of India
SEBI Bhavan, Plot No. C-4A, G Block,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051. ...... Respondent
Mr. Prakash Shah, Advocate for the Appellants.
Mr. Kumar Desai, Advocate with Mr. Tomu Francis, Advocate for the
Respondent.
CORAM : Justice J. P. Devadhar, Presiding Officer
Jog Singh, Member
Per : Jog Singh (Oral)
1.These four appeals have been filed by the four appellants, namely, Ms. Reena Pandey, Mr. Arun Kumar Bajpai, Mr. Uma Shankar Gupta, Ms. Kanchan Gupta against a common impugned order dated June 27, 2014. By said order, a penalty of ` 10 lac has been imposed under Section 15I of the SEBI Act, 1992 read with Rule 5 of the Adjudication Rules by the learned adjudicating officer for contravention of Regulations 3(a), (d), 4(1), 4(2)(a) to (g) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulation, 2003 (hereinafter referred to as FUTP Regulations) on the following six persons, (1) Ms. Reena Pandey, (2) Mr. Arun Kumar Bajpai, (3) Mr. Uma Shankar Gupta, (4) Ms. Kanchan Gupta, (5) Abhay Kumar Mehta, HUF and (6) Mr. Abhay Kumar Mehta. Two of these six persons, namely, Abhay Kumar Mehta, HUF and Mr. Abhay Kumar Mehta (individual) have not preferred any appeal whereas remaining four namely, Ms. Reena Pandey, Mr. Arun Kumar Bajpai, Mr. Uma Shankar Gupta, 3 Ms. Kanchan Gupta have preferred the four appeals nos. 347, 348, 349, 350 of 2015 respectively.
2. With the consent of the parties, we have heard all the four matters together and are being disposed of by this common order. We have taken case of Ms. Reena Pandey as the lead case.
3. Shri Prakash Shah, learned counsel for the appellants has argued that the four appellants have never been a part of any market manipulation and there was no charge in the show cause notice to that effect. Learned Counsel for the appellants has argued that the only charge in respect of the four appellants is relating to synchronized trades. They were the victims of ill advice given by said two persons HUF/individual. Indeed, it was abovesaid Mr. Abhay Kumar Mehta, who manipulated and instigated the four appellants to allow their accounts to be used for such transactions. Therefore, the appellants deserve consideration in the matter of atleast imposition of penalty and they cannot be put on par with Mr. Abhay Kumar Mehta who was the main culprit and brain behind the whole synchronization. Most of these four appellants have no experience of capital market.
4. Per contra, Shri Desai, Learned Counsel for respondent has sought, to justify the impugned order on the ground that the synchronized trades have been clearly effected in the accounts of each of the appellants. They are party to the larger mischief, therefore, same penalty should be imposed on them also.
5. We have heard the learned counsel for the parties at length and minutely perused the pleadings.
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6. It is evident from the records that during investigation period i.e. from February 1, 2011 to July 14, 2011, it was noted by SEBI that the appellants alongwith Mr. Abhay Kumar Mehta HUF have traded in the scrip of Rodium Realty Ltd. (RRL). It is also clear that the appellants have acted at the instance of the stockbrokers in executing synchronized/ reversal trades in their accounts which led to creation of artificial volume of the scrip of the RRL whose shares are mistraded on the Bombay Stock Exchange. It is, thus, clear that the appellants have been rightly held guilty of violating the provisions of Regulations 3(a), (d), 4(1), 4(2)(a) to (g) of the FUTP Regulations.
7. The learned adjudicating officer has rightly held that trades in question were undertaken in the accounts of appellants by Abhay Kumar Mehta without any intention of performing and without changing the ownership of shares. Therefore, we find no fault with impugned order in holding all the six noticees guilty of synchronized / reversal trades. One Shri Avinash Sahu has been exonerated by the learned adjudicating officer rightly on the ground that an insignificant volume of trade was executed by him. This shows the fairness and proper application of mind on the part of the learned adjudicating officer and cannot be a ground to exonerate the appellants who admittedly undertook synchronized / reversal trades for greater quantity than Anivash Sahu.
8. Having said so, we also note that noticee nos. 5 and 6, namely, Abhay Kumar Mehta, HUF and Mr. Abhay Kumar Mehta who was the kingpin in the whole conspiracy and induced the appellants by promising a small amount of about ` 3000 per ` 1 crore transaction. Thus, the main benefit, if any, was to go to the kingpin. In the circumstances, treating the appellants on par with said two persons is not justified while awarding the penalty. 5 Moreover, some of the appellants before us seem to be absolutely ignorant about the capital market and its working and they were just acting as proxies for Mr. Abhay Kumar Mehta by allowing their accounts to be used by said Mr. Ajay Kumar Mehta / HUF who have not challenged the penalty imposed against them.
9. Therefore, in the peculiarity of facts and circumstances of the case we are inclined to reduce the penalty from ` 10 lac to ` 5 lac in respect of the four appellants to be paid to the respondent within a period of two months from today. Therefore, all the four appeals stand disposed of by modifying the penalty as abovesaid. No costs.
Sd/-
Justice J. P. Devadhar Presiding Officer Sd/-
Jog Singh Member 30.09.2015 Prepared & Compared by PTM