Synchronised trades are not per se illegal; restraint failed without proof of false market creation or price manipulation.

Synchronised or related-party trades are not prohibited per se under the unfair trade practices regulations; liability arises only when they are shown to create a false or misleading market appearance or to manipulate price or volume. Here, the trades were executed on-screen at prevailing market prices, and the record did not establish that the parties engineered an artificial price rise or fall. In the absence of concrete proof of market impact or deliberate price manipulation, the restraint order could not be sustained and was set aside.

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Issues: Whether the inter se and synchronised trades between related entities were, by that fact alone, prohibited under Regulation 4(b) and 4(c) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995, and whether the impugned order could be sustained in the absence of proof of market impact or manipulation.

Analysis: The trades were executed on-screen at prevailing market prices, and the record did not show that the appellants had engineered the artificial rise or fall in the scrip. The investigation material itself indicated that the price decline was mainly due to selling pressure, and there was no concrete evidence of deliberate hammering of the price by the appellants. The governing regulation targets conduct calculated to create a false or misleading appearance of trading, or transactions that result in price reflection based on non-genuine trades. Synchronised or related-party dealings are not per se illegal; they become objectionable only when they manipulate the market or otherwise affect price and volume in a misleading manner.

Conclusion: The impugned trades were not proved to be manipulative or market-affecting, and the order directing the appellants not to deal in securities was unsustainable.

Final Conclusion: The appeals succeeded and the restraint order was set aside because mere related-party synchronised trading, without proof of false market appearance or price manipulation, does not attract the prohibition.

Ratio Decidendi: Synchronised or related-party trades are not prohibited per se under the unfair trade practices regulations; liability arises only when such trades are shown to create a false market or to manipulate price or volume.

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