TaxTMI 
TaxTMI 
2013 (11) TMI 1425
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....ities Market) Regulations, 2003 ('PFUTP Regulations' for short). Since facts in all these appeals arise from common investigation, all these three appeals are heard together and disposed of by this common judgment. 2. During the period 27th March, 2009 to 12th August, 2009 (hereinafter referred to as the 'investigation period') the Respondent noticed that there was sharp rise in price and trading volumes of scrip of Rich Capital and Financial Services Ltd. ('RCFL' for short). Investigation conducted by the Respondent revealed that during the investigation period scrip of RCFL was interalia traded at Bombay Stock Exchange (BSE) for 138 days and that the price of the scrip at BSE opened at Rs. 8.90 on 27th March, 2009 and moved to a high of Rs. 80.15 on 12th August, 2009 and closed at Rs. 73.90 on 12th August, 2009 with average volume of 5,258 shares per day. 3. On completion of investigation show cause notices were issued to the appellants, calling upon them to show cause, as to why enquiry should not be held against appellants in terms of Rule 4 of the Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by the Adjudicating Officer) Rul....
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....5HA of the SEBI Act. 7. Mr. Deepak Dhane, learned counsel appearing on behalf of appellants in Appeal nos.184 and 185 of 2012 and Mr. Prashant Ingle, learned counsel appearing on behalf of appellant in Appeal no.202 of 2012 submitted as follows: (a) Findings recorded in the impugned orders are based on incomplete materials furnished to the appellants and failure on part of the Respondents to furnish entire copy of the investigation report inspite of repeated requests has vitiated the impugned orders. Passing of impugned orders without furnishing the basis on which SEBI Board ordered investigation, failure to furnish complete investigation report and furnishing incomplete order logs after granting personal hearing to the appellants, are in violation of the principles of natural justice and hence the impugned orders are liable to be quashed and set aside. (b) Findings recorded in the impugned orders to the effect that the appellants were connected with each other and connected with the entities named therein, who traded in the shares of RCFL in connivance with each other are based on erroneous presumption and without any evid....
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.... of new price high. (e) Fact that most of orders placed by the appellants in respect of shares of RCFL matched with the entities set out in the show cause notices could not be a ground to hold that appellants and the said entities were related/ connected entities and were acting in tandem with each other, because, matching of trades was purely a matter of coincidence. In any event trades in the scrip in question effected by appellants were negligible compared to the total volume of transactions during the investigation period and therefore, the impugned decisions based on mere conjectures cannot be sustained. (f) Impugned orders purport to hold that appellants have effected circular/reversal trades which is contrary to facts on record. Appellants are jobbers and are day traders, wherein, they buy and sell shares on same day on several occasions in order to earn profit and in such a case there may be transactions with same party, who is also a jobber. Therefore, merely because some transactions were with the same jobber, it could not be inferred that there were circular/reversal trades. Consequently, findings recorded in the im....
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....sonable opportunity and hence constitutes breach of principles of natural justice [State of Uttar Pradesh v. Harendra Arora [2001] 6 SCC 392]. It is equally well established that non supply of copy of documents having no bearing on charges framed in the show cause notice or non supply of documents tendered during inquiry but not relied upon by Inquiry Officer in support of charges, does not amount to violation of principles of natural justice [Chandrama Tiwari (supra).] 11. In the cases before us, although appellants have repeatedly demanded complete copy of the investigation report, they have not demonstrated as to how failure to furnish complete copy of the investigation report has caused prejudice to them. It is neither the case of appellants that documents relied upon in the show cause notice have not been furnished to them, nor it is the case of appellants that any particular document in possession of respondent which has bearing on the issues involved has been denied to the appellants, as a result of which prejudice has been caused to appellants. Therefore, unless there are compelling reasons, it would be just and proper that in every case the respondent furnishes entire c....
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....s that without disclosing evidence on record, conclusion drawn against appellants regarding relationship between parties is totally erroneous. We see no merit in the above contentions, because, conclusion regarding relationship between the parties is drawn on the basis of KYC documents as more particularly set out in para 16 of the impugned order. Appellants are neither disputing the relationship between the parties set out in the impugned order, nor they are disputing the contents of the KYC documents. Their only grievance is KYC documents have not been furnished to them. It is relevant to note that no such request for furnishing copies of the KYC documents were made by appellants in their affidavit-in-reply to the show cause notices. No such request was made even during personal hearing. Therefore, in the absence of denial, findings regarding relationship of appellants with RCFL recorded in the impugned orders cannot be faulted. 16. Argument that appellants have not played any role in new price high/LTP variation is without any merit. Out of the price rise of Rs. 71.25 noticed during the investigation period, Ashesh Agarwal, Sanjeev Agarwal and Big Broker House Stock Ltd. (app....