TaxTMI 
TaxTMI 
2013 (12) TMI 399
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.... Act, 1992 read with Regulations 3(a), 3(b), 3(C), 3(d) and 4(1) and 4(2)(a), (b) and (g) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (FUTP Regulations). 2. The appellant claims to be the Karta of a Hindu Undivided Family. He has been regularly trading in the securities market in various scrips for the last almost 10 years or so. He also claims to have an impeccable track record in terms of compliance with the rules, regulations and other norms governing the securities market. 3. The appellant submits that he was holding 20,000 shares of Alka Securities Limited (ASL) i.e. the company in question in physical form. He requested his depository (DP) for dematerialization o....
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.... confirmed on October 30, 2009. SEBI found violation of certain regulations of FUTP Regulations which suggested certain trading activity on the part of the appellant alongwith others with the intention of creating artificial volumes so as to give the market players a false impression regarding liquidity in the scrip. 6. A show cause notice dated December 27, 2010 was issued by the respondent to various persons including the appellant for his role as a conduit in the scheme of manipulation of the shares of ASL. The appellant on January 19, 2009 had received 20,000 shares of ASL in his demat account no. 1204470000013256, which had been transferred to his said demat account form the demat account no. IN30038610193653 of a promoter, Ms. Dimp....
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....llant clearly proves circular trading with the sole intention of creating artificial volume in the scrip of ASL. 9. Further, it is submitted by Shri Kumar Desai, learned counsel for the respondent, that on February 26, 2009, the appellant sold the said shares through his broker, which the investigation done by SEBI has irrefutably found to have been purchased by JMDE Packaging and Realties Ltd. (19000 shares) and Alpha Graphic India (1000 shares), referred to as two purchasers. SEBI's investigation and the SCN clearly identified the said two purchasers as being the persons who were responsible alongwith others in manipulating the price and volume of the shares of ASL on the BSE. It is pertinent to note that the said two purchasers have n....
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.... (c) employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange; (d) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made there under. 4. Prohibition of manipulative, fraudulent and unfair trade practices-(1) Without prejudice to the provisions of regulation 3, no person shall indulge in a....
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....ship of such security; (h) to (r) ........................" 11. A perusal of the impugned order dated May 11, 2012 passed by the learned Whole Time Member (WTM) reveals that the shares in question were transferred to the applicant and other noticees from the accounts of promoters and not from Dena Bank. This finding of fact has not been rebutted by the appellant at all. Therefore, it is difficult to accept the contention advanced on behalf of the appellant by Shri Vinay Chouhan, learned counsel of the appellant that he had purchased the shares from Dena Bank. It is a matter of record that on January 19, 2009, 20,000 shares of ASL were transferred to the demat account of the appellant from the account of one Di....
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....d by one Mr. Mahesh Kothari Share & Stock Brokers Pvt. Ltd. (MK) for a loan against the shares of ASL. However, the appellant therein had kept the shares of the company in fact in his demat account without any transaction whatsoever in the said shares which were stated to be pledged for the loan in question. The role of the appellant was, therefore, confined to extending loan facility to MK and no more. He was not found to have been engaged at all in any dealing in the shares of the ASL in any manner. He had no role in the circular/manipulative trades highlighted by the learned WTM in the impugned order for the simple reason that he did not trade in the shares. The role of the appellant in that case was that of a mere financier. He kept the....