2015 (7) TMI 58

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....ri Prakashbhai Ishwarbhai Rana Vs. SEBI, and in Appeal No.181 of 2014 in the matter of BMD Exports Pvt. Ltd. & Ors. Vs. SEBI, are more or less identical to Appeal No.93 of 2014 in the matter of Shri Dave Harihar Kiritbhai vs. SEBI which is dealt in details hereunder. Hence with the consent of Ld. Counsels of Appellants and Respondent, all four matters were heard together and it was agreed that order applicable in leading case, i.e. Appeal no.93 of 2014, will be applicable to other three also. Hence, it was decided to hear Appeal No.93 of 2014, in details. 2. Securities and Exchange Board of India (SEBI) conducted investigation in initial public offer (IPO) of RDB Rasayan Ltd. (RDB) and its subsequent trading on and around listing day, since scrip of RDB witnessed wide fluctuations in price of RDB scrip in Bombay Stock Exchange (BSE). RDB came out with IPO of 45,00,000 equity shares of Rs. 10 per share, at issue price of Rs. 79 each. 3. Show Cause Notice (SCN) was issued on 29/7/2013 by Ld. A.O. and Appellant was alleged to have received part of IPO proceeds, routed in a circuitous manner by RDB, in order to enable him to make payment to his stock broker on time i.e. T+2 settlemen....

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....up company of RDB. * RDB had paid capital of Rs. 13.21 crore, before IPO and reserves of Rs. 4.66 crore as on March 31, 2011 i.e. net worth of Rs. 17.87 crore, and amount of loan of Rs. 50 crore to be given by RDD to RDB RIL, as referred in explanatory statement to EGM notice dated September 21, 2011, was IPO proceeds which was to be received by RDB. * In view of above, it is stated in SCN that it can be concluded that IPO money was routed by RDB through a web of interconnected entities to make transaction look complex and hide the actual source of money, in order to enable Appellant to make payment to its stock broker on time, i.e. as per T+2 settlement mechanism. 5. Appellant made the following submissions before the Tribunal during hearing of the matter: * Appellant is an individual investor has been a trader in the securities market since the past 3-4 years. * Appellant has regularly borrowed funds from Sardhav Investment and Finance (Pvt.) Ltd. and repaid the same, pursuant to an agreement dated 4/2/2011. Appellant is also liable to pay interest on such loans at agreed rate. A copy of ledger account of Sardhav, as maintained in Appellant's books for financial year 201....

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....sions. * In view of the fact that Appellant did not file any reply to SCN of Ld.A.O. and also did not avail of personal hearing granted to him by Ld. A.O., it is not possible, at appeal stage, to look into various documents filed for the first time in present appeal. The proper course may have been to send the case in remand to Respondent for granting hearing to Appellant, examine the documents filed by Appellant and pass order thereafter, but the same is not been adopted, in view of the fact that Appellant is not asking for remand of his case to Respondent, principles of natural justice have not been violated and even allegedly violated by Respondent and since further it is being increasingly observed by the Tribunal that many persons/entities do not appear before SEBI (Respondent) to submit reply to SCN or, even worse, do not accept notices/letters of Respondent and when orders are passed ex-parte by Respondent, appear before Tribunal in appeal and claim non-receipt of notice and do not appear and/or submit reply to SCN but claim violation of principles of natural justice due to not being provided opportunity to reply to SCN or not provided personal hearing. This leads to unne....

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....matory Order dated 8th October, 2012. i. Each of Appellants has made one large purchase transaction at same time on or about 13:14:43 pm (pg 90 of SCN) at about same price of Rs. 81. It may be noted that counterparty and counterparty broker of each of the trades is same i.e. Techno Broking & Financial Services Pvt. Ltd. j. No reply was filed by Shri Dave Harihar Kiritbhai & Shreyanshnath Shares and Financial Services Pvt. Ltd. to SCN before Ld. A.O. and the other two i.e. Shri Prakashbhai Ishwarbhai Rana and BMD Exports Pvt. Ltd. craved leave to refer to the reply filed to ad-interim order cum SCN dated 28th December, 2011, before another authority of Respondent. k. None of Appellants availed of opportunity of personal hearing which was granted to them on several occasions. l. Each of them admitted that they required funds to meet pay in obligations for trading done on 1st day of listing. Each of them borrowed/received money from Sardhav. m. In spite of the fact each Appellant's claim not to know other three, but reply of each Appellant to ad-interim order cum SCN is identical, memo of appeals and rejoinder is also identical. n. Fund flow from RDB to Sardhav and to each....