TaxTMI 
TaxTMI 
2019 (3) TMI 828
X X X X Extracts X X X X
X X X X Extracts X X X X
....another Company is sufficient to invoke the provisions of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 ('PFUTP Regulations, 2003' for short) is the question raised in this appeal. Since vide order dated December 27, 2017 the Adjudicating Officer ('AO' for short) of Securities and Exchange Board of India ('SEBI' for short) has answered this question affirmatively and imposed a penalty of Rs. 8 lakh on the appellant, this appeal has been filed challenging the said order. 2. During an investigation SEBI observed that the Chairman of Emami Ltd. Shri R.S. Agarwal (appellant herein) reportedly told a Times of India journalist that he is interested in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....airman has only expressed his desire to acquire any FMCG or Pharma business / company including Amrutanjan within the financial and operational resources of the company. We, however, do not hold any shares in that company". Amrutanjan's reply to the clarifications sought by NSE was as follows:- "the said news item is false and without basis. The promoters of the company have no intention to sell out and the promoters do not forsee any reason to dilute their stake and exit from the company". 4. It is on record that on April 5, 2010 at 13:49 pm NSE reproduced the clarification provided by Amrutanjan on the website of NSE for public information. 5. Subsequently, during the investigation SEBI also found that the reported statement made b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aling 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 fraudulent or an unfair trade practice in securities. (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely:- (e) any act or omission amounting to manipulation of the price of a security; (r) planting false or misleading news which may induce sale or purchase of securi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....audulent" shall be construed accordingly; Nothing contained in this clause shall apply to any general comments made in good faith in regard to- (a) the economic policy of the Government; (b) the economic situation of the country; (c) trends in the securities market; (d) any other matter of a like nature; whether such comments are made in public or in private; 6. In order to strengthen the arguments in the impugned order that the reported statement made by the appellant did impact the market of Amrutanjan both in terms of the price of its scrip as well as in terms of volumes, an analysis of the market position in BSE as well in NSE from February 17, 2010 till April 19, 2010 in terms of open price, high price, low price, clos....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... However, subsequent to April 3, 2010 the prices increased to a high of Rs. 1229 and large number of bulk trades were observed on most of the trading days in the first half of April 2010 in both BSE and NSE. Accordingly, the submission of the Counsel for the respondent is that the appellant knowingly violated the PFUTP Regulations and section 12(A)(c) of SEBI Act. 9. We do not find merit in the arguments of the respondent. First of all the statement attributed to the appellant is as reported by a news reporter. There is no evidence as to the appellant acquiring any shares of Amrutanjan. On the other hand, what is available on record is that no effort in acquisition has been made. Further the appellant has clarified to the Stock Exchange im....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vement in the prices etc. of a profitable company with sufficient liquidity cannot be attributed to such a reported statement alone. 11. Before parting with, the limitations of a comparative static analysis as given in the impugned order also needs to be emphasized. The comparison made in the impugned order is by taking the price / volume data of April 1, 2010 and April 5, 2010. However a look at the data for 30th and 31st March, 2010 also give a different picture which is as follows:- NSE Date Open Price High Price Low Price Close Price Traded Quantity 30-Mar-10 854.9 989 848.1 949.3 489648 31-Mar-10 950 1054 937.5 1020.5 834070 01-Apr-10 1030.1 1044.95 1001 1024.35 308538 05-Apr-10 1025.1 1229.25 1025.1 ....