TaxTMI 
TaxTMI 
2019 (3) TMI 828
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....ompany regarding his interest to acquire 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 o....
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.... growth of the company. In the stated media report, our Chairman 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....
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....age 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 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:- (....
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....ving out misinformation that affects the market price of the security, resulting in investors being effectively misled even though they did not rely on the statement itself or anything derived from it other than the market price. And "fraudulent" 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....
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....e of the scrip of Amrutanjan from first week of March 2010 when the price was hovering in the range of Rs. 550-565 and rose to Rs. 1054 on April 1, 2010. The impugned order further holds that there were no bulk trade in BSE and only a few bulk trades in NSE prior to April 3, 2010. 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 t....
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....d news item alone is not sufficient to prove a serious charge like fraud. If at all the reported statement is correct it could an expansive mood of the person. Silence as a sign of wisdom cannot be stretched to a point of total silence in the world of securities market. Substantial movement 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 p....