AI Drafter 
TaxTMI 
TaxTMI 
2019 (10) TMI 110
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..... Rajasekharan were found to have violated Securities and Exchange Board of India (Prohibition of Fraudulent of Unfair Trade Practices Relating to Securities Markets) Regulation, 2003 (hereinafter referred to as PFUTP Regulations) as well as Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 (hereinafter referred to as 'PIT Regulations') while the rest of the appellants were found to have violated the PFUTP Regulations. The impugned order would show that the appellant Mr. V.R. Venkatachalam was the promoter of M/s. TCP Ltd. (hereinafter referred to as 'TCP') during the relevant period. Appellant Rajashekharan was the Executive Director of TCP. Said TCP was incorporated as a Joint Venture with Tamil Nadu Industrial Development Corporation Ltd. and Mitsubishi Corporation Japan. The scrip of TCP though was not listed on National Stock Exchange of India Ltd. (hereinafter referred to as 'NSE') but permission to trade on NSE platform was granted. The shares were however not frequently traded. Prior to 8th August, 2013 no trading was found to have occurred in the scrip. The last date of trading was on 4th April, 2013. However, for a period from 8t....
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.... Mr. V.R. Venkatachalam put a case before the respondent SEBI that between 16th August, 2013 to 21st August, 2013 he purchased 10,24,503 shares from Mr. E. Shanmugam who was his brother-in-law as well as copromoter of TCP Ltd. The entire shareholding of Shri E. Shanmugam was bought by him in pursuance of a family arrangement with the promoters. The shares were purchased at Rs. 352.50 to Rs. 302.70 while the lowest price of Rs. 201 had reached two weeks thereafter i.e. only on 2nd September, 2013. He also therefore argued that had there been an intention to manipulate the prices to purchase the shares by him at a lower price he would have just waited for another two weeks till the price fell to Rs. 201/-. As regards the allegation of insider trading he submitted that he had not taken pre clearance for opposite transactions executed within six months for 500 shares in January, 2014, 200 shares in July, 2014 and 214 shares in August, 2014 as it was aggregating to less than Rs. 10 lakhs as per the Model Code of Conduct for Prevention of Insider Trading adopted by TCP. Same submissions were made by Appellant Mr. V.R. Rajeshakharan, the Executive Director of TCP who had traded in thre....
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....onds or minutes while no other trade activity was noted on that day. 10. In that view of the matter the following penalty was imposed by the Adjudicating Officer. Sl. No Name of the Noticee Penal Provision under SEBI Act, 1992 Amount of Penalty 1 Mr. V.R. Venkatchalam Section 15HA of SEBI Act, 1992 Rs. 15,00,000,00/-(Rupees Fifteen Crores only) Section 15HB of SEBI Act, 1992 Rs. 3,00,000/-(Rupees Three Lakhs only) 2 Mr. V. Rajasekharan Section 15HA of SEBI Act, 1992 Rs. 1,00,000,00/-(Rupees One Crore only) Section 15HB of SEBI Act, 1992 Rs. 3,00,000/-(Rupees Three Laksh only) 3 Section 15HA of SEBI Act, 1992 Rs. 1,00,000,00/-(Rupees One Crore only) 4 Mr. Srivastan P Rs. 1,00,000,00/-(Rupees One Crores only) 11. The learned counsels for the appellants countered the finding of the Adjudicating Officer. Mr. Gaurav Joshi, Senior Advocate submitted that appellant Mr. V.R. Venkatachalam was not at all benefited by the alleged trade of the other parties. As per the family arrangement between the appellant and his brother-in-law, another promoter of TCP, he....
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....ivatsan would show that he had traded out of curiosity. He further submitted that infact these miniscule trades matching within seconds or minutes had depressed the price of the share as detailed by the Adjudicating Officer and therefore the argument of Venkatachalam that he could have waited for two more weeks is merely an afterthought. 15. Mr. Mustafa Doctor further submitted that though it is the case of the appellant Venkatachalam that as a result of family settlement he had purchased the shares, the copy of the memorandum of undertaking in this regard filed at Exhibit E by the appellant in his appeal would show that so called family arrangement was executed much after the transactions i.e. on 13th September, 2013 as an afterthought. He further submitted that for the transfer without approval, finding that purchase of the shares in small quantity were made, penalty of Rs. 3 lakhs only was imposed and, therefore, no interference in the impugned order is warranted. 16. In reply Mr. Gaurav Joshi learned senior counsel submitted that respondent SEBI did not challenge the factum of oral family settlement which is permissible in law. 17. Learned counsel for Mr. V. Rajasekhar....