TaxTMI 
TaxTMI 
2013 (10) TMI 1539
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....5HA of the Securities and Exchange Board of India Act, 1992. 2. The impugned order is passed pursuant to an enquiry held by the Adjudicating Officer under Rule 5 of the Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 while investigating certain trading and dealing in the equity shares of Era Constructions (India) Ltd., now known as Era Infra Engineering Ltd. (ECIL). The total investigation period is of about eight months i.e. from March 17, 2004 to November 12, 2004. The appellant is however stated to have traded for a short period of about two months between May 19, 2004 to July 23, 2004 and on September 23, 2004. The appellant's trading volume is state....
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....sed prejudice to the case of the appellant in as much as relevant documents have come to be destroyed in the meanwhile by stock exchanges etc. 6. We have heard both the learned counsel for the parties at length and we have perused the show cause notice, impugned order and pleadings minutely. In the entire impugned order nowhere is it provided by the respondent on the basis of any cogent or convincing or even circumstantial evidence that the appellant was involved with the group of brokers or other clients in manipulating the scrip or creating volumes in the said scrip with a view to destabilize the equilibrium of the market. During the arguments also a specific query was put to the respondent as to whether there is any finding regarding ....
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....w. Paras 12, 13, 14 and 18 are relevant and are reproduced here-in-below. "12. Penalty under impugned order is imposed upon appellant solely on ground that almost all trades in shares of Adani Exports Ltd. effected by appellant during investigation were found to be synchronized and those trades were with only one group. It is well established by various decisions by this Tribunal that synchronized trade is per se not illegal. Synchronized transaction would be illegal if it is executed with a view to manipulate the market, is dubious in nature and is executed with a view to avoid regulatory detection, does not involve change of beneficial ownership or is executed to create false volumes resulting in upsetting market equilibrium etc.....
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.... guilty for violating Regulations, whereas, in the present case, appellant seeks exoneration not on the ground that no action has been taken against another person who has also been found guilty, but, on the ground that trades in question were carried out in ordinary course of business and there is no connection between appellant and the group with which appellant has traded. Once it is held that there is no basis for drawing inference that synchronized trades were effected by appellant with a view to create artificial volume in the scrip and thereby disturb market equilibrium, it would not be proper to hold that appellant has violated PFUTP Regulations / Broker Regulations and consequently penalty imposed upon appellant cannot be sustained....
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....ime are not in themselves sufficient to bring home the residual charge against the Appellants. There has to be sufficient evidence on record to clearly prove connivance on the part of the Appellants with a counter party to prove the charge in question against the Appellants. In the absence of any such evidence and unambiguous findings by the learned WTM to this effect, we have no option but to quash the impugned order in question. 18. Next, the Appellants have brought on record certain circulars and extracts from the Joint Parliamentary Report presented to the Parliament on December 19, 2002 which, inter alia, clearly state that:- "SEBI has also stated that in second interim report of December 2001 that Ketan Parekh entiti....