TaxTMI 
TaxTMI 
2019 (10) TMI 1510
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....vocate, Mr. Vikas Bengani, Advocate for the Appellant. Mr. Kumar Desai, Advocate with Mr. Chirag Bhavsar, Advocate i/b MDP & Partners for the Respondent. ORDER Per : Justice Tarun Agarwala, Presiding Officer 1. Five appeals have been filed against a common order passed by the Whole Time Member (hereinafter referred to as, 'WTM') of Securities & Exchange Board of India (hereinafter referred to as, 'SEBI'). These appeals have been clubbed together and are being decided together. Before we consider the submissions raised by each of the appellants, it would be essential to give a brief background of the facts leading to the filing of the present appeals. 2. SMS Techsoft (India) Ltd. (hereinafter referred to as, 'the company') allotted 3 crores shares through preferential allotment to 31 entities on March 13, 2012. After stock split in the ratio 1:10 in November 2012, these 3 crores shares became 30 crores shares. The allotment of shares had a lock in period of one year and thus, the allottees could not sell the shares during the lock in period. Around the time when the lock in period was coming to an end, Short Text Messages (SMS) were sent to various inve....
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....ber 5, 2013 and have made profits by this sale. It was alleged that majority of the entities shared a common mobile number and common e-mail which belonged to Shri Rajesh Mangilal Ranka and, therefore, these entities were connected with each other through a common e-mail, mobile number and address. It was also alleged that there was a movement of funds from the bank account of one of the entities to other entities. It was also alleged that the majority of the entities have authorized Rajesh Ranka to receive the bank statement on their behalf. It was also alleged that the price of the scrip moved from 0.60 paisa after the lock in period to 0.71 paisa and after offloading the shares, the price of the scrip gradually declined to 0.45 paisa in August 2013 and then declined to 0.09 paisa on November 5, 2013. It was also alleged that most of the entities also traded in the shares of the scrip after the lock in period, namely, that they were buying and selling the shares of the scrip on the platform of the stock exchange. It was, thus, contended that the noticees while acting together as a group adopted a fraudulent device and artifice to defraud the genuine shareholders of the company by....
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....gorgement amount should not be made joint and several and that the appellant should only be held to be liable to disgorge the amount to the extent of the profit made as per Section 11B of the SEBI Act. 10. In Appeal No. 394 of 2018, it was contended that the shares were never sold and, therefore, no profit was made, consequently, there cannot be any disgorgement. It was contended that disgorgement on the basis of notional profit cannot be made in support of his submission. The learned counsel placed reliance upon the decision of Hon'ble Supreme Court in Chainrup Sampatram vs. Commissioner of Income-tax [(1953) 24 ITR 481(SC)]. 11. The learned counsel in Appeal No. 408 of 2018 contended that the appellant Rajesh Ranka was only an employee in the company and was not a preferential allottee nor had sold or made profit by selling the shares nor acted together in concert with any other entity nor adopted fraudulent devices in the fraud and, therefore, could neither be debarred nor can be held liable for disgorgement of the unlawful gain or profit. In support of his submission, the learned counsel placed reliance upon the decisions of this Tribunal in Shailesh S. Jhaveri vs. SEBI (....
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....were acting in concert as majority of the appellants had a common e-mail and address of Rajesh Ranka who is alleged to be an employee in the company and to whom a power of attorney was also given to the bank to send all e-mails and statements of accounts. This fact has not been denied by any of the appellants. 17. The contention that the appellant Rajesh Ranka cannot be held guilty either for debarment or for disgorgement as he was neither a preferential allottee nor profited by the sale of these shares is patently erroneous. Rajesh Ranka has been found to be acting in concert with the appellant and other entities in adopting fraudulent devices and was operating all the accounts of the appellants through the power of attorney given to him. In certain instances, there has been evidence of transfer of funds from one account to the other account. The WTM has further found that he had access to the e-mail account of all the appellants and was also the authorized signatory of the bank account of all the other appellants. Not only that, the bank statement of the appellants was being sent to him. Therefore, he was part of the fraud and even though he may not be an allottee himself but wa....