TaxTMI 
TaxTMI 
2023 (10) TMI 1555
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....dhna Broadcast Limited ('Sadhna' for short) and Sharpline Broadcast Limited ('Sharpline for short). Since the modus operandi and the issue is similar all these appeals are being decided together. For facility, the facts stated in Appeal no. 679 of 2023, Jatin Manubhai Shah is being taken into consideration. 2. The appellants in Appeal nos. 679 of 2023, 680 of 2023, 681 of 2023, 682 of 2023 and 683 of 2023 are aggrieved by the confirmatory order dated July 20, 2023 passed by the WTM affirming the ex parte ad interim order dated March 2, 2023 passed by SEBI against 31 noticees including the appellant in the matter relating to the scrip of Sadhna. Appeal nos. 672 of 2023, 673 of 2023, 674 of 2023, 675 of 2023, 676 of 2023 and 677 of 2023 are against the order dated July 11, 2023 passed by the WTM confirming the ex parte ad interim order dated March 2, 2023 relating to the scrip of Sharpline. 3. It transpires that some complaints were received by SEBI regarding price manipulation and offloading of shares by certain entities in the scrip of Sadhna. It was alleged that misleading YouTube videos with false contents were being uploaded to lure unsuspecting investors to trade in th....
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..... 6. The WTM in paragraph no. 32 held that all the noticees are individually liable to disgorge the illegal gains individually made by them as depicted in table no. 16 but simultaneously held that noticees nos. 1, 4, 5, 6, 7, 10, 11, 23 and 31 are jointly and severally liable for all of the illegal gains cumulatively made by all the noticees as tabulated in table no. 16 which works out to Rs. 41.85 crore. 7. The WTM further found that some of the noticees named in paragraph no. 30 of the impugned order were engaged in the similar modus operandi with regard to scrip (namely Sharpline). Considering the aforesaid, the WTM came to the conclusion in paragraph no. 37 of the impugned order that the noticees may divert the alleged unlawful gains before the investigation is concluded and directions for disgorgement, if any, are passed and, therefore, by the impugned order issued a slew of directions including impounding of the alleged unlawful gains, freezing of their bank accounts and further restraining them from accessing the securities market. 8. On similar facts and on same modus operandi, the WTM passed another ex parte ad interim order dated March 2, 2023 in the scrip of Sha....
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....he time to complete the investigation in the interest of justice. 11. Against the ex parte ad interim order the appellants in Appeal nos. 679 of 2023, 680 of 2023, 681 of 2023, 682 of 2023 and 683 of 2023 appeared before WTM and filed their objections praying for vacation of the ex parte ad interim order. Their objections were heard but no orders were being passed by the WTM and accordingly some of these appellants filed an appeal before this Tribunal which appeals were disposed of by an order dated July 12, 2023 directing the respondent to pass a confirmatory order on before July 21, 2023. Based on the directions of this Tribunal the impugned confirmatory order was passed on July 20, 2023. By the confirmatory order the ex parte ad interim order dated March 2, 2023 was confirmed with the following modifications, namely- "21.1 The liability for the illegal gain made by Noticee nos. 4, 5, 6, 7 and 9 individually shall stand modified as mentioned at Table no. 3. Consequently, the total illegal gain made by all the Noticees also stands modified to INR 40,60,66,012. 21.2. The direction in para 38.7 of the Interim Order shall not prohibit the credit of shares to be r....
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....indicates that the appellants have not denied the inter se connection with the other noticees as indicated in the interim order, namely, with the Misleading Message Disseminator (MMD), namely, Noticee no. 1 who was the creator of the YouTube video. In the light of the aforesaid finding the ex parte ad interim order was confirmed. 17. Having heard the learned counsel for the parties and having perused the record we find that the controversy involved in the present appeal is squarely covered by a decision of this Tribunal in Appeal no. 284 of 2023, Arshad Husain Warsi and Others vs SEBI and other connected appeals decided on March 27, 2023 wherein we had set aside the directions and issued certain directions during the pendency of the investigation. In our view the appellant is also entitled for the same relief for the following reasons:- (a) The appellants admit that they are connected to Noticee no. 1. Some of the appellants have extended loan and therefore to that extent the connection is admitted. (b) On the other hand, we find that :- (i) The appellants were not involved in the making / distribution or uploading of the videos on the YouTube channels....
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.... investors. There is no evidence to show that the appellants were involved in the making, distribution, promotion and uploading of the videos on YouTube channels. 21. Thus, mere connection with Noticee no. 1 at the moment cannot lead to any conclusion that the appellants were engaged in a coordinated scheme to induce unsuspecting investors to acquire securities in the scrip in question. 22. Ad-interim orders can be passed in case of urgency or where it is found that the noticee is about to dispose of the property. In the absence of any finding that the appellants will defalcate the unlawful gains, the impounding order constitutes malice in law. Further, the power must be exercised with extreme care and caution and should be resorted to only as a last resort or measure. Merely by stating that the appellants may divert the unlawful gains is not based on any cogent evidence rather on surmises and conjectures and formation of unguided subjected satisfaction which is not permissible. The appellants are full time investors in the securities market. Their livelihood depends on their trading activities. They have been out of the securities market for more than six months in view of t....