TaxTMI 
TaxTMI 
2025 (11) TMI 533
X X X X Extracts X X X X
X X X X Extracts X X X X
....al No. 621 of 2022 was filed by Pat Financial Consultants Pvt. Ltd. (Pat - Noticee No. 2) and Appeal No. 622 of 2022 was filed by Gandiv Investment Pvt. Ltd. (Gandiv - Noticee No. 1). As the impugned order is common to the appellants, both the appeals are being taken up together and disposed of by this common order. 2. The brief facts of the case are as follows: The appellants Pat and Gandiv both are companies in the business of trading of securities and have cumulatively have traded over Rs. 1175 crores in various scrips between 2012 to 2015. The appellants in the aforesaid appeals and Mr. Bharat J Patel (Noticee No. 3) traded in the scrips of Ponni Sugars (Erode) Limited from November 15, 2012 to October 9, 2014. A common show cause notice (SCN) dated August 1, 2017 was issued to all the 3 noticees. Subsequently, an adjudication order dated January 24, 2019 was passed against all the three notices. Mr. Bharat J. Patel expired on May 29, 2021 and thus the proceedings against him stand abated. 3. Further, the order dated January 24, 2019 was then challenged before this Tribunal with respect to the penalty of Rs. 5 lakh levied on Pat and Rs. 10 lakh levied on Gandiv. The pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubmitted that the difference in the price is from 5 paise to Rs. 7 and that all the trades were with unconnected parties. Shri Lashkari submitted that it is not even contended by the respondent that the shares were available at a lower price and that the respondent's contention that the appellant contributed to 216 trades at above LTP is untenable as there were 419 trades which were not above LTP. Shri Lashkari further submitted that the impugned order notes that the appellant contributed about 18.2% of the total market positive in LTP, however, the respondent has not considered that the balance 82% were contributed by the third parties and no action was taken against them. Shri Lashkari submitted that the 10 instances given in the impugned order (Table 22) showing Pat's high LTP trades in nearly all instances the unconnected third-party seller had placed the orders earlier in time at a price higher then the LTP which was merely accepted by the appellant as a buyer. The respondent's allegation that the 51 trades done by appellant at NHP is not tenable as no details have been given. Shri Lashkari stated that the respondent has not made allegation of any collusion whatsoever between ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the penalty from that given in the previous order though there are no change in facts. 9. Shri Sumit Rai, learned Advoate for the respondent submitted that the appellants in both the appeals and Shri Bharat Patel (Noticee 3) have colluded in increasing the price of the scrip of Ponni Sugars. They contributed to the price rise in the scrip by repeatedly placing buy order at price higher than LTP and by placing buy order above prevailing sell order price thereby significantly contributed to positive LTP and NHP. Shri Rai further contended that Pat traded through Finquest Securities Pvt. Ltd., wherein Mr. Bharat Patel was a director; Mr. Bharat Patel was a director of Gandiv and that there were funds transferred from Mr. Bharat Patel to appellants. Shri Rai contended that the appellants are repetitive violators and hence the penalty is compounded. 10. Shri Rai submitted that the impugned order has noted that due to the trades of the appellants there was an increase in price of scrip in the Patch II from Rs. 235.45 to Rs. 372 and during Patch IV from Rs. 90.1 to Rs. 239.15 while there were no corporate announcements made during the said period. Shri Rai further submitted that a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d counsels for both the parties and on the basis of material before us, we are persuaded by the respondent's argument that the trading pattern of both the appellants indicate that their buy trades did lead to price manipulation. Pat contributed to 21% of total market positive LTP while Gandiv contributed more than 50% of total market positive LTP in Patch IV and II respectively. The appellants failed to give any reasons for placing the buy orders above LTP except to say that majority of their trades were at LTP or below LTP. In our view, placing substantial number of buy orders above LTP goes against the basic tenet of trading that the buyer would normally buy at the lowest price possible while sellers would sell at the highest price possible. No explanation was provided by the appellants for the trading strategy adopted by them. We also note that their contribution to NHP was also high at 35% of total market NHP by Pat and about 56% of total market NHP by Gandiv. Thus, we are convinced that the trading pattern of the appellants of placing buy orders above the LTP led to price manipulation and creation of NHP and was in violation of Regulation 3 and 4 of the PFUTP Regulations. 1....