TaxTMI 
TaxTMI 
2012 (5) TMI 880
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....hole time member restraining the appellant from buying, selling or dealing in the securities market or accessing the securities market directly or indirectly for a period of one year from the date of the impugned order. The appellant is an individual who applied for the allotment of preferential issue of shares of Datasoft Application Software (India) Ltd. (the company). The charge leveled against the appellant, in short, is name lending which resulted in facilitating G.S. Sridhar and his group of companies in making an application in the preferential allotment of the shares of the company. The whole time member concluded that the appellant had violated regulation 6 of the Securities and Exchange Board of India (Prohibition of Fraudulent an....
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....iry, the latter amount of Rs. 1,02,00,000 was found to have originated from M/s. Burlington Finance Ltd., Kolkata. The analysis of the source of funds revealed that Sridhar group had used the names of a few entities through Shalibhadra Securities Ltd. for making application for the allotment of preference shares. The appellant, Shri Rahul H. Shah, is one of them, who paid an amount of Rs. 19,98,000 through a cheque drawn on Central Bank of India, Fort, Mumbai. It was noticed that applications made by 16 entities were forfeited by the company because of default in payment of call money. The appellant is one among them. However, the fact remains that the appellant had made an application for allotment of 7,40,000 shares in the preferential al....
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....at it did not materialize on account of default in payment of application money and so there was no room for any manipulation. The appellant had not invested his funds with full knowledge of the consequences of the action and the mere application for shares did not have any impact on the market, let alone any fraud. The issue was never listed and so there was no possibility of control and management of the company by Sridhar group as alleged by the whole time member and so the role of the appellant in the alleged fraudulent action is totally nil. According to the appellant, the whole scheme was masterminded by his father and he had no initiative or involvement in the process and he was not connected with any market operations. It is also su....
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.... through circular transactions and this was resorted only to avoid the normal process of law. It is submitted that the appellant was 21 years old during the relevant period and he has personally signed the application for preferential allotment. It was also mentioned that the application for preferential allotment indicated the 'occupation' of the appellant as "business" and so the contention that he was and not conversant with commercial transactions is not justified. 5. We have considered the arguments of both the parties. As mentioned above, the only charge that is leveled against the appellant in this case is that of name lending. A perusal of the application for preferential allotment of shares clearly shows that the relevant applic....
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.... on the order passed by this Tribunal in the case of Libord Finance Ltd. vs. Whole Time Member, Securities and Exchange Board of India (Appeal no.37 of 2008 decided on March 31, 2008). We have perused this order. The said order infact does not substantiate the argument advanced by the learned counsel for the appellant. On the contrary, it is specifically observed in the said order that "If the nature of the misconduct is such which is likely to affect adversely the securities market or the interest of the investors in general, it is open to the Board to issue under section 11-B such directions as may be necessary to protect the integrity of the market or the interests of the investors including a direction to restrain the delinquent from ac....