TaxTMI 
TaxTMI 
2025 (11) TMI 612
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.... Per : Justice P. S. Dinesh Kumar, Presiding Officer This appeal is directed against order dated August 25, 2023 passed by AO Adjudicating Officer, SEBI Securities and Exchange Board of India imposing a penalty of Rs. 10 Lakh each on both the appellants. 2. We have heard Ms. Rishika Harish, learned Advocate for the appellants and Mr. Prathmesh Kamat, learned Advocate for the respondent. 3. Brief facts of the case are, SEBI conducted an investigation in the scrip of 'Rupa and Co. Ltd.,' to ascertain whether any entities have traded. It was observed by the SEBI that the March quarter result had led to a price increase of 20% in the share price of the scrip on NSE and BSE on June 01, 2021. Accordingly, the UPSI Unpublished Price Se....
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....ived from Rupa and Co. Ltd. • Mr. Patwari is not responsible for any trading activity done by first appellant. By a resolution of 2014, the CFO of the Company, Mr. Sanjay Kumar Agarwal was authorized to carry out the trades. This fact is recorded in SEBI's investigation report. Appellant has brought the said resolution to SEBI's notice. Therefore, SEBI ought to have established that the UPSI was communicated by Mr. Patwari to Mr. Sanjay Kumar Agarwal. SEBI has not discharged its burden of proof. • SEBI in its reply has contended that Mr. Patwari has admitted that he had learnt about the UPSI on May 26, 2021 and the final information on May 29, 2021. If this allegation were to be true, second appellant would not hav....
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....h were finalized on May 30, 2021. 7. Shri Kamat adverted to a table in para 54 of the impugned order and argued that the trading pattern clearly establishes that on the very next day of receiving the UPSI by the second appellant, the first appellant has indulged in trading in the scrip of Rupa and Co. Ltd. 8. In sum and substance, Shri Kamat submitted that in view of the admitted position that Mr. Patwari was an independent director of Rupa and Co. Ltd., and Chairman and MD of the first appellant company and first appellant had traded in the scrip of Rupa and Co. Ltd., on the very next day of receiving the UPSI, he is rightly held as an 'insider' as per SEBI (PIT) Regulations, 2015 SEBI (Prohibition of Insider Trading) Regulations, 20....
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....was, in fact, responsible for trading and there is no proof that Mr. Patwari had communicated the UPSI to the CFO. It was next urged that there is no change in the trading pattern. The following table Table 6 at paragraph No. 49 of impugned order shows appellants' trading pattern: Trade Date Buy Quantity Buy Value (in Rs.) Sell Quantity Sell Value (in Rs.) 21-March-2017 1000 2,85,500 - - 31-Mar-2017 - - 1,000 3,26,700 28-Jun-2017 4000 18,93,523 31-Aug-2018 4,000 31-May-2021 (before disclosure of UPSI) 5000 21,34,074 0 0 01-Jun-2021 (after disclosure of UPSI) 0 0 5,000 23,71,500 06-Aug-21 3,0....