TaxTMI 
TaxTMI 
2022 (11) TMI 1590
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....rohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (hereinafter referred to as 'PFUTP Regulations') in respect of trading by certain entities in the scrip of CCL. APPOINTMENT OF ADJUDICATING OFFICER 2. Vide order dated March 15, 2022, SEBI appointed the undersigned as the Adjudicating Officer under Section 15-I of SEBI Act and Rule 3 of SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995 (hereinafter referred to as 'Adjudication Rules') to inquire into and adjudge under the provisions of Section 15HA of SEBI Act, the alleged violations of Sections 12A(a), (b), (c) of SEBI Act and Regulations 3(a), (b), (c), (d) and 4(1), and 4(2)(a) of PFUTP Regulations by (1) Mr. Anil Kumar (hereinafter referred to as Noticee 1/by name), (2) Tanvi Fincap Private Limited (hereinafter referred to as Noticee 2/by name), (3) Rama Anil Gupta Associates Private Ltd. (hereinafter referred to as Noticee 3/by name) (4) Kansabati Tradecom Pvt. Ltd. (hereinafter referred to as Noticee 4/by name) and alleged violations of Sections 12A(a), (b), (c) of SEBI Act, and Regulations 3(a), (b), (c), (d) and 4(1), 4(2)(a) and 4(2)(e) of PFUTP Regulations by Sayuj Pallithaz....
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.... shares have been sold to the aforesaid top 3 buyers." f) "The following entities were observed to be major net sellers during IP (Tejaswani Tradecom Pvt Ltd, Blossom Dealcom Private Limited, Chaturbhuj Marketing Pvt Ltd, Terminal Vincom Pvt Ltd, Suktara Tradelink Pvt Ltd and Noticee No. 4)." g) "It was observed that although the scrip was illiquid, sell orders of major net sellers and buy orders of top 3 buyers were placed within five minutes of each other. Therefore, it is alleged that these trades were executed by aforesaid top buyers to facilitate exit to the major net sellers in the scrip of CCL." h) "It was also observed that the aforementioned buyers and major net sellers have traded only in post-split i.e. Patch 2 of IP. In Patch 2, in 75 out of total 91 trading days wherein the aforesaid buyers and major net sellers have traded, the average daily traded volume was only 11929 shares. However, in remaining 16 trading days wherein the aforesaid buyers and major net sellers have traded the average daily traded volume during those days was 57251 shares. Details of the trades wherein sell and buy orders were placed within 5 minutes of each other." ....
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....rn Fincap Limited from 31.08.2011 till amalgamation of Western Fincap Limited with Noticee No. 2 (promoter of CCL International Limited) on May 21, 2014, in the postinvestigation period, by order of Hon'ble High Court of Delhi (Annexure 7). The other top buyer who had majorly purchased shares of suspected entities viz. Ultra Tech Products Private Limited was observed to be connected to Western Fincap Limited by common email ID [email protected]. It was observed that Ultra Tech Products Private Limited was also amalgamated with Noticee No. 2 on May 21, 2014 in the post-investigation period." k) "Therefore, in view of the above, it was alleged that the major net sellers namely, Tejaswani Tradecom Pvt Ltd, Blossom Dealcom Private Limited, Chaturbhuj Marketing Pvt Ltd, Terminal Vincom Pvt Ltd, Suktara Tradelink Pvt Ltd and Noticee No. 4 along with counterparty buyers namely, Noticee No. 3, Western Fincap Limited, and Ultra Tech Products Private Limited created artificial/fictitious volume and gave a false and misleading appearance of trading in the scrip of CCL in order to provide exit to the major net sellers through nongenuine trades in the illiquid scrip of CCL. On....
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....d major net sellers through non-genuine trades in the illiquid scrip of CCL, thereby allegedly violating the provisions of Sections 12A(a), (b), (c) of SEBI Act and Regulations 3(a), (b), (c), (d) and 4(1), 4(2)(a) of PFUTP Regulations." ALLEGED VIOLATION OF SECTION 12A(a), (b), (c) OF SEBI ACT, READ WITH REGULATIONS 3(a), (b), (c), (d) and 4(1), 4(2)(a) and 4(2)(e) OF PFUTP REGULATIONS BY NOTICEE 5 a) "SEBI observed that the trades carried out by Noticee No. 5 had contributed Rs.17.60 to net LTP in 27 trades and Rs.19 to positive LTP in 19 positive LTP trades. In all the positive LTP trades of Noticee No.5, the buy order was placed after the sell order. The Noticee had contributed to more than 5% of positive LTP." b) "During investigation, SEBI further observed that the Noticee No. 5 contributed Rs.19 to positive LTP in 19 positive LTP trades i.e. 6.43% of market positive LTP. It was observed that in all the 18 out of 19 positive LTP trades, buy orders of only 1 share were placed by Noticee No. 5. In remaining 1 trade, buy order of only 7 shares were placed by the entity. Further, it was observed that in all 19 instances, Noticee No. 5 repeatedly placed ....
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.... of 1 share each at buy order rate above the last traded price either before the sell orders are placed by sellers or to match existing higher sell order rates, the Noticee No. 5 allegedly manipulated the scrip price." h) "...it is observed that through 20 first trades, Noticee No. 5 contributed Rs.7.99 to positive LTP which is 47.11% of his market positive LTP of Rs.16.96 (which contributed 11.03% to market positive LTP). Thus, it is alleged that the entity manipulated the price of the scrip through small orders of 1 share each." i) Noticee No. 5 had repeatedly placed orders for miniscule quantity of 1 share each at buy order rate above the last traded price to match existing higher sell order rates. Thus, in view of the aforesaid analysis of the trading pattern of Noticee No. 5 in the scrip of CCL it is alleged that trades of Noticee No. 5 were not genuine and did not serve any economic purpose but were executed to manipulate the price of the scrip to maintain and sustain a higher scrip price. It is therefore alleged that the trades of Noticee No. 5 were manipulative in nature and allegedly violated the provisions of Sections 12A(a), (b), (c) of SEBI Act and Reg....
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....o the SCN and failed to appear for the hearings or seek adjournment on the scheduled dates of hearing. Thus, I note that Noticee 4 has been granted sufficient opportunities of hearing and making submissions in the instant adjudication proceeding and it has failed to avail the said opportunities. 6. I note that Noticee 4 has neither filed any reply nor availed of the opportunity of a personal hearing despite the service of the SCN and Hearing Notices, as stated above. In this regard, it is pertinent to note that the Hon'ble Securities Appellate Tribunal ('Hon'ble SAT') in the matter of Classic Credit Ltd. vs. SEBI (Appeal No. 68 of 2003 decided on December 08, 2006) has inter-alia, held that, "...the appellants did not file any reply to the second show-cause notice. This being so, it has to be presumed that the charges alleged against them in the show cause notice were admitted by them". It is also pertinent to note that the Hon'ble SAT in the matter of Sanjay Kumar Tayal & Others vs. SEBI (Appeal No. 68 of 2013 decided on February 11, 2014), has also, inter alia, observed that: "...appellants have neither filed reply to show cause notices issued to them nor availed opportunity o....
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....- a fact that is corroborated by the fact that apart from the common number, there is no other material or evidence to indicate any connection or connivance between the parties." viii. "All our transactions have been carried out on the floor of the stock exchange. Undisputedly, in case of screen-based trading, the automated system matches orders on a price-time priority basis and hence it is not possible for anybody to have access over identity of counter party. Since counterparty identity is not displayed, one can never have any choice with whom it wants to deal or not deal." 11. "Be the case as it may, we state and assert that at no point of time were we aware of counterparty with which our transactions were matched since the transaction was executed through the normal screen-based trading system of stock exchange where matching is done by automated on-line module." ix. "The buying and selling of the said units at a particular time with the said counterparty constitutes one instance of trade. This signifies that there is exists no illegal pattern to suggest fraudulent activity. In the case of M/s PKC Commodities Ltd suggests that there are many factors ....
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....Rupees Three Thousand Only) per share, nonetheless, Noticee Nos. 2 and 3, refrained from selling the shares or reducing their shareholding in CCL. This substantiates the fact that the Noticee Nos. 2 and 3 have attempted to acquire and consolidate the shareholding in CCL. The purchase of shares made during the Investigation Period form part of this effort of consolidation of shareholding." xv. "It is further stated that the practice of the promoters of consolidating their shareholding in CCL is ongoing, as they continue to hold shares in CCL. Since March 2010 to June 2022, the Promoter & Promoter Group shareholding (which includes the shareholding of the Noticees) has increased from 13.88% to 56.55%. A copy of the shareholding pattern of the Promoter and Promoter Group, taken from the website of the BSE Limited, is annexed hereto and marked as Annexure 2" xvi. "The Investigation Report clearly stipulates that there has been no circular or reversal trading, which is also apparent from the fact that the Noticees have not made corresponding sales and continue to hold the shares of CCL even today. Further, there is only one alleged instance of alleged synchronized trad....
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....ees numbered from 1 to 4 directly or indirectly and I have no information of such persons or entities who are part of this Show Cause Notice sent by the Regulatory Office." ix. "That your claim that I am among Top 10 LTP Contributors as Buyers for price manipulation during the period June 21, 2011 to August 16, 2011 and I am surprised to know that I have been picked as among Top 10 LTP Contributors when my sum of quantity traded in the scrip is 0.00105% of total quantity of shares, i.e., 32 Qty V/s 30402 no of Shares. Therefore, the rationale of considering me as Top 10 LTP Contributors is questionable and against my understanding to know my fault, benefit availed by me and benefit passed on to others considering the regulations and its applicability against me." x. "That for the purpose of your inquiry for the period between August 17, 2011 to January 01,2012, your office again considered me as among Top 10 LTP Contributors as Buyers for price manipulator for the period between August 17, 2011 to January 01,2012 for the traded quantity of 59 shares as against the total quantity of 69136 which is not even 0.00085% of traded quantity, which is again against my unde....
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....ies listed or proposed to be listed on a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of this Act or the rules or the regulations made thereunder; (b) employ any device, scheme or artifice to defraud in connection with issue or dealing in securities which are listed or proposed to be listed on a recognised stock exchange; (c) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognised stock exchange, in contravention of the provisions of this Act or the rules or the regulations made thereunder; Relevant provisions of PFUTP Regulation: 3. Prohibition of certain dealings in securities No person shall directly or indirectly- (a) buy, sell or otherwise deal in securities in a fraudulent manner; (b) use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention ....
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.... completed on March 08, 2022 and adjudication proceedings in the matter were approved on the same date. Subsequently, vide Order dated March 15, 2022, the undersigned was appointed Adjudicating Officer for commencing adjudication proceeding against the Noticees. Thereafter, the SCN in the matter was issued on April 04, 2022. Thus, considering the above chronology, I find that SCN in the present proceeding has been issued within a reasonable period of time and there has been no delay in issuance of SCN. 12. After issuance of SCN, adequate opportunities were granted to Noticees to represent their cases and replies were also received from Noticees with regard to the allegations against them in the SCN. Further, looking at the material available at the disposal of the Noticees, I note that Noticees were provided with all the relevant material, to enable them to form a definite defense to the charges in the SCN, which the Noticees 1-3 and Noticee 5 have provided through their respective replies. Hence, I note that the said Noticees have failed to show that, how delay, if any, in the instant matter has prejudiced their interest. Therefore, I do not find any merit in the contention rai....
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....ds at BSE and created a misleading appearance of trade. In this regard, from the BSE PriceVolume data pertaining to the scrip of CCL, I observe the following movement in the Price and Volume of the said scrip at BSE before, during and after the IP: TABLE- A Period Date Price/Date & Vol Opening Price/ volume on 1st trade day of the period Closing price/Vol on last trade day of the period Low price/ Vol during the period High price/ Vol during the period Avg. no. of shares traded daily during the period Total traded quantity Pre-IP 20/04/2011 to 20/06/2011 Price Rs.39.60 Rs.30.75 Rs.30 Rs.41.55 1009.26 43398 Date 20.04.2011 20.06.2011 20.06.2011 04.05.2011 Vol 40 889 889 1147 Patch 1 21/06/2011 to 16/08/2011 Price Rs.27.15 Rs.50.7 Rs.27.15 Rs.57.55 4269.28 170771 Date 21.06.2011 16.08.2011 21.06.2011 11.08.2011 Vol 952 1866 952 13129 Patch 2 17/08/2011 to 30/12/2011* Price Rs.10.1 Rs.15.7 Rs.10.1 Rs.19.75 19897.6 1810681 Date 17.08.2....
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....Kumar. Further, it is observed from KYC of Rama Anil Gupta Associates Pvt Ltd that Anil Kumar was the proprietor of Anil Prahalad & Co. which was the CA for Noticee 3 and his firm had provided networth certificate dated 17.08.2011 to Noticee 3. 2 Anil Kumar ADQPK7840M From KYC of Rama Anil Gupta Associates Pvt Ltd, Noticee 2 (Promoter of CCL) and Anil Kumar (Promoter and Director of CCL and Noticee 2), it is observed that the three entities share common mobile number 9810217030. CAF obtained from TSP shows the mobile number belongs to Anil Kumar. Further, it is observed from KYC of Rama Anil Gupta Associates Pvt Ltd that Anil Kumar was the proprietor of Anil Prahalad & Co. which was the CA for Noticee 3 and his firm had provided networth certificate dated 17.08.2011 to Noticee 3 3 Western Fincap Limited AABCW1401H Ajay Pratap Singh was director in Western Fincap Limited from 31.08.2011 till amalgamation of Western Fincap Limited with Noticee 2 (promoter of CCL) on May 21, 2014 vide Order passed by Hon'ble Delhi High Court.. Western Fincap Limited and Ultra Tech Products Private Limited share common email ID [email protected]. 4 Ultra &nb....
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....er 9748150083. 8 Suktara Tradelink Pvt Ltd AAMCS5366G 9 Kansabati Tradecom Pvt. Ltd. AAECK0758J Entities at Sl.No. 7, 8 & 9 are connected by common mobile number 9748150083. 10 Blossom Dealcom Private Limited AADCB9903B Entities at Sl.No 5 & 10 have common director Gopal Sonker. 18. In this connection, charts depicting the relationship among the suspected entities, including Noticees, within the respective groups and/or with the promoters of CCL are given below: 19. I note that in their submissions, Noticees 1-3 and Noticee 5 have denied that they are connected entities. Noticee 4 has not made any submissions in respect of its alleged connection to Noticees 1-3. I further note that Noticees 1-3 have contended in their common reply that SEBI has failed to establish any connection or collusion between Noticees and the other trading entities regarding trading in the scrip of CCL. In support of their contention they have placed reliance upon the judgement of Hon'ble SAT in Jagruti Securities Pvt. Limited vs. SEBI (Appeal No. 102 of 2006; decided on October 27, 2008) and SPJ Stock Brokers Private Limited v.....
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....tended that Noticee 1 was approached by Mr. Ajay Pratap Singh, as he wished to open a demat account for Noticee 1 and the phone number of Noticee 1 was mistakenly used for the purpose of opening the demat account from which trades were executed on behalf of Noticee 3. I have also considered the aforesaid contention of Noticees 1-3 and observe that Noticees 1-3 have not produced any evidence to corroborate their aforesaid contentions. I also observe that had the phone number of Noticee 1 been mistakenly used as claimed by the said Noticees, Noticee 1 would have taken steps to ensure that the concerned broker rectified its records. However, Noticee 1 has not produced any evidence of any communication with the concerned broker in this regard. It may not be out of place to presume that Noticee 1 would have received information through phone calls or SMS in relation to the trades executed by Noticee 3 due to the presence of his phone number in the latter's KYC. I also note that it cannot be mere coincidence or mistake that Noticee 3, Noticee 2 and Noticee 1 shared a common mobile number during the IP. Therefore, I am of the view that Noticee 1 was aware of the trades executed by N....
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....e certain entities including Noticees 2, 3 and 4, which constituted top 10 buy and sell clients based on the trades executed by them in the scrip at BSE. The trades of top 10 buy and sell clients at BSE during the investigation are summarized as under: Table- C Buy Client Pan Buy Client Name Gross Buy % of Gross Buy to Mkt Vol Sell Client PAN Sell Client Name Gross Sell % of Gross Sell to Mkt. Vol. AABCF3000H Rama Anil Gupta Associates Private Ltd. (formerly known as Fort Fertichem Sales Private Limited)*# 597495 30.15% AADCT3699L Tejaswani Tradecom Private Limited* 307900 15.54% AABCW1401H Western Fincap Limited* 177600 8.96% AADCB9903B Blossom Dealcom Private Limited* 168110 8.48% AABCU3467H Ultra Tech Products Private Limited* 79500 4.01% AAECC0401A Chaturbhuj Marketing Private Limited* 102600 5.18% AEAPK1314B Arun Kumar 75875 3.83% AADCT2680H Terminal Vincom Private Limited* 99500 5.02% AAKCS1813N Shreya Vyapaar Private Limited 70882 3.58% AAMCS5366G Suktara Tradelink Pvt Ltd* 87031 4.39% AACCV2637B Vandana Cloth Centre Pvt Ltd ....
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....1 794080 1.06% 41.13% 40.07% 25. I observe from the table above that the 6 entities, namely, Tejaswani Tradecom Pvt Ltd, Blossom Dealcom Private Limited, Chaturbhuj Marketing Pvt Ltd, Terminal Vincom Pvt Ltd, Suktara Tradelink Pvt Ltd and Noticee 4 offloaded their shares during the post-split period/Patch 2 of the IP. The respective sell quantity of the said major net sellers during Patch 2 of the IP and corresponding buy quantity from major net buyers are summarized as under: Table- E Sr. No. Sellers* Total sell quantity by Sellers (A) Buyers* Total Shares bought by entities (B)=(1)+(2)+(3) % of total Buy Qty to Sell Qty %(B)/(A) Rama Anil Gupta Associates Private Limited (1) Western Fincap Limited (2) Ultra Tech Products Private Limited (3) 1 Tejaswani Tradecom Private Limited 3,07,900 2,48,879 - - 2,48,879 80.83% 2 Blossom Dealcom Private Limited 1,68,110 47,000 95,748 24,850 1,67,598 99.70% 3 Chaturbhuj Marketing Private Limited 1,02,600 52,600 41,350 8,650 1,02,600 100% 4 Terminal Vincom Private Limited 99,500 99,500 - - ....
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.... Sell Client with Buy Client wherein buy and sell orders were placed within 5 minute s of each other Total Volume of Sell Client (A) Total Volume of Buy Client (B) Total Vol of trades between Sell and Buy Client (C) Vol of Trades wherein buy and sell orders were placed within 5 minutes of each other (D) % (D)/(A) % (D)/(B) TEJASWAN I TRADECOM PRIVATE LIMITED RAMA ANIL GUPTA ASSOCIATES PRIVATE LIMITED 158 134 117 3,07,900 5,97,4 95 2,48,87 9 2,33,37 9 75.80% 39.06% Table-9b: Break-up of 117 trades between Tejaswani Tradecom Private Limited and Noticee 3 Details of trades wherein buy and sell order were placed No of Trades Vol of Trades between buy & sell client (I) % of (I) to Mkt Vol (Mkt Vol-1981452 shares) % of (I) to Sell Client's Total Vol (Sell Vol-307900) % of (I) to Buy Client's Total Vol (Buy Vol-597495) Within 1 minute of each other 69 1,49,679 7.55% 48.61% 25.05% Within 2 minutes of each other 21 32,000 1.62% 10.40% 5.35% Within 3 minutes of each other 18 29,200 1.47% 9.48% 4.89% Within 4 minutes of each other ....
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.... 9,633 0.49% 5.73% 1.13% Total (within 5 minutes) 80 1,62,598 8.21% 96.72% 19.03% Total (5 and more than 5 minutes) 1 5,000 0.25% 3.00% 0.60% Grand Total 81 1,67,598 8.46% 99.72% 19.63% Table-11a: Break-up of 44 trades between Chaturbhuj Marketing Private Limited and top 3 buyers namely, Noticee 3, Western Fincap Limited and Ultra Tech Products Private Limited Sell Client Buy Client Total No of Trades of Sell Client No of trades of Sell Client with Buy Client No of trades of Sell Client with Buy Client wherein buy and sell orders were placed within 3 minutes of each other Total Volume of Sell Client (A) Total Volume of Buy Client (B) Total Vol of trades between Sell and Buy Client (C) Vol of Trades wherein buy and sell orders were placed within 3 minutes of each other (D) % (D)/(A) % (D)/(B) Chaturbhuj Marketing Private Limite....
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....Client Total No of Trades of Sell Client No of trades of Sell Client with Buy Client No of trades of Sell Client with Buy Client wherein buy and sell orders were placed within 4 minutes of each other Total Volume of Sell Client (A) Total Volume of Buy Client (B) Total Vol of trades between Sell and Buy Client (C) Vol of Trades wherein buy and sell orders were placed within 4 minutes of each other (D) % (D)/(A) % (D)/(B) Suktara Tradelink Private Limited RAMA ANIL GUPTA ASSOCIATES PRIVATE LIMITED 55 51 43 87,031 5,97,495 65,445 62,425 71.73% 10.45% Table-13b: Break-up of 43 trades between Suktara Tradelink Private Limited and Noticee 3 Details of trades wherein buy and sell order were placed No of Trades Vol of Trades (I) % of (I) to Mkt Vol (Mkt Vol 1981452 shares) % of (I) to Sell Client's Vol (Sell 87031) Total Vol- % of (I) to Buy Cl....
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.... 2700 0.14% 5.40% 0.32% Total (within 3 minutes) 16 49,999 2.52% 99.99% 5.85% Total (3 and more than 3 minutes) - - - - - Grand Total 16 49,999 2.52% 99.99% 5.85% 29. I observe from the BSE price volume data, order log and trade log and the above tables that although the scrip was illiquid, sell orders of major net sellers and buy orders of top 3 buyers for large quantities were placed during Patch 2 of the IP either immediately or within five minutes of each other. I also observe from the aforementioned tables that the buy and sell orders were repeatedly placed at the same time or within 5 minutes of each other by the major net buyers namely, Noticee 3, Western Fincap Limited and Ultra Tech Products Private Limited and the major net sellers namely, Tejaswani Tradecom Pvt Ltd, Blossom Dealcom Private Limited, Chaturbhuj Marketing Pvt Ltd, Terminal Vincom Pvt Ltd, Suktara Tradelink Pvt Ltd and Noticee 4 respectively. I am of the view that the aforesaid trading pattern in Patch 2 of the IP demonstrates a concerted attempt by the aforesaid major net sellers and t....
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....d with the aforesaid major net sellers including Noticee 4, with the intention to manipulate the trading volume of the scrip of CCL upwards at BSE during Patch 2 of the IP and thus induce liquidity in the scrip. 31. I further note that the entities, Western Fincap Limited and Ultra Tech Products Private Limited, were amalgamated with Noticee 2, promoter of CCL, vide order passed by Hon'ble High Court of Delhi on May 21, 2014. The applicable Scheme of Amalgamation was approved and made effective from April 01, 2012. Clause 2.13 of Part-II of Transfer and Vesting of Undertaking in the aforesaid Scheme of Amalgamation states that "With effect from the Appointed Date, Transferee Company shall bear the burden and the benefits of any legal or other proceedings initiated by or against Transferor Companies". Therefore, I observe that Noticee 2 is liable for the violations committed by Ultra Tech Products Private Limited and Western Fincap Limited. 32. From the price volume data, BSE order log and trade log, I note that during the period from June 21, 2011 to August 16, 2011 ("Patch 1 of the IP"), the price of the scrip of CCL at BSE opened at Rs. 27.15, reached a high of Rs. 57.55, i....
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.... the execution of the aforesaid positive LTP trades. Further, I observe that in all 19 instances, Noticee 5 repeatedly placed buy orders to match already existing orders with an order rate higher than LTP and negligible quantity in all instances. I also observe that the aforesaid 19 positive LTP trades were miniscule trades which were the result of buy orders placed by Noticee of only one share each and one buy order of 7 shares. The details of the aforesaid trades are given as under: Table - 16 Buyer Name No of trades (LTP>0) Positive LTP contribution when buy order qty was of 1 share only Positive LTP contribution when buy order qty was between 2-10 shares Positive LTP contribution when buy order qty was more than 10 shares Total positive LTP contribu tion (Rs.) % of positive LTP to total mkt positive LTP % contribution to total mkt positive LTP through small orders (1-10 shares) No of trades Positiv e LTP contri bution (Rs.) No of trades Positive LTP contribu tion (Rs.) No of trades Positive LTP contribu tion (Rs.) Sayuj &nbs....
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....rwal 1.44 3014 10 1.54 1011 4 -0.10 1001 2 1002 4 1.00% AAGPA7488J Jankidevi Giriraj Kishore Agarwal 1.32 1 1 1.32 1 1 0.00 0 0 0 0 0.86% ACHPA6417E Reena Agrawal 1.24 10000 20 1.24 316 2 0.00 0 0 9684 18 0.81% Total 34.51 69136 217 38.65 19540 102 -4.14 7003 24 42593 91 25.13% Market Total -37.05 1810681 2916 153.80 328185 586 -190.85 454651 625 1027845 1705 100.00% 37. I observe from the table above that the 59 buy trades of Noticee 5 had contributed Rs.14.71 to net LTP in the scrip and his 40 buy trades had contributed positive LTP of Rs.16.96 in the scrip, i.e. 11.03% of market positive LTP. I also observe from the BSE order log and trade log that in all the 40 positive LTP trades of Noticee 1, only 1 share was traded. I further observe that in 5 instances, Noticee 5 placed buy orders shortly before the sell orders which resulted in buy trades contributing Rs. 2.4 to the LTP i.e. 1.56% of market positive LTP in the scrip. I observe from the order lo....
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.... Ravindra Deoo Mirjolkar -2.40 850 4 0.00 AAUPF3148A Annu Fogla 0.56 950 3 0.81 BZSPS5914F Ramanand Sharma 0.13 1500 3 0.33 AEAPK1314B Arun Kumar -0.30 400 2 0.00 AACCV2637B Vandana Cloth Centre Pvt Ltd 0.00 1515 2 0.00 AAOPA1852A Alka Agarwal 0.05 189 1 0.05 ANBPS3002L Paresh Dhirajlal Shah 0.65 1 1 0.65 Total 1.04 15918 49 9.99 Market total -46.27 25333 91 19.10 41. I observe from the table above that through 20 first trades, Noticee 5 contributed Rs.7.99 to positive LTP which is 47.11% of his market positive LTP of Rs.16.96 (which contributed 11.03% to market positive LTP). Thus, I observe that Noticee 5 had repeatedly placed orders for miniscule quantity of 1 share each at buy order rate above the LTP to match existing higher sell order rates and that the trades resulting from such small orders of Noticee 5 were manipulative in nature as they did not serve any legitimate or rational economic purpose but were executed to influence the price of the scrip upwards. 42. Thus, f....
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.... am of the view that such significant increase in the price and trading volume of the scrip can be attributed to the manipulative trading pattern of Noticees 1 - 4 at BSE during the IP. On basis of the foregoing analysis of the trading pattern of the Noticees, I am of the view that as a result of the aforesaid trading pattern of Noticees 1 to 4, investors were induced into trading in the scrip, based on a misleading impression of high liquidity and trading volume in the scrip. Therefore, I find that Noticees 1 to 4 have indulged in creation of misleading appearance of trade in the scrip of CCL. 44. I have perused the contentions filed by the Noticees 1-3 and Noticee 5. I note that Noticees 1-3 and Noticee 5 have not disputed the aforesaid findings on the trading pattern adopted by them. However, Noticees 1-3 have denied the allegation that their trades were nongenuine and that their trades were manipulative and created a false or misleading appearance of trading in the scrip of CCL. In this regard, Noticees 1-3 and Noticee 5 have contended that their respective trades were executed in the normal course of trading on the floor of the exchange and in case of screen-based trading, ....
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....ch 2010 to June 2022, the Promoter & Promoter Group shareholding (which includes the shareholding of the Noticees) has increased from 13.88% to 56.55%. Noticees 1-3 have further stated that in November 2014, the share price of CCL reached over Rs. 3,000 per share, nonetheless, Noticees 2 and 3 refrained from selling the shares or reducing their shareholding in CCL and the practice of the promoters of consolidating their shareholding in CCL is ongoing, as they continue to hold shares in CCL. In this regard, I find that Noticees 1 to 3 have placed reliance upon the shareholding pattern of the Promoter and Promoter Group, taken from the website of the BSE Limited. Noticee 13 have stated that this substantiates the fact that the Noticees 2 and 3 have attempted to acquire and consolidate their shareholding in CCL and the purchase of shares made during the Investigation Period form part of this effort of consolidation of shareholding. I note that Noticees 1 to 3 have not produced any evidence to in support of their contention that they have not sold any shares of CCL. Be that as it may, it has been established that the trades attributed to Noticees 1 to 3 were manipulative in nature and ....
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....ing appearance of trading in the scrip of CCL. In view of the foregoing observations, I find that the judgements relied upon by Noticees 1 to 3 are not relevant to the instant proceeding. 47. At this juncture, I find it pertinent to discuss the scope and ambit of PFUTP Regulations. I note that Regulations 3(a)-(d) of the PFUTP Regulations, inter alia, prohibit employment of any manipulative/deceptive device, scheme, or artifice to defraud in connection with dealing in securities; engaging in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with dealing in securities. Regulation 4(1) of the PFUTP Regulations provides for prohibition on indulging in fraudulent or unfair trade practices in securities. Regulations 4(2)(a) and (e) of the PFUTP Regulations provide that an act in the course of dealing in securities shall be deemed to be fraudulent or an unfair trade practice if it involves indulging in an act that creates a false or misleading appearance of trading in the securities market or any act or omission which amounts to manipulation of the price of a security. I also find it pertinent to note that in cases o....
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....ays alone etc. is not sufficient to rebut the findings in the impugned order... In such matters, the preponderance of probability based on the totality of circumstances, as held by the Apex Court in the matter of Kishore R. Ajmera (2016) 6 SCC 368 squarely applies. The orders in Jayprakash Bohra (Supra) and Shri Lakhi Prasad Kheradi (Supra) also apply the same ratio." 48. I further refer to the judgement of Hon'ble SAT in the matter of Shri Lakhi Prasad Kheradi vs. SEBI (Appeal No. 232 of 2017; Order dated June 21, 2018) wherein it was held that, "As held by the Apex Court in the case of SEBI V/s Kishore R. Ajmera reported in (2016) 6 SCC 368, in the absence of direct evidence, by taking into account immediate and proximate facts and circumstances surrounding the events on which the charges/allegations are founded it is open to an AO to arrive at a reasonable conclusion that the trade executed were manipulated trades. In the facts of the present case, in our opinion, no fault can be found with the decision of the AO that the trades executed by the appellant were manipulative trades and hence, the appellant was guilty of violating the SEBI Act and the PFUTP Regulations." Thus, pl....
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....even as regular traders or jobbers a genuine party does not put buy / sell order for one share on thousands of occasions when the system was showing much larger number of orders on the other side...Therefore, it is the stand of the learned counsel for SEBI that the impugned order clearly brings out the complete details; how the price of the scrip of Nutraplus was raised in Patch-1 and Patch-4 and how the appellants by placing large number of single share orders manipulated the price and created positive LTP... we are of the considered view that the pattern of trading conducted by the appellants clearly establishes an attempt to manipulate the price of the scrip of Nutraplus. While it can be argued that no law prevents a trader from placing orders for one share, placing such orders thousands of times repeatedly, as in the instant case, is clearly manipulative in nature... A few such trades occasionally may not fall within the ambit of such manipulation as under Section 12A(a), (b), (c) of SEBI Act, 1992 and the PFUTP Regulations. But by no stretch of imagination we can extend that benefit of doubt to the appellants herein who have indulged in such single share trades a large number ....
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....cement would be required... To attract the rigor of Regulations 3 and 4 of the 2003 Regulations, mens rea is not an indispensable requirement and the correct test is one of preponderance of probabilities... The inferential conclusion from the proved and admitted facts, so long the same are reasonable and can be legitimately arrived at on a consideration of the totality of the materials, would be permissible and legally justified. 52. Based on the foregoing analysis of connection and trading pattern as well as placing reliance on the aforesaid judgements, I find that by repeatedly placing buy and sell orders substantially at the same time, as part of a concerted attempt to match trades between themselves by placing substantial quantity of orders, Noticees 1-4 had collectively indulged in a common manipulative strategy, which led to creation of misleading appearance of trade in the scrip of CCL at BSE, which is tantamount to fraud and has induced investors to trade in the illiquid scrip of CCL. I also find that the trading pattern of Noticee 5 in the scrip of CCL shows that Noticee 5 manipulated the price of the scrip upwards during the IP through miniscule trades. 53. I furthe....
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....'s name is struck-off from the RoC list and the company is also dissolved, it is a non-existing company and the adjudication proceedings against the non-existing company is thus a nullity. In this context, I would like to rely upon the judgment of the Hon'ble Delhi High Court in the case of Commissioner of Income Tax (CIT) vs. Vived Marketing Services (P) Ltd., ITA NO. 273/2009 dated September 17, 2009 in which it was held that - "When the Assessing Officer passed the order of assessment against the respondent company, it had already been dissolved and struck off the register of the Registrar of companies under Section 560 of the Companies Act. In these circumstances, the Tribunal rightly held that there could not have been any assessment order passed against the company which was not in existence as on that date in the eyes of law it had already been dissolved. We are of the opinion that the view taken by the Tribunal is perfectly valid and in accordance with law." Further, I note that Black's Law Dictionary explains 'dissolution' as termination or winding up. It further clarifies that the dissolution of a corporation is the termination of its legal existence. Strike off essential....
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.... into account by the adjudicating officer. Section 15J - While adjudging quantum of penalty under section 15-I, the adjudicating officer shall have due regard to the following factors, namely:- (a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; (b) the amount of loss caused to an investor or group of investors as a result of the default; (c) the repetitive nature of the default. 61. In view of the charges as established, the facts and circumstances of the case, the quantum of penalty would depend on the factors listed in Section 15J of SEBI Act. In the instant case, having regard to the factors listed in Section 15J of SEBI Act, it is noted that the material available on record does not demonstrate any quantifiable gain or unfair advantage accrued to Noticees 1-3 and Noticee 5 or the extent of loss suffered by the investors as a result of the default. I also observe that there are no other records to show repetitive defaults of a similar nature by Noticees 1-3 and Noticee 5. However, it has been established that the said Noticees 1-3 had indulged in manipulation of volume and cr....
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....0/- (Jointly and Severally) 2. Tanvi Fincap Private Limited 3. Rama Anil Gupta Associates Pvt. Ltd. 5. Sayuj Pallithazath Arumugham Regulations 3(a), (b), (c), (d) and Regulations 4(1) and 4(2)(e) of PFUTP Regulations Rs. 5,00,000/- (Individually) 65. Noticees 1-3 and Noticee 5 shall remit/pay the said amount of penalty within 45 days of receipt of this order either by way of Demand Draft in favour of "SEBI - Penalties Remittable to Government of India", payable at Mumbai, OR through online payment facility available on the website of SEBI, i.e., www.sebi.gov.in on the following path, by clicking on the payment link: ENFORCEMENT -> Orders -> Orders of AO -> PAY NOW. In case of any difficulties in payment of penalties, said Noticees may contact the support at [email protected]. 66. The Noticees 1-3 and Noticee 5 shall forward said Demand Draft or the said confirmation of e-payment made in the format as given in the table below which should be sent to "The Division Chief, EFD - DRA - 5, Securities and Exchange Board of India, SEBI Bhavan, Plot no. C- 7, "G" Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051....