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2021 (12) TMI 1523 - AT - SEBIPrice manipulation in the scrip - Order passed by the Whole Time Member directing the appellants to disgorge an amount towards wrongful gains alongwith interest at the rate of 12% per annum till the date of payment and further directing that the interest for the period 30th June 2016 till the date of the impugned order dated 30th September 2019 - several corporate announcements were made with a view to increase the price of the scrip of the Company so that the promoter and promoter group entities could reduce their holding at a profitable price HELD THAT - The contention that there was a clear direction in the earlier order of the Tribunal to calculate the acquisition price from the date when PK started selling the shares is wholly misconceived. The Tribunal in paragraph 16 of its order dated 30th June 2016 had only made an observation and not a direction. The contention that no interest is payable with effect from 12th March 2007 and that only interest if any payable after 45 days from the date of the order dated 30th September 2019 appears to be attractive but said contention cannot be sustained. In view of this decision of the Supreme Court in Dushyant Dalal 2017 (10) TMI 149 - SUPREME COURT the contention of the appellant cannot be sustained. For the reasons stated aforesaid the appeal is partly allowed. The WTM is directed to calculate the disgorgement amount taking the acquisition price as Rs.5.34/- per share as on 3rd October 2006 and the sale price at Rs.18.98/- per share. The calculation shall be made by the WTM within four weeks from today alongwith interest. We find that by an interim order of this Tribunal dated 25th October 2019 the appellant was directed to deposit a sum of Rs.2 crore which has been deposited. The said amount shall be adjusted and the balance amount so calculated and intimated to the appellant shall be deposited within four weeks thereafter. Misc. application is disposed of accordingly.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS Relevant legal framework and precedents: The legal framework involves the SEBI Act and the powers of SEBI to order disgorgement of wrongful gains made through fraudulent and manipulative practices in the securities market. The precedents include the Tribunal's previous order dated 30th June 2016 and the Supreme Court's decision in Dushyant Dalal vs. SEBI regarding the power to charge interest. Court's interpretation and reasoning: The Tribunal interpreted that the acquisition price should reflect the actual price at which the appellants purchased the shares, rather than a theoretical price. The Tribunal found that the WTM's determination of the acquisition price as Rs.4.33 per share based on the opening price on 3rd October 2006 was erroneous. Instead, the Tribunal accepted the appellants' argument that the actual purchase price was Rs.5.34 per share. Regarding interest, the Tribunal referred to the Supreme Court's decision in Dushyant Dalal vs. SEBI, which clarified that SEBI has the power to charge interest from the date of the cause of action under the Interest Act, 1978. Therefore, the Tribunal rejected the appellants' argument that interest should only accrue from the date of the impugned order. Key evidence and findings: The key evidence included the trading records showing the purchase of shares by the appellants on 3rd October 2006 at Rs.5.34 per share. The Tribunal found that this evidence supported the appellants' contention regarding the acquisition price. Application of law to facts: The Tribunal applied the principles from the Supreme Court's decision to affirm the legality of charging interest from 12th March 2007. It also applied the principle of determining the acquisition price based on actual purchase transactions rather than theoretical or opening prices. Treatment of competing arguments: The Tribunal considered the appellants' argument that the acquisition price should be based on the date when PK started trading, but found this argument unconvincing as it was only an observation in the previous order, not a directive. The Tribunal also addressed the appellants' reliance on other cases, distinguishing them based on the specific legal context and facts. Conclusions: The Tribunal concluded that the acquisition price should be Rs.5.34 per share, and the WTM should recalculate the disgorgement amount based on this price. The Tribunal upheld the WTM's decision to charge interest from 12th March 2007. SIGNIFICANT HOLDINGS The Tribunal held that the acquisition price for calculating unlawful gains should be based on the actual purchase price of Rs.5.34 per share on 3rd October 2006, rather than the opening price of Rs.4.33 per share. The Tribunal affirmed the principle that SEBI has the power to charge interest from the date of the cause of action, as established by the Supreme Court in Dushyant Dalal vs. SEBI. The final determination was to direct the WTM to recalculate the disgorgement amount using the correct acquisition price and to maintain the interest calculation from 12th March 2007. The Tribunal ordered the WTM to complete the recalculations within four weeks and adjust the amount already deposited by the appellants.
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