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TMI Blog2013 (12) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... change of beneficial ownership or is executed to create false volumes resulting in upsetting market equilibrium etc. - save and except recording that trades executed by appellant with one group were synchronized, no other particulars are set out in the impugned order. Neither names of persons forming group with whom appellant had traded nor their connection with appellant has been set out in the impugned order. Unless some connection between appellant and counterparties with whom appellant traded is established, it is difficult to hold that trades in question were carried out with a view to manipulate market by creating false volumes resulting in upsetting market equilibrium. Appellant had stated that while carrying out jobbing transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Stock-Brokers and Sub-Brokers) Regulations, 1992 ('Broker Regulations' for short) has been imposed against appellant. 2. Appellant is a private limited company incorporated under the provisions of Companies Act, 1956 and is primarily engaged in the business of stock broking and investment. 3. On noticing that in the scrip of Adani Exports Ltd. there were huge spurt in volumes and wide fluctuations in price during the period from July 9, 2004 to January 14, 2005 ('first period' for short) and August 8, 2005 to September 9, 2005 ('second period' for short) Securities and Exchange Board of India ('SEBI' for short) had initiated investigation to look into reasons for price-volume fluctuations. Fluctuation in price noticed during the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred that all those trades were manipulated. By relying on decision of this Tribunal in case of KSL Industries Ltd. v. SEBI in Appeal no. 9 of 2003 decided on September 30, 2003, counsel for appellant submitted that in the absence of any evidence on record to show that trades in question were executed with ulterior motives, penalty should not be imposed solely on the ground that most of the trades were found to be synchronized. 8. Mr. Seksaria, learned counsel appearing on behalf of respondent, on other hand submitted that it is a matter of record that appellant was trading in huge volumes, out of which synchronized trades for 77,99,480 shares of Adani Exports Ltd. were executed by appellant with one group during first period and synch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prevailing in the market etc. Reliance is also placed on decision of Bombay High Court in SEBI v. Cabot International Capital Corpn. [2004] 51 SCL 307 decision of this Tribunal in Appeal no. 171 of 2011 (Sparkline Mercantile Co. Pvt. Ltd. vs. SEBI) decided on January 16, 2012 and Appeal no. 162 of 2012 (Shraddha Stock Broking Pvt.Ltd. vs. SEBI) decided on December 3, 2012 in support of contention that mens rea is not essential element for imposing penalty under SEBI Act and once appellant is found to be guilty of violating regulatory framework, appellant cannot claim exoneration on ground that no action has been initiated by SEBI against another person who has been found guilty for violating the Regulations. 11. We have carefully consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the trades in question were executed with a view to manipulate the scrip. In absence of any circumstantial evidence to suggest that synchronized trades were executed for purpose of upsetting market equilibrium or to manipulate market, it cannot be inferred that appellant was guilty of violating PFUTP Regulations or Broker Regulations. 15. Fact that appellant had stated that while carrying out jobbing transactions some transactions carried out by appellant could have been matching, it cannot be inferred that trades effected by appellant were manipulated. In a screen based trading executed at stock exchanges, it is possible that some persons forming a group in connivance with each other may execute trades in a scrip with a view to create ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Ketan Parekh (supra) is misplaced. In that case evidence on record clearly demonstrated that appellant therein had indulged in circular trading and therefore he was held guilty. In this case there is no evidence on record to show that synchronized trades were executed with a view to create artificial volume in the scrip and thereby disturb market equilibrium. Therefore, decision of this Tribunal in Ketan Parekh's case (supra) has no relevance to present case. Similarly decision of this Tribunal in case of Sparkline Mercantile Co. (P.) Ltd. (supra) is also distinguishable on facts as in that case, connection between parties was established whereas, in the present case, there is nothing on record to suggest even remotely that appellant was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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