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TMI Blog2014 (1) TMI 1652X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of synchronized trades to appellant nos. 1 to 6, mostly on the same day or immediately thereafter within a few days. Nobody has disputed these transactions either before us or before the learned AO. Such reversal of the off-market transactions in a quick succession through synchronized on-market transactions to the same set of entities in almost similar fashion within a very short span of time clearly points out that all the entities are connected to each other in some way. We hold that the story advanced by the appellant nos. 1 to 6 regarding borrowing of loan from entities no. 7 to 21 is misconceived, untenable on facts and hence rejected.In view of the above discussion of law and facts, we do not find any merit in the case of the appellants and the appeals are liable to be dismissed. Powers of SEBI - SEBI as Regulator has ample powers and discretion to take a subjective decision in respect of certain entities on the basis of availability of sufficient evidence against them. At the same time, SEBI is also empowered to take a subjective decision, in a given case, not to take or even drop action against certain other entities in the same case if it is satisfied, on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of artificial volume and misleading appearance of trading in the said scrip. They were found to have executed synchronized trades at incrementally higher prices to create higher price rise in the shares of RUNL. These 21 entities are as under :- 1. Scope Vyapar Pvt. Ltd. 2. Signet Vinimay Pvt. Ltd. 3. Sankalp Vicom Pvt. Ltd. 4. Runicha Mercahnts Pvt. Ltd. 5. Anushree Trade Link Pvt. Ltd. 6. Swaranganga Trading Pvt. Ltd. 7. Shurbhi 8. Anushikha Investments Pvt. Ltd. 9. Vibgyor Financial Services Pvt. Ltd. 10. Amrits Sales Promotion Pvt. Ltd. 11. Sakhi Barter Pvt. Ltd. 12. Vinod Agarwal 13. Vikash Viniyog Pvt. Ltd. 14. Pawan Bhimsaria 15. BNK Investment Services Pvt. Ltd. 16. D M Trading Pvt. Ltd. 17. Norflox Vincom Pvt. Ltd. 18. Swagatam Marketing Pvt. Ltd. 19. J. V. Stock Broking Pvt. Ltd. 20. Rohini Mercantiles Pvt. Ltd. 21. Mangalchand Property & Investment Pvt. Ltd. 4. From records, it is noted that Noticees no. 1 to 6; 15, 16 and 19 have approached this Tribunal (i.e. 9 Noticees in all in the present 9 appeals). Noticee nos. 7, 9, 10, 11, 12, 14, 18 and 21 (i.e. 8 Noticees in all) have already paid the penalty of ₹ 3 lac each imposed on them by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order in question. It is further argued by Shri Joby Mathew on behalf of these six appellants that merely because the appellant no. 1 and its group entities had transferred some shares of RUNL by way of off-market transactions to other entities, it cannot be concluded that they are all related to the appellant; or that they are forming a group. It is also contended that off-market transactions do not affect the price and volume of the shares. Moreover, the transactions by the appellants and its group entities did result in delivery, therefore, the finding that there was no meaningful change in ownership by the respondent in the impugned order is without any basis. 7. The above arguments of Shri Joby Mathew, learned counsel have been adopted by Shri S. K. Jain, learned counsel for the appellant in the case of D. M. Trading Pvt. Ltd. (Appeal no. 94 of 2013) as well as by Shri Ankur Kumar, learned counsel for the appellants in appeal nos. 107 and 108 of 2013 i.e. M/s. J V Stock Broking Pvt. Ltd. and M/s. BNK Investment Services Pvt. Ltd. respectively. Shri S. K. Jain, however, submits that all off-market transactions are not illegal. In this context, Shri Jain submits that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connected to each other in some way. 10. Not only this, appellant nos. 1 to 6 have specifically pleaded that they wanted to raise some funds, therefore, they transacted with the remaining entities of the group. This plea has been advanced on behalf of the appellant nos. 1 to 6. However, the remaining Noticees and / or appellants have contended that they had not extended any loan or fund to these appellants. The contention of the appellant nos. 1 to 6 that they took a loan from other Noticees and / or appellants is contradictory and clearly vitiated by the specific stand taken by the appellants in Appeal nos. 94, 107 and 108 of 2013. These three appellants have drawn our attention towards bill dated November 18, 2009 which shows that Signet Vinimay Pvt. Ltd., appellant in appeal no. 192 of 2013 (one of the six appellants) had received payment of ₹ 34,49,000/- from D. M. Trading Pvt. Ltd., appellant in appeal no. 94 of 2013, being the cost of 20,000 equity shares of RUNL at the rate of ₹ 172.45 per shares. Therefore, we hold that the story advanced by the appellant nos. 1 to 6 regarding borrowing of loan from entities no. 7 to 21 is misconceived, untenable on facts and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in mind the definition aforesaid, we find that the contract in question is not a spot delivery contract. True it is that by the letter dated 30-10-1987 written by Tuhin to Bhagwati, he had stated that the formal agreement had been executed between them on 10-11-1986 and as per the agreement he is transferring the entire 3530 shares of Peerless purchased from the loan amount and the transfer is in its repayment. However, the agreement dated 21-11-1994 between Bhagwati and Tuhin which formed part of the compromise decree provides that the sale of shares took place on 30-10-1987 and in consideration thereof Bhagwati paid a sum of ₹ 10 lakhs on 21-11-1994 and further the dividend on the entire shares up to the accounting year 1989-1990 amounting to ₹ 8,64,850 to be retained by Tuhin. In the face of it, the plea of Bhagwati that the payment of ₹ 10 lakhs was made to buy peace, is not fit to be accepted and, in fact, that forms part of the consideration for the sale of shares. Once we take this view, the plea of the appellant that it is a spot delivery contract is fit to be rejected. We agree with the reasoning and conclusion of the Company Law Board and the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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