9911796707
TMI Blog2012 (4) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... 1992. The adjudicating officer found the appellant guilty of violating regulation 4 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (FUTP Regulation) and accordingly penalty of 3 lacs was imposed. 2. The appellant is the proprietor of M/s. Rajesh N. Jhaveri. He was engaged in trading of the scrip of M/s. Adani Exports Ltd. (the company) and he was found to have acted, alongwith a few other entities, in the manipulation of the scrip of the company. The Board conducted investigations in the buying, selling and dealing in the shares of the company for the period November 27, 2003 to December 23, 2003. During investigation, it was noticed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded the issue of show cause notice and the contents of paragraph 4.0 therein observing that the requirements of Rule 4(1) and 4(3) have been complied with substantially and no prejudice has been caused to the appellant. 5. We have considered the rival submissions. At the outset, it has to be mentioned that the objection now raised by the appellant's learned counsel has not been raised either before the adjudicating officer or in the grounds of appeal before this Tribunal. However, the issue being one of a question of law, we would like to deal with the same. Rule 4(1) of the Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 envisages the adjudicating officer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easoned conclusion regarding the conduct of the person. These notices are essential for avoiding unjust and arbitrary action of the authorities. So, what is crucial for consideration is whether the person accused has been given sufficient notice and reasonable opportunity to defend himself. In the present case, we find that the above requirements have been complied with. The show cause notice was issued on May 31, 2006. The appellant sent a reply to the show cause notice on June 26, 2006. Further, the appellant was issued with a notice on August 12, 2009 and a personal hearing was scheduled on August 25, 2009. In the meantime, the appellant applied for consent proceedings before the Board and sought another opportunity pending decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed on September 27, 2011. In fairness, the proceedings need not have taken such a long time. However, the list of events given in detail in paragraph 5 above would show that there was constant correspondence between the appellant and the adjudicating officer on several issues relating to the matter and on every occasion personal hearing was also granted. As long as it is not on record that any prejudice has been caused to the appellant because of the delay, the ground taken by the appellant's learned counsel cannot be entertained. 8. With regard to the merits of the case, the main argument of the appellant is that the alleged volume of transactions is negligible as compared to the total trades in the scrip of the company and it has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is observed that the appellant alongwith a few other entities was involved in 228 reversal trades in 10 days out of 19 days of trade and this has not been disputed by the appellant. According to him, the percentage of trades involved in the manipulation is quite substantial and the trades relate to only 10 days which is very significant. It is also pointed out that the investigation period in the present case relates to the period prior to split up of shares and so the decision of the Tribunal referred to by the appellant's learned counsel is not squarely applicable. 10. We have considered the submissions of the learned counsel and gone through the records of the case. The charge is one of synchronization/reversal of trades in the scrip of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The reversal of most trades took place on the same day or on next day after execution of first set of trades. It cannot be a co-incidence that such a large number of transactions spread over many days have matched between specific brokers only. Also, the zero time difference or near zero time difference between placement of buy and sell orders indicates your clear intention to create artificial volume on the days of your trades. Such type of transactions cannot be considered as genuine transactions." 11. The facts of the case would show that the appellant and the connected entities have placed orders in such a way as to ensure matching of the buy and sell quantity and the price with the same counter parties and the difference in time is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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