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TMI Blog2019 (3) TMI 828X X X X Extracts X X X X X X X X Extracts X X X X ..... e company”. While dealing with a serious issue of fraud the authorities need to ascertain the motive in the absence of any connecting evidence. Is nothing to prove that the quoted statement in the news report is exactly what is stated by the appellant unless the statement is derived from a written communication issued by the Chairman or by his Company which is not the case here. There is no evidence to link to a motive. Neither the appellant nor his Company Emami had / have acquired the shares of Amrutanjan. In any case they were actually interested in acquiring; the Chairman of the acquiring company would not have talked up the prices of the shares of the acquiring company (Target Company). In the absence of any motive or a scheme or any evidence a reported news item alone is not sufficient to prove a serious charge like fraud. If at all the reported statement is correct it could an expansive mood of the person. Silence as a sign of wisdom cannot be stretched to a point of total silence in the world of securities market. Substantial movement in the prices etc. of a profitable company with sufficient liquidity cannot be attributed to such a reported statement alone. Befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uoting the appellant:- Yes we are interested to buy Amrutanjan. Our group is looking for acquisition in the pharma and FMCG sectors. But, we do not know who is buying into that company. 3. A Show Cause Notice (SCN) dated June 7, 2016 was issued to the appellant directing to show cause why an enquiry should not be held and penalty be not imposed under Section 15HA of the SEBI Act, 1992 for the alleged violation of SEBI Act, 1992 and PFUTP Regulations of 2003. During the investigation the appellant vide letter dated June 25, 2015 clarified to SEBI that he only expressed his desire for acquisition in the Pharma or FMCG sectors including Amrutanjan as the same would contribute organically and inorganically to the growth and expansion of his company s business. It is also on record that on April 5, 2010 soon after the newspaper report dated April 3, 2010 (April 3 and April 4, 2010 was Saturday and Sunday respectively and hence market closed), the National Stock Exchange of India Limited ( NSE for short) sought clarification from both the Companies Emani and Amrutanjan on the reported statement of the Chairman of Emami Ltd. Emami replied to NSE as follows:- Our gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made there under. 4. Prohibition of manipulative, fraudulent and unfair trade practices ( 1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities. ( 2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely:- ( e) any act or omission amounting to manipulation of the price of a security; ( r) planting false or misleading news which may induce sale or purchase of securities. Fraud as defined in PFUTP Regulations, 2003 is as follows:- Definitions 2. ( 1)(c) fraud includes any act, expression, omission or concealment committed whether in a deceitful manner or not by a person or by any other person with his connivance or by his agent while dealing in securities in order to induce another pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. We have extensively heard Shri Somasekhar Sundaresan, learned Counsel for the appellant and Shri Karan Bhosale, learned Counsel for the respondent SEBI. We have also perused the documents placed before us. We note that fraud in securities market is a serious offence as defined in law and as dealt in the PFUTP Regulations. The objective of the PFUTP Regulations is to act as a deterrent against fraudulent and manipulative behavior and practices in the securities market and to provide exemplary punishment for violations. 8. Now the question before us is whether a reported statement made by the Chairman of a Company about his interest in another Company amounts to fraud or a fraudulent act in the given facts of the case. The impugned order states that there was substantial movement in the price of the scrip of Amrutanjan from first week of March 2010 when the price was hovering in the range of ₹ 550-565 and rose to ₹ 1054 on April 1, 2010. The impugned order further holds that there were no bulk trade in BSE and only a few bulk trades in NSE prior to April 3, 2010. However, subsequent to April 3, 2010 the prices increased to a high of ₹ 1229 and large numbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso needs to be emphasized. The comparison made in the impugned order is by taking the price / volume data of April 1, 2010 and April 5, 2010. However a look at the data for 30th and 31st March, 2010 also give a different picture which is as follows:- NSE Date Open Price High Price Low Price Close Price Traded Quantity 30-Mar-10 854.9 989 848.1 949.3 489648 31-Mar-10 950 1054 937.5 1020.5 834070 01-Apr-10 1030.1 1044.95 1001 1024.35 308538 05-Apr-10 1025.1 1229.25 1025.1 1225 887705 BSE Date Open Price High Price Low Price Close Price ..... X X X X Extracts X X X X X X X X Extracts X X X X
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