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TMI Blog2010 (2) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Since arguments were addressed in Appeal no. 225 of 2009, the facts are being taken from this case. 2. A common show cause notice dated March 18, 2008 was issued to the appellants pointing out that there was a sharp increase in the price of the scrip of Brijlakshmi Leasing Finance Limited (for short the company) during the period of investigation and that the appellants had traded in the scrip and their trades resulted in influencing the price upwards. It is alleged that the appellants purchased large quantities of shares at higher price and thereby became instrumental in creating artificial volumes in the scrip which was illiquid. The Board carried out investigations for the period from January 1, 2002 to June 6, 2002 and again for the period from February 3, 2004 to July 14, 2004. The show cause notice alleges that the trades executed by the appellants do not appear to be genuine. The show cause notice further mentions that the trading by the appellants had contributed to the market volumes in the scrip and that orders were placed at prices higher than the last traded price. Since the appellants were largely purchasers of the scrip, they are alleged to have manipul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blish his links with any other person to complete the overall pattern of market manipulation. However, it refers to his purchases being supported by cash deposits in his account. After observing that it is not always necessary to require a counterparty seller to manipulate or create artificial volumes in an illiquid scrip, he held the appellant guilty of the charges levelled in the show cause notice. 5. We have heard the appellant in person and Dr. Mrs. Poornima Advani, Advocate on behalf of the Board who have taken us through the records including the show cause notice and the impugned order and are of the view that the charges of manipulation as leveled against the appellant have not been established. Merely because an investor like the appellant placed orders for the purchase of a scrip at a price higher than the last traded price does not by itself lead to the conclusion that he was manipulating the price of the scrip. There could be several good reasons for an investor to do this. For instance, an informed investor in a given case may feel that the fundamentals of a company justify a higher price than the one at which the scrip is trading in the market, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... okers and the trades get executed only when the buy and sell orders match subject to price, time priority, this is what the Tribunal observed:- The adjudicating officer has rightly observed that on a screen based trading system, buyers and sellers put in their orders through their respective brokers and the trade gets executed only when the buy and sell orders match subject to price time priority. We may like to add that the price time priority signifies two things; first is the matching of price and second is the priority in point of time. When a buy order is placed on the system, it will be matched with the best sell order (lowest price) available on the system subject to the condition that no buyer will be made to buy at a price more than what he has offered. If more than one pending sell orders match the buy order, the sell order placed earlier in point of time will be picked up to complete the trade. Similarly, a sell order will be matched with the best buy order (highest price) subject to the condition that no seller will be made to sell at a price lower than what he has fed into the system. If more than one pending buy orders match the sell order, the buy order pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dates on which the appellant had traded in the scrip of the company. On January 1, 2002 the appellant purchased 1000 shares at ₹ 42.70 per share when the last traded price was ₹ 41.1. From this it is inferred that the appellant had raised the price from the ₹ 41.10 to ₹ 42.70. This is so but when we look at the trades executed on days when the appellant did not trade, the price of the scrip had similarly gone up and buy orders had been put into the system which were higher than the last traded price. Admittedly, the appellant did not trade in the scrip of the company on January 14, 2002 on which date a number of trades in the scrip were executed. In all those trades the buy order is higher than the last traded price. This clearly shows that not only the appellant but there were others as well who were trading in the scrip at rates higher than the last traded price. There is nothing on the record to show that the Board had proceeded against them. Be that as it may, the trades on January 14, 2002 clearly establish the fact that the price of the scrip was generally going up and it was not the appellant who was responsible. In this view of the matter, the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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