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TMI Blog2023 (11) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... Adjudicating Officer ("AO" for convenience) on the same issue and on the same facts and consequently all these five appeals are being taken up together. For facility, the facts stated in Appeal No. 74 of 2021 is being taken into consideration. 2. Appeal No. 74 of 2021 has been filed by Arvind Babulal Goyal against the order dated October 23, 2019 and addendum dated October 29, 2019 passed by the WTM restraining the appellant from accessing the securities market for a period of four years and from associating himself with any listed Company as a Director. In addition, Arvind Babulal Goyal was directed to disgorge a sum of Rs. 7,08,51,405/- (Rupees Seven Crores Eight Lakhs Fifty One Thousand Four Hundred and Five Only) towards loss avoided along with interest @ 12% per annum w.e.f. December 01, 2020 till the date of the impugned order. Appeal No. 96 of 2020 has been filed by Pooja Arvind Goyal against the order dated October 23, 2019 passed the WTM debarring the appellant for a period of 3 years. Appeal No. 19 of 2021 has been filed by Pooja Arvind Goyal wife of Arvind Babulal Goyal against the order dated April 30, 2020 imposing a penalty of Rs. 14 lakhs for failure to comply with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t thereto a show cause notice dated February 29, 2016 was issued to the 5 noticees alleging violation of Section 12A of the SEBI Act read with Regulation 3 and 4 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 ("PFUTP Regulations" for convenience). The show cause notice alleged that Arvind Goyal was the nodal person in conducting the trading in the scrip during the investigation period and that Arvind Goyal was trading from the accounts of Abhay Javlekar, Dharmendra Bhojak, Pooja Goyal and Ramesh Daga and that such trading made by Arvind Goyal was synchronized, self-trades and also reversal of trades creating artificial volume and, therefore, contravened the provisions of the SEBI Act and the PFUTP Regulations. The show cause notice further alleged that the combined shareholding had triggered the requirement of making an open offer under Regulations 10 and 11 of the SAST Regulations as these 5 noticees were acting in concert and had failed to make an open offer thereby violating the said regulations. The show cause notice also alleged that the noticees had made wrongful gains or avoided loss and therefore was liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving perused the impugned order and the record, we find that the finding in paragraph 4.11 of the impugned order that the modus operandi of Arvind Goyal was to accumulate the shares through the trading account of Abhay Javlekar and to dispose of such shares pursuant to the circulation of false and misleading SMS is patently erroneous and based on surmises and conjectures. There is no evidence or document on record to come to a conclusion that Arvind Goyal had a modus operandi to accumulate the shares. 13. The finding that shares accumulated by Arvind Goyal were disposed of pursuant to circulation of false and misleading SMS is against the evidence on record. We find from a perusal of Table 7 and 8 of the impugned order that no trades were executed by Arvind Goyal after the issuance of SMS on January 11, 2011. Table 7 and 8 clearly indicates that Arvind Goyal and Pooja Goyal neither purchased nor sold shares post issuance of SMS. Therefore, the finding given by the WTM in paragraph 4.11 that shares were sold by Arvind Goyal pursuant to the circulation of SMS is a perverse finding. 14. We also find that there is no connection of Arvind Goyal with the SMS sender. The impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from his trading account. 19. In our opinion, upon perusal of the relevant documentary records, we find that the finding that the appellant was trading from the account of Abhay Javlekar is not based on proper appreciation of the documentary evidence. In the first instance, we find that the Know Your Client ("KYC") document of Abhay Javlekar shows the email ID of Arvind Goyal and mobile number which has been given is 9322229797. The WTM has presumed that the mobile no. 9322229797 is the mobile number of Arvind Goyal. This number has been denied by the appellant. No effort was made by the investigating officer or by the WTM to find out as to who is the owner of this mobile no. 9322229797. 20. The WTM in paragraph 4.3(i) of the impugned order indicates that Abhay Javlekar's mobile number was 8080729797 which finding is against the material evidence on record in as much as Abhay Javlekar in his statement dated January 02, 2014 has clearly stated that the mobile number of Arvind Goyal is 8080729797. 21. The appellant Arvind Babulal Goyal admits that his email ID was used by Abhay Javlekar while opening a trading account with Yoke Securities but denies using his account for trading p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying self-trades, synchronized and reversal trades thereby creating an artificial volume in the scrip in question is again erroneous and against the evidence in as much as no trades were carried out by Arvind Goyal or Pooja Goyal after the issuance of SMS. 23. Since no trades were carried out by Arvind Goyal and Pooja Goyal pursuant to the alleged SMS the question of their trades being manipulative and adopting unfair trade practice does not arise. For the same reason, the violation of Regulations 3 and 4 of the PFUTP Regulations cannot be sustained as a result the order of disgorgement towards unlawful gain or loss averted cannot be sustained since we do not find any violation of the PFUTP Regulations. 24. Even though, we have set aside the order of disgorgement we, however, observe that the order of disgorgement was made on the basis of the impounding order impounding an amount of Rs. 5,43,88,397.34. This amount cannot be considered in as much as show cause notice crystalised the disgorgement amount to Rs. 1,19,00,467/-. We are of the opinion that the disgorgement amount of Rs. 1,19,00,467/- has been crystalized under the show cause notice and therefore the said amount could on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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