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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 ..... rities market for a period of four years and from associating himself with any listed Company as a Director HELD THAT:- The finding that the modus operandi adopted by Arvind Babulal Goyal was to accumulate the shares and thereafter dispose off such shares pursuant to circulation of SMS is patently erroneous and against the material evidence on record. As 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 as given - WTM has presumed that the mobile no. is 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. quoted. Abhay Javlekar admits before the investigating officer that his DIS slip book and cheque book was issued to one Jayesh Solanki which statement is contrary to the stand which he now takes that Arvind Babulal Goyal had taken the DIS slip and chequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goyal collectively as husband and wife and Abhay Javlekar in his individual capacity had triggered the obligation to make an open offer under Regulations 10 and 11 of the SAST Regulations respectively and if they had triggered the requirement of making an open offer under Regulations 10 and 11 of the SAST Regulations then appropriate penalty commensurate with the acquisition should be levied. Appeal allowed. - JUSTICE TARUN AGARWALA, PRESIDING OFFICER AND MS. MEERA SWARUP, TECHNICAL MEMBER For the Appellant : Mr. Ashim Sood, Advocate with Mr. Kunal Kataria, Mr. Ankur Loona, Ms. Aparna Wagle and Ms. Siddhi Somani, Advocates i/b. Alliance Law. Ms. Yugandhara Khanwilkar, Advocate and Ms. Dharshanadivya Subramanian, Advocate i/b Triad Law Chambers For the Respondent : Mr. Pradeep Sancheti, Senior Advocate with Mr. Abhiraj Arora, Mr. Deepanshu Agarwal, Ms. Misbah Dada and Mr. Shourya Tanay, Advocates i/b ELP. PER: JUSTICE TARUN AGARWALA, PRESIDING OFFICER 1. Five appeals have been filed against different orders passed by the Whole Time Member ( WTM for convenience) and the Adjudicating Officer ( AO for convenience) on the same issue and on the same facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was found that the noticees had indulged in synchronized trades, self-trades and reversal of trades thereby creating a false appearance of trading and manipulation of the trading volumes in the scrip in question. It was also found that Arvind Goyal had played a pivotal role in the manipulation/ volume creation in the scrip and allegedly traded in the name of Abhay Javlekar, Dharmendra Bhojak, Pooja Goyal and Ramesh Dwarkadas Daga and whereas Abhay Javlekar, Arvind Goyal and Ramesh Daga had earned profits, Pooja Goyal and Dharmendra Bhojak had incurred losses. It was also found that these 5 noticees were acting in concert and, on account of the combined equity shareholding of the 5 noticees, had triggered the requirement of making an open offer under Regulations 10 and 11 of the SAST Regulations which they failed to do so. 4. Accordingly, an ad-interim ex-parte impounding order dated 20 October 2015 was passed directing that the amount of unlawful gains or loss averted to the tune to Rs. 5,87,12,087.59 be impounded, jointly and severally from Abhay Javlekar, Arvind Goyal and Ramesh Daga. 5. Pursuant thereto a show cause notice dated February 29, 2016 was issued to the 5 notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res held by / through trading in the accounts of Abhay Javlekar and secondly to dispose of the said shares pursuant to the circulation of false and misleading SMS. The WTM further came to the conclusion that since the price of the scrip in question did not increase Arvind Goyal off-loaded the shares in the securities market to avoid further loss. Further, Arvind Goyal entered into manipulative and unfair trade practice through self-trades without intention of creating beneficial ownership and also synchronized and reversal trades for creating artificial volume creation in the scrip on account of trading from his account and from the accounts of Abhay Javlekar and Pooja Goyal. 10. On this finding the WTM debarred Arvind Goyal for four years and further directed him to disgorge a sum of Rs. 7,08,51,405/- along with 12% interest and Abhay Javlekar and Pooja Goyal were also debarred for a period of three years. 11. We have heard Shri Ashim Sood, the learned counsel and Ms. Yugandhara Khanwilkar, the learned counsel for the appellants and Shri Pradeep Sancheti, the learned senior counsel for the respondent. 12. Having perused the impugned order and the record, we find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to circulation of SMS is patently erroneous and against the material evidence on record. 18. A finding has been given by the WTM that Arvind Goyal was trading from the accounts of Abhay Javlekar and Pooja Goyal. Pooja Goyal is the wife of Arvind Goyal and the appellant admitted that he was also trading from his wife s account. The appellant, however, denies that he has done any trading from the accounts of Abhay Javlekar. In this regard, the WTM has relied upon a letter dated January 06, 2014 issued by the broker Yoke Securities Limited in which it was indicated that the orders were placed in the trading account of Abhay Javlekar through mobile number 9322229797. The email address that was provided was of Arvind Babulal Goyal i.e. [email protected]. The WTM further relied upon the submissions made by Abhay Javlekar in which he contended that Arvind Babulal Goyal was using his account and had provided him the Demand Instruction Slips ( DIS ) and blank cheques for the purpose of trading. This statement has been relied upon by the WTM holding that Arvind Babulal Goyal was the nodal person trading on behalf of Abhay Javlekar from his trading account. 19. In our opinion, upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roker Yoke Securities but has not considered the subsequent letter dated January 24, 2014 issued by Yoke Securities in which he categorically stated that Abhay Javlekar was aware of the trades executed from his trading account. In addition to the aforesaid, Abhay Javlekar admits before the investigating officer that his DIS slip book and cheque book was issued to one Jayesh Solanki which statement is contrary to the stand which he now takes that Arvind Babulal Goyal had taken the DIS slip and cheque book for the purpose of trading. In our opinion, contradictory stand has been taken by Abhay Javlekar. Abhay Javlekar further admits that many trades were carried out without his knowledge by Pradeep Makhija of Yoke Securities. In the light of the aforesaid glaring evidence which is on record it is difficult to believe that Arvind Babulal Goyal was using Abhay Javlekar s trading account. Thus, the finding given by the WTM that Arvind Babulal Goyal was using Abhay Javlekar s account for trading purpose is not based on sound evidence. 22. Similarly, the finding that Arvind Goyal was involved in manipulative and unfair trade practice by employing self-trades, synchronized and reversal t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Goyal, Pooja Goyal and Abhay Javlekar in their own capacity had acquired the shares. Whether they individually crossed the trigger of 15% / 5% under Regulations 10 and 11 of the SAST Regulations is required to be considered afresh. The AO is required to see whether or not Arvind Babulal Goyal and Pooja Goyal collectively as husband and wife and Abhay Javlekar in his individual capacity had triggered the obligation to make an open offer under Regulations 10 and 11 of the SAST Regulations respectively and if they had triggered the requirement of making an open offer under Regulations 10 and 11 of the SAST Regulations then appropriate penalty commensurate with the acquisition should be levied. Since, we are not in a position to find out the percentage of the acquisition made by these entities the matter is required to be decided afresh by the AO. 27. For the reasons stated aforesaid, the impugned order passed by the WTM in so far as it relates to Arvind Babulal Goyal and Pooja Goyal is set aside. Appeal No. 74 of 2021 filed by Arvind Babulal Goyal and Appeal No. 96 of 2020 filed by Pooja Arvind Goyal are allowed. The impugned orders in Appeal No. 19 of 2021 filed by Pooja Arvind ..... 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