Clarificatory Order in the matter of Peacock Industries
- Order No.WTM/KMA/IVD/202/01/2010
Ratio decidendi
The rule this decision rests on
A restraint order that bars named persons from dealing in securities may be modified under ss. 11B and 11(4) of the SEBI Act to permit those persons to square off existing open positions in the Futures and Options segment, because closing out is necessary to deal with positions that predate the order. A prohibition in a restraint order extends only to the persons expressly named in it. A person who is not named, such as a sub-broker who is merely indirectly connected with a restrained person, is not debarred by the order. Where a restraint is relaxed to permit close-out, the relief is confined to that purpose. The restrained persons may not take fresh positions, increase open positions, or execute trades, and the stock exchanges must ensure that no fresh positions are created for them.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
WTM/KMA/IVD/202/01/2010 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER UNDER SECTIONS 11B AND 11(4) OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 IN THE MATTER OF PEACOCK INDUSTRIES LIMITED 1. The Securities and Exchange Board of India (hereinafter referred to as SEBI), vide an Order dated December 31, 2009, had restrained Mr. Pawan Kumar Goyal, M/s Goyal Investments, M/s Goyal Brothers (Proprietor, Mr. Arun Goyal) and Goyal Securities (Proprietor, Mr. Vinod Goyal), from accessing the securities market and further prohibited them from buying, selling or dealing in securities, directly or indirectly, for a period of one year. Thereafter, Motilal Oswal Securities Limited (a stock broker registered with SEBI), vide letter dated January 4, 2010 had informed SEBI that its client Mr. Pawan Kumar Goyal has outstanding position in the Futures & Options Segment prior to the SEBI Order and that the contracts are due for expiry on January 28, 2010, and sought guidance of SEBI on the same. It was further informed that Mrs. Renu Goyal, the wife of Mr. Pawan Kumar Goyal was a sub-broker affiliated to it and requested SEBI to clarify whether the said sub-broker could be allowed to do business through it or whether the sub-broker was also debarred as she was indirectly linked with Mr. Pawan Kumar Goyal.
2. As Mr. Pawan Kumar Goyal has open positions in the Futures & Options Segment of NSE, it would be necessary to close out the said open positions. Further, as the SEBI Order had prohibited various others as mentioned above, I consider it appropriate to issue the following directions. As regards, the query regarding the sub-broker M/s. Renu Goyal, only persons/entities as mentioned in paragraph 1 above have been prohibited vide the aforesaid SEBI Order. 3. In view of the foregoing, in exercise of powers conferred upon me under Sections 11B and 11(4) of the Securities and Exchange Board of India Act, 1992, I, hereby permit the concerned stock exchanges to allow Mr. Pawan Kumar Goyal, M/s Goyal Investments, M/s Goyal Brothers (Proprietor, Mr. Arun Goyal) and Goyal Securities (Proprietor, Mr. Vinod Goyal) to square off their existing open positions in the Futures and Options Segment, if any, immediately. The said persons/entities would not be allowed to take fresh positions or increase their open positions or execute trades. Further, the concerned stock exchanges should also ensure that no fresh positions are created for the said persons.
4. The directions issued vide the SEBI Order dated December 31, 2009 shall be modified only to the extent as mentioned above.
DR. K. M. ABRAHAM WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA PLACE: MUMBAI DATE: JANUARY 6, 2010
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