Econo Trade India Limited vs Securities And Exchange Board Of India

IN THE SECURITIES APPELLATE TRIBUNAL AT MUMBAI DATED THIS THE 8TH DAY OF OCTOBER, 2026 Misc. Application No.762 of 2026 In Appeal No.264 of 2026 Econo Trade (India) Ltd. .....Appellant (By Mr. Rushin Kapadia, Advocate with Mr. Anil Shah, Ms. Mansi Mane and Ms. Vanisha Wadhwa, Advocates i/b. Juris Matrix Partners LLP, Advocates & Solicitors for the Appellant.) The Securities and Exchange Board of India .....Respondent (By Ms. Prachi Pandya, Advocate with Ms. Nidhi Singh and Ms. Komal Shah, Advocates i/b. Vidhii Partners for the Respondent.) With Misc. Application No.761 of 2026 In Appeal No.265 of 2026 Econo Broking Private Ltd. .....Appellant (By Mr. P.N. Modi, Senior Advocate with Mr. Rushin Kapadia, Mr. Anil Shah, Ms. Mansi Mane and Ms. Vanisha Wadhwa, Advocates i/b. Juris Matrix Partners LLP, Advocates & Solicitors for the Appellant.) 2 The Securities and Exchange Board of India .....Respondent (By Mr. Chetan Kapadia, Senior Advocate with Ms. Nidhi Singh and Ms. Komal Shah, Advocates i/b. Vidhii Partners for the Respondent.) ORDER ON INTERIM RELIEF Per: Justice P.S. Dinesh Kumar, Presiding Officer These two appeals are directed against order dated 30.06.2026 passed by the WTM1 SEBI2, debarring the appellants from accessing the securities market for a period of 6 years, directing joint and several disgorgement of ₹17.75 Crore along with Hanif Shekh controlled entities and imposing penalty of ₹2 Crore on each.

These miscellaneous applications for the stay of the impugned order in both the appeals are heard together and disposed of by this common order. 2. M.A. No.761 of 2026 in Appeal No.265 of 2026 is filed by Econo Broking Private Limited ('Econo Broking/EBPL' for short). M.A.No.762 of 2026 in Appeal No.264 of 2026 is filed by Econo Trade (India) Ltd. ('Econo Trade/ETIL' for short). 3. We have heard Mr. Pesi Modi, learned Senior Advocate for the appellant in M.A. No 761 of 2026 in Appeal No.265 of 2026, 1 Whole Time Member 2 Securities and Exchange Board of India 3 Mr. Rushin Kapadia, learned Advocate for the Appellant in M.A. No.762 of 2026 in Appeal No.264 of 2026. Mr. Chetan Kapadia, learned Senior Advocate for the respondent in M.A. No 761 of 2026 in Appeal No.265 of 2026 and Ms. Prachi Pandya, learned Advocate for the respondent in M.A. No 762 of 2026 in Appeal No.264 of 2026. 4. Brief Facts of the case are: a. On 19.06.2023, SEBI passed an ex parte ad interim order cum show cause notice against 226 noticees/entities alleging:  That price and volume was manipulated in five scrips3;  'Buy' recommendations for all the five scrips were widely circulated by Hanif Shekh (Noticee No.1) through bulk SMS and on websites. b. SEBI's case is, in the first phase, artificial price and volumes were created through structured trades among connected entities ('PV Influencers'); c. In the second phase, Hanif Shekh (Noticee No.1) circulated 'buy' recommendations.

In the scrip of Mauria Udyog Limited ('MUL' for short), collaborators created artificial volume by trading among themselves to sustain the momentum generated by the PV influencers. Except in 3 Mauria Udyog Ltd, 7NR Retail Ltd, Darjeeling Ropeway Ltd, GBL Industries Ltd & Vishal Fabrics Ltd. 4 DRCL, the resultant inflated prices enabled 'off-loaders' connected with the Companies' promoters or Hanif Shekh to off-load the shares and make unlawful gains of ₹143.79 Crore, which were allegedly transferred through layers and conduit entities to the promoters and/or entities controlled by Hanif Shekh. d. Allegation against appellants (Noticee Nos.5 and 6) is that they have received and routed the funds. 5. Mr. P.N Modi, learned Senior Advocate for the Econo Broking4 praying for stay of the impugned order submitted that: i. Econo Broking is a registered stock broker with NSE, BSE and MCX. It is also a depository participant with CDSL. It has more than 40,000 registered clients; ii. SEBI passed the interim order on 19.06.2023 and the same was confirmed on 13.10.2023. The final order has been passed after three years i.e. 30.06.2026.

Hence, there is an inordinate delay in conducting the proceedings by the SEBI; iii. There is no allegation of trading against Econo Broking. The only allegation is that there are 'connections' between Appellant in M.A. No.761 of 2026 in Appeal No.265 of 2026 4 5 the Econo Broking and Hanif Shekh and 'fund transactions' with other noticees mentioned in Table 7 of the impugned order; iv. Neither Hanif Shekh nor his father (Noticee No.2) or mother (Noticee No.3) were directors or KMPs or employees or shareholders of Econo Broking during the investigation period i.e.2017-2020. They became shareholders in April, 2021. Hanif Shekh's mother was a director in Econo Broking between 04.3.2022 and 24.07.2023. Econo Broking is a professionally managed company and therefore the allegation that Hanif Shekh was 'controlling' the company is untenable; v. The only allegation against Econo Broking is transferring funds mentioned in Table 7 of the impugned order. All parties with whom fund transactions are alleged in Table 7 are appellant's registered trading clients. All transactions with them are legitimate; vi.

SEBI has not quantified any gain attributable to each entity. The impugned trades were during 2017-2020. Appellant has not traded in any of the five scrips; vii. The Exchanges have treated the appellant as not 'fit and proper' pursuant to the impugned order and directed necessary action and the appellant may lose its registration as a Broker. 6 6. Mr. Rushin Kapadia, learned Advocate appearing for the Econo Trade5 submitted that he adopts the submissions made by Mr. Modi in M.A. No.761 of 2026 in Appeal No. 265 of 2026. In addition, he submitted that: i. Econo Trade is a RBI registered NBFC6 and listed on BSE. As an NBFC, appellant primarily lends money. It also invests in the securities market; ii. Econo Trade had multiple fund transactions with Noticee Nos.6, 7 and 5.A entities (Noticee Nos.220, 222 and 223) in the ordinary course of its business as an NBFC and the same are reflected in income tax filings. To support this contention, Econo Trade submitted copies of purported loan agreements entered with those entities; iii. The appellant is not a 'Hanif-controlled entity' as alleged in para 419 of the impugned order.

It is an RBI registered NBFC and listed public company, managed by a professional Board and qualified KMPs. Hanif Shekh neither held any shares nor a director in Econo Trade and he had no role in its lending decisions. His parents hold minority shares i.e.26.19% in Econo Trade; iv. The impugned order holds that appellant having its office in the same building in which other Noticees have their offices corroborates the fraudulent scheme. This finding is Appellant in M.A. No. 762 of 2026 in Appeal No.264 of 2026 5 Non- Banking Financial Company 6 7 arbitrary and unsustainable. Appellant operates from 9/12, Lal Bazar Street, Kolkata, which is a large commercial building housing numerous independent entities. Mere sharing of a common address cannot establish conspiracy, particularly in the absence of any evidence. 7. Opposing the interim prayer in M.A. 761 of 2026 in Appeal No.265 of 2026, Mr. Chetan Kapadia, learned Senior Advocate for the SEBI submitted that: i. Econo Broking is a Hanif Shekh connected entity and part of the group, namely the Sub Group 5, who are the ultimate beneficiaries of the sale proceeds of the off- loaders in the 5 scrips; ii.

Hasina Kasambhai Shekh (Hanif Shekh's mother) holds 55% shares in Econo Broking. One of the e-mail addresses of Hanif Shekh is [email protected] which shows his association/connection with Econo Broking (erstwhile Bansal Finstock). This Email ID ([email protected]) is mentioned in the account opening form of Sai Metaltech LLP (Noticee No.7) which is a partnership firm of Mr. Hanif Shekh; iii. Jignesh Shah (Sub Group 5.A) who had fund transactions with Econo Broking holds 7.5% shareholding in Econo 8 Broking and admittedly a friend of Hanif Shekh and Kasambhai Shekh. He was in frequent contact with Hanif Shekh during the investigation period; iv. SEBI has relied upon the instances of fund transfers 7 of Econo Broking with the various entities and connections of such entities with Hanif Shekh; v. The loan agreement for an amount of ₹15 Crore is executed on a stamp paper, whereas none of the other loans of such huge amounts of Econo Trade are not on stamp paper but written on white sheets; vi. Econo Broking received certain funds from Linkup, a Sub- Group 3 entity, which was not even a client of Econo Broking, in July 2019. The fund transfers of Econo Broking with Briya Enterprise, a sub-group 5.A entity, started as early as June 2019. Whereas as per the information regarding contract notes furnished by Econo Broking, Briya started trading through Econo Broking only in August 2020; vii.

Similarly, fund transfers with Kanungo started as early as January 2019, whereas the trading of Kanungo through Econo Broking commenced only in July 2020; 7 Tabulated in Table 7 of the impugned order 9 viii. The trading activity by Econo Trade through Econo Broking was minimal (buy value of ₹3.28 Crore and sell value of ₹3.30 Crore) between 01.01.2019 and 31.12.2020, whereas, Econo Broking has claimed the pay-in and pay- out obligations to be ₹36.57 Crore and ₹40.05 Crore, respectively; ix. It is clear that the fund transfers of Econo Broking with entities such as Briya, Kanungo and Econo Trade were not pursuant to pay-in and pay-out obligations. 8. Opposing the interim prayer in M.A. 762 of 2026 in Appeal No. 264 of 2026, Ms. Prachi Pandya, learned Advocate for the SEBI submitted that: i. Hanif Shekh, Hasina Kasambhai Shekh, Kasambhai Umarbhai Shekh and Robert Resources Limited are promoters and have 26.19% shareholding in Econo Trade. Hasina kasambhai Shekh is Executive Director of Econo Trade and Kasambhai Umarbhai Shekh was Director between 21.07.2018 and 31.07.2020 of Econo Trade; ii.

Linkup Financial Consultants Private Limited, a Sub-Group 3 entity (Noticee No.106) and D.K. Jain Properties, a Sub group 2.A entity (Noticee No.209), have a similar address as Econo Trade; 10 iii. Hanif Sheikh is one of the shareholders of Econo Trade. Further, the mobile number of Hanif Sheikh is provided in the ICICI Bank account opening form of the Econo Trade. In addition, the mobile number of Hanif Shekh and KYC details of Hasinaben Shekh and Kasambhai Shekh were provided in the ICICI Bank account opening form of Econo Trade; iv. Eight of the Sub-Group 3 entities hold more than 1% shareholding in Econo Trade; v. Huge fund transactions have taken place between the Econo Trade and other Noticees and other entities, which Econo Trade has sought to justify as loan transaction without providing any proof; vi. The loan agreement between Econo Trade and Econo Broking in 2015 for an amount of ₹15 Crore has been executed on a stamp paper, whereas none of the other loans of Econo Trade are stamped and written on white sheets. Econo Trade has not produced any proof in respect of the alleged loans and disbursement of ₹213.79 Crore during the SMS period.

9. We have considered rival contentions and perused the records. 11 10. Undisputed facts are, Hanif Shekh's parents are shareholders in both Econo Broking and Econo Trade. It is SEBI's case that Econo Broking has indulged in fund transfers in layers. Econo Broking has sought to explain that the transactions were bona fide. Matter requires consideration after completion of pleadings. In the absence of unimpeachable material on record, it is not possible to record any finding with regard to Econo Broking's innocence. However, this appeal is one of the cases in the batch of appeals. 11. So far as the case of Econo Trade is concerned, the main allegation is, transaction of about more than ₹200 Crores during the period when 'buy' recommendation was circulated through SMS. It is alleged that the loan transaction of only ₹15 Crore is recorded on a stamp paper and the remaining transactions (of approximately ₹200 Crore) are on white papers. There is no material on record to hold that the transactions were in the normal course of business. 12. In the light of facts recorded hereinabove, we are of the opinion that appellants have not made a prima facie case for grant of stay of the impugned order.

These two appeals fall in a batch of cases. In some other cases of the same batch, we have considered and granted interim relief by imposing appropriate conditions. In our view, in these cases, only recovery can be stayed by imposing conditions. The SEBI has directed the appellants to disgorge ₹17.75 Crore jointly with Hanif Shekh connected entities and imposed a penalty of ₹2 Crore each. It 12 would be just and appropriate to direct the appellants to deposit 50% of penalty and disgorgement as condition. 13. Hence, the following: ORDER i. Recovery of disgorgement and penalty amount shall remain stayed subject to deposit of 50% of penalty individually and 50% of disgorgement amount either jointly or severally with the SEBI within four weeks from today. The same shall be kept in an interest bearing accounts. ii. Misc. Application No.761 of 2026 in Appeal No.265 of 2026 and M.A.No.762 of 2026 in Appeal No.264 of 2026 are disposed of. Justice P.S. Dinesh Kumar Presiding Officer Ms. Meera Swarup Technical Member Dr. Dheeraj Bhatnagar Technical Member RAJALA Digitally signed 08.10.2026 by KSHMI NAIR RAJALAKSHMI H Date: 2026.10.08 RHN H NAIR 14:03:26 +05'30'