Mangesh Madhukar Dhotre vs Sebi

against the present appellant by the Adjudicating Officer (hereinafter

referred to as 'AO') of respondent Securities and Exchange Board of

India (hereinafter referred to as 'SEBI') directing him to pay a

penalty of Rs. 5 lac for the violation of the provisions of Regulation

3(a), 3(b), 3(c), 3(d) and Regulation 4(1), 4(2)(a) and 4(2)(e) of the

Securities and Exchange Board of India (Prohibition of Fraudulent

and Unfair Trade Practices relating to Securities Market)

Regulations, 2003 (hereinafter referred to as 'PFUTP Regulations'),

the present appeal is preferred.

2. Respondent SEBI conducted investigation into the scrip of

Voltaire Leasing & Finance Ltd. (hereinafter referred to as 'VLFL')

for a period between August 12, 2014 to July 31, 2015. It was found

that in all 16 persons were involved in the scheme of increasing the

price of the shares of the company on the stock exchange through

fraudulent manner. It was found that the company had decreasing

profit for three years. In 2013, the profit was Rs. 24.5 lacs. In the

next year, it went down to Rs. 20.1 lacs and subsequently in 2015-16

it decreased to Rs. 4.2 lacs. Despite this, the price of the scrip moved

in the opposite direction from Rs. 2.42 to Rs. 32.1 during 3

investigation period. It was further found that the trading in the scrip

was suspended with effect from July 19, 2010. The same was

revoked on July 26, 2010. Post-revocation, for a period of three

years, the scrip traded on the stock exchange platform for just two

days only. During the investigation period, however, though the

trading occurred the average volume was only 15 shares. The price

however rose as detailed supra.

3. The record would show that three noticees had in off-market

transaction supplied shares to 13 other persons including the present

appellant. This group then traded those shares on the exchange

platform and increased the price. Upon hearing the appellant and

others, the impugned order was passed. Hence, the present appeal.

4. We have heard the learned counsel for the parties.

5. Before the respondent SEBI the appellant filed a reply. He

submitted that he was not at all aware of the transaction of the

company for which he was held guilty. He did not have any record

in this regard or even recollect any such transaction in the scrip. He

completely shown ignorance regarding the trades. 4

6. This statement was made before the respondent SEBI, in face

of the fact that while the investigation period was August 2, 2014 to

July 31, 2015, the show cause notice was issued just within three

years i.e. on April 27, 2018.

7. Before the Tribunal however the appellant took a somersault.

Now he pleaded that his signatures were either obtained by

somebody or were forged. He was merely a watchman and as such

he has not carried any trade. Learned counsel for the respondent

further pointed out that three of the entities involved in the present

case, had preferred appeal against the order of the Whole Time

Member (hereinafter referred to as 'WTM') wherein they were

restrained from accessing the securities market for a period of three

years. This Tribunal vide order dated March 15, 2021 in the Appeal

No. 409 of 2020 dismissed the appeal on merit holding that the

transactions were carried out in violation of PFUTP Regulations.

The present appellant had not challenged the said order passed by the

WTM. The findings of fact have thus become final so far as the

present appellant is concerned.

8. In the circumstances, the appeal is devoid of any merit.

Hence the following order :- 5

ORDER

9. The appeal is hereby dismissed without any order as to costs.

10. This order will be digitally signed by the Private Secretary on

behalf of the bench and all concerned parties are directed to act on

the digitally signed copy of this order. Certified copy of this order is

also available from the Registry on payment of usual charges.

Justice M. T. Joshi Judicial Member

Ms. Meera Swarup Technical Member 03.01.2023 PRAMILA Digitally signed by PRAMILA TANAJI MISAL PTM TANAJI MISAL Date: 2023.01.06 16:56:17 +05'30'