Mr. Kiran Kulkarni vs Sebi

reasons stated in the applications the delay in the filing of the

appeals are condoned. The applications are allowed.

2. Both the appeals are against a common order and are

being taken up together. The appeals are filed against the order

dated April 19, 2021 passed by the Whole Time Member

("WTM" for convenience) of the Securities and Exchange

Board of India ("SEBI" for convenience) under Section 11 and

11B of the SEBI Act restraining the appellants from buying,

selling or otherwise dealing with securities including mutual

funds, in any manner, for a period of two years from the date of

the impugned order.

3

3. The facts leading to the filing of the present appeal is,

that the appellants are directors of the Company. The Board of

the Directors of the Company in its Board meetings dated

November 27, 2012 and December 03, 2012 approved buy-back

of shares to the extent of 25% of the paid-up capital at a price of

Rs. 75/- per share and proposed a dividend of Rs. 2/- per share.

These announcements for reasons best known to the Company

and its directors remained unexecuted. On this basis, a show

cause notice was issued and, after considering the reply, the

WTM came to the conclusion that the Company had no

intention of fulfilling the said obligations and therefore the

announcements were made with the intention to artificially

influence the price of the scrip and that these announcements

were fraudulent in nature with intention to artificially inflate the

price of the scrip of the company.

4. We have heard Shri Joby Mathew, the learned counsel

for the appellants and Shri Akash Rebello, the learned counsel

for the respondent.

5. The learned counsel for the appellants contended that

the respondent has failed to appreciate that at the time when the

Company had made the announcements regarding buy-back of 4

shares and dividend there was no reason to apprehend any

shortage of funds to meet the expenses relating to the same. It

was contended that the announcement for the dividend came

pursuant to the profit earned by the company for the half year

ending September 2012 but at the end of the financial year due

to reasons beyond the control of the Company there was

shortage of funds and consequently the buy-back process and

the payment of dividend could not be executed. It was thus

contended that the appellants had genuine reasons not to

implement the announcements and therefore this aspect was not

properly considered by the WTM while passing the impugned

order.

6. Having heard the learned counsel for the appellants, we

find that admittedly the announcement of buy-back of shares

and payment of dividend was not executed by the Company.

There was failure on the part of the Company and its directors

in not implementing the announcements so made by them

through their Board meetings. The contention that the

Company suffered losses and got embroiled in litigation cannot

be a reason for not implementing the announcements. If the

Company had good intention and they were unable to

implement their announcements then they should have taken 5

immediate steps to withdraw those announcements but the same

was not done and consequently the WTM rightly came to the

conclusion that the appellants had no intention to implement the

announcements. We are also in agreement that failure to

implement the announcements was a fraud played by the

Company on the investors.

7. For the reasons stated aforesaid, we do not find any

merit in the appeals and are dismissed at the admission stage

itself without calling for a reply.

8. The present matters were heard through video

conference due to Covid-19 pandemic. At this stage it is not

possible to sign a copy of this order nor a certified copy of this

order could be issued by the Registry. In these circumstances,

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. Parties will act on

production of a digitally signed copy sent by fax and/or email.

Justice Tarun Agarwala Presiding Officer

Justice M. T. Joshi RAJALA Judicial Member 29.09.2021 KSHMI Digitally signed by RAJALAKSHMI H NAIR Date: 2021.10.01

PK 16:14:54 +05'30'

H NAIR