Mukesh Kumar Sohanlalji Gupta vs Sebi

Date of Hearing : 22.01.2020 Date of Decision : 28.01.2020

Appeal No. 418 of 2018

Bhagwat Singh Kitawat Upali Oden, Nathdwara, District - Rajsamand, Rajasthan - 313301. ..... Appellant

Versus

Securities & Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ... Respondent

Mr. Harsh Kesharia, Advocate for the Appellant. Mr. Vishal Kanade, Advocate with Mr. Abhiraj Arora, Mr. Vivek Shah, Advocates i/b ELP for the Respondent.

With Appeal No. 419 of 2018

Prakash Chandra Purohit Village Upali Oden, Nathdwara, District - Rajsamand, Rajasthan - 313301. ..... Appellant

Versus 2

Securities & Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ... Respondent

Mr. Harsh Kesharia, Advocate for the Appellant. Mr. Vishal Kanade, Advocate with Mr. Abhiraj Arora, Mr. Vivek Shah, Advocates i/b ELP for the Respondent.

With Appeal No. 440 of 2019

Mukesh Kumar Sohanlalji Gupta 11, Janta CHS Ltd., Jesal Park, Opposite Jain Temple, Bhayander (East), Thane - 401 105. ..... Appellant

Versus

Securities & Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. ... Respondent

Mr. Vikas Bengani, Advocate for the Appellant. Mr. Abhiraj Arora, Advocate with Mr. Vivek Shah, Advocate i/b ELP for the Respondent.

CORAM : Justice Tarun Agarwala, Presiding Officer Dr. C. K. G. Nair, Member

Per : Justice Tarun Agarwala, Presiding Officer 3

1.

Three appeals have been filed against the order dated August

31, 2018 passed by the Adjudicating Officer (hereinafter referred to

as 'AO') imposing a penalty for violation of Regulations 3 and 4 of

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).

Since the issues are common, all the three appeals are being decided

together by a common order.

2. A show cause notice was issued leveling a charge that the

appellants and other noticees are connected entities and had acted in

concert and indulged in trades contributing to the positive Last

Traded Price (LTP) thereby resulting in the price rise of the scrip of

Svaraj Trading & Agencies Ltd. (hereinafter referred to as 'STAL' or

'Company'). The AO while considering the issue of manipulation by

the appellants and other noticees with regard to the price of the

shares of the company found that there is no collusion of the

appellants with the five preferential allottees / noticees. Inspite of

giving this finding, the AO held that since there was an increase in

the price of the scrip, the appellants were responsible for such

increase by selling miniscule quantities of the scrip which were 4

violative of Regulations 3 and 4 of the PFUTP Regulations. The AO

accordingly, imposed a penalty upon the appellants. The appellants

being aggrieved by the said order have filed the present appeals.

3. The controversy involved in the present appeals is squarely

covered by the decision of this Tribunal in M/s. Nishith M. Shah

HUF vs. SEBI in Appeal No. 97 of 2019 and other connected

appeal decided on January 16, 2020, wherein this Tribunal held that

selling miniscule amount of shares by itself is not illegal nor

manipulative nor violative of Regulations 3 and 4 of the PFUTP

Regulations unless collusion with others is found. This Tribunal in

the said judgment also held that the charge of raising the price

artificially has to be established and the element of collusion between

the buyer and the seller is a sine quo non. In the instant case, the

charge of collusion with other noticees and / or the five preferential

allottees has been disbelieved by the AO itself. Thus, if collusion is

not proved, the charge under Regulations 3 and 4 of the PFUTP

Regulations cannot be sustained.

4. In the light of the aforesaid decision of the Tribunal, the

impugned orders cannot be sustained and are quashed. The appeals 5

are allowed. In the circumstances of the case, parties shall bear their

own costs.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C. K. G. Nair Member 28.01.2020 Prepared & Compared by PTM