Rakeshkumar Narayanbhai Prajapati vs Sebi

Date of Decision : 03.01.2023

Appeal No. 431 of 2020 Dukes Products (India) Limited Having its Registered Office at 4th Floor, Dukes Avenue, Sy. No. 330 and 336, Plot No. 8-1-299/85, 86, 87, 88, 94 and 95, Ward No. 13, Block B, Al-Hamra Colony, Shaikhpet, Hyderabad - 500 008. ...Appellant

Versus

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

Mr. Pesi Modi, Senior Advocate with Mr. Kunal Katariya, Advocate i/b Mr. Vikas Bengani, Advocate for the Appellant.

Mr. Kevic Setalvad, Senior Advocate with Ms. Nidhi Singh, Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 330 of 2020 Mahendra Dhanjibhai Amin B-308, Shankardhan Plaza, Mehul Cinema, J.N. Road, Mulund (W), Mumbai - 400 080. ...Appellant

Versus 2

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

Mr. Prakash Shah, Advocate with Mr. Kushal Shah, CA i/b Prakash Shah & Associates and Mr. Mahendra Amin, Appellant in person for the Appellant.

Mr. Kevic Setalvad, Senior Advocate with Ms. Nidhi Singh, Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 359 of 2020

Laxmi Kanta Tolasariya Metrozone, Tower H, Flat No. 1504, 44, Pillaiyar Koil Street, Beside Vr. Mall, Anna Nagar, Chennai - 600 040. ...Appellant Versus

Securities and 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. Kevic Setalvad, Senior Advocate with Ms. Nidhi Singh, Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent. 3

WITH Appeal No. 362 of 2020

1.

Srikant Karwa (HUF) (Karta : Shrikant Karwa)

2. Shakuntala Karwa

C/O Ghanshamdas Karwa, 12-10-97, Near Gandhi Chowk, Raichur, Karnataka - 584 101. ...Appellants

Versus

Securities and 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 Appellants.

Mr. Kevic Setalvad, Senior Advocate with Ms. Nidhi Singh, Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 411 of 2020 Viren Shelters LLP (Previously known as Viren Shelters Limited) Having its Registered Office at Sy. No. 330 and 336, Plot No. 8-1-299/85, 86, 87, 88, 94 and 95, Ward No. 13, Block B, Al-Hamra Colony, Shaikhpet, Hyderabad, TG-500 008. ...Appellant

Versus

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

Mr. Vikas Bengani, Advocate for the Appellant.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 420 of 2020

1. Jitendra C. Janani HUF 2101, 21st Floor, A Wing, Hiranandani Heritage, S.V. Road, Kandivali West, Mumbai - 400 067.

2. Ramesh C. Janani HUF 111, CIEM Industrial Estate, Ramchandra Lane Extn, Kachpada, Malad West, Mumbai - 400 064.

3. Krunal Ramesh Janani 64, Tanay Apartment, Saibaba Nagar, Borivali West, Mumbai - 400 067. ...Appellants Versus

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

Mr. Saurabh Bachhawat, Advocate with Mr. Jay Vakil, Advocate i/b Mr. Jay Vakil, Advocate for the Appellants.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

5

WITH Appeal No. 428 of 2020

Gopi Krishna Manepally (HUF) Karta : Gopi Krishna Manepally, 1-5-8, Dhan Bazar, Opp. Comtti Dharamkanta, General Bazar, Secunderabad, Hyderabad, Andhra Pradesh - 500 003. ...Appellant Versus

Securities and 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.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 429 of 2020

Murali Krishna Manepally (HUF) Karta : Murali Krishna Manepally, 1-5-8, Dhan Bazar, Opp. Comtti Dharamkanta, General Bazar, Secunderabad, Hyderabad, Andhra Pradesh - 500 003. ...Appellant Versus

Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. ...Respondent 6

Mr. Vikas Bengani, Advocate for the Appellant.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 430 of 2020

Solex Commercial & Credit Pvt. Ltd.

Having its Registered Office at Second Floor, Plot No. 82, IDA, Kattedan, Hyderabad, TG-500 008. ...Appellant

Versus

Securities and 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.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 432 of 2020

Dukes Consumer Care Limited Having its Registered Office at Plot No. 45, S.E.I.E., Kattedan, Hyderabad, TG-500 077. ...Appellant

Versus

Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. ...Respondent 7

Mr. Vikas Bengani, Advocate for the Appellant.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 444 of 2020

Ankit Agarwal Plot No. 23, Nandagiri Hills, Hyderabad - 500 033. ...Appellant Versus

Securities and 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.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Misc. Application No. 367 of 2021 And Appeal No. 445 of 2020

Umang Projects LLP (Previously known as Umang Projects Limited) Having its Registered Office at Sy. No. 330 and 336, Plot No. 8-1-299/85, 86, 87, 88, 94 and 95, Ward No. 13, Block B, Al-Hamra Colony, Shaikhpet, Hyderabad, TG-500 008. ...Appellant 8

Versus

Securities and 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.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 447 of 2020

Omprakash Agarwal HUF Karta : Dr. Om Prakash Agrawal, House No. 21-1-366/1, Ghansi Bazar, Hyderabad, TG-500 002. ...Appellant

Versus

Securities and 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.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 450 of 2020

Dr. Om Prakash Agarwal H.N. 8-2-293/82/A/1023, Road No. 49, Jubilee Hills, Hyderabad, TG-500 033. ...Appellant 9

Versus

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

Mr. Somashekar Sundaresan, Advocate with Ms. Prachi Mishra, Mr. Abhishek, Advocates i/b Mr. Vikas Bengani, Advocate for the Appellant.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 464 of 2020

Rakeshkumar Narayanbhai Prajapati D 82, Sarvoday Nagar Soc. Part - 2, Nr. Sola Rlw Crossing, Sola Rd. Ghatlodia, Ahmedabad - 380 061. ...Appellant

Versus

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

Mr. Hardik Vora, Advocate for the Appellant.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

10

WITH Misc. Application No. 557 of 2020 And Appeal No. 535 of 2020

Bharti Bharatkumar Upadhyay A/1501, Hubtown Sunmist, Sai Wadi, Near East West Flyover, Andheri East, Mumbai - 400 069. ...Appellant

Versus

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

Mr. Kunal Katariya, Advocate with Mr. Sahebrao Wamanrao Buktare, Advocate and Mr. Ravi Vijay Ramaiya, CA i/b Shah & Ramaiya, Chartered Accountants for the Appellant.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Misc. Application No. 233 of 2021 And Appeal No. 198 of 2021

Inventure Finance Pvt. Ltd.

Viraj Towers, 201, 2nd Floor, Near Landmark, Western Express Highway, Andheri East, Mumbai, Maharashtra - 400 069. ...Appellant

Versus

Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. ...Respondent 11

Mr. Kunal Katariya, Advocate with Mr. Sahebrao Wamanrao Buktare, Advocate and Mr. Ravi Vijay Ramaiya, CA i/b Shah & Ramaiya Chartered Accountants for the Appellant.

Mr. Kevic Setalvad, Senior Advocate with Ms. Nidhi Singh, Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 544 of 2021 Prakashkumar Narayanbhai Prajapati D 82, Sarvoday Nagar Soc. Part - 2, Nr. Sola Rlw Crossing, Sola Rd. Ghatlodia, Ahmedabad - 380 061. ...Appellant Versus

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

Mr. Hardik Vora, Advocate for the Appellant.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 142 of 2022

Madhu Karnesh Shyamsukha 1302, Samarpan Royal, Opp. Western Express Highway, Near Rivali Park, Borivali (East), Mumbai - 400 066. ...Appellant

Versus

Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. ...Respondent 12

Mr. Vikas Bengani, Advocate for the Appellant.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the for the Respondent.

WITH Appeal No. 143 of 2022

Karnesh Pannalal Shyamsukha 1302, Samarpan Royal, Opp. Western Express Highway, Near Rivali Park, Borivali (East), Mumbai - 400 066. ...Appellant

Versus

Securities and 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.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the for the Respondent.

WITH Appeal No. 144 of 2022

Prachi Kagzi 21/42, Usha Kiran Building, 15, Carmichel Road, Mumbai - 400 026. ...Appellant Versus

Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. ...Respondent 13

Mr. Vikas Bengani, Advocate for the Appellant.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the for the Respondent.

WITH Appeal No. 145 of 2022

Nitin Kagzi 21/42, Usha Kiran Building, 15, Carmichel Road, Mumbai - 400 026. ...Appellant Versus

Securities and 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.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the for the Respondent.

WITH Appeal No. 146 of 2022

Champalal Mohanlal Jain 1002 Ganesh Darshan, 10th Floor, L.T. Road, Borivali (West), Mumbai - 400 092. ...Appellant

Versus

Securities and Exchange Board of India, SEBI Bhavan, Plot No. C-4A, G-Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051. ...Respondent 14

Mr. Vikas Bengani, Advocate for the Appellant.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the for the Respondent.

WITH Appeal No. 147 of 2022

Ruchit Hiralal Jain 1501, Rushab Tower, Next to Telephone Exchange, Mazgaon, Mumbai - 400 010. ...Appellant

Versus

Securities and 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.

Ms. Nidhi Singh, Advocate with Ms. Binjal Samani, Ms. Aditi Palnitkar, Ms. Moksha Kothari, Advocates i/b Vidhii Partners for the for the Respondent.

WITH Appeal No. 661 of 2022

Gopi Krishna Manepally HUF Karta : Gopi Krishna Manepally, 1-5-8, Dhan Bazar, Opp. Comtti Dharamkanta, General Bazar, Secunderabad, Hyderabad, Andhra Pradesh - 500 003. ...Appellant

Versus 15

Securities and 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 Appellants.

Mr. Akash Rebello, Advocate with Ms. Nidhi Singh, Ms. Deepti Mohan, Ms. Binjal Samani, Ms. Purvi Jain and Mr. Niket Dalal, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 662 of 2022

Murali Krishna Manepally HUF Karta : Murali Krishna Manepally, 1-5-8, Dhan Bazar, Opp. Comtti Dharamkanta, General Bazar, Secunderabad, Hyderabad, Andhra Pradesh - 500 003. ...Appellant

Versus

Securities and 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 Appellants.

Mr. Akash Rebello, Advocate with Ms. Nidhi Singh, Ms. Deepti Mohan, Ms. Binjal Samani, Ms. Purvi Jain and Mr. Niket Dalal, Advocates i/b Vidhii Partners for the Respondent. 16

WITH Appeal No. 663 of 2022

Laxmi Kanta Tolasariya Metrozone, Tower H, Flat No. 1504, 44, Pillaiyar Koil Street, Beside VR. Mall, Anna Nagar, Chennai - 600 040. ...Appellant

Versus

Securities and 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 Appellants.

Mr. Akash Rebello, Advocate with Ms. Nidhi Singh, Ms. Deepti Mohan, Ms. Binjal Samani, Ms. Purvi Jain and Mr. Niket Dalal, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 664 of 2022

Nainesh Gunvantlal Jain HUF 2nd Floor, Flat No. 22, Tenerife Building, Little Gibbs Road, Malabar Hills, Mumbai - 400 006. ...Appellant

Versus

Securities and 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 Appellants. 17

Mr. Akash Rebello, Advocate with Ms. Nidhi Singh, Ms. Deepti Mohan, Ms. Binjal Samani, Ms. Purvi Jain and Mr. Niket Dalal, Advocates i/b Vidhii Partners for the Respondent.

WITH Appeal No. 665 of 2022

Vaishali Nainesh Jain 2nd Floor, Flat No. 22, Tenerife Building, Little Gibbs Road, Malabar Hills, Mumbai - 400 006. ...Appellant

Versus

Securities and 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 Appellants.

Mr. Akash Rebello, Advocate with Ms. Nidhi Singh, Ms. Deepti Mohan, Ms. Binjal Samani, Ms. Purvi Jain and Mr. Niket Dalal, Advocates i/b Vidhii Partners for the Respondent.

WITH Misc. Application No. 1059 of 2022 And Appeal No. 666 of 2022

Nainesh Gunvantlal Jain HUF Karta : Nainesh Gunvantlal Jain 2nd Floor, Flat No. 22, Tenerife Building, Little Gibbs Road, Malabar Hills, Mumbai - 400 006. ...Appellant

Versus 18

Securities and 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 Appellants.

Mr. Akash Rebello, Advocate with Ms. Nidhi Singh, Ms. Deepti Mohan, Ms. Binjal Samani, Ms. Purvi Jain and Mr. Niket Dalal, Advocates i/b Vidhii Partners for the Respondent.

WITH Misc Application No. 1060 of 2022 And Appeal No. 667 of 2022

Vaishali Nainesh Jain 2nd Floor, Flat No. 22, Tenerife Building, Little Gibbs Road, Malabar Hills, Mumbai - 400 006. ...Appellant

Versus

Securities and 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 Appellants.

Mr. Akash Rebello, Advocate with Ms. Nidhi Singh, Ms. Deepti Mohan, Ms. Binjal Samani, Ms. Purvi Jain and Mr. Niket Dalal, Advocates i/b Vidhii Partners for the Respondent. 19

WITH Appeal No. 779 of 2022

Prakashkumar Narayanbhai Prajapati D 82, Sarvoday Nagar Soc. Part - 2, Nr. Sola Rlw Crossing, Sola Rd. Ghatlodia, Ahmedabad - 380 061. ...Appellant

Versus

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

Mr. Hardik Vora, Advocate for the Appellant.

Mr. Akash Rebello, Advocate with Ms. Nidhi Singh, Ms. Deepti Mohan, Ms. Binjal Samani, Ms. Purvi Jain and Mr. Niket Dalal, Advocates i/b Vidhii Partners for the Respondent.

AND Appeal No. 780 of 2022

Rakeshkumar Narayanbhai Prajapati D 82, Sarvoday Nagar Soc. Part - 2, Nr. Sola Rlw Crossing, Sola Rd. Ghatlodia, Ahmedabad - 380 061. ...Appellant

Versus

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

Mr. Hardik Vora, Advocate for the Appellant.

Mr. Akash Rebello, Advocate with Ms. Nidhi Singh, Ms. Deepti Mohan, Ms. Binjal Samani, Ms. Purvi Jain and Mr. Niket Dalal, Advocates i/b Vidhii Partners for the Respondent. 20

CORAM : Justice Tarun Agarwala, Presiding Officer Justice M.T. Joshi, Judicial Member Ms. Meera Swarup, Technical Member

Per : Justice Tarun Agarwala, Presiding Officer

1. 33 appeals by 36 noticees have been filed against orders of

the Whole Time Member („WTM‟ for short) and Adjudicating

Officer („AO‟ for short) of the Securities and Exchange Board

of India („SEBI‟ for short) out of which 26 appeals have been

filed against the order dated August 31, 2020 passed by the

WTM issuing directions under 11 and 11B of the Securities and

Exchange Board of India Act, 1992 („SEBI Act‟ for short)

cautioning some noticees and debarring other noticees for

specified period ranging from 3 months to 1 year and 7 appeals

have been filed by the noticees against the order dated June 30,

2022 passed by the AO wherein penalties have been imposed

ranging from Rs. 25,000/- to Rs. 5 lakh. Since the issue is

common, all the appeals are being decided together.

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

the shares of Kelvin Fincap Limited (formerly known as

Dahyabhai Sons Ltd. and hereinafter referred to as „Kelvin or

the „Company‟) were suspended on the Bombay Stock

Exchange Limited („BSE‟ for short) till November 2011 and till 21

March 29, 2012 there was no trading of its shares except one.

The Company was in the business of financing and investment.

As per the Annual Report of 2011-12 and 2012-13, the

Company earned a negligible profit of Rs. 25,869/- in 2011-12

and Rs. 43,957/- in 2012-13. The Annual Reports indicated that

Kelvin had poor fundamentals and there was no positive

corporate announcement, yet the Company issued preferential

allotment of shares on March 20, 2012 to 256 persons raising

Rs. 13 crores by issuing Rs. 1.30 crore shares in physical form

on a premium. As a result of the issuance of the preferential

shares, the promoters shareholding decreased to 5.31% and total

number of shareholders increased from 176 to 225.

3. SEBI examined the sharp rise in price / volume in the

scrip during 2013-14. Upon examination it was found that 361

connected entities traded substantially amongst themselves and

created artificial volume and contributed to artificial price rise

in the scrip. Further, the promoters transferred 7,11,058 shares

to group entities off market and thereafter these group entities

transferred the shares to the other noticees including the

appellants.

4. Pending investigation and in order to protect the interest of

the investors and integrity of the securities market, SEBI passed 22

an ex parte ad interim order dated August 14, 2014 restraining

44 entities from accessing the securities market and further

prohibited them from buying, selling or dealing in securities in

any manner whatsoever till further directions. The interim order

was confirmed by an order dated March 31, 2015 against 42

entities. Thereafter, detailed investigation was carried out and,

by an order dated October 3, 2017 a revocation order against 20

entities were passed revoking the interim order.

5. The investigation was divided into 3 patches. Patch - 1 is

for the period June 18, 2013 to July 28, 2013 wherein the price

rose from Rs. 151.55 paise to Rs. 225/- i.e. an increase of 48%.

The shares were thereafter split in the ratio 1:10 and Patch - 3

was for the period July 24, 2013 to May 29, 2014 wherein the

price rose from Rs. 118 to Rs. 535. It was also noticed that after

the lock in period, there was heavy trading wherein preferential

allottees off-loaded their shares after June 18, 2013.

6. Based on the investigation, the show cause notice dated

December 7, 2017 was issued to only 216 noticees out of 361

noticees. The show cause notice alleged that the price rose

drastically during the Patch - 3 period in spite of the fact that

the Company had very poor fundamentals and there was no 23

corporate announcement which could lead to an increase in the

price of the scrip. The show cause notice alleged that in Patch -

3 period 369 group entities traded out of which 46 group entities

traded as buyers and rest as sellers. The group entities and the

other noticees which included the appellants contributed to

Rs. 552.25 to net LTP and the trading volume was 82,53,011

shares of a Company which had no fundamentals. It was, thus,

alleged that these trades contributed to price rise and

manipulated the price of the scrip. The show cause notice also

alleged that 37 preferential allottees sold 50,31,597 shares for

Rs. 115.01 crore which was 99.05% of the shares.

7. Out of 116 noticees 84 noticees filed their replies alleging

that they had no connection with the promoters, directors or

with the Company and that they were trading in the ordinary

course of business and had received shares from off market

from one of the group entities who had not executed any trades

and was also not a counter party to the trades executed by the

noticees. It was also urged that no action was taken against the

group entities and that only a few trades of the noticees were

found to be manipulative which were minuscule compared to

the total number of trades executed by the group noticees. 24

8. The WTM after considering the material evidence, found

the noticees to be connected with the Company, promoters and

directors either directly or through group entities of the

Company in some form or the other. The WTM found that it

was not necessary to proceed against the group entities as there

was no evidence against them. The WTM found that noticees 1

to 18 acted as buyers, as well as noticees 114, 115 and 116 and

have aided these buyers in contributing to the price of the shares

by selling their shares with the sole purpose of increasing the

price of the scrip during Patch - 3. The WTM further found that

the buy orders in small quantities were being placed above LTP

at a higher price when sell orders were already existing on the

Stock Exchange platform and that trading was being done

amongst themselves between the noticees and the group entities

which was manipulative in nature as well as fraudulent which

amounted to unfair trade practices. It was found that noticees /

appellants as buyers and sellers subsequently placed orders

above LTP thereby increasing the price.

9. Accordingly the WTM cautioned some of the noticees and

directed them to be careful in future as the volume of trades was

miniscule as compared to others. The WTM for other noticees

debarred them for specified period as mentioned in the 25

impugned order. Similarly, AO imposed a penalty ranging from

Rs. 25,000/- to Rs. 5 lakh.

10. We have heard Shri Pesi Modi, the learned senior counsel,

Shri Somasekhar Sundaresan, Shri Prakash Shah, Shri Kunal

Katariya, Shri Vikas Bengani, Shri Saurabh Bachhwat,

Shri Hardik Vora, Ms. Rinku Valanju, Shri Rushin Kapadia, the

learned counsels for the appellants in respective appeals and

Shri Kevic Setalvad, the learned senior counsel, Shri Sumit Rai,

Shri Akash Rebello and Ms. Nidhi Singh, the learned counsels

for the respondent in respective appeals.

11. All the appellants before us have sold shares in Patch - 3

and are alleged to have raised the price of the scrip.

12. In Appeal no. 431 of 2020 Dukes Products (India) Ltd. it

is alleged that the appellant was shown to be connected to Geeta

Shah from whom the appellant had bought 10,000 shares off

market. It was alleged that Geeta Shah was subsequently

exonerated and that no show cause notice was issued and

consequently the appellant should have been exonerated as the

alleged link with the Company and / or group entities was

broken especially when there is no evidence that the appellant

was connected to any other noticees or group entities. It was 26

also urged that only 8 trades out of 106 trades contributed to

positive LTP and only 2 trades contributed to new high price

which was miniscule for which the debarment and penalties

imposed was harsh and disproportionate. It was further alleged

that there was no intelligible differentia adopted by the

respondent in as much as investigation was against 361

connected noticees and show cause notice was issued to only

116 noticees. Further, 69 noticees have been cautioned and

others have been penalized by way of debarment which is

discriminatory as well as arbitrary. It was also urged that the

appellant had only placed sell orders and could not manipulate

the price in as much only buyers can manipulate the price as

they had placed orders above LTP. In support of his

submissions the learned counsel placed reliance upon the

decision in BP Comtrade Pvt. Ltd., Appeal no. 189 of 2020,

decided on November 20, 2020 and Manish Suresh Joshi vs

SEBI, Appeal no. 2 of 2020, decided on January 13, 2020.

13. In Appeal no. 330 of 20020, Mahendra Dhanjibhai Amin,

the appellant contended that he had no connection with the

buyer and the connection through off market from GFL

Financials India Ltd. is disputed. The appellant contends that he

was a preferential allottee and had paid allotment money. Such 27

assertion is backed by a bank statement which shows that the

appellant had paid money for the preferential allotment of the

shares. The appellant disputed that he had purchased shares

through off market. Alternatively, it was contended that the

appellant, as seller in Patch - 3, had a miniscule impact on the

LTP which was less than 1% and therefore for such miniscule

trades the appellant should not be penalized. The appellant

denied that he had indulged in price manipulation.

14. In Appeals no. 359 of 2020 (Laxmi Kanta Tolasariya),

362 of 2020 (Srikant Karwa HUF and Shakuntala Karwa),

411 of 2020 (Viren Shelters LLP), 428 of 2020 (Gopi Krishna

Manepally HUF), 429 of 2020 (Murali Krishna Manepally

HUF), 430 of 2020 (Solex Commercial & Credit Pvt. Ltd.),

432 of 2020 (Dukes Consumer Care Limited), 444 of 2020

(Ankit Agarwal), 445 of 2020 (Umang Projects LLP),

447 of 2020 (Omprakash Agarwal HUF), 142 of 2022 (Madhu

Karnesh Shyamsukha), 143 of 2022 (Karnesh Pannalal

Shyamsukha), 144 of 2022 (Prachi Kagzi), 145 of 2022 (Nitin

Kagzi), 146 of 2022 (Champalal Mohanlal Jain), 147 of 2022

(Ruchit Hiralal Jain), 544 of 2021 (Prakashkumar Narayanbhai

Prajapati), 666 of 2022 (Nainesh Gunvantlal Jain HUF) and 667

of 2022 (Vaishali Nainesh Jain) it was contended that there is no 28

connection of the appellants with the Company, promoters and

directors of group entities and that a discriminatory policy has

been adopted. It was urged that the preferential allottees have

been exonerated who had gained the maximum by selling the

shares and earned Rs. 11 crores profits and, on the other hand,

the appellants have been indicted on the basis of sale of a few

shares which were found to be above LTP. It was urged that

they have not manipulated the price while executing sell orders

in Patch - 3. It was further contended that the trades in question

were miniscule compared to the total volume and, in many

cases, the volume of trades was less than 1%. It was, thus, urged

that SEBI in various decisions itself has taken a stand that if the

volume of trades is less than 1% then no action should be taken

against such noticees. In support of their submissions reliance

was placed on a decision of WTM, SEBI in Nikki Global

Finance Ltd. dated February 26, 2021 and AO dated

December 29, 2021. It was also urged that the WTM while

considering the miniscule trades made by them had only issued

a word of caution and directed the appellants to be careful in

future in spite of which the AO has imposed a penalty of Rs.

25,000/- on each of the appellants. It was urged that even the

direction of caution should not have been imposed by the WTM

since the trades were miniscule and the imposition of penalty by 29

AO was wholly arbitrary. In support of their submissions

reliance was placed on a decision of this Tribunal in Surendra

Kumar Gupta vs SEBI, Appeal no. 343 of 2021 decided on

February 7, 2022 and in the matter of Kaushik Rajnikant

Mehta vs SEBI in Appeal no. 76 of 2019 decided on May 5,

2021.

15. Similar arguments was raised in Appeal no. 420 of 2020,

Jitendra C. Janani HUF, Ramesh C. Janani HUF and Krunal

Ramesh Janani and Appeal no. 464 of 2020 Rakesh Prajapati . It

was urged that there was no connection with the Company or its

group entities and that sell orders were placed before the buy

orders and were not connected to the counter parties and trades

were below 1%. The appellants had received shares off market

from Universal Credit and Securities Ltd., SDFC Finance Ltd.

and RFL International Ltd. who were not issued any show cause

notice. In support of their submissions have relied upon a

decision of this Tribunal in Manish Suresh Joshi vs SEBI,

Appeal no. 2 of 2020, decided on January 13, 2020 and in

Kaushik Rajnikant Mehta vs SEBI in Appeal no. 76 of 2019

decided on May 5, 2021.

30

16. In Appeal no. 450 of 2020, Dr. Omprakash Agarwal it was

urged that the appellant did not contribute to positive LTP in

Patch - 3 and that the appellant has been linked on the basis of

an alleged connection with the promoters and that the promoter

has been exonerated by the respondent and therefore the

connection with the Company is broken and consequently the

appellant could not be charged. It was also urged that

connection shown with Narendra Shah is erroneous in as much

as Narendra Shah was not a party to the proceedings as no show

cause notice was issued.

17. In Appeal no. 535 of 2020, Bharti Upadhyay it was urged

that the appellant is a housewife and a widow and had no

knowledge of the trades being executed as the same was being

done by her father. It was urged that the appellant had

purchased shares off market from a group entity Cromakem

Limited who was in turn was exonerated and therefore the link

was broken and no penalty could have been awarded.

18. In Appeal no. 198 of 2021, Inventure Finance Pvt. Ltd. it

was urged that finding that appellant had contributed to increase

the LTP and NHP by selling shares at a higher price was not

based on any evidence. Further there was no connection with 31

the Company or the group entities. Further, the trades executed

by the appellant were not manipulative.

19. Appeals no. 663 of 2022 (Laxmi Kanta Tolasariya), 661

of 2022 (Gopi Krishna Manepally HUF), 780 of 2022

(Rakeshkumar Narayanbhai Prajapati), 779 of 2022

(Prakashkumar Narayanbhai Prajapati), 662 of 2022 (Murali

Krishna Manepally HUF), 664 of 2022 (Nainesh Gunvantlal

Jain HUF), 665 of 2022 (Vaishali Nainesh Jain) have been filed

by the appellants challenging the order of the AO whereby

penalty has been imposed ranging from Rs. 25,000/- to Rs. 5

lakh. The ground urged is the same as stated earlier against the

order passed by the WTM.

20. Having considered the submissions of the parties we

find that vague allegation has been made by the appellants with

regard to the connection. The WTM and the AO have dealt in

detail the connection of the appellants with the other noticees.

Such connection has not been disputed except a few which will

be discussed herein below. It is submitted that the appellants

along with other noticees were connected amongst themselves

by way of common address, e-mail id, mobile numbers, fund

transfers, off market transfers etc. and were part of a common

scheme of artificially inflating the price of the scrip of the 32

Company which barely had any financial worth and business

performance. The appellants along with other noticees

contributed to positive LTP and also created a NHP during

Patch-1 and Patch-3 by trading among themselves. We are of

the opinion that in the absence of any strong evidence the

contention of the appellants that they had no connection with

the other noticees is not based on any sound reasoning.

21. In this regard the appellant Dukes Products (India) Ltd.

contended that he has been shown to be connected with one

Geeta Shah from whom 10,000 shares were bought off market.

It was alleged that since Geeta Shah was subsequently

exonerated and no show cause notice was issued, the alleged

link with the Company and / or with the group entities was

broken and the appellants should also be exonerated is patently

misconceived. This submission cannot be accepted as we find

that apart from Geeta Shah the appellant was connected with

other entities. Further, Geeta Shah is connected to the counter

party buyer Do Max Steel Limited and also had a common

e-mail with Cromakem Limited. Further we find that an ex parte

ad interim order dated August 14, 2014 was passed against 44

entities which included Geeta Shah as she was suspected to

have carried out price manipulation and had fund transaction 33

with the Company and had also acquired shares off market from

the promoters of Kelvin. This restraint order continued for

almost 3 years when it was revoked on October 13, 2017. Thus,

it is not a case of exoneration of Geeta Shah but it was a case

that upon further investigation no further evidence came out to

prosecute or take further action against Geeta Shah. Thus, the

contention that the link was broken because Geeta Shah was

exonerated is erroneous and cannot be accepted.

22. Similar is the case of Om Prakash Agarwal in Appeal

no. 450 of 2020 who contended that the connection with

Narendra Shah was broken as Narendra Shah was exonerated

and no show cause notice was issued to him. We find that

further proceedings under Section 11(4) and 11B read with

Section 11(1) of the SEBI Act were recommended and

undertaken against Narendra Shah for aiding and abetting the

Company and its promoters directors for violation of the

provisions of the Companies Act and SEBI (Issue of Capital and

Disclosure Requirements) Regulations, 2009 („ICDR

Regulations‟ for short). Even though Narendra Shah was not

made a party to the show cause as he had not undertaken any

trades with the connected entities, the connection with Narendra

Shah was rightly retained in the show cause. We further find 34

that the appellant was connected with other noticees directly or

indirectly.

23. Insofar as the appellant Bharti Bharatkumar Upadhyay

in Appeal no. 535 of 2020 is concerned the said appellant not

only received shares from Cromakem Limited in off market

transfer but was also a counter party to one of the impugned

trades with Cromakem Limited. We further find that Cromakem

Limited was found to be connected not only to the Company but

also to various entities of the Company and its promoters. The

mere fact that no action was taken against Cromakem Limited

due to lack of evidence is no ground for exonerating the

appellant.

24. Reliance by the appellants in the case of Manish Suresh

Joshi vs SEBI, Appeal no. 2 of 2020, decided on January 13,

2020 wherein the said appellant was exonerated of the PFUTP

violation on the ground that once the link in the chain is broken

and there was no other connection between the said appellant

with the other entities is distinguishable on facts as in the instant

case we find that there were other links which connected the

appellants with the other entities. The decision of this Tribunal

in BP Comtrade Pvt. Ltd., Appeal no. 189 of 2020 decided on

November 20, 2020 and in Surendra Kumar Gupta vs SEBI, 35

Appeal no. 343 of 2021 decided on February 7, 2022 and in

Kaushik Rajnikant Mehta vs SEBI in Appeal no. 76 of 2019

decided on May 5, 2021 are not applicable in the facts and

circumstances of the present case.

25. Thus, the contention that certain entities from whom the

appellants had acquired shares off market were let off is

incorrect.

26. The contention that the preferential allottees were let off

is again misconceived. It has been found that three of the

preferential allottees, namely, Inventure Finance Pvt. Ltd.,

Mukesh N Desai and Suryamangal Media and Entertainment

Ltd. have violated the securities laws. The allegation of price

manipulation in the scrip of contributing to LTP was established

and they have been penalized accordingly. In respect of other

preferential allottees, no findings of price manipulation were

found in the investigation and consequently no action was taken

against them. The appellant Mahendra Dhanjibhai Amin may

have also been a preferential allottee but had also purchased

10,000 shares off market from GL Financials Ltd. the same is

reflected in his demat account and no objection was raised by

him. Whereas, he continues to feign ignorance of the receipt of 36

the shares, the fact that he sold 5770 shares out of 10,000 shares

on different dates has not been disputed by him. Thus, his stand

cannot be accepted.

27. The contention that the respondent had adopted no

intelligible differentia in choosing entities in the show cause

notice and that the same was arbitrary and discriminatory is

patently erroneous. It is submitted that pursuant to detection of a

huge rise in traded volume and price of the shares of the

Company, the preliminary enquiry found on the basis of

analysis of trading activities that the shares of the Company had

low liquidity but increased substantially after 361 related

entities started trading among themselves and contributed to

artificial price rise in the scrip. Based on the preliminary

examination an ex parte ad interim order was passed against 44

entities which included buyers, sellers and even promoters and

group entities who had a substantial shareholding in the

Company. Subsequently, after detailed investigation the show

cause notice was issued to 116 entities. The investigation report

and the impugned order indicates that out of the larger group of

361 entities after due analysis and investigation found that some

of the entities were not connected with the promoters and

directors or other group entities and that 116 connected entities 37

out of the larger group were found to have traded amongst

themselves and contributed significantly to the net positive LTP

as well as NHP. The show cause notice indicates that the

entities were consistently trading amongst themselves and have

successfully being pushing the LTP and NHP upwards

sometimes by placing miniscule orders. Nothing has been

brought before us to show that the other entities who were

earlier identified were also trading amongst themselves with the

appellants and were pushing the LTP and NHP upwards. In the

absence of any evidence being placed by the appellants other

than the fact that the investigation identified 361 noticees which

was reduced to 116 entities when the show cause was issued, in

our opinion, is not sufficient to show that no intelligible

differentia was exercised by the respondent while issuing the

show cause notice. Classification is based on intelligible

differentia. The differentia bears a reasonable nexus with the

object sought to be achieved. In our opinion, we find that the

classification is based on an intelligible criteria and has a nexus

with the objectives of the Regulations. The Board exercised

intelligible differentia based on the material before it and issued

show cause notice to the relevant entities in the attendant

circumstances relating to the modus operandi of fraudulent

trade practices committed by the appellants. Thus, the 38

contention that the show cause notice issued to 116 entities was

not based on any intelligible differentia is patently erroneous.

28. The contention that no manipulative trades was carried

out by the appellants and there was no manipulative trading

pattern is patently erroneous. The evidence that has come on

record indicates that the appellants and all the connected entities

apparently traded as a cohesive group with a predetermined

mindset to manipulate the price of the group by cumulatively

contributing to the LTP of the scrip over a long period of time.

As a result each appellants contributed to the LTP in small or

large percentage.

29. In this regard, we find that the trades of the present

appellants in question were in Patch-3 of the investigation

period (24.07.2013 to 29.05.2014), when the price of the scrip

opened at Rs. 118 and closed at Rs. 535 in 205 trading days.

The impugned trading activity found in this Patch was of 111

connected entities (18 buyers and 93 sellers), (including the

appellants (all sellers) who were found to have traded among

themselves and contributed significantly to the net positive LTP

as well as NHP of the scrip.

39

30. These 111 noticees (including the appellants herein)

together contributed Rs. 746.85 to the LTP of the scrip (37.77%

of the market positive LTP) involving 2,02,204 shares during

Patch-3. Further 17 noticees (including 10 appellants) by trading

with other noticees had cumulatively contributed to NHP of Rs.

161.3 as sellers in 29 trades amounting to 38.21% of the total

NHP contribution during the relevant period.

31. Insofar as LTP contribution is concerned these 111

noticees (including the appellants herein) together contributed

Rs. 746.85 to the LTP of the scrip (37.77%) of the market

positive LTP) involving 2,02,204 shares during Patch-3. It was

found that 155 trades executed amongst the 111 noticees

amounted to positive contribution to LTP. The time difference

between the buy orders and sell orders ranged from mere 2

seconds to a bit more than 5 hours, but no difference in buy

order limit price and sell order limit price was noticed. The

individual LTP contribution of each of the 111 noticees

(including the appellants) are been set out at Table 6 of SCN

which remains undisputed. The details of the 155 trades

executed between the buyer noticees and seller noticees as set

out in Table 12 of impugned order is also not disputed. 40

32. The modus operandi followed by the appellants and

other entities comprising of buyers as well as sellers was to

consistently place buy orders in small quantities at prices above

the LTP which were subsequently matched by sell order; or

place sell order at higher than LTP (majority of the sell orders

were placed first), which were then matched by the buyers in

small quantities.

33. The evidence on record shows that the trading pattern

timing of order placement, order rate, order quantity, trade time,

trade rate, trade quantity, time difference, price difference, LTP

difference etc. in respect of the trades of the appellants as sellers

indicates that all the orders were placed above LTP by the

appellants. The time difference in the execution of the trades

ranged from mere 2 seconds to 5 hours which indicates that

trade were being matched almost immediately or within a short

span of time after placement of order which is the peculiar trade

behavior in an illiquid scrip such as that of the Company. In all

the cases, the sell order was placed first at a specific rate above

the LTP by the appellants and was bought by a connected buyer

at the same price within a short span of time. In the case of

Dukes Products (India) Limited out of 8 positive LTP trades 4 41

trades matched with the same buyer, namely, Do Max Steel

Limited.

34. From the perusal of the impugned order it is clear that

the modus operandi was that the buyers and sellers aided each

other, wherein the buyers purchased the shares placed by the

sellers at an increased price from the last traded price of the

scrip thereby contributing significantly to the positive LTP of

the scrip. The time difference between the buy orders and the

sell orders ranged from a mere 2 seconds to a bit more than 5

hours, but no difference in buy order limit price and sell order

limit price was noticed. Such a peculiar trading pattern of

matching and concentrated trades by the 111 noticees who were

a group of connected entities cannot be a mere coincidence. The

role performed by each of the noticees (including the appellants)

was in aid of one another and raised the price of the scrip and

the same could not have been possible without these noticees

having engaged in a pre-conceived scheme to manipulate the

price of the scrip. The overall trading pattern of all the noticees

combined (including the appellants) clearly evidences the

preponderance of a larger conspiracy between them. The buyer

noticees have accepted their manipulative trading behavior as

none of them have challenged the impugned order. 42

35. We also find that 17 noticees (including the appellants

namely Inventure Finance Pvt. Ltd., Dukes Products (India)

Ltd., Mahendra Dhanjibhai Amin, Umang Projects LLP, Dukes

Consumer Care Ltd., Solex Commercial Credit Pvt. Ltd., Viren

Shelters, Bharti Upadhyay, Prakashkumar Prajapati and Rakesh

Prajapati by trading with other noticees had cumulatively

contributed to NHP (new high price) of Rs. 161.3 as sellers in

29 trades amounting to 38.21% of the total NHP contribution

during the relevant period. In the present case it was observed

that the scrip witnessed sustained increase of market price over

a period of time due to consistent contribution to the LTPs and

repeated creation of NHPs owing to the manipulative trades of

the aforesaid noticees (including the aforesaid appellants). The

individual NHP contribution of each of the 111 noticess

(including the appellants) are set out at Table 15 of impugned

order.

36. It was urged that the trades made were miniscule which

had no impact in the market and further no penalty could have

been imposed upon the appellant. This submission cannot be

accepted in as much as the evidence indicates that the appellants

who have traded among themselves consistently with the sole 43

purpose to increase the LTP. The contribution of each

participant in such trades howsoever miniscule it may be in

quantity cannot be ignored since the modus operandi was that

the appellants in connivance with the buyers were trading

amongst themselves. The collective volume has to be

considered rather than few and miniscule trades of an individual

noticee. In this regard this Tribunal in Hemant Sheth & Ors. vs

SEBI, Appeal no. 205 of 2019 decided on March 4, 2020 held

as follows:-

"Further, the submission that self trades are very insignificant percentage of the total market volume to prove charges is not in tune with the SEBI's own policy that small quantity of self trades happens sometimes automatically has no meaning in the larger context where it is clear that the appellants were trying to manipulate the trade through various means including synchronized and reversed trades."

"In a scheme of manipulative and unfair trading it is not necessary that every participant should be indulging in every type of trading violation or even in the same / similar magnitude. Once they are found to be part of a group trying to manipulate the volume or price of the scrip they became party to the violation. Hair splitting arguments that some traded more than others or on more days or some indulged in synchronized reversal and self trade while others did only one of those types do not cast away their violations."

37. In Yashwant Deoras vs Walchand Ramchand, AIR

1951 SC 16, the Supreme Court held:-

44

"In the very nature of things, fraud is secret in its origin or inception and in the means adopted for its success. Each circumstances by itself may not mean much, but taking all of them together, they may reveal a fraudulent or dishonest plan."

The said principle is applicable in the instant case.

38. In view of the aforesaid, we are of the confirmed

opinion that the order of the WTM and the AO holding that the

appellants had violated the provisions of Regulation 3 and 4 of

the PFUTP Regulations read with Section 12A of the SEBI Act

does not suffer from any error of law. The WTM and the AO

after taking into the factors contemplated under Section 15J

rightly issued the directions under Section 11 and 11B of the

SEBI Act by the WTM and penalties by the AO which we do

not find any error.

39. However, we find that the WTM has only issued a

"caution" to certain appellants as the trades were found to be

miniscule which did not warrant any directions for debarment,

etc. The WTM has cautioned and directed them to be careful in

future. Black‟s Law Dictionary, Sixth Edition, defines „caution‟

as „to warn, exhort, to take heed, or to give notice of danger‟.

Once a caution / a warning has been given to the appellant to be

careful in future by the WTM considering the trades executed 45

by these appellants as not being so grievous to issue a direction

of debarment under Section 11 and 11B of the SEBI Act we are

of the opinion when such caution / warning is given it is not

appropriate for the AO to impose a penalty for the same

violation. In view of the aforesaid, the imposition of penalty by

the AO on these appellants who have been cautioned by the

WTM cannot be sustained.

40. For the reasons stated aforesaid, while affirming the

violation committed by the appellants all the appeals filed

against the orders of the WTM are dismissed.

41. The Appeals no. 661 of 2022 (Gopi Krishna Manepally

HUF, 662 of 2022 (Murali Krishna Manepally HUF), 663 of

2022 (Laxmi Kanta Tolasariya), 664 of 2022 (Nainesh

Gunvantlal Jain HUF, 665 of 2022 (Vaishali Nainesh Jain) and

779 of 2022 (Prakashkumar Narayanbhai Prajapati) against the

order of AO imposing a penalty of Rs. 25, 000 is quashed. The

appeals are allowed. Appeal no. 780 of 2022 (Rakeshkumar

Narayanbhai Prajapati) against the order of the AO is dismissed

with no order as to costs. Miscellaneous applications are

disposed of.

46

42. 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 Tarun Agarwala Presiding Officer

Justice M.T. Joshi Judicial Member

Ms. Meera Swarup Technical Member MADHUKA Digitally signed by MADHUKAR R SHAMRAO 03.01.2023 SHAMRAO BHALBAR Date: 2023.01.06 msb BHALBAR 17:05:19 +05'30'