Sandeep Tulsiram Agarwal vs Sebi

IN THE SECURITIES APPELLATE TRIBUNAL AT MUMBAI DATED THIS THE 13TH DAY OF AUGUST, 2026 CORAM: Justice P.S. Dinesh Kumar, Presiding Officer Ms. Meera Swarup, Technical Member Dr. Dheeraj Bhatnagar, Technical Member Appeal No.848 of 2022 Sandeep Tulsiram Agarwal 36, Royal Enclave, Nr. Asopalav Bunglows, Ahmedabad, Gujarat-380059. .....Appellant (By Mr. Saurabh Bachhawat, Advocate with Mr. Kaushik Puranik and Ms. Mona Vora, Advocates for the Appellant.) Securities and Exchange Board of India SEBI Bhavan, Plot No.C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051. .....Respondent (By Mr. Chetan Kapadia, Senior with Mr. Manish Chhangani, Mr. Sumit Yadav, Mr. Abhay Chauhan and Mr. Atul Agrawal, Advocates i/b. The Law Point for the Respondent.) 2 With Appeal No.849 of 2022 Manoj Tulsiram Agarwal 15-ManiChandra Co-op Housing Sco., 2 Thaltej Ahmedabad, Gujarat - 380054. .....Appellant (By Mr. Saurabh Bachhawat, Advocate with Mr. Kaushik Puranik and Ms. Mona Vora, Advocates for the Appellant.) Securities and Exchange Board of India SEBI Bhavan, Plot No.C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051. .....Respondent (By Mr. Suraj Chaudhary, Advocate with Mr. Manish Chhangani, Mr. Sumit Yadav, Mr. Abhay Chauhan and Mr. Atul Agrawal, Advocates i/b.

The Law Point for the Respondent.) With Appeal No.850 of 2022 Pushpadevi Tulsiram Agarwal No.5, Royal Crescent, Nr. Asopalav Bunglows, Ahmedabad, Gujarat - 380059. .....Appellant (By Mr. Saurabh Bachhawat, Advocate with Mr. Kaushik Puranik and Ms. Mona Vora, Advocates for the Appellant.) Securities and Exchange Board of India SEBI Bhavan, Plot No.C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051. .....Respondent 3 (By Mr. Suraj Chaudhary, Advocate with Mr. Manish Chhangani, Mr. Sumit Yadav, Mr. Abhay Chauhan and Mr. Atul Agrawal, Advocates i/b. The Law Point for the Respondent.) With Appeal No.851 of 2022 Mahendra Tulsiram Agarwal No.5, Royal Crescent, Nr. Asopalav Bunglows, Ahmedabad, Gujarat - 380059. .....Appellant (By Mr. Saurabh Bachhawat, Advocate with Mr. Kaushik Puranik and Ms. Mona Vora, Advocates for the Appellant.) Securities and Exchange Board of India SEBI Bhavan, Plot No.C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051. .....Respondent (By Mr. Chetan Kapadia, Senior with Mr. Manish Chhangani, Mr. Sumit Yadav, Mr. Abhay Chauhan and Mr. Atul Agrawal, Advocates i/b.

The Law Point for the Respondent.) With Appeal No.852 of 2022 Sudha Mahendra Agarwal No.5, Royal Crescent, Nr. Asopalav Bunglows, Ahmedabad, Gujarat - 380059. .....Appellant (By Mr. Saurabh Bachhawat, Advocate with Mr. Kaushik 4 Puranik and Ms. Mona Vora, Advocates for the Appellant.) Securities and Exchange Board of India SEBI Bhavan, Plot No.C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051. .....Respondent (By Mr. Suraj Chaudhary, Advocate with Mr. Manish Chhangani, Mr. Sumit Yadav, Mr. Abhay Chauhan and Mr. Atul Agrawal, Advocates i/b. The Law Point for the Respondent.) With Appeal No.853 of 2022 Namrata Sandeep Agarwal 36, Royal Enclave, Nr. Asopalav Bunglows, Ahmedabad, Gujarat-380059. .....Appellant (By Mr. Saurabh Bachhawat, Advocate with Mr. Kaushik Puranik and Ms. Mona Vora, Advocates for the Appellant.) Securities and Exchange Board of India SEBI Bhavan, Plot No.C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051. .....Respondent (By Mr. Suraj Chaudhary, Advocate with Mr. Manish Chhangani, Mr. Sumit Yadav, Mr. Abhay Chauhan and Mr. Atul Agrawal, Advocates i/b.

The Law Point for the Respondent.) 5 THESE APPEALS ARE FILED UNDER SECTION 15T OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 TO SET ASIDE THE ORDER DATED JULY 29, 2022 PASSED BY THE WTM, SEBI. THESE APPEALS HAVING BEEN HEARD AND RESERVED FOR ORDERS ON MAY 04, 2026 COMING ON FOR PRONOUNCEMENT OF ORDER THIS DAY, THE TRIBUNAL MADE THE FOLLOWING: ORDER Per: Justice P.S. Dinesh Kumar, Presiding Officer These six appeals are directed against order dated 29.07.2022 passed by the WTM1, SEBI2 directing disgorgement, debarring from accessing the securities market and dealing in the scrip of Kushal Limited; and imposing penalties on the appellants for violation of Securities laws. 2. Appeal Nos.848 to 853 of 2022 are filed by Sandeep Tulsiram Agarwal ('Sandeep' for short), Manoj Tulsiram Agarwal ('Manoj' for short), Pushpadevi Tulsiram Agarwal ('Pushpadevi' for short), Mahendra Tulsiram Agarwal ('Mahendra' for short), Sudha Mahendra Agarwal ('Sudha' for short) and Namrata Sandeep Agarwal ('Namrata' for short) respectively. 3. We have heard Mr. Saurabh Bacchawat, learned Advocate for the appellants and Mr. Chetan Kapadia, learned Senior 1 Whole Time Member 2 Securities and Exchange Board of India 6 Advocate and Mr. Suraj Chaudhary, learned Advocate for the SEBI.

4. Brief facts of the case are: 05.12.2017, the Company made a corporate announcement on the BSE about the Board meeting to be held on 14.12.2017, to consider declaration of second interim dividend and the unaudited financial results for the quarter and half year ended on 30.09.2017. The trading window was closed between 05.12.2017 and 16.12.2017 for the Promoters, Directors and Designated employees. c) Noticee No.1, Sandeep3 is the MD of the Company; Noticee No.2, Namrata4 is his wife; Noticee No.3, Sudha5 is the wife of Noticee No.6, Mahendra; Noticee No.4, Pushpadevi6 is MD's mother; Noticee No.5, Manoj7, the ED of the 3 Appellant in Appeal No.848 of 2022 4 Appellant in Appeal No.853 of 2022 5 Appellant in Appeal No.852 of 2022 6 Appellant in Appeal No.850 of 2022 7 Appellant in Appeal No.849 of 2022 7 Company and MD's brother; and Noticee No.6 is Mahendra8, MD's another brother. d) It was noticed that the Noticee Nos.1 to 4 had traded in the scrip during the UPSI9 period and Noticee No.1, 5, and 6 had communicated the UPSI to other Noticees. e) A show cause notice was issued to all six appellants alleging communication and trading during the UPSI period.

Appellants filed their replies. After adjudication, the impugned order has been passed directing them to: 7. We have carefully considered rival contentions and perused the records. 8. Undisputed facts are, the MD14 of the Company, his wife, his brother's wife and his mother have purchased Company's shares between 22.11.2017 and 04.12.2017. SEBI's main allegation is that the said purchases are within the UPSI period. 9. UPSI is defined in Regulation 2(1)(n) of the PIT Regulations as follows: (Emphasis supplied) 10. The next admitted position is, on 05.12.2017, the Executive Director15 brought the proposal for interim dividend. On the same day, the notice of proposed Board meeting was given. It was rightly argued by Mr. Kapadia that for a listed company to consider declaring dividend, whether interim or final, the management is required to know the financials. It is, therefore, logical to infer that the financials were known to the concerned in the management, when the ED (Manoj) proposed second interim dividend. The next admitted position is, Board meeting was held on 14.12.2017 and a corporate announcement declaring the interim dividend was made on the same day.

11. The financials under consideration for announcement of interim dividend were for quarter ended 30.09.2017. Regulation 33(3)(a) of LODR Regulations, 2015 requires the Company to submit the quarterly financial results to the stock exchange within 45 days, which expired on 14.11.2017. Though, it was argued by the appellants that one month extension was obtained by the Company, no material is placed on record to show the exact date on which financials were ready. In the absence of any specific material to the contrary, it is reasonable to consider the statutory period prescribed in the Regulations, which is, on or 15 Executive Director - Manoj 11 before 15.11.2017. Admittedly, appellants have purchased Company's shares between 22.11.2017 and 04.12.2017, which is after expiry of the timeline prescribed by the LODR Regulations to submit the financials. We have perused the copies of the email dated 03.11.2020 sent by SEBI and the relevant portion reads thus: Information required - a) Copy of the consent received from the abovementioned three companies b) Details of the management (i.e. name of directors on the board, designation and tenure) of the abovementioned three companies. c) Persons who were aware of the proposal of amalgamation/merger in the abovementioned three companies.

2) With respect to the Minutes of the board of Kushal Ltd, dated September 14, 2017 (copy attached), please provide the following information- a) Agenda, minutes of meetings of the board of the Directors held on August 16, 2017 and August 18, 2018 and proof of circulation of the agenda. 3) With respect to the Minutes of the board of Kushal Ltd. dated December 14, 2017 (copy attached), please provide the following information- a) Agenda, minutes of meetings of the board of the Directors held on November 13, 2017 and November 21, 2017 and proof of circulation of the agenda. 4) With respect to the un-audited financial results for the quarter ended June 2017, September 2017 and December 2017. please provide the chronology of events with regard to the following- a) Preparation of the financial results for the three quarters. b) Discussions, submissions of the financial results to the auditor. c) Finalization of the results. d) Submission of the results to the board. Please provide the above chronology of events 'date-wise' (le. the date when the event was initiated) for each of the event, Including the people Involved in each of the event, their designation, PAN, email and mobile number.

5) The relationship of the following entities with the other Promoters/ Directors of Kushal Limited - a) Ms. Namrata Sandeep Agrawal b) Ms. Pushpadevi Agrawal c) Shri Sandeep Tulsiram Agrawal d) Ms. Sudha Mahendra Agrawal You are requested to provide the above data by November 10, 2020. Regards Peter Mardi AGM SEBI 022 2644 9233/9000 (Board number)" 13. A careful perusal of the above reply shows two things. Firstly, admission on the part of the Company that it had not maintained precise log of activities and secondly that the activities relating to the results were happening over 7 to 10 days before the Board meeting. This means the Company did not have a proper record of dates as to when exactly the accounts were finalised. Admittedly, on 13.11.2017, the Company has declared the first interim dividend. We have perused the minutes of the Board meeting held on 13.11.2017. With regard to declaration of first interim dividend for the financial year 2017-18, it is stated thus: (Emphasis supplied) 14. The above resolution makes it clear that the management had full knowledge that the Company was expecting good profits in that financial year.

Within 10 days therefrom i.e.22.11.2017, appellants started acquiring large quantity of shares in the following manner: Appellant Name Date of Gross Buy Trade (Quantity) Namrata Sandeep Agrawal (Noticee No.2) 22.11.2017 1,00,000 (Appellant in Appeal 853 of 2022) 23.11.2017 56,630 27.11.2017 43,370 30.11.2017 1,35,000 Sandeep Tulsiram Agrawal (Noticee No.1) 28.11.2017 64,765 (Appellant in Appeal 848 of 2022) 29.11.2017 94,235 Sudha Mahendra Agrawal (Noticee No.3) 01.12.2017 1,25,000 (Appellant in Appeal 852 of 2022 Pushpadevi Agrawal (Noticee No.4) 04.12.2017 1,00,000 (Appellant in Appeal 850 of 2022 15. It was argued by Mr. Kapadia that the appellants had not traded in any other scrip except Kushal Limited during the UPSI period. This contention is not controverted. The fund transfers for the trades have taken place in the following manner. 4.57 crores (including Rs 40 lakhs received from Noticee No. 6) to her Broker for her trades during 22.11.2017 to 30.11.2017. b) On December 01, 2017, Noticee No. 6 transferred Rs. 1.21 crores to the bank account of his wife, Noticee No. 3, who transferred Rs 1.70 crores (including Rs 1.21 crores received from Noticee 6) to her Broker for her trade on 01.12.2017. c) Noticee No. 3 provided Rs. 1.58 crores to Noticee No. 4 for her trade on 04.12.2017."

16. The appellants have vehemently contended that at best the UPSI period ought to have been construed from 05.12.2017, when Board meeting was announced. SEBI has contended in its 17 reply that the UPSI period was from 01.10.2017 to 14.12.2017. However, in its written submissions, SEBI has taken a stand that the earliest point at which the UPSI concretely came into existence was 13.11.2017. To support this submission, SEBI has relied upon Chairman's announcement in the Board meeting dated 13.11.2017 that the Company was expecting good profits in the current financial year. It was urged that Chairman's statement has reference to financial results for quarter ending 30.09.2017. With regard to appellants' submission that extension was obtained to finalise the accounts, we have already held that such contention is untenable because there is no material to support that contention. As per Regulation 33(3)(a) of LODR Regulations, 2015, the Company was required to submit the quarterly financial results to the stock exchange within 45 days, which expired on 14.11.2017. As noted hereinabove, SEBI has also accepted 13.11.2017 as the earliest point when the UPSI is said to have concretely come into existence.

In the absence of any other material, we are persuaded to accept this contention and accordingly hold the UPSI period from 13.11.2017 to 14.12.2017. 17. Trading has taken place between 22.11.2017 and 04.12.2017. The purchasers of the shares are MD, his wife, mother and his brother's wife. The MD and ED are 'connected persons'16. MD's wife and mother are 'immediate relatives'17. The remaining purchaser, namely MD's brother's wife (Noticee No.3) 16 as defined in Regulation 2(1)(d)(i) of PIT Regulations. as defined in Regulation 2(1)(d)(ii) of PIT Regulations. is dependent on Noticee No.6, who is none other than the third brother of both MD and the ED. Noticee No.3 has received ₹1.21 Crores out of total purchase of ₹1.70 Crores from her husband. Therefore, she falls within the definition of Regulation 2(1)(d)(ii)(f). Thus, it is clear that the MD and his close relatives have purchased the shares of his Company during the UPSI period and we find no error in WTM's finding on this aspect. 18. The next point for consideration is, penalty and disgorgement. The appellants have purchased the shares during the UPSI period and retained with them.

The WTM has calculated the 'notional gains' while ordering disgorgement. 19. The 2nd interim dividend was approved in the meeting held on 14.12.2017 and on the same day it was disclosed to the stock exchanges after the market hours. When the market opened on the following day i.e.15.12.2017, there was an increase in Company's share price by 1.74% and the stock price rose to ₹143.05. The WTM has calculated the disgorgement in the following manner: 20. The notional gain has been calculated by deducting the price of acquisition from ₹143.05, the share price on the immediate next day of announcement. Mr. Kapadia has relied upon the decision in Dushyant N Dalal18, Top Class Capital Markets Private Limited19 by this Tribunal and Shapiro20 from US Court of Appeals for Second Circuit to support the notional gain theory. We may record that in Dushyant N Dalal, Top Class Capital Markets Private Limited, this Tribunal has upheld calculation of disgorgement based on notional gain. In Dushyant N Dalal21 it is held thus: 21. In Top Class Capital Markets Private Limited, it is held thus: 22. The facts of this case are conspicuous.

The 1st interim dividend was announced on 13.11.2017 and we have held that is the date of commencement of UPSI period. There is no dispute with regard to the last of date of UPSI period i.e.14.12.2017. The trades have taken place between these two dates. Hence, in our view, there is no error in notional gains computed by the SEBI. 23. The next question is with regard to the penalty. Following factors provided in Section 15J of the SEBI Act, 1992 are required to be considered while adjudging the quantum of penalty: 24. The quantum of disproportionate gain is extracted above. The WTM has recorded that no loss has been caused to any specific investor and there is no material on record to hold that appellants default was repetitive in nature. Hence, out of three factors, only factor (a) needs to be considered. It was argued that Company had obtained extension to complete the financials by one month, although it is not discernible from the records. The MD (Sandeep), the ED (Manoj) have communicated the UPSI to the other members of the family who have acquired the shares. The transfer of funds has taken place as mentioned in para 15 above.

The Managing Director and his wife have also purchased the shares. All persons fall under Regulation 2(1)(g)(i) of PIT Regulations. Hence, we find no error in the quantum of penalty imposed on each appellant. 25. The next aspect is debarment. The WTM has directed debarment of all appellants for one year from accessing the market and two years from dealing with the Company's shares. Admittedly, appellants have not traded in other scrips either in pre-UPSI, UPSI or post UPSI period. This period accounts for 8 months. Thus, the debarment with regard to other scrips has no bearing on the appellants. So far as debarment of two years in 22 dealing with Company's scrip is concerned, we are of the opinion that in the facts of this case, no exception can be taken to WTM's order. 26. In the results, these appeals fail and are accordingly dismissed. Pending interlocutory application(s), if any, stand disposed of. No costs. Justice P.S. Dinesh Kumar Presiding Officer Ms. Meera Swarup Technical Member Dr. Dheeraj Bhatnagar Technical Member Digitally signed RAJALA byRAJALAKSHMI H 13.08.2026 KSHMI NAIR Date: RHN H NAIR 2026.08.13 15:01:17 +05'30'