Siya Bansal & Anr. vs Sebi

Order Reserved On: 23.03.2018 Date of Decision : 06.04.2018

Appeal No. 67 of 2018

1.

Siya Bansal

2. Rajan Bansal H. No. 1082, Satsang Road, Ludhiana, Punjab. ...Appellants

Versus

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

2. Sandhya Sahebrao Badekar 115/B Shalimar Miracle, Plot No. 26, Opp. ICICI Bank, SV Road, Goregaon (West), Mumbai- 400 062 ...Respondents

Mr. Manohar Parkash Bansal, Representative for Appellants.

Mr. Vishal Kanade, Advocate with Mr. Chirag Bhavsar, Advocate i/b MDP & Partners for Respondent No. 1

Ms. Sandhya Sahebrao Badekar, Respondent No. 2 in Person.

CORAM: Justice J.P. Devadhar, Presiding Officer Dr. C.K.G. Nair, Member

Per: Justice J.P. Devadhar

1. Appellants are aggrieved by the order passed by the Adjudicating

Officer ("AO" for short) of Securities and Exchange Board of India

("SEBI" for short) on 04.08.2017. By the said order the AO of SEBI has

imposed penalty of ` 15 lac on each appellant under Section 15HA of the 2 Securities and Exchange Board of India Act, 1992 ("SEBI Act" for short)

for violating the SEBI (Prohibition of Fraudulent and Unfair Trade

Practice relating to Securities Market) Regulations, 2003 ("PFUTP

Regulations" for short).

2. On perusal of the impugned order, it is seen that during the period

from 27.12.2011 to 24.01.2012 the price in the scrip of KGN Enterprise

Limited ('Company" for convenience) increased from ` 200 to ` 898 i.e.

increase by 349%. Investigation carried out by SEBI revealed that

Ms. Sandhya Sahebrao Badekar had contributed ` 250 by way of New

High Price (NHP) in the scrip of the company in 11 trades with two

counter parties, namely, the appellants who are connected to each other

through common address. On further investigation it was noticed that

Ms. Sandhya had contributed ` 210 in NHP by 6 trades with Appellant

No. 2 and ` 40 in NHP by 5 trades with Appellant No. 1 which were

repetitive in nature.

3. Investigation further revealed that on 27.12.2011 there was only 1

buy interest in the market for 100 shares of the company until 12:39:10 at

the rate of ` 149 per share. The Appellant No. 2 entered the market at

12:39:12 with sell order at the rate of ` 200 for 1 share. The said order

was accepted but with a warning as it was almost breaching the dummy

price band set by the exchange as per the exchange policy to avoid any

price manipulation on the first day of listing. Subsequently, within a

matter of 4-5 seconds the appellants kept putting sell orders for 1 share

each and one order for 10 shares at the rate of ` 250, ` 300, ` 350, 3

` 400, ` 450, ` 481.... ` 500 respectively. All these trades were

accepted with a warning as they were almost breaching the dummy price

band. Thus, the appellants together took the price of the KGN scrip from

` 149 to ` 500 within a span of 1 minute and 37 seconds. In view of the

fact that the appellants had repeatedly contributed to the NHP, SEBI

considered the trades to be manipulated trades in violation of PFUTP

Regulations. Accordingly, proceedings were initiated and by the

impugned order penalty of ` 15 lac is imposed on each appellant under

Section 15HA of SEBI Act.

4. Authorised Representative of the appellants submitted that the

appellants have been actively trading in the stock market through SEBI

registered sub-broker for the past more than one decade and in all these

years there has never been any misdoing on their part. He submitted that

there was no illegal motive or any malafide intention to manipulate the

market price of the scrip or defeat the market mechanism. He submitted

that since the appellants have neither taken any unfair advantage from the

trades in question nor the said trades were repetitive in nature, the penalty

imposed against the appellants deserves to be quashed and set aside.

5. We see no merit in the above contentions.

6. Fact that the orders placed by the appellants resulted in NHP is not

in dispute. Moreover, conduct of the appellants in placing orders

creating NHP inspite of the warning issued by the stock exchange clearly

shows that the orders placed by the appellants were not bonafide orders.

From the order and the trade logs set out in para 20 & 21 of the impugned 4

order it is abundantly clear that the appellants repeatedly indulged in

creating NHP inspite of the warning issued to them. In such as case,

decision of the AO that the appellants repeatedly placed orders which

were virtually breaching the dummy price band set by the exchange in

gross violation of the PFUTP Regulations cannot be faulted.

7. Penalty imposable under the SEBI Act for violating PFUTP

Regulations under Section 15HA of SEBI Act is up to ` 25 crore.

However, the AO after considering all mitigating factors has imposed

penalty of ` 15 lac on each appellant which cannot be said to be

unreasonable or excessive.

8. In the result, we see no merit in the appeal and the same is hereby

dismissed with no order as to costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Dr. C.K.G. Nair Member 06.04.2018 Prepared & Compared By: PK