Yellow Consultants Private Ltd. vs Sebi

Order Reserved On: 03.03.2020 Date of Decision : 16.03.2020

Appeal No. 144 of 2019

Highlight Leafins Pvt. Ltd. 1011, Embassy Centre, 207, Nariman Point, Mumbai- 400 021 ...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

WITH Appeal No. 145 of 2019

Yard Securities Pvt. Ltd. 1011, Embassy Centre, 207, Nariman Point, Mumbai- 400 021 ...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 2

WITH Appeal No. 146 of 2019

Green Cottage and Resorts Ltd. 1011, Embassy Centre, 207, Nariman Point, Mumbai- 400 021 ...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

WITH Appeal No. 147 of 2019

Zoom Colonizers Pvt. Ltd. 1011, Embassy Centre, 207, Nariman Point, Mumbai- 400 021 ...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

WITH Appeal No. 148 of 2019

Phenomenal Crafts Pvt. Ltd. 1011, Embassy Centre, 207, Nariman Point, Mumbai- 400 021 ...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 3

AND Appeal No. 149 of 2019

Yellow Consultants Private Ltd. 1011, Embassy Centre, 207, Nariman Point, Mumbai- 400 021 ...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. Ashok Singh, Advocate with Ms. Mahi Lalka, Advocate for Appellants in Appeal Nos. 144 to 149 of 2019.

Mr. Vishal Kanade, Advocate with Mr. Shehaab Roshan, Advocate i/b K. Ashar & Co. for the Respondent in Appeal Nos. 144 to 149 of 2019.

CORAM: Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Justice M. T. Joshi, Judicial Member

Per: Justice Tarun Agarwala

1.

Two sets of Appeals have been filed against the two

different orders passed by the Adjudicating Officer ("AO" for

convenience) of the Securities and Exchange Board of India

("SEBI" for convenience). Appeal No. 144 of 2019 and 145 of

2019 is against an order dated September 27, 2018 passed by

the AO imposing a penalty under Section 23H of the Securities

Contracts (Regulation) Act, 1956 ("SCRA" for convenience) 4

and 15A(b) of the SEBI Act. The second set of appeals are

Appeal Nos. 146, 147, 148 and 149 of 2019 against the order

dated September 26, 2018 passed by the AO imposing a penalty

for violation of Section 16 of the SCRA. The issue involved in

all the appeals is the same and, accordingly all the appeals are

being decided together. For facility, the facts in the first set of

Appeals in Appeal No. 144 of 2019 and the second set of

Appeals, namely in Appeal No. 146 of 2019 are being taken into

consideration.

2. In Appeal No. 144 of 2019 the charge is that off-market

transfer of shares was made by the appellant without any

consideration. The contention before the AO was that the

transfer of shares was made against a consideration but proof of

receipt of the consideration has been misplaced and is no longer

traceable. The AO recorded a finding that since no

documentary proof was filed the transfer of shares without

consideration is proved and is in violation of Section 16 of the

SCRA. In Appeal No. 145 of 2019 the additional charge is, that

on account of transfer of shares there was a change in the

shareholding of the appellant by two percent which was not

disclosed. Admittedly, the change in the shareholding was not 5

disclosed and, consequently the AO found that there was a

violation of Section 15A(b) of SEBI Act.

3. In the second set of appeals the facts in Appeal No. 146 of

2019 is, that the appellant was induced to enter into a loan

transaction and accordingly pursuant to the said loan agreement

the appellant provided a loan in the form of shares. It was

contended that the borrower issued a cheque which bounced and

thereafter a legal notice was given and a complaint was lodged

to the police. It was thus contended that the appellant was

cheated and that it was not a case that the off-market transfer of

shares was without any consideration. The AO did not accept

the submission of the appellant and found that the shares were

transferred without any consideration thereby violating Section

16 of the SCRA.

4. We have heard Shri Ashok Singh, Advocate for the

appellants and Shri Vishal Kanade, Advocate for the

respondent. Having heard the learned counsel for the parties,

we find that admittedly in the first set of appeals no

documentary proof has been filed to show that the off-market

transfer of shares was based on any consideration. In the

absence of any documentary proof, we do not find any error in 6

the order of the AO coming to the conclusion that the off-

market transfer of shares was based on no consideration.

5. In the second set of appeals we find that the contention

that the appellant was induced to transfer the shares is not based

on any concrete evidence and is without any foundation. We

also find that the shares were transferred and, subsequently a

cheque is alleged to have been issued which accordingly to the

appellant had bounced. We, however, find that no steps were

taken by the appellant for recovery of the amount by way of

filing a suit or by filing an application under Section 138 of the

Negotiable Instruments Act. Thus, an irresistible inference has

been drawn by the AO to the effect that the transfer of shares

were without consideration which we do not find any manifest

error.

6. In the light of the aforesaid, all the appeals fail and are

dismissed with no order as to costs.

Sd/-

Justice Tarun Agarwala Presiding Officer Sd/-

Dr. C.K.G. Nair Member Sd/-

Justice M. T. Joshi Judicial Member 16.03.2020 Prepared & Compared By: PK