BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No. 204 of 2010
Date of Decision : 28.02.2011
Samradha Finstock Pvt Ltd.
12/B, Sairaj Nagar,
Mathuradas Road South,
Kandivali (West),
Mumbai – 400 067.
…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. Vinay Chauhan, Advocate for the Appellant.
Mr. Kumar Desai, Advocate with Ms. Da ya Gupta and Ms. Harshada Nagare,
Advocates for the Respondent.
CORAM : Justice N.K. Sodhi, Presiding Officer
P.K. Malhotra, Member
S.S.N. Moorthy, Member
Per : Justice N.K. Sodhi, Presiding Officer (Oral)
This appeal is directed against an ex parte order dated October 27, 2010
passed by the adjudicating officer imposing a monetary penalty of ` 26 lacs on the
appellant for violating different clause s of Regulation 4 of the Securities and
Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices
relating to Securities Mark et) Regulations, 2003. Even though the appellant was
served with the show cause notice dated July 25, 2008 after the case was remanded by
this Tribunal on January 12, 2010, it did not file its reply and the adjudicating officer
had no option but to proceed ex parte. The learned counsel for the appellant has not
made any grievance of the fact that the appellant was not heard. He has, however,
drawn our attention to pa ragraph 41 of the impugned or der wherein it has been
observed that the violations committed by the appellant were of a repetitive nature
and reference has been made to the case of Atlanta Ltd. wherein some interim order
had been passed in September 2007 against th e appellant and some other entities by
the whole time member of the respondent Board. Section 15J of the Securities and
Exchange Board of India Act, 1992 lays down the factors to be taken into account by
the adjudicating officer while imposing monetary penalties under Chapter VIA of the
2
Act. One of the factors mentioned therein is whether the default committed by the
delinquent is repetitive in nature. As al ready observed, the appellant has been found
to be guilty of repetitive defaults by maki ng reference to the order passed in the case
of Atlanta Ltd. The learned counsel for the appellant has placed before us the order
dated February 11, 2010 passed by the adjudicating officer in the case of Atlanta Ltd.
wherein also the appellant was one of the traders who was alleged to have
manipulated the scrip of Jindal Drilling & Industries Ltd. (for short the company). We
have perused this order and fi nd that the adjudicating officer gave a clean chit to the
appellant and absolved it of the wrong doing as alleged in that case. This being so, the
adjudicating officer wrongly observed in paragraph 41 of the impugned order that the
appellant was guilty of violations which were repetitive in nature. It appears that it
was for this reason that a heavy penalty of 26 lacs had been imposed. The learned counsel for the appellant has also brought to our notice the order passed by this Tribunal in Hem Kanak Mercantile Pvt. Ltd. vs. The Adjudicating Officer, Securities and Exchange Board of India, Appeal no. 171 of 2009 decided on March 11, 2010. The appellant in that case was also one of the entities alleged to have manipulated the scrip of the company along with the appellant now before us. While dealing with the case of Hem Kanak Mercantile Pvt. Ltd. we had reduced the penalty from 26 lacs
to 7 lacs. Since it has not been shown that the appellant was guilty of any repetitive violations, the penalty imposed by the adjudicating officer is reduced to 7 lacs.
Since the impugned order has not been chal lenged on merits, we do not disturb the
other findings recorded therein.
In the result, the appeal is disposed of as above and the impugned order stands
modified accordingly. No costs.
Sd/-
Justice N.K. Sodhi
Presiding Officer
Sd/-
P.K. Malhotra
Member
Sd/-
S.S.N. Moorthy
Member 28.2.2011
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