BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI

            Appeal No. 113 of 2011 

   Date of decision: 5.8.2011     

GIR Marketing & Trading Co. Pvt. Ltd.
7 Grant Lane, 3rd Floor, Room No 320,
Kolkata- 700 001.

G

                                     ……Appellant 

Versus

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

                                …… Respondent 

Mr. Vinay Chauhan, Advocate with Mr. Anant Upadhyay, Advocate for the Appellant.
Mr. Shiraz Rustomjee, Advocate with Mr. Mihir Mody, Advocate 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 order will dispose of a group of seven Appeals no. 113 to 119 of 2011 all of
which raise common questions of law and ar e directed against similar but separate
orders passed by the adjudicating officer imposing monetary penalties on the appellants.
The common charge that has been levelled against the appellants is that they executed
matched and synchronized trades in the scrip of Saumya Consultants Limited (for short
the company) while trading through a co mmon broker namely, Ahilya Commercials
Limited. Apart from the trades being s ynchronized and matched, the adjudicating
officer has found that there we re other linkages as well be tween the appellants as a
result of which they traded in the scri p and executed non genuine trades and thereby
violated the provisions of the Securities a nd Exchange Board of India (Prohibition of
Unfair Trade Practices rela ting to Securities Market) Re gulations 2003. It is common
case of the parties that the appellants trad ed (bought and sold) in the shares of the

2
company for about 20 days mainly during the period from July to August 2003 and that
there have not been many trades thereafter. We also find from the record that during the
period when the appellants traded, they were the only ones trading in the scrip in the
market and that there were no other trader s. As already observed, the seven appellants
had a common broker and, therefore, the trad es executed by them were cross deals.
Cross deals per se are not illegal but the common broker executing the buy and sell
orders is not expected to match those orde rs by putting in orders for the same quantity,
at the same price and at the same time . The learned counsel appearing for the
respondent Board has placed before us a ch art depicting the trades executed by the
appellants on the Calcutta Stock Exchange. We find from the chart that in most of the
cases the buy and sell orders had been put in to the system for the same price, same
quantity and at the same time. In othe r words, it was the common broker who by
manipulation was matching the trades on behalf of the appellants and did not allow the
price order mechanism of the exchange to ma tch the trades. Proceedings were initiated
against the broker as well and a statement of its representative was recorded. He stated
that the buy and sell orders had been placed on the specific instru ctions of the clients
who were the appellants. Having regard to th e trading pattern of the appellants and the
manner in which the trades had been matched, we are satisfied that the trades executed
by them were non genuine which were meant to create artificial volumes in the market.
We are also satisfied that the appellants have violated Regulat ions 3 and 4 of the
aforesaid Regulations which prohibit persons from directly or indirectly buying, selling
or otherwise dealing in securities in a fraudulent manner. Th ese regulations also
prohibit persons from indulging in fraudulent or unfair trade practices in securities. In
this view of the matter, no fault can be found with the findings recorded by the
adjudicating officer.

2. The learned counsel appearing for the appellants then pointed out that the
   adjudicating officer in the impugned orders has imposed different amounts of penalty
   on the appellants when their wrong doing was the same. We have perused the impugned
   orders and find that a sum of ` 3 lacs is the base figure fixed by the adjudicating officer 3
   for executing manipulative trades and thereaft er, for reasons which are not very clear,
   he goes on to increase the pe nalty amount in the cases of Concrete Credit Limited,
   Morgan Financial Services Private Limited and Astrols Dealcom Private Limited, the
   appellants in Appeal no. 116, 118 and 119 of 2011. The adjudicating officer has
   referred to some offer made by these three appellants offering their shares in an open
   offer which fact has been seriously disputed by the learned counsel for the appellants.
   The learned counsel appears to be right becau se we find no material on the record to
   show that any such offer had been made by these appellants as referred to by the
   adjudicating officer. This being so, in the case of these appellants as well, the penalty
   for executing manipulative trades should be 3 lacs each. However, Astrols Dealcom Private Limited the appellant in Appeal no. 119 of 2011 has also been found guilty of not responding to the summonses issued to it by the investigating officer during the course of the investigations. For this non compliance, a sum of 1 lac has been imposed
   as penalty. The learned counsel for the a ppellant could not seriously challenge the
   findings of the adjudicating officer in this regard. For the reasons recorded above, we fi nd no merit in these appeals and dismiss
   the same. However, the penalty on each of the appellants shall be 3 lacs and in the case of Astrols Dealcom Private Limited it shall be 4 lacs. The impugned orders shall
   stand modified accordingly. No costs.
   Sd/-
   Justice N.K.Sodhi
   Presiding Officer Sd/- P.K.Malhotra Member Sd/-
   S.S.N. Moorthy
   Member
   5.8.2011
   pmb
   Prepared & Compared By: Pmb

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