BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI

Appeal No. 202 of 2011

Date of Decision: 5.1.2012

Mahesh H. Bissa
D1, Dhiraj Apartment,
Poddar Road, Malad (E),
Mumbai – 400 097. …… Appellant

Versus

Securities and Exchange Board of India
SEBI Bhavan, C-4A, G Block,
Bandra Kurla Complex, Mumbai – 400 051. …… Respondent

Mr. Prakash Shah, Advocate for the Appellant.
Mr. Kumar Desai, Advocate with Mr. Mobin Shaikh and Mr. Rushin Kapadia, Advocates for the Respondent.

CORAM : P. K. Malhotra, Member
S.S.N. Moorthy, Member

Per : S.S.N. Moorthy, Member

The present appeal has been filed against the adjudication order of the Securities and Exchange Board of India (for short the Board) by which a penalty of 5 lacs was imposed on the appellant. The appellant is an individual engaged in the business of trading in shares. The Board conducted investigations in the buying, selling and dealing in the shares of M/s. Adani Exports Ltd. (AEL) for the periods July 09, 2004 to January 14, 2005 and August 01, 2005 to September 5, 2005. During both the periods the price of the scrip registered wide fluctuations. During investigation it was noticed that the appellant had traded substantially in the scrip of AEL th rough M/s. Shrihari Hira Stock Broking P. Ltd. and entered into synchronized trades with other entities on the Bomb ay Stock Exchange. The synchronized trades entered into by the appellant created artificial volumes in the scrip of AEL and the appellant was directed to show cause why penalty should not be levied for unlawful trading as found during investigation. The appellant did not file any reply to the show cause notice. However a statement was recorded from him during personal hearing of the case and the appellant admitted to the trading as alleged in the show cause notice. His only plea was that he had no ulterior motive of manipulating the trades. The adjudicating officer, after considering the statement recorded from the appellant and nature of transactions, levied a penalty of 5 lacs under section 15HA of the Securities and Exchange Board of India Act, 1992.

2.We have heard the learned counsel for the parties. During the hearing of the appeal the appellant’s learned counsel would admit th at the appellant had entered into certain manipulative trades as alleged in the show cause notice. His main argument was for reduction of the quantum of penalty in as much as several other entities including counter parties with whom the appellant had transactions were foisted with a penalty of 1 lac only and there is no justification for a penalty of 5 lacs in the appellant’s case.

3.We have considered the arguments advanced by the learned counsel on both the sides. There is no denying the fact that the appellant had entered into manipulative trades in his dealings in the scrip of AEL. This is evidenced from the appellant’s own admission before the adjudicating officer. However we find considerable force in the argument of the appellant’s counsel that in the case of entities similarly placed the quantum of penalty has been only a sum of 1 lac. It is to be noticed that the appellant has stopped trading in the market for the past two and half years. This fact also remains undisputed. The appellant’s learned counsel has submitted copies of the adjudication orders passed in respect of Shri Sunil Kuril, Shri Sunil Purohit, Shri Ankit Vairana, Ms. Rina Shah, Shri Santosh Gade, Shri Haresh Posnak and Shri Mahesh Kumar A. Panchal who had traded in the same scrip and during the same period. It is noticed that the penalty imposed has been only 1 lac in each case. All the above persons are said to be counterparties in the transactions carried on by the appellant. There could be some variations in the trade practices as followed by the appellant as an individual and that followed by the counterparties. However, the facts of the case as evidenced in the adjudication orders in respect of the counter parties filed before us do have a bearing on the appellant’s case as well. Taking into consideration the above mentioned facts we are of the view that ends of justice would be met in the present case by reducing the penalty to ` 2.5 lacs. We order accordingly. The appeal is disposed of as above with no order as to costs.

Sd/-
P.K. Malhotra
Member

Sd/-

S.S.N. Moorthy
Member
5.1.2012

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