BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Order Reserved on:18.6.2019
Date of Decision:
7.8.2019
Appeal No.166 of 2017
G. Moorthi
Plot No.3, Janki Kutir, Juhu
Church Road, Juhu, Mumbai – 400049.

….. Appellant
Versus
Securities & Exchange Board of India
SEBI Bhavan, C-4A, G Block,
Bandra Kurla Complex,
Mumbai 400051.

…… Respondent
Mr. Shashikant D. Chandak, Advocate with Ms. Kanchan S.
Chandak, Advocate for the Appellant.
Mr. Karan Bhosale, Advocate with Mr. Santanu Mitra,
Advocate i/b. Desai & Diwanji for the Respondent.
With
Appeal No.190 of 2017
Ritika Sushil Jhunjhunwala
41, Meghna Apartments, S.V. Road,
Santacruz (West), Mumbai-400054.

….. Appellant
Versus
The Adjudicating Officer
Securities & Exchange Board of India
SEBI Bhavan, C-4A, G Block,
Bandra Kurla Complex, Bandra (E),
Mumbai 400051.

…… Respondent
2
Mr. Vinay Chauhan, Advocate with Mr. Nikhil Shah and Mr.
Mit Shroff, Advocate i/b. Joby Mathew & Associates for the
Appellant.
Mr. Karan Bhosale, Advocate with Mr. Santanu Mitra,
Advocate i/b. Desai & Diwanji for the Respondent.
CORAM: Justice Tarun Agarwala, Presiding Officer
Dr. C.K.G. Nair, Member
Justice M.T. Joshi, Judicial Member
Per : Justice M.T. Joshi
1.

Aggrieved by the order of the Adjudicating Officer of
Securities and Exchange Board of India (hereinafter referred
to as ‘SEBI’) dated 16th June, 2017 imposing penalty in the
amount of Rs.15 lakhs so far as appellant Ms. Ritika
Jhunjhunwala is concerned and Rs.25 lakhs so far as appellant
Mr. G. Moorthy is concerned under Section 15HA of the
Securities and Exchange Board of India Act, 1992 (hereinafter
referred to as ‘SEBI Act’) for violation of the provisions of
Securities and Exchange Board of India (Prohibition of
Fraudulent and Unfair Trade Practices relating to Securities
Market) Regulations, 2003 (hereinafter referred to as ‘PFUTP
Regulations’), the present appeals have been preferred against
the common order.
2.

The record would show that the respondent SEBI had
received
various
complaints
against
one
Mr.

Sudhir
3
Jhunjhunwala, one Mr. Sanjay Talati and present appellant
Mr. G. Moorthi that they were indulging in rigging the prices
of the shares of M/s. Gemini Communication Limited
(hereinafter referred to as ‘GCL/Company’).
In the year 2007-2008, the investigation was started.
Respondent SEBI also came to know during investigation that
complaints were filed with the police by Mr. Sudhir
Jhunjhunwala as well as his wife Mrs. Madhu Jhunjhunwala
and the appellant Mr. G. Moorthi against each other. In those
circumstances, the respondent SEBI conducted price and
volume analysis of the scrip of the Company of preinvestigation period i.e. July 1, 2006 to December 31, 2006
and of the investigation period from January 1, 2007 to April
30, 2008.
Upon analysis of the transactions, the respondent SEBI
formed an opinion that the present appellant Ritika, Mr.
Sudhir Jhunjhunwala and his wife Mrs. Madhu Jhunjhunwala,
one Mr. Sanjay Talati had during the first patch of
investigation i.e. January 1, 2007 to May 15, 2007 had
purchased 5,63,695 shares from the platform of BSE Ltd
(hereinafter referred to as ‘BSE’) and 2,58,473 shares from the
platform of National Stock Exchange of India Ltd. (hereinafter
4
referred to as ‘NSE’). Thereafter, during the rest of the period
they had purchased shares in miniscule quantity and in fact
had sold those shares which included intra group trades
amongst the group. There were also sychronised deals and
self trades between the groups on various occasions as noted
in the order from para 12 to 21 of the impugned order.
3.

The defense of Mr. Sudhir Jhunjhunwala and Mrs.

Madhu Jhunjhunwala was that one Mr. Sanjay Talati was the
key person who had transferred money and shares to his and
his wife’s demat account only for collateral and margin
purposes for the shares to be purchased from the market.
They were only financiers to the entire deal in which they had
incurred huge losses and, therefore, a suit is filed in the
Hon’ble Bombay High Court against the recovery of losses.
The couple further informed SEBI that Mr. Sanjay Talati and
appellant Mr. G. Moorthi were interested in only in rigging the
price of the shares of GCL. When the couple found this
intention they stopped purchasing the shares of the Company
and the shares were sold during that period.
SEBI in the initial notice had alleged that the present
appellant Ms. Ritika is the daughter of the couple. In her reply
before the SEBI she denied the said relationship or any
5
connection with the group branded as Jhunjhunwala group by
the respondent SEBI. She explained that during the relevant
period she not only traded in the GCL but also in several other
companies during the period. Her trades in GCL were not
substantial and in fact she had made loss. She pointed out that
in March 19, 2007 and April 20, 2007 she traded only for ten
days and once in June, 2007 for 100 shares in the GCL. As
the price of GCL was increasing she had purchased the shares
and she had nothing to do with the so called Jhunjhunwala
group.
Appellant Mr. G. Moorthi submitted before the
Adjudicating Officer that in fact he was the victim of the fraud
committed by one Mr. Sanjay Talati and Mr. Sudhir and Mrs.
Madhu Jhunjhunwala.

Based on their guarantee he had
transferred Rs.5.87 crores from his own source to them in
March, 2007 and thereafter he transferred three lakh shares of
GCL from his holdings to Jhunjhunwalas.

It was a
relationship of lender and borrower for an interest of 24
percent and also to arrange a good buyer for the bulk
placement of shares of GCL belonging to him and appellant
Mr. G. Moorthi assured of 15 percent commission on sale
consideration. However, neither the money was returned nor
6
any sale proceeds of the shares were given to him. Thereafter,
after much persuasion Mr. Sudhir and Mrs. Madhu
Jhunjhunwala entered into an MOU on 6th February, 2008 for
the repayment. However, as no money was paid he filed a
complaint and the case was pending in the Hon’ble Madras
High Court during that period. He therefore pleaded that he
was not part of any Jhunjhunwala group. He transferred the
funds and shares to Mr. Sudhir and Mrs. Madhu Jhunjhunwala
in good faith which was held by him for the period of more
than one year earlier.

He denied entering into any
synchronized trading and as such he also wanted to be
exonerated.
4.

The Adjudicating Officer accepted the plea of the
appellant Ritika that she was not the daughter of Mr. Sudhir
and Mrs. Madhu Jhunjhunwala. However, the Adjudicating
Officer concluded that in view of the synchronized trade
evident from the analysis, she was close relative of Mr. Sudhir
and Mrs. Madhu Jhunjhunwala.

In view of this fact, the
impugned order came to be passed against her. So far as the
appellant Mr. G. Moorthy is concerned the Adjudicating
Officer found that the appellant had on his own admission had
transferred three lakh shares of GCL and also an amount of
7
Rs.5.83 cores to Mr. Sudhir and Mrs. Madhu Jhunjhunwala.
The submission of appellant Mr. G. Moorthy that he
transferred shares in the account of Mr. Sudhir and Mrs.
Madhu Jhunjhunwala to arrange a good buyer for the bulk
placement of shares and also transferring substantial amount
would according to the Adjudicating Officer show that it was
not a normal transaction of transfer of shares. It was a transfer
without any consideration and not a genuine transfer and as
such finding that all these activities were carried out for
rigging the price the Adjudicating Officer imposed the
penalty. Hence the present appeals.
5.

We have heard Mr. Shashikant D. Chandak, Advocate
assisted by Ms. Kanchan S. Chandak, Mr. Vinay Chauhan,
Mr. Nikhil Shah and Mr. Mit Shroff, Advocates for the
Appellants and Mr. Karan Bhosale, Advocate assisted by Mr.
Santanu Mitra, Advocate for the Respondent.

Learned
counsel for the appellant Ritika emphatically submitted that
the appellant was wrongly described as daughter of Mr. Sudhir
and Mrs. Jhunjhunwala and, thus, on this wrong footing the
whole proceedings continued.

Upon pointed query, the
learned counsel made a statement at the bar that the appellant
Ritika is the niece of Mr. Sudhir jhunjhunwala. He however
8
submitted that some documents sought by the present
appellant were never produced. Investigation report was never
supplied to the appellant though the proceedings were initiated
after ten years. The record Annexure ‘A’ to the appeal would
show that during the period the appellant had traded in various
scrips and Annexure ‘B’ would show that in GCL trading she
had actually suffered loss. In the circumstance, he submitted
that the appeal be allowed.
6.

Learned counsel for the appellant Mr. G. Moorthi
submitted that the appellant is a victim of fraud committed by
Mr. Sudhir and Mrs. Madhu Jhunjhunwala. The appellant had
innocently transferred the shares as detailed supra to Mr.
Sudhir and Mrs. Madhu Jhunjhunwala who managed the
same. They have however misused the same and, therefore,
the Adjudicating Officer ought not to have passed order
against the present appellant.
7.

On the other hand, learned counsel for the respondent
SEBI took us through the trading pattern, the submissions of
the appellant on record, the conclusion of the Adjudicating
Officer and submitted that no interference in the appeal is
warranted.

9
8.

Upon hearing both sides in our view both the appeals
are liable to be dismissed for the following reasons:a.

In so far as the appellant Mr. G. Moorthi is
concerned his own submission would show that he
had transferred substantive shares to Mr. Sudhir
and Mrs. Madhu Jhunjhunwala off market without
any consideration for management of portfolio by
promising a commission of 15 percent. The record
would show that Mr. Sudhir and Mrs. Madhu
Jhunjhunwala had another story to tell. Be that as
it may. It is clear from the records that the share
were not transferred with an intention to transfer
the beneficial ownership. The record would show
that during the same period Mr. Sudhir and Mrs.
Madhu Jhunjhunwala as well as the present
appellant Ritika had purchased bulk of shares from
the platform of BSE and NSE and thereafter the
same were sold in different quantities.

More
notably the percentage of trading of this group
would
show
that
they
have
contributed
substantially in the buying and selling during that
10
period i.e.8,34,472. Similarly, the sale was also of
the substantive proportion i.e. 14,55,160.
b. Most important factor is the intra group transfers
between appellant Ritika and Mr. Sudhir and Mrs.
Madhu Jhunjhunwala on BSE platform, which
occurred within less than a minute which has been
highlighted by the Adjudicating Officer as under:
Buyer
Seller
Moorthi Madhu Ritika Sudhir
24999 52226
Madhu
335
20693
Ritika
39975
6953
1256
Sudhir
39975
7288 26255 72919
Total
c.

Total
77225
21028
48184
1,46,437
Further, the details of the synchronized trade and
some of the instances of trading for a specific
period is highlighted as under:
Date
13-Feb-07
8-Mar-07
12-Mar-07
13-Mar-07
19-Mar-07
20-Mar-07
21-Mar-07
22-Mar-07
23-Mar-07
26-Mar-07
30-Mar-07
14-May-07
Date BSE
Total Total
no. of traded
trades quantity
288
189
49
72
104
96
222
140
207
171
18
98
1,654
83,934
56,976
27,116
69,312
22,133
18,255
31,481
54,226
46,209
27,272
25,167
26,599
4,88,680
Jhunjhunwala group
Day’s
No.of
Sync
Buy + Sync
trades
Sell
trades (No.of
shares)
21,953
35,342
26,000
60,197
30,165
17,233
39,023
87,744
62,182
40,205
50,000
23,556
4,93,600
6
1
1
2
1
1
1
7
2
3
2
1
28
6,953
5,000
10,000
24,975
8,696
1,256
335
33,420
10,000
18,303
24,999
2,500
1,46,437
Sync
trades as
%
of
daily
traded
qty
at
BSE
8.28%
8.78%
36.88%
36.03%
39.29%
6.88%
1.06%
61.63%
21.64%
67.11%
99.33%
9.40%
29.97%
Sync
trades as
%
of
clients
Buy +
Sell
63.34%
28.29%
76.92%
82.98%
57.66%
14.58%
1.72%
76.18%
32.16%
91.05%
100.00%
21.23%
59.33%
11
d.

Similar is the case regarding similar trading on the
NSE platform which are detailed as under:Buyer
Sudhir
Sudhir
Madhu
Ritika
GrandTotal
57,785
14,500
72,285
Seller
Ritika
5,000
25,000
30,000
Total
5,000
82,785
14,500
1,02,285
Further, synchronized trades were observed on the
following dates:
Date
20-Mar-07
21-Mar-07
22-Mar-07
23-Mar-07
26-Mar-07
30-Mar-07
Total
Date NSE
Total Total
no. of traded
trades quantity
55
112
77
30
76
36
386
19,641
12,634
44,285
11,073
24,863
29,927
1,42,420
Jhunjhunwala group
Day’s
No.of
Sync
Buy + Sync
trades
Sell
trades (No.of
shares)
36,202
5
5,000
14,043
1
2,500
86,000
9
43,000
20,000
2
10,000
37,786
3
16,785
58,000
2
25,000
2,52,031
23 1,02,285
Sync trades
as % of
daily traded
qty at NSE
25.46%
19.79%
97.10%
90.31%
67.51%
83.54%
71.32%
Sync
trades as
%
of
clients
Buy + Sell
27.62%
35.60%
100.00%
100.00%
88.84%
86.21%
81.17%
e. This analysis of the trading of Mr. Sudhir and Mrs.
Madhu Jhunjhunwala with appellant Ritika would
clearly show that it cannot just be a coincidence
that exact quantity of buy and sell would match
within a time difference of less than one minute.
The trades also points toward the one and only fact
that the trades entered into by the appellant
alongwith other group members was not a genuine
transfer. In that view of the matter, the order of the
12
Adjudicating Officer in this regard requires no
interference.

Both the appeals are thereby
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
7.8.2019
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