BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No. 182 of 2011

Date of Decision : 15.11.2011

M/s. Mahesh Kothari Share & Stock
Brokers Pvt. Ltd.
54, Bombay Mutual Chambers,
Ambalal Doshi Marg,
Fort, Mumbai – 400 023.

…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. Sean Wassoodew, Advocate for the Appellant.
Mr. Prateek Seksaria, Advocate with Mr . Mihir Mody and Mr. Mobin Shaikh,
Advocates for the Respondent.

CORAM : Justice N.K. Sodhi, Presiding Officer
P.K. Malhotra, Member

Per : Justice N.K. Sodhi, Presiding Officer (Oral)

The short question that arises in this appeal is whether the appellant complied
with the summons issued to it under sect ion 11C of the Securities and Exchange
Board of India Act, 1992 (for short the Act). During the course of the investigations
the Securities and Exchange Board of Indi a (for short the Boar d) has the power to
require any person associated with the secu rities market to furnish such information
or produce such books, registers or records as may be cons idered necessary if such
information or production of records is re levant or necessary for the purpose of the
investigations. In the case before us, the Board observed spurt in the price and trading
volumes in the shares of Alka Securities Ltd. (for short Alka). It undertook detailed
investigations in respect of dealings in the scrip of Alka during the period from
September, 2008 to July, 2009. It was observed during the course of the
investigations that the appellant herein which is a sister concern of Alka and a
registered stock broker had dealt in th e shares of Alka during the period of
investigations. The investigating officer by his summons dated February 10, 2010

2
called upon the appellant to furnish information on matters enumerated in the
annexure thereto. Information was sought from the appellant on the following points-
“Details Required for the period September 01, 2008 to July 31, 2009

1. Date of account opening of M/s Aidos Trade Ltd. (Aidos) with
   Mahesh Kothari Shares and Stock brokers Pvt Ltd. (MKSL)
2. Date of Account opening of M/s Alka Securities Ltd with MKSL
3. Please mention the UCC of Alka, Aidos
4. Details of First trade of Alka , Aidos, BO1000 (Scrip, qty, date,
   exchange, etc.)
5. Details of Quarterly statement sent to BO1000, Alka & Aidos and
   Proof of Delivery
6. Details of Contract notes sent to the BO1000, Alka & Aidos and
   Proof of Delivery
7. Details of Collateral statement se nt to the BO1000, Alka & Aidos
   and Proof of Delivery
8. Cheque details of payments received/paid from/to
   BO1000/Aidos/Alka by MKSL in the following format
   Sl.
   No.
   Client
   name
   Client
   code
   Cheque
   no.
   Date a/c no.,
   Bank
   details

In-
favour
of

Issued
by
Am
ount
(Rs.)

Remark
s

9. Shares received/paid from/to BO1000/Aidos/Alka by MKSL in the
   following format
   Sl.
   No.
   Client
   name
   Cli
   ent
   co
   de

Scr
ip
Na
me

D
at
e

Settl
ement
Exch
a
nge

Receiv
ed from
the
BOID

Na
me
Tran
sfe
rred
to
the
BOI
D

Na
me
Qu
ant
ity

Re
m
a
rk
s

10. Aidos had received money Rs. 36,61,197 from Mahesh Kothari on
    December 05, 2008. The corresponding entry is not figuring in the
    client ledger. Explain.
11. Client ledger of BO1000, Alka, Aidos (in excel format)
12. List of Bank account maintained by MKSL in the following format

Sl.
No.
Account
no.
Bank
name
A/c
opened
on

A/c closed
date if any
Purpose of
the
account

Remarks

13. List of De-mat account maintained by MKSL

Sl.
No.
BOID DP
Name
A/c
opened
on

A/c
closed
date if
any

Purpose of
the account
Remarks

While furnishing information to the inves tigating officer, the a ppellant appears to
have made efforts not to disclose any in formation regarding Alka and it was Alka’s
scrip that was being inves tigated. We have on record the reply furnished by the
appellant. It has furnished some detail s in regard to Ai dos Trade Ltd. but no

3
information has been furnished regarding Alka. The adjudicating officer in paragraph
19 of the impugned order has pointed out th e details of the information which the
appellant failed to furnish in regard to Alka and we are in agreement with him that the
appellant deliberately withheld the information asked for and thereby hampered the
investigations. It must be remembered that all persons associated with the securities
market are required to cooperate with the market regulator in the matter of
investigations which it undertakes in terms of Section 11C of the Act. If such persons
are allowed to withhold information from the regulator, the latter will not be able to
carry out the duties enjoined on it by the Act. Non-coop eration with the market
regulator in this regard has, therefore, to be viewed seriously. We do not know what
else would have emerged had the appellant furnished the required information to the
investigating officer. In this view of the matter, we find no ground to interfere with
the impugned order holding the appellant guilty for violating Section 11C of the Act.
Since the appellant failed to furnish the information asked for, the adjudicating officer
was justified in imposing a monetary pena lty under section 15A(a) of the Act which
provides for a penalty of one lakh rupees for each day during which the failure to
furnish information continues or 1 crore whichever is less. In the case before us, the adjudicating officer has levied a penalty of 10 lakhs only and has already taken a
lenient view in the matter.
In the result, the appeal fails and the same is dismissed. No costs.
Sd/-
Justice N.K. Sodhi
Presiding Officer

          Sd/-  
           P.K. Malhotra 
                             Member 

15.11.2011
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