BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Date of Decision: 4.12.2019
Misc. Application No.458 of 2019
And
Appeal No.380 of 2019
Sweta Virendra Shah
B-11, Krupa Apartment,
Behind Shefali Apartment,
Vasna, Ahmedabad – 380007.

….. Appellant
Versus
Securities and Exchange Board of India
SEBI Head Office,
SEBI Bhavan II, Plot No.C-7,
“G” Block, Bandra- Kurla Complex,
Bandra (East), Mumbai – 400 051.
…… Respondent
Mr. Jinendra D. Parikh, Authorised Representative for the
Appellant.
Mr. Chirag Bhavsar, Advocate with Ms. Eram Quraishi,
Advocate i/b. MDP & Partners for the Respondent.
CORAM: Dr. C.K.G. Nair, Member
Justice M.T. Joshi, Judicial Member
Per : Justice M.T. Joshi (Oral)
1.

Aggrieved by the imposition of penalty of Rs.2 lakh for
violation of provisions of Regulation 9(1) read with Schedule
B of the Securities and Exchange Board of India (Prohibition
of Insider Trading) Regulations, 2015 (hereinafter referred to
as ‘PIT Regulations) the present appeal is preferred.

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2.

Appellant Swetha was working as Accounts Manager
with Kushal Tradelink Ltd. (hereinafter referred to as the
‘Company’) from 1st February, 2016. She was a Designated
Employee under the PIT Regulations. It was found that she
had entered into opposite transactions (contra trade) i.e. sell
or buy shares of the Company during the six months period
following the prior transaction. Further, she had traded twice
in the scrip of the Company during the period when the
trading window remained closed in violation of the
provisions of the Code of Conduct as prescribed under
Regulation 9(1) read with Schedule B of the PIT Regulations.
3.

It is an admitted fact that while the trading window
remained closed from October 19, 2016 to November 16,
2016 the appellant had purchased 200 shares of the
Company. Similarly, when the trading window was closed
for the period between December 21, 2016 to January 7,
2017 she again purchased 150 shares of the Company.
4.

The appellant submitted before the Adjudicating
Officer that she had joined the Company in February, 2016
and was made permanent in April, 2017.

Her scope of
working was restricted to the compliance of direct taxes.
She had no access to any financial data which was price
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sensitive. The total quantum of transaction executed by her
was below the threshold limit as prescribed under the Code
of Internal Procedures and Conduct for Prohibition of Insider
Trading.

The contra trade was executed only with
investment motive and not for any speculation. She further
submitted that as she had not carried any of the transactions
with any speculative intention the proceedings may be
dropped.

Alternatively, she submitted that she may be
directed to contribute in Investor Education Protection Fund
the profit earned by her.
5.

The Adjudicating Officer found that the submission of
the appellant are against the provisions of the model Code of
Conduct as well as the PIT Regulations as the issue of
threshold limit is irrelevant to the present issue. Therefore
taking into consideration the provisions of Section 15HB and
15J of the Securities and Exchange Board of India Act, 1992
(hereinafter referred to as ‘SEBI Act’) and finding that the
amount of disproportionate gain or unfair advantage cannot
be quantified, imposed a penalty of Rs.2 lakhs. Hence the
present appeal.
6.

Learned counsel for the appellant submitted that the
appellant was a newly appointed officer during that period.

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She was unaware of the Model Code of Conduct. The trades
entered into by her are very miniscule and hence he
submitted that the appeal may be allowed.
7.

On the other hand, learned counsel for the respondent
submits that the violation of the provisions is clearly
established. The appellant was Designated Officer during the
period and, therefore, as per the PIT Regulations alongwith
the Model Code of Conduct there cannot be any escape from
the liability.
8.

Having heard both the sides, in our view though the
appellant is found to have violated the provisions as detailed
above considering the miniscule transactions carried by her
and finding that she was a new entrant in the Company, the
penalty imposed upon her is rather disproportionate.
9.

Section 15J of the SEBI Act provides as under:Factors to be taken into account by the adjudicating
officer.
15J. While adjudging quantum of penalty under section
15-I, the adjudicating officer shall have due regard to
the following factors, namely :—
(a) the amount of disproportionate gain or unfair
advantage, wherever quantifiable, made as a result of
the default;
(b) the amount of loss caused to an investor or group of
investors as a result of the default;
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(c) the repetitive nature of the default.
10. The
Adjudicating
Officer
had
observed
that
disproportionate gain or unfair advantage made by the
appellant cannot be quantified. Similarly, the loss suffered
by the investor as a result of the appellant’s default cannot
also be quantified. Taking into consideration all these facts,
in our view instead of penalty of Rs.2 lakhs imposed by the
respondent penalty of Rs.1 lakh would be just and sufficient.
11. The appeal is therefore partly allowed without any
order as to costs. The penalty imposed by the Adjudicating
Officer at Rs.2 lakhs is reduced to Rs.1 lakh.

Misc.

Application for stay is disposed of.

Sd/Dr. C. K. G. Nair
Member
Sd/Justice M.T. Joshi
Judicial Member
4.12.2019
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RHN