BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI

Appeal No.134 of 2012

Date of Decision: 27.6.2012

Todi Securities Pvt. Ltd
1st Floor, Room no.12,
1 RN Mukherjeee Road,
Kolkatta – 700001.

         …… Appellant 

Versus

Securities and Exchange Board of India
SEBI Bhavan, Plot No.C4A, G Block,
Bandra Kurla Complex,
Bandra (East), Mumbai – 400 051.

         …… Respondent 

Mr. Vinay Chauhan, Advocate for the Appellant.
Mr. Shiraz Rustomjee, Senior Advocate w ith Mr. Mihir Mody and Mr. Akhilesh Singh,
Advocates for the Respondent.
CORAM : P. K. Malhotra, Member & Presiding Officer ( Offg.)
S.S.N. Moorthy, Member
Per : P. K. Malhotra (Oral)

The appellant before us is a company incorporated un der the Companies
Act, 1956 having its registered office at Kolk ata. The appellant is registered with
Securities and Exchange Board of India (for short the Board) as a stock broker of
National Stock Exchange of India Ltd (NSE ), Bombay Stock Exchange Ltd. (BSE),
United Stock Exchange Ltd. (USE) and MC X Stock Exchange Ltd (MSE). The
appellant is stated to be trading/jobbing co mpany and 99 per cent of its transactions are
said to be proprietary transactions.

2. The background of the case is that Tijaria Polypipes Ltd. (the company) came out
   with its IPO and raised funds to the extent of 60 crores for expansion and diversification
   plans. The appellant traded in the sc rip of the company. The Board initiated
   investigation into the IPO of the company and came to a prima facie conclusion that
   predominant portion of the proceeds of the IP O of the company were diverted by the
   company for operations in the equity market leading to the suspicion that the issue was
   for siphoning/diversion of funds. The allegation against the appellant is that it received

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funds from the company which were used to purchase shares on the first day of the
trading in the scrip of the company. Accordingly, the whole time member of the Board,
by his order dated December 28, 2011, issued cert ain directions including a direction to
the appellant prohibiting it from buying, sell ing or dealing in any securities in any
manner in the proprietary accoun t and also prohibiting it from entering into any fresh
agreements with new clients in its operations as stock broker till further orders. The said
impugned order was also treated as a show cau se notice and the appellant was afforded
an opportunity to file his repl y. The appellant filed its re ply. Opportunity for personal
hearing was also granted. After considering the submissions made by the appellant, the
whole time member of the Board, by its order dated May 11, 2012, confirmed the
directions issued vide ad-interim ex-parte order dated December 28, 2011.

3. The grievance of the appellant is that the submissions made by it before the
   whole time member have not been consider ed and the impugned or der has been passed
   without application of mind.
4. We have heard the learned counsel for th e parties for some time. We have also
   perused the ex-parte ad-interim orde r dated December 28, 2011 and the impugned
   interim order dated May 11, 2012. We are not inclined to agree with the learned counsel
   for the appellant that while passing the im pugned order the whole time member has not
   considered the submissions made by the a ppellant. Paragraph 5 of the impugned order
   refers to the submissions made by the appell ant and paragraphs 6 and 7 of the impugned
   order record observations of the Board. We cannot lose sight of th e fact that a large
   number of parties are involved in the case and the matter is still at the investigation stage.
   In such a case it may not be practicable for the Board to record reasons in detail while
   passing an interim order. It will be sufficient if the Board records the submission of the
   appellant and expresses a prima facie view thereon. Therefor e, we are not inclined to
   intervene in the matter at this stage on merits. However, keeping in view the fact that the
   appellant is said to be a trading/jobbing co mpany and 99 per cent of its transactions are
   proprietary transactions, the investigati on, qua the appellant, should be completed
   expeditiously. Learned counsel for the appell ant states that he has already made the
   necessary submissions before the Board a nd no further material is required to be
   produced. If the Board need s any further material in formation for carrying out

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investigation in the right perspective, it is free to call for such information as deemed
necessary. The investigation qua the appe llant should be completed by the end of
September, 2012 and if it is decided to issu e any show cause notice, the same may be
done by 31st October, 2012. We make it clear that we are not expressing any opinion on
the merits of the case.
The appeal stands disposed of as above with no order as to costs.

            Sd/-
P.K. Malhotra
Member &
Presiding Officer ( Offg.)

      Sd/- 

S.S.N. Moorthy
Member
27.6.2012
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