R S Ispat Ltd And Others vs Securities And Exchange Board Of India

Tarun Agarwala, Presiding Officer

We have heard the learned counsel for the parties through video conference. The controversy involved in these appeals is squarely covered by a

decision of this Tribunal in the case of Global Earth Properties and Developers Pvt. Ltd. vs Securities and Exchange Board of India (Appeal No. 212

of 2020 decided on September 14, 2020) and other connected appeals.

The learned counsel for the appellants urged that their case is distinguishable on facts and urged that the decision relied upon by the Tribunal in the

case of Rakhi Trading (SEBI vs Rakhi Trading (CA No. 1969/2011, order dated February 8, 2018) is not applicable. The counsels urged that the show

cause notice only related to the increase in artificial volume and that the finding of violation of the Regulations cannot be made on the basis of

preponderance of probability. Some orders passed by the Adjudicating Officer („AO‟ for short) in this regard was also relied upon. Some counsels

urged that the loss was only notional and others contended that they made miniscule trades. It was also urged that there was no synchronized trades

since the counterparty was not known and therefore the finding was based on surmises and conjectures. It was also contended that instructions was

not issued to the Broker to execute the trades in this fraudulent manner and therefore SEBI should have taken action against the Broker. It was also

urged that the AO has passed the order with a predetermined mind. Lastly it was contended that the penalty imposed was excessive and, in the event,

the appeals are being dismissed in that event the appellant may be allowed to pay the amount in installments or given some reasonable time to deposit

the amount.

Having heard the learned counsel for the parties we find that the present appeals are squarely covered by our order passed in Global Earth (supra).

We find that the modus operandi in all the appeals is the same. The trades were executed within a few minutes the trades were reversed with the

same counter party on the same date. The Supreme Court in Rakhi Trading (supra) held that such trades are not genuine trades and are violative of

Regulations 3 and 4 of the 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‟). We find that the submissions raised by the counsels are with a slight

variation which is immaterial to the ultimate result. The Tribunal had also considered the quantum of penalty imposed and finds that there is no

arbitrariness in the orders passed by the Adjudicating Officer. However, the appellants would be permitted to deposit the amount within a stipulated

period in view of the prevailing situation. The Misc. Applications if any are also disposed of.

In view of the aforesaid all the appeals are dismissed with no order as to costs. The appellants are directed to deposit the amount as per the

impugned order within two months from today.

The present matter was heard through video conference due to Covid-19 pandemic. At this stage it is not possible to sign a copy of this order nor a

certified copy of this order could be issued by the registry. In these circumstances, this order will be digitally signed by the Presiding Officer on behalf

of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Parties will act on production of a digitally signed

copy sent by fax and/or email.