Rajesh Ranka vs Securities And Exchange Board Of India

M.T. Joshi, J

The appellant is aggrieved by the order of the Adjudicating Officer (‘AO’ for short) of Securities and Exchange Board of India

(‘SEBI’ for short) dated October 30, 2018 which reads as under:

“After taking into consideration the facts and circumstances of the case, material on record, the violation committed by the Noticee of the

directions issued by SEBI vide Order dated July 28, 2010, the seriousness and gravity of the irregularities committed by the Noticee, I, in exercise of

the powers conferred upon me under Section 15 I of the SEBI Act read with the Rule 5 of the Adjudication Rules, hereby impose penalty of Rs.

10,00,000/- (Rupees Ten Lakh only) on the Noticee viz. Shri Rajesh Ranka under the provisions of Section 15HB of the SEBI Act for his failure to

comply with the directions of SEBI, which was issued to him vide Order dated July 28, 2010 under the provisions of sections 11, 11(4) and 11 B of the

SEBI Act, 1992.â€​

That admitted facts on the record would show that vide earlier order dated July 28, 2010 the present appellant was debarred from entering the

securities market which reads as under:-

“……..taking into consideration facts and circumstances of the case, I, in exercise of the powers conferred upon me under Sections 19

of the SEBI Act, 1992 read with Sections 11(4) and 11B of SEBI Act, 1992 and Regulation 11 of the SEBI (Prohibition of Fraudulent and

Unfair Trade Practices relating to Securities Market) Regulations, 2003, do restrain Shri Rajesh Ranka from buying, selling or dealing in

securities and from associating in securities market in any manner whatsoever for a period of 2 years.â€​

It is an admitted fact that despite the above order the present appellant on March 3, 2012 has carried out the following activities as recorded at

paragraph 14 at page 31 of the impugned order which reads as under:-

 “I find that on March 15, 2012, the Company had made further issue of 300,00,000 equity shares of Rs. 10 each at a price of Rs. 10

through preferential allotment to its three promoters, and also to 28 other persons/entities. It was observed that Noticee was an employee of

the Company during the relevant period and he was also the authorized signatory to operate the bank account of the Company (which was

maintained with ING Vysya Bank). Therefore, he was connected with the Company as its employee. Further, during the course of

examination by SEBI, it also emerged from the KYC documents of the preferential allottees that majority of the allottees in the preferential

allotment of the company were Ahmedabad based persons/entities. It was observed that 27 allottees (out of a total of 31 allottees in the

preferential allotment) had a common mobile number, i.e. ‘9825032074’ and a common e-mail address, i.e.

‘rajranka8@yahoo.com’. As per the KYC forms of the preferential allottees, which was obtained from their broker viz. Monarch

Research and Brokerage Pvt. Ltd. it was observed that the preferential allottees had authorized the Noticee as their nominee while opening

the trading account with the above mentioned stock broker. It is noted that the above mentioned mobile number and email address belonged

to the Noticee, which also confirms the key role played by the Noticee in the preferential allotment of SMSTL. Further, the initial funding by

the Noticee to the extent of Rs. 1,99,50,000/- in the preferential allotment of the Company and by rotating the same funds back and forth

among the allottees to show false subscription in the preferential allotment only accentuates the key role played by the Noticee in the said

preferential allotment.â€​

The only defence of the appellant is, that he being an employee was forced by one Mr. Mahesh Shah to carry the said activities. The said Mr.

Mahesh Shah has died later on October 4, 2013. The facts on record would clearly show that the present appellant carried out the above activities in

indirect manner which could not have been carried out directly by him. It is clear that what is not permitted directly cannot also be carried out

indirectly.

In the circumstances, the appeal is hereby dismissed with no order as to costs.