Mansukh Finance And Investments P. Ltd And Others vs Securities And Exchange Board Of India

Tarun Agarwala, Presiding Officer

The present appeals have been filed against a common order dated 31st March, 2010 passed by the Adjudicating Officer imposing a penalty for various violations. Since common issues have been raised all the appeals are being taken up together.

There is a delay of 365 days in the filing of the appeal. The ground urged is that in view of the pandemic the appeal could not be filed.

Considering the aforesaid and in view of the order of the Supreme Court in suo moto writ petition (civil) no(s).3/2020 dated 23rd March, 2020 the delay is condoned. The applications are allowed.

The charge levelled against the appellants are three fold, namely, (a) non-compliance of the summons issued by the investigating authorities (b) failure to disclose implementation status of all corporate announcements and (c) fraudulent trade practices, namely, synchronized trades and cross deals.

The AO after considering the material evidence on record and after hearing the parties found that the aforesaid charges stood proved and, accordingly, imposed penalties under each head.

Having heard the learned counsel for the appellant at some length we find that the investigating authority had issued various summons to the appellants requiring them to furnish relevant details and information especially regarding the implementation status of all corporate announcements. In this regard, we find from the record that certain replies were given by the appellants which were found to be inadequate and only partial details were submitted. The details so submitted only related to the corporate announcements made by them but no details were submitted with regard to the implementation of these corporate announcements. The AO found that most of the announcements were either not implemented and that the information that was released was primarily in the nature of various correspondence relating to the procedural issues pertaining to the initiation of the project.

We find that the pattern of corporate announcement was fraudulent with a manipulative intent by deploying a scheme to influence the price of the scrip which is corroborated from the evidence that has been brought on record and which has been dealt with in detail in the impugned order which we do not find any error. We also find that the Dhule project did not materialize but the corporate announcement had lured the general investors to fall in the trap laid down by the Company. The Company failed to update the failure to implement corporate announcement in the relevant returns and deliberately hid the information from the investigating authority. Thus, the violation stood proved under section 11C(2), (3) of the SEBI Act.

Consequently, there was abject failure to disclose the corporate announcement for which the AO has rightly penalized. In so far as synchronized trades and cross trades are concerned there is a categorical finding that the appellants who were connected entities had traded amongst themselves with a manipulative intent to manipulate the price. A categorical finding has been given that the difference between buy order and sell order was less than one minute and, therefore, the finding that these trades were synchronized trades does not suffer from any error of law. Nothing has been pointed out by these appellants as to why these trades could not be treated as synchronized trades. The pattern of the synchronized trades as well as the cross trades clearly indicates a predetermined mind to increase the price and volume of the scrip.

We are satisfied that there was non-compliance of the summons and failure to disclose the non-implementation of the corporate announcements. Further, we are satisfied that the appellants had indulged in synchronised as well as cross trades. Consequently, we do not find any error in the impugned order. The appeals fails and are dismissed summarily at the admission stage itself without any order as to costs.

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 Private Secretary 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.