Surenderkaur Paramjeet Panesar And Others vs Securities And Exchange Board Of India

Tarun Agarwala, Presiding Officer

The show cause notice was issued to 89 noticees by the Whole Time Member (‘WTM’ for short) of the Securities and Exchange Board of India (‘SEBI’ for short) and after considering the matter, the WTM passed an order dated September 6, 2021 holding that noticee nos. 1 to 6 i.e. the Company and its Directors had devised an arrangement whereby 83 connected entities, namely, noticee nos. 7 to 89 had manipulated the price of the scrip in four patches of trading during the investigation period thereby violating Regulation 3 and 4 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (‘PFUTP Regulations’ for short). The WTM further found that 77 of these 83 entities were also counterparties to the sale of shares by 1059 entities / allottees and thereby created artificial inflation and volume of trading which was manipulative and fraudulent and again violative of Regulation 3 and 4 of the PFUTP Regulations. The WTM accordingly debarred noticee nos. 1 to 6 from accessing the securities market for a period of one year and notice nos. 7 to 89 for a period of six months.

For the same violation and for the same cause of action the Adjudicating Officer (‘AO’ for short) also initiated proceedings by issuance of a show cause notice to 86 noticees and after considering the matter directed these 86 noticees to pay a penalty of Rs. 1 crore jointly and severally under Section 15 HA of the SEBI Act, 1992. 32 noticees have filed 14 appeals against the order of the WTM as well as the order of AO. This Tribunal at the time of entertaining the appeal had stayed the debarment order and had further directed the appellants to deposit a sum of Rs. 2 lakh each.

During the course of hearing of the appeal it was urged that apart from the merits the order of disgorgement jointly and severally was wholly illegal as the appellants were not inter-connected with the other noticees and consequently in this regard urged that the appellants would be happy if the penalty against each of the appellants is confined to Rs. 2 lakh each as directed in the interim order without prejudice to their rights on this issue to contest the matter on merits.

It was also stated that for the same violation SEBI has initiated criminal proceedings which is pending before the Sessions Judge, Mumbai. It was urged that the SEBI would be relying upon the orders of the AO and WTM before the Sessions Judge, Mumbai.

Considering the aforesaid this Tribunal is of the view that in the given circumstances each of the appellants should pay a sum of Rs. 2 lakh each. This observation of the Tribunal was not opposed by the respondent.

Considering the aforesaid and for the reasons stated aforesaid, we dispose of the appeals with the following directions:-

(a) We direct the appellants to deposit a sum or Rs. 2 lakh each.

(b) If the said amount is deposited, the balance amount shall not be recovered. Any deposit made by the appellants pursuant to the interim order would be adjusted accordingly.

(c) The debarment period is reduced to the period underwent by the appellants.

(d) The impugned orders of the AO and WTM will not be utilized by either of the parties in the criminal proceedings pending before the Sessions Judge, Mumbai or before any other authority and that the Session Judge would not be influenced by the orders of the AO, WTM or of this Tribunal.

The appeals are disposed of in terms of the aforesaid directions with no order as to costs. The miscellaneous applications are disposed of.

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. Certified copy of this order is also available from the Registry on payment of usual charges.