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2019 (3) TMI 197 - SC - SEBIPenalty u/s 15HB of SEBI Act - Penalty for failure to furnish information, return, etc - determining the quantum of penalty - test of preponderance of probability - HELD THAT:- Huge volume of trading between same set/group of brokers can in a given case reasonably point to some kind of a fraudulent and manipulative exercise with prior meeting of minds. Further, there is a difference between synchronized trading involving bulk quantities and negotiated trades as a result of consensual bargaining involving synchronization of buy and sell orders resulting in matching thereof as per permissible parameters which are programmed accordingly. Test of preponderance of probability applies for the adjudication and determination of civil liability for violation of the SEBI Act or the provisions of the Regulations framed thereunder (see RAKHI TRADING PRIVATE LTD. [2018 (2) TMI 580 - SUPREME COURT OF INDIA]). Keeping the aforesaid parameters in mind, the adjudicating authority had imposed penalty of ₹ 3,00,000/( Rupees three lakhs only) under Section 15HB of the SEBI Act, which has been upheld by the Appellate Tribunal being commensurate with the violation. No infirmity with the concurrent findings or with the quantum of penalty imposed and the same is upheld. Penalty for violation of Section 11C( 3) under Section 15A( a) of the SEBI Act - HELD THAT:- During the course of hearing by SEBI, most details as provided by the appellants were general in nature. In case there was no violation pertaining to mobilization of funds from the public under various schemes/arrangements, this could have been so stated in clear and categoric terms. Moreover, the contention that the offices were sealed which rendered them incapable to furnish information has been rejected for two good reasons. First, this stand is belated and held to be an afterthought when it could have been raised at the first instance when the reply dated 5th December, 2012 was furnished, given that the records were seized by the police on 5th May, 2011. Second, assertion was contradicted by their own conduct when during the proceedings they had submitted a few documents, which were incomplete and not as desired. They did not make any distinction as to the documents within their possession and as to those with the police. Appellate Tribunal had in these circumstances affirmed the finding that there was a lack of good faith and failure in complying with the aforesaid notices/letters/summons/emails. Adjudicating Officer had, therefore, rightly recorded that noncompliance of summons had hampered the further course of investigation. The failure was without any justification. Agreeing with the said findings, the Appellate Tribunal has observed that details were withheld with a view to delay the investigation being conducted by SEBI to the detriment of investors from whom funds were collected by the appellants in contravention of CIS Regulations. No fault with the reasoning given. We are of the opinion that the fault squarely lied with the appellants and, thus, penalty of ₹ 1,00,00,000/( Rupees one crore only) for violation of Section 11C( 3) under Section 15A( a) of the SEBI Act does not call for any interference.
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