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2019 (11) TMI 1120 - SECURITIES APPELLATE TRIBUNAL, MUMBAIAcquisition of 5 per cent and more shares or voting rights of a company - manipulative orders in a short time - the appellant’s strategy was to purchase bulk of the shares at a lesser market price. Thereafter, he used to place buy orders on the opening of the market at much higher price than the LTP for small number of shares some time one share only. Once that order got executed then he used to sell his stock at a higher price - Violation of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (‘SAST Regulations’) and Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 (‘PIT Regulations’) - whether the transfer of shares were infact acquisition attracting the provisions of SAST Regulations and eventually PIT Regulations or the transaction was merely a pledge ? - HELD THAT:- the issue of effect of exoneration of the counter parties is immaterial. It is true that synchronized trades or self trades in itself without any motive may not be called manipulative trade practices. In the present case, however the pattern as highlighted above would go to show that the present appellant Tarun Kumar with a view to gain, indulged into trading in a fraudulent manner as detailed supra. In our view the order of the Adjudicating Officer in this regard therefore cannot be faulted. Acquisition of shares accounted for 16.77% of the total shareholding - The case of all the appellants in this regard is that they had not “acquired” shares. - They executed agreement for pledge of the shares with these two appellants as a security towards finance to be raised. - Held that:- Regulation 7 provides for disclosures even in case of pledge to private individual, the transaction in question for public in general and market was change in the shareholding pattern. The term pledge was nowhere put either in the transfer account of the promoters or depository account. In that view of the matter, the violations of the Regulations is clearly ruled. As regards the quantum of penalty the learned counsel for the appellant submits that the magnitude of the ‘offence’ is required to be considered while awarding compensation in criminal cases. He further submitted that the appellant ought to have been heard on quantum of compensation. On the other hand, learned counsel for the respondent rightly submits that the present case cannot be branded as criminal case. He points to the reasoning forwarded by the Adjudicating Officer in the impugned order in this regard. He submits that the fraudulent practices of appellant Tarun Kumar in trading the shares of Rajratan and not making disclosure as well as nondisclosure of acquisition of shares of Velan Hotels Ltd. and public announcement to acquire the shares would amount to deprivation of fair treatment of the shareholders who are affected by the change in control. In the circumstance, he submitted that the penalty of ₹ 15 lakhs imposed upon appellant Tarun Kumar for violation of PFUTP Regulations, ₹ 25 lakhs on the appellants jointly and severally for violation of Regulation 10 read with Regulation 14 of the SAST Regulation and of ₹ 6 lakhs on appellant Tarun Kumar and Jinesh for violation of Regulation 13(1) of PIT Regulations and Regulation 7(1) of the SAST Regulations was justified. He further supports the penalty imposed upon the appellant Jinesh of ₹ 4 lakhs for violation of Regulations 13(3) and 13(5) of the PIT Regulations. Considering all the material on the record, in our view the discretion exercised by the Adjudicating Officer needs no interference in this regard also. In the circumstances, the appeals are hereby dismissed.
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