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Showing 41 to 60 of 1714 Records
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2020 (2) TMI 1675 - KERALA HIGH COURT
Uploading FORM GST TRAN-1 - HELD THAT:- We take note of the fact that, challenge in these appeals are against an interim order. The said order does not contain any specific directions. On the other hand, the learned counsel for the respondents in the writ petition was only directed to get instruction with respect to the alleged non-compliance of the directions contained in the earlier judgments. It is well within liberty of the appellants herein to point out the above mentioned aspects before the learned Single Judge and to seek appropriate modification of the interim order, if found necessary. We do not find anything to presume that, the learned Single Judge will not consider such submissions, if made with supporting materials.
The above writ appeals are hereby dismissed by reserving liberty to the appellants to raise all the contentions raised herein before the learned Single Judge, in seeking modification of the impugned interim order, if found necessary.
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2020 (2) TMI 1674 - SC ORDER
Initiation of CIRP - Objection / Appeal by another lender (Financial Creditor) against the initiation of CIRP - Locus Standi
NCLAT dismissed appeal of the appellant in [2019 (8) TMI 1849 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI], by stating that, After admission of the application under Section 7, if the Appellant claims that it is one of the 'Financial Creditor', it can file claim before the 'Resolution Professional', but it cannot challenge the order of admission in absence of any challenge by the 'Corporate Debtor', on the ground that it has first charge on the asset of the 'Corporate Debtor' or has superior claim over the claim of the other 'Financial Creditors'.
SC dismissed the appeal by stating that, "We find no ground to interfere with the impugned judgment(s) passed by the Tribunal."
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2020 (2) TMI 1673 - ITAT KOLKATA
Estimation of income - Undisclosed sale - assessing income @60% of the profit rate - HELD THAT:- We notice that this assessee is a cloth merchant and proprietor of M/s Geeta Tex Fabrics. Case file suggests that the learned lower authorities have assessed her income derived from cloth trading @0.75% profit rate. That being the case, we are of the opinion that the CIT(A)’s impugned action assessing 60% profit rate is neither based on the assessee’s corresponding books of accounts nor that adopted in preceding and succeeding assessment years.
We therefore conclude that a lumpsum profit rate @7.5% of the rates in issue, already double than that accepted @0.75%, would be just and proper keeping in mind the peculiar facts and circumstances involved herein. Necessary computation to follow as per law. It is made clear that our instant estimation shall not be treated as a precedent in other assessment year(s). Assessee’s appeal is partly allowed.
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2020 (2) TMI 1672 - TRIPURA HIGH COURT
Withdrawal of tax concessions - benefit in terms of the promise for grant of exemptions - HELD THAT:- The Supreme Court in case of Union of India & Ors. v. Unicorn Industries [2019 (9) TMI 791 - SUPREME COURT] which squarely covers this issue against the respondents, where it was held that the withdrawal of the exemption to the pan masala with tobacco and pan masala sans tobacco is in the larger public interest. As such, the doctrine of promissory estoppel could not have been invoked in the present matter. The State could not be compelled to continue the exemption, though it was satisfied that it was not in the public interest to do so.
Appeal is disposed of accordingly.
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2020 (2) TMI 1671 - ITAT DELHI
Addition u/s 69 - unexplained deposits in his bank account - assessee as per its explanation before the tax authorities submitted that he is trading in Kiryana items and has income from sale of agricultural produce along with milk and Ghee and there are some cash receipts from his real brother - HELD THAT:- The assessee claims to be illiterate and the fact that he did not have the best of legal advice available, is glaring on the record as even proper and appropriate grounds could not be raised. The aim of the statute is to collect just and due taxes for the State and not encash the ignorance of the tax payers. The representation before the CIT(A) admittedly was not proper. Accordingly, in the interests of substantial justice, the issues are set aside to the file of CIT(A) with the direction to decide the same afresh in accordance with law by way of speaking order after giving the assessee a proper opportunity of being heard. Appeal of the assessee is allowed for statistical purposes.
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2020 (2) TMI 1670 - BOMBAY HIGH COURT
Completion of proceedings pursuant to the show-cause - time limitation - Respondents contends that the Petitioner can answer the show-cause notice and get the issue adjudicated - HELD THAT:- The Customs Act 1962, stipulates limitation for completion of proceedings pursuant to the show-cause - We are informed that limitation would expire by 25 March 2020. Since the matter is being adjourned, to avoid further complications, there shall be ad-interim stay to the impugned show-cause notice dated 25 July 2019.
Stand over to 26 March 2020.
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2020 (2) TMI 1669 - ITAT INDORE
Levying the late fees u/s 234E - processing the statement of tax deducted at source u/s 200A before the amendment was brought in w.e.f. 01.06.2015 in the provisions of section 200A - HELD THAT:- Following the decisions given by us in the case of State Bank of India, Genda Chowk and others [2018 (11) TMI 1714 - ITAT INDORE] and M/s. Madhya Pradesh Power Transmission Ltd. & others [2018 (12) TMI 1323 - ITAT INDORE] and Bhupesh Kumar J. Sanghvi & others [2019 (1) TMI 1739 - ITAT INDORE] are of the opinion that in the given set of facts of the instant appeals wherein fee u/s 234E of the Act was levied in the statements processed u/s 200A of the Act before 01.06.2015 i.e. before the amendment brought into effect from 01.06.2015 in section 200A of the Act thereby enabling the revenue authorities to raise demand in respect of levy of fees u/s 234E of the Act. Ld. CIT(A) erred in confirming the levy of late fees u/s 234E of the Act by the assessing officer. Accordingly findings of ld. CIT(A) in all these 165 appeals are reversed and revenue is directed to delete the levy of fees u/s 234E of the Act in all these 165 cases. Thus, common issue raised in these bunch of appeals is decided in favour of the assessees.
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2020 (2) TMI 1668 - ITAT PUNE
TP Adjustment - rejecting of the aggregation of transactions approach adopted by the assessee for benchmarking its manufacturing activities - HELD THAT:- We find that as rightly pointed by the AR the similar issue had come up before this Tribunal latest by in A.Y. 2011-12 [2018 (9) TMI 1691 - ITAT PUNE] wherein the Tribunal placing reliance in earlier orders passed in assessee’s own case upheld the aggregation approach adopted by the assessee to benchmark international transactions in manufacturing activity. We find the issue raised in ground No. 2 is similar to issue raised in A.Y. 2011-12 basing on same identical facts and no contrary order placed on record against order of ITAT, in view of the same, ground No. 2 raised by the assessee is allowed.
Comparing segmental profitability of the assessee between export of AEs segment and domestic sales segment ignoring product difference, differences in markets as well as difference in the functions, assets and risks - The similar issue had come up before this Tribunal in assessee’s own case wherein the Tribunal held that TNMM is to be applied and the margins of assessee are to be compared with average margins of external comparable companies.
Action of AO/TPO in excluding export incentive while computing the operating margin of the assessee in export to AEs segment - Similar issue had come up before this Tribunal in assessee’s own case for A.Y. 2011-12 [2018 (9) TMI 1691 - ITAT PUNE] wherein it has been held that export incentive is to be included as part of operating income while determining operating margin of assessee.3. In view of the above, we hold that export incentives are to be considered as operating income of assessee, while benchmarking international transactions of assessee, ground raised by the assessee is allowed.
Considering PLI as operating profit to total cost as against operating profit to sales, without proving cogent reasons - HELD THAT:- The identical issue had come up before this Tribunal for A.Y. 2011-12 [2018 (9) TMI 1691 - ITAT PUNE] wherein the Co-ordinate Bench considering the earlier orders of Tribunal in assessee’s own case held the PLI of net profit to sales is to be accepted.
Not granting the benefit of ± 3 percent as per proviso to section 92C(2) - HELD THAT:- We direct the AO/TPO to give benefit of range of ± 5% if the variation does not exceed the said tolerance margin, thus, ground raised by the assessee is allowed.
Addition on account of management fee - HELD THAT:- We are of the opinion that the matter should be remanded to the file of AO/TPO, as the case may be, for the purpose of comparing the facts of the case and the relevant terms of agreement between the CBDT and the assessee. AO is directed to examine the facts closely and conclude the assessee on the issue of applicability of APA to the assessee's case for the year under consideration in principle. AO is also directed to consider the above cited decisions of Pune Bench of the Tribunal as well as Delhi Bench of the Tribunal for the legal proposition of deciding the issue in the light of APAs. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
Disallowance of expenses u/s. 14A - HELD THAT:- We remit the issue back to the file of the Assessing Officer to adjudicate the issue in lines of the order of the Tribunal in assessee's own case for assessment year 2011- 12 [2018 (9) TMI 1691 - ITAT PUNE]. Thus, ground raised in appeal by the assessee is allowed for statistical purposes.
Disallowance of deduction u/s. 35(2AB) - HELD THAT:- The Hyderabad Bench of the Hon'ble ITAT in the case of M/s. Electronics Corporation of India Ltd. [2013 (1) TMI 109 - ITAT HYDERABAD] has categorically held that is not for either the assessing authority or the appellate authority to decide on the expenditure which will be entitled to weighted deduction u/s. 35(2AB). In fact, u/s. 35(2AB) (3) if any question arises u/s. 35 as to whether and if so, what extent any activities constitutes or constituted or any asset was used for scientific research, the matter should be referred to the appropriate authority whose decision will be final. In this case the appropriate authority is the DSIR.
DSIR has certified the quantum of eligible R & D expenditure for the purposes of weighted deduction u/s. 35(2AB), the figure cannot be tampered with by ITAT. Even if the assessee is right in that, there is a mistake in the certificate issued by the DSIR, which we don't know, the same can only be rectified by DSIR and not the ITAT in appellate proceedings.The details of electricity expense and legal and professional fees related to R & D unit was called for. In response, the same was submitted by the assessee. Perusal of details, the AO observed that electricity bills and legal fees does not specify that it was incurred for R & D unit only and it cannot be held that this expenditure was solely incurred for R & D unit only.
Disallowance of claim of additional depreciation - HELD THAT:- As in the case of in the case of Commissioner of Income Tax Vs. Shri T.P. Textiles Pvt. Ltd. [2017 (3) TMI 739 - MADRAS HIGH COURT] and in both these cases, it has been unanimously observed and held that the assessee can claim balance depreciation in the subsequent assessment year. The Hon‟ble Bombay High Court was of the opinion that there emerges no reason to take a different view from that taken by the aforesaid two High Courts, examining the situation at considerable length. Therefore, appeal of the Revenue was dismissed by the Hon‟ble Jurisdictional High Court. Respectfully, following the binding judgment of the Hon‟ble Jurisdictional High Court, we allow ground raised by the assessee
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2020 (2) TMI 1666 - SC ORDER
Seeking permission for withdrawal of SLP - petitioner is under CIRP - HELD THAT:- There is no dispute that the petitioner has approached the National Company Law Tribunal (NCLT) for reliefs that are the subject matter of these Special Leave Petitions. Mr. Nakul Diwan, learned senior counsel submits that the NCLT by an Order dated 30.1.2020 directed the 1st respondent not to utilise the amount of bank guarantee till the next date of hearing.
The petitioner are permitted to withdraw these Special Leave Petitions and approach the NCLT for any further orders - The Special Leave Petitions are, accordingly, dismissed as withdrawn.
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2020 (2) TMI 1665 - NATIONAL COMPANY LAW TRIBUNAL. ALLAHABAD BENCH
Seeking reversal of transaction of appropriating the margin money of the corporate debtor appropriated by the respondents in breach of the moratorium declared by this Hon’ble tribunal - whether margin money which is in form of security for issuance of letter of credit to the Corporate Debtor can be foreclosed/recovered/debited from the accounts of the Corporate Debtor by a financial creditor during the CIRP period? - such appropriation would tantamount to breach of moratorium by the financial creditors or not - HELD THAT:- It is admitted facts that LC is an independent transaction and bank is bound to extend from time to time the validity period of LC and it cannot be said that money payable by the issuing bank are money belonging to judgment debtor. It is further submitted that the corporate debtor has admitted in its annual report and balance sheet as on 31 March, 2018 that they have offset the financial asset and liability to the extent of 87.10 crores of which Rs. 59.26 crores is PNBs share which is also reflected in Form C. And as per clause 8 of Form C of IBBI (Insolvency Resolution Process for Corporate persons) Regulations, 2016, the claim submitted by the banks/creditors specifically provide for the list of securities, on which the moratorium applies and this list is an exclusive list of security and it does not find any mention of margin money.
In light of the provision of Sec 14 of Insolvency and Bankruptcy Code, 2016, specifically Sec 14(1)(c)of IBC,2016 which covers the security as claimed in the present application; this adjudicating Authority is of the view that when as Corporate Insolvency Resolution Process is initiated against the corporate debtor, the sound rationale of granting moratorium is to ensures that individual creditors are prevented from unilaterally initiating enforcement action which could defeat a holistic restructuring of the company arid further ensures that the company has control over its operating assets to be able to continue transacting as a going concern and the financial economy of the company should not hampered during the process.
The adjudicating authority finds that the margin money which is in form of security, was appropriated by the financial creditors from the accounts of the corporate debtor , after the CIR process has been intiated and all these transactions were done during moratorium period which this adjudicating authority finds, is against the purpose of which the moratorium is granted; as the purpose of moratorium includes keeping the corporate debtor’s assets together during the insolvency resolution process and facilitating orderly completion of the processes envisaged during the insolvency resolution process and further ensuring that the company may continue as going concern while the creditors take a view on resolution of default and the moratorium ensures a stand still period during which creditors cannot resort to individual enforcement action which may frustrate the object of the CIR process and the margin money which was the asset of the corporate debtor, was appropriated after moratorium being declared, which is against the provision of law and cannot be appropriated during the CIRP - Further, if the amount of margin money which is appropriated by the respondents bank is adjustment with the amount of bill, which was paid by the bank on behalf of corporate debtor and not the appropriation of corporate debtor’s fund towards the dues of the bank than this adjudicating authority is of the view that it should not have been done during the CIRP process and when moratorium has already being granted then the respondent banks cannot be permitted to transgress the provision of law as it will be considered as breach of moratorium and they cannot recover any amount from the account of the corporate debtor.
This adjudicating authority directs all the respondents to reverse the transactions of appropriating the margin money against the letter of credit and the demand loan aggregating to Rs. 164,24,70,284/ and to credit the amount of the margin money into the current accounts of the Corporate debtor.
Application allowed.
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2020 (2) TMI 1664 - ITAT MUMBAI
Estimation of income - Bogus purchases - A.O. made addition by estimating GP on such alleged bogus purchases - HELD THAT:- As decided in own case [2019 (12) TMI 1617 - ITAT MUMBAI] restore the matter back to the file of the A.O. to restrict the addition to the extent of lower GP declared by the assessee in respect of bogus purchases as compared to GP on normal purchases. The assessee is also directed to give full details to the A.O. with regard to GP earned on normal purchases and also GP earned on alleged bogus purchases. Appeals of the assessee are allowed in part for statistical purposes only.
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2020 (2) TMI 1663 - MADRAS HIGH COURT
Recovery of dues - priority of charges - overriding effect of Section 31B of the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 over the recovery of all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or Local Authority - HELD THAT:- The prevailing position is that debts due to any secured creditor shall be paid in priority over all other other debts and revenues, taxes, cesses and rates payable to the Central or State Government or local authority.
The sale of the properties in question shall be registered, if the documents are otherwise in order. The petitioner bank is directed to keep the sale considerations apart in a separate interest bearing, marked account, till, and subject to disposal of this writ petition.
Since the main issue is stated to be pending before the Supreme Court, list this matter on 16.03.2020.
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2020 (2) TMI 1662 - SC ORDER
Sanction of Financial Scheme of Compromise and Arrangement between Applicant, Arun Kumar Jagatramka (Promoter) and the Company (Corporate Debtor) - HELD THAT:- Issue notice, returnable on 23.03.2020.
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2020 (2) TMI 1661 - GUJARAT HIGH COURT
Principles of natural justice - non-grant of opportunity for cross-examination of the witnesses - Reliability of statements of witnesses - HELD THAT:- The Court is of the view that the order, which has been rendered is essentially based upon the statements, which have been relied upon by the department, then the persons making those statements were required to be permitted to be cross-examined by the petitioner.
In the instant case, this Court also do not propose to examine any other aspect or merits, else it would not be proper thereafter to remand the matter and as the counsel for the respondents also could not controvert or dispute the settled proposition of law and as it is also not disputed that the statements, which have been taken into consideration for casting the order, the persons making those statements have not been permitted to be cross-examined on the perception that the same was only a delaying tactic - Therefore, without observing anything further on the merits, the order is required to be quashed and set aside only on the ground of authority’s denial to grant cross-examination, as requested, had vitiated the order and, therefore, the concerned respondent no.2 shall afford an opportunity to cross-examine the persons, authorities, whose statements have been relied upon as well as the officers involved in the investigation and cast the order afresh after applying mind to the facts and circumstances of the case and it may be observed at this stage that so far as other merits are concerned, the Court has not gone into and it would be absolutely appropriate to the authority to apply its mind and pass appropriate order as expeditiously as possible.
Petition disposed off.
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2020 (2) TMI 1660 - SUPREME COURT
Empanelment for promotion - Whether the non-empanelment of the Appellant for promotion to the rank of Major General was contrary to the promotion policy? - HELD THAT:- The Appellant was considered for empanelment by the First Selection Board on 24.04.2015 in accordance with the guidelines laid down in the promotion policy dated 04.01.2011. The Appellant secured a total of 89.667 per cent marks. The record pertaining to the First Selection Board, held on 24.04.2015 was placed before us. The Selection Board did not recommend the Appellant for empanelment for promotion to the rank of Major General in Intelligence Corps. After examining the complete profile of the officer, the Selection Board was of the opinion that the Appellant did not have the requisite potential and was not fit for promotion to the rank of Major General. The Appellant was considered again for empanelment in September, 2015 in which he secured 90.469 marks out of 100 but was not recommended for empanelment.
The Appellant was the only officer of 1981 batch who was considered for empanelment for promotion to the rank of Major General on 24.04.2015. The apprehension of the Appellant that he was compared with the merit of the earlier batch is unfounded.
The earlier policy followed for promotion to higher ranks in the Army from 1987 was revised in the year 2008 to introduce a quantification system to be followed by the Selection Boards. The policy governing promotions to higher ranks in the Army was issued on 04.01.2011 in supersession of the earlier policy of the quantification system. Primacy is given to the CRs as is clearly mentioned in the policy. There is nothing mentioned in the policy that an officer can be ignored for empanelment only on the basis of the value judgment in spite of his securing high marks on the basis of the other criteria - In the instant case, the Appellant was the only eligible Brigadier of his batch for empanelment to the rank of Major General with a meritorious record of service. He could not have been deprived of his empanelment only on the basis of value judgment of the Selection Board.
There is no presumption that a decision taken by persons occupying high posts is valid. All power vested in the authorities has to be discharged in accordance with the principles laid down by the Constitution and the other Statutes or Rules/Regulations governing the field. The judicial scrutiny of a decision does not depend on the rank or position held by the decision maker. The Court is concerned with the legality and validity of the decision and the rank of the decision maker does not make any difference.
The only point that is considered is regarding the non-empanelment of the Appellant being in accordance with the promotion policy of the Respondent. The non-empanelment of the Appellant for promotion as Major General is contrary to the promotion policy. He is entitled for reconsideration for empanelment by a Review Selection Board strictly in accordance with the promotion policy by keeping in mind the observations in this judgment. The Respondents are directed to complete this exercise within a period of six months from today.
Appeal allowed.
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2020 (2) TMI 1659 - BOMBAY HIGH COURT
Declaration, perpetual injunction and possession - edifice of the suit is constructed on the premise that the suit properties were owned by Kalpita Builders Private Limited and could have been alienated only with the consent of two Directors or the majority of Directors - HELD THAT:- Section 430 is brought into force with effect from 01st June, 2016, vide Notification No. SO 1934(E), dated 01.06.2016. The submission of the plaintiff, that the jurisdiction of the Civil Court is barred, is on the premise that in view of the coming into force of Section 430, the jurisdiction of the Civil Court is barred, since the NCLT is empowered to deal with and decide the issues framed by the trial Court.
It is not even the case of the plaintiff that the Civil Court did not have the jurisdiction to decide the suit. Indeed, the plaintiff invited the Civil Court to decide the legality and validity of the sale deeds executed by Respondent No.1 in favour of Respondents No.2 to 19 and agreement to sell in favour of defendant no.20. The submission is, that the amended provisions of the Act came into force during the pendency of the appeal and, therefore, the appellate Court ceased to have jurisdiction over the matter - the provisions, on which the plaintiff is heavily relying, came into effect from 01.06.2016. Even according to the plaintiff, the Civil Court did have the jurisdiction when the suit came to be decided. If this be so, the fact that Section 430 of the Act has come into effect during the pendency of the appeal, would not necessitate return of the appeal for being presented before the NCLT.
Petition dismissed.
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2020 (2) TMI 1658 - ITAT KOLKATA
Disallowance u/s.143(1) based on the audit report - addition of club expenses - mistake of the auditor/clerical error in the Tax Audit Report cannot be the basis for disallowance of expenses which has been legally spent by the assessee wholly and exclusively for business purposes - HELD THAT:- As no adjustment/disallowance/addition of the expenditure claimed by the assessee on account of club expenses could not have been disallowed without issue of notice u/s. 143(2) of the Act as held by the Hon’ble High court in Peerless General Finance Co. Ltd. [2009 (10) TMI 429 - CALCUTTA HIGH COURT] - Further, we note that the assessee had already suo moto disallowed expenditure incurred on CSR activities, interest on late payment of TDS, penalty of PF and penalty of entry tax total - So, the allowability of club expenses which assessee claimed could not have been disallowed without giving proper opportunity to the assessee, which omission on the part of AO [CPC] is against the principles of Natural Justice and it cannot be sustained. Therefore,we allow the appeal of the assessee and direct deletion of addition. Appeal of assessee allowed.
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2020 (2) TMI 1657 - SUPREME COURT
Rectification of mistake - it has been submitted that the correct date in the office report of the disposal of Special Leave Petition (C) CC No. 3881 of 2010 ought to have been 6 April, 2009 and not 6 April, 2010 - HELD THAT:- The office report dated 9 July, 2010, which was placed on record when the Special Leave Petitions were dismissed on 12 July, 2010, suffered from an inadvertent mistake. In the interests of justice, we recall the order dated 12 July, 2010 and restore the Special Leave Petitions to file.
The Review Petitions are accordingly allowed.
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2020 (2) TMI 1656 - SC ORDER
Maintainability of appeal before Supreme court - low tax effect - HELD THAT:- Perused the office report dated 26.02.2020, according to which in following matters the tax effect is less than Rs.Two Crores.In view of CBDT Circular dated 8.8.2019, we see no reason to interfere in aforesaid appeals, which are accordingly dismissed. No costs.
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2020 (2) TMI 1655 - SECURITIES AND EXCHANGE BOARD OF INDIA
Offence under SEBI - self trades - restrain orders - Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control - whether alleged self-trades in MBL proprietary account were non-intentional, non-manipulative, inadvertent and accidental? - violation of provisions of Regulation 3 (a),(b),(c),(d), Regulations 4(1), 4 (2) (a) (g) of PFUTP Regulations and Clause A(3), A( 4) & A(5) of Broker Regulations - HELD THAT:- Self-trades had impact on the price of the shares of GNCL, however, self-trades were so designed to appear that the volume creation is negligible but were in fact motivated by the manipulative intention of creation of false price ascension. Thus, preponderance of probability is that these trades are intentional self-trades. Therefore, we conclude that the impugned self-trades by MBL are intentional and manipulative self-trades.
MBL contented that in order to check the price of the scrip, MBL placed a single share buy order and these insignificant quantum of trading could not impact either the price or volume of the scrip. In this regard, we note that single share buy order placed by MBL got matched with the already available large sell order of MBL at a price higher than the last traded price thereby establishing the higher LTP. Further, such order placement pattern of MBL were observed in large number of MBL self-trades and the same were repetitive in nature.
We note that due to such trading pattern, MBL had positive LTP contribution of Rs. 289.35 through 5,041 self-trades. Further, we also note the observation of Hon’ble Securities Appellate Tribunal (SAT) in order dated February 25, 2020 in the matter of Mrs. Kalpana Dharmesh Chheda and others Vs. SEBI that [2020 (2) TMI 1420 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] “…. when the appellants were holding a large number of shares, their selling miniscule quantity of one share each on more than four dozen occasions is nothing but a strategy of manipulation and unfairly benefiting by off-loading the entire shareholding after raising the price to considerable levels…..”. Though the said observation of the Hon’ble SAT was rendered in the context of manipulative trading pattern adopted by single share transaction, the same equally holds good in the present factual matrix of the case as well, in respect of manipulative self-trades through single share transaction.
Thus, in view of the observation of Hon’ble SAT, that manipulation in the scrip can be done by single share order placement method also, which has precisely happened in the present matter, in such a scenario, volume created by such trades / self-trades in the scrip is irrelevant / immaterial. Thus, considering at the pattern of trading done by MBL and the fact that MBL had derived benefit through that particular scheme or nature of trading, the trading pattern adopted by MBL is of a manipulative and unfair nature and would fall within the ambit of the PFUTP Regulations. Hence, we merit in the submission of MBL that single share order placement could not impact either the price or volume of the scrip.
Whether MBL have violated the provisions of Sections 12A(a), (b), (c) of SEBI Act read with Regulations 3(a), 3(b), 3(c), 3(d), 4(1), 4(2)(a), 4(2)(e) and 4(2)(g) of PFUTP Regulations? - The modus operandi adopted by MBL is that it had continuously placed single share buy order immediately after placing sell order of large quantity at a price higher than the last traded price. These single share buy order got matched with its own sell order of large quantity resulted into self-trade of 1 shares. This single share self-trades had increased the price of shares of GNCL, which benefit MBL. This pattern of single share self-trades which were repetitive in nature by MBL is observed to be manipulative with the intention to inflate the scrip price. Thus, MBL has acted in a manner which led to a misleading appearance of trading in the scrip and manipulated the price of the scrip without any intention of change of ownership of the securities.
In view of the findings mentioned at paragraph 23, 24, 25 and 26 above and modus operandi adopted by MBL, it of the view that alleged violations of provisions of Sections 12A(a), (b), (c) of SEBI Act read with Regulations 3(a), 3(b), 3(c), 3(d), 4(1), 4(2)(a), 4(2)(e) and 4(2)(g) of the PFUTP Regulations against MBL stand established.
Whether MBL by acting as broker and counterparty broker for self-trades in its own account on NSE, has failed to exercise due skill and care, thereby violated the provisions of Clauses A (2) of the Code of Conduct for Stock Brokers as specified under Schedule II read with Regulation 7 of Brokers Regulations, 1992 read with Regulation 9 of Brokers (Second Amendment) Regulations, 2013? - As already held that self-trades executed by MBL in its proprietary account are intentional self-trades through single shares self-trades with manipulative intention of creation of false price ascension. It is noted such conduct is an intentional conduct of MBL. Therefore, where MBL has intentionally committed a fraudulent activity of self-trades, the requirement that it should have exercised due skill, care and diligence while trading in the shares of GNCL in its proprietary account, does not arise. Thus, alleged violation of provisions of Clauses A (2) of the Code of Conduct for Stock Brokers as specified under Schedule II read with Regulation 7 of Brokers Regulations, 1992 read with Regulation 9 of Brokers (Second Amendment) Regulations, 2013 against MBL does not get attracted in view of the finding on the intentional self-trades by MBL.
SEBI appropriate directions against MBL - As modus operandi adopted by MBL is that it had placed single share buy order immediately after placing sell order of large quantity at a price higher than the last traded price thereby establishing the higher LTP. These single share order got matched with its own sell order of large quantity resulted into self-trade of 1 shares. MBL through the execution of self-trades of 1 shares, had artificially increased the price of the scrip for its own benefit. This pattern of single share self-trades by MBL were repetitive. Thus, considering at the pattern of trading done by MBL and the fact that MBL had derived benefit through that particular scheme or nature of trading, the trading pattern adopted by MBL is of a manipulative and unfair nature with the intention to inflate the scrip price which resulted into violation of PFUTP Regulations. It goes without saying once the higher price is established by these manipulative self-trades, the other trades by other counter parties, which happen subsequent to this manipulated self-trades, are executed at a price artificially hiked by self-trades.
Order - As in exercise of the powers conferred upon under Sections 11, 11(4) and 11B read with Section 19 of the Securities and Exchange Board of India Act, 1992, hereby restrain MBL from buying, selling or otherwise dealing in securities, in its proprietary account, directly or indirectly, for a period of four (4) years from the date of this order. Needless to say, in view of prohibition on sale of securities, it is clarified that during the period of restraint, the existing holding, including units of mutual funds, of MBL shall remain frozen.
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