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2020 (2) TMI 872 - AT - SEBIFraudulent and Unfair Trade Practices relating to Securities Market - Dealing illiquid scrip in order to create artificial volume and market price for vested gain - HELD THAT:- Appellant did not furnish the requisite information to the investigation team. Further, no reply was filed by the appellant pursuant to the show cause notice. Inspite of service of the summons, the appellant failed to appear nor filed any reply to defend himself even though ample opportunity of personal hearing was given. Charge levelled against the appellant remained unreburted. Further, we find that the AO considered the material evidence on record and came to a conclusion that the price payable to the stock exchange pursuant to the default committed by the appellant's client in the delivery of shares was not recovered by the appellant from its client leads to an irresistible inference that the appellant was itself dealing in the illiquid scrip in order to create artificial volume and market price for vested gain. It has come on record that during the period when the appellant's alleged client sold 120 shares the price rose from ₹ 4,351/- per share to ₹ 4,438/- per share. AO was thus, of the opinion that creating artificial volumes and increase in the price scrip was violative of Regulations 3 and 4 of the PFUTP Regulations. The AO also found that due diligence was not carried out by the appellant in the registration of the client and that the appellant had failed to satisfy itself about the genuineness and financial soundness of its client. We are of the opinion that the documents filed before this Tribunal were not produced by the appellant either before the investigation team or before the AO. Such documents cannot be considered by this Tribunal unless leave of the Tribunal is taken by filing an application for production of additional evidence in consonance with the principles of Order 41 Rule 27 of the Code of Civil Procedure. Such documents cannot be entertained nor can it be considered by the Tribunal. Maximum penalty imposed - AO has considered the factors under Section 15J of the SEBI Act and has held that the material available on record is insufficient to quantify the amount of disproportionate gain or unfair advantage made by the appellant or the loss suffered by the investors as a result of the acts done by the appellant can be ascertained. Considering this aspect, we find that since the quantification could not be done, the AO on the basis of approximation has levied a penalty of ₹ 15 lacs which in our opinion is just and appropriate. In the given facts and circumstances of the case, we find that a maximum penalty under Section 15HA and 15HB is ₹ 25 crores which could be imposed. Considering the gravity of the offence, the AO has only imposed a penalty of ₹ 15 lacs instead of imposing a maximum penalty.
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