TMI Blog2016 (7) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... a final fact finding authority cannot be disputed. According to the learned counsel, the facts found by the SAT should not be disbelieved by this Court. However, for coming to a definite conclusion contrary to the findings arrived at by the lower authority, the appellate authority, in the instant case, the SAT, ought to have recorded specific reasons for arriving at a different conclusion, but we do not find any sound reason for coming to a different conclusion in the impugned order. On the other hand, we find detailed discussion for coming to a particular conclusion in the order, which was passed by the Whole Time Member of the SEBI and therefore, we do not see any reason for the SAT to disturb the said finding without mentioning any strong and justifiable reason for coming to a different conclusion. The Whole Time Member of the SEBI has very meticulously examined the aforestated facts and in our opinion he has rightly come to the conclusion that the dealings of the respondents were not fair and were in violation of the Act as well as the Regulations. - Civil Appeal No. 2252 of 2010, Civil Appeal Nos. 2285, 2286, 2294 & 2303 of 2010 - - - Dated:- 11-7-2016 - Anil R. Dave A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arities/illegalities had been committed by some persons so as to corner shares of the said companies by adopting certain unscrupulous, immoral and improper methods not known to the law, which had not only affected the RII but had also an effect on the share market because such dealings by certain greedy persons would adversely affect the faith of a common man in the functioning of the share market. The basic purpose with which the Act was enacted was to see that the share market functions properly and effectively so that ultimately it may not adversely affect the economy of our country. 5. Investigations was made by the officials of the SEBI and in pursuance of the said investigation it was revealed that in the matter of the IPO of the aforestated two companies, shares which were meant for RIIs had been cornered through hundreds of benami/fictitious demat account holders, which was in violation of the provisions of Section 12A (a), (b), (c) of the SEBI Act, 1992. Moreover it was also found that the said transactions were in violation of Regulations 3 and 4(1) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brokerage from the demat account holders but the facts found by the authorities making the investigation are absolutely different. All the demat holders were paid some amount by the concerned respondents and the shares had been sold at a much higher price thereafter. In normal circumstances, no share holder would sell his shares through a broker or otherwise at a price below the market value. In the instant case all the 553 demat account holders have received the same price viz. ₹ 1170/- per share and that too some of the demat holders sold the shares either on the date of listing of shares of the company with the BSE and NSE or even prior thereto, when the market price of the shares was also not known or determined. In normal circumstances, no man with normal prudence would ever enter into such type of transaction but in this case all the 553 demat account holders did it ! 9. Upon knowing the nature of the transactions, the Whole Time Member of the SEBI was convinced that all the transactions pertaining to opening of the demat accounts, applications made by the applicants holding the demat accounts, sale by those account holders to the respondents and sale by the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticular person at a price which is much below the prevailing market price of the shares. We, once again, note the fact that many of these demat account holders had used addresses of others and had signed in a fishy manner in their demat accounts. In fact, the so-called sale of shares was bogus as there was someone who had financed all the demat holders, who had given back the shares to the respondents to whom they had lent their names for getting the shares. 13. The Whole Time Member of the SEBI has very meticulously examined the aforestated facts and in our opinion he has rightly come to the conclusion that the dealings of the respondents were not fair and were in violation of the Act as well as the Regulations. 14. Upon perusal of the impugned order passed by the SAT, we do not find any specific conclusion arrived at by the SAT to the effect that the findings recorded by the Whole Time Member as well as the Adjudicating Officer of the SEBI were incorrect. The appeals before the SAT were in nature of First Appeal and therefore, it was open to the SAT to re-appreciate the evidence after looking at the facts of the case but upon perusal of the impugned order, we do not find a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree with the said submission, because normally a person would give his own address when he is opening his demat account. Rarely, a person would give someone else s address if he is not having any permanent address or is likely to shift his residence. In the instant case, not one or a few, but several demat holders had given one particular address and it is also pertinent to note that upon initiation of an inquiry at the instance of the SEBI, most of the demat accounts had been closed by the demat account holders. 20. The submission was also to the effect that the shares could have been sold before they were listed with a stock exchange and such a sale cannot be said to be an illegality. Looking at the fact that number of persons, having common address of their demat accounts, selling their shares at the same price to a particular person before listing of shares of a company with a stock exchange is not a normal thing. In the facts and circumstances of the case, we do not accept the said submission made by the learned counsel appearing for the respondents. 21. We also note that the Securities Contracts (Regulation) Act, 1956 (SCRA) has been enacted to prevent undesirable trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the requirements of the provision of either Section 13 or Section 2(i) of the SCRA. Therefore, the off market trading indulged into by the Respondents was rightly held to be per se illegal by the Whole Time Member. 23. The submission made to the effect that the Tribunal is a final fact finding authority cannot be disputed. According to the learned counsel, the facts found by the SAT should not be disbelieved by this Court. However, for coming to a definite conclusion contrary to the findings arrived at by the lower authority, the appellate authority, in the instant case, the SAT, ought to have recorded specific reasons for arriving at a different conclusion, but we do not find any sound reason for coming to a different conclusion in the impugned order. On the other hand, we find detailed discussion for coming to a particular conclusion in the order, which was passed by the Whole Time Member of the SEBI and therefore, we do not see any reason for the SAT to disturb the said finding without mentioning any strong and justifiable reason for coming to a different conclusion. 24. For the aforestated reasons and in view of the submissions made by the learned counsel appearing for ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
