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TMI Blog2019 (11) TMI 1120X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulations, 1992 (hereinafter referred to as 'PIT Regulations') alongwith Appellant no.1 Tarun Kumar and rest of the appellants in Appeal no.260 of 2017. Appellant Tarun Kumar is solely found violating Regulations 3, 4 (2) (a), (b), (e) and (g) of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as 'PFUTP Regulations'). Thus, two distinct facts are involved in the common impugned order passed by the respondent Securities and Exchange Board of India (hereinafter referred to as 'SEBI'). It would be worthwhile first to take for consideration the case of violation of PFUTP Regulations by appellant Tarun Kumar Brahambhatt. 2. The proceedings were initiated against the appellant Tarun Kumar alongwith other noticees no.3 to 7 (not before us) for manipulating the prices of Rajratan Global Wire Ltd. (hereinafter referred to as 'Rajratan'). The Adjudicating Officer found that the other noticees trade was miniscule and no nexus could be found in the trade between appellant Tarun Kumar and these other noticees. In the circumstances, the proceedings against those noticees wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith manipulative intention behind such trade. So far as trades of others noticees are concerned, no connection was found in trading. They were not counter parties to the transactions of the appellant. However finding the above trading pattern of the appellant Tarun Kumar, he was found to have violated the provisions of the PFUTP Regulations as detailed supra. 5. The submissions of the appellant before the Adjudicating Officer as well as the submissions of the learned counsel for the appellant are that the appellant in fact traded within the circuit limit fixed by the stock exchanges. The appellant has traded between 22nd February, 2010 to 8th July, 2010 by which time the price of the shares had already increased from Rs. 73 to Rs. 170. The net effect of the trading of the appellant is merely Rs. 28.28 increase which is negligible. No uniform unidimensional pattern of trading of the appellant can be found. Even as recently as on 28th June, 2009 the price of the shares of Rajratan is Rs. 866 which would show that the Company is fundamentally strong. It was further argued that the appellant was alleged to have entered into the synchronized trades but the counter parties are exoner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Mr. Muthukumaran Ramalingam and Mr. M.R. Gautam were in need of funds for establishing a shopping mall project. Therefore they approached appellants Tarun Kumar and Jinesh for finance. They executed agreement for pledge of the shares with these two appellants as a security towards finance to be raised. Accordingly, 13,60,000 shares were transferred in off market transaction by the said promoters to these two appellants as well as other appellants. However, because of various reasons the funds could not be raised by these appellants. In the circumstances 4,25,166 shares were returned to the promoters from the account of the appellant Tarun Kumar and his wife Prarthana Brahambhatt. Further, they were not 'persons acting in concert' as per the definition of SAST Regulations. As no acquisition of shares has taken place, SAST Regulations as well as PIT Regulations would not be applicable. The Adjudicating Officer did not accept the submission. The AO found that though the copy of the agreement before her would show that there was a pledge agreement between appellants Tarun Kumar and Jinesh the same is not recorded as a pledge in depository records. The shares were transferred as ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the target company to the target company, and the stock exchanges where shares of the target company are listed within two days of such purchase or sale along with the aggregate shareholding after such acquisition or sale. Explanation.-For the purposes of sub-regulations (1) and (1A), the term 'acquirer' shall include a pledgee, other than a bank or a financial institution and such pledgee shall make disclosure to the target company and the stock exchange within two days of creation of pledge."(Emphasis supplied) 9. As regards the violation of Regulation 10 the issue for consideration is as to whether the transfer was pledge or acquisition of shares. The learned counsel for the appellant submitted that later on the appellants have returned substantive shares and only 2,33,933 shares remained to be returned. This fact is recorded in the order dated 10th January, 2018 passed by another Adjudicating Officer while dealing with the same transactions under Regulation 11 of the SAST Regulations, 1997. He further submits that the Adjudicating Officer has exonerated the promoter and the present appellants from the said proceedings accepting the case that it was a pledge transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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