TMI Blog2020 (8) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... nection have been established between the Appellants and the suspected/connected entities nor with the promoters or directors etc. of Mapro Industries. The scrip of Mapro was not a miracle scrip, as reflecteded in its limited trading data given in the impugned order, for the Appellants to place their orders in the early morning itself, mostly just after 9 a.m. at prices higher than LTP by 2 to 4% as if this scrip had to be bought at any cost. If any investor takes such a stand, and if he/she is so convinced of the performance of the scrip, he/she would buy at least a reasonable quantity rather than placing a buy order for miniscule quantities of 1, 2, 5 or 10 shares etc as done by the appellants. Nature and pattern of trading of the Appellants are violative of the stated provisions of PFTUP Regulations, 2003 but in the given facts and circumstances of the matter and in the absence of any effort in the impugned order towards connecting the dots in terms of relationship/connection/money transfer/even some interaction between the Appellants and other suspected entities or to the promoters of Mapro we are unable to uphold the penalty imposed on the two Appellants. A warning to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to as LTP ) they have manipulated the trading system and disturbed the market equilibrium in the scrip of Mapro. Together these ten entities raised the price of the scrip by ₹ 241.95 by trading a total quantity of 1174 shares in 43 trades. It was also held in the impugned order that the contribution of these ten entities was about 69% of the total net LTP which was achieved in 29 trades with a total quantity of just 234 shares. 4. Coming specifically to the two Appellants herein, their relative contribution in terms of trades and raising of LTP etc. are as follows. (a) Details of trades by Bharti Goyal All Trades Trades with LTP 0 Trades with LTP 0 and buy orders placed first No.of trades No.of shares LTP Cont. (in Rs.) % to Mkt LTP No.of trades No.of shares LTP Cont. (in Rs.) No.of trades No.of shares LTP Cont. (in Rs.) % to Mkt LTP 9 284 28.65 8.13% 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bharti Goyal, appearing in person contends that she invested in the shares of Mapro in the normal course of business as she is a small-time trader though not frequent. Both the Appellants also contended that they have no connection or relationship with any connected/suspected entity and finally lost money in this investment. On a specific query from the Bench as to why they were placing buy orders at prices higher than the LTP, the learned counsel for the Appellant L.K. Vyas submitted that Mapro was found to be a good investment and since people were not selling the shares they were placing buy orders at a higher price than LTP. 6. On the other hand, learned counsel for the Respondent in Appeal by Vyas (Appeal no.160 of 2020) Shri Kumar Desai contends that placing buy orders well above the LTP is completely irrational as no rational investor would like to buy shares at a price substantially higher than the LTP. Moreover, both the Appellants were placing orders in the trading system early in the day and thereby raising the price unilaterally which is effectively market manipulation. In the process they also impacted the volumes apart from impacting the price of the scrip; and bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. 4. Prohibition of manipulative, fraudulent and unfair trade practice (1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities. (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely:- (a) indulging in an act which creates false or misleading appearance of trading in the securities market; .. (e) any act or omission amounting to manipulation of the price of a security; 9. After hearing the learned counsel for the Appellant L.K. Vyas and Appellant Ms. Bharti Goyal in person and after perusing the records we are of the considered view that there are missing links in the investigation as brought out in the impugned order. While the trading pattern of both the Appellants; placing the buy orders for generally very small number of shares and the timing of the orders; all point towards possible violation of the provisions of PFUTP Regulations it is also possible that an investor through a thorough observation of the movement of the scrip could be placing orders in the system ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellants are violative of the stated provisions of PFTUP Regulations, 2003 but in the given facts and circumstances of the matter and in the absence of any effort in the impugned order towards connecting the dots in terms of relationship/connection/money transfer/even some interaction between the Appellants and other suspected entities or to the promoters of Mapro we are unable to uphold the penalty imposed on the two Appellants. A warning to the Appellants that repetition of trading of similar nature/pattern as the impugned ones will lead to penal consequences is sufficient to meet the ends of justice. 13. Both the appeals are partly allowed with no order as to costs. Consequently Misc. Application no.144 of 2020 in Appeal No.159 of 2020, seeking interim relief has become infructuous and is also disposed of as such. 14. The present matter was heard through video conference due to Covid-19 pandemic. At this stage it is not possible to sign a copy of this order nor a certified copy of this order could be issued by the registry. In these circumstances, this order will be digitally signed by the Presiding Officer on behalf of the bench and all concerned parties are directe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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