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TMI Blog2022 (5) TMI 761X X X X Extracts X X X X X X X X Extracts X X X X ..... DICIAL MEMBER MS. MEERA SWARUP, TECHNICAL MEMBER Mr. Ashish Sharma, Advocate i/b Jain Sharma & Co. Chartered Accountants for the Appellant. Mr. Samyak Gangwal, Advocate with Mr. Krishnesh Bapat, Advocate for the Appellant. Mr. Mani Shankar Chattopadhaya, Advocate for the Appellant. Mr. Varun Nathani, Advocate with Mr. Sukrut Mhatre, Advocate for the Appellant. Mr. Shadad M. Khan, Advocate for the Appellant. Mr. Rajiv Kumar Choudhary, Advocate with Mr. Kailash Dhanuka, Advocate Mr. Ram Awatar Dhoot, CA i/b R. A. Dhoot & Co. Chartered Accountants for the Appellant. Mr. Mukesh Mohan Goyal, Advocate i/b RG Laws for the Appellant. Mr. Abhiraj Arora, Advocate with Ms. Anshu Mehta, Mr. Shourya Tanay and Mr. Harshvardhan Nankani, Advocates i/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uently the proceedings should be dismissed for non-joinder of necessary parties. Some of the appellants also contended that the investigation report was not supplied and in view of the latest decision of the Supreme Court in the matter of T. Takano vs Securities and Exchange Board of India & Anr. (Civil Appeal Nos. 487 - 488 of 2022) decided on February 18, 2022 the impugned order should be set aside and the respondent should be directed to supply the investigation report before proceeding further. It was also urged that the penalty imposed is excessive and arbitrary and does not commensurate with the violation. It was contended that only one or two trades were made for which a heavy penalty has been imposed and that the factors contained u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not necessary for this Tribunal to delve into the assertions raised by the appellants. All the appeals fail and are dismissed in the light of the decision of this Tribunal in the matter of Global Earth Properties and Developers Pvt. Ltd. (supra). 6. However, before parting we would like to say that a large numbers of appeals are being filed on the same issue on a daily basis. We find that SEBI had made an investigation which revealed that thousands of entities were indulging in reversal trades which were found to be non-genuine trades and a misuse of the Stock Exchange platform. SEBI accordingly initiated penalty proceedings in a large number of matters in which penalties were imposed, against which large number of appeals were filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. In this regard the penalty which is being imposed is under 15HA of the SEBI Act which prescribes a minimum penalty of Rs. 5 lakh. This provision was amended on September 8, 2014 by Act No. 27 of 2014. Most of the trades in this illiquid stock option matters are during the period 2014-15. We find that where transaction were executed prior to September 8, 2014 the AOs have imposed a penalty of Rs. 1 lakh and on similar trades executed after September 8, 2014 a penalty of Rs. 5 lakh have been imposed. Thus, on the same set of violation two quantum of penalties are being imposed, Rs. 1 lakh and / or Rs. 5 lakh or more as the case may be. This has created an anomalous situation and is a bit unfair. 12. Section 15JB of the SEBI Act provides f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs would be conducted in accordance with the procedure specified in the Regulations. Chapter II provides the procedure for filing 'Application for Settlement', Chapter III provides the 'Scope of Settlement, Chapter IV provides the 'Terms of Settlement', Chapter V provides the constitution of a High Powered Advisory Committee which recommends the terms of settlement and Chapter VI provides the 'Procedure for Settlement'. The procedure envisaged under the settlement rules is thus complicated and at times the terms of settlement becomes stringent. 14. The settlement scheme that was issued in August 2020 under Chapter VI of the aforesaid Settlement Regulations, 2018 did not generate interest to these small time noticees who had executed few ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been initiated under the illiquid stock option matters wherein similar kind of transaction have been executed and similar violation is proposed against all these noticees under Regulation 3 and 4 of the PFUTP Regulations. These 14,000 entities form a class of persons and are involved for similar defaults. Therefore, in our opinion, the Board can specify a procedure and terms of settlement for these classes of persons under Clause 26 of the Settlement Regulations, 2018. 17. We are, thus, of the opinion that SEBI should reconsider and seriously give a thought in coming out with a fresh scheme under Clause 26 of the Settlement Regulations, 2018. Such scheme can be a onetime scheme for this class of person. The terms of settlement should be a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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