SECURITIES APPELLATE
TRIBUNAL, MUMBAI
Shirish Chandrakant Shah
v.
Securities and Exchange
Board of
JUSTICE N.K. SODHI,
PRESIDING OFFICER
ARUIN BHARGAVA AND UTPAL
BHATTACHARYA, MEMBER J
APPEAL NO. 124 OF 2007
OCTOBER 16, 2007
October 16, 2007
Section 11B of the Securities and Exchange Board of India Act, 1992 -
Power to issue directions - On receipt of complaints, SEBI ordered
investigations into alleged irregularities committed by appellant in trading of
a company's scrip - During said investigations, it was admitted by appellant
that he had traded on behalf of different persons whose bank and demat accounts
were opened by him without their knowledge / consent for purpose of trading in
said company's scrip - SEBI, thus, restrained appellant from accessing capital
market for a period of two years under action 11B - Whether in view of
appellants own admission, SEBI was justified in folding that appellant had
committed fraudulent acts by opening false demat and rank accounts for
purpose of trading and that was enough to uphold impugned order - Held, yes -
Whether, therefore, instant appeal was to be dismissed - Held, yes
FACTS
On
receipt of complaints, the respondent - SKBI ordered investigations to find out
the alleged irregularities in the trading of certain company's scrip. The
investigations revealed that the appellant had traded in the said scrip on
behalf of several clients, who were his front men; that he created artificial
volumes in the market and that he also opened fictitious bank and demat accounts
in the names of those clients by using their ration cards and photo identity
cards. On the basis of said findings recorded by the investigating authority,
the appellant was served with a show-cause notice under section 11B. in reply
to which, he filed his reply denying all the allegations. The respondent,
however, on the basis of the material on record, found that the charges
levelled against the appellant stood established. Consequently, it restrained
the appellant from accessing the capital market for a period of two years.
On
appeal:
The
Board had relied upon the admissions made by the appellant during the course of
the investigations. The appellant had admitted before the investigating officer
that he had traded on behalf of different persons whom he introduced to
different brokers and advised them to trade in the scrip of the company. There
was also on record an affidavit dated 30-10-2002 which the appellant had
furnished to one 'A' in which he admitted that he had obtained photographs and ration
cards of his family members on whose behalf he had been trading. The appellant
had also admitted in the affidavit that on the basis of those photographs and
ration cards he, without the knowledge and consent of 'A" and his family
members, opened in their names demat accounts and bank accounts foi mi purpose
of trading in the scrip of the company.
The Board had referred to that affidavit in the impugned order and also
to the admission made by the appellant before the investigating officer. In
view of that material on the record, his subsequent denial had not been
accepted. The Board was justified in holding that the appellant had committed
fraudulent acts by opening false demat and bank accounts for the purpose of
trading and that was enough to uphold the impugned order. It was not necessary
to examine how the appellant had created artificial volumes in the scrip of the
company. [
On
the basis of the appellant's own admission, he had opened fictitious demat
account and bank accounts. These were serious offences apart from being serious
market irregularities. In view of the seriousness of the charges established
against the appellant, the impugned order could not be said to be harsh. [
In
the result, the appeal failed and the same was dismissed. [