Order against RP&C International Limited - Fii And Coral Reef Inv. Co. Private Limited, Sub-Account Of Fii - Rp&C International Limited

SECURITIES AND EXCHANGE BOARD OF INDIA 

DIRECTIONS UNDER SECTION 11 AND 11B OF SEBI ACT, 1992 READ WITH REGULATION 11 OF SEBI (PROHIBITION OF FRAUDULENT AND UNFAIR TRADE PRACTICES RELATING TO THE SECURITIES MARKET) REGULATIONS, 2003, AGAINST RP&C INTERNATIONAL LIMITED - FII AND CORAL REEF INV. Co. PRIVATE LIMITED, SUB-ACCOUNT OF FII – RP&C INTERNATIONAL LIMITED.

 

WTM/GA/55/ISD/3/06

1.0 BACKGROUND

 

1.1 RP & C International is a Foreign Institutional Investor (FII) registered with Securities and Exchange Board of India. Coral Reef Inv. Co. Private Limited was a Sub Account of RP&C International, the aforesaid FII registered with SEBI.

 

1.2 The scrip of Global Trust Bank (hereinafter referred to as GTB) witnessed significant price rise accompanied with rise in volumes during the financial year 2000-2001. It was noticed that the price had actually gone up from a low of Rs.57.00/- on October 11, 2000 to Rs.114.70/- on November 20, 2000 (on BSE), i.e., an increase of more than 100% in just 29 trading sessions. During the same period the prices on NSE had gone up from a low of Rs.57.05/- to a high of Rs.114./-. For the period from September 1, 2000 to October 10, 2000 the average daily volumes on BSE were below 38,000 while the same had increased to more than 7,70,000 during the period of October 25, 2000 to November 23, 2000. For the same periods the average daily volumes on NSE were 4,20,000 and 12,96,000 respectively.  

 

1.3 An investigation was ordered by SEBI into the buying, selling and dealing in the scrip of GTB under the provisions of the SEBI Act, 1992 read with SEBI ( Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 1995 and other SEBI Regulations.

 

1.4 During the course of Investigations, it was observed that there was significant concentration of trading among a few brokers and common clients associated with Ketan Parekh (“KP”). An analysis of the trading of the clients of the top trading members revealed that the clients were related to each other and belonged to the same group. These factors indicated that there was no genuine interest of trading in the GTB scrip and a small group of brokers and investors had created artificial volumes and price manipulation in the scrip.

 

1.5 It was further observed that KP entities had purchased shares from the promoter group in synchronized manner and later parked it with some FIIs and OCBs thereby creating the artificial volume in the scrip. OCBs and certain sub-account including Sub account of RP & C International (hereinafter referred to as “RP & C”) named  Coral Reef Inv. Co. Pvt Ltd (hereinafter referred to as “Coral Reef” ) were used by KP entities for circular trading, parking of shares, creation of artificial market and volumes, building up of concentration in select scrips, circumvention of Takeover Regulations, etc.

 

1.6 Therefore, SEBI vide interim order dated 31.12.2002 prohibited 50 entities including the RP &C and Coral Reef from trading in the shares of GTB till the completion of investigations. After affording a post decisional hearing on February 03, 2003, the interim directions were revoked on 12/6/2004 for the reasons stated therein.

 

2.0 SHOW CAUSE NOTICE AND RP & C’S  REPLY

 

2.1 Subsequently, a show cause notice dated 30.6.04 under Section 11 and 11B of SEBI Act , 1992 read with Regulation 11 of SEBI(Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market)Regulations, 2003 was issued to RP & C and Coral Reef advising it to show cause as to why suitable directions be not issued to them for the allegations detailed therein.

 

2.2 RP & C replied to the said show cause notice vide its letter dated 19.08.2004 and stated as under:

 

 2.2.1 Coral Reef is a broad-based Sub account duly registered with RP & C which is duly registered with SEBI. Their FII registration expired on September 6, 2003.

 

 2.2.2 The principal shareholder in Coral Reef is Investec Bank(Schweiz) AG (“Investec”). Investec is regulated by National Banking Commission in Switzerland and is a subsidiary of Invested Banking Group, a substantial publicly traded banking group which is based in South Africa and has overseas operations in London, Zurich, Mauritius, and Channel Islands.

 

 2.2.3 Coral Reef does not hold any listed securities and held only one unlisted security on September 3, 2002. Coral reef was then in the process of disinvesting its residual positions. In fact all non-cash assts of Coral Reef have been realized. Hence, it clearly indicates the absence of connection between Coral Reef and KP entities.

 

 2.2.4 As on December 31, 2001 and the date hereof, Coral Reef and RP & C owned no GTB shares and had no intention of acquiring such shares. Coral Reef holds no shares of Indian companies and will be making no further investments in the Indian Securities Market.

 

 2.2.5 RP& C submitted that;

 a) It had not traded in the scrip of GTB shares in violation of SEBI FUTP Regulations

 b) It was not a party to any arrangement and it had no knowledge of any of the trades in the GTB shares being in the nature of synchronized /matched /negotiated trades.

 c) It had no prior understanding with the KP entities for being used as a ‘parking entity’

 d) It had not indulged in any price manipulation of the GTB shares or indulged in activities resulting in the creation of an artificial market in the shares of GTB

 

 2.2.6 With regard to the trades of Coral Reef,  RP & C submitted that the trades are genuine trades which resulted in deliveries and Coral Reef satisfied all the obligations in respect of such trades on the stock exchange. The methodology in respect of the relevant trades were as follows;

 a) RP & C would place trades in the Stock Exchange BSE or NSE in the relevant scrip based on the market analysis conducted by its investment advisors.

 b) RP & C communicated the parameters of the trades such as price, quantity, nature of trade (buy or sell) to the SEBI registered stock brokers.

 c) In respect of purchase trades, the relevant purchase ie Coral Reef made available ready funds with the stock broker prior to the relevant settlement date and in respect of sale trades, the relevant seller i.e., Coral Reef made available ready stocks with the stock broker prior to the relevant settlement date.

 d) All the trades were executed through the order matching mechanism of the stock Exchange and RP & C was never aware of the identity of counterparty buyer/seller.

 

 2.2.7 In respect of the Relevant Trades, RP&C only communicated the trade requirements to its stock brokers, Triumph International Finance Ltd (TIFL) and Indsec Securities (Indsec). RP&C at no point of time was aware as to the manner in which TIFL or Indsec executed the trades and neither did RP&C have any reason to believe that TIFL and / or Indsec may / were executing the Relevant Trades in violation of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Act relating to securities market) Regulations, 1995.

 

 2.2.8. With regard to the allegation that the purchase trades done by Coral Reef on September 5, 2000 and September 7, 2000 were done via cross deals from another client of TIFL – Nishkalp Investments & Trading Company. Ltd (Nishkalp), RP &C submitted that RP&C was never aware that Nishkalp was a client of TIFL. Furthermore, RP&C has always been concerned with the proper execution and settlement of the trade in accordance with the laws. In this regard, RP&C placed trade orders with a SEBI registered stock broker of considerable repute (at the relevant time). RP&C had no knowledge as to how TIFL executed the trades. Moreover, RP&C only had knowledge that the purchases were made in the NSE and had no knowledge of the identity of the counterparty seller. It is also submitted that all purchase trades done by Coral Reef were executed at the prevailing market prices and at brokerage rates which were in accordance with the prevailing market rates.

 

 2.2.9. With regard to the allegation that the sale trades done by Coral Reef on September 18, 2000, September 22, 2000, October 6, 2000 and October 25, 2000 were done via cross deals from another client of TIFL / Triumph Securities Ltd – Classic Credit Ltd (Classic), RP&C submitted that they placed trade orders with a SEBI registered stock broker of considerable repute (at the relevant time). RP&C had no knowledge as to how TIFL / Triumph Securities Ltd executed the trades. Moreover, RP & C only had knowledge that the sale trades were made in the NSE and had no knowledge of the identity of the counter party buyer. It is also submitted that the abovementioned sale trades done by Coral Reef were executed at the prevailing market prices and at brokerage rates, which were in accordance with the prevailing market rates.

 

 2.2.10 With regard to the allegation that the purchase trades done by Coral Reef on November 7, 2000 and the sale trade done by Coral Reef on November 10, 2000 were done via cross deals from another client of TIFL – Classic Credit Ltd (Classic). RP & C submitted that they were never aware that Classic was a client of TIFL. Furthermore, RP&C has always been concerned with the proper execution and settlement of the trade in accordance with the laws. In this regard, RP&C placed trade orders with a SEBI registered stock broker of considerable repute (at the relevant time). RP & C, had no knowledge as to how TIFL executed the trades. Moreover, RP&C only had knowledge that the purchase /sale trades were made in the NSE and had no knowledge of the identity of the counter party buyer / seller. It is also submitted that the abovementioned purchase / sale trades done by Coral Reef were executed at the prevailing market prices and at brokerage rates, which were in accordance with the prevailing market rates.

 

 2.2.11 It further submitted that there was no obligation on the part of RP&C and Coral Reef to monitor the manner in which the relevant trades were executed. Once the trade orders were placed with the relevant stock broker – TIFL, it was TIFL’s obligation and duty to ensure that the trades were executed on the stock exchange in accordance with the relevant laws. It was not possible for RP&C and Coral Reef to know as to how TIFL was executing the relevant trades. In this regard, it is submitted that so far as RP&C and Coral Reef are concerned the relevant trades were genuine trades. It is also submitted that RP&C and Coral Reef had no reason to suspect that the relevant trades were cross deals or negotiated deals.

 

 2.2.12 With regard to the allegation of arrangement between RP&C, Coral Reef with KP entities to park the GTB shares, RP & C submitted that all the shares of GTB allotted to Nishkalp in a preferential allotment of GTB shares have reached Classic via Coral Reef. It further submitted that the purchase trades done by Coral Reef on September 5, 2000 and September 7, 2000 were genuine purchase trades placed by Coral Reef with its stock broker – TIFL. RP&C and Coral Reef had no knowledge as to the identity of the counterparty seller or the counterparty selling stock broker. So far as RP&C and Coral Reef were concerned the purchase trades done by Coral Reef on September 5, 2000 and September 7, 2000 were trades executed by TIFL on NSE. Similarly, the sale trades done by Coral Reef on September 18, 2000 , September 22, 2000, October 6, 2000 and October 25, 2000 were genuine sale trades placed by Coral Reef with its stock broker – TIFL, RP&C and Coral Reef had no knowledge as to the identity of the counterparty buyer or the counterparty buying stock broker.

 

 2.2.13  It was submitted that merely because Coral Reef has made a loss in the abovementioned transactions, it cannot under any circumstances be alleged that there was an ‘arrangement’ between Coral Reef and KP entities. Furthermore, Coral Reef invested in the Indian securities market on the basis of inter alia, investment advice and research.

 

 2.2.14 It has been further alleged in the show cause notice that the abovementioned transactions by Coral Reef created an illusion in the market that GTB shares held by Nishkalp were sold to foreign institutional investors and not to KP entities and also that such trades created artificial volumes which were misleading.

 

 2.2.15  Coral Reef and RP&C understood such trades to be trades executed on the screen based trading mechanism of the stock exchange as any other stock market trade. It is submitted that there was no calculation on the part of Coral Reef or RP&C to create any false or misleading appearance of trading in the GTB shares. It was further stated that the relevant trades were executed through the screen based trading mechanism of the stock exchange. Execution of trades in stock exchanges through the electronic trading terminal of the respective stock exchange, take place in an automatic environment over which RP&C and Coral Reef have no control, wherein the purchaser/seller does not have any information as to each others identity. The electronic screen based trading of the respective stock exchanges only indicate the specific quantity of stock which is available at a specific price at a specific time. Accordingly, all the relevant trades of Coral Reef were conducted through trading terminals of the relevant stock exchange it was not possible due to the impersonal nature of screen based trading system at any point of time for Coral Reef to be aware of the identity of the purchasing brokers or the clients of the counterparty purchasing brokers or the clients of the counterparty purchasing brokers who had placed the buy / sell orders.

 

 

 2.2.16 In connection with the allegation of aiding and abetting of KP entities in generating artificial volumes, engaging in circular trading in the GTB shares and aiding KP entities in building up of concentrated positions, parking of shares, creation of artificial volumes and financing transactions under the colour of purchase and sale of shares R P & C submitted as per Section 3(1) of the General Clauses Act, 1897 the word “abet” would have the meaning ascribed to it in the Indian Penal Code 1860 unless there is anything repugnant in the subject or in the context.. For an abetment of an offence intention or knowledge of the abettor in ration to the offence is an essential requirement, SEBI has not demonstrated or adduced ay evidence in the SCN or the material that Coral Reef or RP & C has intentionally and with knowledge aided and abetted the KP Entities in generating artificial volumes and engaging in circular trading of GTB shares and in building up of concentrated positions in GTB shares, parking of GTB shares, and financing transactions under the colour of purchase and sale of GTB shares. In Sterlite Industries (India) Ltd vs SEBI (2001) 34 SCL 485 (SAT-MUM), the Securities Appellate Tribunal (“SAT”) ruled that Regulation 4 of the SEBI FUTP Regulations is attracted only if a transaction is made with an intention of artificially raising or depressing the prices of securities. It is submitted that the show cause notice does not demonstrate any evidence which indicates any intention on the part of RPC / Coral Reef to depress or manipulate prices.

 

 2.2.17. Furthermore, it has been alleged in the show cause notice that Coral Reef helped in cornering the shares of GTB, which led to price manipulation. In this regard, it may be noted that the trades of Coral Reef in the GTB shares on the relevant dates were insignificant when compared to the total trading volume in the market of GTB shares and such insignificant trades could not have affected the price of the GTB shares. In Sanman Consultants vs SEBI, ([2001] 30 SCL 45 (SAT-MUM)), SAT ruled that stray cases of sale and purchase cannot lead one to a conclusion of market manipulation. It is submitted that the show cause notice does not provide any such evidence or instances of market manipulation. Furthermore, the alleged trades cannot under any circumstances be said to be a ‘series of transactions’.

 

  2.2.18.The show cause notice on page 3 states “It appears that Coral Reef was used for parking of GTB shares to circumvent the Takeover Regulations and helped in cornering the shares of GTB, which led to price manipulation.” In this regard, it is submitted that the show cause notice does not specify the provisions of the Takeover Regulations which have been violated and neither does the show cause notice specify the manner in which the provisions of the Takeover Regulations have been violated. In any case, it is submitted that Coral Reef and / or RP& C were not persons acting in concert with any of the KP entities as per Regulations .2(1)(e)(1) of the Takeover Regulations in the absence of commonality of objectives and a community of interests which could be acquisition of shares or voting rights beyond the threshold limit, or gaining control over the company and their act of acquiring the shares or voting rights in a company must serve this common objective.

 

 2.2.19 They further held that the directions under Section 11 and Section 11B of the SEBI Act, 1992 in the present circumstances cannot be used for imposition of a penalty on them. In Sterlite Industries (India) Ltd vs SEBI ((2001) 34 SCL 485 (SAT)) (“Sterlite Case”), the SAT ruled that an order under Sections 11 and 11B of the SEBI Act must be preventive or remedial in nature and cannot be penal in nature. In BPL Ltd vs SEBI ([2002] 38 SCL 310) (SAT)) (“BPL Case”), the SAT further reiterated that a direction which is in the nature of a prospective prohibition cannot be considered as a remedial measure in the interest of the investors, as a prospective ban cannot remedy an act of market manipulation allegedly indulged three years ago. In Anand Rahtis vs SEBI ([2002] 36 SCL 182(sat)), SAT ruled that Section 11B of the SEBI Act does not empower SEBI to impose directions or measures which are in the nature of penalties. In the Sterlite case, the SAT has ruled the same. Therefore, it is submitted that in view of the penal consequences of any proposed order under Sections 11 and 11B of the SEBI Act, any order under Sections 11 and 11B of the SEBI Act cannot be held to be within the legal framework of Sections 11 and 11B of the SEBI Act and would cause undue loss and prejudice to the reputation of Coral Reef.

 

 2.2.20  Paragraph 2 of Page 2 of the show cause notice states “Further investigations into the role of the sub-account is in progress.” In this regard, RP & C sought an opportunity for hearing on completion of such investigations. Furthermore, they submitted that  serious allegations in the nature of price manipulation, creation of artificial volumes have been made by SEBI without completion of investigations.

 

 

3.0 SUBMISSIONS IN THE PERSONAL HEARING

 

3.1 A personal hearing was granted to RP & C and Coral Reef on 22.09.05. RP & C were represented by Advocate Darius Kambatta and they reiterated the submissions made in their letter dated 19.08.2004. The following further submissions were made:

 

 3.1.1 The RP & C Group is regulated by the Financial Services Authority in the United Kingdom, the National Association of Securities Dealers in the United States and the Financial Services Commission in Mauritius and has never been subject to any investigation by such regulators in respect of its business. The RP&C Group enjoys widespread international reputation and goodwill. The allegations made in the Order, so far as they relate to Coral Reef and RP& C, are of a serious nature and are likely to harm the reputation and goodwill of RP&C. Accordingly, and in the light of the abovementioned submissions, they contended that there was no material on record for further action against RP&C or Coral Reef for any violation of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 2003 and the Takeover Regulations and no orders /directions be passed under Sections 11 and 11B of the SEBI Act, 1992 read with the SEBI FUTP Regulations or under Regulations 44 and 45 of the Takeover Regulations.

 

4.0 CONSIDERATION OF ISSUES

 

4.1 I have carefully examined the findings of Investigations, show cause, the reply and the submissions by RP & C. RP&C was an FII registered with SEBI  and Coral Reef was a broad based sub-account of FII,  RP & C. This sub account was investigated for alleged misuse by Ketan Parekh entities for parking of shares, building up of concentrated positions, circumventing Takeover code etc.

 

 4.2 The transactions done by Coral Reef are as under;

 

 

 

4.3 The purchases done by Coral Reef on 5/9/2000 and 7/9/2000 were done via cross deals from another client of Triumph International Finance Ltd., Nishkalp Investments & Trading Co. Ltd. These same shares were sold as shown in the table on 18/9/2000, 22/9/2000, 28/9/2000, 6/10/2000 and 25/10/2000 through Triumph International Finance Ltd. and Triumph Securities Ltd. via cross deals with the purchasing client being Classic Credit Ltd. for all the trades. Thus, all the shares allotted to Nishkalp Investments & Trading Co. Ltd. in the preferential offer have reached Classic Credit Ltd. via Coral Reef. From the sale price and purchase price for the above mentioned deals, it is evident that Coral Reef has made a huge loss to the tune of Rs.6.18 crores. No entity which genuinely buys shares as "investment" would sell at a loss in such a short notice. It  points to an arrangement with entities associated with the Ketan Parekh group to park the shares. Total trading of RP & C in scrips associated with Ketan Parekh group was around 85.70% of total trading done by it. These transactions done by Coral Reef had a two fold effect on the market, first they created the illusion that Nishkalp Investments & Trading Co. Ltd. shares were sold to FIIs and not to Ketan Parekh promoted entities and second they created artificial volumes which were misleading.

 

4.4 The purchase of 14,00,000 shares on 7/11/2000 was done via cross deal with the selling client of Triumph International Finance Ltd. being Classic Credit Ltd. Coral Reef has sold these shares on 10/11/2000 via another cross deal and the buying client once again is Classic Credit Ltd. It is clear that the name of Coral Reef was also being used as a conduit only.

 

4.5 The said transactions show that above mentioned entities were used by Ketan Parekh entities to park shares for a short period and for circular trades. On many occasions trades were done through cross deals. It was also seen that these transactions were synchronised deals and the orders were placed in such a way that shares sold by Ketan Parekh entities were purchased by a particular promoter group entity/OCB/Sub Account and when these promoter group entity/OCB/Sub Accounts sold back shares through synchronised transactions these were purchased only by Ketan Parekh entities. Such matched transactions ensured that the movement of shares were restricted to this select group of OCBs, Sub Accounts & Ketan Parekh entities only. These cross & matched deals were in gross abuse of the trading system and they hampered efficient price discovery. It is clear that these transactions used to be done at a predetermined price.

 

In appeal no 54 of 2002 – Nirmal Bang Securities Pvt. Ltd v/s SEBI, the Hon’ble Securities Appellate Tribunal has held as under with regard to synchronized deals

 

“BEB has been charged for synchronized deals with First Global. I have examined the data provided by the parties on this issue. I find many transactions between BEB and FGSB. There are many instances of such transactions. I find the scrip, quantity and price for these orders had been synchronized by the counter party brokers. Such transactions undoubtedly create an artificial market to mislead the genuine investors. Synchronized trading is violative of all prudential and transparent norms of trading in securities. Synchronized trading on a large scale can create false volumes. The argument that the parties had no means of knowing whether any entity controlled by the client is simultaneously entering any contra order elsewhere for the reason that in the online trading system, confidentiality of counter parties is ensured, is untenable. It was submitted by the Appellants that it was not possible for the broker to know who the counter party broker is and that trades were not synchronized but it was only a coincidence in some cases. Theoretically this is OK. But when parties decide to synchronize the transaction the story is different. There are many transactions giving an impression that these were all synchronized, otherwise there was no possibility of such perfect matching of quantity price etc. As the Respondent rightly stated it is too much of a coincidence over too long a period in too many transactions when both parties to the transaction had entered buy and sell orders for the same quantity of shares almost simultaneously.”

 

4.6 By entering into these trades Ketan Parekh entities tried to induce people to trade in the scrip by creating artificial volumes. Further, RP & C and Coral Reef aided and abetted KP entities in building up of concentrated positions, parking of shares, creation of artificial volumes and synchronized trades. Such transactions wherein the buy and sell orders are matched are highly irregular and defeat the purpose of normal order matching system in the price discovery process in the exchanges and would also be in violation of Regulation 4 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to securities market) Regulations, 1995 which reads as under:-

 

 “Prohibition against market manipulation.

 

4 No persons shall

(a) effect, take part in, or enter into, either directly or indirectly, transactions in securities, with the intention of artificially raising or depressing the prices of securities and thereby inducing the sale or purchase of securities by any person;

(b) indulge in any act, which is calculated to create a false or misleading appearance of trading on the securities markets;

(c) indulge in any act, which results in reflection of prices of securities based on transactions that are not genuine trade transactions;

(d)  enter into a purchase or sale of any securities, not intended to effect transfer of beneficial ownership but intended to operate only as a device to inflate, depress, or cause fluctuation in the market price of securities;”

 

4.7   As already noted above, the orders were placed in such a way that shares sold by Ketan Parekh entities were purchased by a particular promoter group/entity/OCB/sub-accounts and when this promoter group/OCB/sub- accounts sold back shares through synchronized trades, cross deals etc., the counter party for the trades were Ketan Parekh entities.

 

4.8 Acting in concert is something about which actual evidence is normally difficult to come. The Supreme Court had dealt with the issue in the case of CIT vs East Coast Commercial Co.Ltd. AIR (1967) SC 768 (Kedia Family case) in the context of Section 23A of the Indian Income Tax Act, 1922 wherein the question was whether Kedia family had acted in concert to control the affairs of the concerned company. In the facts of that case, there was no evidence of any overt act showing that they were acting in concert and thereby constituted and acted as a block. In para 14 of the judgement, the SC observed as follows:

 

“….. It is sufficient, if having regard to their relation, etc., their conduct and their common interest, that it may be inferred that they must be acting together, evidence of actual concerted acting is normally difficult to obtain, and is not insisted upon.” (p.772)

 

Further, in the matter  of SEBI v/s Cabot International Capital Corporation [2004] 51 SCL 307 (BOM), the Hon’ble High Court of Bombay observed that ‘for breaches of provisions of SEBI Act and Regulations, according  to us, which are civil in nature,  mens rea is not essential.’

4.9   Under the circumstances, it is concluded from the method and manner of execution of the aforesaid transactions, that Coral Reef, the sub-account of FII,  RP & C allowed themselves, either wittingly or unwittingly, to be used as a conduit in parking of GTB shares by KP entities, building up of concentrated positions and creating artificial volumes, giving misleading appearance of trades. Hence,  it can be inferred that RP &C and Coral Reef have violated Regulation 4 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 as aforesaid. The evidence of connected circumstances and preponderance of probabilities, common course of natural events and combination of facts creating network and artificial volumes gives rise to a reasonable inference that the noticee acted unfairly and also not in good faith while entering into the aforesaid transactions. The standard of proof required in a proceeding of this nature is at variance with the standard of proof required in criminal cases. It is sufficient if the preponderance of probabilities suggests towards the indulgence of the delinquent in the misconduct. The strict rules of Evidence Act and proof beyond reasonable doubt are not applicable to a proceeding of this nature. The Supreme Court’s decision in Gulabchand vs Kudilal AIR, 1966, SC 1734 and the decision of the Special Court for trial of offences relating to transactions in securities in the matter of National Housing Bank versus ANZ Grindlays Bank, 1998 (2 ) LJ 153 is relied upon in this regard.

 

 

5.0 ORDER

 

5.1 It is noticed that Coral Reef Inv. Co. Private Limited and RP & C International Limited are no longer operative and hold no sub account licence and FII registration  respectively. They, therefore, are disabled to undertake any transactions in securities in India. As per the interim order dated 31.12.02,  RP & C International Limited and Coral Reef Inv.Co. Pvt Limited were refrained from buying, selling or transacting, pledging or disposing or dealing in any manner in the shares of GTB pending investigations in the matter. The said interim order was revoked vide order dated 12.6.04.

 

5.2              Taking into account the relative role of Coral Reef Inv. Co. Private Limited and RP & C International Limited as brought out, the submissions made, the facts and circumstances of the case and the interim order dated 31.12.02 whereby the entities were restrained from dealing only in GTB shares and which was in operation for over 17 months pending investigations and that Coral Reef Inv. Co. Private Limited and RP & C International Limited are no longer operative since September 2003 in the Indian capital market, and the fact that the promoters of GTB were restrained from dealing in the shares of GTB only for a period of 18 months vide SEBI Order dated 23^rd March, 2004 and also considering that the scrip of GTB is not currently traded after its merger with Oriental Bank of Commerce, I am of the considered view that the matter does not call for any further directions

 

 

PLACE: MUMBAI	G.ANANTHARAMAN
DATE: 21 /03/ 2006	WHOLE TIME MEMBER
	SECURITIES AND EXCHANGE BOARD OF INDIA