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IN THE SECURITIES APPELLATE TRIBUNAL MUMBAI Appeal No.107 of 2005 ��������� Date of Decision : 06.11.2006
Dr. S.D. Israni, Company Secretary alongwith Shri
Satyan Israni, Advocate for the Appellant Shri Ravi Hegde, Advocate for the Respondent CORAM ����������� Justice N.K. Sodhi, Presiding Officer ����������� C. Bhattacharya, Member Per:� � Justice N.K. Sodhi, Presiding
Officer (Oral) This order will dispose of two
connected Appeals nos. 107 and 133 of 2005 in which common questions of law and
fact arise.� Appeal no.107 of 2005 has
been filed by Shri Pravin Juneja under section 15T of the Securities and
Exchange Board of India Act, 1992 (for short �the Act�) against the order dated
28th February, 2005 passed by the adjudicating officer imposing a
penalty of Rs.1 lac on him under section 15A of the Act for withholding
material information from the investigating officer during the course of
investigations.� The other appeal has
been filed by Shamken Multifab Ltd. and its chairman-cum-managing director
because they too are alleged to have withheld material information from the Securities
and Exchange Board of India (for short �the Board�).� The appeal filed by Shri Pravin Juneja
deserves to be dismissed on the short ground that he has not approached this
tribunal with clean hands and has made not only inconsistent statements but
also taken a false plea that he had resigned from the directorship of Shamken
Multifab Ltd. (for short �the company�) and therefore he was not responsible
for furnishing the information asked for by the investigating authority. Investigations were ordered into the
buying, selling and otherwise dealing in the scrip of the company because the
Board noted an unusual rise in the net traded quantity of the scrip of the
company with sharp rise in the price.�
During the course of the investigations the company was asked by the
Board to provide various details including (a) pre and post acquisition
shareholding pattern of the group companies including their promoters and (b)
distinctive number of shares of the company acquired by the group companies
during the period from 1.2.2000 to 31.7.2000.�
These details were sought from Shri Pravin Juneja who admittedly was a
Director (corporate-finance) of the company.�
Summons where issued on 25.8.2003 requiring him to appear on 28.8.2003
and furnish the required information.� He
appeared before the investigating officer on 5.9.2003 and his statement was
recorded.� When a specific question was
put to him regarding the pre and post acquisition shareholding pattern of the
group companies and their promoters and also regarding the distinct number of
shares acquired by the group companies, his reply was that he would furnish the
information in the next three to four days.�
It is not in dispute that the appellant did not furnish this information
thereafter.� He claims that he had
resigned from the directorship of the company with effect from 1.10.2003 and
that he had no concern with the company or any other group company
thereafter.� The stand of the company in
the connected appeal is however different.�
It is not necessary for us to examine the contradictory� stand of the company and Shri Pravin Juneja
in this regard because there is enough material on the record to show that the
plea of resignation put up by Shri Pravin Juneja is false to his knowledge and
was rightly rejected by the adjudicating officer.� There is on record a letter dated �You may kindly also note that the
undersigned is going to be out of town for next two weeks and requests you
humbly for a later date�. The aforesaid letter written by the
appellant and the request made by him clearly proves the fact that he had not
resigned from the directorship of the company with effect from 1.10.2003 as
claimed by him.� Had he resigned, he
would have informed the Board that the company should be contacted for the
requisite information.� In this view of
the matter, we are in agreement with the findings of the adjudicating officer
that Shri Pravin Juneja had not resigned from the company as claimed by him.� This being so, it is not in dispute that the
appellant failed to furnish the information required by the Board during the
course of investigations and he also failed to appear in person.� The adjudicating officer was therefore
justified in imposing a penalty of Rs.1 lac.�
Since the adjudicating officer has already taken a lenient view we find
no ground to interfere with the impugned order. Similar information was sought from
the company and summons were issued requiring its chairman-cum-managing
director to appear in person on 25.8.2003.�
He also appeared on 5.9.2003 when his statement was recorded.� The question put to him and answer given by
him would show that there was a deliberate attempt on his part to withhold the
requisite information from the Board.�
The question and the answer are reproduced hereunder for facility of
reference: �Q - ��� Based on NSE Investigation, into unusual
price and volume movement in the scrip of Shamken Mulifab Ltd., SEBI has
conducted further enquired in the case.�
Our investigations have broadly revealed that almost the entire trading
in the scrip during the period under investigation (June-July 2000) can be
linked to your group through M/s. Dhanvarsha Investments and Vandana Securities
both were operating as unregistered sub-brokers. Almost entire payments made in the accounts
of Dhanvarsha Investment and Jeev Narayan Mishra (Proprietor Dhanvarsha
Investments) are from Shamken group pertaining to trading in the shares.� These accounts of Dhanvarsha and Jeev Narayan
Mishra were solely opened for the purpose of dealing in shares of Shamken. M/s.
Dhanvarsha and Vandana Securities had entered into various cross deals and
structured deals through Adroit Financials and Maheshwari Technical and
Financial Services, both members of NSE.�
It has been found that both the brokers, who traded on behalf of
Dhanvarsha & Vandana (who in turn were dealing on behalf of Shamken) were
not buyers, with their trading accounting for more than 95% of the net traded
quantity for the market in the three settlements and 46% in the settlement no.29.
�It also constituted a significant chunk
of the gross trading in the market at NSE.�
There was apparently an attempt to create a false market in the scrip
and influence its price through the trading by Shamken. We would like to have your comments
on the above. A -���� I have no
knowledge about the issues raised by you.�
I am not involved in day-to-day affairs pertaining to dealing in
shares.� These matters are looked after
Sh. Pravin Juneja, Director (Corporate Finance) and Sh. V.R. Rao, Company� Secretary.�
I hereby authourise them to give replies on these issues and provide
whatever other details required by you.�
I will stand by their replies� How could the managing director of
the company state that he was not involved in the day to day affairs pertaining
to dealing in shares. Even if he was not he could have gathered the information
from his subordinates within the company and furnish the same to the Board
within the next few days.� The
allegations made against the company were serious and, therefore, it was
incumbent upon it and its directors including the managing director to furnish
the requisite information.� Since that
information has not been furnished, the adjudicating officer was right in
imposing a penalty of Rs.5 lac on the company and its managing director.� No fault can, thus, be found with the order
of the adjudicating officer in this regard. ����������� In
the result, the appeals fail and they stand dismissed with no order as to
costs. ����������������������� Sd/- ����������������������������������������������������������������������������������������������� Justice
N.K. Sodhi ����������������������������������������������������������������������������������������������� Presiding
Officer ����������������������������������� ����������������������������������������������������������������������� Sd/- ����������������������������������������������������������������������������������������������� C.
Bhattacharya ����������������������������������������������������������������������������������������������� Member ����������������������� RRN 06.11.06 |
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