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IN THE SECURITIES APPELLATE TRIBUNAL

MUMBAI

�

Appeal No. 78 of 2005

��

Date of decision: November 24, 2006

Triumph International Finance India Ltd.�� .� Appellant

�� Versus

Securities & Exchange Board of India �� .Respondent

Shri Vicky Singh, Advocate along with Shri Hitesh S. Jain, Advocate for the appellant

Mr. Kumar Desai, Advocate with Ms. Sejal Shah, Advocate for the respondent.

CORAM

�� Justice N. K. Sodhi, Presiding Officer

�� C. Bhattacharya, Member

Per:�� Justice N. K. Sodhi, Presiding Officer (Oral)

�� Challenge in this appeal is to the order dated August 24, 2004 passed by the Adjudicating Officer imposing a penalty of Rs.1 lac on the appellant for not responding to the summons issued to it during the course of investigations ordered by the Securities and Exchange Board of India (for short the Board) to enquire into the affairs and dealing in the scrip of Software Solutions India Limited (for short the company).

�� The appellant before us is a stock broker registered with the Board.� It had traded in the scrip of the company on behalf of its clients. The investigating officer issued summons dated October 4, 2002 calling upon the appellant to furnish the information referred to in Annexure A and B attached thereto.� The appellant was required to furnish the names, addresses and demat accounts of nine clients on whose behalf it had traded in the scrip of the company.� The codes of the clients as they appeared on the screen of the stock exchange had been mentioned in the summons.� Further, the appellant was required to furnish the settlement wise net obligation of the clients for the period from October 1, 1999 to June 30, 2000.� A copy of the demat accounts/ beneficiary account indicating the movement of shares of the company from the account of the broker to the accounts of the clients was also asked for.� In case of sales the appellant was required to furnish the proof of payments made to the clients and in the case of purchases the proof of payment received from the clients was asked for.� In addition some other information as referred to in the Annexures to the summons was also required to be furnished.� It is the appellant�s own case that it did not respond to this summons.� The investigating officer then issued another summons dated 30.10.2002 calling upon the appellant to furnish the information by 15/11/2002.� Again there was no response from the appellant.� The investigating officer then issued summons dated 19^th March, 2003 requiring the appellant to appear in person so that the statement of its representative could be recorded.� The appellant was informed that it should bring all documents/ records as may be necessary in support of its defence in the case of trades executed in the scrip of the company.� It was in response to this summons that the appellant addressed a letter dated 10.04.2003 furnishing some information to the investigating officer.� Specific reference in this letter was made to the summons dated 19^th March, 2003.� The information supplied was incomplete and the appellant had not furnished the names and addresses of its clients on whose behalf it had traded in the scrip of the company.� The name of one of the clients viz. Wakefield Holding, Port Louis, Maurititus was mentioned in the reply but without its code number.� The particulars and details of other clients as required from the appellant were not furnished.� Since the information furnished was incomplete, the Board appointed an adjudicating officer to enquire into the alleged violation of the provisions of section 11C(3) of the Securities and Exchange Board of India Act, 1992 (hereinafter called the Act).� The adjudicating officer found that the appellant had not responded to the summons dated 4.10.2003 and 30.10.2002 and that the reply furnished by it on 10.04.2003 in response to the summons dated 19.03.2003 was incomplete.� He accordingly imposed a penalty of Rs.1 lac on the appellant after taking into consideration the provisions of section 15J of the Act.� Hence this appeal.

�� We have heard the learned counsel for the parties.� The learned counsel for the appellant very fairly admitted that the information that was furnished by the appellant in response to the summons was incomplete and belated but since there was no contumacious breach of the statutory provisions by the appellant, the adjudicating officer was not justified in imposing the penalty and that the impugned order deserves to be set aside.� We are unable to accept the contention of the learned counsel.� Admittedly, the appellant did not respond to the summons dated 4.10.2002 and 30.10.2002.� It is only in response to the summons dated 19.3.2003 which was meant for the personal appearance of the appellant for recording its statement that the letter dated 20^th April 2003 was addressed in which some information was furnished.� We have perused the information furnished by the appellant and on the face of it is clear that it was so scanty and incomplete that it did not amount to compliance with the summons.� The Board was investigating the dealings in the scrip of the company and the appellant had traded in that scrip on behalf of its clients.� The investigating officer had furnished in the summons nine codes and wanted the appellant to furnish the names and address of its clients to whom those codes pertained.� Instead of furnishing the names and addresses, the appellant furnished the name of only one client without giving its code.� The appellant in its reply dated 10^th April, 2003 had also referred to the details of Arbitrage. �The details of one stock exchange had been furnished but not of the other.� Arbitrage means the trading carried on to take advantage of the price deferential of the same scrip on two different exchanges.� When the appellant did not furnish the details of the other exchange, the information supplied was of no use.� Proof of payment made to the clients in the case of sales and proof of payment received from the clients in case of purchases had not been furnished.� We are, therefore, satisfied that non supply of this information amounts to non compliance of the summons and that the adjudicating officer was right in observing that the statutory provisions of the Act had been violated.� We cannot agree with the learned counsel for the appellant that there was no contumacious breach of the statutory provisions.� It has been observed by the Supreme Court in Chairman SEBI Vs Shriram Mutual Fund & another AIR 2006 S.C. 2287 that if breach of the statutory provisions is established, as in the case before us, penalty must follow.� In this view of the matter no fault can be found with the impugned order.

�� In the result, the appeal fails and the same stands dismissed with no order as to costs.

Sd/-

Justice N. K. Sodhi

Presiding Officer

Sd/-

C. Bhattacharya

Member

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IN THE SECURITIES APPELLATE TRIBUNAL MUMBAI � Appeal No. 78 of 2005 �� Date of decision: November 24, 2006 Triumph International Finance India Ltd.�� .� Appellant �� Versus Securities & Exchange Board of India �� .Respondent Shri Vicky Singh, Advocate along with Shri Hitesh S. Jain, Advocate for the appellant Mr. Kumar Desai, Advocate with Ms. Sejal Shah, Advocate for the respondent. CORAM �� Justice N. K. Sodhi, Presiding Officer �� C. Bhattacharya, Member *Per:�� Justice N. K. Sodhi, Presiding Officer (Oral)* �� Challenge in this appeal is to the order dated August 24, 2004 passed by the Adjudicating Officer imposing a penalty of Rs.1 lac on the appellant for not responding to the summons issued to it during the course of investigations ordered by the Securities and Exchange Board of India (for short the Board) to enquire into the affairs and dealing in the scrip of Software Solutions India Limited (for short the company). �� The appellant before us is a stock broker registered with the Board.� It had traded in the scrip of the company on behalf of its clients. The investigating officer issued summons dated October 4, 2002 calling upon the appellant to furnish the information referred to in Annexure A and B attached thereto.� The appellant was required to furnish the names, addresses and demat accounts of nine clients on whose behalf it had traded in the scrip of the company.� The codes of the clients as they appeared on the screen of the stock exchange had been mentioned in the summons.� Further, the appellant was required to furnish the settlement wise net obligation of the clients for the period from October 1, 1999 to June 30, 2000.� A copy of the demat accounts/ beneficiary account indicating the movement of shares of the company from the account of the broker to the accounts of the clients was also asked for.� In case of sales the appellant was required to furnish the proof of payments made to the clients and in the case of purchases the proof of payment received from the clients was asked for.� In addition some other information as referred to in the Annexures to the summons was also required to be furnished.� It is the appellant�s own case that it did not respond to this summons.� The investigating officer then issued another summons dated 30.10.2002 calling upon the appellant to furnish the information by 15/11/2002.� Again there was no response from the appellant.� The investigating officer then issued summons dated 19^th March, 2003 requiring the appellant to appear in person so that the statement of its representative could be recorded.� The appellant was informed that it should bring all documents/ records as may be necessary in support of its defence in the case of trades executed in the scrip of the company.� It was in response to this summons that the appellant addressed a letter dated 10.04.2003 furnishing some information to the investigating officer.� Specific reference in this letter was made to the summons dated 19^th March, 2003.� The information supplied was incomplete and the appellant had not furnished the names and addresses of its clients on whose behalf it had traded in the scrip of the company.� The name of one of the clients viz. Wakefield Holding, Port Louis, Maurititus was mentioned in the reply but without its code number.� The particulars and details of other clients as required from the appellant were not furnished.� Since the information furnished was incomplete, the Board appointed an adjudicating officer to enquire into the alleged violation of the provisions of section 11C(3) of the Securities and Exchange Board of India Act, 1992 (hereinafter called the Act).� The adjudicating officer found that the appellant had not responded to the summons dated 4.10.2003 and 30.10.2002 and that the reply furnished by it on 10.04.2003 in response to the summons dated 19.03.2003 was incomplete.� He accordingly imposed a penalty of Rs.1 lac on the appellant after taking into consideration the provisions of section 15J of the Act.� Hence this appeal. �� We have heard the learned counsel for the parties.� The learned counsel for the appellant very fairly admitted that the information that was furnished by the appellant in response to the summons was incomplete and belated but since there was no contumacious breach of the statutory provisions by the appellant, the adjudicating officer was not justified in imposing the penalty and that the impugned order deserves to be set aside.� We are unable to accept the contention of the learned counsel.� Admittedly, the appellant did not respond to the summons dated 4.10.2002 and 30.10.2002.� It is only in response to the summons dated 19.3.2003 which was meant for the personal appearance of the appellant for recording its statement that the letter dated 20^th April 2003 was addressed in which some information was furnished.� We have perused the information furnished by the appellant and on the face of it is clear that it was so scanty and incomplete that it did not amount to compliance with the summons.� The Board was investigating the dealings in the scrip of the company and the appellant had traded in that scrip on behalf of its clients.� The investigating officer had furnished in the summons nine codes and wanted the appellant to furnish the names and address of its clients to whom those codes pertained.� Instead of furnishing the names and addresses, the appellant furnished the name of only one client without giving its code.� The appellant in its reply dated 10^th April, 2003 had also referred to the details of Arbitrage. �The details of one stock exchange had been furnished but not of the other.� Arbitrage means the trading carried on to take advantage of the price deferential of the same scrip on two different exchanges.� When the appellant did not furnish the details of the other exchange, the information supplied was of no use.� Proof of payment made to the clients in the case of sales and proof of payment received from the clients in case of purchases had not been furnished.� We are, therefore, satisfied that non supply of this information amounts to non compliance of the summons and that the adjudicating officer was right in observing that the statutory provisions of the Act had been violated.� We cannot agree with the learned counsel for the appellant that there was no contumacious breach of the statutory provisions.� It has been observed by the Supreme Court in Chairman SEBI Vs Shriram Mutual Fund & another AIR 2006 S.C. 2287 that if breach of the statutory provisions is established, as in the case before us, penalty must follow.� In this view of the matter no fault can be found with the impugned order. �� In the result, the appeal fails and the same stands dismissed with no order as to costs. Sd/- Justice N. K. Sodhi Presiding Officer Sd/- C. Bhattacharya Member