Appeal No. 229 of 2012. Case: Kamlesh Baheti, HUF Vs Securities and Exchange Board of India. Securities and Exchange Board of India

Case NumberAppeal No. 229 of 2012
CounselFor the Appellant: Mr. Vinay Chouhan, Advocate and For the Respondent: Mr. Kumar Desai, Advocate with Mr. Akhilesh Singh, Advocate
JudgesJog Singh, Member & Presiding Officer (Offg.) and A. S. Lamba, Member
IssueSecurities and Exchange Board of India Act, 1992 - Sections 19, 11(4) & 11B
Judgement DateJune 28, 2013
CourtSecurities and Exchange Board of India


Jog Singh

  1. The appellant is challenging impugned order dated May 11, 2012, passed by the respondent, restraining him from accessing the securities market and prohibiting him from buying, selling or otherwise dealing in securities, directly or indirectly, for a period of two years under Sections 19, 11(4) & 11B of SEBI Act, 1992 read with Regulations 3(a), 3(b), 3(C), 3(d) and 4(1) and 4(2)(a), (b) and (g) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (FUTP Regulations).

  2. The appellant claims to be the Karta of a Hindu Undivided Family. He has been regularly trading in the securities market in various scrips for the last almost 10 years or so. He also claims to have an impeccable track record in terms of compliance with the rules, regulations and other norms governing the securities market.

  3. The appellant submits that he was holding 20,000 shares of Alka Securities Limited (ASL) i.e. the company in question in physical form. He requested his depository (DP) for dematerialization on May 31, 2008 and the said shares were credited to his demat account on June 20, 2008. In September 2008, Dena Bank initiated some recovery proceedings against the defaulting company i.e. ASL. Accordingly, Dena Bank made an offer to sell certain quantity of shares of ASL as part and parcel of their recovery process. The applicant also applied for acquiring 20,000 shares alongwith a pay order of Rs. 32,000 at the rate of Rs. 1.60 per share on October 3, 2008. Pursuant thereto, Dena Bank, by way of an off market transfer, transferred said 20,000 shares of ASL through an Inter DP transfer to the appellant''s demat account. This appears to have been done on January 19, 2009.

  4. On February 26, 2009 the appellant sold 20,000 shares of ASL in the normal course of business. The appellant submits that these shares were acquired by him prior to the investigation period. This was done by the applicant through its broker. The broker completed the pay-in obligation against the said sale by transferring the shares of ASL in question from the demat account of the appellant to the broker''s own pool account on February 27, 2009. This transaction was completed through the clearing facility provided by the Bombay Stock Exchange.

  5. On July 28, 2009 the respondent passed an ex-parte order under the relevant provisions of the SEBI Act and prohibited the appellant alongwith others, from buying, selling or dealing in the securities of ASL till further orders. The said interim order was later confirmed on October 30, 2009. SEBI found violation of certain regulations of FUTP Regulations which suggested certain trading activity on the part of the...

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