Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Securities and Exchange Board of India (Stock Brokers and Sub- Brokers) Regulations Securities and Exchange Board of India Act Enquiry Officer 1992 |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Act(s) Referred | Securities and Exchange Board of India Act, 1992 (15 of 1992) |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Disposed Off |
Headnote | Securities and Exchange Board of India Act, 1992 — s, 19-- Securities and Exchange Board of India (Stock Brokers and Sub- Brokers) Regulations, 1992- Reg 9 — Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Market) Regulations, 2003 - SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 - Reg 13(4) — Fraudulent/ manipulative practices under the SEBI Regulations and violation of the Conduct Regulations by the brokers and sub-brokers — Degree of proof required to hold them liable — Power of imposition of penalty - In the first category, sub broker acting through broker, allegedly involved in creating artificial volumes in the illiquid scrips and Member, SEBI held the broker liable and ordered suspension for four months -— In second category, sub brokers allegedly synchronised trades in respect of a huge number of illiquid scrip in quick succession of time — In third category, allegation that respondent-broker along with other member brokers, indulged in circular trading of the scrip on behalf of one client and suspension of respondent's membership for one month - Tribunal holding that in the absence of any direct proof of evidence showing the involvement of broker and sub-broker, charges not substantiated, and interfered with the penalty - On appeal, held: As regards power of imposition of penalty for manipulative or fraudulent practices or for violation of the Regulation, 1992, no clarity in the parallel provisions contained in the Act and the Regulations — Comprehensive legislation can bring more clarity and certainty on the norms — In the instant case, there is no direct evidence forthcoming — In the first category, inference of negligence/lack of due care etc., not established even on proof of the primary facts alleged so as to make broker liable which was rightly upheld by the tribunal — As regards the second and third category, conclusion has to be gathered from various circumstances like the volume of the trade effected; the period of persistence in trading in the particular scrip; the particulars of the buy and sell orders, namely, the volume thereof; the proximity of time between the two and such other relevant factors - It is clear from all these surrounding facts and circumstances that there has been transgressions by the respondents beyond the permissible dividing line between negligence and deliberate intention - If the primary authority had thought it proper to impose different penalties in different cases involving different set of facts, interference should not be made - Orders of the tribunal set aside and penalty imposed on brokers by SEBI restored. |
Judge | Honble Mr. Justice Ranjan Gogoi |
Neutral Citation | 2016 INSC 201 |
Petitioner | Securities And Exchange Board Of India |
Respondent | Kishore R. Ajmera |
SCR | [2016] I S.C.R. 1118 |
Judgement Date | 2016-02-23 |
Case Number | 2818 |
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