Judgment:
1. Since the issues raised in this appeal already stand concluded in favour of the appellant and against the respondent by an earlier order dated 11/02/2005 passed by this Tribunal, it is not necessary to set out the facts in detail. The brief facts in so far as they are relevant are being noticed.
2. Securities and Exchange Board of India (for short "SEBI") conducted investigations in the trading of the scrips of Intellivision Software Limited (for short "the Company") for the period from February 15, 2002 to April 10, 2002. The investigations revealed that some attempt had been allegedly made to manipulate the volumes and price of the scrip.
Accordingly SEBI appointed an enquiry officer to conduct an enquiry. It transpired that the Company had forfeited 31,00,000/- shares as per its Board resolution dated 05/04/2000 for non payment of call money.
29,02,400 shares out of the forfeited ones were re-issued by the Board to different allottees. Viram Investment Private Limited (for short "Viram") was allotted 1,50,000 shares out of the forfeited shares.
Viram is a private limited company jointly owned by Mr. Amal Parikh and Mr. Uday Shah who are equal shareholders therein. Viram transferred 1,50,000 shares of the Company allotted to it to the demat account of Mr. Amal Parikh and Mr. Uday Shah in equal proportion on August 9, 2001. This was done in pursuance to an agreement dated April 1, 1999 with which we are not concerned. On February 19, 2002 Mr. Amal Parikh and Mr. Uday Shah sold the shares to the appellant herein at the then prevailing market price of Rs. 103/- per share. It may be mentioned that the appellant is a private limited company and is registered as a broker and its promoters are Mr. Amal Parikh and Mr. Uday Shah. A month later the appellant sold 1,45,000/- shares back to Viram through the stock exchange at the then prevailing market price of Rs. 30.05 per share and thereby it booked a trading loss for income tax purposes.
These transactions were found by the enquiry officer to be fictitious which, according to him, resulted in misleading appearance of trading in the scrip of the Company on the securities market and he found them to be self deals which were not genuine trade transactions. He also found that these transactions did not result in the transfer of beneficial ownership of the shares which remained within the group entities and that the sales were meant to operate only as a device to depress the market price of the scrip to evade tax by creating an artificial book loss. Accordingly, a recommendation was made to SEBI to debar Viram, Amal Parikh, Uday Shah and the appellant from accessing the securities market. SEBI accepted the enquiry report in the case of Viram, Amal Parikh and Uday Shah and by separate orders debarred them from accessing the securities market for a period of six months. No order was then passed in the case of the appellant. Viram, Amal Parikh and Uday Shah filed Appeals nos. 160, 161 and 162 of 2004 respectively before this Tribunal challenging the orders passed by SEBI. By order dated 11/02/2005 the Tribunal allowed the appeals and set aside the orders passed by SEBI. The transactions were held to be genuine trade transactions. SEBI has now by order dated 02/02/2006 accepted the enquiry report in the case of the appellant as well and has suspended its certificate of registration for a period of six months. It is against this order that the appellant has come up in appeal.
3. Since the aforesaid transactions have already been held to be genuine trade transactions by this Tribunal which order has become final, we have no hesitation in setting aside the impugned order dated 02/02/2006 passed by SEBI in the case of the appellant as well.
4. Before concluding we may observe that the learned counsel appearing for SEBI urged before us that the case of the appellant was different from the case of the others inasmuch as it is a registered broker and has a code of conduct to follow which it has violated in the present case and therefore its case should be viewed differently. We are unable to accept this contention. It is true that the appellant is a broker and there is a code of conduct prescribed for the brokers but SEBI while taking action against the appellant has not found it guilty of having violated any provisions of the code of conduct. The only ground on which the impugned order is based is that it was a party to the synchronized trades referred to in the earlier part of the order. In this view of the matter we find no difference between the case of the appellant and of the other three entities which were parties to the same transactions.
5. In the result, the appeal is allowed and the impugned order dated 02/02/2006 set aside with no order as to costs.