sebi:EAD/PM-NK/AO/43/2018-19
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Facts / Headnote
Noticee's submissions rejected; violations of Section 16 read with SEBI Notification G.S.R 219(E) dated March 2, 2000, Section 13 and Section 18 read with Section 2(i) of SCRA found (penalty determination pending in excerpt)
Provisions invoked
- s. 13
- s. 16
- s. 23H
- s. 23J
- s. 18
- s. 23
- s. 17
- s. 30
- s. 23I
- s. 29A
- s. 18(1)
- s. 43(5)
Parties
- Noticee (purchaser of 20,000 shares of Tilak Finance Limited)
- Romy Realty Private Limited (Noticee No. 2)
Holding
The Adjudicating Officer rejected the Noticee's contention that the transaction qualified as a spot delivery contract under Section 2(i)(b) of SCRA, and rejected the Noticee's factual claim that payment was made on September 17, 2012, finding the transaction was not a spot delivery contract and thus in violation of Section 16 read with the March 2, 2000 notification, Section 13 and Section 18 of SCRA.
Full text
Page 2 of 24 Romy Realty Private Limited had sold 20,000 shares to the Noticee at Rs. 10/- per share in an off market transaction on July 27, 2012. However, due to non-availability of the demat account no. of the Noticee, the securities could not be transferred at the time of the contract and the same was transferred in September 2012 when the demat account details were provided by the buyer i.e. the Noticee. Investigation further observed that the payment of consideration of Rs. 2,00,000/- (Rupees Two Lacs only) towards the above purchase was made on October 29, 2012. Investigation further, observed that the Noticee, during investigation, had admitted the purchase of 20,000 shares of TFL in an off market transaction from Romy Realty Private Limited on July 27, 2012 at Rs. 10/- per share and paid the consideration of Rs. 2,00,000/- towards the aforesaid shares only on October 29, 2012. APPOINTMENT OF ADJUDICATING OFFICER
Page 3 of 24 Contracts (Regulation) Act, 1956. Copies of all the documents relied upon in issuing the SCN were provided to the Noticee along with the SCN.
Page 4 of 24 After the receipt of SCN, vide my letter dated October 30, 2017, I had requested SEBI to provide me inspection of documents and information and also provide a copy of the investigation report. Under the direction of the AO, I wrote to the investigation department on November 25, 2017 and also sent a reminder December 23, 2017. Then vide letter dated March 23, 2018, received by me on March 26, 2018, I was informed by SEBI that the inspection is scheduled for 2:30 pm on March 27, 2018, which I requested for rescheduling as the notice was too short and I was out of Mumbai. Then finally vide letter dated April 27, 2018 I was informed that the inspection is scheduled on May 7, 2018 at 2:30 pm. My authorised representative reached SEBI at the stipulated time and requested for the investigation report and other documents. The SEBI official informed him that he will only share the SCN and the copies of annexures thereto and no other document will be provided. I humbly submit that the inspection was not at all provided by SEBI and it was mere eyewash as absolutely nothing in addition to SCN and annexures thereto was provided during the inspection, which I already had. So effectively I have been denied an opportunity of inspection. I was awaiting another opportunity for inspection which may be fruitful, but I was surprised to receive letter no. EAD/AO-PM/NK/19490/2018 dated July 11, 2018 alleging that I have not replied to SCN dated October 16, 2017 even af
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Source: SecMarx — sebi:EAD/PM-NK/AO/43/2018-19. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.