sebi:WTM/AB/IVD/ID11/8666/2020-21

SEBI · SEBI · 2014-10-22 · Ananta Barua, Whole Time Member

Reviewed by Varun Matlani, Advocate — Securities Lawyer practicing in SAT and SEBI

Facts / Headnote

Interim directions revoked; Noticees warned to be careful in future dealings; proceedings against Noticee no. 2 held capable of continuing notwithstanding IBC Section 32A

Provisions invoked

• s. 11B
• s. 19
• s. 11(1)
• s. 12A
• s. 28A
• s. 17
• s. 30
• s. 14
• s. 132
• s. 149
• s. 31
• s. 33
• s. 131
• s. 32A
• s. 32A(1)
• s. 29A
• s. 29A(2)
• s. 32A(2)

Regulations relied on

• SEBI (PFUTP) Regulations, 2003 — 3(a)
• SEBI (PFUTP) Regulations, 2003 — 3(b)
• SEBI (PFUTP) Regulations, 2003 — 3(c)
• SEBI (PFUTP) Regulations, 2003 — 3(d)
• SEBI (PFUTP) Regulations, 2003 — 4(1)
• SEBI (PFUTP) Regulations, 2003 — 4(2)(a)

Parties

• National Steel and Agro Ltd (Noticee no. 1)
• Ruchi Soya Industries Ltd (Noticee no. 2)
• Ruchi Global Ltd (Noticee no. 3)
• Noticee no. 4
• UKS Oils Pvt. Ltd. (Noticee no. 5)

Holding

The Noticees' open interest positions in Castor Seeds Contracts were required to be clubbed based on common ownership and control structures, and the Noticees were found to have violated client-level open position limits. The interim directions were revoked and the Noticees were warned to be careful in future dealings; proceedings under Sections 11 and 11B of the SEBI Act can continue against Noticee no. 2 despite Section 32A of the IBC.

Full text

Final Order in the matter of trading activities of certain entities in Castor Seeds Contract at NCDEX Page 2 of 60 2. The SCN states that as per erstwhile Forward Markets Commission’s (hereinafter referred to as “FMC”) circulars dated October 22, 2014 and December 11, 2014 pertaining to client level open position limits, the permissible client level position for Castor Seed Contracts was 12,000 MT or 5% of market wide Open Interest (hereinafter referred to as “OI”), whichever is higher. SCN alleges that Noticee no. 1 to 3 while dealing in Castor Seeds Contracts on NCDEX, collectively, violated open interest limits for Castor Seeds Contracts laid down vide aforesaid circulars read with FMC’s letter dated January 10, 2012, on all the 18 trading days during the Investigation Period. SCN alleges that Noticees no.1 to 3 are connected to each other based on common ownership and control structures, and therefore, the open interest of Noticees no. 1 to 3 were supposed to be clubbed while considering open interest limits. Further, SCN also alleges that Noticee no. 4 and 5 collectively, violated open interest limits laid down in FMC circulars dated October 22, 2014 and December 11, 2014 and FMC’s letter dated January 10, 2012, on 13 out of 18 trading days during the Investigation Period. SCN alleges that Noticees no. 4 and 5 are connected to each other based on common ownership and control structures, and therefore, the open interest of Noticees no. 1 to 3 were supposed to be clubbed w

Final Order in the matter of trading activities of certain entities in Castor Seeds Contract at NCDEX Page 3 of 60 Regulations 3(a), 3(b), 3(c), 3(d), 4(1) and 4(2)(a) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as “PFUTP) Regulations”).

Final Order in the matter of trading activities of certain entities in Castor Seeds Contract at NCDEX Page 4 of 60 3100 3200 3300 3400 3500 3600 3700 3800 01-Jan-2016 02-Jan-2016 03-Jan-2016 04-Jan-2016 05-Jan-2016 06-Jan-2016 07-Jan-2016 08-Jan-2016 09-Jan-2016 10-Jan-2016 11-Jan-2016 12-Jan-2016 13-Jan-2016 14-Jan-2016 15-Jan-2016 16-Jan-2016 17-Jan-2016 18-Jan-2016 19-Jan-2016 20-Jan-2016 Price Date January -2016 2500 2700 2900 3100 3300 3500 3700 3900 01-Jan-2016 02-Jan-2016 03-Jan-2016 04-Jan-2016 05-Jan-2016 06-Jan-2016 07-Jan-2016 08-Jan-2016 09-Jan-2016 10-Jan-2016 11-Jan-2016 12-Jan-2016 13-Jan-2016 14-Jan-2016 15-Jan-2016 16-Jan-2016 17-Jan-2016 18-Jan-2016 19-Jan-2016 20-Jan-2016 21-Jan-2016 22-Jan-2016 23-Jan-2016 24-Jan-2016 25-Jan-2016 26-Jan-2016 27-Jan-2016 Price Date Feb-2016

Source: SecMarx — sebi:WTM/AB/IVD/ID11/8666/2020-21. 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.