G. Sagarmal v. SEBI

BEFORE THE SECURITIES APPELLATE TRIBUNAL, MUMBAI

APPEAL NO. 33/2000

In the matter of

G. Sagarmal Bihani Appellant Vs. Bombay Stock Exchange Respondent no.1 Securities and Exchange Board of India Respondent no.2 APPEARANCE Shri S. S. Rai Advocate Shri Girdhari S. Bihani Authorised Representative For Appellant Shri Sagar Divekar Advocate I/b. Wadia Ghandy & Company For Respondent no.1 Shri S.V. Krishna Mohan Division Chief, SEBI Shri Vijayakrishnan Legal Officer, SEBI For Respondent no.2

ORDER

In the present appeal the Appellant has challenged the order dated 19^th June, 1999 made by the Chairman, Securities and Exchange Board of India, whereby the Appellant's claim for Rs. 3, 96, 400 relating to transactions in the shares of Adeshwar Cotton Industries Ltd., was rejected.

The background leading to the issuance of the impugned order, as could be seen from the facts available from the pleadings, is as follows. On receipt of several complaints about market manipulation in the share prices of Adeshwar Cotton Industries Ltd (the company), Respondent no.2 ordered an investigation into the Circumstances leading to the unusual and abnormal fluctuations in the company's share price, which was found to have gone up from Rs. 35 to Rs. 220 during August 2, 1995 to September 18, 1995. Investigation revealed price rigging as the reason for such abnormal price movements. However, as an investor protection measure, Respondent 2, on receiving information about the unusual fluctuations in the price and volume of the shares of the said company, directed the stock exchange to freeze the proceeds which were received by the exchange from auctions/close out of the transactions and withhold the proceeds as an interim measure, pending the investigation. On completion of the investigation and in the light of the finding that the market was manipulated by the interested parties to their advantage, Respondent 2 decided that the difference between the close out and the standard transactions rate should not be given to the buyers but the same be impounded and credited to the Investors Protection Fund of the exchange. However, those persons aggrieved by the said decision were given opportunity to represent to the Respondent providing a fair opportunity to explain their view point, so as to enable the Respondent to reconsider the cases to avoid hardship to the genuine buyers. The Appellant claiming to