CASE STUDY

SEBI Special case
No.133(2015)
BY:TUSHAR ARORA
ROLL NO: 05116659420
YEAR: 1ST YEAR 2ND SEM
COURSE: MBA-FA
 WHY THE CASE WAS FILED

 It   is   contended   that   the   complainant   conducted   a   formal

investigation into the dealing in the scrip of M/s.Karuna Cables Limited (KCL  in
 short) for  the period from  10/2/2005 to 16/9/2005.
 He involves in the manipulation of the market   with   regard   to   the   KCL.
but the accused failed to comply the summons and notices and   also   failed   to
  submit   information/documents   to   investigating
authority. 
 Thus, it is alleged that the accused has violation provisions of
Section 11C (2) and 11C(3) of the SEBI Act.
 CONTD.

  In this case SEBI act to protect the interest of the investors in the securities
market conducted a formal investigation
into the dealing in the scrip of M/s.Karuna Cables Limited (KCL  in  short) for
 the period from  10/2/2005 to 16/9/2005.
  During the course of investigation,  the accused requiring him to explain the nature of
transactions which indicated his involvement in the manipulation of the market with
regard to the KCL and   called   upon   him   to   offer   his
comments, but the accused failed to comply the summons and notices and   also   failed
  to   submit   information/documents   to   investigating authority.
Thus, it is alleged that the accused has violation provisions of
Section 11C (2) and 11C(3) of the SEBI Act.  
 CONTD.

  the accused has violated the provisions of
Section 11C(2) and 11C(3) of the SEBI Act and thereupon he imposed
the  penalty of Rs.10,00,000/­ (Rs.Ten Lakhs) upon the accused under
Section 15A(a) of the SEBI Act and directed him to pay the same within
45 days from the date of receipt of the order by way of a demand draft payable at Mumbai. 
 SEBI sent reminders to the
accused vide letter dated 20/7/2009 by register Post AD, 20/5/2010
and 21/10/2010 by Speed Post.  Despite receipt of the reminders the accused   has   not  
come   forward   to   deposit   the   amount   of   penalty lawfully   imposed   upon   him   by  
the  adjudicating   officer,   hence   the present   complaint   filed   under   Section   24(2)   of  
the   SEBI   Act   on 22/9/2014.
 CONTD.

 In response to the summons issued to the accused, he appeared
before the Court in this proceeding. 
The contents of the charge were read over and explained to the accused
in vernacular to which he pleaded not guilty and claimed to be tried.
His defence is one of total denial and false prosecution.
 IMPLICATION

 the accused has violated the provisions of
Section 11C(2) and 11C(3) of the SEBI Act and thereupon he imposed
the  penalty of Rs.10,00,000/­ (Rs.Ten Lakhs) upon the accused under
Section 15A(a) of the SEBI Act and directed him to pay the same within
45 days from the date of receipt of the order by way of a demand draft
payable at Mumbai.
 the   charge  against   the   accused   for   the   offence
punishable under Section 24(2) of the SEBI Act.
 This means the accused was punished under section 24 (2), If   any   person
  fails   to   pay   the   penalty   imposed   by   the
adjudicating officer or fails to comply with any of his directions or
orders, he shall be punishable with imprisonment for a term which
shall not be less than one month but which may extend to (ten years,
or with fine, which may extend to twenty­five crore rupees or with both).”
 ORDER BY COURT

 Accused Mohanbhai Narayanbhai Naidu is hereby convicted for the   offence  

punishable   under   Section   24(2)   of   the   Securities   and
Exchange Board of  India, 1992 and he is sentenced  to pay a fine of Rs.1,25,000/­ 
(Rupees   One   Lakh   Twenty   five   only),   in   default,   to undergo s
 Out of total fine amount of Rs.1,25,000/­, the accused shall pay
Rs.1,00,000/­ (Rupees One Lakh only) to SEBI as compensation, by a
Demand Draft or Pay Order, and an amount of Rs.25,000/­ (Rupees
Twenty Five Thousand only) shall be deposited in the Court .
imple imprisonment for six months.
 Accused to surrender his bail bonds.
 MY OPINION OF THE CASE

 In this case the accused has violated provisions of Section 11C (2) and 11C(3) of the SEBI Act. 

because his failure represent in front of the court after sending him several summons and also
failed to provide to   submit   information/documents   to   investigating authority. The accused
found guilty charge  against   the   accused   for   the   offence punishable under section
24(2) of the SEBI act, 1992. His defence is one of total denial and false prosecution.
After this court Judgment is dictated and pronounced in open Court. Accused mohanbhai Narayanbhai naidu
sentenced to pay fine of rs 1,25,000, in default, to undergo simple imprisonment for six months.
Out of total fine amount of Rs.1,25,000/­, the accused shall pay
Rs.1,00,000/­ (Rupees One Lakh only) to SEBI as compensation, by a
Demand Draft or Pay Order, and an amount of Rs.25,000.

Accused to surrender his bail bonds