- (1.) The operative findings recorded against the respondent on the basis of which penalty of Rs.1,00,00,000/- (Rupees one crore) has been levied have been set out in paragraph 3 of the order dated 9th November, 2012 passed by the learned Securities Appellate Tribunal, Mumbai (hereinafter referred to as "Appellate Tribunal") in Appeal No.216 of 2011 which is to the following effect: "3. The facts of the case, in brief, which are taken from Appeal no. 216 of 2011, are that the Securities and Exchange Board of India (the Board) conducted investigations into the trading activity of Shri Kanaiyalal Baldevbhai Patel (for short 'KB') an individual trader and Passport India Investment (Mauritius) Ltd. (for short 'Passport'), a foreign institutional investor, for the period January, 2007 to March, 2009. It was noted that KB had placed and executed orders before the order of Passport and consequently squared off his position when the orders of Passport were placed in the market. Mr. Dipak Patel, appellant in Appeal no. 216 of 2011 (for short 'Dipak') was the portfolio manager of Passport and is also cousin of KB, appellant in Appeal no. 74 of 2012 and Shri Anandkumar Baldevbhai Patel (for short 'AB), appellant in Appeal no.78 of 2012. The modus operandi of these persons, as noted by the Board, was that Dipak provided information to KB and AB regarding forthcoming trading activity of Passport. Taking advantage of the same KB indulged in 'front running' i.e. he placed and executed orders before the order of Passport and consequently squared off the position when the orders of Passport were placed in the market. It was noted by the Board that trades were executed using telephone number registered in the name of AB at the common residential address of KB and AB. Thus AB allegedly aided and abetted KB and Dipak in these transactions. By adopting this method KB earned a total profit of Rs. 1,56,32,364/- from the alleged trades. The Board was of the view that such trading is violative of Regulation 3(a),(b), (c) and (d) of FUTP regulations. According to the Board, it also breached the integrity of the market and therefore in exercise of the powers under section 19 read with Section of the Securities and Exchange Board of India Act, 1992 (for short the Act), the whole time member of the Board passed an ad interim order on May 28, 2009 giving directions as under, pending investigation: .. .. ..
(2.) There is no finding or conclusion recorded by the learned Appellate Tribunal that the aforesaid omissions and commissions on the part of the respondent amounts to front running which finding is specifically recorded against Kanaiyalal Baldev Patel and Dipak Patel. While penalty of Rs.5,00,00,000/- (Rupees five crore) each has been imposed on Kanaiyalal Baldev Patel and Dipak Patel, in the case of the respondent (Anandkumar Baldevbhai Patel) a penalty of Rs.1,00,00,000/- (Rupees one crore) has been imposed. We do not see how if the conclusion of the learned Appellate Tribunal is common to all the three above referred persons the respondent could have been treated differently. No conclusion in the light of the findings of the learned Appellate Tribunal that the trading was done by using the telephone numbers registered in the name of the respondent amounted to front running is also recorded. Rather the finding of the learned Appellate Tribunal is that the respondent had aided and abetted Kanaiyalal Baldev Patel and Dipak Patel in the transactions.
(3.) Learned counsel for the appellant (SEBI) has vehemently urged that such findings are recorded in the Adjudication Order and the said order has merged with the order of the learned Appellate Tribunal. We disagree with the aforesaid contention urged by the learned counsel for the appellant. In the appeal(s) filed by the aggrieved person(s) against the order(s) of the Adjudicating Officer, the learned Appellate Tribunal was expected to record its own independent findings and arrive at its own conclusions for holding the respondent liable for the penalty imposed. It seems that the learned Appellate Tribunal has proceeded on the basis that the case of the respondent is same and similar to the case of Kanaiyalal Baldev Patel and Dipak Patel which, evidently, is not.;