MBL AND COMPANY LIMITED versus SECURITIES AND EXCHANGE BOARD OF INDIA

Citation: [2022] 4 S.C.R. 817 · Decided: 26-05-2022 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Dismissed
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Judgment (excerpt)

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MBL AND COMPANY LIMITED
v.
SECURITIES AND EXCHANGE BOARD OF INDIA
(Civil Appeal Nos. 4262-4263 of 2022)
MAY 26, 2022
[DR DHANANJAYA Y CHANDRACHUD AND
BELA M TRIVEDI, JJ.]
Securities and Exchange Board of India Act 1992: ss. 12(A)
(a), (b), (c), ss. 15Z, 15HA, 15HB, ss. 11, 11(4), 11B/19 – Prohibition
of manipulative and deceptive devices, insider trading and
substantial acquisition of securities or control – On facts, appellant
engaged in manipulative trade as a result share price of a company
came to be manipulated – Order passed by the Whole Time Member-
WTM prohibiting the appellant from carrying on trading in its
proprietary account, for a period of four years – Thereafter, the
adjudicating officer imposed penalty of Rs 15 lakhs – During the
pendency of the proceedings before the tribunal, the appellant was
directed to deposit Rs two crores with SEBI, conditional upon which
the order passed by the WTM was directed to remain stayed – On
appeal, held: WTM while imposing an order of debarment,
specifically applied its mind to the impact of manipulation of the
price of scrips – Impact of a manipulation cannot be assessed only
in terms of the gain caused to the participants themselves, but in
terms of the wider consequences of the action on the securities market
– In view thereof, the order passed by the WTM cannot be regarded
as disproportionate – Moreover, WTM prohibited the appellant from
participating in its proprietary account for a specified period,
leaving it open to continue operation in their broking account –
Thus, the order passed by the WTM not interfered with – Prohibition
of Fraudulent and Unfair Trade Practices relating to Securities
Market Regulations 2003.
Dismissing the appeals, the Court
HELD: 1.1 In the instant case, the Whole Time Member-
WTM, while imposing an order of debarment, has specifically
applied its mind to the issue as regards the impact of such a
manipulation. While dealing with this aspect, the WTM observed
[2022] 4 S.C.R. 817
817
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SUPREME COURT REPORTS
[2022] 4 S.C.R.
that the manipulation of the price of scrips seriously impinges
upon other counter parties in the securities market. In other
words, the impact of a manipulation which is carried out by a
participant in the securities market cannot be assessed only in
terms of the gain which has been caused to the participants
themselves, but in terms of the wider consequences of the action
on the securities market. [Para 12][825-A-C]
1.2 The securities market deals with the wealth of investors.
Any such manipulation is liable to cause serious detriment to
investors’ wealth. The order which has been passed by the WTM
cannot be regarded as disproportionate so as to result in the
interference of this Court in the exercise of its jurisdiction u/s.
15Z of the Securities and Exchange Board of India Act 1992.
Moreover, the WTM has prohibited the appellant from
participating in its proprietary account for a specified period,
leaving it open to the appellant to continue operation in their
broking account. [Para 14][826-B-C]
Adjudicating Officer, Securities and Exchange Board
of India v. Bhavesh Pabari (2019) 5 SCC 90;
N. Narayanan v. SEBI (2013) 12 SCC 152 : [2013] 6
SCR 391 – referred to.
Case Law Reference
(2019) 5 SCC 90
referred to
Para 11
[2013] 6 SCR 391
referred to
Para 13
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 4262-
4263 of 2022.
From the Judgment and Order dated 13.05.2022 of the Securities
Appellate Tribunal, Mumbai in Appeal No. 494 of 2020 and Appeal No.
04 of 2021.
Dr. Abhishek Manu Singhvi, Anish Dayal, Sr. Advs., Navpreet
Singh Ahluwalia, Nidhiram Sharma, Adhish Sharma, Nitin Pandey, Aakash
Khattar, Umesh Kumar Khaitan, Advs. for the Appellant.
Pratap Venugopal, Abhishek Baid, Anup Jain, Ashok Kr. Jain,
Praneet Das for M/s Expletus Legal, Advs. for the Respondent.
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The Judgment of the Court was delivered by
DR DHANANJAYA Y CHANDRACHUD, J.
Factual Background
1. The Whole Time Member1 of the Securities and Exchange
Board of India2 passed an order on 28 February 2020, in exercise of the
jurisdiction under Sections 11, 11(4) and 11B read with Section 19 of the
Securities and Exchange Board of India Act 19923, restraining the
appellant from buying, selling or otherwise dealing in securities in its
proprietary account, directly or indirectly, for a period of four years from
the date of the order.
2. On 17 March 2020, the adjudicating officer exercised their
powers under
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