SECURITIES AND EXCHANGE BOARD OF INDIA versus M/S. OPEE STOCK-LINK LTD. & ANR.

Citation: [2016] 4 S.C.R. 171 · Decided: 11-07-2016 · Supreme Court of India · Bench: ANIL R. DAVE · Disposal: Appeal(s) allowed

Judgment (excerpt)

[2016) 4 S.C.R. 171 
SECURITIES AND EXCHANGE BOARD OF INDIA 
v. 
M/S. OPEE STOCK-LINK LTD. & ANR. 
(Civil Appeal No. 2252of2010) 
JULY 11, 2016 
[ANIL R. DAVE AND R. BANUMATHI, JJ.) 
Securities Contracts (Regulation) Act, 1956 - ss. 13, 2(i) -
Securities and Exchange Board of India Act, 1992 - s. 12A(a), (b), 
(c) - Securities and Exchange Board of India (Prohibition of 
Fraudulent and Unfair Trade Practices Relating to Securities 
Markets) Regulations, 2003 - Initial public offerings (!PO) - Shares 
offered to public at large by two companies - Shares over subscribed 
- Shares meant for Retail Individual Investors cornered through 
hundreds of benami/fictitious demat account holders through off 
market transactions - Violation ofs. 12A(a), (b). (c) of the SEBI Act 
and Regs 3 and 4(1) of the 2003 Regulations - On appeal, held: It 
is clear from the transactions that demat account holders were not 
genuine, they were henami!fictitious and shares were purchased on 
behalf of someone, who had financed these demat account holders, 
at a price less than the market price of the shares - Demat account 
holders used addresses of others and signed in a fishy manner in 
their demat accounts - Entire chain of the transactions of shares 
was against the interest of small investors - Transfer of shares did 
not comply with the requirements of the provision of either s. 13 or 
s. 2(i) of SCRA - Thus, Whole Time Member as well as Adjudicating 
Officer rightly held the off market trading indulged into by 
respondents to be per se illegal, not fair and in violation of the Act 
as well as Regulations. 
Securities Contracts (Regulation) Act, 1956 - Nature of- Held: 
ls a special law to regulate the sale and purchase of shares and 
securities - Thus, prevails over the provisions of the Contract Act, 
1872 and Sale of Goods Act, 1930, insofar as the matters ~pecifically 
dealt with by the 1956 Act. 
Allowing the appeals, the Court 
A 
B 
c 
D 
E 
F 
G 
HELD: 1.1 From all the transactions, which are in the nature 
H 
171 
172 
A 
B 
c 
D 
E 
F 
G 
H 
SUPREME COURT REPORTS 
[2016] 4 S.C.R. 
of a scam, it is clear that the demat account holders were not 
genuine and either they were benami or fictitious and the shares 
were purchased on behalf of someone, who had financed these 
demat account holders and a show was made as if the shares 
were finally sold to the concerned respondents. The entire chain 
of the transactions of shares and doubtful nature of the demat 
holders, establishes the fact that all these transactions were 
nothing but a scam. If the respondents had acted as brokers, 
they ought to have been registered brokers, but they were not. 
By having the said device, the respondents had done something 
which was against the interest of small investors because from 
their quota the shares were allotted to the demat account holders 
who were not genuine. [Para 11] [179-C-E] 
l.2 As a result, the respondents got undue benefit. They 
got the shares transferred from the so called demat holders at a 
price which was less than the market price of the shares. Normally 
such things never happen in a well regulated stock exchange. 
The share prices are known to all persons interested in buying 
or selling shares and in such circumstances, it cannot be believed 
that 553 persons would sell their shares at a time to one particular 
person 11t a price which is much below the prevailing market price 
of the shares. Many of these demat account holders had used 
addresses of others and had signed in a fishy manner in their 
demat accounts. In fact, the so-called sale of shares was bogus as 
there was someone who had financed all the demat holders, who 
had given back the shares to the respondents to whom they had 
lent their names for getting the shares. The Whole Time Member 
of the SEBI rightly held that the dealings of the respondents were 
not fair and were in violation of the Act as well as the Regulations. 
[Paras 12, 13] [179-E-H; 180-A] 
1.3 Upon perusal of the impugned order passed by the SAT, 
it is found that SAT did not arrived at any specific conclusion to 
the effect that the findings recorded by the Whole Time Member 
as well as the Adjudicating Officer of the SEBI were incorrect or 
perverse. The appeals before the SAT were in nature of First 
Appeal and therefore, it was open to the SAT to re-appreciate 
the evidence after looking at the facts of the case.[Para 14] [180-
B] 
SECURITIES AND EXCHANGE BOARD OF INDIA v. 
MIS. OPEE 

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