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SC Refuses To Interfere With Order Debarring MBL From Dealing With Securities Upto 4 Yrs

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Khushi Gupta

Published on: May 27, 2022 at 18:00 IST

The Supreme Court, on Thursday, refused to interfere with the order of the Securities Appellate Tribunal (SAT) which had affirmed the order of the Whole-Time Member, SEBI (WTM) to debar MBL Company Limited from dealing in securities in its proprietary account for a period of 4 years.

A Bench comprising Justices D.Y. Chandrachud and Bela M. Trivedi noted that even though the profit made by the Company from the violation was claimed to be meagre, the fact that the manipulation breached the integrity of the securities market and in turn caused detriment to the investor wealth is a crucial consideration.

The Bench was convinced that the WTM had rightfully considered the same. Therefore, it opined that the order of the WTM cannot be regarded as disproportionate.

More-so, when the WTM has restrained MBL from participating only in its proprietary account, allowing it to continue operations in its broking account.

The Bench noted that the WTM while imposing order of debarment had applied her mind to the consequence of the manipulation. It took note of the fact that the WTM had accurately observed that the manipulation of price of scrips adversely impacted the other counter-parties and the securities market.

The Bench was of the view, “The manipulation is not assessed only in terms of gain but wider consequences of the action on the securities market. In the present case, order of WTM as well as that of SAT noted the modus operandi was to place huge orders higher than the last traded price of the company, thereafter to make self trade of only one share for that higher price thus establishing a new LTP…”