SC upholds SAT order on penalty for manipulating Ruchi Soya share price

SC upholds SAT order on Ruchi Soya stock manipulation

The Supreme Court on April 19 junked pleas by Shreyaans Credit and Capital Ltd and Uni24 Techno Solutions challenging the order of Securities Appellate Tribunal (SAT) to cough a penalty for manipulating the price of Ruchi Soya shares in 2012.

These entities had challenged the interest component of 12 percent levied on them in addition to the penalty. The interest was to be paid by these entities from September 28, 2012 till the date of actual payment. Senior advocate Nakul Dewan, who appeared for these entities contended that the interest was unusually high and urged the court to set it aside.

Additional Solicitor General (ASG) Venkatraman, who appeared for Securities Exchange Board of India (Sebi) argued that both the market regulator and SAT had the power to impose such an interest.

A bench of justices Sanjiv Khanna and Dipankar Dutta, on hearing both the parties, dismissed the appeal as it did not find any merit in the case.

In April 2022, Sebi imposed a penalty of Rs 25 lakh on nine entities for indulging in fraudulent trade practices in the scrip of Ruchi Soya Industries Limited on September 27, 2022.

The market regulator imposed  a total penalty of Rs 25 lakh along with 12 percent interest on entities such as  Aventis Biofeeds Pvt Ltd, Navinya Multitrade Pvt Ltd, Uni24 TechnoSolutions Pvt Ltd, Sunmate Trade Pvt Ltd, Shreyans Credit and Capital Pvt Ltd, Betul Oils and Feeds Pvt Ltd, Betul Minerals and Constructions Pvt Ltd, Vision Millenium Exports Pvt Ltd, and Moebius Credit and Capital Pvt Ltd.

Sebi had investigated in the trade of securities and futures of Ruchi Soya during the last half hour of trading between 15:00 hours and 15:30 hours on September 27, 2012. It was found that the price of these shares were manipulated as a result of which these entities had made unlawful gains.

The Sebi order noted that three entities placed  buy tags on the scrip of Ruchi Soya at a price higher than the Last Traded Price (LTP), although sell orders were available in the system for the requisite quantity at a lower price, during the period.

Some of these entities have acted as sellers and colluded with their connected entities to increase the price of Ruchi Soya in the cash market to obtain a higher settlement price for the futures of Ruchi Soya expiring on September 27, 2012.

These entities appealed against this order at the SAT. SAT upheld the order against all entities excepting for two companies namely Betul Oil and Betul minerals.