The Supreme Court today dismissed a petition of Vatsa Corporation, challenging five-year ban imposed by market regulator the Securities and Exchange Board of India (Sebi) for indulging in circular trading.
A Bench comprising Chief Justice S H Kapadia and Justices K S Radhakrishnan and Swatanter Kumar dismissed the peition of Vatsa Corporation, after it failed to file proper cash flow chart for the period between 1996-99.
Earlier in September, the apex court had directed Vatsa Corporation to file flow chart of cash that went to its intermediaries and money received back by it during 1996-99.
The apex court was hearing an appeal by Vatsa Corporation challenging Sebi's order banning the company from dealing in security market for five years.
Sebi had found that that Vatsa Corporation advanced Rs 10 crore to one Surefit Finance (SFPL), which in turn had passed on this amount to Aryabhat Securities (ASPL).
ASPL later had returned the amount to Vatsa Corporation. In the cash flow chart, Vatsa Corporation would give its account numbers, the amount involved and whether the amount has come back to it through circuitous transactions, as alleged by the regulator.
Circular trading is generally a fraudulent transaction where the seller already knows at what price those stocks would be bought from the market. This usually happens among closely knit entities which helps push the trading volumes.
Vatsa Corporation has also challenged the orders of the Bombay Stock Exchange, where the shares allotted by the company in three preferential issues in 1996, 1998 and 1999 were banned from trading.
