Adjudication Order in respect of Kedar Mal Poddar HUF in the matter of trading in Illiquid Stock Options at BSE

BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. Order/MS/SM/2026-27/32689]

UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF INDIA

ACT, 1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING

INQUIRY AND IMPOSING PENALTIES) RULES, 1995.

In respect of

Kedar Mal Poddar HUF

(PAN: AACHK5074Q)

In the matter of Trading in Illiquid Stock Options on BSE

BACKGROUND OF THE CASE

Securities and Exchange Board of India (hereinafter referred to as “SEBI”)

observed large scale reversal of trades in stock options segment of Bombay

Stock Exchange (hereinafter referred to as “BSE”). SEBI observed that such

large scale reversal of trades in stock options lead to creation of artificial volume

at BSE. In view of the same, SEBI conducted an investigation into the trading

activities of certain entities in illiquid stock options at BSE for the period April 1,

2014 to September 30, 2015 (hereinafter referred to as "IP").

Pursuant to investigation, it was observed that total 2,91,744 trades comprising

substantial 81.40% of all the trades executed in stock options segment of BSE

during the IP were non genuine trades. The aforesaid non-genuine trades

resulted into creation of artificial volume in stock options segment of BSE during

the IP. It was observed that Kedar Mal Poddar HUF (PAN: AACHK5074Q)

(hereinafter referred to as the “Noticee”) was one of the various entities who

indulged in execution of reversal trades in stock options segment of BSE during

the IP. Such trades were observed to be non-genuine in nature and created

false or misleading appearance of trading in terms of artificial volumes in stock

options and therefore were alleged to be manipulative, deceptive in nature. In

view of the same, SEBI initiated adjudication proceedings against the Noticee

Page 1 of 4 for violation of the provisions of Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a)

of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations,

2003 (hereinafter referred to as “PFUTP Regulations, 2003”).

APPOINTMENT OF ADJUDICATING OFFICER

Pursuant to transfer of Erstwhile AOs, the case was assigned to this office as

Adjudicating Officer in the matter, vide communique dated June 01, 2026,

under section 19 read with Section 15-I(1) of the SEBI Act, 1992 (hereinafter

referred to as “SEBI Act, 1992”) and Rule 3 of SEBI (Procedure for Holding

Inquiry and Imposing Penalties) Rules, 1995 (hereinafter referred to as

“Adjudication Rules”) to conduct adjudication proceedings in the manner

specified under Rule 4 of Adjudication Rules read with Section 15-I(1) and (2)

of SEBI Act, 1992, and if satisfied that penalty is liable, impose such penalty

deemed fit in terms of Rule 5 of Adjudication Rules and Section 15HA of SEBI

Act, 1992.

SHOW CAUSE NOTICE, REPLY AND HEARING

A Show Cause Notice having reference no.

SEBI/HO/EAD3/P/OW/2022/32984/1 dated August 02, 2022 (hereinafter

referred to as ‘SCN’) was issued by erstwhile AO to the Noticee via SPAD under

Rule 4(1) of the Adjudication Rules to show-cause as to why an inquiry should

not be initiated against it for the alleged violation of Regulations 3(a), (b), (c),

(d) and 4(1), 4(2)(a) of PFUTP Regulations, 2003 and liable to penalty under

section 15HA of the SEBI Act, 1992 for the violations alleged to have been

committed by Noticee.

Further, the Noticee was informed about the SEBI Settlement Schemes, 2022

through the aforesaid SCN dated August 02, 2022 in terms of regulation 26 of

the Securities and Exchange Board of India (Settlement Proceedings)

Regulations, 2018 in the matter of Illiquid Stock Options and in case, Noticee

does not wishes to avail of the facility under the SEBI Settlement Scheme,

2022, Noticee was advised to file a reply to the SCN within 30 days of the receipt

Page 2 of 4 of the SCN. The aforesaid SCN cum SEBI Settlement Scheme 2022 was sent

to Noticee via email and SPAD.

6. The SCN issued to the Noticee inter-alia alleged the following:

6.1. It was observed from the trade data of the Noticee that it had allegedly

executed 4 reversal trades in 2 contracts, which resulted in creation of

artificial volume of 486304 units which created false and misleading

appearance of trading and generated artificial volumes in the stock options

segment of the BSE during the investigation period during April 1, 2014 to

September 30, 2015 in violation of the aforesaid regulations.

6.2. In view of the above, it was alleged that the Noticee, by indulging in

execution of reversal trades in Stock Options with same entities on the

same day, which were non-genuine in nature, had created false or

misleading appearance of trading in the alleged contracts in the options

segment of BSE. As these contracts were illiquid in nature, the Noticee

allegedly created artificial volume in stock options which was manipulative

and deceptive in nature. Therefore, it was alleged that the Noticee violated

the provisions of Regulation 3(a), (b), (c), (d), 4(1) and 4(2)(a) of PFUTP

Regulations.

Vide Hearing Notice dated March 17, 2023, Noticee was provided opportunity

of hearing by the erstwhile AO. Digitally signed Hearing Notice was delivered

through email. However, Noticee failed to avail the said opportunity of hearing.

Vide email dated May 30, 2023, Noticee was granted another and final

opportunity of hearing in the matter on June 08, 2023. Noticee vide letter dated

June 07, 2023 submitted reply to the SCN along with Partition deed of Kedar

Mal Poddar HUF and death certificate of Kedar Mal Poddar. Further, on the

scheduled date of hearing i.e June 08, 2023, Authorized Representative of

Noticee appeared on behalf of Kedar Mal Poddar HUF for hearing.

Page 3 of 4

Noticee vide its reply dated June 07, 2023 submitted that the Kedar Mal Poddar

HUF was dissolved on September 15, 2017 and the Karta of HUF died on

10/01/2020. In support of the contention of the Noticee, partition deed dated

September 15, 2017 and death certificate of the Karta of the HUF issued by

Bidhannagar Municipal Corporation (issued u/s. 12/17 of the RBD Act. 1969

and Rule 9/ 14 of the WBRBD Rules 2000) was submitted. It is noted from the

material available on record that all the members of the HUF have separated

on September 15, 2017 and the assets have been divided among them.

In view the above, it is noted that the Kedar Mal Poddar HUF against whom

adjudication proceedings was initiated is not in existence, Noticee has ceased

to exist as a legal entity on September 15, 2017. Therefore, the present

adjudication proceedings have become infructuous and do not survive against

the Noticee.

ORDER

In view of my findings noted in the preceding paragraphs and in exercise of the

powers conferred upon me under Section 15-I of the SEBI Act read with Rule 5

of the Adjudication Rules, adjudication proceedings initiated against Kedar Mal

Poddar HUF (AACHK5074Q), vide SCN dated August 02, 2022 is disposed of.

In terms of rule 6 of the Adjudication Rules,1995, copy of this order is sent to

SEBI and Authorised Representative of Noticee who filed the reply to the SCN

and appeared for hearing before erstwhile AO.

Place: Mumbai

Medha Digitally signed by Medha Jeevan

Jeevan Sonparote

Sonparote Date:2026.08.31

15:51:53 +05'30'

Date: August 31, 2026

MEDHA SONPAROTE

ADJUDICATING OFFICER

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