Case Law Details
Swapnil Bhatt Vs Central Bureau of Investigation (Madhya Pradesh High Court)
Madras High Court held that confirmation of Dabba trading is based on inadmissible piece of evidence. Accordingly, prosecution becomes a futile exercise and hence quashed.
Facts- During the investigation, MCX informed that ‘Moneyhouse Commodities Pvt. Ltd.’ was its registered member with member ID 40855 and was legally authorized for ‘Forward Trading’ and that using its platform, had ‘Forward Trades’ turnover of Rs. 22,635.37 crores and earned profit of Rs. 1,68,54,905/- during 2011-13.
According to the investigator, some persons were indulged in unauthorized ‘Forward Trading’ or ‘Dabba Trading’ outside the portal of MCX by using ‘Meta Trade-5’ software (here-in-after referred to as MT-5). This software was developed and owned by MetaQuotes Inc, Cyprus.
It had been alleged that the petitioners earned crores of Rupees in profit towards the brokerage for the trading on the MT-5 software. However, there is no such document to prove this. SEBI the nodal agency to prosecute such crimes did not initiate any inquiry on any of the accused persons. The alleged profit earned on this dummy software did not reflect on the books of accounts of the petitioner. Even after intimation given by the investigator, the income tax authorities did not initiate any inquiry on the alleged profit earned. The GST authority had passed an order to recover a penalty of rupees 24 lacs on the basis of a notional figure. This penalty was quashed by the CGST and Central Excise and Customs and remitted the matter back for reconsideration.
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