E-Paper
‘Dabba trading’ racket of ₹4,672-cr busted, accused caused revenue losses of ₹1.95 cr
Police in Mumbai have arrested a 45-year-old man for illegal dabba trading, a form of share trading outside authorised stock exchanges used primarily to avoid tax payments. Jatin Suresh Mehta, a Kandivali West resident, is alleged to have caused a revenue loss of INR1.95 crore ($291,000) over four months. The police found that Mehta had made share transactions worth INR4,672 crore and that he had no licence or permission to trade shares. The police have seized INR50,000 in cash, five mobile phones, a laptop and other electronic equipment from his office.
MUMBAI: The crime branch on Tuesday busted an illegal “dabba trading” racket and found that the operator, a 45-year-old Kandivali West resident, made share transactions worth around ₹4,672 crore and caused a revenue loss of around ₹1.95 crore in the past four months.
Dabba trading is an illegal form of trading in shares, where operators of such trading rings allow people to trade in equities outside the stock exchange platform.
The accused, Jatin Suresh Mehta, who worked as a share broker, was arrested for illegal share trading from Kandivali.
The police inspector Vinayak Chavan of unit 11 got an input that an illegal trading operation was being run from office number 5 in the Sanket Building in the Mahavir Nagar area of Kandivali West. The crime branch unit along with representatives of the National Stock Exchange (NSE) and Multi-Commodity Exchange (MCX) of India, confirmed that Mehta did not have any licence or permission to trade in shares.
Mehta was not having any kind of legal permission for running a stock exchange and was running illegal share trading using an application namely ‘moody’ and duped the government by avoiding payment of various taxes.
The joint team raided Mehta’s office. During the raid, the crime branch also seized ₹50,000 in cash and five mobile phones along with a laptop, tab and other electronic equipment from the office. The police officials said the equipment was used for illegal share trading. Mehta was using an application and was making spot trading, said a police officer.
After checking the list of trading – mostly done in cash – found in Mehta’s laptop, the police found that the volume of the share trading between March 2023 and June 20 done by the accused was around ₹4,672 crore.
During further investigation the police learnt that Mehta caused revenue loss to the tune of ₹1.95 crore by avoiding payments of security transaction tax and capital gain tax, state government stamp duty, SEBI turnover fees, stock exchange trading revenue, said deputy commissioner of police Raj Tilak Roshan of the crime branch.
Police registered a case of criminal breach of trust, cheating under relevant sections of the Indian Penal Code against the accused and that of the Security Contract Regulation Act. Mehta was produced before a court and remanded in police custody till June 26.
What is Dabba Trading?
Dabba trading is also known as box trading or bucket trading. It refers to trading shares outside authorised stock exchanges done through illegal means, primarily to avoid payment of taxes.
It also refers to the practice of betting on stock price movements without undertaking a real transaction to take physical ownership of a particular stock. In other terms, it is gambling centred around stock price movements where the persons placing the bets gain, if the stock price goes up and loses to the broker if it goes down.
