Max Heights Infrastructure Linked Entities Fined Rs10 Lakh for Misleading Stock Split Scheme

Moneylife Digital Team 22 September 2025

Investor Interest

Market regulator Securities and Exchange Board of India (SEBI) has imposed a joint and several penalty of Rs10 lakh on Shubham Mittal (noticee 1), Skylarge Realcon Pvt Ltd (noticee 2), Gaurav Narang (noticee 3), Bigsea Trading Company Pvt Ltd (noticee 4), Rekha Narang (noticee 5), Jagtarni Traders Pvt Ltd (noticee 7) and Tilak Raj (noticee 8) for their role in a misleading stock split scheme in Max Heights Infrastructure Ltd (MHIL).

The penalty follows SEBI’s investigation into suspicious trading in MHIL shares between 31 October 2022 and 15 March 2023.

SEBI’s probe revealed that Mr Mittal, an independent director of MHIL, along with the other noticees, proposed a share split that was initially approved by the board but later rejected by shareholders. Despite the rejection, the announcement artificially boosted MHIL’s share price and trading volume, enabling connected entities to sell their holdings at inflated prices. During this period, noticees 2 to 5, 7, and 8 collectively offloaded nearly 10 lakh shares worth Rs6.44 crore, representing 6.41% of MHIL’s equity.

The investigation also highlighted close links among the noticees. Gaurav and Rekha Narang, who are spouses and directors in multiple entities, coordinated trades using shared mobile numbers and know-your-customer (KYC) details. Mr Mittal, as chairman of the audit committee and member of key statutory committees, had full knowledge of shareholder holdings, making his claims of ignorance untenable.

SEBI noted that the stock split announcement drove MHIL’s share price from Rs25.12 on 25 November 2022 to Rs26.37 by 28 November, eventually rising to Rs99 by March 2023, while trading volumes surged from 5,826 to 56,067 shares. The regulator emphasised that even if stock splits do not directly affect value, price-sensitive corporate actions can be misused to manipulate liquidity and demand.

Concluding that the noticees acted in concert to create a misleading market scenario, SEBI found them in violation of Section 12A of the SEBI Act, 1992 and the SEBI PFUTP Regulations, 2003.

Citing judicial precedents and market conduct regulations, SEBI ordered the noticees to pay the Rs10 lakh penalty jointly and severally for their fraudulent trading practices.

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