TaxTMI 
TaxTMI 
2019 (5) TMI 2003
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...., Kolkata. The focus of the investigation was to ascertain whether there were any violations of the provisions of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as "SEBI Act") and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as "PFUTP Regulations") by certain entities in the scrip of TEL during the period October 18, 2012 to January 07, 2015 (hereinafter referred to as "Investigation Period"). 3. During the investigation period, corporate announcements were in nature of announcements of financial results, book closure for Annual General Meeting, Annual General Meetings and shareholding pattern. Further, the company for FY 2013, FY 2014 and FY 2015 registered a loss of Rs. 0.04 crore, Rs. 0.10 crore and Rs. 0.13 crore respectively. 4. Based on the price volume chart, the investigation period has been divided into two patches as follows: Period Duration Opening Price/ vol on 1st day of period (`) Closing Price/ Vol on last day of period (`) Low Price/Vol during the Period (`) High Price/Vol during the Period (`) Avg no of shares tr....
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.... 120299 91 -91.35 82130 58 564207 780 4.61 3 Aditi Information Technology Pvt Ltd 100.95 169924 109 123.20 47825 25 -22.25 26597 14 95502 70 2.47 4 Avinash Concepts 96.35 166354 101 132.80 39451 28 -36.45 50755 20 76148 53 2.66 5 Topwell Properties Private Limited 90.05 462993 454 175.60 77752 49 -85.55 92400 45 292841 360 3.51 6 South Asia Portfolios Private Limited 74.95 336590 316 121.60 82722 59 -46.65 45950 22 207918 235 2.43 Jayant Security & Finance ltd 74.80 74.80 149126 203 98.10 16202 21 -23.30 26901 29 106023 153 1.96 Rajesh Pravinkumar Jasani 55.50 250 21 55.50 205 11 0.00 0 0 45 10 1.11 Shankheshwar Metals Pvt.Ltd 52.05 499 11 52.05 212 5 0.00 0 0 287 6 1.04 7 Safed Sales Private Limited 46.65 8279 17 46.65 3659 10 0.00 0 0 4620 7 0.93 Total of Top 10 Entities 972.55 35....
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....29.70 109200 42 314388 344 3.47 Janvi Tanvi Share Traders Private Limited 36.10 397271 352 60.30 84582 62 -24.20 21399 14 291290 276 1.21 Shivkhori Construction Private Limited 10.85 999027 731 305.80 227401 119 -294.95 145422 103 626204 509 6.12 Spice Merchants Private Limited 10.80 10500 9 10.80 3000 2 0.00 0 0 7500 7 0.22 Runicha Merchants Private Limited -0.50 4500 6 0.25 1000 1 -0.75 500 1 3000 4 0.01 Pushpanjali Commotrade Private Limited -7.10 107662 79 30.85 11650 9 -37.95 53700 23 42312 47 0.62 Limestone Properties Private Limited -27.85 671838 487 237.45 132185 73 -265.30 176397 100 363256 314 4.75 Esquire Enclave Private Limited -55.50 886526 763 182.25 123145 73 -237.75 202812 101 560569 589 3.65 Total of 14 Connected Entities 655.60 6612898 6218 2023.40 1168960 761 - 1367.80 1011519 558 4432419 489....
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....ember 30, 2009 * It was observed from company letter dated November 22, 2010 to BSE Ltd. that the above warrants were fully paid then and were subsequently converted into equal number of equity shares and such equity shares were allotted to 14 allottees against equal number of warrants. Based on data received from RTA, it was observed that except Ms. Sarala Shah, the other 13 allottees connected to the company transferred 2,26,50,000 out of 2,27,30,000 (i.e. 99.65% of the shares allotted) to 1,565 unique entities (including joint transfers) during November 28, 2011 and January 01, 2013 via off-market transfer of shares in physical form. Out of 1,565 unique entities, 1,255 entities sold shares during the investigation period. * Aforesaid 1,255 entities had received shares from entities connected to the company and 295 out of 1,255 entities were counterparties to the trades of nine Noticees connected to the company against whom it is alleged that they have manipulated the price of the scrip during patch - 1. * It is noted that 14 entities connected to the company who have traded in the scrip, 13 entities connected to the company who were issued convertible ....
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....e actions/directions in terms of Sections 11(1), 11(4) and 11B of SEBI Act should not be initiated against them for the alleged violation of the provisions of PFUTP Regulations. 6. The SCN was served on all the Noticees via speed post except on Safed Sales Private Limited, Janvi Tanvi Share Traders Private Limited and South Asia Portfolios Private Limited. SCN was served on them subsequently vide newspaper publication in Sanmarg, Anand Bazar Patrika, Times of India (Kolkata edition), Navbharat Times and Times of India (New Delhi edition) on February 12, 2019. REPLY & HEARING 7. It is noted from the records that none of the Noticees to whom the SCN was served, submitted a reply to the SCN. Considering the facts and circumstances of the case, Noticees were granted an opportunity of hearing on February 28, 2019, vide hearing notice dated February 5, 2019. It is noted from the records that the hearing notice was served on Spice Merchants Private Limited via speed post while it was served on Janvi Tanvi Share Traders Private Limited, South Asia Portfolios Private Limited and Safed Sales Private Limited via newspaper publication in Sanmarg, Anand Bazar Patrika, Times of India (K....
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....o issue Nos. (ii) is in affirmative, what directions, if any should be issued against the Noticees? Issue No. 1 - Whether the Noticees by trading with connected entities have manipulated the price in the scrip of TEL during the period October 18, 2012 to June 17, 2013? 11. It is observed from the IR that based on KYC details, MCA documents, off-market transaction details and relevant bank account statements, five Noticees namely Radison Properties Private Limited, Natural Housing Private Limited, Topwell Properties Private Limited, South Asia Portfolios Private Limited and Safed Sales Private Limited are connected to one another and to the company. Further, the remaining Noticees, Janvi Tanvi Share Traders Private Limited, Kingfisher Properties Private Limited, Shivkhori Construction Private Limited and Spice Merchant Private Limited were connected to the aforesaid five Noticees. Furthermore, it is noted from the IR that the company had issued 2,27,30,000 convertible equity warrants on preferential basis twice during 2009-2010 to 14 allottees. The said warrants were fully paid and were subsequently converted into equal number of equity shares and such equity shares were allot....
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....0 0 7500 7 0.22 Total of 9 Noticees 694.50 4941873 4872 1520.55 900768 600 -826.05 578110 333 3462995 3939 30.42 Total Of Market 464.90 11595228 11623 4996.30 2229668 1530 - 4531.40 2098037 1390 7267523 8703 100 13. From the table above, it is noted that the nine Noticees connected to the company contributed for 30.42% of market positive LTP. On analysing the counter parties to the positive LTP contributing trades of the said nine Noticees, it was observed that out of 600 of such trades, in 497 trades, the counter parties were 295 connected entities who had received shares in off-market in physical form the allottees of convertible equity warrants. The trade details of said nine connected Noticees with 295 connected entities as counterparties are tabulated below- Sr. No. Buyer Name Sum of LTP (in `) Sum of Trd. Qty No of trades 1 Radison Properties Private Limited 297.45 193872 135 2 Shivkhori Construction Private Limited 210.70 193341 97 3 Natural Housing Private Limited 195.65 108790 79 4 Topwell Propertie....
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....entities, on one day, it has executed only one trade but out of the remaining 22 days, on 14 days, Kingfisher had bought shares at a lower price before executing trades at higher prices with the connected entities. It indicates that though Kingfisher was aware that shares are available at lower prices, it still executed buy trades at higher prices. No justification has been given by Kingfisher to behave opposite of a rational buyer who buys at lower prices. This when seen in the light that company was making losses and the scrip was hardly been traded before February 11, 2013, shows that Kingfisher was not a genuine buyer. Moreover, when Kingfisher was placing buy orders, sell orders were pending in the system. Therefore, sell order quantity was known to Kingfisher but Kingfisher did not buy all the available quantity at the prevailing price. Kingfisher bought only a part of the available quantity and then on subsequent trading days bought more shares at a much higher price. For instance, on February 13, 2012, Kingfisher bought 250 shares at Rs. 381.5/- when the available quantity was 8,000 shares. Then on the next trading day, Kingfisher bought 12,500 shares at an average price o....
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.... test would always be that what inferential process that a reasonable/prudent man would adopt to arrive at a conclusion..." 19. Taking support of the observations of Hon'ble Apex Court in Kishore R Ajmera matter, I note that in cases of market manipulation, admittedly, no direct evidence would be forthcoming / available. Manipulative transactions are to be tested on the conduct of parties and abnormality of practices which defy normal logic and laid down procedures. What is needed, is to prove that in a factual matrix, preponderance of probabilities indicate a fraud. 20. In the instant matter, the findings that have been gathered from various circumstances for instance connection between the Noticees and the counter parties, overall trading in the scrip before the Noticees started trading during patch-1, particulars of the buy orders and sell orders, absence of any explanation from the Noticees for behaving opposite to that of a reasonable buyer who buys the scrip at a low price, lack of fundamentals of the company etc., leads to the conclusion that the trades executed by the Noticees with the connected entities, are manipulative in nature. In view of the significant posi....
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....d that such trades are fraudulent in nature and would operate as deceit upon any person trading in the extant scrip. I therefore, find that Radison Properties Private Limited, Natural Housing Private Limited, Topwell Properties Private Limited, South Asia Portfolios Private Limited, Kingfisher Properties Private Limited, Janvi Tanvi Share Traders Private Limited, Safed Sales Private Limited, Shivkhori Construction Private Limited and Spice Merchants Private Limited have violated Regulations 3(a), (b), (c), (d) and Regulations 4(1), 4(2) (a) and (e) of PFUTP Regulations. Issue No. 3 - If answer to issue Nos. (ii) is in affirmative, what directions, if any should be issued against the Noticees? 23. Section 11 of SEBI Act casts a duty on the Board to protect the interests of investors in securities and to promote the development of and to regulate the securities market. For achieving such object, it has been authorised to take such measures as it thinks fit. Thus, power to take all measures necessary to discharge its duty under the statute which is a reflection of the objective disclosed in the preamble has been conferred in widest amplitude. Pursuant to the said objective, PFUT....