TaxTMI 
TaxTMI 
2016 (8) TMI 1614
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.... Sekar Vasu ADRPV2013N Promoter Related: 14 Manisha Narpatkumar Chopra ACTPC4078P 1. Vinay Chopra 15 Deepak Agarwal HUF AAGHD3018R 1. Ramesh Chandra Mishra and Lokanath Mishra 16 Govind Agarwal HUF AADHG0808H 17 Heena Hitendra Nagda ABVPN8122C 1. P.K. Ramesh 18 Darshan D Bhanushali AGKPB3602K 1. P.K. Ramesh 19 Alok Navinchandra Kubadia ABFPK6567J 1. Khmir Arun Kamdar 20 Bina Devi Dhanuka AEZPD5474N 1. Zal Andhyarujna 2. Neerav Merchant 3. Archit Jayakar 4. Rahil Jhaveri 5. Akanksha Agarwal 21 Mayank Dhanuka ADLPD5568J 22 Neha Dhanuka ADOPB3260E 23 Nikunj Dhanuka ADNPD6220D 24 Rajkumari Dhanuka ADUPD7020N 25 Umang Dhanuka ADLPD0494K 26 Madan Mohan Dhanuka ADQPD6035P 27 Gajakarna Trading Pvt Ltd AAECG2103R 1. Ravi Ramaiya 28 Mahaganapati Financial Services Pvt Ltd AAHCM1333N 29 Nimesh S Joshi AAFPJ6734M 30 Roshni N Joshi AGSPJ6909M 31 Hitesh N Kawa AGYPK8780F 32 Roopal H Kawa ANMPK4236D 33 Akash Ranchhodbhai Golakia ALDPG8381J ....
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....S5640E 1. Prakash Shah 2. Robin M Shah 73 Anil Vishanji Dedhia AABPD9375L 1. Khamir Kamdar 74 Mayur Ishvardas Gandhi AAEPG6125C 75 Hemant Jayant Gogri AEIPG1584P 76 Brijesh Chowdhary Lavu ABAPL3679D Self 77 Ankit Miglani AACPM1902D 1. Vinay Chauhan 2. K.C. Jacob 78 Archana Miglani AREPS5118G 79 Anuj Miglani AABPM6332L 80 Priyanka Miglani ARIPS3477L 81 Ashok Jain HUF AADHA7870F 1. Rishika Harish 2. Amit B Dey 82 Prakash Hiralal Jain HUF AAHHP7899B 83 Kaushal Kanhayalal Bagadia AADPB1550B 1. Prakash Shah 84 Poonam Kaushal Bagadia AAEPS7956D 85 Arvind Chhotalal Morzaria AEKPM9977L 86 Anil Kumar Chamanlal ADZPC5979N 1. Shailashri Bhaskar 87 Jay Hansraj Chheda AJLPC9910H 1. Sunil Badsiwal 88 Neha Bansal ADSPA3332J 1. Prakash Shah 89 Sadhna Rani ABHPA9244J 90 Savita Bansal AEJPB6903J 91 Monesh Israni AAJPI8348E 1. Deepak R Shah 92 Sunny Mirchandani ALVPM6130D 93 Nareshkumar Kishanlal Saraf AALPS7124C 1 Rinku Valanju. 2. Nareshkumar Kishanlal Saraf ....
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....ferred to as "interim order"), restrained 178 entities, including Pine Animation Limited (formerly known as "Four K Animation Limited." and hereinafter referred to as "Pine") and its promoters and directors from accessing the securities market and further prohibited them from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever, till further directions. 2. The interim order was passed in view of prima facie findings about a scheme/device or artifice involving a façade of preferential issue of equity shares of around Rs.24.7 crores in order to provide fictitious long term capital gains ("LTCG") to Pine's preferential allotees and promoter related entities (i.e. entities to whom Pine's promoters transferred their shares in physical form) so as to convert their unaccounted income into accounted one. It was observed that after the release of compulsory lock-in period, the preferential allotees and the promoter related entities were provided exit at a high price by the entities related/connected amongst themselves and with Pine (hereinafter referred to as "Exit Providers"). In the process Exit Providers, preferential allotees and th....
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....imately 113%. f) Between June 20, 2013 and December 16, 2013, ("Patch 2") the scrip was traded only on 13 trading days and the price moved from Rs. 1006 (unadjusted and Rs. 100.6 adjusted to share split) to Rs. 910 (unadjusted and Rs. 91 adjusted to share split). g) Thereafter, there was a huge increase in the traded volume during the period December 17, 2013 to January 30, 2015 and the entities connected / related, directly or indirectly, to Pine, started providing hugely profitable exit to the preferential allotees and promoter related entities. h) Such sharp rise in price and volume of the scrip was not supported by any acceptable market factor such as fundamentals, trading history, corporate announcements, etc as discussed in the interim order but was on account of non-genuine and manipulative trading in the scrip by certain entities. 3. The interim order provided the restrained entities opportunity to file their objections, if any, within twenty one days from the date of the order and, if they so desire, to avail opportunity of personal hearing before SEBI. Several entities filed their replies in the matter and availed opportunity/ies of personal ....
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....deem the units of the mutual funds so subscribed; (ii) to avail the benefits of corporate actions like rights issue, bonus issue, stock split, dividend, etc. (iii) to sell the securities lying in their demat accounts as on the date of the interim order, other than the shares of the companies which are suspended from trading by the concerned stock exchange, in orderly manner under the supervision of the stock exchanges so as not to disturb the market equilibrium and deposit the sale proceeds in an interest bearing escrow account with a nationalised bank. (iv) to utilise and deal with the sale proceeds, lying in the aforesaid escrow account under the supervision of the concerned stock exchange, as provided hereunder:- (a) the sale proceeds may be kept in a fixed deposit with a nationalised bank or may be utilised for subscription to units of the mutual funds which shall always be held in the demat form and if such units are redeemed the proceeds thereof shall be credited to the aforesaid escrow account or may be utilised for subscription to the units of mutual funds; (v) The aforementioned window for sale of shares lying in respective port....
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....em in their individual name. b) In the matter of Shri Murali Shanmugham, on request received from him for de-freezing of the demat account number 1205460000207696 held by his mother Mrs. Kamala. S, jointly with him, considering the fact that the investments in the securities held in the jointly held demat account were made by Mrs. Kamala. S from her own source of funds and that she holds rights and interests in those securities, Mrs. Kamala was vide order dated August 18, 2016, allowed to transfer the securities from the demat account held jointly with Mr. Murali Shanmugham to another demat account exclusively held by her in her individual name. 9. Considering the fact that no response was received from the 26 entities, the matter was proceeded further and order dated July 05, 2016 was passed against the following 26 entities, based on the material available on record, confirming the directions issued against them vide interim order dated May 08, 2015: Table 1: S. No. Name PAN Category 1 Archana Saluja AANPS2300L Preferential Allotee 2 Amit Singh BABPS7447D Exit Provider 3 Anjali Suppliers Private Limited AAJCA1784D Exi....
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....al and. Pooja Mahendra Mittal. Confirmatory proceedings with regard to Kishore P Mehta, Rajesh C Mehta, Kantilal L Shah, Mayank Dhanuka, Madan Mohan Dhanuka, Bina Devi Dhanuka, Rajkumari Dhanuka, Neha Dhanuka, Nikunj Dhanuka and Umang Dhanuka is dealt in this order. 11. In view of the above out of total 178 entities debarred vide interim order dated May 8, 2015 in the matter, the confirmatory orders have been passed in respect of 28 entities as mentioned hereinabove. The proceedings against 123 entities are being dealt with in this order. The following remaining 27 entities are either yet to submit their written submission or have requested for opportunity of personal hearing :- Table 2: S.No. PAN Name Category 1 AAJPM6827G Krishnakumar Omprakash Murarka Director 2 ABEPJ7142D Madanlal Jain Promoter Related 3 ABEPJ7147G Moolchand Jain Promoter Related 4 ADIPJ9498C Mukesh Kumar Jain Promoter Related 5 AFOPJ4431P Vikas Jain Promoter Related 6 AEFPS6298M Brij Bhushan Singal Preferential Allotee 7 AACPG7709G Pankaj Dhanji Goshar Preferential Allotee 8 ABAPA2027N Praveen K Arora....
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....or 113809995 12 AAJPI8348E Monesh Israni 96723175 13 ADZPC5979N Anilkumar Chamanlal 87654200 14 AEIPG1584P Hemant Jayant Gogri 93448750 15 AADPB1550B Kaushal Kanhayalal Bagadia 84655287 16 AAEPS7956D Poonam Kaushal Bagadia 84593213 17 AGMPK5927A Anil Kumar Kasaraneni 78501550 18 AABPS7441L Pradip Damji Shah 79109225 19 AAAPP9409N Gopal Nihchaldas Pariani 72097825 20 AAEPS8716P Hirji Morarji Shah 70960750 21 AADHA7870F Ashok Jain HUF 48041943 22 AEKPM9977L Arvind Chhotalal Morzaria 45435010 23 AAAHH5526G Haresh Rawani Huf 45128900 24 AABPD9375L Anil Vishanji Dedhia 40122000 25 AAIPS4820L Kantilal Lalji Shah 37251230 26 AAZPM0573H Rajesh Champaklal Mehta 35780835 27 AJLPC9910H Jay Hansraj Chheda 39392775 28 ACMPM6181A Kishor Pranjivan Mehta 33075606 29 AAAPB5499G Balchand Jain 31222685 30 AADPR1704M Priyanka Haresh Rawani 26545250 31 AEJPB6903J Savita Bansal 27956750 32 ABHPA9244J Sadha Rani 27598200 33 AAACT8706B TVC Shares....
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....92G 927945 8,31,87,753 8 Sebika Commodities Pvt Ltd AARCS9144H 720449 5,51,81,408 9 Spark Commodeal Private Limited AAOCS2216D 705374 6,17,17,449 10 Esha Securities Ltd AAACE2862P 670644 6,33,79,090 11 Ridhi Vincom Private Limited AAECR9858C 632995 5,91,76,420 12 Dove Suppliers Pvt Ltd AADCD7017J 624434 4,03,48,417 13 Apex Commotrade Private Limited Ltd AAJCA4459K 618981 5,69,62,423 14 Dhanraksha Vincom Private Limited AADCD6028P 615991 5,75,27,170 15 Anjali Suppliers Private Limited AAJCA1784D 567120 4,17,27,282 16 Goldensight Traders Private Limited AAFCG4773J 411950 3,15,61,200 17 Antaryamini Traders Private Limited AALCA7880J 367114 4,31,64,295 18 Dhyaneshwar Dealers Pvt Ltd AAECD8010E 337363 2,74,34,922 19 Ramya Mercantile Pvt Ltd AAGCR6009M 321300 3,03,10,505 20 Devatma Distributors Private Limited AADCD7140G 314466 2,89,89,582 21 Kapeeshwar Vintrade Pvt Ltd AAECK7329P 307500 2,52,91,390 22 Swarnprakash Traders Private Limited AATCS6718D 299619 2,63....
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....,00,92,097.20 7 AEZPD5474N Bina Devi Dhanuka 48000 45,30,150.00 4,80,000.00 40,50,150.00 Group Total 963000 8,49,31,265.20 7,53,01,265.20 8 AAWPG3157A Vijuben Ranchhodbhai Golakia 51500 47,23,025.00 5,15,000.00 42,08,025.00 9 AAYPG3878J Ranchhodbhai Jasmatbhai Golakia 96100 85,12,992.50 9,61,000.00 75,51,992.50 10 AEEPG1294G Chintan Ranchhodbhai Golakia 95300 85,03,297.50 9,53,000.00 75,50,297.50 11 ALDPG8381J Akash Ranchhodbhai Golakia 51500 47,23,025.00 5,15,000.00 42,08,025.00 Group Total 294400 2,64,62,340.00 2,35,18,340.00 12 ACIPM0237D Shakuntala Maru 55500 44,73,425.00 5,55,000.00 39,18,425.00 13 ADUPM7778C Paras Chand Maru 90300 54,39,310.00 9,03,000.00 45,36,310.00 14 AJWPM1991R Saurabh Maru 100000 59,59,230.00 10,00,000.00 49,59,230.00 Group Total 245800 1,58,71,965.00 1,34,13,965.00 15 AABPF1503E Sushilkumar Shribhagwan Fatehpuria 100000 85,75,730.60 10,00,000.00 75,75,730.60 16 AABPF1507A Umadevi Sushilkumar Fa....
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....is felt that at this stage a view can be taken for the Noticees based on reply/submissions already received. 15. The replies/submission of 123 Noticees are summarised as under. It is noted that some of the entities belonging to the same category, have submitted replies that are similar /identical in nature. Such replies have been grouped together for the sake of brevity. In addition to the various case laws referred by the noticees, they have inter alia submitted the following I: Pine Animation Limited and Directors 1. Pine Animation Limited: a) The entity denied all allegations made against the company and its directors in the interimorder. b) The entity has submitted that there were no documents relied upon that would substantiate that the company or any of its officers having nexus with the shareholder or any other entities as mentioned in the order and that there were no document relied upon that would substantiate that the company or any of its officers are responsible for the market movement in the company's scrip. Moreover, neither the company, nor the officers of the company has gained any benefit from the same. c) None of....
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....increase in EPS from -0.24 to 0.15 in just a span of one year itself justifies the growth of the company and its ability to grow in future and outperform the benchmark industries. Hence, the allegation that the price of scrip was not supported by its fundamentals is incorrect, irrational and is unwarranted. j) Neither the company nor its directors have benefitted in any manner with respect to the trading in the shares of the company. k) The directors of company have just acted in their capacity of directors and have done all acts and business transactions within the purview of all rules and regulations applicable to them. l) There has been no complaint filed by anyone to any regulatory authority towards any malafide intentions of the company. m) The company has purely carried out its business activities and aimed maximizing profits to create shareholders wealth. 2. Lalji Ramraj Yadav: a) The entity has stated that no documents/evidences were provided to him before passing ad-interim order against him, which is in violation to the law of natural justice. b) The entity has denied all allegations made in the order and has ....
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....on received from the entities. 5. Mandar Subhash Palav: a) The entity has stated that no documents/evidences were provided to him before passing ad-interim order against him, which is in violation to the law of natural justice. b) The entity has denied all allegation made in the order and has submitted that he has not violated the provisions of SEBI Act and PFUTP Regulations as alleged in the order. c) He had been appointed as the Non-Executive Independent Director of M/s. Pine Animation Limited (Formerly Four K Animation Limited) w.e.f 18th January, 2012. d) He had no role to play with the operation of the company and was not involved in any decision taken by the management. He was not in control of the day to day affairs of the company and had acted only in the capacity of the independent director for proper compliance and disclosure requirements of the company. e) He has not held and do not hold any share of M/s. Pine Animation Limited and have never transacted in any shares of the company and also has no role to play in respect to either in the movement of the price of shares of M/s. Pine Animation Limited or the volume of t....
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....ion of shares were made subsequently through banking channels during February 2012. e. He had signed the B/S and P/L for the year ending March 31, 2012 and submitted his resignation letter on July 01, 2012 and left for USA in July 2012 and came back only in January 2013. f. On his return, he found that his name was still appearing as a Director of the company. He enquired with Mr. Nimesh Joshi and Mr. Hitesh Kawas and was assured that it will be removed soon. g. On February 4, 2013, he wrote to the Registrar of Companies, Chennai, informing them that he had resigned from the company Board through his resignation letter to the company dated July 01, 2012. The entity enclosed a copy of his letter addressed to the Registrar of Companies, Chennai, in this regard. h. He was not involved in any activities of the company after change of ownership. II: Promoters and Directors of the Promoter Companies 1. Unique Image Production Pvt. Ltd., First Entertainment Pvt. Ltd., Murali Shanmugam, Prabhu Sekar and Sekar Vasu: a. The entities have submitted that based on their industrial experience, they thought that they can bring busines....
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...., she started selling the shares gradually. d. The entity has according requested to allow her to access the securities market. 2. Govind Agarwal HUF And Deepak Agarwal HUF: a. The entities have submitted that they had met Mr. Hitesh Kawa in Mumbai who informed them that he was dealing in suspended company (ies) shares. On his pursuance they decided to risk Rs 30,000/- as investments in small companies. Accordingly, Around January 2013, they bought 10,000 equity shares each, of the company which constitutes hardly 0.001% of the then paid up capital. b. They were not aware that Mr. Hitesh Kawa belonged to any alleged promoter group or the shares he bought earlier belonged to any promoter of the Company. They have never met any Director or company personnel including that of the Promoters or Mr. Hitesh Kawa thereafter. They have submitted that they are neither connected to any promoter or director of the Company nor any alleged entities. c. At the time of their purchase, as there were no trades in the stock exchange, the sell or purchase of the shares were only possible through off market deals. The payment was made by way of cheque from t....
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....dividend and profits. c. They are neither directly nor indirectly related to the said Company or any of its Promoters or Directors and were neither in a position nor have acted in concert with Pine Animation Limited and its Promoters or Directors to misuse the Stock Exchange System. d. Ms. Nagda has submitted that the purchase of 16,000 shares of Pine in the month of March 2013 was carried out as per the provisions of law and in a bonafide manner. The entity refutes the allegation contained in the SCN that she is a 'Promoter Related Entity' as she had not purchased from promoters or in the Preferential allotment. The shares were bought from an independent third party M/s Mahaganpati Financial Services Pvt. Ltd. after having been advised by one Mr. Jasubhai in this regard. e. Mr. Bhanushali has submitted that he came across an advertisement in the Economic Times newspaper by one Bhushit Trading Private Ltd., who, as per the advertisement, were dealing in the physical/odd lot shares of all companies. In the month of March 2013, Mr. Rajkumar, the authorized person of the said firm gave an option of investing in the shares of Pine. He had legally and in a bon....
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.... he is neither directly nor indirectly related to the said Company or any of its Promoters or Directors and also that neither was in a position nor have acted in concert with Pine Animation Limited and its Promoters or Directors to misuse the Stock Exchange System. d. The inclusion of his name in the Pine Group is erroneous as there is no elaboration on any evidence provided in the said Order and the examination materials provided by SEBI which conclusively establishes his nexus with the Exit Providers and the Promoter related entities. e. He has denied that his act and/or omission amounts to fraud, as there were no intentions of creating any kind of artificial price rise, nor concealment of any fact or making a false representation. He cannot be held liable for any violation of the SEBI Act or the PFUTP Regulations and strongly state that the shareholders cannot be held liable for the alleged misdeeds of the promoters or the Company or their related entities. f. He has earnestly sold shares of the said Company in a blind and transparent mechanism without any nexus to any of the counter parties. 5. Madan Mohan Dhanuka, Neha Dhanuka, Nikunj dhanuk....
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.... In the instant case, they had learnt for the first time from the Orde) that Pine's promoters sold their shareholding interalia to Gajakarna Trading (being one of the 6 entities) The shares were issued directly in the name of Gajakarna Trading as witnessed from the Share Certificates and there was no reason or possibility for them to ever suspect or know that the shares were ever owned by promoters of Pine. Thus, without any link or connection between them Gajakarna Trading and/or the promoters of Pine, their categorisation as a 'Promoter related entity' is itself bad in law and unreasonable. j. Off-market purchase of shares is a permitted method of purchasing the shares of a company. k. The entities have submitted that the Order is discriminatory is as much as, only those entities who have earned over Rs. 1,00,00,000 are alleged to have partaken in the wrongdoing and other entities, have, for reasons unexplained, been excluded from liability. l. There is no material whatsoever to suggest any laundering by them. The entities have submitted that notwithstanding this, and assuming for the sake of arguments that there was any alleged money laundering....
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....hariji Constructions.The facts substantiating the genuineness of the arms' length nature of the loan transaction are set out in their entirety in these Replies. u. The Noticees say and submit that these loan transactions have no bearing whatsoever upon the sale and purchase of the shares of Pine by the Noticees. Further, the Order altogether fails to make any connection between the loan transactions and purchase in the shares of Pine. As such the loan transaction is entirely irrelevant for the purposes of the Order and ought to have been excluded from consideration. v. Ms. Bina Devi Dhanuka, Mr. Mayank Dhanuka, Mr. Umang Dhanuka and Ms. Rajkumari Dhanuka, who are the directors of Bihariji Constructions, have submitted that in paragraph 25 of the Order, it is stated that 2 loans in a sum of Rs. 25,00,000 each were advanced by Pine to Biharij Constructions. It is alleged that the loans were advanced from monies received by Pine from the Preferential Allotments and that the said monies were not used by Pine for the stated purpose of the Preferential Allotment(s). In this regard, the said entities have submitted that they were not aware of and/or concerned with th....
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.... meaningful information substantiating the allegations was provided. g. The entities Mr. Nimesh Joshi, Ms. Rashmi Nimesh Joshi, Mr. Hitesh Kawa and Ms. Roopal Kawa, have stated that from the order it does not appear that approval of Judicial Magistrate was sought before attaching their demat accounts. The entities have submitted that though section 11(4) ( e ) applies to bank accounts and not demat accounts, but both bank and demat accounts are used to park assets in the favour of beneficial owners and hence demat accounts should be treated at par with bank accounts and all the requirements for attachment of bank accounts should be complied with while attaching demat accounts, which has not been done in this case. h. The entities Mr. Nimesh Joshi, Ms. Rashmi Nimesh Joshi, Mr. Hitesh Kawa and Ms. Roopal Kawa have further submitted that by restraining them from accessing securities markets and attaching their demat accounts, SEBI has subjected their investments to a huge risk of devaluation, which they have been made to face for no fault. 7. Akshar Ranchhodbhai Golakia, Chintan Ranchhodbhai Golakia, Ranchhodbhai Jasmatbhai Golakia, Vijuben Ranchhodbhai Gola....
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....estor in the stocks and securities. The purpose of purchase of shares and securities is to have appreciation in his wealth and liquidity in case of need. Due to certain conditions imposed in the said order, he not able to sell shares of Pine. c. He has submitted that he got a tip from the market to buy shares of Pine Animation Ltd, stating that this company has good prospects in the future. Relying upon this tip, bought 20000 shares of Pine Animation Ltd, in physical form. He sold the shares of Pine Animation Ltd through his broker "Share Wise Equity Brokers Private Limited" through BOLT. He confirmed that there were no cash transaction or no exchange of monies took place illegally. He never knew who the buyers were. d. He is neither related nor connected to any promoter, directors. He further confirmed that he does not have any business or professional dealing with Pine Animation Ltd. e. SEBI has mentioned certain persons were responsible for pushing the price of the scrip but does not mention his name therefore action can be taken only against them and not against him. Further, SEBI has not given any finding in the order that any entity listed in the or....
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....the shares at the ruling market price. Further, they have sold only a small portion of their shares in Pine and this is wholly inconsistent with the allegations made in the interim order that they were party of price manipulation, tax avoidance etc. f. Their holding in the shares of Pine was a small fraction of their total investment in shares. g. The entities have stated that they have not caused loss to any investors nor have they made any wrongful profits at the cost of any other person. h. They have not received any funds from Pine as so alleged from the preferential issue proceeds. Further, they have stated that they are not connected whatsoever with the company, its promoters, any of the preferential allottees, any of the other purchase of the shares, with the person who sold them the shares, with any of the alleged exit providers, etc. i. Further, they are neither a part of the Promoters nor connected with any of such persons named. They are not connected directly or indirectly whether by way of financial/personal relation or otherwise with the Promoters, the transferees from the Promoters or the Exit Providers. j. Therefore, they....
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....ch remotely links him to the sweeping allegations. m. The entity has accordingly had requested the directions in the ex-parte order be revoked and all proceedings be dropped. 2. Anil Kumar Kasaraneni and Neelam Mor: a. The entity denied all allegations made in the order and has claimed to be a genuine investor. b. During February 2013, Mr. Kasaraneni met a person at an exhibition in Mumbai and had discussion about investment opportunity in securities market and subsequently got invitation to invest in Pine. Ms. Neelam Mor's brother-in-law met a person at an exhibition in Mumbai and as had discussion about investment opportunity in securities market and subsequently got invitation to invest in Pine c. The order does not offer any documentary evidence regarding any nexus of the entities with promoter directors of Pine. Therefore the allegation against them is not tenable in law. d. They have denied any relation with Pine, promoter/director, PA, promoter related entities and exit providers. In addition, they have also denied that they had ever used securities market system to artificially increase volume and price for making il....
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.... a. They have denied all allegations made against them in the order. b. The order has been passed without according opportunity to them to present their case, which is against the principles of natural justice, fairness and equity. c. They are genuine investors and investing in the shares of this company was a normal commercial transaction. d. They have purchased the shares out of their own funds. They expected reasonable returns from this investment and did not have any malafide intentions in investing in the shares of the said company. e. They are still holding 94% of the shares purchased by them which implies that they had no intentions to make a profitable exit giving rise to the alleged artificial price rise. f. They have no nexus with alleged preferential allotees and exit providers as none of the shares sold by them were purchased by exit providers. They had no role in price rigging and have no relation with alleged entities that were responsible for price rigging. g. They deny that they are in any way connected with the Company, the Promoter Related entities and the Exit Provider entities. h. Investment....
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....y, investors cannot be punished k. The Order is unconstitutional & causing grave, serious and undue hardship to them. l. Accordingly, the order passed against them deserves to be set aside and have requested for de-freezing their demat account, permitting to access the securities market and be allowed to buy sell or deal in securities directly or indirectly. 6. Mahendra Vasantrai Pandhi, Sanjay Dnyaneshwer Nikam (HUF) and Santosh Yashwant Tandel: a. They have denied all allegations made against them in the order. b. The order has been passed without according opportunity to them to present their case, which is against the principles of natural justice, fairness and equity. c. They are genuine investors and investing in the shares of this company was a normal commercial transaction. d. Had informed about the purchase of shares to the Income Tax department and the shares were purchased out of their own/family funds and that the same has not been borrowed from anyone. e. They expected reasonable returns from this investment and did not have any malafide intentions in investing in the shares of the said company. ....
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....e allowed to buy sell or deal in securities directly or indirectly. 7. Vasudev Mahirwan Hemrajani: a. The entity has denied all allegations made against him in the order. b. The order has been passed without according opportunity to him to present his case, which is against the principles of natural justice, fairness and equity. c. The entity is a genuine investor and investing in the shares of this company was a normal commercial transaction. d. Had informed about the purchase of shares to the Income Tax department and the shares were purchased out of his own/family funds and that the same has not been borrowed from anyone. e. Had expected reasonable returns from this investment and did not have any malafide intentions in investing in the shares of the said company. f. The entity is still holding 94% of the shares purchased which implies that he had no intentions to make a profitable exit giving rise to the alleged artificial price rise. g. The entity denied that they are in any way connected with the Company, the Promoter Related entities, Exit Provider entities and the entities who have contributed to the pr....
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.... q. The Order is causing grave, serious and undue hardship to him. Accordingly, the order passed against them deserves to be set aside and have requested for de-freezing their demat account, permitting to access the securities market and be allowed to buy sell or deal in securities directly or indirectly. 8. TVC Shares Stock & Investment Pvt. Ltd.: a. The entity has denied all allegations made against them in the order. b. The order has been passed without according opportunity to them to present their case, which is against the principles of natural justice, fairness and equity. c. The entity is a genuine investor and investing in the shares of this company was a normal commercial transaction. d. Had expected reasonable returns from this investment and did not have any malafide intentions in investing in the shares of the said company. e. The entity is still holding 90% of the shares purchased which implies that they had no intentions to make a profitable exit giving rise to the alleged artificial price rise. f. The entity denied that they are in any way connected with the Company, the Promoter Related entities Exit P....
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.... providers list. Persons who buy shares cannot be termed as exit providers as they invest based on their calculations. p. The entity is facing grave and severe hardships because of ban and freezing of his demat account. That at an extreme case SEBI could, at best, freeze only shares of the company lying in his demat account ad de-freeze all other shares and lift the ban on him from dealing in securities. q. The Order is causing grave, serious and undue hardship to him. Accordingly, the order passed against them deserves to be set aside and have requested for de-freezing their demat account, permitting to access the securities market and be allowed to buy sell or deal in securities directly or indirectly. 9. Gopal N. Pariani: a. The ex-parte ad interim order is misconceived and contrary to the principle of natural justice in as much as the observations in the preliminary enquiry conducted by SEBI have not been furnished. b. The ex-parte ad interim order is vitiated by making general and generic observation and does not contain any findings which are party specific. c. He has submitted that he has been wrongly clubbed with others ....
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....f a corporate presentation made by the company. The entities had further submitted that Mr. Tushar Vora who is a Chartered Accountant had informed them of an investment opportunity in the shares of Pine and based on a corporate presentation made by an official of from the company, they had applied for the preferential issue. c. The entities had applied for the shares of Pine from their own sources of funds and this was not in furtherance of any fraud or part of any scheme or connivance to defraud as alleged in the order. d. The assumption that "investments in a company with meagre fundamentals cannot be termed as rational investment" is not based on any law or facts. A purported unwise investment decision cannot be treated as any kind of market irregularity and the finding that the allotees had a nexus with the company, its promoters or directors of the company is farfetched and without any basis. e. They had not contributed to the rise in price since he sold on market price and has not influenced the positive increase from the last traded price. They have denied that any effort was made to illegally avoid tax in the form of Long Term Capital gains as all....
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.... market has been restrained and not a single person/entity who has not made long term gains, has been restrained from securities market, except her, indicating discrimination, bias, prejudice, inequality and inconsistency of SEBI in passing the present order against her. b. The entity has submitted that her transaction in Pine Animation is of an "off market" nature and therefore beyond the jurisdiction of SEBI. Thus, ab-initio, the said order passed against her is wholly unsustainable and bad in law and therefore ought to be and deserves to be withdrawn in limine. c. She had made the investment in the preferential shares of Pine Animation Limited on the recommendation of my real younger brother, Pankaj Dhanji Goshar. On 30.07.2014, out of natural love and affection by the way of an "off market transaction", she had gifted 60 Lac shares of Pine to her only real younger brother, Pankaj Goshar for which she had executed delivery instruction slip dated 04.08.2014. In the circumstances, the allegations in the said order with regard to 'tax evasion' or 'avoidance of tax' are unsustainable and non-maintainable against her and the said findings are perverse, arbitrary, mi....
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....e of all others named in the said Order. 12. Anil Vishanji Dedhia and Mayur Ishwardas Gandhi: a) They have denied all allegations made against them in the order. b) The order has been passed without according opportunity to them to present their case, which is against the principles of natural justice, fairness and equity. c) They are genuine investors and investing in the shares of this company was a normal commercial transaction. d) They expected reasonable returns from this investment and did not have any malafide intentions in investing in the shares of the said company. e) They are still holding a majority of the shares purchased which implies that they had no intentions to make a profitable exit giving rise to the alleged artificial price rise. f) They deny that they are in any way connected with the Company, the Promoter Related entities and the Exit Provider entities. g) Investment made by them in Pine was based on presentation received by them about business plan, expansion plan, future prospects, balance sheet, annual report of company & was post revocation of suspension. h) It is not establi....
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....tract. The price of scrip can be influenced due to innumerable factors as like the general market trend, market sentiment, the existing market position of market players etc. g) Except for making an application in the preferential allotment he has absolutely no financial dealing with the Pine group. All his transactions in Pine shares were delivery based and he has met with all obligations on the market. The same were also carried out at the ten prevailing market price and there is no allegation of establishing New High Price (NHP) or that any trades had any impact on the Last traded price (LTP) of Pine shares. h) He has no connection with any of the entities who are alleged to have played role in established New High Price as mentioned in the interim order. i) The inclusion of his name in the Pine group is erroneous as there is no elaboration on any evidence provided in the said order and the examination materials provided by SEBI which conclusively establishes his nexus with the Exit Providers and the Promoter related entities. j) He cannot be held liable for any violation of the SEBI Act or the PFUTP Regulations and strongly state that the sha....
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....ncidence. h. Profit earned by him is completely legal in nature and well deserved as a result of his risk taking ability and well timed decisions. Moreover, this does not in any way throw light upon the fact that the Exit providers and the Preferential Allottees were hand in glove with each other. i. If he would've in fact had any nexus with the Promoter Related Entities or the Exit Providers, he wouldn't have sold just a part of his share holding in the scrip of the company. Instead he would've, like any other prudent person who was to possess a nexus, sold his entire share holding in the scrip of the company, thereby maximizing his profit. j. The price at which he sold his shares was rarely near to the highest price for that particular trading day. In fact, on most days, his selling price is very close to the lowest price for a given trading day. Therefore, had it been the case that he was colluding with other entities to artificially increase the price and the volume, he would have sold the shares at the highest market price to gain maximum profits. But, the fact that the selling price was actually much less than the highest price of that trading day, ....
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....ing in securities market once in a while was ok for him. His investments are solely with a bonafide intention of earning profit in return of his investment. d. The fact that Pine was making a preferential allotment came to knowledge of the client by a charted accountant who hailed from Rajasthan. At that time he was looking to make an investment in a scrip. Therefore, he thought it as a good investment opportunity. On being shown the presentation on the operations of the company and on being assured about the soundness of the investment, he decided to invest in the company through the preferential allotment e. On the completion of the one year lock in period, the scrip witnessed a significant rise in its price. On witnessing the then prevalent trend in the scrip, he chose to sell a few of the total shares held by him in the scrip, thereby making a desirable and an entirely legal profit. He was unaware about any alleged scheme employed by the company or any other investor, until the said order was served upon him. f. At the time he invested in the company, he had no knowledge of the promoter's intention of exiting the company. Therefore, to presuppose that....
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.... m. He has no role in contribution to increase in price either directly or indirectly, nor a part of any scheme for increasing the price of the scrip. n. The client has submitted that the inference taken therein that the Preferential Allottees along with Promoter related entities acting in concert with Exit providers has misused the stock exchange system to generate fictitious LTCG is incorrect. The client has always been and is an honest taxpayer. o. In the entire alleged scheme, he is a victim of the circumstances and not the beneficiary as in alleged. p. He denies that he has violated the provisions of Regulation 2, 3 and 4 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations, 2003 or Section 12A of the SEBI Act. He has neither directly nor indirectly bought or sold or otherwise dealt in the securities in any fraudulent manner. q. Instead of passing a complete restraining order in terms of Section 19 read with Sections 11(1), 11(4) and 11B of the SEBI Act, 1992, A Cease and Desist Order under section 11D would have sufficed the cause and served the purpose of protecting the interest of t....
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....roceeds in his bank account. The same has been properly accounted and fully disclosed to the authorities including Income tax departments hence question of avoidance of Income Tax, as long term profit on securities are exempted from tax as per the Income tax rules. f) His sale value is not even 5% of his holding and if he had mala fide intention and was party to the mala fide plan as alleged he would have sold almost entire holdings. g) He has denied violation of the alleged provisions of PFUTP Regulations. h) All his transactions in Pine Animation share were delivery based and have meet with all obligations on the market. The same were also carried out at the then prevailing market price and there is no allegation of establishing New High Price (NHP) or that any trades had any impact on the Last Trades Price (LTP) of Pine Animation shares. Thus, allegation of any price manipulation is not applicable in his case. 17. Ankit Miglani, Archana Miglani, Anuj Rajinder Miglani and Priyanka Ankit Miglani: a) The entities denied all the allegations made against them in the Order. They have submitted that, I have not violated any of the provisions....
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....roviders. k) The entities have denied that the principle of price discovery was kept aside by them and that the market lost its purpose. The return of their investment was decent and they were prepared to take risk of fall in price while selling their shares. It took about six months to sell their shares and there were many occasions where their sale order did not get executed. l) They have submitted that they are not aware of any alleged modus operandi or mechanism to deceived the authorities by laundering black money or making tax free profits as alleged and have no role to play in the same. 18. Kaushal Kanhayalal Bagadia and Poonam Kaushal Bagadia: a) The entities have strongly contended the allegations and observation contained in the Order. b) The said SEBI Order is against the natural principle of equity, fair play, natural justice and hence bad in law and should be withdrawn. c) Power to issue directions under section 11, 11(4) and 11(B) is a drastic power having serious civil consequences and ramifications on the repute and livelihood of those against whom it is directed. There was no need, necessity or rationalisation i....
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....rder. In addition, they are not a director in any of the companies (entities) named in SEBI's interim order. l) Further, they have no financial dealings like giving loan, taking loan or any other dealing with any of the persons or entities mentioned in SEBI's interim order. m) They have submitted that all their sale transactions of Pine shares were delivery based and they had no idea who purchased their shares since all the transactions were executed through the normal screen based trading system of Stock Exchange. It is an undisputed fact that in case of screen based trading, the automated system itself matches orders on a price-time priority basis and hence it is not possible for anybody to have access aver the identity of counter party dealing in any transaction. n) The entities have stated that they had followed and complied with all the procedure and requirements of the capital market through their broker and stock exchanges. o) Poonam bagadia has mentioned that on May 07, 2015, she had sold shares worth Rs. 24,00,598/- and on May 08, 2015, had sold shares worth Rs. 27,451/- in the market and shockingly as a consequence of the aforesaid rest....
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....m is in breach of my fundamental right of carrying on business bestowed upon every citizen of India guaranteed under Article 19(g) of the 'Constitution of India'. j) The entity has further submitted that he had purchased the shares of Pine with his legitimate source of income from his saving Bank Account and is a regular Income Tax Assessee who files all his Income Tax returns regularly. Hence the question of any 'money laundering' or 'tax evasion' does not arise in his case. k) The entity had assumed that BSE would have exercised adequate due diligence, enquiry and would have obtained all necessary information for issue for preferential shares and also subsequent commencement of trading of Pine on the stock exchange. Further, when the scrip was traded on market, no alert was generated by any regulation authority including SEBI and BSE and it is only in hindsight that SEBI has established on 'prima facie' findings that some entities may have been involved in alleged manipulation in the scrip of Pine. l) His sale transactions of Pine shares were delivery based and has complied with all obligations towards the market. He sold shares after the release of the....
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.... to be in violation of any SEBI Regulations. d) His trades have been on screen by giving instructions to his brokers and not on instructions of any third party. He was holding less than 1% of the total outstanding shares and thus could not have affected the price in any manner. e) He had applied for the preferential issue based on the information memorandum circulated by the company. The investment was made from his own funds. As the basic objective of his investment was to earn profits, the shares were sold once the lock-in ended. f) SEBI cannot presume a connection between the other parties and him and therefore cannot and should not be restricted from carrying out his livelihood and thereby made to face severe financial hardships. g) He is an unsuspecting investor with no relation to the alleged illegal transactions or with the people involved. 21. Jay Hansraj Chheda: a) The entity has denied all allegations made against him in the order. b) During the month of January 2013, he had met with one person who has lot of experience in the stock market and on his advise, he decided to invest in the preferential allotment o....
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.... b) Have traded at the prevailing market price through a registered broker and there is no allegation of any synchronized trade against them in the order. c) Had no knowledge as to who were purchasing the shares, as the sale of shares were through the Stock Exchange mechanism. d) They are not related to promoter related entities or to the exit providers, other preferential allottees, promoter related entities as alleged in the aforesaid order. e) The eligibility for claiming exemption Under Income Tax Act is so provided in the Central Act and cannot be viewed otherwise. The exemption is available depending upon the status of the acquiring person as to whether he is an investor or trader. Therefore, drawing adverse inference on the basis of statutory provision under the Income Tax Act is misconceived Acquiring the share in preferential allotment in accordance with SEBI Regulations cannot be considered a scheme devised. Selling the shares as per market mechanism through screen based trading also cannot be considered as a scheme devised. The gains are legal and hence cannot be considered to be "ill-gotten gains". f) Without any evidence agai....
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....r. b) He is a bonafide investor and invested money in normal course of his investment activity and his investment was within his own financial and risk bearing capacity. c) His investment decision was made on the basis of news and rumours in print media, electronic media, grapevine, investment decision of other investors etc. d) Merely because the Company had allotted preferential shares to him, it cannot be presumed or pre-supposed that he has a nexus, link or relationship with the Pine Company. e) Entity has stated that he is not connected or related to any person whose names are mentioned in the said interim order. He has no relation with Pine Group or its promoters, directors or employee or any other entity. f) None of the companies wherein he is a Director has any common directors from the persons mentioned in the SEBI's interim order. Further, he is not a Director in any of the Companies (entities) named in the SEBI's interim order. g) He had no idea who purchased his shares as all the transactions were executed through the normal trading system of Bombay Stock Exchange. h) He has not received a single rup....
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....o ill intent involved and they had acted in a prudent manner in which any other investor would have acted in the given circumstances. c) SEBI has completely overlooked the fact that they were subscribers of the smallest portion of the total preferential issue of the company. Under no circumstances it can be said that, they were part of any scheme, plan, device and artifice vide which they had evaded any tax. In any event, they had held the shares for more than one year and no company with however good financial planning can predict in advance about its future profitability position and therefore could have planned transactions to avoid tax as alleged. d) They were involved in only sale of shares and not involved in any price discovery or volume creation mechanism. SEBI has failed to furnish any evidence/documents which could establish that they had any relationship with the buyers, promoters in the patch 2 or that they assisted in any manner in creating/maintaining the alleged artificial demand in the stock exchange, of the company, during the patch 2. e) It is inconceivable that huge numbers of persons/entities such as 92 persons/entities were together i....
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....explanation or clarification. c) The entity has submitted that the power to issue directions under section 11, 11(4) and 11 (B) is a drastic power having serious civil consequences and ramifications on the repute and livelihood of those against whom it is directed. However, no such need, necessity or rationalization has been delineated in present interim order for use of such severe and drastic power against her. d) The entity has submitted that an open ended restraint order against her is in breach of her fundamental right of carrying on business bestowed upon every citizen of India guaranteed under Article 19 (g) of the 'Constitution of India'. e) The entity has submitted that as she has very less or almost no educational background her investments were managed by my husband Mr. Naxatramal Nahar. f) She has traded in around 176 stocks and was holding more than 50 stocks. These stocks included stocks from various sectors and sizes ranging from blue chip large caps, mid-caps and a small proportion of penny stocks or small caps. She has paid tax of Rs. 8843 for 2012-13 Rs. 14,852 for 2013-14 and Rs.2,21,574 for 2014-15. g) As the ....
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....rity be applied since the facts and circumstances of her case are exactly similar. 2. Sanjay Kumar Shah: a) The entity has submitted that the shares of Pine Animation Ltd. are listed in BSE and Quoted and as a individual Investor there is nothing wrong on the part of the small investor like him to trade in the normal course in the quoted shares for the nominal profit/loss in share trading. The total investment on his part is only for a meagre 30 shares in two instalments which cannot be considered as a contributory factor for any price scam of the subject share by any stretch of imagination. b) The entity has submitted the he has no connection whatsoever with the management or the brokers or any employee and other stakeholders of Pine and that he is not all associated in any manner with the price sensitive operations of the company. c) The entity has requested to kindly exclude his name from the alleged contributory to price scam as stated in interim order and also defreeze his demat account/trading account. d) The entity had submitted that it would not possible for him to make personal appearance in the hearing before the WTM, SEBI and ....
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....e regular traders in the stock market and do the trading on online platforms provided by stock exchanges i.e. BSE and NSE through the stock brokers. They generally keep watch on rising stocks and try to make some profit out of the rising graph and as the stock was rising consistently they tried to buy some stocks. b) The entity has submitted that they have no connection with any of the other entities mentioned in the order. c) The entity has submitted that they are not able to trade in stock market any longer apart from reputation loss as their name is being displayed in the order. d) Accordingly they have requested to review the order and restore their PAN. 6. JMS Financial Services: a) The entity has stated that the order is wrong and liable to be recalled in respect of them. b) The entity has stated that the order was passed without going through true facts and figures related to their case. c) The entity has submitted that they had not placed the orders for negligible quantity of shares and that if the sellers sell only negligible quantity, same is not within their control and there is no mechanism at online portal ....
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....t they have not violated the provisions of SEBI Act and PFUTP Regulations as alleged in the interim order. b) The order was passed against the principle of natural justice and had brought huge loss to their business. c) They were neither directly nor indirectly related to Pine or any of its promoters or directors. They were neither in a position nor have acted in concert with Pine and its promoters or directors to misuse the stock exchange System. d) They acquired the shares of Pine only as an investor and the said investment was made by them out of their own savings and resources. They regularly invest in shares and securities. Those investments were made with the sole objective of earning dividend and profits. e) They had no knowledge regarding control over price and volume of shares of Pine or its promoters or directors or any other person or group of persons in any manner whatsoever. f) The transaction in the script of Pine was as per the rules and regulations of the stock exchange, as applicable. g) They have done trading in Pine in normal course of trading. h) They were not in any way involved in price manipulatio....
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....section 11 and section 11(B) of SEBI Act has to be exercised judiciously and it is all the more necessary in a case having adverse civil consequences as well as reputational adversity. Further, it is well settled that a discretionary power is not to be invoked arbitrarily devoid of justification, as has been done in the matter under reference. e) In the instant case, there was no such emergent situation or circumstance warranting such an ad interim ex-parte order. f) The entities are an investment and financial company primarily engaged in the trading of securities in secondary and primary market. They are registered with Reserve Bank of India as a Non-Banking Financial Company (NBFC). g) Their trading activity is huge. They are carrying on the trading activities in the market with due diligence, fairness and incompliance with the provisions of law. They have never defaulted in meeting their payment or delivery obligations to the brokers or the Exchange. h) The entities have stated that SEBI has erroneously clubbed them with other entities and branded them as a part of Exit Providers and drawn adverse inferences against them. All their trading in....
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....ey have requested to reconsider the order to the extent it applies to them and withdraw the directions passed against them. 5. Vibgyor Financial Service Ltd.: (a) The entity is into the business of NBFC since the year 2001 and have been investing and trading in shares, derivatives and commodities from a long time. (b) The entity has purchased the shares of Pine in normal course of business after evaluating the trend of the security. His investment in shares of the company was by using the genuine money and it has been accounted for in its financial statements. (c) The trades matched with preferential allottees or promoters related entities are only a miniscule 0.26% of the market volumes. Though 77.31% of the client's trades have matched with preferential allottees/promoters related entities, the entity never knew at that time and even later, only through SEBI order has got to know that he has been trapped in the scam for no fault. (d) The purchase was done in normal course of business, is no where even remotely associated or connected in whatsoever way with the promoters/directors of Pine. (e) They were categorized as a par....
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....ncy situations, where seemingly heavens will fall if the powers are not exercised. (k) Therefore, the entity has requested to revoke the directions passed against him. 6. Dhanraksha Vincome Pvt. Ltd.: (a) The entity has denied all the allegations made against him in the ex-parte order. (b) The entity has stated that the said Ex-parte Order has been passed without granting an opportunity of hearing and the same is therefore in gross violation of principles of natural justice. (c) Besides Investment activities, the entity engages in momentum play, by trading in shares & securities having sudden price and volume action, to make profit out such trading bets. (d) They have been trading in the securities market, in the ordinary course, devoid of any manipulative intent, independently based on his commercial wisdom and analysis and out of their own funds. They have never defaulted in meeting their payment or delivery obligations to the broker. (e) The entity has denied that they are exit providers and are not related/ connected to M/s Pine Animation ltd or M/s Compass Distributors Pvt Ltd or their directors. Further, has submi....
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....ge in beneficial ownership of shares, so far as their trading is concerned. Their trades were insignificant to influence the volume during Patch 3. (m) Therefore, the directions against the entity in the ex-parte order may be set aside. 7. Divya Drishti Merchants Pvt. Ltd.: (a) The entity has denied all the allegations made against him in the ex-parte order. (b) The entity has stated that the said Ex parte Order has been passed without granting an opportunity of hearing and the same is therefore in gross violation of principles of natural justice. (c) Besides Investment activities, the entity is engage in momentum play, by trading in shares & securities having sudden price and volume action, to make profit out such trading bets. (d) He has been trading in the securities market, in the ordinary course, devoid of any manipulative intent, independently based on his commercial wisdom and analysis and out of his own funds. The entity has never defaulted in meeting his payment or delivery obligations to the broker. (e) It was stated by the entity that he has been alleged to be part of the Pine Group solely by virtue of his tr....
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.... or that is related to any of the allottee. It is denied that he has made any gains vide his trading. The content of the order is based on mere apprehension, presumption and assumption and any conclusion drawn based on same would lead to erroneous result. (m) The shares of Pine were acquired by him from his own funds. It is denied that there has been no change in beneficial ownership of shares, so far as his trading is concerned. (n) Therefore, the directions against the entity in the ex-parte order may be set aside 8. Divya Drishti Traders Pvt. Ltd. (a) The entity has denied all the allegations made against him in the ex-parte order. (b) The entity has stated that the said Ex parte Order has been passed without granting an opportunity of hearing and the same is therefore in gross violation of principles of natural justice. (c) Besides Investment activities, the entity is engage in momentum play, by trading in shares & securities having sudden price and volume action, to make profit out such trading bets. (d) He has been trading in the securities market, in the ordinary course, devoid of any manipulative intent, indepen....
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....his own funds. It is denied that there has been no change in beneficial ownership of shares, so far as his trading is concerned. (l) Therefore, the directions against the entity in the ex-parte order may be set aside 9. Ridhi Vincom Pvt. Ltd.: (a) The entity has denied all the allegations made against him in the ex-parte order. (b) The entity has stated that the said Ex parte Order has been passed without granting an opportunity of hearing and the same is therefore in gross violation of principles of natural justice. (c) Besides Investment activities, the entity is engage in momentum play, by trading in shares & securities having sudden price and volume action, to make profit out such trading bets. (d) The entity has been trading in the securities market, in the ordinary course, devoid of any manipulative intent, independently based on its commercial wisdom and analysis and out of its own funds. The entity has never defaulted in meeting its payment or delivery obligations to the broker. (e) The entity has stated that it has been in the order based on the fact that there was off market transaction with Spark Commodeal. C....
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....d that the alleged matching has occurred in the ordinary course, in the anonymous order matching system of the BSE. (m) The entity has denied that it has acted in league/concert with anybody. It is further denied that it has provide any LTCG benefit to any of the allottee or that is related to any of the allottee. It is denied that it has made any gains vide his trading. The content of the order is based on mere apprehension, presumption and assumption and any conclusion drawn based on same would lead to erroneous result. (n) The shares of Pine were acquired by the entity from its own funds. It is denied that there has been no change in beneficial ownership of shares, so far as its trading is concerned. (o) Therefore, the directions against the entity in the ex-parte order may be set aside. 10. Linus Holdings Ltd.: (a) The entity has denied all the allegations made against it in the ex-parte order. (b) The entity has stated that the said Ex parte Order has been passed without granting an opportunity of hearing and the same is therefore in gross violation of principles of natural justice. (c) Besides Investment activitie....
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.... (m) The entity has stated that of the 5,73,86,531 shares sold by preferential allotees and promoter related entities, only 2,82,65,949 shares matched with the alleged 'Exit Provider' and that there is no mention of the other entities who have provided exit for 2,91,20,582 shares to the preferential allotees and promoter related entities and the reason for exempting such entities has nowhere been spelt out. (n) The entity has submitted that it has been in the order based on the premises that some portion of shares bought by the entity matched with that of sell trades of preferential allottees/promoter related entities. The entity further submitted that the alleged matching has occurred in the ordinary course, in the anonymous order matching system of the BSE. (o) The entity has denied that it has acted in league/concert with anybody. It is further denied that it has provided any LTCG benefit to any of the allottee or that is related to any of the allottee. It is denied that it has made any gains vide its trading. The content of the order is based on mere apprehension, presumption and assumption and any conclusion drawn based on same would lead to erroneou....
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....ities who were carrying out trading in that period. j) The entity has denied that it is part of the alleged 'Exit Providers' and have provided exit to any person. In addition, it has no common address, common directors/ shareholders with Pine or with any of the preferential allottees. k) The entity has denied that ite has misused the stock exchange mechanism to generate fictitious LTGC since no LTGC was accrued as all transactions relating to the purchase and sale of the shares of Pine by done within a time span of one year l) SEBI has taken action against him without giving a chance to explain its position which is in gross violation of principles of natural justice, equity and fair play. m) Therefore, the entity has requested for lifting the ban on him. 12. S N Srinivasan: a) The entity has repeatedly sought time to submit written reply. However, further reply has been submitted by the entity. 16. I have considered the allegations levelled against the Noticees in the interim order, their replies/written submissions and other material on record. I note that in the instant case, the directions issued against the Noticees are ....
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.... taken are of an interim nature pending investigation or enquiry. Ad-interim orders may always be made ex-parte and such orders may themselves provide for an opportunity to the aggrieved party to be heard at a later stage. Even if the interim orders do not make provision for such an opportunity, an aggrieved party have, nevertheless, always the right to make appropriate representation seeking a review of the order and asking the authority to rescind or modify the order. The principles of natural justice would be satisfied if the aggrieved party is given an opportunity at the request. " 18. Thus, considering the facts and circumstances of a particular case, an ad-interim ex-parte order may be passed by SEBI in the interests of investors or the securities market. It is pertinent to note that the interim order in the present case was passed under the provisions of sections 11(1), 11(4) and 11B of the SEBI Act. The second proviso to section 11(4) clearly provides that "Provided further that the Board shall, either before or after passing such orders, give an opportunity of hearing to such intermediaries or persons concerned". Further, various Courts, while considering the aforesaid ....
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....isional hearing can be a substitute for pre-decisional hearing. It is a settled law that unless a statutory provision either specifically or by necessary implication excludes the application of principles of natural justice, the requirement of giving reasonable opportunity exists before an order is made. The case herein is that by statutory provision, principles of natural justice are adhered to after orders are passed. This is to achieve the object of SEBI Act. Interim orders are passed by the Court, Tribunal and Quasi Judicial Authority in given facts and circumstances of the case showing urgency or emergent situation. This cannot be said to be elimination of the principles of natural justice or if ex-parte orders are passed, then to say that objections thereupon would amount to post-decisional hearing. Second Proviso to Section 11 of the SEBI Act provides adequate safeguards for adhering to the principles of natural justice, which otherwise is a case herein also..." 20. I, therefore, find that the interim order in this case was in accordance with provisions of law envisaged in the SEBI Act and was not in disregard of the principles of natural justice. It is also pertinent to ....
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....India. In this regard, it is noted that Article 19 (1) (g) guarantees to all citizens the right to practice any profession or to carry on any occupation, trade or business. However, at the same time it is pertinent to mention that this freedom is not uncontrolled as clause (6) of Article 19 authorises legislation which imposes reasonable restrictions on this right in the interest of general public. It is a matter of common knowledge that Securities and Exchange Board of India, 1992 is a special Act enacted by the Parliament conferring on SEBI the duty to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit. In the present case, the restraint order has been passed by SEBI in exercise of the powers conferred upon it by law and towards fulfilment of the duties cast under the SEBI Act. As noted in the interim order, the conduct of the Noticees has been found to be prima facie fraudulent and the Noticees have therefore been restrained from accessing the securities market and dealing in securities till further directions. In view of the above, I find that the restraint order against th....
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....ons of the Noticees in this regard. 26. Having dealt with the preliminary contentions as above, I now proceed to deal with the specific submissions made by the different categories among the Noticees. Pine and its Directors 27. Pine has contended that it is evident from its financials that it had made profit after the preferential allotment with the inflow of further capital. Further, it had with the new investments made, maximised the shareholders wealth by properly utilising their funds in line with its business activities and that they have in no way mis-utilised the shareholder's funds. Pine has further contended that investors/shareholders of the company are in no way connected/associated with it or its directors under any arrangement or scheme and that they have invested in its shares on their own will and after going through the company's profile and its future plans. I note that Pine has further contended that neither the company nor its directors have benefitted in any manner with respect to the trading in the shares of the company and that the directors have just acted in their capacity of directors and have done all acts and business transactions within the purv....
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....bserved that the annual reports do not discuss the factors that contributed to such exponential increase in the revenue from operations. The "Management Discussion and Analysis" indicated that during the relevant period, the animation industry faced various challenges due to global and economic slowdown and increasing rates of interest rates. When the animation industry was facing various challenges and the annual reports are silent about the reasons for the substantial increase in the revenue from operations, it gives rise to a doubt, whether the reported income figures are genuine. This matter is matter of investigation. Pine has failed to give any plausible explanation as how the transfer of the proceeds of preferential allotment to various entities as observed in the interim order, can be said to be utilisation of funds for the disclosed purposes. It has also failed to explain as to how the entire modus operandi including the preferential allotments and stock -split as alleged in the interim order was genuine and not part of device, plan as brought out in the interim order. I, therefore, reject the contentions of the company in this regard. 29. Admittedly, after revocation o....
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....is to exit of preferential allottees at a very high price could not have been fructified without the involvement and co-operation of the directors of Pine. I, therefore, do not find any merit in the contention of the directors in this regard. 32. I further note that one of the directors, viz; Mr. Rajagopalan Nagaraja Sharma has submitted that he had tendered his resignation to the Board, immediately on change of ownership of the company, but was asked to continue for a short time till the new Board of Directors was formed. However, finding his name still appearing as director of the company in January 2013, he had written to the Registrar of Companies, Tamil Nadu, Chennai on February 04, 2013, informing them about his resignation in July 2012. I note that Mr. Sharma has not produced any document to substantiate that the company had received the resignation letter submitted by him in July 2012. Further, the Annual Report of the company for the year ending March 2013, continued to show Mr. Sharma as one of the directors of Pine and also mentions about his appointment as Executive Director for a period of one year from 2nd September 2013 to 1st September 2014. I therefore, do not a....
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....and one of the directors Mr. Nagaraj Sharma, who have made submissions that Nimesh S. Joshi and Hitesh N Kawas had got in touch with them, asking if the promoter shares can be acquired. I also note that the said promoter related entities have not provided any documents in support of their claim of having given loans to the promoters. Accordingly, at this stage, I do not find any merit in the submissions made by the said promoter related entities and reject the same. 36. I note that some of the promoter related entities have also submitted that interim order is discriminatory in as much as only those entities who have earned over Rs. 1,00,00,000 are alleged to have partaken in the wrongdoing and other entities, have, for reasons unexplained, been excluded from liability. Further, the entities have also submitted that for the purpose of including them in the shortlisted group, their sales have been incorrectly clubbed together, while individually, they have sold shares for less than Rs. 1 crore. In this regard, I find it important to mention that the interim order clearly mentions that detailed investigation in the matter is in progress. The fact that certain Promoter Related Enti....
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....ntioned in the interim order, except the Promoter Related Entities, would devise the impugned plan/scheme for the benefit of the entities who are neither party to the plan/scheme nor have any complicity in the plan with others. The facts and circumstances of this case, in my view, prima facie indicate that the transfer of these shares in physical form was under a prior arrangement for the ulterior motive or the end objective of the scheme that has been brought out explicitly in the interim order. In view of the foregoing, I reject the contentions of Promoter related entities in this regard. 38. I further note that some of the promoter related entities namely - Ms. Bina Devi Dhanuka, Mr. Mayank Dhanuka, Mr. Umang Dhanuka and Ms. Rajkumari Dhanuka, who are the directors of Bihariji Constructions have with respect to the fund transaction between Pine and Bihariji Constructions, submitted that the loans were advanced by Pine to Bihariji Constructions and that they were not aware of and/or connected with the source of funds used by Pine to advance the loans to Bihariji Constructions and that therefore, the said directors of Bihariji Constructions cannot be classified wrongly as Promo....
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....al basis; (c) the company allots shares to the preferential allottees. 41. The preferential allottees, in this case, have failed to substantiate their claim that they made investment in preferential allotment and were not known to the company or its promoters/directors and/or had no nexus, connection with them in the preferential allotment. When asked during personal hearings to the respective preferential allottees they have failed to give any plausible explanation as to how the company could make allotment to them if they were not known to it or its promoters/directors and if they had no nexus/connection with them. The preferential allottees have claimed that they were approached by certain individuals with a presentation and were asked to make investment in the preferential allotment but they have failed to explain as to how only they were selected by the Company for making presentation to them individually. The fact that such presentations were made to few preferential allottees, individually, itself suggests existence of prior understanding and nexus between the company, its promoters/directors and the Noticees. 42. It is well accepted position that a preferenti....
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....e to reiterate para 39 of the interim order which reads as under: "39. ...I note that currently a major portion of the shareholding (around 65.93%) lies with the Preferential Allottees and Promoter related entities . It is further noted that as on May 06, 2015, the allottees are still holding 18,03,34,724 shares of Pine that were allotted to them in the aforesaid preferential allotments. Further, the promoter related entities who bought shares from promoters are holding 23,00,645 shares of Pine as on May 06, 2015.The price of the scrip as on May 06,2015 was Rs.24/- per share. Thus, the preferential allottees and promoter related entities who are still holding these shares, may potentially book a bogus tax exempt LTCG of approximately Rs.420 crore. Unless prevented they may use the stock exchange mechanism in the same manner as discussed hereinabove for the purposes of their dubious plans as prima facie found in this case. In my view, the stock exchange system cannot be permitted to be used for any unlawful/forbidden activities." 45. Some of the preferential allottees have contended that they are Private Limited Companies and provisions of Section 11JB of Income Tax Act ....
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....uld be considered as acquisition date and period of holding will have to be computed from then on. Thus, the sale proceeds received by Mr. Pankaj Goshar on the sale of shares received by him as a gift from his sister would have been eligible for claiming exemption from tax on LTCG. 48. I further note that prima facie the fact remains that the preferential allotment made to Ms. Lata Shah and the act of gifting of shares to her brother Mr. Pankaj Goshar all form a part of the modus operandi wherein the whole scheme of preferential allotment was orchestrated to enable the allottees to book illegitimate profits, avail fictitious/bogus LTCG on these profits and convert their unaccounted income into accounted one by misusing the securities market system in the manner as mentioned in the said interim order. In these facts and circumstances, I prima facie do not find any merit in the contention of the above mentioned Ms. Lata Shah in this regard and reject the same. 49. I note that some of the preferential entities, namely, Mr. Anmol Prakash Babani, Mr. Kunal Ramesh Babani and Mr. Sharan Mohan Babani have submitted that they have no nexus with the exit providers as none of the shares....
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.... to the price rise. From LTP analysis, it was observed that price of the scrip increased from Rs.47.2 to Rs.100.6 mainly through first trades in 19 instances. 53. The Noticees have contended that they have no connections with any of the other entitles mentioned in the interim order. Further, the Noticees have also contended that they have made miniscule investments in the scrip of Pine and subsequently sold off the shares yielding minimal profits. 54. Without going to any further discussion on this subject matter, based on common sense and knowledge, I am of the view that the role played by the entities trading in the Patch I to artificially increase the price during the lock in period in order to give huge profitable exit to preferential allottees and promoter related entities as brought out in the interim order of May 8, 2015 needs to be seen holistically. This is further strengthened by the fact that restrictions have been imposed on some of the LTP contributors in several interim orders issued by SEBI on the same modus operandi. Hence, the role played by the Noticees in the Patch 1 need to be seen in the backdrop of scale and size of operations undertaken by helping the b....
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....alysis of order book made after the passing of the interim order, it was observed that during the price increase period i.e. patch 1, there were total of 119 buy orders for 21,420 shares placed by 25 buyers. Of these 21,420 shares, buy orders for 16,740 shares constituting 78.15% of the order book were placed by the 6 LTP Contributors as brought out in the table above. From the data it is also observed that, they have placed buy orders with average quantity per order in the range of 47 shares to 461 shares. From the above trading pattern of the noticees, it was observed that the contribution to price rise by top 3 LTP Contributors is individually quite high (around 15%). In this background, I reject the submissions of top 3 LTP Contributors that their trading did not have an impact on the price rise of the scrip of Pine. 58. Further, order log analysis of top buy-side order book (in terms of all order placed in the order book) was carried out and is tabulated as under: Table 8: Name of the entity PAN No. of orders placed Sum of shares placed in all orders % of order book Avg qty per order Trade to Order ratio Sanjay Kumar Shah AJSPS5543F 14 64....
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....hereby controlled the supply of shares. Such selling behavior also exhibits suspicious trading in spite of a huge demand for the shares. Although the role of buyers in creating such demand cannot be outrightly ignored, the facts and circumstances of each case need to be holistically examined. In this case, from the material available on record, I note that the Noticees are not connected / related to the company or its promoters or directors or with any entities mentioned in the interim order. The Noticees have demonstrated that they had placed the buy orders seeing huge demands on previous trading day as against thin volume traded and purchase quantity was always far less than the traded volume. Further, they had placed impugned orders in the scrip without foreseeing any manipulation or being a party to the scheme described in the interim order. They have also demonstrated that they had purchased only 1181 shares out of his own funds through 31 trades without being party to the scheme in question. I do not find sufficient material at this stage to attribute role of the some of the LTP contributors in the dubious plan, scheme or devices and to continue the directions issued in the i....
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....se need to be holistically examined. Exit Providers 65. I now proceed to deal with submissions of Exit providers on merit. 66. Exit providers have contended that SEBI has erroneously named them as exit providers and clubbed them as Pine Animation Group entities and they have not done any wrong-doing. In this regard, I would like to reiterate para 19 of the interim order which reads as under: "The transactions wherein the Exit Providers bought most of the shares sold by the Preferential Allottees and Promoter related entities cannot be just a coincidence particularly when sellers have nexus with Pine and its promoters/directors by virtue of being Preferential allotees/Promoter related entities and other factors mentioned in Annexure-A. It is interesting to note that in Patch 1, 92.52% of the share capital of Pine was with the Preferential Allotees and the Promoter related entities. From the analysis presented for Patch 1 and 2, it was established that the shares of Pine were not in demand by the general investors of the market and saw very low volume on most of the trading days and hence could not have commanded the price as observed in Path 3. In any market, a sud....
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....di or scheme in question. 69. Some of the Exit providers have contended that they had not acted as counterparties to the preferential allotees and the promoter related entities. In the instant case, exit providers had acted as buyers when the preferential allottees and the promoter related entities were selling the shares of Pine after the lock-in period. It is apparent from the trading pattern that these Exit providers had bought shares at high prices. Such trading behaviour belies any economic rationale and indicates existence of premeditated arrangement among the Noticees. Moreover, as discussed in the interim order, had these Noticees not traded/dealt in the scrip of Pine during the relevant time, it would not have been possible for the preferential allotees and the promoter related entities to offload/sell in large numbers at such price in such a stock that has hardly any intrinsic value. 70. In view of the above facts and circumstances, I find that exit providers had prima facie acted in concert/league and misused the exchange platform to provide exit to the preferential allotees and promoter related entities at a high price thereby enabling these preferential allotees ....
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....163B, M. G. Road, Kolkata 700 007. It shows that they are sharing address and also known to each other. Therefore, I reject this contention. 74. With regard to the contention made by Linus Holdings Ltd., that there have been no fund transfers between Alishan Estate Pvt. Ltd and Duari Marketing Pvt. Ltd., it is observed from the bank statement that Alishan Estate Pvt. Ltd had received Rs. 10 lac from Duari Marketing Pvt. Ltd. on September 09, 2014. In this regard, I note that this fund transaction in itself is an indication that they are known to each other as the said transfer was done on one to one basis and in virtue of Linus Holdings Ltd. and Alishan Estate Pvt. Ltd., having a common director, it shows the connection between Linus Holdings Ltd. and Duari Marketing Pvt. Ltd. In addition to their connection, the trading of these connected entities in the same scrip i.e Pine at the same time and in similar pattern as other entities of Exit Provider Group signifies their role in the scheme in question that led to misuse of securities market system. In view of the same I find no merit in the contention of Linus Holdings Ltd. 75. With regard to the contention of BSR Finance and ....
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....riod. Thereafter, the preferential allotees and the promoter related entities were able to offload their shares at high price, continuously for a period of around 13 months. In any normal market, a sudden supply if not matched by similar demand leads to price fall. In this peculiar case, the preferential allotees and the promoter related entities were able to offload shares at high price because of the presence of Exit Providers who acted as buyers when the preferential allotees and the promoter related entities were selling their shares. In the whole process, artificial demand was created by the entities of the Exit Providers so as to absorb the supply from the preferential allotees and the promoter related entities. Thus as a result of the trading between preferential allotees and the promoter related entities and the Exit Providers in patch-3, the average trading volume in the scrip increased astronomically to the extent of 4433 times. Such increase in volume was mainly on account of matched trading amongst preferential allotees, promoter related entities and the Exit Providers. This artificial volume in the scrip created by the preferential allotees, promoter related entities a....
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.... S.No. Name of the entity PAN Company: 1 Pine Animation Limited AAECM0267A Directors of Pine Animation Limited: 2 Nagaraja Sharma Rajagopalan AABPN3336R 3 Deepak Prakash Rane AMCPR0635A 4 Lalji Ramraj Yadav AAPPY0422P 5 Mandar Subhash Palav AOMPP1671C 6 Nirmal Pragjibhai Jodhani AJZPJ7049J 7 Priyesh Prakash Pethe APUPP9069B 8 Santosh Kumar BMKPK5626B Promoters/Directors of the Promoter Companies: 9 First Entertainment Private Limited AABCF0975D 10 Unique Image Production Pvt. Ltd. AAACU9294K 11 Murali Shanmugam AEZPM6900L 12 Prabhu Sekar ARUPP1577G 13 Sekar Vasu ADRPV2013N Promoter Related: 14 Manisha Narpatkumar Chopra ACTPC4078P 15 Deepak Agarwal HUF AAGHD3018R 16 Govind Agarwal HUF AADHG0808H 17 Heena Hitendra Nagda ABVPN8122C 18 Darshan D Bhanushali AGKPB3602K 19 Alok Navinchandra Kubadia ABFPK6567J 20 Bina Devi Dhanuka AEZPD5474N 21 Mayank Dhanuka ADLPD5568J 22 Neha Dhanuka ADOPB3260E 23 Nikunj Dhanuka ADNPD6220D 24 Rajkumari Dhanuka ADUPD7020N ....
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.... AABPM6332L 80 Priyanka Miglani ARIPS3477L 81 Ashok Jain HUF AADHA7870F 82 Prakash Hiralal Jain HUF AAHHP7899B 83 Kaushal Kanhayalal Bagadia AADPB1550B 84 Poonam Kaushal Bagadia AAEPS7956D 85 Arvind Chhotalal Morzaria AEKPM9977L 86 Anil Kumar Chamanlal ADZPC5979N 87 Jay Hansraj Chheda AJLPC9910H 88 Neha Bansal ADSPA3332J 89 Sadhna Rani ABHPA9244J 90 Savita Bansal AEJPB6903J 91 Monesh Israni AAJPI8348E 92 Sunny Mirchandani ALVPM6130D 93 Nareshkumar Kishanlal Saraf AALPS7124C 94 Peeyush Makhija BGGPM9415G 95 Damji Anandji Rambhia ADPPR2047A 96 Kantilal Lalji Shah AAIPS4820L 97 Kishor Pranjivan Mehta ACMPM6181A 98 Rajesh C Mehta AAZPM0573H LTP Contributors: 99 Prem Lata Nahar AFAPN8764M 100 Dhirendra Kumar Gupta and Sons HUF AAFHD9092L 101 J M S Financial Services Ltd. AAACJ8428J 102 Nellakkara Raghunath AESPN9474K 103 Sanjay Kumar Shah AJSPS5543F Exit Providers: 104 Vibgyor Financial Services Pvt Ltd AAACV8378B 105 Bazigar Trading Pvt Ltd AABCB3....
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....nterim ex parte order dated May 08, 2015 as against the aforesaid 122 Noticees except that they can:- (a) enter into delivery based transactions in cash segment in the securities covered in NSE Nifty 500 Index scrips and/ or S&P BSE 500 scrips; (b) subscribe to units of the mutual funds including through SIP and redeem the units of the mutual funds so subscribed; (c) deal in Debt/Government Securities; (d) invest in ETF (e) avail the benefits of corporate actions like rights issue, bonus issue, stock split, dividend, etc.; (f) tender the shares lying in their demat account in any open offer/delisting offer under the relevant regulations of SEBI; 84. Further considering business and personal exigencies and liquidity problems submitted by the restrained entities I allow them further relaxations/reliefs as under:- (a) They are permitted to sell the securities lying in their demat accounts as on the date of the interim order, other than the shares of the companies which are suspended from trading by the concerned stock exchange, in orderly manner under the supervision of the stock exchanges so as not to disturb the marke....