TaxTMI 
TaxTMI 
2021 (6) TMI 1190
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.....10 and closed at Rs. 77.15. Pursuant to the investigation, SEBI inter alia alleged that the following 18 entities who were observed to be connected to each other viz. Chandrakant B Shah, Ajay Ravindra Shah, Santosh Vasant Bhelekar, Saurabh Kumar Rasiklal Gandhi, V and R Yarns Private Limited, Kinita Real Estate Private Limited, Gajpal Buildinfra Private Limited, Grantview Properties Private Limited, Monaecum Properties Private Limited, Jasmin Susilkumar Bajoriya, Indivar Traders Private Limited, Abijah Real Estate Pvt Ltd, Jignesh Chandrakant Shah, Moss Traders Pvt Ltd, Ailish Traders Pvt Ltd, Jeshna Mulltitrade Pvt Ltd, Addo Constructions Pvt Ltd, Sunlight Commotrade Pvt Ltd manipulated the scrip price of AVIL and created a misleading appearance of trading in the scrip during Patch 1 by such trades in violation of Regulations 3(a)(b)(c)(d), 4(1), 4(2)(a) and 4(2)(e) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (hereinafter referred to as PFUTP Regulations, 2003). Accordingly, adjudication proceedings was initiated against the abovementioned 18 entities under Section 15HA of the SEBI Act, 1992 for the aforesaid alleged violations. Subsequently, ....
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....riod January 1, 2009 to April 24, 2015 (hereinafter referred to as 'Investigation Period').The entire price movement in the scrip of AVIL during IP was examined in the following patches: (i) Patch 1 (Price rise): January 01, 2009 to August 1, 2011 (ii) Patch 2 (Price fall): August 2, 2011 to December 30, 2011 (iii) Patch 3 (Price fall): January 2, 2012 to April 24, 2015(December 31, 2011 and January 1, 2012 being trading holidays) Period Dates Open (Rs) Close (Rs.) Low (Date) High (Date) Avg. no. of (shares) traded daily during the period. Pre Investigation Period 01/12/2008-31/12/2008 Price 1.60 1.79 1.60 (01/12/2008) 2.00 (12/12/2008) 45,193 Volume 3085 3300 2500 (29/12/2008) 2,53,300 (23/12/2008) Investigation Period Patch-1 (01/01/09-01/08/11) Price 1.80 77.15 1.44 (09/01/2009) 87.10 (03/03/2011) 5,74,050 Volume 1400 6,77,184 290 (06/01/2009) 28,07,494 (19/03/2010) Patch-2 (02/08/11-30/12/11) Price 77.50 0.66 0.66 (30/12/2011) 77.85 (02/08/2011) 3,83,723 Volume 10,86,554 5,63,507 108 (23/09/201....
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....r. The LTP contribution of these 52 entities as a buyer is given as under: S. No. All trades LTP Diff. >0 LTP Diff. < 0 LTP Diff. =0 % of positive LTP to Total Market positive LTP Entity Name Net LTP Sum of Qty No of trades LTP QTY traded No of trades LTP QTY No of trade QTY No of trade s 1. AILISH TRADERS PRIVATE LIMITED 101.85 17824652 3728 190.65 4760774 831 -88.8 1288063 578 11775815 2319 3.34 2. AJAY RAVINDRA SHAH 97.7 213374 321 102.2 71655 205 -4.5 65558 25 76161 91 1.79 3. GAJPAL BUILDINFRA PRIVATE LIMITED 52.6 8279096 6230 277.05 2023757 1248 -224.45 1166315 2159 5089024 2823 4.86 4. MONAECUM PROPERTIES PRIVATE LIMITED 37.5 2734395 1484 78.35 818841 427 -40.85 416826 368 1498728 689 1.37 5. CHANDRAKANT B SHAH 31.34 14102139 3054 77.45 2534413 665 -46.11 1004071 443 10563655 1946 1.36 6. JESHNA MUILTITRADE PVT LTD 26.3 3660960 3801 257.3 8....
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....NAROIS IMPEX PRIVATE LIMITED 6.15 2280900 443 13.85 760378 106 -7.7 146995 51 1373527 286 0.24 24. ETHAN CONSTRUCTIONS PRIVATE LIMITED 6 1796710 369 16.9 565757 88 -10.9 165629 64 1065324 217 0.30 25. MOSS TRADERS PVT LTD 5.94 3172034 597 15.69 498729 114 -9.75 212926 69 2460379 414 0.28 26. MAGAN MERCANTILE PVT LTD 3.8 627724 85 3.85 248527 14 -0.05 200 1 378997 70 0.07 27. MOONLIGHT SOLUTIONS PRIVATE LIMITED 3.7 293350 119 5 84203 29 -1.3 46651 12 162496 78 0.09 28. C AND K REALTORS PRIVATE LTD. 3.7 572349 147 6.25 181716 31 -2.55 90602 19 300031 97 0.11 29. ROHO REAL ESTATE PRIVATE LIMITED 3.25 3421798 683 11.35 788296 110 -8.1 186767 68 2446735 505 0.20 30. MERITORIOUS REALTY PRIVATE LIMITED 2.6 1033483 141 2.8 251989 21 -0.2 1925 2 779569 118 0.05 31. ADILA TRADERS PRIVATE LTD 2.3 1738003 292 5.2 335659 42 -2.9 125362 29....
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....MARISHA REAL ESTATE PVT LTD 0.2 555195 80 0.5 67869 7 -0.3 12301 3 475025 70 0.01 50. INTERTICK DEVELOPERS PRIVATE LIMITED 0.2 132850 24 0.25 59704 3 -0.05 9950 1 63196 20 0.00 51. ROLL ON ADVERTISMENT AND MARKETING SERVICES PVT LTD 0.2 290400 42 0.35 29977 3 -0.15 25513 2 234910 37 0.01 52. WESTLITE INFRA PROJECTS PVT LTD 0.1 75000 15 0.1 10249 2 - - - 64751 13 0.00 Group Total 612.89 145569810 43882 1923.58 33108889 9152 - 1310.69 11572684 10040 100888237 24690 33.75 Among Group -43.73 26228873 5007 91.0 5489637 677 -134.73 2875190 1052 17864046 3278 1.60 Market Total 75.35 367391854 138496 5704.21 79925429 29074 - 5628.86 52193017 31582 235273408 77840 100.00 6. From above table, it is alleged that suspected group entities had contributed to net positive LTP of Rs. 612.89 during patch 1 of IP. Their total contribution was 33.75% of market positive LTP contribution as....
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....NT BHELEKAR* 191 191 40.05 0.70 5. AMVPG6042M SAURABH KUMAR RASIKLAL GANDHI* 96 89 17 0.30 6. AAGCM5765M MONAECUM PROPERTIES PRIVATE LIMITED* 45 45 14.4 0.25 7. AAICA1021G AILISH TRADERS PRIVATE LIMITED* 35 36 13 0.23 8. AJKPS6764L CHANDRAKANT B SHAH* 8 9 2.12 0.04 9. AADCK7739G KINITA REAL ESTATE PRIVATE LIMITED* 5 5 1.25 0.02 10. AADCV1473C V AND R YARNS PRIVATE LIMITED 1 1 0.55 0.01 11. AKBPB3342D JASMIN SUSILKUMAR BAJORIYA 1 1 0.4 0.01 12. AAFCM1942F MOSS TRADERS PVT LTD 1 1 0.1 0.00 13. AADCG0799G GRANTVIEW PROPERTIES PRIVATE LIMITED 1 1 0.05 0.00 Grand Total 983 991 298.52 5.23 *entities which are common in the list of buyers as well as counterparties. 10. It is alleged from the trading pattern of the above group (13 entities) that they were not acting as genuine buyers and had no bona fide intention to buy because in-spite of sufficient sell orders with abundant quantity being available in the market, they placed buy orders for only 1 ....
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.... this junction it will be a burden on the Noticee. The impugned transactions pertain to the period September 2009, June to August 2010 and November 2010. Whereas the SCN is issued on 08.02.2018 and hence there is a delay of more than 7 years in issuance of SCN which delay is not even explained. In the matter of HB Stockholdings Limited versus Securities and Exchange Board of India (Appeal No. 114 of 2012), Hon'ble SAT while observing that 'the alleged trades took place in the year 2000. The first show cause notice itself was issued by the Respondent on September 2, 2005 i.e. after a period of more than five years had already lapsed. There is not even a whisper in the impugned order to explain away such a long delay in issuing the SCN' observed that, "At this point we find it pertinent to note that human memory has a short shelf life. Allowing matters to go on and on for years together by the Respondent serves no purpose, rather it risks loss of evidence such as important documents which may get destroyed while the issue gathers dust. Such systemic failures occur to the disadvantage of all parties concerned and lead to consequences such as genuine violators being allowed to function....
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....of SEBI, the Tribunal reduced the debarment from ten years to seven years for the partial disclosure of information in the prospectus. In the ultimate analysis, the order of debarment was for violation of partial disclosure in the prospectus and not for violation of PFUTP Regulations. The AO while imposing the penalty 3 has not factored this debarment while fixing the quantum of penalty. Further, in our opinion, the factors contemplated under Section 15J was also not considered by the AO in the right perspective." Hereto annexed and marked as Annexure "B" is a copy of the said order dated 02.08.2019. 5. The Noticee states that he is 83 years old and is not actively trading in the securities market since 2012. Thus, any penalty levied at this juncture i.e. after a period of 10 years from the settled impugned transactions will be a burden on the Noticee. 6. The Noticee states that the following are the details of trades of 8 days on which days certain trades of the Noticee are considered objectionable towards positive LTP : Date Total quantity buy Qty of shares alleged towards +LTP LTP (Rs) Market volume 24.09.2009 65151 ....
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..... No other role, involvement or participation with respect to the trades of these 2 companies is shown or established. 79 Santosh Vasant Bhelekar Off market transfer with S No 78 The quantity of shares and the day on which the said off-market transaction is executed is not even mentioned in the SCN and the Noticee requests SEBI to provide with the details of these off-market transfers. As per the Noticee, there were no off-market transaction that took place with Santosh Bhelekar The Noticee states that for the purpose of establishing connection, 79 entities are sought to be connected. The Noticee states that for the purpose of positive LTP allegation, the investigation was boiled down to 52 entities. Further, the investigation was boiled down to 18 entities for the purpose of positive LTP allegation by entering into trades of 1 or 2 shares. The Noticee states that SEBI has been fumbling and faltering in deciding the parameters for the purpose of charge. Thus, it appears that discretion is not used judiciously and judicially. The Noticee denies that the Noticee was a part of the group as alleged or otherwise. The Noticee's trading was separate, indepen....
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....Total market volume : 36,73,91,854 shares Noticee's total buy volume : 1,41,02,139 shares (as per SCN) Noticee's alleged objectionable volume : 9 shares % of Noticee's alleged/objectionable volume to market volume: 0.0000024% Total number of trading days in investigation period: 1563 days Total number of trading days of Noticee's trades : 153 days Noticee's Total number of trading days of alleged LTP trades: 8 days Market Total positive LTP : Rs. 5704.21 Group total positive LTP ; Rs. 1923.58 Market total Net LTP / Price rise during the investigation period : Rs.75.35 Group total net LTP : Rs. 612.89 Total objectionable Positive LTP : Rs. 298.52 (LTP on account of trades of 1 or 2 shares) Noticee's alleged Pos LTP : Rs. 2.12 Further during Patch - 1, the total market net LTP / price rise was of Rs. 75.35 however the Group total net alleged LTP is Rs. 612.89. There is no analysis of the same given in SCN, in the absence of which the LTP analysis given by SEBI is incomplete and of no consequence thereof. Further in respect of 98....
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....of the Noticee is only 0.04% of the total market positive LTP. The Noticee states that there has been no connection established with the sellers with whom the abovementioned 8 trades got matched. Therefore there was no prior meeting of minds and the trading was system driven, technical and of no consequence to Noticee and counter-party. Date Buyer Name Seller Name Qty of shares alleged towards +ve LTP LTP (Rs) Remarks 24.09.2009 Chandrakant Shah Vishit Jain 2 0.37 The counterparty is not a notice to the SCN and No connection of whatsoever nature with the counter is alleged 21.06.2010 Chandrakant Shah Vicky Rajeshbhai Jhaveri 1 0.10 The counterparty is not a notice to the SCN and No connection of whatsoever nature with the counter is alleged 25.06.2010 Chandrakant Shah Suresh Nanalal Daga 1 0.15 The counterparty is not a notice to the SCN and No connection of whatsoever nature with the counter is alleged 30.06.2010 Chandrakant Shah Ajesh Kumar Verma 1 0.25 The counterparty is not a notice to the SCN and No connection of whatsoever nature with the counter is alleged 01.07.2010 ....
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....ransactions were already established in the market on the previous days which is analyzed as follows: Date Trade Rate (Rs) Remarks 25.06.2010 48.15 The rate was already established on 24.06.2010 and hence the alleged LTP of 15 paise (0.15) is of no significance and has not contributed into price rise 30.06.2010 47.65 The rate was already established on previous days and the scrip price was moving in the range of Rs. 47.1 to Rs. 49.8 since 24.06.2010 and hence the alleged positive LTP of 25 paise (0.25) is of no significance and has not contributed to price rise as such. 01.07.2010 47.3 The rate was already established on previous days and the scrip price was moving in the range of Rs. 47.1 to Rs. 49.8 since 24.06.2010 and hence the alleged positive LTP of 20 paise (0.20) is of no significance and has not contributed to price rise as such 08.07.2010 48.95 The rate was already established on previous days and the scrip price was moving in the range of Rs. 47.1 to Rs. 51.25 since 24.06.2010 and hence the alleged positive LTP of 30 paise (0.30) is of no significance and has not contributed to price rise as such. 06.08.2010 46.5 The ....
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....t aware of wrongdoings, if any, of others. (ii) The Noticee is 83 years old and penalty, if any, will be a burden on him. (iii) Delay in issuance of notice of more than 7 yrs from the date of impugned transactions has caused great prejudice to the Noticee. (iv) The Counter parties to the Noticee's trades are not a noticee to the SCN and are also not alleged as connected entities. (v) Noticee's positive LTP of Rs. 2.12 which is 0.04% of the market volume is treated objectionable. (vi) The Noticee is undergoing debarment based on the direction vide WTM's order dated 30.07.2020 (vii) There is change in beneficial ownership of the shares. (viii) The Noticee has not taken regulatory proceedings in a nonchalant manner. PRAYER In the circumstances, since this reply of the Noticee demolishes the allegations against him, it is humbly prayed that there is no case for any further actions in regard to the charges levied vide the impugned SCN and accordingly the matter be closed at your end. Vide email dated September 14, 2020, Authorized Representative (AR) of the Noticee requested to postpone the personal hearing in th....
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.... heard the learned counsel for the parties. It was contended that there was an inordinate delay in the issuance of the show cause notice for violation of provisions of PIT Regulations or of the LODR Regulations and therefore on the ground of inordinate delay the proceeding should have been dropped and no penalty could have been imposed. It was contended that the alleged violation occurred in the year 2010 whereas the show cause notice was issued in the year 2018 after eight years for which no explanation has been given. 6. Having considering the matter, we are of the view that there has been an inordinate delay on the part of the respondent in initiating proceedings against the appellants for alleged violations. Much water has flown since the alleged violations and at this belated stage the appellants cannot be penalized. It is alleged that disclosure under PIT Regulations was not made but similar disclosure was made by the appellant under SAST Regulations. Therefore, information was available on the Stock Exchange and therefore it cannot be said that the respondents were unaware of the alleged violations. Further, the purpose of disclosure was to make the market aware of ....
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....of the opinion that on account of inordinate delay the initiation of proceedings by issuance of the show cause notice which culminated into a penalty order cannot be sustained. The show cause notice and the impugned orders passed by the AO are quashed. Both the appeals are allowed. Further, Civil Appeal No. 8444 ~8445 of 2019 Securities and Exchange Board of India vs, Ashok ShivlalRupani& Anr, etc. filed by the SEBI against the aforesaid Order has been dismissed by the Hon'ble Supreme Court of India vide its Order dated 15th November, 2019 thus affirming the decision of the Hon'ble Tribunal. b) In the Appeals filed by various entities including Mr. Ashlesh Gunvantbhai Shah & Ors, the Hon'ble Tribunal vide its Order dated 31-01-2020 set aside the Order of the SEBI and allowed the Appeal. (Appeal Nos. 169, 171, 172, 231, 264, 266 and 277-281 of 2019). The said Order of the Hon'ble Tribunal specifically deals with the allegation of violations of PFUTP Regulations. My case is no different from the case dealt in the aforesaid Orders. The alleged trades belong to the year 2009 - 2011, SEBI took almost 7 -8 years to issue the present SCN. In this scenario, I....
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.... role that he played in the manipulation of the scrip of the company which was said to have been described in the investigation report. Without going into the issues sought to the raised in this appeal, we set aside the impugned order and remit the case to the adjudicating officer for a fresh enquiry in accordance with law." b. Order dated 19-02-2020 passed by the Hon'ble Tribunal in Appeal No. 414 of 2018 and Ors filed by Dhirajbhai V. Sanghvi HUF and Ors :- "The points urged are that the appellants were connected entities I and were acting in concert is perverse which no reasonable person would arrive at such a finding based on the material evidence on record. The increase in the price of the scrip was not on account of trading by the appellants but was on account of the performance of the company, when they made various corporate announcements over a period of time which factor has not been considered. The finding that the appellants had executed reversal trades is against the concept of reversal trades and the finding that the appellants had executed synchronized trades was misconceived in as much as there is no connection of the appellants with other entities....
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....market transaction from Indivar Traders Private Limited. Since a considerable time has been lapsed, I am not remembering under which circumstances I had executed the off market transactions with Indivar Traders Private Limited. Therefore, I am not in a position to make any submission on the said off market transaction. G. Furthermore, the entire SCN is based on purported connections with 212 +13 = 225 entities / persons out of which only 18 entities/person have been made Noticees to the SCN. Thus, the SCN exhibits a classic case of arbitrariness and discrimination. H. It is also pertinent to mention that evidentiary documents have not been provided to strengthen the allegation of connection amongst the alleged 79 suspected group entities. Thus, the details of connection provided in the Annexure C of the SCN are not legally tenable. I. The onus shall be on SEBI to prove as to whether I was connected to all the entities mentioned in the Annexure C and also Whether there was any prior meeting of minds or collusion with such entities to manipulate the price of the scrip of AVIL. However, no such exercise has been done by SEBI while issuing the present SCN. In....
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....alty, if any, should not be imposed against me under Section 15HA of the SCN. K. It is further submitted that all the trades executed by me were in normal course of business and no fraudulent or manipulative practice can be alleged against me for such trades. There is no evidence or finding in the SCN that I was colluding with the other alleged group entities or there was a prior meeting of minds to manipulate the price of the scrip of AVIL. The SCN has been issued based on mere surmises and conjectures without any iota of evidence against me based on which I have been alleged to have violated the said PFUTP Regulation. A charge of market manipulation is a very serious violation which should be supported with higher degree of evidence. Only based on farfetched connection the present SCN has been issued to me. L. has also been alleged in the SCN that I had bought shares in miniscule quantity ranging from 1-2 shares against existing sell orders for larger quantities. In this regard it is submitted that the lot size of the scrip of AVIL is 1 and therefore it is upon the buyer or seller to place the order quantity at his own wish and not depending on the counter party's order ....
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....bunal in the matter of KSL & Industries Ltd. vs. Chairman, SEBI (Appeal No. 9 of 2003) vide order dated September 30, 2003 has inter alia held that: - "A wild allegation of market manipulation, in particular the charge of fraudulent action unsupported with convincing evidence is not to be sustained. I fully agree with Shri Khambatta's submission in this regard that allegation of 'fraud' cannot survive on mere conjectures and surmises." c. Also in the matter of Kapil ChatrabhujBhuptani vs. SEBI (Appeal No. 95 of 2013) the Hon'ble Tribunal vide order dated 10" October, 2013 has inter alia held as follows: "7, Therefore in our considered opinion simple trading by the appellant in a particuiar scrip without any proved nexus between trades with the other so called group of brokers and clients is not per se punishable..." Noticee placed reliance on order passed by the Hon'ble SAT in the matter of HB Stock Holdings Ltd. vs. SEBI (Appeal No. 114 of 2012) dated August 27, 2013, Jagruti Securities Ltd vs SEBI dated October 27, 2008, Moneygrowth Investment and Consultants Pvt Ltd vs SEBI dated August 27, 2008 and M/s Nishith M Shah HUF vs SEBI dated January....
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.... the view that, for the sake of uniformity, Noticees Nos. 1 to 42 also be afforded the same treatment. 5.2 In view of the discussions above, I am constrained to observe that a warning would be reasonable for the Noticees in respect of the reversed circular, synchronized trades and the off market transactions alleged to have executed by them, in the scrip of Crazy Infotech." Your goodself ought to have followed the same principle of uniformity while passing the Interim Order against the said 18 alleged Noticees including myself. V. It is further pertinent to mention that SEBI had pick and choose data for making allegation against me. There were 25,278 trades were executed for 1 shares during the entire period of Investigation. Thus, the 154 trades of one shares executed by me had no significance influence to the market price of the scrip. W. It is further submitted that the alleged contribution to +ve LTP due to my trades were around 1.55% to net market positive LTP. The total of the 13 entities including mine of the alleged +ve net contribution to LTP was around 5.23%. The figure of 5.23% was not significant to influence the market equilibrium. X....
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....nd the group had contributed to positive LTP in the scrip of AVIL. vi. Regulation 4(2)(a) - Most of the trades executed by me were delivery based transactions. vii. Regulation 4(2)(e) - Trades executed by me have only contributed 1.55% to the LTP in the scrip of AVIL during Patch 1 period of the Investigation and they were genuine trades without any intention to manipulate the price of the scrip. In view of the submissions made hereinabove no violation of any provisions of SEBI (PFUTP) Regulations, 2003 can be made out against me. It is prayed that the captioned SCN/proceedings be dropped against me. I request your goodself to grant an opportunity of personal hearing before passing of any Orders in the matter and I crave leave to file Additional Submissions, if so required. Vide email dated September 22, 2020, Noticee was provided copy of relevant pages of Investigation Report and specific details of off market transfers undertaken by Noticee, as requested by Noticee vide its reply to the SCN. Personal hearing in the matter was conducted on September 22, 2020. In view of additional documents provided to the Noticee vide email dated September 22, 2020, another o....
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....a 11 (A) (iv) on page number 8 to 10 of the investigation report, the Ld. Investigating Officer observed that "in respect of 983 trades, the buy client (suspected group entities) had placed an order for 1 or 2 shares although a Sell Order if was existing for a larger quantity. Such trades had contributed to Rs. 289.52 towards positive LTP, ie. (5.23% of the net market positive LTP) .............................Thus, it was observed from the trading pattern of the above group (13 entities) that they were not acting as genuine buyers and had no bonafide intention to buy because in spite of sufficient sell orders with abundant quantity being available in the market, they placed buy orders for only 1 or 2 shares repeatedly in each transaction, in 983 instances, which were above the last traded price. In 49 instances the counterparties were also found to be connected. By these repeated trades, the entities, as a group, were instrumental in establishing a price higher than the last traded price and thus contributed to increase in scrip price with each of their trades. In view of the repeated nature of such trades by them, the culpability in increasing the price is established, H....
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....ansaction were of the later period and therefore several Noticees has given benefit of doubts as no other allegation of connection were made against them. I have no different case as of above. I am facing allegation for +ve LTP trades executed during Patch 1 period of the Investigation i.e. 01-01-2009 to 01-08-2011. My name is included in the whole matter as I was found connected with one of the Noticee through off market transaction. The alleged off market transactions belongs to later dates i.e. 27-092011 and 03-10-2011. Applying the same yardstick in my case, the alleged off market transaction is of subsequent to the trading, a benefit of doubt should be given to me also as the said off market transaction cannot be an adequate basis for connection with the Group / other Noticees in the scrip of the Company. In view of the submissions made hereinabove no violation of any provisions of SEBI (PFUTP) Regulations, 2003 can be made out against me. It is prayed that the captioned SCN/proceedings be dropped against me. I request your goodself to grant an opportunity of personal hearing before passing of any Orders in the matter and I crave leave to file Additional Submissions, if so req....
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....ember 07, 2020 and was granted opportunity of personal hearing on September 14, 2020. The letter dated August 25, 2020 returned undelivered from the address of Noticee 5 as mentioned in its aforesaid letter dated January 27, 2019. Vide publication dated November 30, 2020, Noticee was granted another opportunity of personal hearing on December 15, 2020. However, no communication was received from Noticee in this regard. 4.6. Kinita Real Estate Pvt Ltd (Noticee 6) The common SCN was served on the Noticee via SPAD. Vide letter dated February 02, 2019, Noticee acknowledged the receipt of SCN, and requested for the investigation report, trade log and order log for the day i.e. January 13, 2011. Vide letter dated August 25, 2020, Noticee was granted final opportunity to submit reply to the SCN by September 07, 2020 and was granted opportunity of personal hearing on September 16, 2020. The letter dated August 25, 2020 returned undelivered from the address of the Noticee as mentioned its letter dated February 02, 2019. Further, copy of the aforesaid letter dated August 25, 2020 and the relevant extract of the Investigation Report was sent through email to the Noticee's email id as me....
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....cember 15, 2020. However, no communication was received from Noticee in this regard. 4.9. Monaecum Properties Pvt Ltd (Noticee 9) The common SCN was sent via Speed Post with Acknowledgement Due (SPAD). However, the SCN returned undelivered. Therefore, SCN was served on the Noticee vide affixture on February 23, 2018. Vide letter dated February 02, 2019, Noticee requested for copy of SCN to be sent to email ID- '[email protected]'. Vide email dated December 17, 2019, copy of SCN was sent to the Noticee on the aforesaid email ID. However, no reply from the Noticee was received. Vide letter dated August 25, 2020 and email dated August 27, 2020, Noticee was granted final opportunity to submit reply to the SCN by September 07, 2020 and was granted opportunity of personal hearing on September 15, 2020. The letter dated August 25, 2020 returned undelivered from the address of Noticee 9 as mentioned in its letter. Vide publication dated November 30, 2020, Noticee was granted another opportunity of personal hearing on December 15, 2020. However, no communication was received from Noticee in this regard. 4.10. Jasmin Susilkumar Bajoriya (Noticee 10) The common SCN was sent via S....
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....e Board of India (Appeal No. 114 of 2012), Hon'ble SAT while observing that 'the alleged trades took place in the year 2000. The first show cause notice itself was issued by the Respondent on September 2, 2005 i.e. after a period of more than five years had already lapsed. There is not even a whisper in the impugned order to explain away such a long delay in issuing the SCN' observed that, "At this point we find it pertinent to note that human memory has a short shelf life. Allowing matters to go on and on for years together by the Respondent serves no purpose, rather it risks loss of evidence such as important documents which may get destroyed while the issue gathers dust. Such systemic failures occur to the disadvantage of all parties concerned and lead to consequences such as genuine violators being allowed to function normally in the capital market for years together, whereas in some situations the reputation of innocent entities gets tarnished as they wait.for the wheels of justice to turn a bit faster than the pace at which they seem to be going." On this line Hon'ble Tribunal concluded that "Thus, the existence of unnatural and unexplained delay of more than a decade and pre....
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....nt while fixing the quantum of penalty. Further, in our opinion, the factors contemplated under Section 15J was also not considered by the AO in the right perspective." Hereto annexed and marked as Annexure "B" is a copy of the said order dated 02.08.2019. 5. The Noticee states that the Noticee has filed an appeal before Hon'ble SAT against the WTM's order dated 30.07.2020. The said appeal is admitted by Hon'ble SAT and the date for final hearing in the matter before Hon'ble SAT is on 5% October 2020. 6. The Noticee states that it is a private limited company incorporated on 30th September 2009. The Directors of Indivar Traders Private Limited are Ramnath Ramprasad Kahar, Solanki Jayeshbhai and Nisha Sanjay Unavane. The Noticee was a trader and an investor in the capital market. 7. The Noticee states that the Noticee is alleged to have acted as a counter party to the positive LTP trades of the buyer. The following are the details of trades of 1 day on which day 1 sell trade of the Noticee is considered objectionable towards positive LTP : Date Total sell quantity Qty of shares alleged as seller towards +ve LTp LTP (Rs) Market volume (Qty) ....
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....4, 22 The Noticee states that not a single trade, which is objectionable, is shown with the purported connected entities. The connection with S No.13 on the basis of common address do not mean anything unless such connection is reflected in the transactions which is not the case here. 22 AADCN1076D Narois Impex Pvt Ltd Common Address with S No 12, 14, 22 The Noticee states that not a single trade, which is objectionable, is shown with the purported connected entities. The connection with S No.13 on the basis of common address do not mean anything unless such connection is reflected in the transactions which is not the case here. The Noticee states that for the purpose of establishing connection, 79 entities are sought to be connected. The Noticee states that for the purpose of positive LTP allegation, the investigation was boiled down to 52 entities. Further, the investigation was boiled down to 18 entities for the purpose of positive LTP allegation by entering into trades of 1 or 2 shares. The Noticee states that SEBI has been fumbling and faltering in deciding the parameters for the purpose of charge. Thus, it appears that discretion is not use....
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.... volume : 1 share % of Noticee's alleged / objectionable volume to market volume -'0.00000027% Total number of trading days in investigation period : 1563 days Total number of trading days of Noticee's trades : 54 days Noticee's Total number of trading days of alleged LTP trades: 1 day Market Total positive LTP : Rs. 5704.21 Group total positive LTP : Rs. 1923.58 Market total Net LTP / Price rise during the investigation period : Rs. 759.35 Group total net LTP : Rs. 612.89 Total objectionable Positive LTP : Rs. 298.52 (LTP on account of trades of 1 or 2 shares) Noticee's alleged Positive LTP : 25 Paise Further during Patch - 1, the total market net LTP / price rise was of Rs. 79.35 however the Group total net alleged LTP is Rs. 612.89. There is no analysis of the same given in SCN, in the absence of which the LTP analysis given by SEBI is incomplete and of no consequence thereof. Further in respect of 983 trades wherein the buy client had placed order for 1 or 2 shares, such trades had contributed to Rs. 298.52 towards +ve LTP out of which the Noticee's positive LTP is 25 paise as a s....
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.... The Noticee states that the positive LTP of 25 paise alleged with respect of 1 trade of the Noticee is only 0.02% of the total market positive LTP. The Noticee states that there has been no connection established with the buyer with whom the abovementioned 1 trade got matched. Therefore there was no prior meeting of minds and the trading was system driven, technical and of no consequence to Noticee and counter-party. 13. Itis pertinent to mention that the counter party to the Noticee's sell trade was Gajpal Buildinfra Private Limited with whom no connection of the Noticee is alleged. The Noticee relies upon the Hon'ble SAT's judgement dated 16.01.2020 in the matter of Nishith M Shah HUF Vs. SEBI wherein it is held that 'In order to apply the aforesaid test, the facts of the present case is, that there is no direct evidence of collusion between the appellant as a seller with that of the buyer. There is no finding that the appellant was known to the directors or promoters of the Company. Since no direct evidence is forthcoming we have to see the indirect connection which is that the appellant was selling small quantities of scrips. Trading in small q....
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....t prejudice to the Noticee. (iii) The Counter parties to the Noticee's alleged single trade is not alleged as connected entities. (iv) Noticee's alleged positive LTP of 25 paise which is 0.02% of the total market positive LTP is treated objectionable which is miniscule and minute. (v) The Noticee is undergoing debarment based on the direction vide WTM's order dated 30.07.2020 (vi) There is change in beneficial ownership of the shares. (vii) The Noticee has not taken regulatory proceedings in a nonchalant manner. Personal hearing in the matter was conducted on September 15, 2020 on video conferencing mode (webex platform). The authorized representative of the Noticee appeared for the said hearing and reiterated the submissions made the Noticee by its reply dated September 14, 2020. Hearing minutes are on record. 4.12. Abijah Real Estate Pvt Ltd (Noticee 12) The common SCN was sent via Speed Post with Acknowledgement Due (SPAD). However, the SCN returned undelivered. Therefore, SCN was served on the Noticee vide affixture on February 22, 2018. Vide letter dated February 05, 2019, Noticee requested for copy of SCN to be sent to its....
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....t file any reply to the second show-cause notice. This being so, it has to be presumed that the charges alleged against them in the show cause notice were admitted by them". 6. Further, the Hon'ble SAT in the matter of Sanjay Kumar Tayal & Others vs SEBI (Appeal No. 68 of 2013 decided on February 11, 2014), has also, inter alia, and held that: "...appellants have neither filed reply to show cause notices issued to them nor availed opportunity of personal hearing offered to them in the adjudication proceedings and, therefore, appellants are presumed to have admitted charges leveled against them in the show cause notices..." 7. Further, the same position is reiterated by the Hon'ble SAT in the matter of Dave Harihar Kirtibhai Vs SEBI (Appeal No. 181 of 214 dated December 19, 2014), wherein the Hon'ble SAT held as under: "...further, it is being increasingly observed by the Tribunal that many persons/entities do not appear before SEBI (Respondent) to submit reply to SCN or, even worse, do not accept notices/letters of Respondent and when orders are passed ex-parte by Respondent, appear before Tribunal in appeal and claim non-receipt of notice and do not appear ....
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....rities which are listed or proposed to be listed on a recognized stock exchange; (d) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made thereunder. Regulation 4 of SEBI (PFUTP) Regulations, 2003: -Prohibition of manipulative, fraudulent and unfair trade practices (1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities. (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely:- (a) indulging in an act which creates false or misleading appearance of trading in the securities market; (e) any act or omission amounting to manipulation of the price of a security; 11. I note that investigations were carried out by SEBI in the scrip of AVIL for the period January 1, 2009 to....
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....er 13 entities were found to be connected to the 66 entities identified as above, and had traded in the scrip of AVIL during the IP. Hereinafter, these 79 entities have been referred to as "Suspected group". 13. LTP analysis was carried out to ascertain whether any entities manipulated the price of the scrip of AVIL in contravention of the provision of PFUTP Regulations. I note that there was a sharp price rise during Patch 1 (January 01, 2009 to August 1, 2011). During this period, the price of the scrip opened at Rs.1.80, reached a high of Rs. 87.10 and closed at Rs.77.15 i.e., an increase of 4738.89%, with a net LTP of Rs. 75.35 and a market positive LTP of Rs.1472.63. It is observed that 58 of suspected group entities had traded in the scrip of AVIL, out of which 52 entities had contributed to net positive LTP as a buyer. The LTP contribution of these 52 entities as a buyer is given as under : - Table-I : Details of LTP contribution of the Suspected Group entities S. No. All trades LTP Diff. >0 LTP Diff. < 0 LTP Diff. =0 % of positive LTP to Total Market positive LTP Entity Name Net LTP Sum of Qty No of trades LTP QTY tr....
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....2 0.41 17. GRANTVIEW PROPERTIES PRIVATE LIMITED 9.7 2005533 569 17.65 469796 127 -7.95 167106 56 1368631 386 0.31 18. ADAMINA TRADERS PRIVATE LIMITED 9.1 3965893 738 20.7 979515 144 -11.6 186627 70 2799751 524 0.36 19. SUNLIGHT COMMOTRADE PRIVATE LIMITED 8.95 561241 233 12.65 178553 59 -3.7 55838 41 326850 133 0.22 20. INDIVAR TRADERS PRIVATE LIMITED 8.15 4643425 792 14.1 817607 120 -5.95 139661 58 3686157 614 0.25 21. JIGNESH C SHAH 7.68 4449867 972 21.25 586389 175 -13.57 345354 129 3518124 668 0.37 22. JAYALALITA COMMODITIES PRIVATE LIMITED 6.3 4244341 743 21.45 1248427 153 -15.15 175276 87 2820638 503 0.38 23. NAROIS IMPEX PRIVATE LIMITED 6.15 2280900 443 13.85 760378 106 -7.7 146995 51 1373527 286 0.24 24. ETHAN CONSTRUCTIONS PRIVATE LIMITED 6 1796710 369 16.9 565757 88 -10.9 165629 64 1065324 217 0.30 25. MOSS TRADERS PVT LTD 5.94 ....
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....25701 13 853923 441 0.04 43. JIHAN MERCANTILE PRIVATE LIMITED 0.9 642669 114 2.25 75878 21 -1.35 113704 16 453087 77 0.04 44. ANVITA REAL ESTATE PRIVATE LIMITED 0.55 82000 10 0.55 44866 5 - - - 37134 5 0.01 45. PRABHAV INDUSTRIES LIMITED 0.5 236500 19 0.55 114550 6 -0.05 15000 1 106950 12 0.01 46. WHITETEXT INFRASTRUCTURE PRIVATE LIMITED 0.25 569156 121 1.6 43285 13 -1.35 10142 15 515729 93 0.03 47. ANVITA TRADING COMPANY PRIVATE LIMITED 0.25 82000 7 0.35 64443 3 -0.1 750 1 16807 3 0.01 48. ORANGE MIST PRODUCTIONS PRIVATE LIMITED 0.25 326501 26 0.55 53701 6 -0.3 3145 3 269655 17 0.01 49. MARISHA REAL ESTATE PVT LTD 0.2 555195 80 0.5 67869 7 -0.3 12301 3 475025 70 0.01 50. INTERTICK DEVELOPERS PRIVATE LIMITED 0.2 132850 24 0.25 59704 3 -0.05 9950 1 63196 20 0.00 51. ROLL ON ADVERTISMENT AND MARKETING SERVICES PVT LTD 0.2 290400 ....
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....ssions, if any. 16. Noticee 1 and 2 have inter alia contended that cogent connections between each Noticee and each of the suspected entity has not been established. I note in this regard that connections by way of common directorship, common email ID, offmarket transfer etc have been clearly established, so that every entity in the suspected group is connected either directly or indirectly with each other. Further, the contentions raised by Noticees as regards deficiency in evidentiary proofs have been addressed as discussed above. 17. I further note that most of the Noticees viz. Noticee 3 to 10, 12 and 13 have not submitted reply to the SCN, and therefore, have not produced any counter argument to rebut the allegations of inter-connectedness amongst them. Therefore, I note that as conveyed to the Noticees as Annexure 3 to the SCN, the material on record is sufficient to reasonably conclude that Noticees in the instant matter were connected to each other directly or indirectly. 18. I note that in the SCN, the act of Noticees of executing trades with abnormal trading patterns inter alia involving small order quantities, has been alleged to be fraudulent and manipulative, ....
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....ntion to buy because they were placing buy orders in small quantities (1 or 2 shares) despite existence of large sell order in the system, in 983 instances, which were above last traded price. I note for instance from Table-II that, Ajay Ravindra Shah carried out 154 trades with order size of 1 share each, which resulted in LTP contribution of Rs 88.25 (1.55% of net market positive LTP). Similarily, Jeshna Multitrade Pvt Ltd carried out 197 trades with total order size of 198 shares, comprising of 196 trades for 1 share each and 1 trade of 2 shares. Such trades led to LTP contribution of Rs 69.25 (1.21% of net market positive LTP). 22. I note that such buy orders in small quantities were carried out by Noticees while sell orders with larger quantities were available in the stock exchange's system. I note few instances from the trade log as follows: Table-III: Few trades of miniscule quantities executed by 13 buyers TRADE_ DATE CLIENTNAME CP_CLIENTNA ME TRADE _TIME BUY_O RDER_T IME SELL_O RDER_T IME TRAD E_RA TE TRAD E_VA LUE BUY ORDE R_RA TE SELL_ ORDE R_RA TE BUY ORDE R_LTP SEL L_O RDE R_LT P TRA DED _QT Y BUY ORD ER QTY SELL ORDE....
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....02 trades by GAJPAL BUILDINFRA PRIVATE LIMITED May 03, 2011 to June 09, 2011 All trades by GAJPAL BUILDINFRA PRIVATE LIMITED and AILISH TRADERS PRIVATE LIMITED June 10, 2011 to June 29, 2011 All trades by GAJPAL BUILDINFRA PRIVATE LIMITED except 03 trades by MONAECUM PROPERTIES PRIVATE LIMITED July 05, 2011 and July 06, 2011 All trades by MONAECUM PROPERTIES PRIVATE LIMITED July 07, 2011 to August 01, 2011 All trades by GAJPAL BUILDINFRA PRIVATE LIMITED except 01 trade each by AILISH TRADERS PRIVATE LIMITED and MONAECUM PROPERTIES PRIVATE LIMITED 24. I note from Table-IV that Noticees had been executing the buy orders one after the other, as per a pre-planned scheme. They continued to buy shares in small quantities despite existence of sell orders for higher quantities, following the same trading pattern one after the other. For instance, from November 05, 2009 to April 26, 2010, only Ajay Ravindra Shah executed the trades in small quantities of 01 or 02 shares. Thereafter, from July 06, 2010 to July 09, 2010, all trades were executed by Saurabh Kumar Rasiklal Gandhi except 1 trade by Chandrakant Shah. I note that Noticees continued to trade as per such a....
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....A DED _QT Y BUY ORD ER QTY SELL ORDE R QTY LTP (Rs.) LTP CONT (Rs.) 03/05/2011 Gajpal Buildinfra Pvt Ltd Shailesh S Jhaveri 10:24:01 10:24:01 9:22:16 63.25 63.25 63.25 63.2 62.9 1 1 2000 63.2 0.05 Gajpal Buildinfra Pvt Ltd Jhaveri trading and Investment pvt ltd 10:49:27 10:49:27 10:25:36 63.15 63.15 63.15 63.1 63.25 1 1 1000 63.1 0.05 Gajpal Buildinfra Pvt Ltd Jhaveri trading and Investment pvt ltd 10:49:51 10:49:51 10:25:36 63.15 63.15 63.15 63.1 63.25 1 1 1000 63.1 0.05 Gajpal Buildinfra Pvt Ltd Jhaveri trading and Investment pvt ltd 11:06:47 11:06:47 10:25:36 63.15 63.15 63.15 63.1 63.25 1 1 1000 63.1 0.05 Gajpal Buildinfra Pvt Ltd Jhaveri trading and Investment pvt ltd 11:39:08 11:39:08 10:39:03 63.2 63.2 63.2 63.1 63.05 1 1 7450 63.1 0.1 Gajpal Buildinfra Pvt Ltd Jhaveri trading and Investment pvt ltd 11:39:20 11:39:20 10:39:03 63.2 63.2 63.2 63.1 63.05 1 1 7450 63.1 0.1 Gajpal Buildinfra Pvt L....
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....on with the buyer the trading pattern shows a concerted effort to manipulate the market and therefore we are of the opinion that the appellant was not acting as a genuine seller. We also find that the appellant had no bonafide intention to sell because inspite of sufficient buy orders being placed with abundant quantity being available in the market the appellant was only placing sell orders of one share at a time. This clearly shows his intention of manipulating the market for vested reasons." 30. Noticees have inter alia submitted they were not connected to counterparties to the impugned transactions and that the counterparties were not issued SCN as regards the instant matter. I note in this regard that the instant charges are confined to the trades of the Noticees on the basis of trading pattern exhibited by them, and the resulting impact on the trading in the scrip of AVIL. The trades executed by counterparties are not relied upon while making charges in the SCN. I note that the Hon'ble SAT in the matter of Systematix Shares & Stocks India Limited vs. SEBI (DoD: 23/04/2012, Appeal no. 21 of 2012) dealt with a similar contention raised by appellant that SEBI had discriminate....
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....or 1 or 2 shares above LTP, which have been overlooked while framing allegations. Further, Chandrakant B Shah has submitted that out of the total buy volume of 1.41 crores generated by him, buy volume of only 9 shares has been considered objectionable. I note in this regard that the consideration in the instant matter is limited to the impugned trades, which had been observed to be contributing to price manipulation. The investigation presumably could not notice any abnormality in such other trades as being pointed out by Noticee. Therefore, the establishment of violation depends only on nature and pattern exhibited by such trades relied upon in framing charges, while other trades executed by a Noticee, in the same scrip of otherwise, are beyond the scope of present considerations. 33. Noticee 2 (Ajay Ravindra Shah) has submitted that there is no bar on trading in 1 or 2 shares of a scrip, and that only 4 out of 321 trades executed matched with a connected counterparty coincidentally. Further, Ajay Ravindra Shah has submitted that most of his transactions were executed after opening of market. I note that the present charges are based on the overall trading pattern and methodolo....
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....ticee 1 has also contended that its counterparties were not related. In this regard, I note that the allegation against the Noticee is that the Noticee was placing buy orders for miniscule quantities (01 share or 02 share) at higher LTP even though sell orders from the counterparties were available for large quantities (i.e. in the range of 25 to 5000 shares). Thus, I find that a manipulative pattern was present in the trades of Noticee 1. 37. Noticee 1 (Chandrakant B Shah) has also submitted that on most of the occasions, the rate at which positive LTP has been alleged to be created were already established on the previous days so that the LTP contributed was of no significance. In this regard, I note that the buy orders of Noticee 1 were placed at higher price than the Last Traded Price, thus his trades contributed to the positive LTP in the scrip and accordingly contributed to the price rise in the scrip. Thus, I find no relevance in the Noticee's argument that the rates at which he traded had already been witnessed on previous days. Details of LTP contribution by the Noticees have been detailed elsewhere in this order. 38. I note that Noticees have inter alia contended th....
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....PERTIES PRIVATE LIMITED Yes No 12 MONAECUM PROPERTIES PRIVATE LIMITED Yes Yes 13 JASMIN SUSILKUMAR BAJORIYA Yes No 14 INDIVAR TRADERS PRIVATE LIMITED No Yes 15 ADDO CONSTRUCTIONS PVT LTD No Yes 16 SUNLIGHT COMMOTRADE PRIVATE LIMITED No Yes 17 ABIJAH REAL ESTATE PVT LTD No Yes 18 JIGNESH CHANDRAKANT SHAH No Yes 40. Therefore, I note that despite presence of larger sell quantities in the market, 13 entities including the Noticees executed buy trades with quantity of 01 or 02 shares invariably above the prevailing LTP. Further, 14 entities (including 9 entities from the list of 13 buyers) acted as counterparty in 49 trades executed by the buyers in small quantities, aiding the positive contribution to the LTP of the scrip of AVIL. Therefore, I can observe that all 983 trades executed by the 18 entities including the Noticees were manipulative and had the potential to induce investors to invest in the scrip, while in reality the 13 entities were taking turns to trade in the scrip in small quantities by matching the existing sell orders and were artificially inflating the scrip price. 41. I w....
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....pected Group and the buy orders were placed by buyers in small quantities with a manipulative intent, I observe that the above Noticees were alleged to be counterparties to only one such trade and that they had placed sell orders for large quantities. Keeping in view the trading behaviour of the above Noticees, I find the charge to have not been established so to conclude that they are manipulative and therefore I extend benefit of doubt to Noticee 11, 12 and 13 and exonerate them from the charges of violation of PFUTP Regulations, 2003. Further, I note from Table-II, that the following Noticees viz. V and R Yarns Pvt Ltd (Noticee 5), Grantview Properties Pvt Ltd (Noticee 8) and Jasmin Sushilkumar Bajoriya (Noticee 10) have placed small buy orders (i.e. single share buy orders) in only one instance each. I note that though it is established that the said Noticees viz. Noticee 5, 8, and 10 are part of the Suspected Group, keeping in view that a manipulative pattern of trades is not established qua them, I am willing to take a lenient view against the said Noticees. Under the circumstances, I now hold that the Noticee 1 to 4, 6, 7 and 9 have executed trades which were fraudulent and ....
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....t the said failure is repetitive. However, in the present matter I note that by executing manipulative trades in small quantities to increase the price of scrip of AVIL, Noticee 1 to 4, 6, 7 and 9 have violated the provisions of Regulation 3(a), (b), (c), (d) and 4 (1), 4 (2) (a) and (e) of PFUTP Regulations, 2003. 47. Further, in light of order dated August 02, 2019 of Hon'ble SAT in the matter of P G Electroplast vs SEBI, I also note that, vide Order dated July 30, 2020 Hon'ble Whole Time Member of SEBI has debarred Noticee 1, 2, 4, 6, 7 and 9 for from accessing the securities market and further prohibit them from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, for the period 6 months. ORDER 48. Accordingly, taking into account the aforesaid observations and in exercise of power conferred upon me under Section 15-I of the SEBI Act read with Rule 5 of the Adjudication Rules, 1995, I hereby impose following penalty under Section 15HA of the SEBI Act, 1992 on the following Noticees for the violation of the provisions of Regulation 3(a), (b), (c), (d) and 4 (1), 4 (2) (a) and (e) of PFU....