order in the matter of dealings in the shares of goldstone technologies limited

8/9/2019 Order in the matter of dealings in the shares of Goldstone Technologies Limited

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In the matter of dealings in the shares of Goldstone Technologies Limited Page 1 of 19

WTM/RKA/EFD-DRA-II/43/2015

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER

Under Section 11B read with Section 11(4) of the Securities and Exchange Board of India

Act, 1992 in respect of:

Sl. No. Name of the Noticees PAN

1. Mr. Bhavesh Pabari AKGPP8679N

2. Mr. Bipin Jayant Thaker ABYPT4984H

3. Mr. Kishore Chauhan AFPPC9703G

4. Mr. Prem Mohanlal Parikh ALHPP3489N

5. Mr. Hemant Madhusudan Seth ANOPS8607E

6. Ms. Mala Hemant Seth AZXPS0694J

7. Mr. Ankit Sanchaniya BLNPS3316L

8. Mr. Bhupesh Rathod AACPR3785K

9. Mr. Bipinkumar Gandhi AJHPG6989J

10. Mr. Bharat Shantilal Thakkar AAZPT9542R

In the matter of dealings in the shares of Goldstone Technologies Limited

Appearances:

Mr. Bhavesh Pabari – in Person.

1. Goldstone Technologies Limited (hereinafter referred to as ‘GTL/company’), is a

company listed at Bombay Stock Exchange Limited (BSE) and the National StockExchange (NSE). Securities and Exchange Board of India (hereinafter referred to as

'SEBI') initiated investigation into the trading in certain scrips including GTL pursuant to

the detection of a huge rise in the traded volumes and/or price of the shares of these

companies during the years 2008, 2009 and 2010.

2. Upon analysis of the trading activity in the above scrips, it was prima facie observed that

certain entities had indulged in creating artificial volume by trading among themselves, in a

synchronized manner, carrying out off-market transfers among themselves for the purpose

of meeting settlement obligations of another and thus contributing to the price rise in

these scrips.

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3. In view of the above, in order to protect the interests of investors and to preserve the

safety and integrity of the market, SEBI passed an interim order dated February 02, 2011

(“interim order ”) restraining 39 persons/entities including Mr. Bhavesh Pabari, Mr. Bipin

Jayant Thaker, Mr. Kishore Chauhan, Mr. Prem Mohanlal Parikh, Mr. Hemant

Madhusudan Seth, Ms. Mala Hemant Seth, Mr. Ankit Sanchaniya, Mr. Bhupesh Rathod,Mr. Bipinkumar Gandhi and Mr. Bharat Shantilal Thakkar from accessing the securities

market and further prohibited them from buying, selling or dealing in securities in any

manner whatsoever, till further directions. The said interim order later confirmed by SEBI

vide order dated July 08, 2011 (“Confirmatory Order ”) but did not deal with the

abovementioned 10 entities.

4. SEBI initiated an investigation relating to buying, selling or dealing in the shares of the

scrip of GTL to inter alia ascertain the violation of the provisions of the Securities and

Exchange Board of India Act, 1992, Rules and Regulations. The period of investigation

was taken as January 21, 2009 to April 13, 2010 (hereinafter referred to as ‘Investigation

Period'). The investigations, inter alia, revealed that:

(i) Certain connected/related entities had traded significantly in the said scrips during

2008, 2009 and 2010. The relationship/connection between the entities were

determined based on at least one of the following parameters:

(a) Similarities in the particulars/details in the KYC documents such as common

telephone number, addresses, e-mail addresses, etc.;(b) Trading activity in terms of buy/sell among the group and the frequency and

off-market transfers between them;

(c) Fund transfers between the members of the said group.

(ii) On the basis of the said criteria, one group was identified as the 'Pabari-Parikh'

group (the PPG). The members of the group and the basis of

relationship/connection amongst them is as follows:

Sl.No.

Client Name KYC Relation FundMovement

Share movementthrough off markettransaction

1. Bhupesh Rathod Introduced entities at sl. nos.11, 10, 9, 7 for trading a/cand knows sl. No. 14.

With entity atsl. No. 16.

-

2. Ketan BabulalShah

- - With entity at sl.no.10.

3. Bharat Shantilal Thakkar

Entity at sl. no. 9 is hisnephew.

Same address with sl. no.9.Entity at sl. no. 9 is hisnominee.

With entitiesat sl. nos. 9,

10, 16.

With entity at sl. no.9.



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Joint a/c with entity at sl. no.9.Business relations withentities at sl. nos. 4, 6, 7, 10,11, 16, 17.

4. Bipin Jayant Thaker

Same Tel. no. with entity atsl. no. 9.

Business relations withentities at sl. nos. 3, 6, 7, 9,10, 11, 16, 17.

With entity atsl. no. 9.

With entities at sl.nos. 12, 6, 9, 10, 11.

5. Bharat G Vaghela Same address & Tel. no. asentity at sl. no. 8 who hasshare movement with entityat sl.no. 9.Entity at sl. No. 6 is nephewof entity at sl. no. 9 andshares same Tel. no. withentity at sl. no. 9.


-

6. Chirag Rajnikant

Jariwala

Same Tel. no. with entity at

sl.no.9.Entity at sl. no. 9 is his uncle.Business relations withentities at sl. nos. 3, 4, 7, 9,11, 16, 17.

With entities

at sl. nos. 9,11, 5.

With entity at sl. no.

4.

7. Kishore Chauhan Joint a/c with entity at sl. no.9.Entities at Sl. nos. 9 & 11 are witness for demat a/c.Business relations withentities at sl. nos. 3, 4, 6, 9,10, 11, 16.

With entitiesat sl. nos. 9,10, 11.

With entities at sl.nos. 9, 10, 11, 17.

8.

BipinkumarGandhi

- - With entity at sl. no.9.

9. Bhavesh Pabari Entity at sl. no. 3 is his uncle& entity at sl. no. 17 is hisbrother in law.Entity at sl. no. 10 is cousinof entity at sl. no. 9.Entities at sl. nos. 9 & 11both directors of Rajnandi Yarns Pvt. Ltd.Share common Tel. no. withentities at sl. nos. 16, 17, 4.Entity at sl. no. 1 introducedhim for trading a/c.Business relations withentities at sl. nos. 4, 6, 7, 10,11, 14, 16.

- With entities at sl.nos. 10, 11, 3, 4, 16,17, 8.

10. Prem MohanlalParikh

Entity at sl. no. 10 is cousinof entity at sl. no.9.Common email with entitiesat sl. 16, 10 & 17.Entity at sl. no. 11 is nomineeof entity at sl. no.10.Business relations withentities at sl. nos. 3, 4, 6, 7, 9,


With entities at sl.nos. 9, 11, 7, 3, 4,12, 16, 17.



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11, 16, 17.11. Hemant

MadhusudanSheth

Entities at Sl. nos. 9 & 11both directors of Rajnandi Yarns Pvt. Ltd.Same email with entity at sl.no. 17.Business relations with

entities at 1, 3, 10, 16, 17, 4,6, 7 & sl. no. 14 is his wife &sl. no. 15 is his nephew.


With entities at sl.nos. 9, 10, 7, 14, 16,17, 12, 4.

12. Jigar PrafulGhoghari

- - With entities at sl.nos. 4, 10, 11, 16.

13. Vipul HiralalShah

- With KaushikRajnikantMehta whohas off-markettransaction

with entity atsl. No. 9.

With entity at sl.no.9.

14. Mala HemantSheth

Entity at sl. no. 14 is the wifeof entity at sl. no. 11 andentity at sl. no. 15 is thenephew.

With entitiesat sl. nos. 9,10.

With entity at sl. no.11,

15. Gaurang Ajit Seth Has common address & Tel.no. with entity at sl. no. 11 &entities at sl. no. 11 and 9both directors of Rajnandi Yarns Pvt. Ltd.

- -

16.

Ankit Sanchaniya Same Tel. no. with entity atsl. no. 10 and also shares Tel.no. with entity at sl. no. 9 who is the nominee for hisa/c.Business relations withentities at sl. nos.3, 4, 6, 7, 9,10, 11, 17.

With entitiesat sl. nos. 9,10.

With entities at sl.nos. 9, 10, 11, 6, 12,17.

17. Vivek KishanpalSamant

Entity at sl. no. 9 is thebrother in law & sharescommon Tel. no. & entity atsl.no. 9 is the nominee of sl.no. 17 for trading a/c & banka/c.Shares email with entity at sl.no. 11.Shares email with entity at sl.no. 10.


With entities at sl.nos. 9, 11, 6, 7, 10,16.

(iii) On BSE, 17 group entities including the above mentioned 10 entities, (‘PPG

entities’) traded through 25 stock brokers, purchasing 1,30,91,871 shares accounting

for 40.57% of the total volume traded during the period under investigation and

sold 1,28,10,113 shares accounting for 39.70% of the total volume traded during theperiod under investigation.



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(iv) Several of the trades were synchronised amongst the PPG entities in the scrip of

GTL during the investigation period. Further, out of the total trading of 1,18,39,849

shares within the group entities, for 51,99,929 shares accounting for 16.11% of the

market volume the buy and sale orders were placed within one minute of each other

51,99,929 shares constituting 39.72% of the total buy of the PPG entities and40.59% of the total sale of the PPG entities.

(v) Out of these 51,99,929 shares, it was observed that with respect to 9,09,391 shares

accounting for 2.82% of the total market volume the buy and sale orders were

placed in such a manner that the time difference between the buy order and sale

order was within one minute with matching price and quantity. These 9,09,391

shares constituted 6.95% of the total buy of the PPG entities and 7.10% of the total

sale of the PPG entities.

(vi) Certain entities among the PPG entities including Mr. Bharat Shantilal Thakkar, Mr.

Kishorbhai Balubhai Chauhan, Mr. Bhabesh Prakash Pabari, Mr. Prem Mohanlal

Parikh, Mr. Hemant Madhusudan Sheth, Ms. Mala Hemant Sheth and Mr. Ankit

Rajendra Sanchaniya also indulged in self trades on the BSE (i.e., buy client as well

as the sell client for a given trade was the same resulting in no change of beneficial

ownership). In all these self trades mentioned above, the buy and sell stock brokers

were also same. The detail of the same is presented as under:

Name of the entity Total buy Total sale

Self trade

qty

% of

Total

Buy

%

Total

Sale

% of

Market

Volume

No of Self

trades

Bharat Shantilal Thakkar 6,51,250 8,38,432 25,000 3.84 2.98 0.08 1

Kishorbhai Balubhai Chauhan 13,81,255 14,26,051 8,878 0.64 0.62 0.03 4

Bhabesh Prakash Pabari 18,13,258 22,42,150 1,54,337 8.51 6.88 0.48 24

Prem Mohanlal Parikh 28,63,884 23,56,356 5,49,150 19.18 23.31 1.70 63

Hemant Madhusudan Sheth 34,22,459 31,33,816 5,29,009 15.46 16.88 1.64 94

Mala Hemant Sheth 3,15,103 3,15,504 35,197 11.17 11.16 0.11 3

Ankit Rajendra Sanchaniya 12,48,798 14,48,990 72,305 5.79 4.99 0.22 15

Grand Total 1,16,96,007 1,17,61,299 13,73,876 11.75 11.68 4.26 204

(vii) The price volume data shows that the shares of GTL were traded for 297 trading

days during the Investigation Period on the BSE. Out of 297 trading days, the PPG

entities, traded among themselves on 108 days. It was observed that the volume oftrades undertaken by the PPG entities, contributed significantly to the daily market



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volume in the scrip on BSE during the investigation period ranging from 0.13% on

January 21, 2009 to 93.35% on November 17, 2009. Out of the 108 trading days on

which the PPG entities traded amongst themselves, on 68 trading days PPG

entities, contributed to more than 50% of the total market volume.

(viii)

Out of 108 trading days in which the PPG entities traded amongst themselves, on78 trading days the PPG entities, including the above mentioned 10 entities,

executed synchronised trades.

(ix) The synchronised trades were executed by the PPG entities, contributing

significantly to the daily market volume, ranging from 0.13% on January 21, 2009 to

83.07% on September 15, 2009. Out of 78 trading days, on 17 trading days the PPG

entities contributed to more than 50% of the total market volume through

synchronised trades.

(x) Out of 78 trading days, on 26 trading days the trades executed by the PPG entities

were such that not only both buy and sell orders were placed within a time

difference of one minute but the order quantity and price of the orders exactly

matched. These kinds of perfectly synchronised trades were executed amongst the

PPG entities contributing significantly to the total market volume ranging from

0.23% on February 12, 2009 to 67.26% on April 23, 2009 and on 3 trading days by

contributing to more than 50% of the market volume.

(xi)

Out of 1,23,760 trades in the scrip of GTL on BSE during the investigation period,

24,047 trades took place at a price less than the Last Traded Price (LTP) and 76,324

trades took place at a price equal to LTP and 23,388 trades at a price greater than

LTP. Out of these 1,23,760 trades, the 17 PPG entities dealing through multiple

brokers entered into 5,163 buy transactions. Out of these 5,163 trades 588 trades

took place at a price less than LTP (contributing a gross fall in price by ` 67.84),

3,394 trades took place at a price equal to LTP and 1,211 trades at a price greater

than LTP (contributing a gross increasing in price by ` 162).

(xii) During the period under investigation, the price of the scrip opened at ` 22.65 on

BSE and touched a high of ` 47.75, i.e. there was increase of ` 25.10.

(xiii) The trade log of the entities trading on the NSE revealed that on NSE, 12 PPG

entities trading through multiple stock brokers purchased 20,76,282 shares

accounting for 6.19% of the total volume traded in the scrip of GTL on NSE

during the period under investigation and sold 20,65,506 shares accounting for

6.16% of the total volume traded in the scrip of GTL on NSE during the period

under investigation.



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(xiv) The 12 PPG entities who traded in the scrip of GTL on NSE were Mr. Ketan

Babulal Shah, Mr. Bipin Jayant Thaker, Mr. Bharat G. Vaghela, Mr. Chirag

Rajnikant Jariwala, Mr. Kishore Chauhan, Mr. Bhavesh Pabari, Mr. Prem Mohanlal

Parikh, Mr. Hemant Madhusudan Sheth, Mr. Asif Ilyas Shaikh, Ms. Mala Hemant

Sheth, Mr. Ankit Sanchaniya and Mr. Vivek Kishanpal Samant. On the NSE, out of

the 12 PPG entities, 11 PPG entities, traded in 13,14,087 shares constituting 3.92%

of the total market volume in the scrip and accounted for 63.29% of the total

purchase of the group and 63.62 % of the total sale of the group.

(xv) Certain entities among the PPG entities, i.e., Mr. Prem Mohanlal Parikh, Mr.

Hemant Madhusudan Sheth and Mr. Ankit Rajendre Sanchaniya also indulged in

self trades on the NSE (i.e., buy client as well as the sell client for a given trade was

the same resulting in no change of beneficial ownership).

(xvi)

The PPG entities had indulged in off-market transfer of 11,22,836 shares of GTL

amongst themselves during the period January 01, 2009 and January 31, 2011 which

further support the connection among the group.

(xvii) Thus, large scale trading amongst the PPG entities was noted most of which were

synchronized in nature and also resulted in no change in ownership, and created an

artificial demand in the scrip of GTL leading to price rise which was misleading and

disadvantageous to the genuine investors in the securities market. The self trades

executed among the PPG entities did not reveal any real change in ownership of

shares traded among them and the same was for the purpose of increasing volume

of trading or influencing the price.

5. The afore-discussed actions on the part of the above mentioned 10 entities, i.e., execution

of synchronized and self trades, creation of artificial volume and price manipulation which

not only distorted market equilibrium but were also found to be fraudulent in nature, were

alleged to have violated the provisions of regulations 3 (a), (b),(c),(d), 4(1), 4(2) (a),(b) (e)

and (g) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to

Securities Market) Regulations, 2003 (the PFUTP Regulations).

6. Consequently, separate Show Cause Notices (SCN) all dated November 13, 2014 were

issued to Mr. Bhavesh Pabari, Mr. Bipin Jayant Thaker, Mr. Kishore Chauhan, Mr. Prem

Mohanlal Parikh, Mr. Hemant Madhusudan Seth, Mr. Mala Hemant Seth, Mr. Ankit

Sanchaniya, Mr. Bhupesh Rathod, Mr. Bipinkumar Gandhi and Mr. Bharat Shantilal

Thakkar (hereinafter collectively referred to as ‘the noticees’ and individually by their

respective names), calling upon them to show cause as to why suitable directions under

section 11B read with section 11(4) of the Securities and Exchange Board of India Act,

1992 (the SEBI Act, 1992) should not be issued against them for the alleged violation of

the provisions of regulations 3(a), (b),(c),(d), 4(1), 4(2) (a),(b) (e) and (g) of the PFUTP



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Regulations, 2003. The provisions of the regulations alleged to be contravened by the

noticees are reproduced hereunder:

Regulation 3. Prohibition of certain dealings in securities

“3. No person shall directly or indirectly

(a).

buy, sell or otherwise deal in securities in a fraudulent manner;(b). use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed

in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention

of the provisions of the Act or the rules or the regulations made there under;

(c). employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities

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 there under.

Regulation 4. Prohibition of manipulative, fraudulent and unfair trade practices

4. (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;

(b) dealing in a security not intended to effect transfer of beneficial ownership but intended to operate onlyas a device to inflate, depress or cause fluctuations in the price of such security for wrongful gain or

avoidance of loss;

(c) ....................................................................................................................................

(d) ....................................................................................................................................

(e) any act or omission amounting to manipulation of the price of a security;

(f) ................................................................................................

(g) entering into a transaction in securities without intention of performing it or without intention of

change of ownership of such security;”

7. Vide separate letters dated November 26, 2014 and November 27, 2014 Mr. Bhavesh

Pabari, Mr. Bharat Shantilal Thakkar, Mr. Hemant Madhusudan Seth and Ms. Mala

Hemant Seth sought copies of certain documents which were provided to them vide

letters dated December 16, 2014. While some of the aforementioned noticees replied to

the respective SCNs issued to them, the others did not submit any reply as mentioned in

the following table:



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Sl. No. Name of the Noticees Date of Reply

1. Mr. Bhavesh Pabari January 31, 2015

2. Mr. Bipin Jayant Thaker February 02, 2015

3. Mr. Kishore Chauhan No reply

4. Mr. Prem Mohanlal Parikh February 02, 2015

5. Mr. Hemant Madhusudan Seth February 02, 2015

6. Ms. Mala Hemant Seth January 31, 2015

7. Mr. Ankit Sanchaniya February 02, 2015

8. Mr. Bhupesh Rathod February 02, 2015

9. Mr. Bipinkumar Gandhi No reply

10. Mr. Bharat Shantilal Thakkar January 31, 2015

8. An opportunity of personal hearing was granted to the noticees on February 03, 2015.

During the hearing, Mr. Bhavesh Pabari appeared in person and reiterated the submissions

made vide his letter dated January 31, 2015. As regards, Mr. Kishor Chauhan, it has been

brought to my notice that during the adjudication proceedings in the same matter, one Ms.

Rupal K. Chauhan, claiming to be wife of Mr. Kishore Chauhan, has informed SEBI that

the said noticee had passed away on May 29, 2013 and had enclosed a certified copy of the

death certificate as issued by the Department of Health and Family Welfare, Governmentof Gujarat, in support thereof. None of the remaining noticees appeared in person. Other

than Mr. Kishor Chauhan and Mr. Bipinkumar Gandhi all the remaining noticees have

filed their written submissions. These noticees have inter alia made following submissions

as follows:

(i) Mr. Bhavesh Pabari: (a). Pursuant to the investigation in the matter, in addition to the instant proceedings,

adjudication proceedings were also initiated against the noticee. and a show cause

notice was issued to him.(b). The noticee has already submitted his reply to the said show cause notice issued by

the Adjudicating Officer. Hard copies of trade logs and order logs were provided

in CD format and there was difficulty to purify/sort the data which was in whole.

The action proposed report was not enclosed with the documents provided.

(c). As regards allegation regarding his acquaintance with Narendra Ganatra is

concerned, the Hon’ble Securities Appellate Tribunal (the Hon’ble SAT), vide its

order dated July 29, 2011 in the matter of Narendra Ganatra v. SEBI has held as

under:

“The connection of the appellant with other group entities is also restricted to his brother



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Nimesh Ganatra and Mr. Bhavesh Pabari. The fact that the appellant shares common

address with his brother Nimesh Ganatra or has introduced Bhavesh Pabari to broker is not

sufficient evidence to prove the charge of connivance in executing circular trades.”

Therefore, he should not be charged with one charge repeatedly as the Hon’ble

SAT had already put aside the said allegation.

(d). There is no denial that this noticee was not a director in Rajnandi Yarns Private

Limited but the decision of investment of Rajnandi Yarns Private Limited was

taken in company board meeting and not at an individual level.

(e). This noticee does not have any business relationship with certain other noticees

involved.

(f). The documents furnished have failed to provide any documentary evidence to

prove the relationship with other noticees.

(g).

In the adjudication proceedings, the Adjudicating Officer has imposed a penalty of

` 5,00,000/- on the noticee which has been appealed against before the Hon’ble

SAT.

(h). The noticee is aggrieved by the interim order and the confirmatory order passed against

him making him unable to have any financial means and capacity to take service of

legal consultation and represent his case in the present proceedings.

(ii) Mr. Bipin Jayant Thaker:

(a). Pursuant to the investigation in the matter, in addition to the instant proceedings,

adjudication proceedings were also initiated against the noticee and a show cause

notice was issued to him.

(b). The noticee has already submitted his reply to the said show cause notice issued

by the Adjudicating Officer. The action proposed report was not enclosed with

the documents provided.

(c). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty

of ` 5,00,000/- on the noticee which has been appealed against before the

Hon’ble SAT.

(d).

The noticee is aggrieved by the interim order and the confirmatory order passed against

him making him unable to have any financial means and capacity to take service

of legal consultation and represent his case in the present proceedings.

(iii) Mr. Prem Mohanlal Parikh:




(b). The noticee has already submitted his reply to the said show cause notice issued

by the Adjudicating Officer.



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(c). The action proposed report was not enclosed with the documents provided.

(d). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty


Hon’ble SAT.

(e). The noticee is aggrieved by the interim order and the confirmatory order passed against



(iv) Mr. Hemant Madhusudan Seth:

(a). A preliminary reply was already submitted through reply dated November 27,

2014 against the show cause notice.

(b). Pursuant to the investigation in the matter, in addition to the instant proceedings,



(c). The noticee has already submitted his reply to the said show cause notice issued


(d). Hard copies of trade logs and order logs were provided in CD format and there

was difficulty to purify the data which was in whole. The action proposed report

was not enclosed with the documents provided.

(e). The noticee does not deny that he was not a director in Rajnandi Yarns Private

Limited but the decision of investment of Rajnandi Yarns Private Limited was

taken in company board meeting and not at an individual level.

(f).

The documents furnished have failed to provide any documentary evidence toprove the relationship.

(g). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty


Hon’ble SAT.

(h). The noticee is aggrieved by the interim order and the confirmatory order passed against



(v)

Ms. Mala Hemant Seth:


2014 against the Show Cause Notice.

(b). Pursuant to the investigation in the matter, in addition to the instant proceedings,


notice was issued to her.

(c). The noticee has already submitted her reply to the said show cause notice issued


(d).

Hard copies of trade logs and order logs were provided in CD format and there was difficulty to purify the data which was in whole. The action proposed report



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was not enclosed with the documents provided.

(e). Financial transactions with Mr. Prem Mohanlal Parikh are admitted.

(f). While it is true that she is the wife of Mr. Hemant Madhusudan Seth, she denies

having any business/professional connection with him and submits that she is

living an independent life and is taking her own independent decisions.

(g).

She has not received the copy of bank statement evidencing transactions with Mr.

Prem Mohanlal Parikh and a copy of her letter dated July 08, 2012 has not been

received by her.

(h). The noticee has no business relationship with other noticees and documents

furnished have failed to provide any documentary evidence to prove the

relationship.

(i). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty


Hon’ble SAT.(j). The noticee is aggrieved by the interim order and the confirmatory order passed against

her making her unable to have any financial means and capacity to take service of

legal consultation and represent her case in the present proceedings.

(vi) Mr. Ankit Sanchaniya:




(b).

The noticee has already submitted his reply to the said show cause notice issuedby the Adjudicating Officer.

(c). The action proposed report was not enclosed with the documents provided.

(d). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty


Hon’ble SAT.

(e). The noticee is aggrieved by the interim order and the confirmatory order passed against



(vii) Mr. Bhupesh Rathod:

(a). The noticee was not implicated by the interim order and the confirmatory order .

(b). The noticee had carried out share trading activity in the normal and ordinary

course of business activity through a well recognised SEBI registered stock

broker. At the relevant time and even thereafter till date, no grievance or

complaint of any nature has been raised by any of the aforesaid broker or the

stock exchange on whose trading terminal the impugned transactions were

carried out.(c). The noticee had bought 10,000 shares and sold 10,000 shares at BSE on delivery



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basis during January 21, 2009 to April 13, 2010. The noticee had not done any

trading of shares at NSE. Hence, all the trades were genuine and bona fide .

(d). Pursuant to the investigation in the matter, in addition to the instant proceedings,



(e).

The noticee has already submitted his reply to the said show cause notice issued

by the Adjudicating Officer and seeks to rely on the same in the instant

proceedings.

(f). The action proposed report was not enclosed with the documents provided.

(g). The noticee had no off market transactions in the scrip of GTL with the persons

mentioned in the SCN. The noticee had no linkages or relation to the market

trades executed by them or by him on the trading platform of the stock exchange.

(h). It is incomprehensible to hold or bind the noticee as belonging to any group or

connected entities as alleged in the SCN. The allegation which is not supportedby any evidence necessarily leads to prove and establish that it is factually

incorrect and legally unsustainable and merely based on surmises and conjectures

and hence lacks credentials.

(i). The alleged connection on the basis of which the noticee is roped into the

present proceedings was that he had introduced Mr. Bhavesh Pabari, Mr. Kishore

Chauhan, Mr. Prem Mohanlal Parikh and Mr. Hemant Madhusudan Seth for

trading account.

(j). The noticee has further clarified in his reply to the Adjudicating Officer that the

introduction was sought by the noticee’s broker S.P. Jain Securities Limited for

merely the sake of introduction of their identity,

(k). The noticee had not undertaken any risk responsibility and liability for carrying

out any transaction. The noticee had not taken any profit or income.

(l). It was an undisputed fact that noticee had neither carried out any transaction nor

was instrumental for the transaction carried out by those persons in the market.

(m). Introduction of some person to his stock broker cannot mean that the noticee

associates or carries out share trading activity with them jointly. Introduction of

every client to broker is mandatory and therefore broker normally insistsintroduction from good existing client before registering new person as client.

(n). The noticee has no business relationship with other noticees and documents

furnished have failed to provide any documentary evidence to prove the

relationship.

(o). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty


Hon’ble SAT.

(p). The noticee is aggrieved by the interim order and the confirmatory order passed against




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(viii) Mr. Bharat Shantilal Thakkar:


2014 against the SCN.

(b).

The interim order and confirmatory order passed against the noticee directed SEBI tocomplete the investigation by December 31, 2011 which was further extended to

July 31, 2012 but it appears that the case has still not been completed.

(c). The noticee denies all allegations made in the SCN except to the extent

specifically admitted by him.

(d). The noticee submits that six different show cause notices have been issued to

him for trading in five different scrips. These six show cause notices have been

issued in and around the same time and the investigation period of the five scrips

is also of around the same time which is really perplexing to understand.

(e).

In the adjudication proceedings, the Adjudicating Officer has imposed a penalty


Hon’ble SAT.

(f). The noticee is aggrieved by the interim order and the confirmatory order passed against



9. At the outset, I find that the principles of natural justice have been followed in so far that

all the noticees were given an opportunity to file written submission and attend hearing topresent their case in the present proceedings. It is to be noted that the adjudication

proceedings and the present proceedings are different. The noticees have mentioned in

their submissions that they are not in a position to attend personal hearing and present

their case before me. I, therefore, proceed to deal with the replies/submission of the

noticees before me. The noticees have contended that they are aggrieved by the interim

order and confirmatory order passed against them. However, I note that the said confirmatory

order does not implicate any of the noticees.

10.

The noticees have submitted that the action proposed chart had not been provided to

them and that the trade logs and order logs were provided in a CD format due to which

the noticees were unable to purify the data pertaining to them. I have perused through the

documents sought by the entities and the documents furnished to them. I note that all

such relevant documents that were relied upon in the SCN have been duly provided to the

noticees. Further, due to the voluminous nature of the trade logs and order logs, the same

was given through a compact disc. Ms. Mala Hemant Seth has also stated that certain bank

statement and letter has not been provided to her. From the documents issued to her, I

note that said documents were duly provided through letter dated December 16, 2014. I,therefore, find that all the relevant documents that have been relied upon in the SCN or



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that have been sought by the noticees have been furnished to them. Further, none of the

noticees have disputed the trade logs, order logs or bank statements pertaining to the

instant matter.

11. I will now proceed to deliberate on the submissions made by the noticees. I note that Mr.

Bhavesh Pabari has denied his relationship/connection with Mr. Narendra Ganatra and inthis regard has relied upon the Hon’ble SAT order dated July 29, 2011 in the matter of

Narendra Ganatra v. SEBI . I note that vide his letter to SEBI dated July 13, 2012, Mr.

Bhavesh Pabari has admitted that Mr. Narendra Ganatra is his friend. A copy of the said

letter was also furnished to Mr. Bhavesh Pabari during the instant proceedings. However,

the said letter or its contents have not been disputed by Mr. Bhavesh Pabari. I, therefore,

reject the contention of Mr. Bhavesh Pabari regarding his relationship with Mr. Narendra

Ganatra.

12.

Mr. Bhavesh Pabari and Mr. Hemant Madhusudan Seth have contended that though they

were directors in Rajnandi Yarns Private Limited, the decision regarding investment of

Rajnandi Yarns Private Limited was taken in company board meeting and not at an

individual level. In this regard I note that several off market transactions have been entered

into between the noticees and Rajnandi Yarns Private Limited the details of which are as

under:

Date Client Name Counterparty Client Name No. of Shares

15/02/2010 Kishor Balubhai Chauhan Raj Nandi Yarns Private Limited 2450030/04/2010 Ankit R Sanchaniya Raj Nandi Yarns Private Limited 3000

30/04/2010 Prem Mohanlal Parikh Raj Nandi Yarns Private Limited 3000

30/04/2010Raj Nandi Yarns PrivateLimited Ankit R Sanchaniya 3000

30/04/2010Raj Nandi Yarns PrivateLimited Prem Mohanlal Parikh 3000

13. Such transactions clearly depict that Rajnandi Yarns Private Limited first bought shares

from Mr. Prem Mohanlal Parikh and Mr. Ankit Sanchaniya and on the same day sold those

shares back to them. Further, it is noted from the KYC of Mr. Bhavesh Pabari that he and

Mr. Ankit Sanchaniya are cousins. Mr. Hemant Madhusudan Seth and Mr. Prem Mohanlal

Parikh have fund movements as well as off market securities movement. Therefore, it is

too much of a coincidence to assume that the Mr. Bhavesh Pabari and Mr. Hemant

Madhusudan Seth had no role in the investment of Rajnandi Yarns Private Limited.

14. Ms. Mala Hemant Seth has admitted to fund transactions with Mr. Prem Mohanlal Parikh.

Ms. Mala Hemant Seth has further contended that while it is true that she is the wife of

Mr. Hemant Madhusudan Seth, she denies having any business/professional connection

with him and submits that she is living an independent life and is taking her ownindependent decisions. I note that Ms. Mala Hemant Seth also has fund market



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movements and off market transactions with Mr. Bhavesh Pabari and Mr. Prem Mohanlal

Parikh. Vide her letter dated July 8, 2012, Ms. Mala Hemant Seth has admitted that the

transactions in the securities market in her name were handled by her husband Mr.

Hemant Madhusudan Seth. A copy of the said letter has been provided to Ms. Mala

Hemant Seth. The said letter has not been disputed by Ms. Mala Hemant Seth. I, therefore,

do not find any merit in the contention of Ms. Mala Hemant Seth regarding her

business/professional connection with her husband Mr. Hemant Madhusudan Seth.

15. With respect to the submissions made by Mr. Bhupesh Rathod, I note that to introduce a

client to a stock broker is a role of utmost responsibility in which the introducer claims

that the person being introduced will trade responsibly. I do not agree that Mr. Bhupesh

Rathod would have introduced Mr. Bhavesh Pabari, Mr. Kishore Chauhan, Mr. Prem

Mohanlal Parikh and Mr. Hemant Madhusudan Seth without any existing relationship

between them. I also note from the trading of Mr. Bhupesh Rathod that he entered into 59

trades, out of which 14 trades were above the Last Traded Price and the trades at Last

Traded Price were 44. In view of these facts and circumstances, I reject the contention of

Mr. Bhupesh Rathod that his trades were genuine and bona fide .

16. I note that the details of the relationship amongst the noticees, their trade logs and their

off market transactions have been sufficiently proved and were also furnished to the

noticees along with the SCN. Such relations and transactions have not been disputed.

Considering the factors as described in the SCN, I note that the noticees are apparently

related/connected to each other on the basis of relationship, common addresses, e-mails,telephone numbers, fund transfer, etc. However, some of the noticees have disputed those

factors/basis of connections/relation amongst them. In this regard, I note that the

Hon'ble SAT has, in many cases such as Classic Credit Ltd. vs. SEBI (SAT Appeal no.

68/2003, Order dated December 8, 2006), Classic Credit Ltd. vs. SEBI ( SAT Appeal no. 76/

2003, Order dated January 9, 2007) and Veronica Financial Services Ltd. vs. SEBI ( SAT Order

dated August 24, 2012), held that connection/relations can be established on the basis of

such factors. In view of these facts and circumstances, the noticees are connected to each

other as described in the SCN.

17. Placing of the sell orders with same counterparties for same quantity of shares at the same

price within nil or too negligible time difference repeatedly over a period of time are clear

indication that those trades of the noticees were synchronised/structured. In this regard,

the following observations of the Hon’ble SAT in its order dated July 14, 2006 in the

matter of Ketan Parekh vs. Securities and Exchange Board of India , is worth mentioning:

“.......... A synchronised transaction will, however, be illegal or violative of the Regulations if it is

executed with a view to manipulate the market or if it results in circular trading or is dubious in

nature and is executed with a view to avoid regulatory detection or does not involve change of beneficial



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ownership or is executed to create false volumes resulting in upsetting the market equilibrium. Any

transaction executed with the intention to defeat the market mechanism whether negotiated or not

would be illegal. Whether a transaction has been executed with the intention to manipulate the market

or defeat its mechanism will depend upon the intention of the parties which could be inferred from the

attending circumstances because direct evidence in such cases may not be available. The nature of the

transaction executed, the frequency with which such transactions are undertaken, the value of the

transactions, whether they involve circular trading and whether there is real change of beneficial

ownership, the conditions then prevailing in the market are some of the factors which go to show the

intention of the parties. This list of factors, in the very nature of things, cannot be exhaustive. Any one

factor may or may not be decisive and it is from the cumulative effect of these that an inference will have

to be drawn.”

18. In this case, I note that several synchronized transactions amongst these noticees were in

the nature of self – trade wherein one or the other noticee was on either side of the

transaction. These self-trades clearly did not involve change in beneficial ownership of

traded shares and were, therefore, illegal. It is relevant to mention that with regard to the

nature and effect of self-trades the Hon’ble SAT, in the matter of M/s. Jayantilal Khandwala

& Sons Pvt. Ltd. vs. SEBI (Appeal no. 24 of 2011 decided on June 8, 2011), has held that :

“one cannot buy and sell shares from himself. Such transactions are obviously fictitious and meant only to

create false volumes on the trading screen of the exchange.”

19. In light of the above, I note that the noticees are in fact related to each and have connived

amongst themselves for execution of synchronized and self trades, creation of artificial volume and price manipulation which not only distorted market equilibrium but was also

found to be fraudulent in nature, and have therefore violated the provisions of regulations

3 (a), (b), (c), (d), 4(1), 4(2) (a), (b), (e) and (g) of the SEBI (Prohibition of Fraudulent and

Unfair Trade Practices Relating to Securities Market) Regulations, 2003.

20. I note that the noticees have contended that based on the same set of facts and transactions

as in the instant case monetary penalties were imposed against the noticees by the

adjudicating officer vide his separate orders and the noticees have challenged the said orders

before the Hon’ble SAT. However, I am satisfied that the contraventions as found in this caseare grave and have the potential to disturb the market integrity and disturb the fair, equitable

and efficient functioning of the securities market. In the instant case, the proceedings under

sections 11 and 11B of the SEBI Act have been initiated against the noticees in addition to

the adjudication proceedings against them as the charges against the entities are grave and

have larger implications on the safety and integrity of the securities market. In my view, for

the serious contraventions as found in the instant case, monetary penalty alone would not be

sufficient to safeguard the market integrity. In this regard, the following observations of the

Hon’ble SAT in the order dated December 02, 2010, in the matter of Appeal no. 70 of 2010

– Yashraj Containeurs Ltd. vs SEBI are worth mentioning:



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“.... we cannot resist observing that in view of the serious allegations made against the appellants which

stand established during the course of the adjudication proceedings, the Securities and Exchange Board of

India (for short the Board) should not have been content with initiating only adjudication proceedings

against the appellants in which only a monetary penalty could be levied. This is a fit case where the Board

should have considered initiating proceedings under Sections 11 and 11B of the Securities and Exchange

Board of India Act, 1992 for issuing appropriate directions against the appellants to protect the integrity

of the market and the interests of the investors............................................................

This is, indeed a very serious market illegality/irregularity and, in our view, imposing a monetary penalty

alone on the company and its promoters will not meet the ends of justice. We are constrained to make

these observations because the lenient view taken by the Board does not, in our opinion, protect the

integrity of the market and not even the interest of the investors which is its primary duty. This kind of a

lenient view will not be a deterrent for others and would send a wrong signal that the delinquent could

continue with their nefarious activities by paying a monetary penalty.”

21. I note that vide the interim order dated February 02, 2011 SEBI had restrained, inter alia, the

noticees herein from accessing the securities market and further prohibited them from

buying, selling or dealing in securities in any manner whatsoever, till further directions.

The directions in the interim order qua these noticees is still in force. I also note from the

material on record that Mr. Kishore Chauhan has passed away on May 29, 2013 and,

therefore, the proceeding against him is abated and the SCN dated November 13, 2014 as

against him is disposed off accordingly.

22.

Considering the above, I, in order to protect the interest of investors and the integrity ofthe securities market, in exercise of the powers conferred upon me under section 19 of the

Securities and Exchange Board of India Act, 1992 read with sections 11 and 11B thereof

and regulation 11 of the Securities and Exchange Board of India (Prohibition of

Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003

hereby restrain the following entities 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, whatsoever, for the period as

mentioned in the following table:

Sl. No. Name of the Noticees PAN Period

1. Mr. Bhavesh Pabari AKGPP8679N 5 Years

2. Mr. Bipin Jayant Thaker ABYPT4984H 5 Years

3. Mr. Prem Mohanlal Parikh ALHPP3489N 5 Years

4. Mr. Hemant Madhusudan Seth ANOPS8607E 5 Years

5. Ms. Mala Hemant Seth AZXPS0694J 5 Years



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In th tt f d lin in th h f G ld t n T hn l i Li it d P ge 19 of 19

6. Mr. Ankit Sanchaniya BLNPS3316L 5 Years

7. Mr. Bhupesh Rathod AACPR3785K 5 Years

8. Mr. Bipinkumar Gandhi AJHPG6989J 5 Years

9. Mr. Bharat Shantilal Thakkar AAZPT9542R 5 Years

23. The period of prohibition already undergone by the noticees pursuant to the interim order

dated February 02, 2011, shall be taken into account for the purpose of computing the

period of prohibition imposed in this order. The SCNs issued to the noticees are disposed

of accordingly.

24. A copy of this order shall be served on all recognized stock exchanges and depositories to

ensure that the direction given in the above para are complied with.

25. This order shall come into force with immediate effect.

Sd/-

DATE: MAY 13th, 2015 RAJEEV KUMAR AGARWAL

PLACE: MUMBAI WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA

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