WTM/PS/05/ISD/APR/2015 BEFORE THE SECURITIES AND EXCHANGE ... · PDF fileBEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA ... wherein a share worth ₹10 was split into share worth

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WTM/PS/05/ISD/APR/2015

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

CORAM: PRASHANT SARAN, WHOLE TIME MEMBER

ORDER

Under Sections 11(4) and 11B of the Securities and Exchange Board of India Act, 1992

read with Regulation 11 of the SEBI (Prohibition of Fraudulent and Unfair Trade

Practices relating to Securities Market) Regulations, 2003

In the matter of IFSL LIMITED

In respect of:

S.No. Noticees PAN

1. IFSL Limited AAACI4383H

2. Sonal Fincap Pvt. Limited AAJCS0424Q

3. Dr. Jayant M. Muley Not Available

4. Mr. S.S. Dua Not Available

5. Mr. Mukesh Vora Not Available

6. Mr. Dilip Kulkarni Not Available

7. Mr. Ramdas Kshirsagar AKRPK7116L

8. Mr. Jagdish Uttam Parab AMBPP7561L

9. Mr. Premkumar Singh AVKPS5136N

10. Newleader Trading Co. Pvt. Limited AACCNO923G

11. Sharpline Trading Co. Pvt. Limited AAJCS0043H

12. White Moon Mercantile Co. Pvt. Limited AAACW5810B

13. Mr. Santosh Jagtap AFUPJ0681F

14. Mr. Dattu Shitloe AZRPS4603H

15. Right Star Trading Co. Limited AACCR9880Q

16. Mr. Deepak Narvekar ADSPN9721A

17. Mr. Ganesh Raut AGGPR1017A

18. Fineline Mercantile Co. Pvt. Limited AAACF8758K

19. Stockholm Mercantile Co. Pvt. Limited. AAJCS0042G

20. Mr. Rajkishore Singh ASVPS9426K

21. Mr. Jayesh Waghela AAPPW2530E

22. Vishal Kumar Textiles Limited AABCVO979M

23. Mr. Ajit Suryavanshi AVOPS4111P

24. Mr. Ranjan Mandal AHZPM1923E

25. Mr. Jay Shah AZRPS4128D

26. Mr. Paras Chaplot ADDPC5348M

27. Cardiod Marketing Pvt. Limited AABCC3840Q

28. Mr. Vivekanand Daji Patankar ALTPP0349K

29. Mr. Santosh Pawar ALSPP7445F

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____________________________________________________________________________

1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') upon noticing

sudden spurt in the price and trading volume in the scrip of IFSL Limited (hereinafter

referred to as 'IFSL' or 'the Company') conducted a preliminary examination in the scrip.

The shares of IFSL were listed in the year 1996. It was observed that the price of the scrip

had increased in about 200 trading days from ₹15 to ₹233 during the period of September,

2004 to June, 2005. The shares of the Company underwent share split on July 01, 2005

wherein a share worth ₹10 was split into share worth ₹1. Thereafter, the price of the scrip

again increased from ₹26.70 as on July 01, 2005 to ₹33.65 as on September 13, 2005.

30. Mr. Kiran Dhanavade AHYPD7530R

31. Mr. Jaydeep Mane ALBPM1357J

32. Mr. Amar Adhav AEBPA2694B

33. Mr. Umesh Choukekar AEGPC1262A

34. Mr. Deepak Todkar ADUPT7199Q

35. Mr. Mahesh Kokate AJGPK5105P

36. Mr. Santosh Narvekar ACTPN3464G

37. Mr. Sandeep Kadam AJZPK1388D

38. Mr. Prakash Yadav ABFPY5761L

39. Mr. Vijay Suryavanshi YNPS6546C

40. Mr. Vinod Khetan AHNPK7226L

41. Ms. Anita Khetan ANCPK4061G

42. Mr. Haresh Posnak AAHPP4638C

43. Mr. Dadasaheb Gavhane AIGPG9521L

44. Mr. Lokesh Kapoor AJSPK7027J

45. Mr. Amit Mehta AIDPM8547R

46. Mr. Tejas Thakkar ACVPT6488L

47. Mr. Amul Sheth AUHPS4430R

48. Khodiyar Industries Limited AABCK6551C

49. Mr. Vikas Narnaver ACRPN6457D

50. Mr. Jayesh Kumar Shah AFYPJ2696E

51. Mr. Bachubhai Koyani ANFPK0458E

52. Mr. Dilipkumar Shantilal Mehta ASDPS0763J

53. Mr. Kamlesh Rasiklal Patel ALPPP0536Q

54. Mr. Sureshbhai Baldha AIQPBB670H

55. Mr. Rajender Kumar Gajanand Adukia ACVPA0099C

56. Mr. Mukesh Soni AZFPS0350M

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The preliminary examination in the matter also revealed that the Company had attempted

to show profits by taking into account the sale of unquoted shares along with other

corporate announcements about unrelated business of implementing power projects

through the acquisition of a company (SanInfra Trading Pvt. Limited) of which no

documents were produced to substantiate the claim. The promoters of IFSL were found

simultaneously off loading their holdings in off market transactions to certain clients who

in turn had sold the shares in the market. In view of such prima facie observations, SEBI,

vide an ad interim ex-parte order dated September 28, 2005 (hereinafter referred to as the

'interim order') had inter alia directed the promoter of IFSL namely Sonal Fincap Pvt.

Limited (hereinafter referred to as 'Sonal Fincap') and the directors of IFSL viz. Mr. P. K.

Singh, Mr. Ramdas Kshisagar, Mr. Mukesh Vora, Mr. Dilip Kulkarni, Mr. Rishi Vashist,

Mr. N. Narendra and Mr. Rakesh Singhvi not to buy, sell or deal in the securities of IFSL,

directly or indirectly, till further directions, in this regard. IFSL was directed not to issue

any equity shares or any other instrument convertible into equity shares, in any manner or

not to alter its capital structure in any manner, till further directions. The clients, namely

New Leader Trading Co. Pvt. Limited, Sharpline Trading Co. Pvt. Limited, Right Star

Trading Co. Pvt. Limited, Stockholm Mercantile Co. Pvt. Limited, White Moon Mercantile

Co. Pvt. Limited, Mr. Amar Adhav, Mr. Deepak Narvekar, Mr. Umesh Choukekar, Mr.

Ganesh Raut, Mr. Deepak Todkar, Mr. Rajkishore Singh, Mr. Prakash Yadav, Mr. Jay Shah,

Vishalkumar Textiles Pvt. Limited and Mr. Jayesh Waghela were directed not to buy, sell or

deal in securities of IFSL, directly or indirectly, till further directions. The directions issued

vide the interim order were later confirmed vide Order dated June 16, 2006.

In the meantime, SEBI came to know that Mr. Jay Shah had dealt in the scrip of IFSL

during the period of prohibition. In view of this, SEBI vide another ad interim ex-parte order

dated October 24, 2005, inter alia directed Jay Shah not to buy, sell or deal in any securities,

directly or indirectly, till further directions, in this regard.

2. On completion of the investigation for the period of March 08, 2005 to September 16,

2005, it was revealed that the promoters of IFSL in connivance with certain board of

directors of IFSL, created artificial rise in the price and volume in the scrip of IFSL

through the group of inter-connected entities/ clients. The investigation further revealed

that the two major groups of interrelated clients (categorized in the SCN as 'Group I' and

'Group II' on the basis of their connections and dealings) were dealing in the shares of

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IFSL during the period of examination. These have been categorized, on the basis of their

connections and dealings as detailed hereunder:

a. 'Group I' consists of clients namely Newleader Trading Co. Pvt. Limited, Sharpline Trading

Co. Pvt. Limited, White Moon Mercantile Co. Pvt. Limited, Mr. Vivekanand Daji Patankar,

Mr. Santosh Pawar, Mr. Kiran Dhanavade, Mr. Jaydeep Mane, Right Star Trading Co.

Limited, Mr. Dattu Shitloe, Mr. Amar Adhav, Mr. Deepak Narvekar, Mr. Umesh

Choukekar, Fineline Mercantile Co. Pvt. Limited, Mr. Ganesh Raut, Mr. Deepak Todkar,

Mr. Mahesh Kokate, Mr. Santosh Jagtap, Vishal Kumar Textiles Limited, Mr. Ajit

Suryavanshi, Stockholm Mercantile Co. Pvt. Limited, Mr. Rajkishore Singh, Mr. Santosh

Narvekar, Mr. Jayesh Waghela, Mr. Haresh Posnak, Mr. Sandeep Kadam, Mr. Prakash

Yadav, Mr. Vijay Suryavanshi, Mr. Ranjan Mandal, Mr. Jay Shah, Mr. Dadasaheb Gavhane,

Mr. Amit Mehta, Mr. Tejas Thakkar, Mr. Vinod Khetan, Ms. Anita Khetan, Mr. Lokesh

Kapoor, Cardiod Marketing Pvt. Limited and Mr. Paras Chaplot;

b. 'Group II' consists of clients namely Khodiyar Industries Limited, Mr. Amul Seth, Mr.

Vikas Narnaver, Mr. Jayesh Kumar Shah, Mr. Bachubhai Koyani, Mr. Dilipkumar Shantilal

Mehta, Mr. Kamlesh Rasiklal, Mr. Sureshbhai Baldha, Mr. Rajender Kumar and Mr.

Mukesh Soni.

3. Based on the findings of investigation, SEBI inter alia issued separate show cause notices

(hereinafter referred to as ‘SCN’) (all dated November 01, 2010), the details of which are

mentioned below:

a. SCN under Section 11(4) and 11B of the Securities and Exchange Board of India Act, 1992

(hereinafter referred to as ‘SEBI Act’) read with Regulation 11 of the Securities and

Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to

Securities Market) Regulations, 2003 (hereinafter referred to as 'PFUTP Regulations'),

Regulation 44 of the Securities and Exchange Board of India (Substantial Acquisition of

Shares and Takeover) Regulations, 1997 (hereinafter referred to as 'Takeover Regulations')

and Regulation 11 of the Securities and Exchange Board of India (Prohibition of Insider

Trading) Regulations, 1992 (hereinafter referred to as 'Insider Trading Regulations') to

IFSL Limited and its promoters and directors namely Sonal Fincap, Dr. Jayant M. Muley,

Mr. S.S. Dua, Mr. Mukesh Vora, Mr. Dilip Kulkarni, Mr. Ramdas Kshirsagar, Mr.

Premkumar Singh and Mr. Jagdish Uttam Parab (hereinafter collectively referred to as 'the

Company and its promoter/ directors and individually by their respective names);

b. SCN under Section 11(4) and 11B of the Securities and Exchange Board of India Act, 1992

(hereinafter referred to as ‘SEBI Act’) read with Regulations 11 of the PFUTP Regulations

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to Mr. Jaydeep Mane, Mr. Dattu Shitloe, Mr. Kiran Dhanavade, Mr. Haresh Posnak, Mr.

Ajit Suryavanshi, Mr. Lokesh Kapoor, Mr. Santosh Pawar, Khodiyar Industries Limited,

Mr. Sureshbhai Baldha, Cardiod Marketing Pvt. Limited, Mr. Vijay Suryavanshi, Mr.

Mahesh Kokate, Mr. Dadasaheb Gavhane, Newleader Trading Co. Pvt. Limited, White

Moon Mercantile Co. Pvt. Limited, Mr. Deepak Narvekar, Mr. Ganesh Raut, Mr. Deepak

Todkar, Mr. Jayesh Waghela, Mr. Sandeep Kadam, Mr. Prakash Yadav, Mr. Mukesh Soni,

Mr. Jay Shah, Mr. Paras Chaplot, Mr. Bachubhai Koyani, Mr. Tejas Thakkar, Mr. Santosh

Jagtap, Mr. Santosh Narvekar, Mr. Ranjan Mandal, Mr. Vinod Khetan, Mr. Kamlesh

Rasiklal, Mr. Rajender Kumar, Mr. Dilipkumar Shantilal Mehta, Mr. Vivekanand Daji

Patankar, Mr. Jayesh Kumar Shah, Mr. Amit Mehta, Sharpline Trading Co. Pvt. Limited,

Mr. Amar Adhav, Mr. Umesh Choukekar, Fineline Mercantile Co. Pvt. Limited, Mr.

Rajkishore Singh, Ms. Anita Khetan, Vishal Kumar Textiles Limited, Mr. Amul Seth, Mr.

Vikas Narnaver, Right Star Trading Co. Limited and Stockholm Mercantile Co. Pvt.

Limited (hereinafter collectively referred to as 'the inter-connected clients' and individually

by their respective names).

4. The SCNs alleged that IFSL had made various premature and false public announcements

towards its activities in power sector and the promoter of the Company had transferred

huge quantities of its shares to certain clients, who in turn had created an artificial rise in

the price and volume of IFSL. The SCNs also alleged that some of the directors of IFSL

had actively traded in the scrip of IFSL while acting as part of the inter-connected group of

client . The SCNs, alleged that the acts of the Company and its promoter/ directors were in

violation of the Regulations 3(a), 3(b), 3(c), 3(d), 4(2)(a), 4(2)(b), 4(2)(e), 4(2)(k), 4(2)(r) of

the PFUTP Regulations, Regulation 13(3), 13(6) of the Insider Trading Regulations and

Regulation 12 of the Takeover Regulations.

The SCNs to the inter-connected clients alleged that the clients belonging to the two

groups (found connected by the common phone number, common address, off market

transfer of shares, introduction to brokers, etc.) were acting in concert and created artificial

volumes and price rise in the scrip of IFSL. It has also been alleged that certain clients had

received shares from the promoter through off-market deals, which were off-loaded in the

market with the aid of other connected clients. The SCNs, therefore, alleged that the inter-

connected clients were acting in concert and that the same contributed to the increase in

the volume and price rise in the scrip of IFSL, which constitutes the violation of

Regulations 3(a), 3(b), 3(c), 3(d), 4(2)(a), 4(2)(b) and 4(2)(e) of the PFUTP Regulations.

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Accordingly, the SCNs called upon the Company, its promoter/ directors and the inter-

connected clients, to show cause as to why action under Section 11B and 11(4) of the

SEBI Act, including directions restraining them from buying, selling or dealing in the

securities in any manner for a particular period or any other direction(s) as deemed

appropriate by the competent authority should not be initiated against them. The

Company, its promoter/ directors and inter-connected clients were advised to file their

reply within a period of 21 days of the receipt thereof. It was also informed that in case of

failure, it would be presumed that they had no explanation/ submission to offer and that

SEBI may proceed with the matter on the basis of material available on record.

5. The SCNs were sent to the Company, its promoter/ directors and inter-connected clients

by way of 'Registered Post Acknowledgement Due' at their last known addresses. The

SCNs were delivered to the noticees namely Mr. Lokesh Kapoor, Mr. Ganesh Raut, Mr.

Deepak Todkar, Mr. Jayesh Waghela, Mr. Jay Shah, Mr. Paras Chaplot, Mr. Vinod Khaitan

and Ms. Anita Khaitan. The SCNs issued to the other noticees were returned undelivered

by the postal department. Since, the Company and its promoter/ directors were not found

at their last known address, the SCNs were uploaded on the SEBI website under the head

“Unserved Summons/ Notices” and were also affixed at the last known addresses of the

Company, its promoter/ directors and inter-connected clients so as to enable these to

submit their reply. In the absence of any reply, SEBI also issued a public notice in the

national and regional daily newspapers on February 15, 2012, intimating about the SCNs,

requiring thereby, the Company, its promoter/ directors and the inter-connected clients to

reply to the SCNs within 15 days of the publication, thereof. I note that, the public notice

was issued as a mode of substituted service on the Company and its promoter/ directors,

with an advice that in the absence of any reply to the respective SCN, the matter would be

proceeded ex-parte.

6. Before proceeding further, an opportunity of personal hearing was granted to Mr. Vinod

Khetan, Ms. Anita Khetan and Mr. Lokesh Kapoor on July 17, 2012. However, none of

these turned up for the personal hearing. In the meantime, Mr. Vinod Khetan and Ms.

Anita Khetan vide respective letters both dated July 12, 2012, requested for a copy of the

SCN and an opportunity of personal hearing. The request of Mr. Vinod Khetan and Ms.

Anita Khetan was acceded to and accordingly a copy of the SCN were forwarded to them.

Thereafter, an opportunity of personal hearing was granted to Mr. Vinod Khetan, Ms.

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Anita Khetan, Mr. Lokesh Kapoor and Mr. Paras Chaplot before me on February 18, 2013.

This time again, Mr. Vinod Khetan and Ms. Anita Khetan failed to appear for the personal

hearing. The hearing notice in respect of Mr. Paras Chaplot and Mr. Lokesh Kapoor could

not be delivered.

In the interest of natural justice, one more opportunity of personal hearing was granted to

Mr. Vinod Khetan, Mr. Anita Khetan, Mr. Lokesh Kapoor and Mr. Paras Chaplot on

March 14, 2013. On this date, Mr. Vinod Khetan and Mr. Anita Khetan appeared for the

personal hearing through their authorised representative Mr. A. Vyas, who made oral

submissions. The authorised representative appearing for Mr. Vinod Khetan and Ms. Anita

Khetan also requested for seven (7) days' time for filing of the written submissions, which

was duly granted. However, no written submissions have been filed by these till date.

In the meantime, the noticee namely Mr. Paras Chaplot vide his letter dated March 13,

2013, requested for certain documents. The same were provided to him vide SEBI letter

dated July 09, 2014. Thereafter, vide his letter dated July 21, 2014, Mr. Paras Chaplot

requested for an extension of time for filing of his reply and rescheduling of the personal

hearing.

7. In the interests of natural justice, one more opportunity of personal hearing was granted to

Mr. Lokesh Kapoor and Mr. Paras Chaplot on August 04, 2014. On August 04, 2014, the

authorised representative of Mr. Lokesh Kapoor appeared and made oral submissions. The

authorised representative appearing for Mr. Lokesh Kapoor was also granted one week's

time for filing of the written submissions.

Thereafter, one more opportunity of personal hearing was granted to Paras Chaplot on

September 01, 2014. However, he failed to appear for the personal hearing on the date

fixed. As sufficient opportunities of personal hearing were already granted to him, the

matter was proceeded ex-parte based on the material available on record. In the meantime,

Mr. Paras Chaplot vide his letter dated September 10, 2014, submitted that he had received

the hearing intimation subsequent to the hearing date as he was not in the town at the time

of its delivery. Considering the request, he was granted one more opportunity of personal

hearing on November 17, 2014. On this date again, Mr. Paras Chaplot failed to appear for

the personal hearing. In view of this, I am compelled to proceed with the matter ex-parte

based on the material available on record in respect of Mr. Paras Chaplot and other inter-

connected clients.

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I have seen the attempts made by SEBI to deliver the SCNs to the noticees and note the

steps taken to serve the SCNs to the Company, its promoter/ directors, who were not

traceable at their last known addresses. I note that the principles of natural justice had been

duly complied with for delivering the SCNs. Further, as the subject matter of the case is

old, I am compelled to proceed with the matter ex-parte as against the persons/ entities who

had failed to submit any reply, based on the material available on record.

8. I also note that as considerable time had elapsed from the date of hearing granted to Mr.

Vinod Khetan and Ms. Anita Khetan, in the interest of natural justice, SEBI issued a letter

dated December 03, 2014, to these two asking thereby whether they require another

opportunity of personal hearing or submit further written submissions. In reply, Mr. Vinod

Khetan and Ms. Anita Khetan vide respective letters dated December 21, 2014 requested

for four weeks time to submit the written submissions. I note that, till date, SEBI has not

received the written submission of Mr. Vinod Khetan and Ms. Anita Khetan.

9. The submissions of Mr. Vinod Khetan, Ms. Anita Khetan and Mr. Lokesh Kapoor in brief

are as under:

a. Submission of Mr. Vinod Khetan and Ms. Anita Khetan (clients belonging to 'Group

I')

- The SCN has not alleged that these were connected with the inter-connected clients

forming part of 'Group I' with the same address/ phone number.

- There is no proof that any of the 37 entities allegedly part of 'Group I' had introduced

Vinod Khetan or Ms. Anita Khetan to the respective broker.

- None of the annexures to the SCN show that Vinod Khetan or Ms. Anita Khetan had

increased the price of the scrip of IFSL.

b. Submission of Mr. Lokesh Kapoor (client belonging to 'Group I')

- His transactions in the scrip of IFSL are nine year old. In the year 2005, he had dealt in

few scrips including Today's Pen Limited, Mega Corporation Limited and IFSL and also

received SCN regarding his transactions in the said three scrips. He had been discharged

and proved non guilty in the matters of Today's Pen Limited and Mega Corporation

Limited.

- Proof of delivery or proof of attempt to deliver the summons are not enclosed with the

SCN. The information as sought in summons are already available to SEBI.

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- His role/ wrong doing has not been explained in the entire SCN. The SCN do not

contain any specific charges against him.

- He had received 1,17,927 shares in off market from Mr. Raj Kishore Singh. He had

purchased 3,40,472 shares (0.07% of the total market volume during the entire

investigation period i.e. from March 08, 2005 to September 16, 2005) at an average price

of ₹250.24 and sold 3,81,498 shares (0.07% of the total market volume during the entire

investigation period i.e. from March 08, 2005 to September 16, 2005) at an average price

of ₹244.20. He had traded in the narrow price range of ₹244 to ₹250. He had dealt only

before the stock split and have not traded after stock split. The same shows that his

trades were immaterial, insignificant and had no adverse impact on market equilibrium.

- He had received off-market shares in consideration of old receivable from one Mr. Vishal

Malaviya. He does not know Mr. Raj Kishore Singh and while receiving the shares, he

was not knowing that the shares were received from Raj Kishore Singh's account.

- There is no allegation of synchronised trades against him. The details like order quantity,

order price, order time of buyer and seller are not mentioned in the analysis of

incremental trades.

- He had entered 6 trades during March 08, 2005 to May 06, 2005, and a huge time

difference i.e. of more than one minute to more than two hours was there. Ms. Anjali

Batra is counterparty in 3 of 6 trades. She is not included in the list of connected

entities. The available analysis of the trades and chart does not suggest his role in

manipulation of price.

- His trades under scrutiny are 17,540 shares as compared to his total trading of 7,21,970

shares. As per the analysis on record, rest of his trades i.e. 7,04,430 shares are clean.

- He had not traded in continuous trading pattern and most of his deals were delivery base.

10. I have carefully considered the SCNs dated November 01, 2010 issued to the Company, its

promoter/ directors and the inter-connected clients, the oral submissions wherever made

and the material available on record. Considering the above, the charges raised in the SCN

are being dealt below in seriatim:

a. Whether IFSL and its directors had made premature/ false announcements and also

concealed the information about the promoter's holding in the Annual General Meeting

notice to the shareholders and Bombay Stock Exchange (hereinafter referred to as

'BSE')?

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b. Whether Mr. Ramdas Kshirsagar while acting as 'Chairman' and other directors had taken

control of IFSL, without making the requisite disclosures under the Takeover

Regulations?

c. Whether the promoter of IFSL namely Sonal Fincap had transferred the shares of IFSL

in off-market to a group of inter-connected clients who had offloaded these in the market

which increased the price and volume in the scrip of IFSL?

d. Whether the inter-connected clients forming part of the two groups had executed

synchronized/ structured trades and influenced the volume and price in the scrip of

IFSL?

11. Whether IFSL and its directors had made premature/ false announcements and

also concealed the information about the promoter's holding in the Annual General

Meeting notice to the shareholders and Bombay Stock Exchange (hereinafter

referred to as 'BSE')?

a. I have seen the list of major announcements made by IFSL at BSE as alleged in the SCN,

the same are also being reproduced below for ready reference:

TABLE A

Date & time Major Announcements

May 09, 2005 Meeting of the Board of Directors of the Company will be held on May 16, 2005, inter alia, to consider split up/subdivision of equity shares.

June 03, 2005

Meeting of the Board of Directors of the Company will be held on June 10, 2005, inter alia, to consider the following: 1. The acquisition of San-Infra Trading Pvt. Limited, a solid waste to energy power company. San-Infra proposes to enter into a power purchase agreement for generation of power out of waste material for the state electricity board. 2. Appointment of a valuer to value San-Infra.

June 14, 2005 The Board of Directors of the Company at its meeting held on June 10, 2005, inter alia, has : 1. Appointed Deloitte Haskins & Sells as valuer to value San Infra 2. Acquisition of San Infra, a power company will be considered on the basis of valuation report to be submitted by Deloitte Haskins & Sells, the valuers. 3. Appointment of following persons as Additional Directors:

a) Mr. Dilip Kulkarni b) Mr. Mukesh Vora

June 29, 2005 IFSL Board recommends a dividend of 10 % on the Equity Shares.

July 05, 2005 The Company is in the process of developing ₹800 Million Renewable Energy Power Project with Kalyan Dombivali Municipal Corporation. ... The Company will develop the said Power Station through its wholly owned subsidiary San Infra Pvt. Limited.

July 19, 2005 The Company in association with ENTEC Biogas GMBH, Austria has received a letter of Intent to execute 1000 TPD MSW energy project at Jakarta, Indonesia on turnkey basis from M/s. Metra Impex Co LLC, Dubai, issued on behalf of M/s. Indoenviro Waste Management Co, Jakarta. Indoenviro Waste Management Co is promoted by BOSAWA and KODEL group of Indonesia.

Page 11 of 32

BOSAWA and KODEL group are engaged in shipping and conventional energy plants, hydel electricity, cement, fabrication and other activities. The plant is designed to produce 12 MW Electricity and 250 TPD Bio Fertilizer after blending with other green wastes. The order value is around Rs 2250 mn. The project construction will start in October 2005 and it is expected that the electricity generation will start in the beginning of the next fiscal.

Aug 29, 2005 i) IFSL secures an 8 MW power project at Kalyan. ii) The company would gain Rs. 1600 million on the Carbon Credit advantage

on the Kyoto protocol.

iii) Gross expected revenue from the project to be in the region of ₹4000 million over the project life cycle etc.

Aug 31, 2005 The register of members & share transfer Books of the Company will remain closed from September 24, 2005 to September 30, 2005 (both days inclusive) for the purpose of Payment of Dividend and 19th Annual General Meeting of the Company to be held on September 30, 2005.

Sept 27, 2005 IFSL Ltd has announced that the Company has signed a MoU with FAHLKE Control Systems GMBH for jointly executing a 1000 TPD Municipal Solid Waste to Energy Project in Canada. The Company's share of the project is valued at an estimated at USD 37 million. ... ...

From above, it is noted that IFSL had made various announcements towards its activities,

the details of these and the discussion about their authenticity are discussed below. I note

that IFSL during the course of investigation had failed to provide details about the

announcements or San Infra to SEBI.

i. IFSL vide the public announcement dated June 03, 2005, had proposed to acquire a

company namely San-Infra. For the same, it proposed to appoint a valuer for the

preparation of a valuation report. Later, on June 14, 2005, by way of another

announcement, the Board of Directors of IFSL appointed 'Deloitte Haskins and Sells'

as valuer to value San Infra.

I note that during the course of investigation, IFSL has submitted before SEBI that the

valuation was carried out by a Chartered Accountant, however, it has failed to submit a

copy of the valuation report inspite of being specifically asked about it by SEBI. SEBI in

order to independently verify the facts had also asked 'Deloitte Haskins and Sells' to

submit a copy of the valuation report of San-Infra. To this, 'Deloitte Haskins and Sells'

replied to SEBI that they have not carried out any such valuation for IFSL. This shows

that the announcement by IFSL regarding valuation by 'Deloitte Haskins and Sells' is

false.

ii. IFSL on July 05, 2005, announced that it is in the process of developing ₹800 million

'Renewable Energy Power Project' with Kalyan Dombivali Municipal Corporation

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(hereinafter referred to as 'KDMC'). It was also said that the power station will be

developed through its 'wholly owned subsidiary' namely San Infra.

In this regard, I note that till the date of this announcement there was no information/

intimation to show that IFSL had actually acquired San-Infra or San-Infra has become

the wholly owned subsidiary of IFSL. The announcements as noted above relating to

the power projects indicated that IFSL’s venture in the power project was at a

preliminary stage. It is seen that IFSL was never in the power project activity.

IFSL in its filing with BSE on June 03, 2005, had mentioned San-Infra to be a solid

waste to energy power company. However, from the database of the company filings as

maintained by the Department of Company Affairs (DCA) it was observed that San-

Infra was registered only in 2002 and was in the business of 'retail trade not elsewhere

classified'. The power generation activities are not be considered in the nature of retail

trade.

I also note that as per the annual report for the year 2004-2005, the project with KDMC

was expected to be operational from October 2006. However, vide another

announcement to BSE on August 29, 2005, IFSL had made projections that 'gross

expected revenue from the project to be around ₹4,000 million over the project life

cycle'. Such huge projection of revenue just after the announcement of project and

pending acquisition of San-Infra, gives a clear impression that IFSL had made

premature positive announcements without highlighting the risk factors involved in

such projects.

iii. On September 27, 2005, IFSL made another announcement that it has signed an MoU

with one FAHLKE Control Systems GMBH, Germany for jointly executing 1,000 TPD

(tons per day) 'municipal solid waste to energy' project in Canada. In this announcement

one Mr. Dilip Kulkarni, Chief Executive Officer of IFSL also said that this project will

extend the foot prints of IFSL beyond India and Asia where IFSL already enjoys a

significant presence.

I note that as on the date of such announcement, IFSL had not done/ executed any

business in the nature of 'energy production' and it had no real presence/ experience in

waste to energy space. Till that date, IFSL had made only a few announcements in this

regard, as discussed above and it was only involved in buying and selling of domestic

Page 13 of 32

listed companies. In view of the same, it can be concluded that the projects which were

yet to be operational and were only on paper (as only agreements were signed a few days

prior to such announcement) cannot be considered to have granted IFSL a significant

presence in India and Asia. The same also shows that the announcement was premature

and misleading.

iv. I note from the SCN that IFSL had shown a meagre profit in the financial years ending

March 2003 and March 2004. For the financial year ending March 31, 2005, the net

profit of IFSL increased to ₹6.66 crores, stated to be on account of profits realized as a

result of the disposal of 'unquoted shares' which according to the balance sheet of

IFSL had been valued on the basis of 'negotiated price between the buyer and IFSL, at

an arm’s length transaction'. On the basis of such profit figures for the year 2004-2005,

IFSL declared a dividend of 10% on the equity shares and also made an announcement

in this regard on June 29, 2005. I note that IFSL had never declared dividend before

June 29, 2005. The announcement of the payment of dividend had coincided with

IFSL's other announcements as discussed above.

During the course of investigation, the bank account statement of IFSL with IDBI

Bank, Nariman Point (bearing A/c no. 0041020000022552) was examined on sample

basis which showed the credit entry from another bank account of IFSL also held with

IDBI Bank, Indore Branch (bearing A/c no. 001102000005593) on December 31, 2004.

A further examination revealed that the funds to the tune of ₹50,00,000 in the bank

account maintained with Indore branch were received from the bank account

maintained by IFSL with the Nariman Point branch.

v. IFSL in its notice to BSE regarding 19th Annual General Meeting fixed for September

30, 2005, had mentioned the promoter's holding at 16.88%. The investigation in the

matter revealed that the promoter of IFSL had transferred their almost entire holding

through the off-market transactions between July 11, 2005 to August 31, 2005. Such

facts are further confirmed from the analysis of the demat statement of the promoters.

In view of the same, the notice of IFSL to BSE is clearly a misleading statement about

the promoter's holding.

I note that IFSL pursuant to the passing of the interim order, vide its letter dated October

11, 2005 had replied and stated that it had no knowledge of the trading by promoters in off

market and it had no control over the trades executed on the floor of the exchange/ off-

Page 14 of 32

market deals done by its shareholders including the promoters. It also said that the

corporate announcements were made in the normal and usual course of business and that

the same had hardly any impact on the price/ volume of trading in the scrip of IFSL. It

was also said that the price of IFSL's share was consistently rising since August 2004.

I note that SEBI during the course of investigation had asked IFSL to submit the relevant

documents in support of the above discussed announcements. However, IFSL had failed

to produce such documents, till date. It is observed that none of the Company and its

promoter/ directors have submitted their replies to counter the allegations leveled in the

SCN.

Based on the above facts and circumstances of the case, it can safely be concluded that the

above discussed announcements were made purely to attract the interest of lay investors in

the scrip of IFSL and thereby creating liquidity in the scrip. I also note that directors

namely Mr. Premkumar Singh, Mr. Jagdish Uttam Parab, Mr. Ramdas Kshirsagar, Mr. Dilip

Kulkarni, Mr. Mukesh Vora, Mr. S.S. Dua were on the Board of Directors of IFSL when

the abovesaid announcements were made during the period of May 2005 to September

2005. Further, it is also noted that Mr. Jayant M. Muley was appointed as director of IFSL

on August 16, 2005 and he had attended the board meetings on two days i.e. September 02,

2005 and September 25, 2005.

In view of the above, the act of making such pre-mature announcement constitutes

violation of Regulation 3 (a), (b), (c), (d) and Regulation 4(2)(k) and 4(2)(r) of the PFUTP

Regulations by IFSL and its directors who were on the Board of the Company during the

period when the discussed corporate announcements were made i.e. from May 09, 2005 to

September 27, 2005.

b. Whether Mr. Ramdas Kshirsagar while acting as 'Chairman' and other directors

had taken control of IFSL, without making the requisite disclosures?

The SCN has alleged that Board of IFSL had witnessed significant change during the

period of March 11, 2005 to May 05, 2005. During this period, all the original members of

the Board of Directors had resigned and a new set of members took control over the

functions of IFSL. Such new members as per the SCNs were Mr. Jagdish U. Parab, Mr.

Prem Kumar Singh, Mr. Ramdas Kshirsagar and Mr. Rakesh Singhvi. The details regarding

date of appointment and date of ceasing of the directors of IFSL has been tabled as under:

Page 15 of 32

TABLE B

S.No. Name Date of appointment Date of ceasing

1 Mr. Premkumar Singh March 11, 2005 August 22, 2005

2 Mr. Jagdish Uttam Parab March 11, 2005 September 02, 2005

3 Mr. Rishi Vashist May 25, 2005 August 21, 2005

4 Mr. Ramdas Kshirsagar March 01, 2005 August 22, 2005

5 Mr. Dilip Kulkarni June 10, 2005 June 30, 2006

6 Mr. Mukesh Vora June 10, 2005 June 30, 2006

7 Mr. Rakesh Singhvi April 15, 2005 May 05, 2005

8 Dr. Jayant M. Muley August 16, 2005 January 31, 2006

9 Mr. S.S. Dua August 03, 2005 March 25, 2006

10 Mr. Rajesh Kaushik October 29, 2005 December 30, 2005

11 Mr. Mukesh Kaushik October 29, 2005 September 30, 2006

12 Mr. Bijaya Kumar Sahoo March 25, 2006

13 Mr. Ashish Mohapatra June 30, 2006

14 Mr. Amar Walmiki June 30, 2006

I note from the SCN that Mr. Ramdas Kshirsagar who joined the board of IFSL on March

01, 2005, had taken major policy decisions in the affairs of the Company and also

appointed other directors in the board as noted from the annexure of minutes of board

meetings. He had acted as a Chairman for all the subsequent meetings till he ceased to be a

director of IFSL on August 22, 2005. During the Chairmanship of Mr. Ramdas Kshirsagar

from April 25, 2005, IFSL had started taking major decisions like changing the name of the

Company, splitting of shares, proposed acquisition of San-Infra, recommendation of

dividend, etc. During this period, the board of IFSL also took decisions on the

appointment of other directors into the board suo moto or on the resignation of other

members from the board. I note that Mr. Ramdas Kshirsagar had joined the board of IFSL

as an additional director and had chaired the board for all subsequent board meetings till

his resignation. In view of the same, it can be concluded that Mr. Ramdas Kshirsagar, along

with the other board members (who during their respective tenure had acted in concert

with Mr. Ramdas Kshirsagar while he was Chairman), were in control of IFSL and that

requisite disclosures were not made in that regard.

c. Whether Sonal Fincap (a promoter of IFSL) had transferred the shares of IFSL in

off-market to a group of interconnected entities and failed to make necessary

disclosures?

i. The investigation conducted by SEBI had observed large scale off-market transfer of

shares of IFSL during the period of investigation to the group of inter-connected

clients/ entities. I note from the SCN that the entities/ persons who had received the

shares from the promoter of IFSL along with other connected entities, while trading in

Page 16 of 32

the scrip of IFSL, bought 71,04,547 shares (79% of the entire market purchase) and sold

51,46,085 shares (accounting for 57% of the entire market sales) during the period of

March 08, 2005 to June 30, 2005 (i.e. the period prior to stock split). In the period after

the stock split i.e. July 01, 2005 to September 16, 2005, such entities/ persons have

bought 19,26,86,117 shares (38% of the entire market purchases) and sold 24,55,96,436

shares (49% of the entire market sales).

ii. I note from the demat account statement of IFSL that by the end of August 31, 2005,

Sonal Fincap, one of the promoters of IFSL had transferred 99.01 lakh shares of IFSL

accounting for 12.37% of the total number of shares to various entities in off market as

detailed hereunder:

TABLE C

Date Source Client name Target Client Name No. of shares

11-Jul-05 Sonal Fincap Jagdish Uttam Parab 1,40,000

11-Jul-05 Sonal Fincap Shah Jay 3,00,000

11-Jul-05 Sonal Fincap Ganesh S. Raut 4,65,315

12-Jul-05 Sonal Fincap Dattu Aba Shitole 1,54,000

15-Jul-05 Sonal Fincap Ranjan Mandal 1,55,059

21-Jul-05 Sonal Fincap Jayesh Waghela 2,44,813

26-Jul-05 Sonal Fincap Jayesh Waghela 3,33,926

08-Aug-05 Sonal Fincap Sharpline Trading Co. Pvt. Ltd. 2,00,000


11-Aug-05 Sonal Fincap Surekha H. Sanghvi 1,00,000


17-Aug-05 Sonal Fincap Ritedeal Trading Co. Pvt. Ltd. 1,00,000


22-Aug-05 Sonal Fincap Newleader Trading Co. Pvt. Ltd. 30,00,000

22-Aug-05 Sonal Fincap Deepak A. Narvekar 1,00,000

23-Aug-05 Sonal Fincap Stockholm Mercantile Co. Pvt. Ltd. 3,00,000


23-Aug-05 Sonal Fincap Shah Jay 10,00,000




27-Aug-05 Sonal Fincap Jayesh Waghela 1,25,719

31-Aug-05 Sonal Fincap Vishal Kumar Textiles Pvt. Ltd. 2,53,000

Total 99,01,661

As discussed in the earlier paragraphs, I note that IFSL on one hand had made various

positive announcements including the proposal to enter into the power business by

tying up with a company and on the other hand the promoter of the Company (Sonal

Fincap) had offloaded its stake through off market transactions. Such offloading of

shares had clearly reduced the shareholding of the promoters in IFSL, however, no

disclosures in this regard under the Regulation 13(3) of the Insider Trading Regulations

were made. After the issuance of the SEBI directions vide the interim order, Sonal

Fincap vide its letter dated October 11, 2005 had denied the allegations, however,

Page 17 of 32

subsequently it never responded/ cooperated in the investigation of SEBI. The

summons issued to Sonal Fincap also returned undelivered on all the occasions. IFSL

has also failed to make any disclosure regarding the change in the shareholding pattern

of the promoters. In view of the same, I find Sonal Fincap guilty of not making relevant

disclosures under Regulation 13(3) of the Insider Trading Regulations.

12. Whether the inter-connected clients forming part of the two groups had executed

synchronized/ structured trades and influenced the volume and price in the scrip of

IFSL?

i. I note from the SCN that large scale off loading of the shares of IFSL had happened

during the investigation period as also detailed in Table C above. The entities who

received these shares in off-market have been found to be actively trading in the scrip of

IFSL during the period of investigation. As discussed in the earlier part of the order, the

SCN has alleged that the inter-connected clients belonging to 'Group I' and 'Group II'

had traded in the scrip of IFSL. The SCNs have also alleged that these inter-connected

clients had indulged in substantial trading in the shares of IFSL during the investigation

period and thereby were instrumental in the creation of artificial volume in the shares of

IFSL and its artificial price rise. I note that in response to the SCN, only three clients

namely Mr. Vinod Khetan, Ms. Anita Khetan and Mr. Lokesh Kapoor have attended

the personal hearing and made oral submissions. No written submissions have been

filed by the said clients.

ii. While proceeding further, let me consider the trading activities of the 'Group I' clients

during the period of investigation i.e. March08, 2005 to September 16, 2005:

TABLE D

Trading

before stock split after stock split

S. No.

Client Traded through Broker

Connection Purchase qty. / avg.

rate (₹)

Sold qty. / avg. rate

(₹)

Purchase qty. / avg.

rate (₹)

Sold qty./

avg. rate (₹)

1

Ramdas Kshirsagar

UTI Securities Ltd. and Networth Broking Ltd.

a. He was a common link between Newleader Trading Co. P. Ltd., Sharpline Trading Co. P. Ltd. and IFSL. In all these companies he was a director and had also acted as chairman of IFSL

b. Phone no. given in the KYC documents are '56546670' and '56546666'.

2,69,346

₹252.75

1,18,560

₹249.69

0

1,20,550

₹26.05

3,000

₹225.50

0 1,20,000

₹25.41

1,50,000

₹26.18

2. Jagdish Parab*

Insight Share Brokers P. Ltd., IndiaBulls Securities Ltd.

a. Had received 1,40,000 shares of IFSL in off market from Sonal Fincap,

b. Phone no. given in the KYC documents is '56546670' and '56546666'.

1,69,520

₹226.63

1,69,050

₹226.93

56,92,864

₹23.8

48,09,423

₹23.65

54,317

₹257.72

0 0 20

₹28

Page 18 of 32

and NNM Securities P. Ltd.

24,460

₹237.24

15,670

₹239.22

50,661

₹23.41

50,661

₹23.74

3 Premkumar Singh

Networth Broking Ltd

a. He was one of the Director of IFSL during the period of 11/03/2005-22/08/2005

b. Phone no. given in the KYC documents is '56546666'.

3,000

₹225.50

0 0 25,250

₹24.58

4 Newleader Trading Co. Pvt. Ltd.*

India Bulls Securities Ltd.

a. Common address as that of Sonal Fincap (promoter, IFSL) i.e. D-708, Crystal Plaza, New Link Road, Andheri (West), Mumbai,

b. It had received 30,00,000 shares from Sonal Fincap in off market,

c. Director and authorised person is Ramdas Kshirsagar (also a director of IFSL),

d. Phone no. given in the KYC documents is '56546668'.

- - 1,41,01,801

₹29.59

1,68,91,615

₹27.48

5 Sharpline Trading Co. Pvt. Ltd. *

Insight Share Brokers Pvt. Ltd.

a. Director is Ramdas Kshirsagar, who is also a director of IFSL,

b. It had received 27,00,000 shares from Sonal Fincap in off market,

c. Phone no. given in the KYC documents is '56546666'.

0 0 5,18,61,488

₹27.66

5,41,18,075

₹27.25

6 White Moon Mercantile Co. P. Ltd.

IndiaBulls Securities Ltd.

a. Director is Santosh Jagtap, b. Phone no. given in the KYC

documents is '56546666'.

0 0 0 10,00,000

₹26

7 Santosh Jagtap

IndiaBulls Securities Ltd., Ruchiraj Shares & Stock Brokers Pvt. Ltd. and K&A Securities Ltd.

a. Director of White Moon Mercantile Co. P. Ltd.


0 0 0 3,00,000

₹ 25.87

1,14,400

₹263.56

1,76,500

₹267.34

0 0

22,500

₹258.68

0

0 2,25,000

₹24.35

8

Dattu Shitloe*

IndiaBulls Securities Ltd., Joindre Capital Services Limited and K&A Securities Ltd.

a. He had received 1,54,000 shares of IFSL in off market from Sonal Fincap,

b. He was director of Righstar Trading Company P. Limited,


0 0 1,70,405

₹24.9

3,26,777

₹25.2

3,15,764

₹235.48

3,60,396

₹237.01

28,85,642

₹24.07

30,39,849

₹24.77

45,500

₹257.97

11,480

₹225.50

20,00,000

₹28.01

23,50,000

₹26.58

9 Rightstar Trading Company Pvt. Ltd.


a. Director is Dattu Shitole, who had received 1,54,000 shares of IFSL in off market from Sonal Fincap,

b. Phone no. given in the KYC documents i.e. '56546666'.

0 0 49,089

₹27.85

36,64,094

₹26.60

10 Deepak Narvekar*

IndiaBulls Securities Ltd. and UTI Securities Ltd.



1,01,625

₹239.99

93,645

₹237.73

39,60,187

₹25.77

44,43,314

₹25.29

3,58,675

₹233.4

2,61,360

₹256.75

0 0

11 Ganesh Raut*

IndiaBulls Securities Ltd. and Galaxy Broking Ltd.


b. He was the director of Fineline Merchantile Co. P. Limited.


1,88,660

₹244.38

1,22,995

₹227.62

33,22,413

₹27.56

34,74,970

₹26.68

0 56,500

₹256.42

9,59,687

₹22.58

16,25,000

₹25.14

12 Fineline Merchantile Co. P. Ltd.


a. Director is Ganesh Raut, who had received 4,65,315 shares of IFSL in off market from Sonal Fincap,

b. Phone no. given in the KYC documents is

0 0 5,10,392

₹34.7

60,10,392

₹34.72

Page 19 of 32

'56546666'.

13 Stockholm Mercantile Co. P. Ltd.*

Joindre Capital Services Ltd.


b. Director is RajKishore Singh c. Phone no. given in the KYC documents is

'56546666'.

0 0 63,27,213

₹26.82

77,19,988

₹.27.79

14 RajKishore Singh

Fortis Securities Ltd

a. Director of Stockholm Mercantile Co. Pvt. Ltd.,

b. Phone no. given in the KYC documents is. ' 56546668'

5,87,548

₹234.35

3,91,199

₹236.55

17,23,852

₹26.17

34,11,542

₹26.08

15 Jayesh Waghela*

Peninsular Capital Market Ltd. and India Infoline Securities Pvt. Ltd.


b. Phone no. given in the KYC documents are '56546669' and '56546670'.

c. He was introduced to Peninsular Capital Market Limited by Vinod Khetan

2,51,965

₹237.38

3,30,700

₹245.2

2,37,49,757

₹25.86

2,47,70,958

₹25.44

0 0 6,83,000

₹26.45

4,10,000

₹33.44

16 Vishal Kumar Textiles P. Ltd.*

Ruchiraj Shares & Stock Brokers Pvt. Ltd.


b. Director is Ajit Suryavanshi c. Phone no. given in the KYC documents is

'56546670'

0 0 1,20,01,776

₹26.66

1,30,77,215

₹26.13

17 Ajit Suryavanshi

Fortis Securities Ltd. and Galaxy Broking Ltd.

a. Director of Vishal Kumar Textiles P. Limited,

b. Phone no. given in the KYC document is '56546666'

1,01,135

₹230.01

4,750

₹222.5

0 1,15,000

₹26.98

0 0 7,63,155

₹26.56

10,79,455

₹26.47

18 Ranjan Mandal*

Ruchiraj Shares & Stock Brokers P. Ltd.

a. Had received 1,55,059 shares of IFSL in off market from Sonal Fincap

1,44,671

₹244.66

3,82,321

₹239.7

33,14,531

₹24.09

30,62,185

₹23.61

19 Jay Shah* India Infoline Securities Pvt. Ltd.

a. Had received 13,00,000 shares of IFSL in off market from Sonal Fincap

0 0 51,82,633

₹28.24

67,32,633

₹28.27

20 Lokesh Kapoor

Ruchiraj Shares & Stock Brokers P. Ltd.

a. Received shares in off market from Rajkishore Singh, director of Stockholm Merchantile Co. P. Limited, who received 7,29,829 shares of IFSL from Sonal Fincap.

3,40,472

₹250.24

3,81,498

₹244.2

0 0

21 Cardiod Marketing Pvt. Ltd.

Galaxy Broking Ltd.

a. Had received shares in off-market from Ganesh Raut (Director of Fineline Merchantile Co. P. Limited who received 4,65,315 shares from Sonal Fincap) and Rightstar Trading Co. Pvt. Ltd. (whose director is Mr. Dattu Shitole who received 1,54,000 shares from Sonal Fincap)

b. The director is Paras Chaplot, who was the authorised signatory for the bank accounts of IFSL.

4,190

₹253.69

2,190

₹253.36

0 0

22 Vivekanand Patankar


Phone no. given in the KYC document is '56546666'

1,13,745

₹264.73

53,000

₹263.29

0 3,52,142

₹25.7

23 Santosh Pawar

IndiaBulls Securities Ltd. and Fortis Securities Ltd.


0 51,500

₹263.25

0 1,10,100

₹25.47

4,07,078

₹251.15

45,800

₹242.54

75,50,299

₹26.01

1,11,73,079

₹25.77

24 Kiran Dhanavade



0 3,60,000

₹27.12

25 Jaydeep Mane



3,500

₹258.66

0 5,50,000

₹23.20

5,22,527

₹23.67

26 Amar Adhav

IndiaBulls Securities Ltd., UTI Securities Ltd. and

a. Phone no. given in the KYC document are '56546666' and '56546670'.

b. Had received shares in off-market from Mr. Tejas Thakkar (serial no. 39)

4,86,324

₹246.75

2,78,890

₹253.41

75,86,690

₹26.19

1,08,59,371

₹25.97

3,05,937

₹231.9

2,04,132

₹242.4

1,00,000

₹22.4

1,00,000

₹4.73

17,270 18,270 52,685 60,274

Page 20 of 32

Action Financial Ser. (India) Ltd.

₹242.42 ₹242.43 ₹23.96 ₹23.78

27 Umesh Choukekar



4,50,607

₹245.52

3,87,993

₹249.93

93,69,702

₹27.43

1,01,53,178

₹26.15

28 Deepak Todkar

IndiaBulls Securities Ltd. and UTI Securities Ltd.

Phone no. given in the KYC document are '56546666' and '56546668'

76,672

₹245.99

15,300

₹261.23

1,86,16,888

₹26.46

2,19,67,770

₹26.43

1,52,511

₹241.07

1,24,500

₹249.01

0 1,56,110

₹25.26

29 Mahesh Kokate

IndiaBulls Securities Ltd. and K & A Securities Ltd.


0 0 40,000

₹24.87

0

38,000

₹262.14

0 0 3,80,000

₹26.93

30 Santosh Narvekar

Fortis Securities Ltd


92,775

₹224.45

25,000

₹252.58

28,335

₹26.77

5,14,905

₹27.36

31 Sandeep Kadam

India Infoline Securities Pvt. Ltd.


60,000

₹233.50

0 12,82,000

₹24.93

18,57,466

₹28.95

32 Prakash Yadav

Archi Shares & Stock Brokers Pvt. Ltd.


0 0 38,64,106

₹31.86

38,82,896

₹32.41

33 Vijay Suryavanshi

CSL Stock Broking Pvt. Ltd.


34,840

₹226.90

0 9,66,000

₹27.88

11,23,900

₹29.60

34 Vinod Khetan


He had introduced Jayesh Waghela and Haresh Posnak to broker Peninsular Capital Market Ltd.

10,000

₹251.61

10,000

₹251.75

12,95,828

₹31.3

13,12,406

₹29.15

35

Anita Khetan


Wife of Vinod Khetan 0 0 80,000

₹28.75

80,000

₹25.94

36 Haresh Posnak

Peninsular Capital Market Ltd.

He was introduced to the broker Peninsular Capital Market Ltd. by Vinod Khetan

0 0 6,90,000

₹26.2

6,90,000

₹25.89

37 Dadasaheb Gavhane*


Received shares from Sonal Fincap via off market deal

0 0 2,29,663

₹26.97

27,85,000

₹28.12

38 Amit Mehta

Galaxy Broking Ltd.

Received shares in off market from Sharpline Trading Co. Pvt. Ltd. Who had received 27,00,000 shares of IFSL from Sonal Fincap

0 0 4,500

₹33.25

8,50,000

₹25.85

39 Tejas Thakkar


Had transferred 2,31,000 shares in off-market to Amar Adhav (serial no. 26)

1,23,472

₹256.97

0 0 8,97,920

₹26.98

Total Qty. / Avg. Rate (₹) 5473479/

₹242.61

4093199/

₹244.99

191737242/

₹27.02

244052381/

₹25.65

% to total market volume on gross basis during relevant period 60.83% 45.49% 38.05% 48.43%

* Clients had received the shares from Sonal Fincap. Client namely Mr. Dadasaheb Gavhane had received 22,61,247 shares in off-market from Sonal Fincap on September 01, 2005.

a. The investigation in the scrip of IFSL has revealed that the phone number '56546666',

'56546668', '56546669' and '56546670' as used by the clients (more specifically dealt and

explained below) were in the name of one Mr. Mahesh Mistry, Ground Floor, Kalpataru

Chambers, Nanik Motwani Mahal, Near HDFC Bank, Fort, Mumbai - 400001. I also

note as under:

- the phone number '56546666' has been used by clients namely Sharpline Trading,

White Moon, Vivekanand Patankar, Santosh Pawar, Dattu Shitole, Rightstar

Page 21 of 32

Trading, Amar Adhav, Deepak Narvekar, Umesh Choukekar, Fineline

Merchantile, Deepak Todkar, Mahesh Kokate, Sanotosh Jagtap, Jagdish Parab,

Ajit Suryavanshi, Stockholm Merchantile, Santosh Narvekar, Prakash Yadav, Vijay

Suryavanshi and Premkumar Singh.

- The phone number '56546668' has been used by clients namely Newleader

Trading, Jaydeep Mane, Deepak Todkar, Rajkishore Singh.

- The phone number '56546669' has been used by clients namely Santosh Jagtap,

Jayesh Waghela, Sandeep Kadam.

- The phone number '56546670' has been used by clients namely Ramdas

Kshirsagar, Kiran Dhanavade, Amar Adhav, Jagdish Parab and Jayesh Waghela.

b. From the table D above, I note that Mr. Ramdas Kshirsagar (through the companies

namely Newleader Trading Co. Pvt. Limited and Sharpline Trading Co. Pvt. Limited)

and Mr. Jagdish Parab (both directors of IFSL) had received the shares of IFSL from

Sonal Fincap in off-market and these had traded heavily in the scrip during the relevant

period of investigation i.e. March 08, 2005 to September 16, 2005, along with the other

connected clients. As noted, the phone number of these had also matched with other

clients in the group who also had actively traded in the scrip.

iii. Now I will consider the trading of the 'Group II' clients, wherein the common link as per

SCNs is one Kodiyar Industries Limited:

TABLE E

before stock split after stock split

S. No.

Client Member Connection Purchase qty./

avg. rate (₹)

Sold qty./

avg. rate (₹)

Purchase qty./

avg. rate(₹)

Sold qty./

avg. rate(₹)

1 Amul Sheth Pilot Credit Capital Ltd.

The relation of Amul Sheth and Ramniklal Patel of Khodiyar Industries Limited was found in another SEBI investigation in the matter of one 'e-star Infotech Limited'.

9,340

₹166.05

0 0 0

2 Khodiyar Industries Limited

Gogia International Securities Ltd.

a. Its director is Ramniklal Patel and introduced Jayesh Shah to broker Pawan J. Chudhri

b. It was introduced to broker Gogia International Securities Limited by Vikas Narnawar

c. It had common address as that of Jayesh Shah.

2,08,033

₹204.22

1,32,018

₹251.40

0 0

3 Vikas Narnawar

Adolf Pinto a. He had introduced Ramniklal Patel to Gogia International Securities Limited

10,200

₹158.74

0 0 0

4 Jayesh Shah Pawan J. Choudhri a. He was introduced to the broker Pawan J. Choudhri by Ramniklal Patel

b. He had common address

8,650

₹174.15

0 0 0

Page 22 of 32

as that of Ramniklal Patel

5 Bachubahai Koyani


The address of these clients was 8/16 M K Amin Mg Patel Bldg, 3rd Flr Room No. 30, Fort, Mumbai which is the same as that of Khodiyar Industries Ltd.

2,12,097

₹233.73

1,10,917

₹249.15

0 0

6 Dilipkumar Mehta

Galaxy Broking Ltd.

4,44,773

₹223.73

3,37,709

₹.248.78

12,48,875

₹27.54

15,44,055

₹25.98

7 Kamlesh Rasiklal Patel

Trusted Shares & Investments Ltd.

4,70,454

₹221.66

3,12,706

₹255.39

0 0

8 Sureshbhai Baldha

SSKI Investor Services Pvt. Ltd.

1,16,981

₹250.69

1,08,331

₹255.54

0 0


1,29,040

₹222.97

47,205

₹251.85

0 0

9 Rajendra Kumar Gajanand Adukia

Adolf Pinto He had received shares in off market from Khodiyar Industries Limited whose director is Ramniklal Patel

15,500

₹160.44

0 0 0

10 Mukesh Soni

Trusted Shares & Investments Ltd.

He had transferred the shares to Kishorbhai Bhavsar whose contact no. '22615666' is the same as that of Khodiyar Industries Ltd.

4,000

₹259.25

4,000

₹260.0

0 0

Total Qty. / Avg. Rate (₹) 16,31,068/

₹ 222.26

10,52,886/

₹251.98

12,48,875/

₹27.54

15,44,055/

₹25.98

% to total market volume on gross basis during relevant period 18.12% 11.70% 0.24% 0.30%

From the table E above, I note that Khodiyar Industries Limited and its director Mr.

Ramniklal Patel are the common links for most of the 'Group II' entities.

c. I note from the SCNs that the discussed two groups (Table D and E) together, had

bought 71,04,547 shares @ average rate of ₹237.90, accounting for around 79% of

entire market purchases and sold 51,46,085 shares @ average rate of ₹246.40,

accounting for 57% of entire market sales during the period prior to stock split i.e.

March 08, 2005 to June 30, 2005 and have totally bought 19,29,86,117 shares @ average

rate of ₹27, accounting for around 38% of entire market purchases and sold

24,55,96,436 shares @ average rate of ₹25.65, accounting for 49% of entire market sales

during the period after stock split i.e. July 01, 2005 to September 16, 2005.

d. From the findings of the investigations, it is noted that the address of the client namely

Cardiod Marketing Pvt. Limited (a 'Group I' entity whose director was Mr. Paras

Chaplot, the authorised signatory of IFSL) and Khodiyar Industries Limited (a

'Group II' entity whose director was Mr. Ramniklal Patel) was same i.e. 28, Lal Building,

36, Goa Street, Fort, Mumbai - 400 001. I have seen the pattern of trading of the inter-

connected clients who had received the shares of IFSL in off-market from Sonal Fincap

had either dealt in the market directly or transferred to other clients of the group, who

then traded in the scrip of IFSL. It is also noted from the SCN that Khodiyar Industries

Limited (a 'Group II' client) had transferred 2,25,000 shares and 3,01,210 shares of IFSL

on July 20, 2005 and July 25, 2005, respectively, to Mr. Ganesh Raut (a 'Group I'

Page 23 of 32

client). The above suggests that the clients of the groups i.e. 'Group I ' and 'Group II'

were related/ connected to the each other.

e. I have considered the trading pattern of two groups (Table D and E). From the same,

I note that the clients of the said groups had entered into trades with each other for

8,16,16,211 shares, which had accounted for around 16% of the total traded volumes

during the entire period of investigation (i.e. 43% for the period before the stock split

and 15% for the period after stock split). I have also seen the day wise table showing the

total quantity traded between the clients of 'Group I' and 'Group II' vis-a-vis the daily

traded volumes traded. Out of the total quantities traded by the clients forming part of

'Group I' and 'Group II' in the market, average of around 46% and 9% of trades were

executed during the two patches viz. first patch (i.e. March 08, 2005 to May 06, 2005)

and the second patch (i.e. August 29, 2005 to September 06, 2005) of price rise

respectively. The trading amongst the clients forming part of 'Group I' and 'Group II'

had contributed to more than 50% of that day’s volume, on various days during first

patch of price rise. I note that out of the total trading amongst the said groups about

65% of the trades (i.e. for 5,29,64,145 shares) were through large trades of above 25,000

shares.

I also note from the samples selected in the SCNs that on four days i.e. April 12, 2005,

May 03, 2005, June 29, 2005 and August 11, 2005, on an average around 68% of total

traded volumes were through synchronized orders, out of these about 28% orders were

such wherein the order rate and quantity were identical. Further, during the period prior

to the stock split of IFSL, the brokers dealing on behalf of the inter-connected clients

forming part of the two groups had together contributed to about 85% of the buy

orders and 63% of the sell orders. After stock split, the brokers dealing on behalf of the

two groups had contributed to about 69% of the buy orders and 50% of the sell orders.

A sample showing the trading pattern of the clients has been brought out for reference:

TABLE F

Buy Sell Trade

Date Order time Client name Qty. Rate Order time Client name Qty. Rate Qty. Price Time

difference

12/4/2005 10:22:33 Amar Adav 25000 242.90 10:22:36 Rajkishore Singh 25000 242.90 25000 242.90 00:00:03

12/4/2005 14:55:08 Rajkishore Singh 13000 242.75 14:55:01 Amar Adav 13000 242.75 13000 242.75 00:00:07

12/4/2005 14:59:29 Rajkishore Singh 4300 242.70 14:59:27 Amar Yuvraj Adav 4300 242.70 2300 242.70 00:00:02

12/4/2005 15:02:28 Rajkishore Singh 2000 242.70 14:59:50 Amar Yuvraj Adav 4300 242.70 2000 242.70 00:02:38

12/4/2005 15:10:04 Rajkishore Singh 4000 242.70 15:10:01 Amar Adav 4000 242.70 4000 242.70 00:00:03

12/4/2005 14:59:29 Rajkishore Singh 4300 242.70 14:58:47 Shri Khodiyar Industries Ltd. 1000 241.75 1000 241.75 00:00:42

12/4/2005 14:59:29 Rajkishore Singh 4300 242.70 14:59:13 Shri Khodiyar Industries Ltd. 1000 241.50 1000 241.50 00:00:16

Page 24 of 32

29/6/2005 09:57:50 Jayesh Naresh Waghela 24000 233 09:57:37 Jagdish Uttam Parab 25000 236 24000 233.00 00:00:13

29/6/2005 09:57:52 Jayesh Naresh Waghela 1000 233 09:57:37 Jagdish Uttam Parab 25000 236 1000 233.00 00:00:15

29/6/2005 10:55:42 Ranjan Mandal 25000 223.95 10:55:26 Jagdish Uttam Parab 25000 223.95 25000 223.95 00:00:16

29/6/2005 12:53:38 Deepak Shankar Todkar 10000 223.75 12:53:26 Dattu aba Shitole 10000 223.75 10000 223.75 00:00:12

29/6/2005 12:53:55 Deepak Shankar Todkar 25000 223.75 12:53:48 Jayesh Naresh Waghela 15000 223.75 15000 223.75 00:00:07


29/6/2005 14:22:57 Jagdish Uttam Parab 10000 223.65 14:22:30 Dilipkumar Shantilal Mehta 10000 223.65 10000 223.65 00:00:27

29/6/2005 14:33:47 Jagdish Uttam Parab 8000 223.70 14:33:22 Jayesh Naresh Waghela 4000 223.70 4000 223.70 00:00:25

29/6/2005 14:33:47 Jagdish Uttam Parab 8000 223.70 14:33:45 Dattu aba Shitole 4000 223.70 4000 223.70 00:00:02

29/6/2005 14:49:55 Jagdish Uttam Parab 3000 223.95 14:44:49 Dilipkumar Shantilal Mehta 3000 223.95 3000 223.95 00:05:06

29/6/2005 15:09:44 Deepak Shankar Todkar 3000 223.90 15:09:36 Ranjan Mandal 3000 223.90 3000 223.90 00:00:08

29/6/2005 15:50:16 Vijay Sambhaji Suryavanshi 16000 223.90 15:47:35 Jagdish Uttam Parab 16000 223.90 15660 223.90 00:02:41

29/6/2005 15:50:46 Vijay Sambhaji Suryavanshi 340 223.90 15:47:35 Jagdish Uttam Parab 16000 223.90 340 223.90 00:03:11



3/5/2005 13:51:11 Rajkishore Singh 500 260.90 13:50:22 Ranjan Mandal 9000 260.90 500 260.90 00:00:49

3/5/2005 14:51:25 Santosh Romidas Jagtap 7500 261.55 14:51:26 Umesh Balkrishna Choukekar 25000 261.55 7500 261.55 00:00:01

8/11/2005 09:58:56 Jayesh Naresh Waghela 50000 27 09:55:22 Deepak Shankar Todkar 51000 26.25 43010 26.25 00:03:34

8/11/2005 09:58:31 Jayesh Naresh Waghela 899150 25.95 10:01:09 Amar Yuvraj Adav 9000 26.45 9000 26.45 00:02:38

8/11/2005 10:06:07 Ritedeal Trading Co. P. Ltd 100 26.20 10:06:15 Jayesh Naresh Waghela 13000 26.20 100 26.20 00:00:08

8/11/2005 10:10:40 Jayesh Naresh Waghela 200000 26.25 10:09:15 Santosh Kumar Pawar 2,00,000 26.25 195000 26.25 00:01:25

8/11/2005 10:11:50 Sharpline Trading Co. 1080450 25.90 10:10:06 Vijay Sambhaji Suryavanshi 5000 26.15 3000 26.15 00:01:44

8/11/2005 10:11:50 Jayesh Naresh Waghela 5000 26.25 10:09:15 Santosh Kumar Pawar 200000 26.25 5000 26.25 00:02:35

8/11/2005 10:11:50 Jayesh Naresh Waghela 899150 26.20 10:11:29 Jay Shah 50000 26.25 50000 26.25 00:00:21

8/11/2005 10:11:50 Ritedeal Trading Co. P. Ltd 100 26.30 10:11:46 Amar Yuvraj Adav 9000 26.30 100 26.29 00:00:04

8/11/2005 10:11:50 Ritedeal Trading Co. P. Ltd 100 26.35 10:08:47 Jayesh Naresh Waghela 11000 26.35 100 26.35 00:03:03

8/11/2005 10:11:50 Vishalkumar Textiles P. Ltd. 1000000 26.25 10:13:42 Vijay Sambhaji Suryavanshi 400 26.35 400 26.35 00:01:52

8/11/2005 12:06:41 Sandeep B. Kadam 100000 26.95 12:06:36 Vishalkumar Textiles Pvt.L 100000 26.95 90750 26.95 00:00:05

8/11/2005 12:06:41 Sandeep B. Kadam 100000 26.95 12:06:59 Sandeep B. Kadam 50000 26.95 8250 26.95 00:00:18

8/11/2005 14:22:54 Dattu aba Shitole 500000 28.20 14:23:40 Vinod Premsukh Khetan 5000 28.3 5000 28.29 00:00:46

8/11/2005 14:22:54 Dattu aba Shitole 500000 28.20 14:23:52 Stockholm Mercantile 1600 28.35 1600 28.35 00:00:58

8/11/2005 14:25:18 Jay Shah 75000 28.40 14:23:52 Vinod Premsukh Khetan 5000 28.40 5000 28.4 00:01:26

8/11/2005 14:22:54 Vinod Premsukh Khetan 500000 28.20 14:25:53 Dilipkumar Shantilal Mehta 10000 28.40 10000 28.4 00:02:59


8/11/2005 15:41:00 Deepak Shankar Todkar 1500000 28.45 15:48:52 Stockholm Mercantile 6000 28.45 400 28.45 00:07:52

8/11/2005 15:43:04 Vishalkumar Textiles P. 1000000 28.45 15:51:21 Amit Shantilal Mehta 20000 28.45 1302 28.45 00:08:17

8/11/2005 14:22:54 Vinod Premsukh Khetan 500000 28.20 14:25:53 Dilipkumar Shantilal Mehta 10000 28.40 10000 28.40 00:02:59

From the above sample, it can be seen that the trades were executed in a synchronised

manner by various clients. Such synchronised trades had surely contributed to the

volume in the scrip which in turn represented the active trading. As discussed earlier the

clients of the said 'Group 1' and 'Group II' were connected among the respective groups

with the common link of telephone numbers, common address, off market receipt of

shares etc.

f. The SCN has also alleged that the trades amongst the clients forming part of 'Group I'

and 'Group II' had significantly influenced the price of the scrip. It is noted that the

price rise mainly happened in two patches i.e. March 08, 2005 to May 06, 2005 and

August 29, 2005 to September 06, 2005. During the period of March 08, 2005 to May

06, 2005, the price of the scrip of IFSL had increased from ₹148.10 to ₹275, a rise of

about 85% in 42 trading days. It has been said that the price of the scrip had mainly

increased in intra-day movement. I have seen the details provided along with the SCN

to show that in 75 instances, the price difference was more than ₹2 than the previous

Page 25 of 32

trade price. Further, 135 trades had resulted into new high price in the scrip of IFSL. A

sample of such trades has been reproduced below:

TABLE G

Date Time Qty. Previous

price (₹)

Price

(₹)

Increase

(₹)

Buy client Sell client

31/03/2005 12:20:50 175 218.90 221.25 2.35 Bachubhai Koyani Dilip Kumar Mehta

31/03/2005 14:59:56 140 219.50 222.00 2.50 Dilip Kumar Mehta Ranjan Mandal

31/03/2005 15:18:06 500 222.40 228.50 6.10 Bachubhai Koyani Dilip Kumar Mehta

01/04/2005 10:04:56 100 217.55 222.50 4.95 Umesh Choukekar Ajit Suryavanshi

06/04/2005 11:59:47 320 232.50 235.00 2.50 Rajkishore Singh Lokesh Kapoor

11/04/2005 13:44:50 250 239.50 242.65 3.15 Khodiyar Industries Bachubhai Koyani

15/04/2005 14:59:55 10 243.70 246.50 2.80 Deepak Narvekar Dilip Kumar Mehta

20/04/2005 10:31:25 250 250.20 252.25 2.05 Bachubhai Koyani Khodiyar Industries

20/04/2005 11:04:47 300 250.20 252.25 2.05 Sureshbhai Baldha Kamlesh Patel

20/04/2005 11:23:51 450 250.15 252.40 2.25 Sureshbhai Baldha Kamlesh Patel

27/04/2005 10:25:29 1000 254.00 256.00 2.00 Kamlesh Patel Khodiyar Industries

It was observed that from March 21, 2005, onwards there were about 96 price-

influencing trades in which the counter-parties were the clients mainly forming part of

above discussed two groups. As analysis of such trades are as under:

TABLE H

Period Price movement Total no. of

instances

Buyers Sellers

Group I

Group II

Others Group I

Group II

Others

March 08, 2005 to March 20, 2005

The price increased from ₹148.10 to

₹206.45, a rise of 40% in 9 trading days, with scrip touching its applicable near circuit limit on 6 days

39 35 1 3 - - 39

March 21, 2005 to May 06, 2005

The price increased gradually from

₹200.25 to ₹275, a rise of 37% in 33 trading days

96 38 46 12 36 33 27

Total 135 73 47 15 36 33 66

g. During the period of August 29, 2005 to September 06, 2005, the price of the scrip had

increased from ₹25.45 to ₹38 i.e. a rise of about 49% in 7 trading days. I note that SCN

has given an analysis of all the buy orders, which had resulted in multiple trades and

influenced the price of the scrip by ₹1 or more within one minute, during the period of

August 29, 2005 to September 06, 2005 (annexure 40 to the SCN). The annexure has

details of about 10 such orders placed by the clients namely Newleader Trading Co. Pvt.

Limited and Sharpline Trading Co. Pvt. Limited whose director was Mr. Ramdas

Kshirsagar. A few samples of such orders is given hereunder:

Page 26 of 32

TABLE I

Client Date Quantity Price Time Price rise

Newleader Trading (88430)

31/08/2005 7,50,000 ₹28.40 10:35:41 ₹1.35

10,00,000 ₹28.75 10:38:27 ₹1.35

01/09/2005 25,00,000 ₹30.55 09:55:27 ₹1.85

06/09/2005 10,00,000 ₹38.00 10:14:58 ₹2.3

Sharpline Trading (B314S35)

29/08/2005 5,00,000 ₹26.40 09:55:21 ₹0.95

31/08/2005 544,415 ₹29.25 9:55:38 ₹2.5

31/08/2005 5,00,000 ₹28.90 9:55:39 ₹1.45

h. It is observed that there was buying pressure in the scrip with valid buy orders for

23,54,48,485 shares compared to 18,76,45,354 valid sell orders. I note from the details

annexed with the SCN that the clients belonging to 'Group I' namely Newleader

Trading Co. Pvt. Limited and Sharpline Trading Co. Pvt. Limited had placed the buy

orders at higher price as compared to the other buyers. The brokers entering trades on

behalf of the said two clients had accounted for about 38% concentration in placing of

the buy orders and 30% concentration in placing sell orders. The brokers entering trades

on behalf of the entire 'Group I' had together accounted for about 45% concentration

in placing of the buy orders and 40% concentration in placing sell orders. I note the

allegation made in the SCN that the clients forming part of the 'Group I' and 'Group II'

had supported the price of the scrip till the stock split.

i. I note that the clients forming part of the 'Group I' and 'Group II' had not filed their

submissions during the course of investigation. It is also noted that the SCNs issued to

the clients forming part of the 'Group I' and 'Group II' had returned undelivered except

those issued to clients namely Mr. Vinod Khetan, Ms. Anitha Khetan, Mr. Lokesh

Kapoor and Mr. Paras Chaplot. I note that none of the said clients have replied to the

respective SCNs and has also not given any written submissions. As noted in the earlier

part of the order Mr. Vinod Khetan, Ms. Anitha Khetan and Mr. Lokesh Kapoor had

attended the personal hearing and made oral submissions.

I have considered the oral submissions made by these clients and note that Mr.

Vinod Khetan had traded for huge quantities in the scrip of IFSL during the relevant

period. He had also introduced Mr. Jayesh Waghela and Mr. Haresh Posnak to the

Page 27 of 32

broker, Peninsular Capital Market Limited. I note that Jayesh Waghela had received

7,04,458 shares from Sonal, the promoter of IFSL.

I have seen the trading pattern of Vinod and note that his trades were synchronised

and structured in nature and had matched with the other 'Group I' clients. From the

same, an inference can be drawn that Mr. Vinod Khetan was part of the inter-

connected clients forming part of the 'Group I' and had role in creating volume and

price rise in the scrip of IFSL.

As regards Ms. Anita Khetan, it is noted that the only connection is that she is the

wife of Mr. Vinod Khetan. As discussed above, Vinod Khetan had traded in the scrip

and had introduced two other clients (of 'Group I') to a broker. I note that the

allegation in the SCN are of volume creation and price manipulation. It is noted that

Ms. Anita Khetan has not explained her trading objective in the scrip of IFSL. In

absence of the same, it can be presumed that she was acting along with her husband

(also part of 'Group I') who had traded in the manner as explained above, in the scrip

of IFSL and had role in creation of volume and price rise in the scrip.

Another client who had made his submission is Mr. Lokesh Kapoor. It is noted from

the SCN that he had received shares from another inter-connected client namely Mr.

Rajkishore Singh who was a director of Stockholm Mercantile Co. P. Limited (the

entity who received 7,29,829 shares of IFSL from Sonal Fincap). Mr. Lokesh Kapoor

has submitted that he had certain dues from one Mr. Vishal Malviya and in return he

had received the shares of IFSL from him. He has also submitted that he does not

know Mr. Rajkishore Singh. I note that Mr. Lokesh Kapoor has not submitted any

documentary proof for such claim of dues from the said Mr. Vishal Malviya.

It has been submitted by him that he had traded the shares of IFSL in the narrow

price range of ₹244 to ₹250 and had dealt only before the stock split. It has also been

said that he had entered 6 trades during March 08, 2005 to May 06, 2005 and there

was time difference i.e. of one minute to more than two hours. Further, his trades

under scrutiny are 17,540 shares as compared to his total trading of 7,21,970 shares.

Further, he stated that rest of his trades i.e. for 7,04,430 shares were clean.

In this regard, it is necessary to refer to the trading of Mr. Lokesh Kapoor in the

scrip of IFSL, the same is being reproduced herein below for reference:

Page 28 of 32

TABLE J

Purchase Sale Net

Qty.

Cumulative

net Qty. Date Qty. Rate (₹) Qty. Rate (₹)

24/3/2005 0 0 69480 214.13 -69480 -69480

30/3/2005 0 0 11700 217.95 -11700 -81118

1/4/2005 0 60281 223.95 -60281 141461

6/4/2005 0 41957 234.81 -41957 -183418

11/4/2005 33000 242.92 0 0 33000 -150418

13/4/2005 117927 243.83 0 0 117927 -32491

19/4/2005 54200 250.20 30350 250.97 23850 -8641

5/5/2005 0 0 50000 262.95 -50000 -58641

13/5/2005 46650 266.54 0 0 46650 -11991

16/5/2005 3025 263.46 3025 257.50 0 -11991

17/5/2005 10480 256.22 26605 254.01 -16125 -28116

18/5/2005 18985 256.87 29000 253.63 -10015 -38131

19/5/2005 0 0 15000 250.15 -15000 -53131

20/5/2005 19755 250.89 0 0 19755 -33376

23/5/2005 22150 248.39 26100 257.12 -3950 -37326

24/5/2005 14300 262.50 18000 255.18 -3700 -41026

Total 3,40,472 3,81,498 -41,026

A reading of the above table shows that Mr. Lokesh Kapoor had traded regularly

in the scrip of IFSL and his trading had surely supported the volume and price of

the scrip. Considering the above trading details, it may not be correct to say that

only a portion of his trading was under scrutiny. I note that the trading pattern of

the clients had been explained with the help of a few samples. Having noticed that

shares have moved from Mr. Rajkishore Singh to Mr. Lokesh Kapoor, I am

inclined to taken an adverse view in the absence of any documentary proof to

show that he had any transactions with Mr. Vishal Malviya and that these were

settled through the aforementioned share transfer.

j. Having considered the above discussion, it can be concluded that most of the inter-

connected clients forming part of 'Group I' and 'Group II' had extensively traded in the

scrip of IFSL during the period of investigation. It is noted that most of the clients were

connected by common telephone number and address. A few clients who had received

shares in off market from the promoter of IFSL had traded heavily in the scrip of IFSL

and had also transferred the shares to other clients of the group, who in turn had traded

actively in the scrip. The trades of clients forming part of 'Group I' and 'Group II' can

be said to be synchronized/ structured in nature as explained above and such trades had

played a role in influencing the volume and price in the scrip of IFSL.

Page 29 of 32

k. To sum-up, I note that the directors of IFSL namely Mr. Ramdas Kshirsagar (through

the companies wherein he was a director) and Mr. Jagdish U. Parab along with certain

other inter-connected clients forming part of 'Group I' had received the shares of IFSL

in off-market deals from Sonal Fincap and then these had traded actively in the scrip of

IFSL. The period of such trades coincided with the period during which various major

decisions taken by Mr. Ramdas Kshirsagar during his tenure in the capacity as a

Chairman of IFSL (as discussed in the earlier part of the order). During the time when

such decisions and announcements thereof were being made, the inter-connected clients

forming part of 'Group I' and 'Group II' including Mr. Ramdas Kshirsagar (through his

companies namely Newleader Trading Co. Pvt. Limited and Sharpline Trading

Company Pvt. Limited), who were also acting in concert as demonstrated in the

previous paragraphs had offloaded the shares received in off-market in the market.

l. The same indicates a game plan of the promoter and the directors of IFSL to first induce

the investors to deal in the scrip of IFSL by making misleading announcements about

the Company, simultaneously creating an artificial impression of trading in the scrip by

inter-connected clients and thereby offloading of the shareholding in the market. In

view of the same, it can be concluded that the clients namely Mr. Jagdish Parab, Mr.

Premkumar Singh, Newleader Trading Co. Pvt. Limited, Sharpline Trading Co. Pvt.

Limited, White Moon Mercantile Co. Pvt. Limited, Mr. Santosh Jagtap, Mr. Dattu

Shitloe, Right Star Trading Co. Limited, Mr. Deepak Narvekar, Mr. Ganesh Raut,

Fineline Mercantile Co. Pvt. Limited, Stockholm Mercantile Co. Pvt. Limited, Mr.

Rajkishore Singh, Mr. Jayesh Waghela, Vishal Kumar Textiles P. Limited, Mr. Ajit

Suryavanshi, Mr. Ranjan Mandal, Mr. Jay Shah, Mr. Lokesh Kapoor, Cardiod Marketing

Pvt. Limited, Mr. Paras Chaplot, Mr. Vivekanand Daji Patankar, Mr. Santosh Pawar,

Mr. Jaydeep Mane, Mr. Amar Adhav, Mr. Umesh Choukekar, Mr. Deepak Todkar, Mr.

Mahesh Kokate, Mr. Santosh Narvekar, Mr. Sandeep Kadam, Mr. Prakash Yadav, Mr.

Vijay Suryavanshi, Mr. Vinod Khetan, Ms. Anita Khetan, Mr. Haresh Posnak, Mr.

Dadasaheb Gavhane, Mr. Amit Mehta, Mr. Tejas Thakkar, Khodiyar Industries Limited,

Mr. Bachubhai Koyani, Mr. Dilipkumar Shantilal Mehta, Kamlesh Patel, Mr. Sureshbhai

Baldha and Mr. Mukesh Soni had traded in the scrip of IFSL during the period of

investigation. The trades executed by these had influenced the share price of the scrip

and were in the manner of synchronised and structured trades which in turn had created

Page 30 of 32

volumes in the scrip. Such activities are in violation of the Regulation 3 (a), (b), (c), (d)

and Regulation 4 (2)(a), (b), and (e) of the PFUTP Regulations.

m. Considering the above discussion, it can also be concluded that Sonal Fincap was part

of the entire scheme and has offloaded its holding in IFSL in the background of various

positive announcements and thereby benefited with the entire scheme. Such conduct of

Sonal Fincap is in clear violation of the provisions of Regulation 3 (a), (b), (c), (d) and

Regulation 4 (2) (a), (b), (e), (k) and (r) of the PFUTP Regulations.

n. I note that the client namely Mr. Kiran Dhanavade had only sold the shares of IFSL

during the period of investigation. Further, the clients namely Mr. Amul Sheth, Mr.

Vikas Narnawar, Mr. Jayesh Shah and Mr. Rajendra Kumar Gajananad Adukia had only

purchased the shares of IFSL during the period of investigation. No further details of

trading has been discussed in the SCN. In view of the same, I find that the details given

in SCN are insufficient to establish the charges leveled against the clients namely Mr.

Kiran Dhanavade, Mr. Amul Sheth, Mr. Vikas Narnawar, Mr. Jayesh Shah and Mr.

Rajendra Kumar Gajananad Adukia. Considering the facts and circumstances of the

case, I am of the considered view that the said clients are entitled for a benefit of doubt

in respect of the alleged violations of Regulation 3 (a), (b), (c), (d) and Regulation 4

(2)(a), (b), and (e) of the PFUTP Regulations.

13. In view of the foregoing, I, in exercise of the powers conferred upon me under Section 19

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

1992 read with Regulation 11 of the Securities and Exchange Board of India (Prohibition

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

hereby issue the following directions:

a. restrain the following persons and entities, from accessing the securities market and

prohibit these from buying, selling or dealing in securities in any manner either directly

or indirectly for a period of two (2) years.

S. No. Persons/ Entities PAN

1. IFSL Limited AAACI4383H

2. Sonal Fincap Pvt. Limited AAJCS0424Q

3. Dr. Jayant M. Muley Not Available

4. Mr. S.S. Dua Not Available

5. Mr. Mukesh Vora Not Available

Page 31 of 32

6. Mr. Dilip Kulkarni Not Available

7. Mr. Ramdas Kshirsagar AKRPK7116L

8. Mr. Jagdish Uttam Parab AMBPP7561L

9. Mr. Premkumar Singh AVKPS5136N

10. Newleader Trading Co. Pvt. Limited AACCNO923G

11. Sharpline Trading Co. Pvt. Limited AAJCS0043H

12. White Moon Mercantile Co. Pvt. Limited AAACW5810B

13. Mr. Santosh Jagtap AFUPJ0681F

14. Mr. Dattu Shitloe AZRPS4603H

15. Right Star Trading Co. Limited AACCR9880Q

16. Mr. Deepak Narvekar ADSPN9721A

17. Mr. Ganesh Raut AGGPR1017A

18. Fineline Mercantile Co. Pvt. Limited AAACF8758K

19. Stockholm Mercantile Co. Pvt. Limited. AAJCS0042G

20. Mr. Rajkishore Singh ASVPS9426K

21. Mr. Jayesh Waghela AAPPW2530E

22. Vishal Kumar Textiles Limited AABCVO979M

23. Mr. Ajit Suryavanshi AVOPS4111P

24. Mr. Ranjan Mandal AHZPM1923E

25. Mr. Jay Shah AZRPS4128D

26. Mr. Paras Chaplot ADDPC5348M

27. Cardiod Marketing Pvt. Limited AABCC3840Q

28. Mr. Vivekanand Daji Patankar ALTPP0349K

29. Mr. Santosh Pawar ALSPP7445F

30. Mr. Jaydeep Mane ALBPM1357J

31. Mr. Amar Adhav AEBPA2694B

32. Mr. Umesh Choukekar AEGPC1262A

33. Mr. Deepak Todkar ADUPT7199Q

34. Mr. Mahesh Kokate AJGPK5105P

35. Mr. Santosh Narvekar ACTPN3464G

36. Mr. Sandeep Kadam AJZPK1388D

37. Mr. Prakash Yadav ABFPY5761L

38. Mr. Vijay Suryavanshi YNPS6546C

39. Mr. Vinod Khetan AHNPK7226L

40. Ms. Anita Khetan ANCPK4061G

41. Mr. Haresh Posnak AAHPP4638C

42. Mr. Dadasaheb Gavhane AIGPG9521L

43. Mr. Lokesh Kapoor AJSPK7027J

44. Mr. Amit Mehta AIDPM8547R

45. Mr. Tejas Thakkar ACVPT6488L

46. Khodiyar Industries Limited AABCK6551C

47. Mr. Bachubhai Koyani ANFPK0458E

Page 32 of 32

b. dispose of the show cause notice issued to Mr. Kiran Dhanavade, Mr. Amul Sheth, Mr.

Vikas Narnawar, Mr. Jayesh Shah and Mr. Rajendra Kumar Gajananad Adukia without

any directions.

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

15. A copy of this order shall be served on all the recognised stock exchanges and depositories

for necessary compliance.

DATE: April 28th, 2015 PRASHANT SARAN

PLACE: Mumbai WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA

48. Mr. Dilipkumar Shantilal Mehta ASDPS0763J

49. Mr. Kamlesh Rasiklal Patel ALPPP0536Q

50. Mr. Sureshbhai Baldha AIQPBB670H

51. Mr. Mukesh Soni AZFPS0350M

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WTM/PS/05/ISD/APR/2015 BEFORE THE SECURITIES AND EXCHANGE ... · PDF fileBEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA ... wherein a share worth ₹10 was split into share worth