Confirmatory order in the matter of Kailash Auto Finance Limited

The aforesaid 20 entities are hereinafter collectively referred to as "Noticees"

1. SEBI, vide an ad interim ex-parte order dated March 29, 2016 (hereinafter referred to as “interim order”), restrained 246 entities from accessing the securities market and further prohibited them from buying, selling or dealing in securities in any manner whatsoever, till further directions. The persons/entities against whom the interim order was passed were advised to file their objections, if any, within twenty one days from the date of the order and, if they so desire, to avail themselves of an Order in the matter of Kailash Auto finance Limited.

opportunity of personal hearing before SEBI.

2. The facts and circumstances leading to the passing of the interim order have been discussed therein and I do not deem it necessary to repeat the same and burden this order with repetition. The modus operandi as described in the interim order was that the market platform was grossly misutilized and scheme of reduction of share capital and amalgamation were the mechanisms adopted by Kailash Auto Finance Limited (Kailash Auto) to dubiously increase its value of market capital significantly. Careful Projects Advisory Limited (CPAL) and Panchshul Marketing Limited (PML), the promoters of Kailash Auto prior to their amalgamation, were incorporated with a dubious plan and premeditated arrangement and artifice to increase number of equity shares therein through sham and non-genuine transactions with regard to issuance of their shares which resulted in fetching exorbitant and unrealistic consideration in the said scheme of amalgamation. Pursuant to amalgamation 2058 shareholders of PML and 1,972 shareholders of CPAL (listed as “beneficiaries” in the interim order) received 58,59,10,800 shares of Kailash Auto in the form of consideration.

3. Trading in the scrip of Kailash Auto was manipulated by the connected parties who traded under pre-meditated plan and rigged the price of the scrip by 230% in 36 trading days during Patch-1 as described in the interim order. Further during Patch-2 as described in the interim order, the average trading volume in the scrip was increased by 5,577 times and it was noted that during this period, the beneficiaries were net sellers and connected/related entities were net buyers, providing exit to these beneficiaries. In the process, beneficiaries made huge profit of approximately 3,400% amounting to approximately `1,600 Crores on their investment in a period of 12 months or more and thereon claimed the exemption of long term capital gains (LTCG) on such profit as brought out in the interim order.

4. Apart from market manipulation and misuse of stock exchange system in the scrip of Kailash Auto, the entire plan, device and artifice of private placement, fabrication of share premium, issuance of bonus shares, subsequent transfers and retransfers of shares and funds to connected/related entities was designed and structured to beguile the same as transactions with commercial sense to generate bogus LTCG which is exempt from tax under the provisions of the Income Tax Act, 1961.

5. SEBI, in paragraph 34 of the interim order, advised the Noticees that they may file their objections, if any, within twenty one days from the date of the interim order and, if they so desire, may avail themselves of an opportunity of personal hearing before SEBI, on a date and time to be fixed on a specific request received from them.

6. I note that copies of the interim order were sent to these 20 Noticees through “Speed Post Acknowledgement Due” at their respective last known addresses. However, the copies of the interim orders returned undelivered with remarks, such as “addressee unavailable”, “addresses could not be located” or “letters unclaimed". As per practice, copy of the interim order was also published on the SEBI website in the portable document format (pdf format) on the date of the interim order so that the concerned entities have easy access to it. In addition to the above, the service of the interim order was attempted through the registered e-mail addresses of the Noticees and also through their registered brokers. However, the copies of the interim order could not be served upon the Noticees. In view of the same, advertisements were published in newspapers, viz., The Times of India, Nav Bharat Times, Asomiya Pratidin, The Assam Tribune, Kannada Prabha, The Hindu, Thanthi and Anand Bazar Patrika on July 14, 2016 intimating the said 20 Noticees about the interim order with the advise that they can collect the copies of the interim order by hand from SEBI either themselves or through their authorized representative. They were also informed that if they do not respond to SEBI within 15 days from the date of publication of the said notice, it will be presumed that they have no submission to make in the matter and the matter shall be further proceeded with on the basis of the material available on record. 7. Pursuant to the advertisement published on July 14, 2016, none of the Noticees have submitted their replies to SEBI. I, therefore, find that the Noticees have failed to make out a prima facie case for revocation or modification of the interim order and the material available on record justifies the continuation of the directions passed against them under the ad interim ex-parte order dated March 29, 2016. 8. I, therefore, in exercise of the powers conferred upon me under section 19 of the SEBI Act, read with sections 11(1), 11(4) and 11B thereof, hereby confirm the directions issued vide the ad interim ex-parte order dated March 29, 2016 against the following entities:

Sl. No. Entity PAN 1 Pushpdant Tradelink Pvt. Ltd. AAFCP7632P 2 Goodpoint Impex Pvt. Ltd. AAFCG0606G 3 Ladios Trading Pvt. Ltd. AACCL3868N 4 Levia Trading Pvt. Ltd. AACCL5027D 5 Camellia Vinimay Pvt. Ltd. AADCC5732H 6 Coral Tradecom Pvt. Ltd. AADCC6854G 7 Core Commodities Pvt. Ltd. AAECC2931M 8 Kapeeshwar Vintrade Pvt. Ltd. AAECK7329P

Goldensight Management Pvt. Ltd. AAFCG0066N Gainsay Property Pvt. Ltd. AAFCG2185A 11 Goldensight Traders Pvt. Ltd. AAFCG4773J 12 Rochak Vinimay Pvt. Ltd. AAGCR8142P 13 Albino Overseas Pvt. Ltd. AAHCA6112B 14 Sanmati Goods Pvt. Ltd. AAICS9154Q 15 Sinjan Overseas Pvt. Ltd. AAMCS8721P 16 Shallot Dealtrade Pvt. Ltd. AARCS4827R 17 Shallot Tie-Up Pvt. Ltd. AARCS5133J 18 Shivsathi Mercantile Pvt. Ltd. AASCS6284R 19 Jolly Pathak AHGPP6057P 20 Vinod Sukhani AYUPS6072L

9. Accordingly, the directions issued vide paragraph 31 of the ad interim ex-parte order dated March 29, 2016 shall remain in force qua the abovementioned Noticees till further directions.

10. A copy of this order shall be served on all recognized stock exchanges and depositories to ensure compliance with above directions.

Sd/-

DATE: SEPTEMBER 30, 2016 RAJEEV KUMAR AGARWAL PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA