Order for Ashika Group entities in the matter of Mr. Sanjay Dangi and Others

DIRECTIONS UNDER SECTIONS 11(4), 11B AND 11D OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 AGAINST 1. ASHIKA STOCK BROKING LIMITED, 2. CALCOM CONSULTANCY SERVICES PRIVATE LIMITED, 3. CYNOSURE TIE-UP PRIVATE LIMITED, 4. DELIGHT TIE-UP PRIVATE LIMITED, 5. FOREVER MERCHANTS PRIVATE LIMITED, 6. FOUNTAIN VANIJYA PRIVATE LIMITED, 7. HANURANG VINIMAY PRIVATE LIMITED, 8. MICRO MANAGEMENT LIMITED, 9. PR VYAPAAR PRIVATE LIMITED, 10. PUSHKAR BANIJYA LIMITED, 11. ROSEWOOD VANIJYA PRIVATE LIMITED, 12. SARSWATI VINCOM LIMITED, 13. SPLENDOR VANIJYA PRIVATE LIMITED, 14. WINALL VINIMAY PRIVATE LIMITED AND 15. WITHAL COMMERCIAL PRIVATE LIMITED IN THE MATTER OF MR. SANJAY DANGI, HIS ASSOCIATES & OTHER ENTITIES IN VARIOUS SCRIPS

1. The Securities and Exchange Board of India (hereinafter referred to as SEBI) vide an ad-interim ex-parte Order dated December 2, 2010 (hereinafter referred to as the Order), had issued certain directions in the matter of Mr. Sanjay Dangi, his associates and other entities in various scrips. In the said Order, for the reasons stated therein, the stock broker Ashika Stock Broking Limited (hereinafter referred to as ASBL) was directed not to buy, sell or deal in the securities in their own/proprietary account in any manner till directions and was also directed not to take/deal with fresh/new clients with immediate effect till further orders. Further, fourteen entities who were found to have traded through ASBL, namely, Calcom Consultancy Services Private Limited, Cynosure Tie-Up Private Limited, Delight Tie- Up Private Limited, Forever Merchants Private Limited, Fountain Vanijya Private Limited, Hanurang Vinimay Private Limited, Micro Management Limited, PR Vyapaar Limited, Pushkar Banijya Limited, Rosewood Banijya Private Limited, Sarswati Vincom Limited, Splendor Vanijya Private Limited, Winall Vinimay Private Limited & Withal Commercial Private Limited, were restrained from accessing the securities market and further prohibited from buying, selling or dealing in securities in any manner whatsoever, till further directions. The Order had grouped ASBL and the aforesaid fourteen entities as the Ashika Group. Therefore, this Order shall also collectively refer to them as the Ashika Group and individually by their respective names. The Order had mentioned that the persons/entities against whom the Order was passed may file their objections, if any, within twenty one days from the date of the order and, if they so desire, avail themselves of an opportunity of personal hearing before SEBI.

2. Pursuant to the aforesaid Order, Hanurang Vinimay Private Limited (HVPL) filed its reply dated December 17, 2010 and sought a hearing opportunity on urgent basis. The hearing was scheduled on January 4, 2011 and the entity was represented in the hearing by its authorised representatives Mr. Ramesh Mishra, Mr. S. M. Kothari and Ms. Saran, who made submissions. ASBL submitted its reply dated December 20, 2010 and availed of an opportunity of personal hearing on January 7, 2011, when Mr. Amit Desai (senior counsel) and Mr. Vinay Chauhan (Advocate) appeared on its behalf and made submissions. Mr. Anant Upadhyay, Advocate, Mr. Pawan Jain (Chairman, ASBL), Mr. Daulat Jain (Joint Managing Director, ASBL) and Mr. Nawal Kedia (Compliance officer, ASBL) were also present in the hearing. Eleven of the Ashika group entities, namely, Calcom Consultancy Services Private Limited (CCSPL), Cynosure Tie-Up Private Limited (CTPL), Delight Tie-Up Private Limited (DTPL), Forever Merchants Private Limited (FMPL), Fountain Vanijya Private Limited (FVPL), Micro Management Private Limited (MMPL), PR Vyapaar Private Limited (PRVPL), Pushkar Banijya Limited (PBL), Rosewood Vanijya Private Limited (RVPL), Sarswati Vincom Limited (SVL) and Splendor Vanijya Private Limited (SVPL) appeared in a hearing scheduled on February 2,

2011. Mr. Balveer Chaudhary and Mr. Pravin Parmar represented PRVL, FVPL & MML; Mr. Vinay Chauhan, Advocate represented SVL, PBL & FMPL; Mr. Joby Mathew, Advocate represented DTPL, SVPL, CTPL& RVPL and Mr. Deepak Dhane represented CCSPL on the said date of hearing and made submissions before me. Mr. Sharad Jhunjhunwala, Chief Executive Officer of SVL was also present in the hearing. Winall Vinimay Private Limited (WVPL) and Withal Commercial Private Limited (WCPL) also appeared in a hearing held on February 11, 2011, when Mr. D K Lodha, Cost and Management Accountant, made submissions for WVPL and Mr. Deepak Agarwal, Advocate & Mr. Sabyasachi Chaudhary, Advocate appeared on behalf of WCPL and made submissions.

3. I have considered the submissions made on behalf of the fourteen Ashika Group entities and ASBL. The issue for consideration in this Order would be to decide whether the ad-interim ex-parte directions issued vide the said Order against the Ashika Group need to be continued, modified or revoked in the light of the facts and circumstances of the case and the submissions made by the concerned parties. As stated in the Order, SEBI had initiated an investigation, on the basis of a reference and documents (as mentioned in the Order) received from the Income Tax Department (the IT Department), to find out whether there was any concentration of shareholding of the company Murli Industries Limited (hereinafter referred to as MIL) among the ten entities mentioned therein and whether there was any attempt to manipulate the shares of MIL before its FCCB issue. The said reference had informed SEBI of the manipulation in the shares of MIL and the profit sharing arrangement between MIL and one Sanjay Dangi. Based on the preliminary findings of the aforesaid investigation, it appeared to SEBI that the Dangi group entities (as defined in the Order) have influenced the price of MIL during the ‘pricing period’ of FCCBs and thereafter, exited the scrip at a profit, as per the alleged agreement made with the promoters of the said company. The Order also detailed the trading of the Dangi Group entities in the scrips of MIL, Ackruti City Limited (hereinafter referred to as Ackruti), Welspun Gujarat Stahl Rohern Limited (hereinafter referred to as Welspun), Brushman India Limited (hereinafter referred to as Brushman) and RPG Transmission Limited (hereinafter referred to as RPG). SEBI had observed noticeable trading by the Dangi group entities in the shares of the aforesaid companies, which were prima facie responsible for the increase in the share price as well as spurt in the trading volumes. The Order had discussed as to how the share price of the identified scrips were inflated through the trading by the Dangi group entities and the others (whose role had also been explained therein). The manner of establishment of new higher price and variation in the last traded price through the trades of the Dangi group entities during the relevant period has also been explained in detail in the Order.

4. For the purposes of my consideration, I have first, referred to the averments with respect to the role of the entities of the Ashika Group including ASBL along with their replies and thereafter proceed to give my observations. As regards ASBL, I note the following: a. It was noticed that a group of clients were trading through the stock broker, ASBL and were found to be trading in the scrips in which the Dangi group entities were also actively trading. I note that the Order had stated that “During the preliminary examination, it was also noticed that a group of clients trading through the stock broker namely Ashika Stock Broking Limited (hereinafter Ashika Stock Broking Limited and its group/associate entities are referred to as ‘Ashika Group’) were trading in the scrips in which the Dangi group entities were also actively trading….” The entities in various groups, their relationship and the off-market transfers among them etc., were explained in Annexure B to the Order. The following was also mentioned under the caption “Certain relevant facts …” that “ • A few of the Ashika Group entities share the same/similar addresses as that of the entities having shareholding in the Dangi Group entities, while some had made off-market transfers to the Dangi Group entities. In some cases, the entities in which Dangi group had shareholding, had stake in the entities of the Ashika group. • Ashika Group entities viz. Delight Tie-up Private Limited, Forever Merchants Private Limited, Pushkar Banijya Limited and Calcom Consultancy Private Limited had stake in Amit Business Limited (now merged with Pacific Corporate Services Limited), a Dangi group Entity.

• Micro Management Limited had made off-market transfers to Dangi Group entities while Pushkar Banijya Private Limited had a stake in Dangi Group entities. One of the addresses of Pushkar Banijya Private Limited is 32, Ezra Street, 8th Floor, Kolkata is similar to one of the addresses of Micro Management Limited. • As per the Annual Return filed by Ashika Global Finance Private Limited, on March 24, 2006, Ashika Global Securities Limited had transferred 98,320 shares of Ashika Agro Projects Private Limited (now known as Ashika Global Finance Private Limited) to Ivory Consultants Private Limited as well as Amit Business Limited (who are the Dangi group entities). • Ashika Global Finance Private Limited has the same address as that of Ashika Stock Broking Limited. Further, the entities that are part of the promoters/directors of Ashika Stock Broking Limited viz. Mr. Daulat Jain, Mr. Puran Mal Jain and Ms. Kanchan Devi Jain made off-market transfers to Amit Business Limited, a Dangi group entity.” [Emphasis supplied] It is to be noted that Amit Business Limited had merged with Pacific Corporate Services Limited (now known as Mentor Capital Limited) on February 26, 2010. b. The Order had also mentioned that the Dangi Group entities traded through a large number of stock brokers; the primary among them inter alia being ASBL. The Order had also mentioned that the Dangi group entities were having shareholding in the group company of the stock broker, ASBL and that there were instances wherein the entities that are part of the promoters/directors of ASBL viz. Mr. Daulat Jain, Mr. Puran Mal Jain and Ms. Kanchan Devi Jain made off-market transfers to Amit Business Limited, a Dangi group entity. The said facts were the basis on which it was prima facie observed in the Order that the relationship of the Dangi group inter alia with the stock broker, ASBL went beyond the normal client–stock broker relationship.

c. The Order had given analysis of the trades/other transactions that were entered into by the Ashika Group entities. I note that the Order had made the following observations “Moreover, it is observed that the Dangi group and Ashika group entities have time and again come together in a coordinated manner serving much like mercenaries on hire for execution of fraudulent schemes in the securities market. ………… The ulterior objective of the promoters and the operator was not known to the investors who therefore got induced to deal in the shares of companies without full information and suffer erosion of value of their holdings when Dangi and Ashika group entities suddenly exit the scrip. The nexus between different promoters and the Dangi group therefore emerges clearly and repetitively as the Dangi group successfully offers its services for a commercial consideration; a contract that jeopardizes investor interest and violates the tenets of the securities market.” d. The Ashika Group entities were observed to be heavily trading in the shares of Ackruti and that most of the entities traded in futures contracts underlying the shares of Ackruti for the first time.

It was also noticed that the Ashika Group entities started trading from January 13, 2009 when other promoter related entities of Ackruti had started trading. e. The Dangi group and the Ashika group entities were found dealing in the shares of Brushman during the relevant period, prima facie in order to artificially increase the share price and favour the pricing of the securities to be issued. Mr. Kapil Kumar (managing director in Brushman) was allotted 400,000 equity shares each in two of the Ashika group entities, namely, Splendor Vanijya Private Limited and Delight tie-up Private Limited on December 31, 2008. Further, Delight Tie-up Private Limited had stake in Amit Business Limited, which is a Dangi group entity, while Splendor had made off-market transfer to Amit Business Limited. Further, it was noticed that Amit Business Limited was a shareholder in Splendor Vanijya Private Limited, which itself had stake in Delight tie-up Private Limited. f. Entities belonging to the Dangi group, Ashika group along with Welspun group (as defined in the Order) had actively traded in the shares of Welspun.

Further, Ashika group entities were the counterparties for the trades of other Ashika group entities in the shares of Welspun and the group entities also acted as the counterparties for the trades of the Dangi group.

g. During September 2006- September 2007, Ashika group entities, namely, CCSPL, RVPL and PBL had together purchased 1,23,000 shares of RPG at BSE and the counterparty for approximately 1,17,363 shares was Ashok Finstock Limited (a Dangi Group entity). h. On November 23, 2010, Ashika Group along with the Dangi group had provided exit route to institutional investors in the shares of another company. i. Amit Business Limited (which merged with Pacific Corporate Services Limited) was noticed to be the shareholder in Ashika group entities, DTPL, PBL and CCPL. Further, the Order in page 49 (Annexure B) had inter alia mentioned the following: “b. A few of the Ashika Group entities shares the same/similar addresses as that of entities having shareholding in Dangi Group entities or Dangi Group Entities while some had made off-market transfers to Dangi Group entities. While the Welspun Group entities had shareholding in the Dangi Group entitles. In some cases the entities in which Dangi group entities had shareholding, have stake in the entities of Ashika group. a. Withal Commercial an Ashika Group entity had made off-market transfers of shares viz. Ashika Global Finance and Ashika Global Securities to Amit Business Limited. b. Delight Tie-up Private Limited, Pushkar Banijya Limited and Calcom Consultancy Private Limited part of Ashika group had stake in Amit Business Limited a Dangi group Entity. c. Amit Business Limited a Dangi group entity had shareholding in various Ashika group entities such as Rosewood Vanijya Private Limited, Forever Merchants Private Limited and Splendor Vanijya Private Limited etc... d. One of the addresses of Sarswati Vincom Limited is same as that of Ivory Consultants Private Limited viz. 27, Brabourne Road, 3rd floor, R.N.305, Kolkata -700001.

Ivory Consultants Private Limited had stake in the Pacific Corporate Services Limited e. Forever Merchants Private Limited & Rosewood Vanijya Private Limited, in which Dangi Group entities having stake, had shareholding in Withal Commercial Private Limited f. Rosewood Vanijya Private Limited and Splendor Vanijya Private Limited in which Dangi Group entities having stake, had shareholding in Delight Tie-up Pvt Ltd. g. As per the Annual return filed by Ashika Global Finance P Ltd, on 24-03-2006 Ashika Global Securities Limited had transferred 98320 shares of Ashika Agro Projects P Ltd (now known as Ashika Global Finance P Ltd) to Ivory Consultants P Ltd as well as Amit Business Limited the Dangi group entities. h. Ashika Global Finance P Ltd has same address as that of Ashika Stock broking Limited. i. Further the promoters of Ashika stock broking limited viz. Daulat Jain, Puran Mal Jain and Kanchan Devi Jain made off-market transfers to Amit Business Limited a Dangi group entity. j. One of the addresses of Basant Marketing Private Limited who is having stakes in various Dangi Group and Ashika group entities is 8/1 Lal Bazar Street 3rd Floor, Kolkata. k. One of the Addresses of PR Vyapaar Private Limited is 29A, Weston Street, 3rd Floor, Kolkata, which is similar to the address of Fountain Vanijya Private limited.

Further Fountain Vanijya Pvt Ltd trading through Ashika Stock Broking Limited was observed to be placing orders through dealer Heena M Maldar whose office address is 1008, Raheja Centre, 10th Floor 214, Nariman Point Mumbai. 400021. This office is located in the same building where Dangi Group is based. l. One of the addresses of Pushkar Banijya Private Limited is 32 Ezra Street 8th Floor, Kolkata which is similar to one of the addresses that of Micro Management Limited. Micro Management had made off-market transfers to Dangi Group Entities while Pushkar Banijya Private Limited had stake in Dangi Group entities. m. Dangi group entity Ivory Consultants Private Limited had shareholding in Lotus Capital Financial Services Limited while entities such as Forever Merchants, Micro Management, Pushkar banijya and Rosewood Vanijya had stake in Lotus Capital. While Lotus had made off-market transfer to Dangi Group Entity.”

j. The Order has also mentioned the details of off-market transfers that were noticed from some of the Dangi group entities to certain entities of the Ashika group.

5. ASBL had filed its reply dated December 20, 2010 and supplemented the same with an additional reply dated January 7, 2011. While denying the allegations leveled vide the Order, the entity has submitted it had executed trades for its clients who were the fourteen entities (the Ashika Group entities). According to it, few of those clients were registered with it since 2002 and that the clients were trading on a regular basis in various scrips in the market in all segments. It was submitted that except for the client-stock broker relationship, it did not share any relation with its aforesaid clients. ASBL submitted that the clients had excellent track record in terms of meeting payment/delivery obligations. It was submitted that neither ASBL held shares in any of the said client companies nor any of its promoters/directors were present on the board of the said client companies. The clients had traded independently and that it had executed their trades as a stock broker. It is contended that one of its clients, FVPL has placed orders through its Mumbai office at Raheja Centre where Pacific Corporate Services Limited (PCSL) is also located and that the said building is a commercial building and houses more than 150 offices. According to ASBL, its group companies are Ashika Global Finance Private Limited (AGFPL), Ashika Global Securities Limited (AGSL) and Ashika Credit Capital Limited (ACCL) and they share the same address at Trinity”, 226/1, AJC Bose Road, 7th Floor, Kolkata – 700020. ASBL denied knowledge of any Dangi group and also the scrips in which they were trading. According to it, the clients were trading in various scrips at that time and that it was unaware that the said clients were trading in same the scrips in which Dangi entities were also trading. ASBL also submitted that Amit Business Limited, Ivory Consultants Private Limited, Pacific Corporate Services Limited, Goldflag Trading Company Private Limited and Mr. Sunil Dangi (the brother of Mr. Sanjay Dangi) have traded through it during the relevant period in five scrips discussed in the Order and that except for the client-stock broker relationship, ASBL did not share any relation with them.

6. As regards the off-market transactions of 98,320 shares on September 24, 2009 by Amit Business Limited to the promoters of ASBL i.e. Mr. Puranmal Jain, Mr. Daulat Jain and Smt. Kanchan Devi Jain, it is submitted that the said shares were sold by Ashika Global Securities Limited (AGSL) to Amit Business Limited (ABL) in 2006 with a condition that in case of sale of these shares, they would be first offered to AGSL. Since there was a change of management in ABL in 2009, the shares were transferred to the nominees of AGSL. Similar explanation has been provided for the off market transfer of 2,00,000 shares by ABL to Mr. Daulat Jain on May 28, 2009. In respect of the transfer of shares of Grand Foundary Limited (40 shares), Gujarat Lease Financing (62 shares) and Nath Pulp & Paper (50 shares) by AGFPL to ABL, ASBL submitted that those shares were sold by AGFPL to ABL in 2002 and the share certificates with transfer deeds were given to them. However, in 2007, ABL requested AGFPL to dematerialize those shares and transfer the same to them since it had lost the transfer deeds. Therefore, AGFPL had dematerialized the shares and transferred them to ABL.

ASBL has attributed the same reason for the transfer of 125 shares of Rama News from ACCL to ABL. According to ASBL, the transfer of 1,00,000 shares of Pyramid Saimira from ABL to Mr. Daulat Jain and the return was a mistake on the part of ABL and was rectified within an hour. Similarly, 36,000 shares of Resurge Mines were purchased for PCSL on September 8, 2008 and since PCSL could not make payment for the said purchase, the shares were transferred to the ‘hold back a/c’ on September 10, 2008 but on the same day after noon, the payment was received from PCSL and shares were transferred to the client on the same day. It also stated that the off market transfer of 98,320 shares by AGFPL to ICPL was pure commercial transaction which took place with a valid consideration. ASBL denied having any of the alleged Dangi entities as its shareholder but admitted that in the past, Dangi entities were holding shares of its group companies. It contended that the shares which were transferred in off market were unlisted and therefore such shares can be transferred only through off market transactions.

ASBL has also denied having any relation with the promoters of five companies identified in Order. It submitted that it had not carried out proprietary trades in any of the five scrips except for a few stray trades. The scrip-wise submissions made by ASBL are as under:

a. MIL – None of the Ashika Group or Dangi group clients had traded in the scrip of MIL through ASBL. b. RPG - Only three Ashika Group clients i.e. CCSPL, PBL & RVPL have traded in the scrip of RPG through ASBL. CCSPL bought 50,000 shares on November 3, 2006 and sold them on two days ( 33,784 shares on November 3, 2006 & 16,216 shares on November 7, 2006). PBL has bought and sold 1000 shares on November 3, 2006 and bought 70,000 shares on November 8, 2006 and sold them on November 18, 2006. Similarly, RVPL traded on 3 days during November 3, 2006 to November 16, 2006 and purchased and sold 2,000 shares. It submitted that during the period, 254 other clients had traded in RPG through ASBL and that since the trades were executed on the stock exchange platform, the counterparty (being Ashok Finstock Limited, a Dangi group entity) is not known to ASBL.

c. Brushman – Only two Ashika Group clients i.e. FMPL & PRVL and three Dangi Group clients i.e. ICPL, ABL & PCSL, have traded in the said scrip through it. ASBL submitted their trade details and the same is reproduced as under:

S. No. Entity Group Buy Sell Period 1 FMPL Ashika 40,000 40,000 20.05.08 to 12.09.08 (2 days) 2 PRVL Ashika 4,93,314 4,93,014 19.06.08 to 08.10.080(16 days) 3 ICPL Ashika 6,22,050 4,66,050 12.08.08 to 31.10.08(12 days) 4 ABL Dangi 75,731 75,731 13.06.08 to 04.07.08(7 days) 5 PCSL Dangi 5,00,000 Nil 23.06.08

ASBL submitted that these entities have traded in other scrips also and in both segments (Cash and F&O) and that apart from these clients, there were 41 other clients who had traded in the shares of Brushman through it.

d. Ackruti – In the said scrip, only four Ashika Group clients i.e. FMPL, MML, PBL & WCPL have traded through it during the first period (June 2007 to February 2008) and their trade details as submitted are given below:

S. No. Entity Buy Sell Period 1 FMPL 25 25 01.01.08 to 08.01.08 (2 days) 2 MML 1,14,000 1,14,000 11.07.07 to 22.10.07 (5 days) 3 PBL 6000 5500 09.11.07 to 31.12.07 (8 days) 4 WCPL 500 500 04.09.07 to 13.09.07 (3 days)

According to ASBL, in the second period (January 1, 2009 to March 25, 2009), nine Ashika Group entities and four Dangi Group entities (Mr. Sunil Dangi, ICPL, ABL & PCSL) have traded in the scrip through it. The details as submitted are given below:

TRADES IN CASH SEGMENT

S. No. Entity Group Buy Sell Period 1 FVPL Ashika 28000 8000 27.02.09 to 16.03.09 (3 days) 2 SVPL Ashika 70000 96000 13.01.09 to 02.03.09 (5 days) 3 WCPL Ashika 22000 36000 15.01.09 to 05.03.09 (4 days) 4 CTPL Ashika 20000 20000 15.01.09 to 05.02.09 (3 days) 5 FMPL Ashika 10000 Nil 03.03.09

6 PRVL Ashika 505000 498000 26.02.09 to 17.03.09 ( 5 days) 7 RVPL Ashika 14096 14096 26.02.09 8 DTPL Ashika 205470 205470 15.01.09 to 02.03.09 (16 days) 9 Sunil Dangi Dangi 10000 10000 18.03.09 10 ICPL Dangi 687347 687347 06.01.09 to 17.03.09 (11 days) 11 ABL Dangi 19535 Nil 24.03.09 12 PCSL Dangi 135000 135000 02.03.09 to 05.03.09 (4 days)

TRADES IN F&O SEGMENT

S. No. Entity Group Buy Sell Period 1 SVPL Ashika 1,20,000 1,20,000 13.01.09 to 04.02.09 (3 days) 2 PBL Ashika 3,06,900 3,06,900 05.02.09 to 05.03.09(13 days) 3 WCPL Ashika 31800 31800 13.01.09 to 02.03.09 (10 days) 4 CTPL Ashika 65100 65100 14.01.09 to 17.03.09 (12 days) 5 FMPL Ashika 27000 27000 02.03.09 to 26.03.09 (3 days) 6 PRVL Ashika 60000 60000 04.02.09 to 26.02.09 (2 days) 7 RVPL Ashika 9000 9000 26.02.09 to 02.03.09 (2 days) 8 DTPL Ashika 57300 57300 03.02.09 to 02.03.09 (12 days) 9 Sunil Dangi Dangi 16800 16800 17.03.09 10 ICPL Dangi 211500 211500 07.01.09 to 16.03.09 (12 days)

According to ASBL, these entities have traded in other scrips also in both cash and F&O segments and that apart from these clients; there were 2400 other clients who had traded in the shares of Ackruti through it.

e. Welspun – ASBL submitted that 11 Ashika Group entities and four Dangi Group clients (Mr. Sunil Dangi, ICPL, ABL & Gold Flag Trading Company Private Limited (GTCPL)) have traded in the said scrip through it. The trade details as submitted by it are as under:

TRADES IN CASH SEGMENT

S. No. Entity Group Buy Sell Period 1 FVPL Ashika 640534 640534 24.07.09 to 29.07.09 (4 days) 2 HVPL Ashika 100075 100075 22.05.09 to 28.05.09 (3 days) 3 PBL Ashika 5000 2000 29.07.09 to 20.11.09 (4 days) 4 WCPL Ashika 4183134 4163134 28.05.09 to 23.03.10(31days) 5 SVL Ashika 653954 618954 22.07.09 to 19.11.09 (11 days) 6 PRVL Ashika 1275000 1100000 30.07.09 to 22.03.10 (8 days)

7 WVPL Ashika 500000 500000 28.01.10 8 RVPL Ashika 1000 1000 12.01.10 9 ABL Dangi 487147 487147 30.07.09

TRADES IN F&O SEGMENT

S. No. Entity Group Buy Sell Period 1 FVPL Ashika 2020800 2020800 23.07.09 to 29.07.09 (4 days) 2 WCPL Ashika 11652800 11652800 21.04.09 to 25.03.10 (81 days) 3 SVL Ashika 1918400 1918400 12.05.09 to 25.03.10 (37 days) 4 PRVL Ashika 1068800 1068800 29.07.09 to 26.02.10 (4 days) 5 WVPL Ashika 1275200 1275200 03.11.09 to 18.03.10 (8 days) 6 DTPL Ashika 7200 7200 01.01.09 to 05.01.09 (3 days) 7 CTPL Ashika 20800 20800 30.07.09 8 FMPL Ashika 276000 276000 29.01.09 to 17.03.10 (42 days) 9 ABL Dangi 12462400 11608000 30.07.09 to 25.03.10 (23 days) 10 Sunil Dangi 46400 46400 30.09.09 to 05.11.09 (7 days) Dangi 11 ICPL Dangi 444800 444800 17.03.09 to 17.02.10 (3 days) 12 GTCPL Dangi 52800 52800 31.07.09 to 03.08.09 (2 days)

ASBL submitted that the said entities have traded in other scrips also in both the segments and further stated that in addition to these clients, there were 3500 other clients who had traded in Welspun through it.

6. Calcom Consultancy Services Private Limited (CCSPL), an entity identified as a member of the Ashika group in the Order, has been observed to hold shares in Amit Business Limited and that it had purchased 1,23,000 shares of RPG along with Rosewood Vanijya Private Limited (RVPL)and Pushkar Banijya Limited (PBL). In its reply, the entity has inter alia stated that it had not traded in the shares of MIL, Ackruti, Welspun and Brushman. It has also denied any relation with the promoters/directors/group entities of any of the five companies discussed in the Order. It submitted that it had executed transactions through ASBL in many scrips in the ordinary course of business and its relation with ASBL is only that of a broker-client. According to the entity, it had acquired 4000 shares (0.05% of the capital) of Amit Business Limited by way of allotment on March 31, 2009 and that the said shares were sold on April 22, 2009. It was submitted that the said acquisition was made by CCSPL on the request of Mr. Parasmul Jain, the promoter director of ABL and that it was not aware at that time that ABL is a Dangi group entity. As regards its trades in the shares of RPG was concerned, the entity submitted that it had purchased 50,000 shares and sold 33,784 shares on November 3, 2006 and the remaining shares (16,216 shares) on November 7, 2006. It contended that since the trades were executed on the stock exchange platform, it could not know that the counterparty was Ashok Finstock Limited. It further submitted that it had traded in 68 scrips during September 1, 2006 to September 30, 2007 with a total turnover (cash and F&O) of ` 74.27 Crores.

7. Cynosure Tie-Up Private Limited (CTPL) had received in off-market, 1,00,000 shares of Pyramid Saimira from Amit Business Limited on December 30, 2006. The said entity has submitted that it has not traded in the shares of any of the five companies and denied any connection with Ashika group. It admitted having dealt though several stock brokers including ASBL. It submitted that it had purchased 1,00,000 shares of Pyramid Saimira Theatres Limited in off market from ABL, Dangi entity as the said company was unlisted company when the transaction happened.

8. Delight Tie-Up Private Limited (DTPL) had made an allotment of 4,00,000 shares to Mr. Kapil Kumar, the managing director of Brushman on December 31, 2008 and that it had shareholding in Amit Business Limited, which in turn had stake in Splendor Vanijya Private Limited (SVPL) while SVPL was a shareholder in DTPL. It was also noticed that Rosewood Vanijya Private Limited (RVPL) was one of its shareholders. In reply to the allegations, DTPL has submitted that it has traded in the scrip of Ackruti and Brushman only and that it had purchased 2,05,470 shares of Ackruti (in cash segment ) and 66,300 shares in the F&O segment at the National Stock Exchange of India Limited (NSE) during April 1, 2008 to March 31, 2009. It also submitted that it had allotted 4,00,000 shares to Mr. Kapil Kumar on the aforesaid date, 60,000 shares to RVPL and 2,00,000 shares to SVPL on March 31, 2009. It was also submitted that Amit Business Limited had allotted 4,20,000 shares to it on March 31, 2008 and that SVPL and RVPL ceased to be its shareholders.

9. Forever Merchants Private Limited (FMPL) was found to be the shareholder in Amit Business Limited and the entity is a shareholder in Withal Commercial Private Limited (WCPL). The Order has also mentioned that the said entity was a shareholder in Lotus Capital Financial Services Limited which had made off market transfers to Amit Business Limited. FMPL has submitted that it had traded through two stock brokers, namely, ASBL and Destiny Securities Limited during 2008-2010. It is submitted that the entity has only a client-broker relationship with ASBL and does not own any shares in ASBL or in any of its group companies. The entity submitted that it was allotted 5,74,000 shares of ABL on March 31, 2008 and within 3 months, had sold 2,60,000 shares (on June 20, 2008) and 3,14,000 shares (on June 23, 2008). According to the entity, it was again allotted 2,000 shares by Amit Business Limited on March 31, 2009 and the same were sold on July 3, 2009 and that since then, it does not hold any shares of Amit Business Limited. It denied having any relation with DTPL, PBL and CCSPL. It was also submitted that Amit Business Limited acquired 2,04,000 shares of FMPL on March 31, 2007 and had sold the same on August 6, 2007 and since then, Amit Business Limited has no shareholding in FMPL. The shares of WCPL were acquired on March 31, 2009 and were sold in July 2009. Similarly, it had acquired 2,10,000 shares of Lotus Capital Financial Services Limited on March 31, 2008 and another 90,000 shares on December 17, 2008 and the same were sold in July 2009. According to it, the shares of ABL, WCPL and Lotus were acquired for investment purpose in the ordinary course of business. According to FMPL, it has transacted in the shares of three scrips i.e. Ackruti, Brushman and Welpsun and did not trade in the shares of MIL and RPG. It is the submission that apart from aforesaid three scrips, FMPL has traded in other scrips as well through ASBL during 2008-10. The trading details of FMPL as submitted by it are as follows:

In shares of Ackruti Cash F&O First Patch (June 2007 to Feb. 2008) First patch Bought 25 shares on 01.01.08 & sold 25 Nil shares on 08.01.08

Second patch (January 1.2009 to March Second patch 19, 2009)

Nil. However, traded during May – November Traded on 3 days. Bought 27000 shares 2009 and sold the same during March 2.2009 to March 26,2009 In shares of Welspun Cash F&O Nil 29 buy trades for 146400 shares and 32 sell trades for 181200 shares during January 1,2009 to March 25,2010. In shares of Brushman Cash F&O Bought 40000 shares on 20.05.08 & sold Nil 40000 shares on 12.09.08

10. Fountain Vanijya Private Limited (FVPL) was found to have traded in the shares of Welspun and shared the address with PRVL. It was found to place orders through M/s. Heena Maldar, dealer of ASBL from an address which is in the same building where the Dangi group entity, Pacific Corporate Services Limited is based. FVPL submitted that it registered as the client of ASBL on March 19, 2008 and dealt in various scrips through it since then. It submitted that it has traded through other brokers also and in other products like Mutual Funds & Commodities also. It denied having any inter-se holding with ASBL or its promoters/directors. It submitted that it had purchased 6,40,534 shares of Welpsun and sold the same during July 24, 2009 to July 29, 2009 in the cash segment. In the F&O segment, it bought 20,20,800 shares and had sold the same during July 23, 2009 to July 29, 2009. According to the entity, it had transacted only on 5 days out of the 449 days (referring to the investigation period) and submitted that all its orders were placed on the screen based trading system without being aware of the counter party client/stock broker. The entity submitted that during December 24, 2008 to September 29, 2010, it had purchased and sold 1,32,486 shares of Ackruti in cash segment whereas in F & O segment, it has traded on 3 days and purchased and sold 99,000 shares. According to it, the transactions in the said scrip were in the nature of square-off transactions wherein the transactions were either squared up the same day or on the next day. Though it stated that PRVL and FVPL had a common director in Mr. Pushpjeet Kumar and shared a common address, contended that both the companies operate independently. It was also submitted that Mr. Pushpjeet Kumar has placed orders through the office of ASBL at Mumbai when he was in Mumbai.

11. Hanurang Vinimay Private Limited (HVPL), another entity identified as a member of the Ashika group, has submitted that it registered itself as a client with ASBL on January 17, 2009 and had dealt in various scrips through ASBL since then. According to the entity, it had traded only in the shares of Welspun during the period stated in the Order when it has bought 1,00,000 shares on May 22, 2009 and sold them during May 27 & 28, 2009. It submitted that though it had also traded in the shares of Ackruti, the trades were executed since June 3, 2009 onwards, which was period after the period identified in the SEBI Order. It denied having any common address, common director/promoter, shareholding, off market transactions or financial transactions with any of the group entities mentioned in Order.

12. Micro Management Limited (MML) was found to have received shares in off-market from Amit Business Limited on the 19th and 22nd of December 2006. It had similar address as that of PBL and found to be a shareholder in Lotus Capital Financial Services Limited which has made off market transfer to Amit Business Limited, Dangi Group entity. It is to be noted that Ivory Consultants Private Limited also held shares in Lotus Capital Financial Services Limited. The entity submitted that it was registered as the client of ASBL on February 25, 2002 and had dealt in various scrips through ASBL since then. It submitted that apart from ASBL, it has traded through Destiny Securities Limited and Bhargava Lodha Stock Broking Limited in the shares of Welspun and Ackruti only. In Welspun, it has traded only in 2 days (in F&O segment) through the broker Bhargava Lodha Stock Brokers Private Limited and in Ackruti (in F&O segment), it has executed only one transaction in September 2008 and 5 transactions in March 2009. Regarding the off market transactions with Amit Business Limited in the shares of Himachal Futuristics, Khaitan Electricals & Tata Teleservices Limited, it submitted that those transactions were executed in the normal course of business at prevalent market price and that it was not aware that Amit Business Limited was a Dangi group entity. It further submitted that it had shared address with PBL for some period and stated that in December 2008, PBL has shifted its office. MML also stated that it acquired 2,80,000 shares of Lotus Capital Financial Services Limited in March 2008 and that the same were sold in June 2008.

13. PR Vyapaar Limited (PRVL) was found to have traded in the shares of Welspun and found to have similar address as that of FVPL. The entity has submitted that it was registered as a client with ASBL on May 14, 2008 and dealt in various scrips through it since then. Apart from ASBL, it has traded through Manu Stock Brokers Limited, Bhargava Lodha Stock Broking Limited, etc. The entity has submitted that it had traded in the shares of Welpsun (cash segment) through ASBL during July 18, 2008 to October 22, 2008, during which it has bought and sold 2,44,367 shares. During the period-August 5, 2009 to March 26, 2010, it has traded on 11 days, buying 12,75,000 shares and selling 11,03,201 shares. It further stated that in the F&O segment, it has bought and sold 1,10,400 shares through ASBL and Manu Stock Brokers Limited during 2008-09. During 2009-10, it has purchased and sold 50,11,200 shares of Welpsun. It further submitted Mr. Pushpjeet Kumar was a common director in itself and in FVPL and shared address with FVPL but submitted that both the companies operate independently. According to it, in Ackruti (cash segment), it has traded on 17 days through ASBL during July 31, 2008 to March 17, 2009 when it had purchased 5,71,000 shares and sold 5,96,000 shares. Similarly, during 2009-10, it has traded on 4 days, buying and selling 20,000 shares. It submitted that in the F&O segment, it has bought 2,02,200 shares and sold 2,66,400 through ASBL and Manu Stock Brokers Limited during September 18, 2008 to March 4, 2009.

14. Pushkar Banijya Limited (PBL) was found to be a shareholder in Amit Business Limited and had the address similar to that of MML. It had purchased 1,23,000 shares of RPG alongwith RVPL and CCSPL, the counterparty for 1,17,363 shares (approx.) was Ashok Finstock Limited, a Dangi group entity. It is a shareholder in Lotus Capital Financial Services Limited which made off market transfer to Amit Business Limited. Ivory Consultants Private Limited, another Dangi entity also had shareholding in Lotus Capital Financial Services Limited. The entity submitted that it was client of ASBL since April 22, 2004 and that it had also traded through Systematix Shares & Stocks Limited. According to the entity, it had traded in the shares of RPG, Welspun and Ackruti only. It submitted that on March 31, 2008, it had acquired 4,70,000 shares of Amit Business Limited and sold them during the period-June 2008 to October 2008. It shares address with MML but its address has been changed since December 25, 2008. The trading details as submitted by the entity is given below:

Ackruti Cash F&O First Patch (June 2007 to Feb. 2008) First patch Bought & sold 6000 shares during 09.11.07 to Nil 03.03.08

Second patch (January 1.2009 to March 19, Second patch 2009) Nil. Bought 3,06,300 stock futures and sold the same during February 5.2009 to March 5,2009. Welspun Cash F&O Bought 5000 shares & sold 2000 shares during Nil 29.07.09 to 20.1109 (4 days) RPG Cash F&O Bought & sold 1000 shares on 20.05.08. Nil Bought 70000 shares on 08.12.06 & sold them on December 18,2006. These transactions (cash segment) were executed at stock exchange platform where counterparty is unknown.

PBL further submitted that it had acquired 4,20,000 shares of Lotus Capital Financial Services Limited on March 31, 2008 and further 60,000 shares on December 17, 2008 and the same were sold till April 2009.

15. Rosewood Vanijya Private Limited (RVPL) was found to have purchased 1,23,000 shares of RPG alongwith PBL & CCSPL and the counterparty for 1,17,363 shares (approx.) was Ashok Finstock Limited, a Dangi group entity. The entity had Amit Business Limited as its shareholder and the entity is a shareholder in WCPL and DTPL. RVPL was also found to be the shareholder of Lotus Capital Financial

Services Limited who has made off market transfer to Amit Business Limited and that another Dangi entity, Ivory Consultants Private Limited, also had shareholding in Lotus Capital Financial Services Limited. RVPL submitted that it is an investment company and trades in the market through various brokers i.e. ASBL, Microsec, Angel Capital etc. it submitted that it was allotted 2,60,000 shares of Lotus Capital Financial Services Limited on March 31, 2008 and that the same were sold in two tranches i.e. 1,50,000 shares on June 11, 2008 and 1,10,000 shares on June 17, 2008. Further, according to the entity, it had acquired 60,000 shares each of DTPL & WCPL on March 31, 2009 and those shares were sold to an entity, Commit Marketing Private Limited on September 4, 2009. It was also submitted that Amit Business Limited was allotted 36,000 shares in RVPL on March 31, 2007 and that Amit Business Limited does not hold any shares in it at present. RVPL also stated that it purchased and sold 2000 shares of RPG during November 3, 2006 to November 16, 2006 and that it had traded in 1000 shares of Welspun on January 12, 2010.

16. Sarswati Vincom Limited (SVL) is another entity identified in the Order as being a member of the Ashika group. The entity shared the same address as that of Ivory Consultants Private Limited (ICPL). In its reply, the entity had submitted that there was no change in its management and that during April 2009 a new management had taken over the company from its erstwhile promoters. It stated that prior to April 2009, it was having the same address as that of ICPL and subsequently changed its address and accordingly Form 18 was filed with the Registrar of Componies (ROC). It further submitted that it had traded in the shares of Welspun and Ackruti only and the trade details as submitted by it are summarised as follows:

Ackruti Cash F&O First Patch (June 2007 to Feb. 2008) First patch Bought & sold 6500 shares during 08.10.07 Nil to 06.11.07.

Second patch (January 1.2009 to March Second patch 19, 2009) Nil. Bought 64,500 shares and sold the same during 03.02.09 to 26.02.09 through other brokers. Welspun Cash F&O Bought & sold 6,73,954 shares during Bought and sold 35,63,200 shares during 22.07.09 to 19.11.09 through ASBL & other 12.05.09 to 30.03.10 through ASBL & other brokers. brokers.

17. Splendor Vanijya Private Limited (SVPL) was found to have allotted 4,00,000 shares to Mr. Kapil Kumar (the managing director of Brushman) on December 31, 2008; indulged in off market transactions with Amit Business Limited (ABL) on 29th and 30th of December 2006; Amit Business Limited was its shareholder and SVPL was found to a shareholder of Delight Tie-Up Private Limited. SVPL submitted that it had traded in listed securities through various stock brokers like ASBL, SPFL Securities Limited, Angel Broking Limited etc. It is its submission that the shares of PSTL were wrongly credited into its demat account on December 29, 2006 and therefore the same was reversed on December 30, 2006. As to the allotment to the managing director of Brushman, it submitted that Mr. Kapil Kumar was allotted 4,00,000 shares on December 31, 2008 based on his application dated December 20, 2008 for 2,00,000 shares each and that presently he is not its shareholder. It is also submitted that Amit Business Limited was also allotted 90,000 shares on March 31, 2007 and the said entity does not hold any shares of SVPL presently. As regards its shareholding in DTPL, it was submitted that SVPL was allotted 2,00,000 shares of DTPL on March 31, 2009 and the same were sold in two tranches - 1,00,000 shares on September 19, 2009 and 1,00,000 shares on October 5, 2009.

18. Winall Vinimay Private Limited (WVPL), an entity of the Ashika group was found to have traded in the shares of Welspun. The entity, in its reply, inter alia stated that it had traded only in the shares of Welspun and that in the Cash segment, it has purchased and sold 5,00,000 shares on January 28, 2010 and in the F&O segment, it has purchased and sold 12,75,200 shares on three days - November 26, 2009, December 31, 2009 and March 25, 2010. It is the contention that its trades cannot be instrumental in the price rise of the said scrip as it had traded only after September 2009 when the price had already risen.

19. Withal Commercial Private Limited (WCPL) was also found to have traded in the shares of Welspun during the relevant period. It had off-market transactions with Amit Business Limited on August 28, 2008 and September 24, 2009 and that FMPL and RVPL (in which Dangi group entities had stake) were its shareholders. WCPL has submitted that it invests in the securities market and had traded through several stock brokers including ASBL. It contended that it did not have any other relation with its stock broker except that of client-broker relation. Regarding the off market transfer to Amit Business Limited, the entity submitted that it had sold shares of AGFPL and AGSL in the ordinary course for consideration. With respect to the shareholding of FMPL and RVPL, it was submitted that FMPL and RVPL were holding 5.5% & 1.22% of its capital respectively, as on 31.03.09 and that at present, they do not hold any shares in it. The details of its trades as submitted by it in its reply have been summarised and given below:

Ackruti Cash F&O First Patch (June 2007 to Feb. 2008) First patch Nil. However, bought & sold 61,500 shares Nil during 25.09.08 to 03.12.08.(4 days)

Second patch (January 1.2009 to March Second patch 19, 2009) Bought 46,000 shares & sold 46,000 shares Bought 64,500 shares and sold the same during 15.01.09 to 05.03.09 (4 days) through during 03.02.09 to 26.02.09 through Manu ASBL & Manu Stock Broking Ltd. Stock Broking Ltd.

Bought & sold 1,89,414 shares during 2009- 10 Welspun Cash F&O Bought 42,03,134 shares & sold 41,63,134 Bought 1,16,52,800 and sold shares during shares during 28.05.09 to 23.03.10 through 24.09.09 to 31.12.09 through ASBL. ASBL & Excel Stock Broking Ltd.

All the fourteen entities have inter alia denied being related or associated with the Dangi group or with the promoters of the five companies whose shares had been allegedly manipulated. They have also submitted that their trades were in the normal course of business and were not aware of the modus operandi of the alleged groups.

20. I have considered the aforesaid submissions of the parties. ASBL has acted as the stock broker to the fourteen entities in the aforesaid five scrips. Further, these clients have also traded in other scrips through ASBL. The buy-sell of the said fourteen entities executed through ASBL in the cash segment is given below:

Trades at BSE MIL* Ackruti Brushman ** WELSPUN*** RPG**** Entity B S B S B S B S B S CCSPL 24013 24013 Nil -F Nil -F Nil Nil Nil Nil 50000 50000 CTPL 25000 25000 Nil -F Nil -F Nil Nil Nil Nil Nil Nil DTPL Nil Nil Nil -F Nil -F Nil Nil Nil Nil Nil Nil FMPL Nil Nil Nil -F 25 -F 40000 40000 Nil Nil Nil Nil FVPL Nil Nil Nil -F Nil -F Nil Nil 391627 371601 Nil Nil HVPL Nil Nil Nil -F Nil -F Nil Nil 75 30075 Nil Nil MML Nil Nil 84000-F 113000-F Nil Nil Nil Nil Nil Nil PRVL Nil Nil Nil -F Nil -F 493314 491314 10000 200000 Nil Nil PBL 575 575 1000-F 231-F Nil Nil Nil Nil 71000 71000 RVPL Nil Nil Nil -F Nil -F Nil Nil Nil Nil 2000 2000 SVL Nil Nil 3100-F 2000-F Nil Nil 370360 489843 Nil Nil SVPL Nil Nil Nil -F Nil -F Nil Nil Nil Nil Nil Nil WVPL Nil Nil Nil -F Nil -F Nil Nil Nil Nil Nil Nil WCPL Nil Nil Nil -F Nil -F Nil Nil 844540 694776 Nil Nil

F- First patch in ACL June 2007 to February 2008 S – Second patch in ACL during January1, 2009 to March 19, 2009 * period of examination for MIL is September 2006- July 2007 ** period of examination for BIL is February 2008- November 2008 *** period of examination for Welpsun is May 2009- November 2009 **** period of examination for RPG is September 2006- September 2007 Trades at NSE MIL* Ackruti WELSPUN$ Entities B S B S B S CCSPL Nil Nil Nil-F Nil-F Nil Nil CTPL Nil Nil Nil-F Nil-F Nil Nil DTPL Nil Nil Nil-F Nil-F Nil Nil FMPL Nil Nil 25-F 25-F Nil Nil FVPL Nil Nil Nil-F Nil-F 2,48,907 2,68,933 HVPL Nil Nil Nil-F Nil-F 1,00,000 70,000

MML Nil Nil 30000-F 1000 - F Nil Nil PRVL Nil Nil Nil-F Nil-F 11,30,000 9,40,000 PBL Nil Nil 5000- F 5269 - F 5000 2000 RVPL Nil Nil Nil-F Nil-F Nil Nil SVL Nil Nil 3400- F 4500 - F 7,02,694 5,84,111 SVPL Nil Nil Nil-F Nil-F Nil Nil WVPL Nil Nil Nil-F Nil-F 5,00,000 5,00,000 WCPL Nil Nil 500- F 499- F 33,19,394 33,05,617

* period of examination for MIL is February 2007- July 2007 $ period of examination for MIL is January 2009- March 2010

It is to be noted that the two tables given above includes the trade details of Ashika Group entities taken from the trade data available with SEBI.

21. During examination of the submissions of ASBL and its clients (the fourteen entities) with the trade data, SEBI had noticed significant factual inaccuracies with regard to submissions made on behalf of ASBL and the other Ashika Group entities. For instance, ASBL has stated that its client Micro Management Limited (MML) has traded in the shares of Ackruti (in the first patch), buying and selling 1,14,000 shares whereas MML has contended that it has not traded through ASBL during 2008-10. However, the trade details suggest that the said client had in fact traded through ASBL. In another instance, when both ASBL and CCSPL have denied trading in the shares of MIL, the trade data indicates that CCSPL while trading through ASBL has purchased and sold 24,013 shares during November 1, 2006 to November 6, 2006 (3 trade days). Similar inconsistencies and factually incorrect submissions have been observed for another client CTPL also which has traded in MIL, buying 25000 shares on November 6, 2006 and selling the same quantity on November 23, 2006. The said entity as well as ASBL has denied trading in MIL. Further, it is interesting to note from trade data that when CCSPL (C015) was selling, the counterparty client was mostly Mentor Capital Limited (earlier known as Pacific Corporate Services Limited (PCSL) and CTPL(C376) and when CTPL was selling thereafter, the counterparties were only Mentor Capital Limited and another Dangi group entity, Ashok Finstock Limited (AFL). The said details are as under:

Entity Purchase Counterparty Sell Counterparty

CCSPL 24013 AFL for 24013 shares 24013 PCSL for 9241 shares & CTPL for 14103 shares CTPL 25000 AFL for 10752 shares & CCSPL 25000 PCSL for 24448 shares & for 14103 shares AFL for 552 shares

The Order has alleged PCSL and AFL to be Dangi group entities primarily involved in the manipulation of various scrips stated in the order. This is one instance which indicates that the entities are attempting to conceal or mis-state information and submit only those details that are in their favour or that suit them. The ongoing examination could reveal several such instances. As per information available on the website of ACCL (the group company of ASBL), both PRVL holding 5,00,000 shares (7.15% of the capital) and WCPL holding 4,00,000 shares (5.72 % of the capital) are shown as shareholders of ACCL for the quarter ending on March 2010 & June 2010 and these shares are stated to be under lock-in. This piece of fact is enough to show that the relation between ASBL and its aforesaid clients is not merely a client-stock broker relation as claimed to be and there is something more to it, requiring a detailed examination.

22. I find that Delight Tie-Up Private Limited (DTPL), which has been alleged to be connected with Amit Business Limited (a Dangi group entity) and also to SVPL and RVPL due to cross shareholding. Further, DTPL has allotted 4,00,000 shares to Mr. Kapil Kumar, the Managing Director of Brushman. DTPL has traded in the shares of Ackruti during the second patch. I further find that DTPL has not given any reasons for receiving/allotting shares. Though it has enclosed copies of the allotment advices for the allotment of shares to Mr. Kapil Kumar, SVPL and RVPL, it has not produced any letters on what basis the said shares were allotted. Very importantly, DTPL is a private limited company. In a private limited company, shares are allotted only to persons/entities known to them as the name of the company itself suggests that it is a private enterprise. Further, DTPL has not enclosed any supporting documents towards receipt/payment of funds or bill raised by various entities in respect of purchase or sale transactions. FMPL has a stake in ABL and is also a shareholder in WCPL (another client of ASBL). It has traded in the shares of Ackruti, Brushman and Welspun. Though it has stated that shares were acquired for investment purpose in the ordinary course of business, yet it has also not provided the supporting documents. FVPL has been found to have traded in the shares of Welspun and Ackruti. One of the allegations against FVPL is that it has placed orders from the premises of Mentor Capital Limited where the office of ASBL is also located. It is submitted that one of its director Mr. Pushpjeet Kumar has placed orders through ASBL when he was in Mumbai. Mr. Pushpjeet Kumar is also a director in PRVL. I find that it is unusual for a director of a company to place orders personally at the stock broker’s office, more particularly, when the entity’s business is to deal in shares. It is usually seen that a regular trading company places orders over telephone. The said manner of placing orders creates a strong ground to hold that the concerned parties were well acquainted. As regards HVPL, I find that the entity has only traded in Welpsun and its cumulative trading (BSE+NSE) is purchase and sell of 1,00,075 shares. Apart from the said observation, no other alleged role of HVPL had been discussed in the Order.

23. Micro Management Limited (MML) has been alleged to be related to Amit Business Limited. The said Amit Business Limited has been subsequently merged with a Dangi group entity, Pacific Corporate Services Limited (now known as Mentor Capital Limited). MML also shared address with Pushkar Banijya Limited. It is also noticed that MML had indulged in off-market transactions with Amit Business Limited. Further, it has not produced bank statements to show proof of payment/receipt of funds. PR Vyapar Private Limited (PRVL) is found be sharing the same address as that of FVPL and a director is common in both the said entities. Though, no off market transfers or shareholding in Dangi entities has been noticed in the case of PRVL, it has been found trading through ASBL particularly in the shares of Ackruti and Welspun during the relevant period.

24. Pushkar Banijya Limited (PBL) is another entity identified as part of the Ashika Group, which has traded for 71,000 shares of RPG. It has also indulged in off-market transactions with Amit Business Limited. It is noted that when the PBL is buying shares, the counterparty was Ashok Finstock Limited (AFL) for 69,710 shares (98.18% of its traded quantity). Further, when PBL sold 71,000 shares in 3 trades, AFL was the counterparty buyer for 70,000 shares (98.59%). Though the transactions were executed on stock exchange platform, the counterparty concentration raises a serious doubt as to whether the trades were pre-arranged and structured. The ongoing investigation would ascertain whether these transactions were synchronized/structured in any manner. Rosewood Vanijya Private Limited (RVPL) had Amit Business Limited as its shareholder and itself was a shareholder in Withal Commercial Private Limited (WCPL) and Delight Tie-Up Private Limited (DTPL). The entity has not submitted proof of payment/receipt of funds in respect of the purchase or sale transactions. Further, it is observed from the bills submitted that the shares were allotted or purchased at `50/- and the same were sold after a considerable period for the same price.

A trading company expects profit even if time difference between buy & sell transactions is few minutes and here the time difference is in months and the shares are being transferred at same price. Therefore, the same appears unusual. The investigation shall probe the reasons for the transfer at same price as well as the fund flow and the details of the transferee. Sarswati Vincom Limited (SVL) is alleged to be sharing address with Ivory Consultants Private Limited (an alleged Dangi entity). The entity has submitted that its address changed in April 2009 after the change in management. The entity has been found to have traded substantially in the shares of Welpsun and all these trades are subsequent to the change in its management. Splendor Vanijya Private Limited (SVPL) is also alleged to be connected to Amit Business Limited, a Dangi entity and related to DTPL as its shareholder. It has allotted 4,00,000 shares to Mr. Kapil Kumar, Managing Director of Brushman based on his applications. The pertinent point here is SVPL is an unlisted company and a private company which does not have market accessibility and a Managing director of a listed company is purchasing 400000 shares of unlisted company by investing ` 2 Crores.

No proof of receipt of funds is submitted by SVPL. I note that most of these transactions are being executed at price of `50/- (`10/- face value with `40/- premium). It is a strange coincidence that transactions between unrelated entities are being done at same price. The details of transferees are not unknown at this stage. WVPL has been found to have traded in Welpsun only and was not found connected with any entity. Withal Commercial Private Limited (WCPL) has traded in the shares of Ackruti and Welpsun and that its contribution to the volumes in Welpsun is phenomenal. It has neither provided the bills nor is the proof of payment/receipt of funds provided. WCPL made off-market transfers of shares of Ashika Global Finance and Ashika Global Securities to Amit Business Limited. Forever Merchants Private Limited and Rosewood Vanijya Private Limited, in which Dangi Group entities having stake, had shareholding in WCPL. Rosewood Vanijya Private Limited and Splendor Vanijya Private Limited in which Dangi Group entities having stake, had shareholding in Delight Tie-up Private Limited. Further, it is found to be shareholder of ACCL, Group Company of ASBL.

Mr. Santanu Kumar Das and Mr. Ranjan Kumar Das are common directors of CTPL and DTPL and their registered office address is also same.

25. Most of these alleged Ashika Group entities were observed to be connected to Amit Business Limited, which subsequently merged with Mentor Capital Limited on February 26, 2010. Though the merger happened in 2010, the association of Mr. Sanjay Dangi and Mrs. Alpana Dangi in Amit Business Limited was there since August 24, 2007 when Mr. Sanjay Dangi became a director therein. Thus, it can be prima facie said that ABL has played a central role in bringing alleged Ashika Group entities together for the purpose of manipulation in the various scrips mentioned in the order. Though individually the contribution of Ashika Group entities may appear to be negligible, their collective concentration is substantial, as stated in the previous paragraphs in this Order. Though, ASBL has not actively traded in the aforesaid five scrips, few instances of trades were observed through Ashika Capital Limited. ASBL has informed about only three companies i.e. AGFPL, ACCL & AGSL as its group companies. However, the information available on its website of ACCL (a group company) shows the following companies also as its group companies:

a. Ashika Capital Limited b. Ashika Insurance Broking & Risk Management Limited c. Ashika Venture Capital Private Limited d. Ashika Commodities & Derivatives Private Limited

26. ASBL has submitted that the shares of Grand Foundary Limited, Gujarat Lease Financing and Nath Pulp & Paper were sold by AGFPL to Amit Business Limited (ABL) in 2002 and share certificates with transfer deeds were given to them. After five years, in 2007, ABL requested AGFPL to demat those shares and transfer to them since it lost transfer deeds. It is unusual for a company to ask for dematerialization of shares after five years of transfer. Further, for transfer of shares, both the documents i.e. transfer deed and share certificates are required. Since ABL has lost only transfer deed, it may have requested for fresh transfer deeds and after receiving them, the shares could have been dematerialized by it instead of asking AGFPL to dematerialise and transfer the shares. The same appears unusual. I note that various off market transfers entered into between different entities including Ashika Group entities as well as crossholding of shares needs to be examined in detail during the ongoing investigation.

27. Here is a case, where a group of entities trade through the common stock broker, ASBL in the identified stocks during the relevant period. The price-volumes of those scrips have been allegedly manipulated. The entities who have traded have connections in form of same addresses, common directors, shareholding as discussed above, etc. Considering the totality of the facts, circumstances and the findings of the investigation done so far, I am of the view that the preponderance of probability, at this stage in the proceeding, is too high to take another view than the one taken in the Order. In a fraud allegedly committed by a group of persons, at the preliminary stage, it would not be possible to have concrete evidence as to the involvement of the parties in the manipulation. It is only the preponderance of probability based on the facts that have been unearthed and the attendant circumstances that would lead one to decide whether the parties could have or not be involved in the alleged acts. Relation between the parties and the modus operandi would have to be proved in the manner possible.

At this stage, the preponderance of possibility of the involvement of the parties concerned is too high for me to ignore the same. In a fraud committed through various persons, the individual role or participation could to be less or even negligible but when the role or activities of the entire alleged group are taken together, the same attains mammoth proportions. With respect of HVPL and WVPL, I find that though the said entities have traded in the shares of Welspun, they have either not been related to the others or that no alleged role had been discussed in the Order. Therefore, it would be in the interest of justice to revoke the ex-parte directions issued to HVPL and WVPL. Further, I also note that ASBL had been prohibited vide the Order from taking fresh clients. Having taken into consideration the facts and circumstances and its role, I am of the view that the direction prohibiting the taking of fresh clients can be revoked for the stock broker, ASBL. However, the direction restraining its proprietary trades should remain in force. Therefore, considering the findings in the matter based on the facts and circumstances and the submissions of the parties, I am of the considered view that the interim ex-parte directions against the entities except HVPL, WVPL and ASBL, should continue.

Needless to say, the investigation, which is in progress, would consider the submissions/contentions and the documents furnished by the parties to arrive at conclusions as to the involvement or otherwise of an entity in this matter. The role of the entities shall be reviewed on completion of the investigation and appropriate course of proceedings, if warranted, shall be taken, in accordance with law.

28. In view of the foregoing, I, 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(4), 11B and 11D thereof, hereby issue the following directions:

a. The directions issued vide the ad-interim ex-parte Order dated December 02, 2010 against Calcom Consultancy Services Private Limited, Cynosure Tie-Up Private Limited, Delight Tie-Up Private Limited, Forever Merchants Private Limited, Fountain Vanijya Private Limited, Micro Management Limited, PR Vyapaar Limited, Pushkar Banijya Limited, Rosewood Banijya Private Limited, Sarswati Vincom Limited, Splendor Vanijya Private Limited and Withal Commercial Private Limited are confirmed.

b. The directions issued vide the ad-interim ex-parte Order dated December 02, 2010 against Winall Vinimay Private Limited and Hanurang Vinimay Private Limited are revoked.

c. The directions issued vide the ad-interim ex-parte Order dated December 02, 2010 against the stock broker, Ashika Stock Broking Limited are revoked to the extent of taking fresh clients. However, the direction restraining it from buying, selling or dealing in the securities in its own/proprietary account in any manner, shall continue.

29. I also direct that the investigation in the matter be concluded expeditiously and appropriate action as warranted, in accordance with law, be taken.

30. Copies of this Order shall be served on the National Stock Exchange of India Limited, Bombay Stock Exchange Limited, National Securities Depository Limited and the Central Depository Services (India) Limited, to enable them to take necessary steps for ensuring due compliance with this Order.

DR. K. M. ABRAHAM WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA

PLACE: MUMBAI DATE: JULY 19, 2011