Order in respect of Dhanvarsha Investments and Ors

WTM/RKA/IVD/NRO/144 & 145/2014 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA ORDER UNDER SECTION 11(1), 11(4) (b) AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 IN RESPECT OF:

S. NAME OF THE ENTITIES ORDER NO. NO. 1 DHANVARSHA INVESTMENTS AND ITS PROPRIETOR, MR. 144 JEEV NARAYAN MISHRA, 2 PRASNEETA CONSTRUCTIONS PVT. LTD. AND ITS 145 DIRECTORS, MR. AJAY AGARWAL, MS. SANDHYA AGARWAL AND MR. GAJANAND AGARWAL

IN THE MATTER OF SHAMKEN MULTIFAB LIMITED 1. Securities and Exchange Board of India (hereinafter referred to as “SEBI’) investigated into the unusual price movement in the scrip of Shamken Multifab Limited (hereinafter referred to as “SML” or "the company") following an unusual rise in price from ₹ 6/- on February 23, 2000 to ₹ 25.55/- on July 20, 2000 accompanied with an unusual rise in net traded quantity, from average traded volume of 9,800 shares in the period May-June 2000 to 92,400 shares during the period June 21, 2000 to July 18, 2000. 2. The investigation, inter alia, revealed that – a) There was a price movement in the share price of SML from ₹ 6/- on February 23, 2000 to ₹ 25.55/- on July 20, 2000. The analysis of trading has been carried out in two different trading periods i.e. February 23, 2000 to June 20, 2000 and June 21, 2000 to July 18, 2000. b) Trading in the scrip of SML was largely concentrated with two brokers Maheshwari Technical & Financial Services Ltd. (hereinafter referred to as "Maheshwari") and Adroit Financial Services Ltd. (hereinafter referred to as "Adroit") who had entered into large number of cross and structured deals. These brokers were mainly trading for a common client namely Vandana Securities Ltd. (hereinafter referred to as "Vandana"), who was acting as unregistered sub-broker. Adroit had also traded for its clients, Ms. Sonali Bansal, Shiv Vani Associates and Mr. Moti Ram. The affairs of firm Shiv Vani Associates and trades of Order in respect of Dhanvarsha Investments and Ors.

Ms. Sonali Bansal were handled by one Mr. Amit Bansal (husband of Ms. Sonali Bansal and brother of Mr. Manish Bansal). c) Vandana was mainly trading for Prasneeta Constructions (hereinafter referred to as "Prasneeta") and Dhanvarsha Investments (hereinafter referred to as "Dhanvarsha"). Both these entities were linked to each other. The proprietor of Dhanvarsha namely Mr. Jeev Narayan Mishra was an employee of director of Prasneeta. Both Dhanvarsha and Prasneeta had admitted that they were trading for SML group. They also stated that they were introduced to SML group by Mr. P. K. Agarwal who is a Chartered Accountant and also a friend of Mr. Praveen Juneja, director of SML. Mr. P. K. Agarwal reportedly played an instrumental role in managing the share price manipulation for SML. It has been stated by one Mr. I C Jindal of Vandana that Mr. P. K. Agarwal used to place orders on behalf of Dhanvarsha and Prasneeta. d) The entire trading in the shares by these clients was for various promoter group concerns of SML. SML has admitted that their promoter group concerns had acquired shares from Dhanvarsha.

Fund flow trail has also shown that Dhanvarsha and Prasneeta had received money from SML group concerns for the purpose of trading in the scrip of SML. SML had also given funds to these entities for acquiring its own shares. e) Further, it has been observed that by creating false market in the scrip, the entities i.e. brokers Vandana, Dhanvarsha, Prasneeta, Mr. P K Agarwal, SML and its group concerns attempted to induce general public to deal in the scrip of SML. The motive of their dealings in the shares of SML as observed was to exit from the scrip (after booking profit) once general public had been lured into it. f) The entire trading in the shares by these clients was for various promoter group concerns of SML. SML has admitted that their promoter group concerns had acquired shares from Dhanvarsha. Fund flow trail has also shown that Dhanvarsha and Prasneeta had received money from SML group concerns for the purpose of trading in the scrip of SML. SML had also given funds to these entities for acquiring its own shares. It has been observed that SML attempted to influence price rise of its scrip by trading effected through front entities.

Dhanvarsha, Prasneeta and Vandana who did not have certificate of registration from SEBI to deal in securities. 3. Therefore, show cause notices ("SCNs") dated August 31, 2004 were issued under section 11B of SEBI Act, 1992 read with regulation 12 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 ("PFUTP Regulations, 1995") read with regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 ("PFUTP Regulations, 2003") by SEBI to Dhanvarsha and its proprietor, Mr. Jeev Narayan Mishra and to Prasneeta and its directors, Mr. Ajay Agarwal,

Mrs. Sandhya Agarwal and Mr. Gajanand Agarwal (hereinafter collectively referred to as "the noticees" and individually by their respective names). In the SCNs issued to noticees, it was, inter alia, alleged that – a) Two brokers of NSE namely Maheshwari and Adroit accounted for approx. 95% of the total net traded quantity during the relevant period and that both the aforesaid brokers had mainly traded on behalf of a common client, Vandana. b) Vandana acting in the capacity of an unregistered sub-broker had traded on behalf of Dhanvarsha and Prasneeta. Trading of Dhanvarsha and Prasneeta during the period February 23, 2000 – June 20, 2000 was follows - Name of client Buy Sell Gross Net ( shares) (shares) (shares) ( shares) Dhanvarsha 1,05,000 1,300 1,06,300 1,03,700 Prasneeta 5,90,200 2,25,700 8,15,900 3,64,500 Total 6,95,200 2,27,000 9,22,200 4,68,200 c) The noticees had bought total 6,95,200 shares, which was 53.08% of the total buying of 13,09,600 shares at NSE. The net buying by noticees was 4,68,200 shares, which was 68.50% of the total net buying of 6,83,500 shares at NSE. d) As per the information provided by Vandana, all the trading during June 21, 2000 to July 18, 2000, was done for Dhanvarsha which had purchased 3,39,000 shares and sold 2,28,800 shares resulting in net buy of 1,10,200 shares.

The gross buying by Dhanvarsha through Vandana was 89.30% of its total trading of 3,79,600 shares at NSE. e) Maheshwari and Adroit had entered into a number of cross and structured deals on behalf of Vandana. It was observed that 218 cross deals involving 96,300 shares were executed through Maheshwari, which accounted for approx. 31% of its gross traded quantity in the scrip at NSE during the period June 21, 2000 to July 18, 2000 and 216 cross deals involving 1,20,400 shares were executed through Adroit which accounted for approx. 45% of its gross traded quantity in the scrip at NSE during the period June 21, 2000 to July 18, 2000. Apart from it, 363 structured deals involving 2,17,800 shares were executed by these two brokers which constituted approx. 28.69% of the gross traded quantity at NSE during the period June 21, 2000 to July 18, 2000. The increase in the net quantity traded and price of the scrip from ₹16.95 to ₹25.55 during the period June 21, 2000 to July 18, 2000 is apparently attributable to the large number of cross and structured deals executed by brokers on behalf of Vandana.

The same was done with the mala fide intention of creating a false market in the illiquid scrip of SML thereby rigging the share price.

f) The director of Vandana, Mr. I C Jindal has stated that Mr. P K Agarwal used to place all the orders for purchase and sale of SML shares on behalf of Dhanvarsha and Prasneeta. g) The proprietor of Dhanvarsha, Mr. Jeev Narayan Mishra in his statement to SEBI, recorded on July 09, 2003 and November 12, 2003 submitted that:  He started working as an office boy with Prasneeta, a company of Mr. Ajay Kumar Agarwal with a salary of ₹1,500/- and still working with the same company but now also looking after various bank accounts of the company. The present salary is ₹4,000/-.  His employer Mr. Ajay Kumar Agarwal took him to Mr. Praveen Juneja. That Mr. Juneja asked him to purchase the shares of SML and its group company Shamken Cotsyn Ltd. from open market and that for purchasing these shares he was offered a brokerage of ₹70-80 per lac shares purchased. In the whole deal Mr. Ajay Kumar Aggarwal stood as the guarantor since Mr. Pravin Juneja did not know him and that he earned a brokerage of around ₹30,000- ₹40,000 from SML group.  He was introduced to Mr. Juneja in the meeting wherein Mr. PK Agarwal and his employer Mr. A K Agarwal went along with him.

(This fact was also confirmed by Mr. PK Agarwal in his statement).  All his dealing in SML shares were on behalf of SML group only and no dealing were done in his own account. Further, he had never issued any bills/contract notes for the shares purchased by SML group.  All the orders were placed by Mr. Pravin Juneja and sometimes by Mr. VR Rao and that as already mentioned all his trading in SML shares were for SML Group.  Dhanvarsha sometime in the year 2000 when he was engaged by Mr. Parvin Juneja and Mr. V.R. Rao of SML to buy shares of SML & Shamken Cotsyn Ltd. The firm was opened with specific purpose of executing transactions in the scrips of Shamken Multifab Ltd and he closed it once the task given by the company had been completed.  He also submitted that he had no prior experience of share market and he was not aware of the implications of the task given by the company.  He did not maintain any record pertaining to the aforesaid transactions and had passed on all the records and papers given by Vandana to SML.  Whenever Mr. Juneja and Mr. V.R. Rao used to ask him to purchase shares of SML, Shamken Cotsyn Ltd. he used to place buy order with Vandana.

He also admitted that SML used to give money through cheques which he used to deposit in his accounts and subsequently used to make payment to Vandana. All the money credited into account numbers 2116 and 50320 with Nedungadi Bank came from SML Group. SEBI investigation revealed that these accounts were introduced by Prasneeta. h) The director of Prasneeta, Mr. Ajay Kumar Agarwal, in his statement made to SEBI on October 31, .2003 stated that he had mainly traded in the shares of SML during calendar year 2000. i) Mr. Ajay Kumar Agarwal further stated that Prasneeta was induced to trade in the shares of SML by Mr. Pravin Juneja, director of SML group. He also stated that SML group was interested in purchasing the shares and Mr. Pravin Juneja thus offered Prasneeta an incentive of 10 paisa in the form of commission for acquiring the shares of SML and that all the orders of purchase were given to Mr. Ajay Kumar Agarwal either by Mr. Pravin Juneja himself or his representative. He added that whatever trading in SML shares was done by Prasneeta, it was at the instance of Mr. Pravin Juneja of SML. j) He also stated that Prasneeta was referred to Mr. Pravin Juneja by his brother in law Mr. P K Agarwal who is close friend of Mr. Pravin Juneja, director of SML. k) It is evident that trading in the scrip was done with the mala fide intention of creating a false market in the illiquid scrip of SML thereby rigging the share price. this can be corroborated by the following facts:  That in saving account number 2116 in Nedungadi Bank of Mr. Jeev Narayan Mishra, a total of ₹ 1.01 crore were deposited.

SEBI has obtained the details of source of deposits in the account in approximately 70% of the credit entries. In respect of all these entries, it was discovered that the payments were made by Right Credit & Securities Pvt. Ltd., a group company of SML.  That in current account no. 50320 in Nedungadi Bank operated by Mr. Jeev Narayan Mishra in the name of Dhanvarsha Investments, an amount of ₹ 1,72,20,746 was deposited during the period June 2000 to April 2001. Investigation revealed that 90% of the payment from this account has been made to Vandana.  The other major client of Vandana in the scrip, apart from Dhanvarsha, is Prasneeta. Prasneeta happens to be employer of Mr. Jeev Narayan Mishra, proprietor of Dhanvarsha. Prasneeta has also done trading in the scrip on behalf of SML through Vandana only. Mr. Jeev Narayan Mishra was introduced to Mr. Pravin Juneja to trade in the scrip of SML by Mr. Ajay Kumar Agarwal. The very fact that Mr. Ajay Kumar Agarwal, director of Prasneeta stood as guarantor in the whole deal, as Mr. Juneja did not know Mr. Mishra, proves that Prasneeta and Dhanvarsha were trading in the scrip with the mala fide intention of creating false market in the illiquid scrip of SML thereby rigging the share price.  SEBI investigation further revealed that the two clients of Adroit i.e. Shiv Vani Associates and Ms. Sonali Bansal have traded in the scrip on behalf of Mr. Kalu Ram.

Mr. Kalu Ram in his statement dated November 12, 2003 has stated that Mr. I C Jindal, director of Vandana had introduced him to Mr. Pavan Mishra who was interested in purchasing the shares of SML but who would make payment in cash only and that Mr. Kalu Ram was told that Mr. Amit Bansal, who was dealing on behalf of Shiv Vani Associates and Ms. Sonali Bansal would be ready to accept the cash. He further stated that since Mr. Jindal would not deal in cash, he accepted the offer for a brokerage of ₹ 3,000 and took cash from Mr. Pawan Mishra and gave the same to Mr. Amit Bansal. Mr. Amit Bansal in turn gave him the shares of SML, which were handed over to Mr. Pavan Mishra. Investigation also revealed that Mr. Pavan Mishra was a driver of Mr. Ajay Kumar Aggarwal, director of Prasneeta.  SEBI had examined the bank account of Vandana, trailing backwards the funds stated to have been received from Prasneeta. Some of the cheques were received directly from the account of Prasneeta. However, the following cheques were received by Vandana from the account of Shamken Spinners Ltd., on behalf of Prasneeta, which were duly signed by Mr. Pravin Juneja, director of SML:-

Date Cheque no. Amount ₹ Issued from bank account no. March 23, 2000 550763 1000000 0421613222 March 30, 2000 550768 500000 0421613222 April 27, 2000 245790 313489 0413633001

 Further, a cheque no. 628854 of ₹ 13,10,416/- was issued from the account of Shamken Spinners Ltd. on April 22, 2000 in favour of Prasneeta. Similarly, a cheque no. 550767 of ₹ 6,18,744 was issued in favour of Prasneeta on March 29, 2000 and debited from the account of Shamken Spinners Ltd. no. 0421614222. l) Thus, Dhanvarsha and Prasneeta lent their name and thereby provided a link to SML Group for rigging the share price of SML. They also aided and abetted the market manipulation in the scrip of SML by Vandana, Mr. I C Jindal and SML Group. It is therefore alleged that Dhanvarsha and Prasneeta violated regulation 4(a), (b) and (c) of PFUTP Regulations, 1995 read with regulation 4 (2) (a) and (e) of PFUTP Regulations, 2003. Further, Dhanvarsha and Prasneeta also acted as unregistered sub-brokers for trading in SML shares in violation of rule 3 of SEBI (Stock Brokers and Sub-Brokers) Rules, 1992 read with section 12(1) of SEBI Act, 1992. 4. The noticees were asked to show cause as to why directions under section 11B of the SEBI Act, 1992 including, inter-alia, directions of restraining them and their proprietor / directors from accessing the securities market and prohibiting them from buying, selling and dealing in securities, should not be passed against them.

5. Mr. Jeev Narayan Mishra vide letter dated October 04, 2004 replied to the SCN and submitted the following: i. I started Dhanvarsha in the year 2000 for the purchase of the shares of SML through Vandana on behalf of SML group. ii. Whatever I purchased through Vandana, I passed the same to SML group. Further, I was only purchasing / buying the shares and no sales were made by me. iii. I did not have any prior capital market experience and I was looking for some livelihood at that time. I do not understand or comprehend the cross deals, structured deals, etc. as stated in your show cause notice. iv. I am a layman and do not understand the nitty-gritty of the capital market. I used to simply place orders for purchase of shares with Vandana and I do not know Maheshwari and Adroit. I do not even know what is the modus operandi between Vandana, Maheshwari and Adroit. I simply used to place orders with Vandana and take delivery of shares and pass them on to SML group. v. I had no mala fide intention of entering into any cross or structured deals or rigging of the share price or being any sort of link or in lending our name for the same.

6. Mr. Ajay Agarwal, Mrs. Sandhya Agarwal and Mr. Gajanand Agarwal vide letters dated October 04, 2004 replied to the SCN and submitted the following: i. Prasneeta purchased shares of SML during the period March 14, 2000 to May 23, 2000 only and a total of 2,56,920 shares were purchased through Vandana. on behalf of SML group. During the period June 21, 2000 to July 18, 2000, Prasneeta did not purchase any shares of SML. ii. The total number of shares purchased (i.e. 3,64,500), as alleged in the show cause notice is not correct. Further, the company was only purchasing the shares and no sales were made. iii. Our first purchase was on March 14, 2000 and that too at an average price of ₹ 12.11/- and therefore, the allegation of price increase from ₹ 6/- to ₹ 18/- during the period February 23, 2000 to June 20, 2000 is incorrect. iv. Mr. Jeev Narayan Mishra joined the company only in 2001 and hence during the period when the share price of SML was alleged to be rigged, we had no link and were doing separate and independent activities. v. Mr. Pavan Mishra had worked as driver of Mr. Ajay Kumar Agarwal, but why Mr. I C Jindal introduced him to Mr. Kalu ram is not known and what transactions or activities they were involved is not known to us.

vi. During the period June 21, 2000 to July 18, 2000 in which the cross and structured deals are alleged the company did not buy or sell or deal in any way in the share of Shamken Multifab Ltd. vii. The allegation that Vandana has received from Shamken Spinners Ltd. on our behalf is incorrect and why SML has paid to Vandana is not known to us. viii. We had no mala fide intention of entering into any cross or structured deals or rigging of the share price or being any sort of link or in lending our name for the same. 7. An opportunity of personal hearing was granted by the then Whole Time Member to Dhanvarsha and its proprietor, Mr. Jeev Narayan Mishra on November 07, 2008 and December 12, 2008 and the hearing notices in that regard were returned undelivered. Personal hearing was also granted to Prasneeta and its directors on November 07, 2008. Thereafter, personal hearing was granted by me on March 13, 2012 and November 23, 2012 to the noticees. Prasneeta and its directors again failed to appear. However, the hearing notices issued to Dhanvarsha and its proprietor Mr. Jeev Narayan Mishra returned undelivered from their last known address and the same were uploaded on SEBI website but no response was received from them.

8. I have considered the SCN and other material on record. I note that the Noticees have made their written submissions but have not utilized the opportunities given for personal hearing. I conclude that they do not have to submit anything beyond what has been submitted by them in their written submissions. I, therefore, proceed to decide the matter on merits considering such written submissions made by the Noticees. 9. In case of the noticees, it needs to be examined, whether the noticees have violated Regulation 4(a), (b) and (c) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 read with Regulation 4 (2) (a) and (e) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003. Further, by dealing as unregistered sub-broker whether the noticees have violated Rule 3 of SEBI (Stock Brokers and Sub-Brokers) Rules, 1992 read with Section 12(1) of SEBI Act, 1992. 10. Before dealing with allegations and charges, I deem it necessary to refer to the provisions alleged to have been violated by the noticees in this case.

Those provisions are reproduced as under:- SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 " 4. No person shall - (a) effect, take part in, or enter into, either directly or indirectly, transactions in securities,with the intention of artificially raising or depressing the prices of securities and thereby inducing the sale or purchase of securities by any person; (b) indulge in any act, which is calculated to create a false or misleading appearance oftrading on the securities market; (c) indulge in any act which results in reflection of prices of securities based on transactions that are not genuine trade transactions; " SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 " 4. Prohibition of manipulative, fraudulent and unfair trade practices (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely:- (a) indulging in an act which creates false or misleading appearance of trading in the securities market; (e) any act or omission amounting to manipulation of the price of a security;"

SEBI Act, 1992 "12. (1) No stock broker, sub-broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and such other intermediary who may be associated with securities market shall buy, sell or deal in securities except under, and in accordance with, the conditions of a certificate of registration obtained from the Board in accordance with the regulations made under this Act."

SEBI (Stock Brokers and Sub-Brokers) Rules, 1992 "3. No stock-broker or sub-broker shall buy, sell, deal in securities, unless he holds a certificate granted by the Board under the Regulations: Provided that such person may continue to buy, sell or deal in securities if he has made an application for such registration till the disposal of such application." 11. The question for consideration before me in the present case is whether the noticees have aided and abetted the market manipulation in the scrip of SML by the SML Group and other related entities.

12. It is noted from the SCNs that there was a price rise in the scrip of SML from ₹6/- on February 23, 2000 to ₹25.55/- on July 20, 2000. Two stock brokers, viz., Maheshwari and Adroit had entered into cross deals and structured deals in the scrip of SML and through such transactions they had directly/indirectly influenced the price of the scrip. I further note that SML and its group concerns including Shamken Spinners Ltd. were the ultimate clients of the said brokers. These two stock brokers were mainly trading for a common client viz., Vandana, who was mainly trading for Dhanvarsha and Prasneeta. Gross buying and net buying by these two clients constituted 53.08% and 35.75% respectively of the total buying at NSE. 13. I note from the statement of Mr. Jeev Narayan Mishra that he was an employee of Prasneeta a company of Mr. Ajay Kumar Agarwal and that Mr. Ajay Kumar Agarwal had introduced him to Mr. Praveen Juneja, one of the directors of SML. It has further been stated that the firm Dhanvarsha was opened with a specific purpose of executing transactions in the scrip of SML. 14. I further note that it has been stated by Mr. Jeev Narayan Mishra that he along with Mr. P K Agarwal and Mr. Ajay Kumar Agarwal visited the office of Mr. Pravin Juneja, where the offer to purchase the shares of SML was made.

Mr. Ajay Agarwal had reportedly stood as guarantor in the whole deal, as Mr. Juneja did not know Mr. Jeev Narayan Mishra. Hence, the contention of Prasneeta that Mr. Jeev Narayan Mishra proprietor of Dhanvarsha joined Prasneeta only in 2001 does not hold true. Thus, during the period when the share price of SML was rigged, Dhanvarsha and Prasneeta were interlinked and were not doing separate and independent activities. 15. Mr. Jeev Narayan Mishra further stated that his dealing in SML shares were on behalf of SML group only and no dealing were done in his own account. I note that it has also been stated that no bills / contract notes have been issued by Dhanvarsha for the shares purchased by SML group. I note that whenever Mr. Juneja and Mr. V R Rao asked Mr. Jeev Narayan Mishra to purchase shares of SML, buy orders were placed with Vandana. SML used to give money through cheques and the same were deposited in the account of Dhanvarsha. Mr. Jeev Narayan Mishra also stated in his statement that all the money credited into accounts no. 2116 and 50320 came from SML or by its group concerns.

16. I note that it has been stated by Prasneeta that it was induced to trade in the shares of SML by Mr. Praveen Juneja, director of SML group who offered an incentive of 10 paisa in the form of commission for acquiring the shares of SML. Prasneeta traded in the scrip of SML on behalf of SML group has thus acted as sub-broker without being registered with SEBI as a sub-broker. Thus, it is clear that Prasneeta alongwith Dhanvarsha acted in tandem with director of SML namely Mr. Pravin Juneja and his friend Mr. P K Agarwal for share market operations. 17. I also note that Prasneeta disclosed that 2,66,920 shares of SML were purchased for Shamken Spinners Limited and a payment of ₹ 49.21 lacs was received from it. On examination of the bank account of Vandana trailing backwards for the funds received from Prasneeta, I note that some cheques were received directly from the account of Prasneeta. However, 3 cheques were received by Vandana from the account of Shamken Spinners Limited. I further note that a cheque no. 628854 of ₹ 13,10,416/- was issued from the account of Shamken Spinners Ltd. on April 22, 2000 in favour of Prasneeta.

Similarly, a cheque no. 550767 of ₹ 6,18,744 was issued in favour of Prasneeta on March 29, 2000 and debited from the account of Shamken Spinners Ltd. no. 0421614222. Payments were also made by Shamken Spinners Ltd. to Vandana at the instance of Dhanvarsha.

18. An amount of ₹ 1,01,19,133 was also deposited in the account no. 2116 of Jeev Narayan Mishra during the period September 2000 to July 2001. Further, an amount of ₹ 1,72,20,746 was deposited in account no. 50320 of Dhanvarsha during the period June 2000 to April 2001. I note that Dhanvarsa has stated that all the money credited into account no. 2116 and 50320 came from SML group. 19. Shamken Spinners Ltd. has informed that appointment of Dhanvarsha was merely by way of administrative convenience. Further, it was introduced to the Shamken group by Mr. P K Aggarwal who assured them that Dhanvarsha was an entity already dealing in securities. I note that Mr. P K Aggarwal was a good friend of Mr. Praveen Juneja. I further note that Dhanvarsha has stated that Dhanvarsha Investments was started in the year 2000 for the purchase of the shares of SML thru Vandana on behalf of SML group. It has further been stated that whatever they purchased through Vandana, were on behalf of SML group. 20. Considering the above facts and circumstances, I find that the noticees had traded through the stock brokers Maheshwari and Adroit on behalf of behalf of SML group.

Further, these trades of the noticees had resulted in cross deals and structured deals and had directly / indirectly influenced the share price of SML. Such transactions executed by the noticees are not genuine and were meant to create artificial volumes in the market transactions, as held by the Hon'ble Securities Appellate Tribunal (the Hon’ble SAT) in its order dated August 05, 2011 in Appeal no. 113/2011 - in the matter of GIR Marketing & Trading Co. Pvt. Ltd. vs SEBI as under: “......As already observed, the seven appellants had a common broker and, therefore, the trades executed by them were cross deals. Cross deals per se are not illegal but the common broker executing the buy and sell orders is not expected to match those orders by putting in orders for the same quantity, at the same price and at the same time. The learned counsel appearing for the respondent Board has placed before us a chart depicting the trades executed by the appellants on the Calcutta Stock Exchange. We find from the chart that in most of the cases the buy and sell orders had been put into the system for the same price, same quantity and at the same time.

In other words, it was the common broker who by manipulation was matching the trades on behalf of the appellants and did not allow the price order mechanism of the exchange to match the trades. Proceedings were initiated against the broker as well and a statement of its representative was recorded. He stated that the buy and sell orders had been placed on the specific instructions of the clients who were the appellants. Having regard to the trading pattern of the appellants and the manner in which the trades had been matched, we are satisfied that the trades executed by them were non genuine which were meant to create artificial volumes in the market. We are also satisfied that the appellants have violated Regulations 3 and 4 of the aforesaid Regulations which prohibit persons from directly or indirectly buying, selling or otherwise dealing in securities in a fraudulent manner. These regulations also prohibit persons from indulging in fraudulent or unfair trade practices in securities. In this view of the matter, no fault can be found with the findings recorded by the adjudicating officer.

21. In view of the above, I find that the noticees by virtue of their dealings in the scrip of SML discussed hereinabove, aided and abetted in manipulating the scrip price of SML and attempted to induce general public to take positions in the scrip. 22. I note that Mr. Jeev Narayan Mishra (proprietor of Dhanvarsha) and Mr. Ajay Agarwal, Mrs. Sandhya Agarwal and Mr. Gajanand Agarwal (directors of Prasneeta) were in control of the day to day affairs of Dhanvarsha and Prasneeta, respectively, at the relevant time and in that capacity they had the knowledge of the acts and omissions of these entities. Further, they were also under an obligation to ensure that acts and transactions of SML were not in violation of any of the applicable provisions of SEBI Regulations or other applicable laws. I, therefore, find that the above named directors / proprietor of Dhanvarsha and Prasneeta were responsible for their acts and omissions in this case. 23. Considering the above facts and circumstances of this case, I do not find any material to differ from the allegations and charges in the SCNs and find that the noticees lent their name and thereby provided a link to SML Group for rigging the share price of SML and were thereby instrumental in creating artificial market in the scrip, influencing the scrip price and executing numerous cross deals and structured deals through Maheshwari and Adroit.

Such acts of the noticees were in violation of regulation 4(a), (b) and (c) of PFUTP Regulations, 1995 read with regulation 4 (2) (a) and (e) of PFUTP Regulations, 2003. Further, by dealing as unregistered sub-brokers, Dhanvarsha and Prasneeta violated rule 3 of the SEBI (Stock Brokers and Sub-Brokers) Rules, 1992 read with section 12(1) of the SEBI Act, 1992. 24. I am of the considered view that such fraudulent activities pose prudential threat to the market integrity and orderly development of securities market. I, however, note that the transaction in question had taken place long back in the year 2000. Further, the SCNs that had been issued in the year 2004 do not clearly bring out the magnitude of contribution of noticees in the alleged price and market manipulation in the scrip of SML. 25. In view of the facts and circumstances of this case and the abovementioned mitigating factors, I, in exercise of powers conferred upon me under section 19 read with section 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 and regulation 11 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 read with regulation 13 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 hereby restrain Dhanvarsha Investments, Mr. Jeev Narayan Mishra, Prasneeta Constructions Pvt. Ltd., Mr. Ajay Agarwal, Ms. Sandhya Agarwal and Mr. Gajanand Agarwal from accessing the securities market and prohibit them from buying, selling or otherwise dealing in securities, directly or indirectly, in any manner, whatsoever, for a period of one year from the date of this order.

26. This order shall come into force with immediate effect. A copy of the order shall be served on the Noticees and the stock exchanges for ensuring due compliance with the above directions.

Sd/-

DATE: DECEMBER 9th, 2014 RAJEEV KUMAR AGARWAL PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA