Order in respect of Mr. Savjibhai D. Patel and others in the matter of SJ Corporation>SAT Appeal No.379/2017,380/2017]

WTM/SR/SEBI/EFD-DRA1/69/09/2017 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: S. RAMAN, WHOLE TIME MEMBER ORDER Under Sections 11, 11 (4) and 11B of the Securities and Exchange Board of India Act, 1992 read with the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 in the matter of S J Corporation Limited in respect of: 1. Mr. Savjibhai D. Patel (PAN: AAFPP8999Q); 2. Ms. Ms. Usha S. Patel (PAN: AAFPP9000N); 3. Ramesh D Patel (PAN: AGHPP0007B ); 4. Ramesh D Patel HUF (PAN: AAKHR0408M); 5. Ms. Dharmishta R. Patel (PAN: AAIPP5236F) 6. Ms. Reshma Patel (PAN: AWGPP7594J ) 7. Shamo Investments Private Limited (PAN: AAACS6502Q) 8. Mr. Jayesh Samjibhai Patel(PAN: AAFPP9585L) 9. Ms. Urvashi J Patel(PAN: AAFPP3078E ) 10. Shyam Star Gems Limited (Presently known as Swarnsarita Gems Limited) (PAN: AADCS5179G) 11. Mr. Bhavesh Patel(PAN: AJDPP6220F ) 12. Ms. Hetal Patel(PAN: ARGPP0339J) 13. Ms. Jagruti Patel(PAN: APQPP0020C ) 14. Ms. Manjula Patel(PAN: AJQPP1832J) 15. Ms. Rasila Patel(PAN: AJPPP7275C) 16. Ms. Pragna Patel(PAN: APQPP0022A ) 17. Ms. Geeta Patel(PAN: ALNPP0704A) ) 18. Mr. Shantibhai M Chanchpara(PAN: ABKPC4581B) 19. Ms. Madhuben M Chanchpara(PAN: AHHPC0879M) 1. Securities and Exchange Board of India (“SEBI”) conducted investigation into the trading in the shares of S J Corporation Limited (“SJCL/the company”) on account of unusual price rise in the scrip. SJCL was listed on BSE Limited (“BSE’) during the period of investigation i.e.

from March 18, 2008 to October 1, 2009 (“investigation period”) and the following were observed: i. Share price of the company had increased from Rs.392/- on March 18, 2008 to Rs.3,464/- on August 27, 2009. ii. The company announced a share split in the ratio of 1:10 on August 28, 2009 and the share price again increased from Rs.363.75 on August 31, 2009 to Rs.816/- on September 30, 2009. iii. The closing price of the shares of the company as on October 1, 2009 was Rs.778.10. iv. Certain entities related to the promoters of the company traded in the shares of SJCL allegedly through structured and pre-planned trades with an intention of rigging up the share price prior to the stock split. v. Concurrently, SJCL made certain corporate announcements, prima facie with an objective of generating interest in the scrip. vi. Subsequent to the price increase, the promoter-related entities offloaded the shares in the post-split period (i.e., after August 28, 2009). 2. On the basis of the aforesaid prima facie findings, SEBI, vide ad interim ex-parte Order dated February 5, 2010 restrained (1)Mr. Savjibhai D Patel, (2) Ms. Usha S. Patel, (3) Shyam Star Gems Limited (4) Mr. Ramesh D Patel, (5) Ramesh D. Patel HUF, (6) Mrs. Dharmishta R. Patel, (7) Ms. Reshma Patel, (8) Shamo Investments Private Limited, (9) Mr. Jayesh Samjibhai Patel,(10) Ms. Urvashi J Patel, (11) Mr. Bhavesh Patel, (12) Ms. Hetal Patel, (13) Ms. Jagruti Patel, (14) Ms. Manjula Patel, (15) Ms. Rasila Patel and (16) Ms. Pragna Patel from buying, selling or dealing in the shares of the company, either directly or indirectly, in any manner, till further directions. SEBI vide order dated December 24, 2010 also confirmed the directions of the aforesaid ad-interim ex-parte order dated February 5, 2010. 3. Pursuant to the completion of investigation, SEBI issued a common Show Cause Notice ("SCN") dated November 02, 2015 to (1) Mr. Savjibhai D. Patel,(2) Ms. Usha S. Patel (3) Mr. Ramesh D. Patel, (4) Ramesh D Patel HUF,(5) Ms. Dharmishta R. Patel,(6) Ms. Reshma Patel, (7) Shamo Investments Private Limited, (8)Mr. Jayesh Samjibhai Patel, (9) Ms. Urvashi J Patel, (10) Shyam Star Gems Limited, (11) Mr. Bhavesh Patel, (12) Ms. Hetal Patel, (13) Ms. Jagruti Patel (inadvertently mentioned as Ms. Jagruti Parel in the SCN),(14) Ms. Manjula Patel,(15) Ms.

Rasila Patel, (16) Ms. Pragna Patel, (17) Ms. Geeta Patel, (18) Mr. Shantibhai M Chanchpara and (19) Ms. Madhuben M Chanchpara (Collectively referred to as 'Noticees' and individually by their respective names) calling upon the Noticees to show cause as to why suitable directions under section 11(4) read with sections 11(1) and 11B of the SEBI Act, 1992 should not be issued against them for the alleged violations of the provisions of regulation 3(a), 3(c), 4(1), 4(2)(a), (b) and (e) of the SEBI (PFUTP) Regulations read with section 12A (a), and (c) of the SEBI Act, 1992.

4. Thereafter, the Noticees were granted an opportunity of personal hearing on July 20, 2016 however, certain Noticees sought further documents/inspection of documents. As a result, the hearing was deferred. Subsequently, the required documents/inspections were provided to the Noticees and another opportunity of hearing was granted to the Noticees on February 16, 2017. However, the Noticees sought adjournment, another opportunity of hearing was granted to them on April 19, 2017. The Authorised Representatives of Noticees except for Mr. Ramesh D. Patel, Ramesh D Patel HUF, Ms. Dharmishta R. Patel, Ms. Reshma Patel, Shamo Investments Private Limited and Shyam Star Gems Limited (presently known as Swarnsarita Gems Ltd) appeared before me on April 19, 2017and made submissions. The remaining Noticees were granted another opportunity of personal hearing on June 01, 2017. The Authorised Representatives of Mr. Ramesh D. Patel, Ramesh D Patel HUF, Ms. Dharmishta R. Patel, Ms. Reshma Patel, Shamo Investments Private Limited and Shyam Star Gems Limited appeared before me on June 01, 2017 and made submissions at length. The Noticees were also granted further time till June 05, 2017 to file additional written submissions, if any. Replies/Submissions of the Noticees: 5. It is noted that none of the Noticees filed replies prior to the issuance of hearing notices in the matter. Thereafter, the Noticees filed replies to the SCN as well as made additional written submissions. The main submissions/contentions of the Noticees in their replies/written submissions inter alia, are as under: Reply dated April 14, 2017 filed by Mr. Saavjibhai S. Patel: i. “It is denied that, I have violated the provisions of Regulation 3(c) of PFUTP Regulations read with section 12 A(a) of the Act as alleged.

ii. The entire Notice is hinging on the assumption (which is totally without basis) that the persons/ entities who had traded in the scrip of the Company, had traded at my behest and or on my instructions so as to manipulate the open offer. Allegations in the Notice are premised on the theory of guilt by association. It is specifically and categorically denied that I had any role in the trading done by persons/entities referred to in the Notice. Even there is nothing in the Notice to demonstrate that I had any role to play in the trading done by persons/ entities referred to in the Notice. Only basis of the inference being relationship with certain persons. Admittedly, I have not carried out even a single trade during the entire investigation period. Simply because some of the persons who are related to me, who had independently traded, in the shares of the Company without my involvement cannot lead to automatic inference that said persons/entities traded at my behest or on my instructions. It is submitted that based on alleged tenuous connections serious charges of violating provisions of FUTP Regulations have been leveled, which is legally untenable and unsustainable. iii.

I am one of the promoters and directors of SJCL. Prior to 17th September, 2010 the promoter group of SJCL included Shyam Star Gems Limited (in which I was the promoter). iv. Shyam Star Gems Limited is listed on Bombay Stock Exchange (“BSE”). On17th September, 2010, I had entered into an agreement with Swarnsarita Jewellers Private Limited and others, and sold my stake in Shyam Star Gems Limited. Further, I was also one of the directors of Shyam Star Gems Limited and resigned as a director on March 28, 2011. As on date, I have got nothing to do with Swarnsarita Gems Ltd. v. In the year 2007, I along with members of Jivani family and persons acting in concert had executed Share Purchase Agreement dated 06/04/2007 with the erstwhile Promoters of SJCL acquired 1,32,000 shares from the erstwhile Promoters of SJCL. Consequent to said acquisition, we had made an open offer dated 16th June, 2007 to the public shareholders of SJCL in consonance with the applicable provisions of SEBI (Substantial Acquisition of Shares and Control) Regulations 1997 (“Takeover Regulations”). Post the open offer my shareholding along with members of Jivani family increased to 1,40,200 shares, being 70.10.% of the total equity capital of SJCL. vi.

It is submitted that during the relevant time SJCL had a negative book value. Post-acquisition of SJCL by us, SJCL came on the path of progress and started making profits from September 2008 quarter. vii. Subsequently, during July, 2008 friction arose between me and Jivani group. Since the joint venture did not go smoothly I along with PAC’s acquired 70,100 shares of SJCL from Jivani Group by executing Share Purchase Agreement dated 31/07/2008. Consequent to the said acquisition, I had made an open offer (along with PAC) to the public shareholders of SJCL in consonance with the applicable provisions of Takeover Regulations. The said open offer was made by me along with persons acting in concert at a price of Rs. 447.00 per share. The said price was fixed in consonance with the applicable provisions of Takeover Regulations. It may be noted that the Takeover Regulations stipulate various parameters for calculation of price under different heads. Further, the price payable to the shareholders in the open offer is the highest price worked out, amongst the various heads .Furthermore, the Regulations stipulate that the highest price so worked out as aforesaid, is the minimum offer price that the acquirer is obligated to pay to the public shareholders.

It may be noted that there is no embargo in law on an acquirer to pay higher price than the “minimum offer price” worked out in consonance with the provisions of Takeover Regulations. viii. Post the open offer my shareholding increased to 148,000 Shares of SJCL, constituting 74%of the total equity capital of SJCL. As on date I continue to hold the said 148,000 shares of SJCL. Further, I have not sold a single share of SJCL till date. ix. Subsequently, on February 05, 2010, the Whole Time Member SEBI, vide an ex parte order inter alia prohibited various individuals/entities including me from buying, selling or dealing in the shares of SJCL, in any manner whatsoever, till further directions. Consequent to the said directions, my shareholding of 37.391% in SJCL was frozen in demat account, severely prejudicing me .In response to the said Order I had vide my letter dated February 24, 2010 filed a detailed Reply to the said Order, appeared before the WTM, SEBI. Thereafter, on December 24, 2010, SEBI had passed Order inter-alia confirming the directions issued against SJCL and other individuals/entities vide the ex parte Order dated February 05, 2010. x. It may be noted that I have not carried out even a single trade during the entire investigation period.

Therefore, for the alleged price rise, I cannot be held responsible or accountable in any manner. In so far as corporate announcement regarding share split, is concerned it is submitted that the same was made in the ordinary course. xi. It is denied that the Company had made certain corporate announcements with an objective of generating interest in the scrip as alleged. Said allegation is totally baseless, unfounded and completely contrary to factual position on record. All the corporate announcements made by SJCL were bonafide and made in the ordinary course of business and in compliance with the requirements of the listing agreement .Further, the corporate announcements had no nexus with the trading by persons /entities (including the alleged promoter related entities) in the market. All the corporate announcements made by SJCL were fully implemented to the hilt.

xii. With regard to resignation with retrospective effect from 14.1.10 is concerned it may be pointed out that the Company had inadvertently disclosed my resignation belatedly, and based on the same no adverse inference can be drawn against me. xiii. I repeat and reiterate that I have no link /connection/nexus with the alleged Bhavesh Patel Group, who allegedly played a significant role in manipulating the price of the scrip of SJCL particularly in Period I. Based on their trading no adverse inferences qua me can be drawn. xiv. There is nothing on record to demonstrate as to how, I had any role to play in the trading by Bhavesh Patel Group. Further, with regard to non-tendering of the shares in the offer, as stated hereinbefore, on the date of closure of open offer made by me ( long with persons acting in concert) the price of the shares in the market was Rs 492/- vis-à-vis offer price of Rs 447/-. Perhaps, same could be the factor which would have weighed with the shareholders who did not tender their shares in the open offer. Said critical fact has bene totally ignored and overlooked by SEBI. xv.

Merely because Ramesh D Patel is related to me, the burden of his trading cannot be saddled on to me. I repeat and reiterate that I had absolutely no role to play in the trading done by Ramesh D Patel and his related entities were independently trading without any involvement on my part. Based on the trading done by Ramesh D Patel and his related entities, no adverse inferences against the promoters (including me) can be drawn. xvi. It is submitted that there is no embargo in law, on an acquirer to borrow monies for the purpose of meeting open offer obligations towards public shareholders. All that is to be ensured is that acquirer has to meet financial obligation arising under the open offer, since ensuring payment to public shareholders who tender their shares is sacrosanct. Admittedly, the promoters, as an acquirer, had met their financial obligations in terms of paying the open offer price to all the public shareholders who had tendered their shares in the open offer. Therefore, merely because acquirers had taken loan to meet the open offer requirements, it cannot be alleged that that the statement made by the acquirers that they had adequate resources was misleading. xvii.

There is nothing in the Call logs which can even remotely establish that the calls had nexus with the alleged trading done by Mr Jayesh Patel. Simply the details of the calls exchanged have been set out. It has not been shown as to how there is a nexus of a particular call with the trading done by Mr Jayesh Patel. Therefore the Call log data is neither here or there. All it shows is that I knew Mr Jayesh Patel, whom I had exchanged calls with. The said fact is not denied by me.

xviii. Significantly, it is SEBI’s own case that trading in the scrip of SJCL was done by Mr. JayeshPatelandhis wife Urvashi J Patel during the period 24.3.09 to 10.6.09, whereas the alleged calls pertain to period 1.7.09 to 14.9.09. Therefore, there could never be any nexus between the trading and the calls.” Reply dated April 14, 2017 filed by Submissions of Ms.Usha Patel The Noticee Ms. Usha Patel has reiterated the submissions made by her husband Mr. Saavji Patel. Ms. Usha Patel has also made the following additional submissions: i) “I am a Promoter of SJCL. I have never held any directorship in the Company. I am not involved in day-to-day management or affairs of SJCL in any manner. ii) Post the open offer my shareholding increased to 69,900 shares of SJCL, constituting 34.95% of the total equity capital of SJCL. As on date I continue to hold the said 69,900 shares of SJCL. Further, I have not sold a single share of SJCL till date. iii) I have not traded in the scrip even once and there is no question of her involving in any kind of price manipulation, nor she influenced anyone in the company to do so and she still holds all shares that she held during the investigation period.

Share split announcement and open offer were done in due course of the business and all the regulations were complied with. Merely because some entities are connected to me, it cannot be automatically inferred that the said entities have traded at my behest. She has stated that she had not professional relationship with Ramesh Patel/HUF, Shamo Investments, Jayesh Patel & Urvashi Patel. There is no material/statement to demonstrate that that the entities were advised by me to do trading in the mode and manner as alleged. It is alleged that promoters had executed traded through connected entities. There is nothing to indicate that promoters had either funded or supplied shares or received profits. iv) It is denied that promoters of SJCL have deliberately executed the trades with their associate entities during last 26 weeks of open offer with the sole objective was to ensure SJCL, a frequently traded scrip as alleged. It is reiterated that by the scrip of SJCL becoming "frequently traded", I have been, as an acquirer, the biggest looser since my open offer cost per share went up from Rs 25/ - to Rs 447/-.” Reply dated April 03, 2017 filed by Ms.Dharmishtha R. Patel: i. I am genuine investor of the securities market with very limited knowledge.

I am holding shares of SJCL for the last many years and was holding a total of 8,850 shares at the start of investigation. It would be prudent to mention here that I bought the shares of SJCL in the financial year 2005-06, which was a period much prior to the period of acquisition of the company by Mr. Savjinhai Patel and Ms. Usha Patel. This proves that my intention of acquiring the shares of SJCL was purely investment purposes.

ii. I deny that I have traded allegedly through structured and pre planned trades with the intention of rigging up the share price prior to stock split. In January, 2009, I gifted 9,850 shares of SJCL to my daughter, Ms. Reshma Patel. Eventually, to maintain my shareholding in the Company, I decided to purchase further shares of the Company from the market. Therefore I informed my broker to buy the shares as and when available, however, I was informed that as the scrip was not very liquid, none of my orders got executed, and eventually I abandoned the idea to buy further shares of SJCL. All orders were done with the intent to purchase shares and no misleading appearance of trading was done. There is no evidence that we have indulged in fraudulent and unfair trade practices. iii. I was a promoter/director of Shamo Investments Pvt. Ltd. Further, Mr. Savji D. Patel is a distant relative. Further Mr. Ramesh D. Patel is my husband and Ms. Reshma Patel is my daughter. I had given money worth Rs 16.55 Lakh to Mr. Savjibhai Patel. I had given this money to Mr. Patel as he had sought my help.

I being a family member, as per the needful situation in which Mr. Patel was, gave him the money.” Reply dated April 17, 2017 filed Ramesh D. Patel and Ramesh D. Patel HUF" i. “I am an individual and regular investor of the securities market and have invested in the many scrips other than SJCL. ii. The investments in the scrips have been independent decisions which are based on my own volitions. All the investments in the market have been done with my own funds and have never been financed by any financial institution/bank for the same. iii. It is submitted that I invest in various scrips on the basis of their financials, annual reports and at times on the advice of friends and relatives. iv. However, SEBI has failed to appreciate that several of its own findings belie and contradict its said findings, inter alia as follows:-  The said scrip of SJCL was being traded in the “T group” and was shifted by the BSE to “B group” from February 2008 till 6.10.2009, which includes the entire investigation period. This itself was also a very positive signal and would encourage any investor. It proved that the company was on its way to revival and its performance was improving.  The normal price circuit filter in BSE is about 20%.

Admittedly the price circuit filter for SJCL was 5% since 2007 and was later reduced to 2 % from 15.10.2009.  The said scrip of SJCL was admittedly very illiquid. Admittedly, a very small proportion of the buy orders placed by the Noticees resulted in trades, admittedly there were no sellers at lower prices, and even when we placed orders at higher prices at the circuit filter, admittedly the same did not get executed into trades or full ordered quantities could not be obtained. Therefore, just because I and Ramesh Patel HUF placed orders at higher prices at the circuit filter, cannot lead to any conclusion of any intention to manipulate the scrip.  There is no allegation of any “synchronization” or any intentional matching of trades. In fact there could be no such allegation since buy orders remained open and visible to the entire market for days on end and still no sellers were available at the relevant time.  Admittedly Mr. & Mrs. Savjibhai Patel are related to me and there is nothing at all unusual about parties investing in companies in which their relatives are promoters.  Admittedly the reported / disclosed financial results of SJCL showed that Mr. & Mrs. Savjibhai Patel had in fact revived SJCL and as of March 2009, it became profit making.

From July to September 2009, the results announced by SJCL were “extremely positive” as admitted by SEBI. From a dead company in 2008 with losses and no business at all, it made a profit of Rs. 3.54 crores in 2009.  I admittedly have no role to play in the management of SJCL. It is submitted that I am not a party to the transaction with certain foreign parties in Hong Kong, and thus could not have known about the genuineness of the said transaction.  Admittedly I am to date holding the almost all of the shares of SJCL which were bought by me, which proves that I am a genuine investors and none of my trades were manipulative. There are hardly any shares of the company that I have sold. Admittedly, the realized gains are not large. Therefore the very foundation and basis of the said SCN that trading was carried out with the intention of rigging up the share price, and promoter related entities offloaded the share subsequently is totally flawed, misconceived and belied by the evidence on record and the admitted facts. Therefore the very foundation and basis of the SCN is totally flawed and misconceived.  The said SCN also holds that I had lent money to Mr. Savjibhai Patel for the open offer.

Admittedly Mr. Savjibhai Patel is the brother of my wife, Ms. Dharmishta Patel. Therefore, there was nothing strange or suspicious on our part in giving advance to a family member in need of help on returnable basis when the same was requested by him. This cannot be loan since no interest was charged and this cannot be a business transaction. Admittedly the said advance has been repaid by him. v. I would like to bring to your kind attention the fact that I, and Ramesh D. Patel HUF have not received any personal benefit from the alleged manipulation and fraudulent activity. I state that I and Ramesh D. Patel (HUF) are till date holding almost all of shares of SJCL bought by us. This proves that we are genuine investors and none of the trades were carried out with the intention to manipulate trading in securities market. I would also like to state that even the realised gains on the shares of SJCL sold by us are not large. If I had in fact committed the alleged fraud, I would have made large profits out of the said episode. vi. Shamo is a separate entity and its trading should not be clubbed.

SCN has failed to prove existence of any scheme/arrangement against me." Reply dated April 11, 2017 filed by Shamo Investments Pvt. Ltd:  “The entity has denied all allegations and states that, it has just traded once for 50 shares during the investigation period and its holding in the company is constant since 2007. The relationship of the company’s promoters on personal level should not be construed as they are related entities. Trades done were independent of the alleged connection and based on our decisions. There is no evidence to show connivance between counterparty & us, there was huge time difference between buy & sell order. We have no connection with the counterparty, Bharat Gabani. Shamo has executed 3 of total 7 trades (from para 31 & 30 of SCN) and contributed 2.06% of price rise as against 33.46% alleged in SCN. Investment was made in 2007 and it continues to hold 3101 shares. Since our trades are independent, it cannot be clubbed with Ramesh Patel & his HUF. No negative inference can be drawn that orders were placed from same location (para 32) as the broker was common.

All shares were sold (459 shares) at market price.  Shamo has submitted that Ramesh and Dharmishta Patel resigned on November 13, 2009. Ramesh and Dharmishta Patel sold their shares to Deepak J Mehta, Parul D Mehta & Raju J Mehta.” Reply dated April 03, 2017 filed by Ms.Reshma Patel  “The entity mentions that, she has not traded in the shares. She was holding the shares as she received 98500 shares from her mother as gift between January - July 2009 and had no relation to the open offer which was made in August 2008. She has been clubbed along with others who have traded.” Reply dated March 08, 2017 filed by Jayesh S. Patel:  “The entity has denied all allegations and states that, he is not related to the promoters of the company and SCN erroneously assumes me to be acting in collusion with promoters. The entity states that, he has traded in 130 companies during investigation period. Further, the phone calls made to the promoters were of social nature and after the shares were brought by me and hence decision to buy shares were not influenced. I am an investor in securities market and have traded in various scrips.

Trades were carried out independently. Loan was given to Ramesh Patel by my HUF in 2007 and was repaid before the investigation period. He was already holding 250 shares prior to investigation period and bought 146 shares of which he received 116 shares in delivery. Profit made is genuine and not illegal profit.”

Reply dated April 12, 2017 filed by Ms.Urvashi J. Patel:  “The entity has denied all allegations, Purchased only 5 shares on a single day using stock market mechanism, after the close of open offer and did not receive delivery of these 5 shares. Further she states that, she has no connections with the promoters of the company. She was already holding 400 shares before investigation period. The entity states that, she has traded in 80 companies during investigation period.” Reply dated April 20, 2017 filed by Shyam Star Gems Ltd (now known as SwarnSarita Gems Ltd):  “The current promoters acquired control & management from Savjibhai Patel & Usha Patel in 2010 and the name of the company has now been changed Also the period in which the investigation was held, all the promoters and directors were different and that they have sold all their holding with present promoters (Mahendra M Chordia and Sunil G Jain). They have only traded for 10 shares of the company on January 28, 2009 and has no connections whatsoever with its earlier promoters or the company. Decision to buy shares was approved in Board meeting held on November 6, 2008.  There is no connection with any Noticees and Savjibhai Patel & Usha Patel were erstwhile promoters.

Due to screen based mechanism of exchange, we did not know that the counterparty was Ramesh D Patel HUF. We deny indulging in any fraudulent and unfair trade practices.” Reply dated April 04, 2017 filed by Mr.Shantibhai M. Chanchpara/ Ms.Madhuben Chanchpara:  “I am a regular investor in the securities market and he has been trading in other scrips as well during the investigation period. I first acquired shares of SJCL on October 24, 2007, prior to investigation period. SCN does not contain any specific allegations Shares were not tendered in open offer as the price was Rs.492.08 on the day of closure of open offer. I am connected to Madhuben Chanchpara as she is my Mother and Hetal Chanchpara is my wife and socially connected to some of the other entities as they are from my community. All the trades done by me are on stock exchange and without malafide.” Reply of Ms. Madhuben Chanchpara:  “I am a regular investor in the market and has been trading on own wisdom. I bought 200 shares through stock exchange from my son Shantibhai Chanchpara which was not malafide as he was in need of money.

I have social connections in the community with some of the other entities in the SCN which does not have anything to do with the trading in the market.”

Common reply dated February 10, 2017 filed by Bhavesh Patel, Hetal Patel, Pragna Patel, Jagruti Patel, Manjula Patel, Rasila Patel, Geeta Patel:  “We are family of investors and trades and are in diamond trading for generations. We bought few shares of the company as the company started to work in the field of diamonds which was our own field. We didn’t know that the counterparty stays in the same building. Since there was upward movement in price of scrip, we had purchased shares though HDFC Securities Ltd who was given instructions. The broker decided the timing, quantity and price. Since the trade were delivery based, no artificial trades. After the stock split, sold 4000 shares and made legitimate profits. We made some profit purely by selling their holding in the company purely on the basis of their understanding of the market. We do not know any of the promoters personally.”

Consideration of Issues and findings: 5. I have considered the SCN issued to the Noticees alongwith the documents provided therein, replies and the submissions made by the Noticees during the personal hearing, additional written submissions furnished by the Noticees and the material available on record. In light of the same, I shall now proceed to deal with the charges levelled against the Noticees. 6. The issue for consideration in the present case is whether the Noticees have violated the provisions of sections 12A (a) and 12A(c) of the SEBI Act read with regulations 3(a), 3(c), 4(1), 4(2)(a), (b) and (e) of the PFUTP Regulations? 7. Before dealing with the aforesaid charges in seriatim, the relevant legal provisions, the contravention of which have been alleged in this case may be reproduced hereunder for reference purpose:- SEBI Act 12A. No person shall directly or indirectly – (a) use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be listed on a recognised stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of this Act or the rules or the regulations made thereunder; (c) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognised stock exchange, in contravention of the provisions of this Act or the rules or the regulations made thereunder; PFUTP Regulations "3.

Prohibition of certain dealings in securities No person shall directly or indirectly— (a) buy, sell or otherwise deal in securities in a fraudulent manner; (c) employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange; 4. Prohibition of manipulative, fraudulent and unfair trade practice (1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities. (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely:- (a) indulging in an act which creates false or misleading appearance of trading in the securities market; (b) dealing in a security not intended to effect transfer of beneficial ownership but intended to operate only as a device to inflate, depress or cause fluctuations in the price of such security for wrongful gain or avoidance of loss; (e) any act or omission amounting to manipulation of the price of a security;”

8. I shall now deal with main issue in the matter which is based on the allegation that the Noticees have allegedly employed a scheme for manipulating the price of the shares through transactions executed by the related and associated entities thus indulged in price rigging and price manipulation. The Noticees thus created misleading appearance of trading and thereby were instrumental in creating artificial volumes and impacting the price of the scrip of the company. These acts of the Noticees distorted market equilibrium of the shares of the company and also resulted in manipulation of the open offer price. The facts leading to the said allegation as seen from the investigation are as under: 8.1 SJCL was incorporated in 1981 as Grandpa Trading & Agencies Limited and later in 1999 changed its name to Corcomp Infosystems Limited. The main objective of Corcomp Infosystems Limited was to carry on the business of information technology, software development, software packages etc. Thereafter, vide agreement dated April 06, 2007, the promoters of Corcomp Infosystems Limited sold their shares to following persons : Sr. No. Name of the entity No. of Shares 1. Mr. Dayabhai G. Jivani 33,000 2. Mr. Jagdishbhai H. Jivani 33,000 3. Mr. Savjibhai D. Patel 33,000 4. Ms. Usha S. Patel 33,000 Total 1,32,000

8.2 Above shares were acquired at the rate of Rs.15/- per share from the erstwhile promoters of Corcomp Infosystems Limited. Upon acquisition, said acquirers came out with a public offer for 40,000 shares (20% of the total share capital) at a price of Rs.142/- per share. On October 12, 2007, the new promoters of the company changed its name to S.J. Corporation Limited and also changed the business of the company from Information Technology to Diamond polishing and trading. 8.3 In July 2008, Mr. Savjibhai D. Patel and his wife, Ms. Usha S. Patel along with Shyam Star Gems Limited acquired 70,100 shares from Mr. Dayabhai G. Jivani and Mr. Jagdishbhai H. Jivani at the rate Rs.25/- per share which triggered another open offer. 8.4 Consequently, the aforesaid acquirers made a public announcement on August 04, 2008 in respect of 40,000 shares at Rs.447/- per share. 8.5 Post-acquisition and open offer, Mr. Savjibhai D. Patel and his wife Ms. Usha S. Patel held 1,48,000 shares i.e., 74% of the total share capital of SJCL at the quarter ended December, 2008. 8.6 As per the information obtained from MCA21 portal at the relevant time, the directors of SJCL were Mr. Sanjay Vallabhbhai Patel, Mr. Savjibhai D. Patel, Mr. Rajesh Jesinglal Shah, Mr. Deepak Bhikhalal Upadhyay and Mr. Bhavik Prakash Patel. 8.7 Mr. Savjibhai D. Patel was appointed as the additional director of the company with effect from July 31, 2007. Thereafter, on September 9, 2009, the company announced the resignation of Mr. Savjibhai D. Patel w.e.f. from December 24, 2008. Subsequently, Mr. Savjibhai D. Patel was appointed as the Non-Executive Chairman of the company with effect from January 14, 2010.

8.8 On October 22, 2008, under the new management, SJCL made its first announcement regarding unaudited quarterly financial results for the quarter ended September 30, 2008.  The unaudited quarterly financial results of the company for the quarter ended June 30, 2008 showed nil business or income.  The unaudited quarterly financial results for the quarter ended September 30, 2008 showed sales and purchases at Rs.12.22 crores and Rs.10.19 crores, respectively.  The unaudited quarterly financial results for the quarter ended December 31, 2008 showed sales and purchases at Rs.6.83 crores and Rs.5.50 crores respectively.  The annual results of the company for the financial year 2008-09 showed annual turnover and purchase of Rs.22.28 crores and Rs.18.62 crores, respectively. 8.9 From the shareholding pattern of SJCL disclosed in the BSE website during the investigation period, the following are noted:  Total shares issued by SJCL was 2,00,000. The promoters were holding 1,48,000 shares (74% ) of the total holding of SJCL.  Out of the remaining 52,000 shares, 41,055 were held by persons connected to/related to the promoters of SJCL. From the above, it can be seen that the approximately 89% of the shareholding in SJCL was under the control of promoters. In view of this, it is noted that the corporate announcements made by SJCL during the period, positive financial statements of the company as projected in the financial results declared during the period etc., as detailed above and the consequent price rise in the scrip of SJCL was mostly beneficial to the promoters and promoter connected/related entities. 8.10 As regards the trading in the scrip of SJCL, the following are noted: 8.10.1 During the investigation period, most of the transactions were executed by the Noticees. The details of the connection/relation among the notices are as under: Sl. Name of the entity Connection with promoter No. 1. Savjibhai D. Patel Promoter/director of the company 2. Usha S. Patel Promoter and wife of Savjibhai D. Patel 3. Dharmishtha R. Patel Sister of Savjibhai Savjibhai D. Patel and wife of Ramesh D Patel

Sl. Name of the entity Connection with promoter No. 4. Ramesh D Patel Brother in law of Savjibhai D. Patel 5. Ramesh D Patel HUF Ramesh D. Patel is the Karta of Ramesh D Patel HUF 6. Shamo Investments Pvt. Promoted by Ramesh D. Patel and his wife Dharmistha Ltd R. Patel 7. Reshma Patel Daughter of Ramesh D. Patel and Dharmistha R. Patel 8. Jayesh S Patel Friend of Ramesh D Patel and financially linked with Ramesh Patel and admittedly known to Savijibhai D. Patel and on the basis of phone calls. 9. Urvashi J Patel Wife of Jayesh S. Patel 10. Shyam Star Gems Ltd. Shyam Star Gems Ltd promoted by promoters of the company (SJCL). 11. Shantibhai M Chanchpara His wife Smt. Hetalben S Chanchpara is the proprietor of Sarvottom holdings whose clients were sellers of the shares of the company during the investigation period and admittedly socially connected with him. 12. Madhuben Chanchpara Mother of Shantibhai M Chanchpara 13. Bhavesh Patel Collectively being referred to as “Bhavesh Patel Group” in 14. Jagruti Patel this order as their connection with the promoters is evident 15. Manjula Patel from the fact that they are known to the promoters of 16. Rasila Patel SJCL and residing in the same building where the promoter 17. Pragna Patel group was staying. 18. Geeta Patel 19. Hetal Patel

8.10.2 The trading in the shares of the company has been divided into three periods such as (a) March 18, 2008 to January 27, 2009 (Period - I), (b) January 28, 2009 to August 27, 2009 (Period - II), and (c) August 28, 2009 to October 1, 2009 (Period - III).

Period – I March 18, 2008 to January 27, 2009  It is observed that during the above period, trading took place only on six trading days between March and August 2008. The average daily volume during Period - I was 29 shares.  In the said period, most of the buy orders were placed immediately after the market opened for trading at a price in the upper circuit filter level.  Majority of such trades were carried out by the Noticees viz., Mr. Ramesh D. Patel, Mr. Ramesh D. Patel HUF, Shamo Investments Private Limited. Bhavesh Patel Group acted as the counter parties to the said trades.  The price of the scrip moved up from Rs.392/- on March 18, 2008 to Rs.493/- on August 18, 2008. The next trade took place only on January 28, 2009. Period II: January 28, 2009 to August 27, 2009  During the period II, the Noticees viz., Mr. Ramesh D. Patel, Mr. Ramesh D. Patel HUF, Shamo Investments Private Limited, Ms. Dharmishta Patel, Mr. Jayesh Patel, Ms. Urvashi J. Patel, Shyamstar Gems Limited, Ms. Madhuban Chanchpara and Mr Shantibhai Chanchpara were found to have traded in the shares of the company.  429 shares were traded in 52 trades. The average daily volume was 3 shares only.  The share price increased substantially over very low volume and hit the circuit filters as a result of such trades.  Price of the shares increased from Rs.517/- on January 28, 2009 to Rs.3465/- on August 27, 2009. Period – III-.August 28, 2009 to October 1, 2009  During period III, SJCL came out with a stock split on August 28, 2009.  Subsequently, price of the shares moved up from Rs.363 on August 28, 2009 to Rs.816 on September 30, 2009 and later closed at Rs.778 on October 1, 2009.  During the period III, the Noticees viz., Mr. Ramesh D Patel, Ramesh D. Patel (HUF), Shamo Investments Private Limited, Ms. Dharmishta Patel and Ms. Reshma Patel traded in the scrip of SJCL. 8.11 Dealings of Mr. Ramesh D. Patel, his HUF and Shamo Investment Pvt. Ltd, Ms.Dharmista Patel, Mr. Jayesh S Patel and Ms.Urvashi J Patel

 Mr. Ramesh D Patel is brother-in-law of Mr.Savjibhai D Patel i.e, he is husband of Ms.Dharmishta Patel (Sister of Mr. Savjibhai D.Patel).  Mr.Ramesh D Patel was also the promoter director of Shamo Investment Pvt. Ltd during the relevant period.  The KYC documents of Ramesh D Patel and his HUF with the stock broker Inventure Growth and Securities Ltd mentioned a landline number i.e, 022- 28775954 which was registered in the name of Mr.Doongarshibhai D. Patel who is father of Smt. Dharmishta Patel and Sh. Savjibhai Patel.  KYC documents of Ramesh D. Patel received from the stock broker Edelweiss also mentioned the mobile number (9820186909) of Sh. Savjibhai D. Patel. From the above, it is clear that the Noticee Mr. Ramesh D. Patel is conncted to the Promoter Mr. Savjibhai D. Patel. This fact is also admitted by the Noticee Mr. Ramesh D. Patel in his reply dated April 17, 2017. 8.12 As regards the trades of the abovementioned Noticees during Period I, the following are noted:  It is observed that Mr. Ramesh D. Patel put buy orders on July 18, 2008, July 21, 2008 and July 30 of 2008 for 2,500, 2,000 and 5,000 shares of the company respectively which was larger than any order put during that period. However, the orders placed on July 18, 2008 and July 21, 2008 were not executed.  Out of the 19 trades took place in the shares of the company during the Period - I for a total volume of 6,151 shares, Mr. Ramesh D. Patel bought 2,500 shares in 2 trades on July 30, 2008 at Rs.447 and the trades were executed at 5% upper circuit filter limit and contributed 40.64% of the total market volume.  The said trades not only created artificial volume but also helped in increasing the share price.  On June 18, 2008, Shamo Investments Private Limited bought 50 shares at the 5% upper circuit filter level from one Bharat H. Gabani who was residing in the same building as that of Mr. Savjibhai Patel. The above transactions placed at the upper circuit filter level by the Noticees related to the promoters of SJCL clearly establish their manipulative intentions to increase the price of the scrip.

8.13 As regards the trades of the abovementioned Noticees during Period II, the following are noted:  Mr. Ramesh D. Patel and Ramesh D. Patel HUF together put buy orders for 7,836 shares constituting 17.27% of the total buy quantity.  Further, 97% of the said orders were placed immediately after opening of market (at 9:55 AM) at the upper circuit.  On January 18, 2009, Mr. Ramesh D. Patel matched a sell order for 10 shares as counter-party against buy order of Shyam Star Gems Limited, a promoter related entity of the company.  On February 18, 2009, Mr. Ramesh D. Patel placed three buy orders at 9:55:00, 9:55:02 and 9:55:03 for 50 shares each from the account of Ramesh D. Patel HUF and Shamo Investments Private Limited, at a price of Rs.692.90, at the upper circuit limit.  The said orders were executed at Rs.692.90, thus establishing the price at that level.  Further, from February 18, 2009 to March 5, 2009, Mr. Ramesh D. Patel along with his HUF were observed to be placing buy orders at Rs.725.50 per share, which was again at the upper circuit limit. However, the orders were allowed to expire as trades were not executed.  On June 4, 2009, Mr. Ramesh D. Patel along with his HUF entered a buy order for 190 shares at Rs.1371.40 at 9:55 am which was at the upper circuit limit. On June 30, 2009, July 1, 2009 and July 02, 2009, Mr. Ramesh D. Patel along with his HUF placed buy orders for 66, 98 and 34 shares respectively at the upper circuit limit.  Shamo Investments Private Limited had also put buy orders for 3,938 shares in 52 orders in the price range of Rs.570 to Rs.2,127 per share. Out of the said 52 orders, 49 orders were put at 9:55 am, which appears to be with the intention to set the price in the morning.  Mrs. Dharmishta Patel was observed to have put buy orders for a total of 1,633 shares at the upper circuit limit at the opening of the market around 9:55 am, but the orders were not executed.

 Mr. Ramesh D. Patel along with his HUF and Shamo Investments Private Limited placed buy orders for 13,407 shares at the upper circuit level, immediately after the opening of the market. The said quantity constituted 29.54% of the total buy market volume. Placing of large orders at the upper circuit limit and that too immediately after opening of the market, appears to have been made with an intention to create artificial demand in the market.  The Noticees’ contribution to the price rise during the Period II is as under: i. 429 shares of the company were traded in 40 days and the scrip opened and closed at the upper circuit limit. ii. Mr. Ramesh D. Patel along with his HUF bought 38 shares in 13 trades out of which 10 trades were at the upper circuit limit. iii. Shamo Investments Private Limited bought 7 shares during the period. iv. Out of the total price rise of Rs2972.05 which occurred during the said period, Mr. Ramesh D. Patel along with his HUF and Shamo Investments Private Limited contributed a price rise of Rs.994.32 constituting 33.46% of the total price rise. Mr. Ramesh D Patel along with his HUF and Shamo Investment executed 17 trades out of which 12 were noticed as first trades at upper circuit level which established higher price than the last traded price.  As regards the trading of the Noticees during the Period - III (post share split by the company), the following are noted: i. Mr. Ramesh D. Patel along with his HUF put sell orders for 185 shares in September, 2009 and Shamo Investments Private Limited put sell order of 505 shares. ii. Both the sell orders were placed from the same terminal i.e. same location id i.e. "4000210007021001". iii. During this period Mr. Ramesh D. Patel along with his HUF sold 185 shares in the price range of Rs.511.55 to Rs.685.35 and Shamo Investments Private Limited sold 459 shares in the price range of Rs.447 to Rs.754 per share. iv. It is also observed that post-split, lot of new buyers came in the market and all the above shares were sold to the new buyers.

From the above, it can be seen that Mr. Ramesh D Patel along with his HUF, Dharmishta Patel, Shamo Investment, his friend Sh. Jayesh S Patel and his wife Smt. Urvashi J Patel, had dealt in the scrip during the period of Investigation and took the price of scrip up mainly on first trades. It is noted from the submissions filed by the abovementioned Noticees that they had traded as normal investors. Admittedly, the Noticee had traded in the scrip of SJCL and his orders mostly hit circuit filters. Taking into consideration of the pattern of trades executed by the said Noticees as detailed above and their admitted connection with the Promoters, I am of the view that the abovementioned Noticees were instrumental in the price manipulation of the scrip of SJCL. 8.14 Transactions by Mr. Jayesh Shamjibhai Patel and Ms. Urvashi J. Patel: i. Mr. Jayesh Shamjibhai Patel is a friend of Mr. Ramesh D. Patel and also the husband of Ms. Urvashi J. Patel. As per the statement of Mr. Jayesh Shamjibhai Patel it is noted that he knew Ramesh Patel and that he had financial transactions with Mr. Ramesh D. Patel. ii. Further, many phone calls were observed to have been made between Mr. Jayesh Shamjibhai Patel (mobile number 9821516322) and Mr. Savjibhai Patel denoting the links between the two. iii. On March 30, 2009, Mr. Jayesh Shamjibhai Patel had placed buy order for 200 shares at Rs.884.20 per share which was at the upper circuit filter level. iv. During Period - II, Mr. Jayesh Shamjibhai Patel and Ms. Urvashi J. Patel together put buy orders for 14,132 shares which constituted for 31.14% of the total buy volume (45,383 shares) in the shares of the company. They bought 151 shares which constituted for 35.20% of the total trades executed involving 429 shares. By entering into the above transactions, it is observed that Mr. Jayesh Shamjibhai Patel and Ms. Urvashi J Patel had contributed to the price rise in the scrip.

8.15 Transactions by Shyam Star Gems Limited: i. Shyam Star Gems Limited is a company listed in BSE. Shyam Star Gems Limited and SJCL are in the same area of business. line and are having the same promoters, i.e. Mr. Savjibhai Patel and Mrs. Usha S. Patel. ii. Shyam Star Gems Limited was declared as a person acting in concert with the promoters of the company during the open offer made in August 2008. iii. It is also observed that after a gap of nearly five months from the trade which took place on August 2008, Shyam Star Gems Ltd. placed a buy order for 100 shares of the company on January 28, 2009, out of which, trade in respect of only 10 shares were executed where Ramesh D. Patel HUF acted as the counter party. Though the volume of trades executed by Shyam Star Gems Limited is low, being part of the promoter group, and considering the facts of the case I am of the view Shyam Star Gems Limited was instrumental in manipulation of the price of the scrip.

8.16 Transactions by Mr. Shantibhai M Chanchpara and Mrs. Madhuben Chanchpara: i. Mr. Shantibhai M. Chanchpara is the brother-in-law of Mr. Sanjay V. Patel (one of the directors of the company). Mr. Shantibhai M. Chanchpara and his mother, Mrs. Madhuben Chanchpara traded in the scrip during the period II. ii. Mr. Shantibhai M. Chanchpara was observed to have sold 100 shares to Mrs. Madhuben Chanchpara at Rs.1074.65 on May 5, 2009 in two trades and another 100 shares on May 13, 2009 at Rs.1128.35, constituting 46.62% of the buy volume during Period - II. iii. During Period II, Mrs. Madhuben Chanchpara also placed buy orders for 4,600 shares in the price band of Rs.1074.65 to Rs.1666.8 which shows her intention to create artificial demand in the market. During Period III, Mr. Shantibhai M. Chanchpara was observed to have sold 2,418 shares at an average rate of Rs.693(post-split) per share. Mrs. Madhuben Chanchpara had sold 1981 shares at an average rate of Rs.713 per share.

iv. From the statement of Mr. Shantibhai Chanchpara it is noted that he had admitted that for need of funds, he deliberately executed artificial trades for 200 shares with his mother. The relevant portion of the statement is reproduced hereunder: “I sold the shares of S.J. Corporation to my mother through stock exchange. I was in need of money and my mother had with her. Therefore, I executed trades. My mother put the buy orders and on the counter side I put the sell orders. My mother put the buy orders at upper circuit of 5%”. Admittedly, Mr. Shantibhai Chanchpara and Mrs. Madhuben Chanchpara had traded during the investigation period. However, I note from their statement mentioned above, that they were in need of funds hence they executed the trades in the scrip of SJCL. In this regard, I note that the Stock Exchange Mechanism cannot be used for such transactions. 8.17 Transactions by Mr. Bhavesh Patel and Group: i. Mr. Bhavesh Patel, Ms. Rasila Patel, Ms. Hetal Patel, Ms. Jagruti Patel, Ms. Manjula Patel, Ms. Pragna Patel and Ms. Geeta Patel belong to the same family and for the purposes of this notice, they are collectively referred to as Bhavesh Patel Group and individually by their names. ii. Relationship of members of Bhavesh Patel group: Name of Name of Address as per the client database Email id as per the Telephone No. Inter-se the client the stock provided by BSE and NSDL client database provided relationship broker by BSE and NSDL Ms. Rasila HDFC 1307, Raj Madhur, 13th Floor, Near harshadlast@yahoo.co.in 022 28774447 Mother of Patel Securities Aquaria Club, Devidas Lane, Borivili Pragna Patel Ltd. (W), Mumbai - 400103 and Bhavesh Patel Ms. Pragna HDFC 1307, Raj Madhur, 13th Floor, Near harshadlast@yahoo.co.in 022 28485996 Sister of Patel Securities Aquaria Club, Devidas Lane, Borivili Bhavesh Patel Ltd. (W), Mumbai - 400103 Mr. HDFC 1307, Raj Madhur, 13th Floor, Near harshadlast@yahoo.co.in 022 28774447 Brother of Bhavesh Securities Aquaria Club, Devidas Lane, Borivili Pragna Patel Patel Ltd. (W), Mumbai - 400103 Ms. Jagruti HDFC Flat No-701 A Wing, 7th Floor, Ruchi harshadlast@yahoo.co.in 022 28945476 Daughter of Patel Securities Appts, Devidas Lane, Borivali (W), Manjula Patel Ltd. Mumbai - 400103

Name of Name of Address as per the client database Email id as per the Telephone No. Inter-se the client the stock provided by BSE and NSDL client database provided relationship broker by BSE and NSDL Ms. HDFC Flat No-701 A Wing, 7th Floor, Ruchi harshadlast@yahoo.co.in 022 28945476 Bhavesh Aunt Manjula Securities Appts, Devidas Lane, Borivali (W), of Patel Patel Ltd. Mumbai - 400103 Ms. Hetal HDFC Flat No-701 A Wing, 7th Floor, Ruchi harshadlast@yahoo.co.in 022 28945476 Daughter of Patel Securities Appts, Devidas Lane, Borivali (W), Manjula Patel Ltd. Mumbai - 400103 Ms. Geeta HDFC Flat No.-902,Shikhar Kunj,Upper harshadlast@yahoo.co.in 022 28774446 Sister-in-law of P. Patel Securities Gpovind Nagar,Malad(E),Mumbai Manjula Patel Ltd. 400097 iii. Mr. Bhavesh Patel used to operate the accounts of his above family members who stated to have no knowledge about the stock market. iv. The group traded in the scrip during Period - I and placed buy orders for 7940 shares. v. It is further observed that in 9 trades out of the 19 trades executed during the Period - I, Bhavesh Patel group was on the buying side for 2,890 shares constituting 47% of the total shares traded during the period. vi. The trades of the group were executed from the same location. vii. Bhavesh Patel Group sold 4000 shares after the share split in August 2009. The trades by the Bhavesh Patel group along with the trades executed by Mr. Ramesh D Patel, his HUF and Shamo Investments Private Limited resulted in rise in the price of the shares during the investigation period which otherwise would have been substantially low. Though there is no direct connection of Bhavesh Patel Group with the Promoter group, I do not find any justification for their sudden interest in the scrip of SJCL which was illiquid in Period I. Taking into consideration of the pattern of trades as well as the period during the trades were executed by the said Noticees as detailed above, I am of the view that the abovementioned Noticees were instrumental in the price manipulation of the scrip of SJCL.

8.18 Role of Promoters Mr. Savjibhai D. Patel and Mrs. Usha S. Patel: i. The promoters of the company, namely Mr. Savjibhai D. Patel and Mrs. Usha S. Patel came out with an open offer in respect of their acquisition of 70,100 shares of the company from Mr. Dayabhai G. Jivani and Mr. Jagdishbhai H. Jivani at Rs.25/-per share, in August 2008. The Offer Price of Rs.447/- per share was determined in terms of regulation 20(4)(c) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as the Takeover Regulations, 1997) applicable to frequently traded shares. ii. During last 26 weeks starting from February 4, 2008 to August 1, 2008, trades that took place in the shares of SJCL are as under: Week From To Volume Closing Closing Average Observation No. High Low Rs. Rs. Rs. 7 17.03.08 21.03.08 1750 386.00 386.00 386.00 All trades were executed by family members of Bhavesh Patel 12 21.04.08 25.04.08 1500 405.30 405.30 405.30 All trades for entire 1,500 shares were executed by family members of Bhavesh Patel except one trade for 360 shares. 20 16.06.08 20.06.08 50 425.55 425.55 425.55 Shamo Investments Pvt. Ltd. acted along with another entity on sell side as in above trades. 26 28.07.08 01.08.08 2500 446.80 446.80 446.80 Ramesh D Patel executed a single buy trade for 2,500 shares at upper circuit of 5 %. No trade had ever been noticed in SJCL for such a large volume during these 26 weeks. 5800 Average Price 415.91 iii. It can be seen from the above table that during last 26 weeks of open offer, the trades had been executed by the Noticees. The trading of 2500 shares by Mr. Ramesh D. Patel, which constituted 40% of entire volume during Period - I made the Promoter acquirers to achieve the annualized trading turnover above 5% (i.e. 5.80%) and satisfied the criteria of scrip being treated as frequently traded.

iv. As per the shareholding details of SJCL as on date of public announcement, the Promoters of SJCL had direct connection with 27 shareholders holding 40,240 shares constituting 20.12% of share capital. v. It is observed that only seven shareholders, who are not related to the promoters of the company tendered 7,800 shares in the open offer resulting in total cash outflow of Rs.34,86,600/- only. vi. Maximum fund requirement for the Offer assuming full acceptance was Rs.1.78 crores. The Promoter acquirers opened a fixed deposit account of Rs.50 lacs, being more than 25% of the amount of the consideration with HDFC Bank Ltd. vii. Mr. Savjibhai D. Patel received the funds on July 31, 2008 in his bank account maintained with HDFC Bank details of which are as under: Name Amount (Rs) in lakh Shantaben D Patel 09.40 Shantaben D Patel HUF 0 2. 9 0 Ramesh D Patel 14.00 Dharmistha Patel 16.55 Shamo Investments Pvt. Ltd. 08.20 viii. It is observed that the aforesaid credits to the account of Mr. Savjibhai D. Patel appears to be a loan transaction. Admittedly, the abovementioned entities viz., Mr. Ramesh D. Patel, Ms. Dharmistha Patel and Shamo Investments Pvt. Ltd were connected to the Promoters and trades executed by these entities were instrumental in the price rise of the shares of SJCL during the investigation period. ix. Further, it is noted that several positive declarations made by SJCL during the investigation period such as corporate announcements to issue bonus shares, dividend etc; financial results with sudden increase of sales and purchases of the company etc, also gave a positive impression about the financial health of the Company in the securities market. x. It is pertinent to mention here that at the time of Open Offer, the Promoter acquirers had confirmed that they have adequate resources. It was also stated that the financial obligations for the said offer would be fulfilled through internal reserves of acquirers and no further borrowing from banks/NRI/or FI or otherwise. As noted from the above, the statement made in the open offer document by the Promoters/ acquirers were in contradiction to the actual financial arrangements made by them to provide for payment if all shareholders offered their shares to the acquirers.

xi. All these were for the purpose of taking benefit of the share price which would be set as a result of the open offer. It is pertinent to note that the acquirers could not take advantage of the rise in the price of shares in the wake of open offer and off load the shares in the market. Subsequent to the open offer due to timely intervention by SEBI by way of issuing directions in the interim order. Thus the promoters were prevented from selling their shares in the market and exiting from the company in the wake of the interest created as a result of series of trades as detailed in this order. 9. Taking into considerations of the aforesaid observations/conclusions, it is established that all the Noticees have violated regulation 3(a), 3(c), 4(1), 4(2)(a), (b) and (e) of the PFUTP Regulations read with section 12A (a), and (c) of the SEBI Act.

10. It is pertinent to note that Hon'ble Securities Appellate Tribunal in the matter of V. Natarajan vs. SEBI, SAT Appeal No.104 of 2011 (order dated June 29, 2011), wherein it was held that "… we are satisfied that the provisions of Regulations 3 and 4 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003, were violated. These regulations, among others, prohibit any person from employing any device, scheme or artifice to defraud in connection with dealing in or Issue of securities which are listed or proposed to be listed on an exchange. They also prohibit persons from engaging in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities that are listed on stock exchanges. These regulations also prohibit persons from indulging in a fraudulent or unfair trade practice in securities which includes publishing any information which is not true or which he does not believe to be true. Any advertisement that is misleading or contains information in a distorted manner which may influence the decision of the investors is also an unfair trade practice in securities which is prohibited. The regulations also make it clear that planting false or misleading news which may induce the public for selling or purchasing securities would also come within the ambit of unfair trade practice in securities"

11. It would also be relevant to refer to the following observations made by the Hon'ble Supreme Court of India in its judgment dated April 26, 2013, in the case of N. Narayanan v. Adjudicating Officer SEBI (Civil Appeal Nos. 4112-4113 of 2013). "SEBI, the market regulator, has to deal sternly with companies and their Directors indulging in manipulative and deceptive devices, insider trading etc. or else they will be failing in their duty to promote orderly and healthy growth of the Securities market. Economic offence, people of this country should know, is a serious crime which, if not properly dealt with, as it should be, will affect not only country’s economic growth, but also slow the inflow of foreign investment by genuine investors and also casts a slur on India’s securities market. Message should go that our country will not tolerate “market abuse” and that we are governed by the “Rule of Law”. Fraud, deceit, artificiality, SEBI should ensure, have no place in the securities market of this country and ‘market security’ is our motto."

12. In the present case, the Noticees had acted in a manner highly detrimental to the interests of the securities market and the investors therein. The rulings of the Hon'ble Supreme Court and Securities Appellate Tribunal discussed in the preceding paragraphs apply directly and fully to the facts of the instant case. The development of a strong, transparent and credible securities market is an important pre-requisite for the economic development of our country. The fraudulent activities such as what have been observed in the instant case indeed pose a real threat to the integrity of our securities market. If such activities are allowed to continue, they will jeopardize and tarnish the image of the securities market as a transparent and efficient way of raising capital, shaking the very foundations of capital raising in India. The violations of law observed with respect to the Noticees, if not dealt with sternly, could give rise to a situation where raising of capital would become extremely difficult even for honest companies.

13. As regards the violations committed by the Noticees except Noticee Nos. 17, 18 and 19, I note that they were restrained from buying, selling or dealing in the shares of the company, either directly or indirectly, in any manner from February 5, 2010. All things considered, I find that the period of restraint already undergone by the Noticees are commensurate with the aforesaid violation committed by them. Therefore, I am of the considered view that no further period of restraint or prohibition is required in the present case against the Noticees viz., (1)Mr. Savjibhai D Patel, (2) Ms. Usha S. Patel, (3) Shyam Star Gems Limited (4) Mr. Ramesh D Patel, (5) Ramesh D. Patel HUF, (6) Mrs. Dharmishta R. Patel, (7) Ms. Reshma Patel, (8) Shamo Investments Private Limited, (9) Mr. Jayesh Samjibhai Patel,(10) Ms. Urvashi J Patel, (11) Mr. Bhavesh Patel, (12) Ms. Hetal Patel, (13) Ms. Jagruti Parel, (14) Ms. Manjula Patel, (15) Ms. Pragna Patel and (16) Ms. Rasila Patel.

14. Further, it is also pertinent to mention here that the Adjudicating Officer, SEBI, vide Order dated August 26,2015 imposed a penalty of Rs.2.50 crores on all the Noticees jointly and severally. Considering the same, I am of the view that disgorgement of Rs.54,73,685/- being the illegal profit made by the Noticees is not necessary at this juncture.

15. As regards the Noticees viz., Ms. Geeta Patel, Mr. Shantibhai M Chanchpara and Ms. Madhuben M Chanchpara are concerned, the following facts are pertinent to be mentioned:  Though the Noticee Ms. Geeta Patel, as a part of the Bhavesh Group executed trades in the scrip of SJCL during Period I, it is noted from SEBI’s investigation that Mr. Bhavesh Patel admittedly operated the accounts of his family members as they were not familiar with dealings in securities market.  The Noticees, Mr. Shantibhai M Chanchpara (brother in law of one of the directors of SJCL) and Ms. Madhuben M Chanchpara had executed the trades in the scrip of SJCL during the investigation period. It is, however, noted from their submissions mentioned at paragraph 8.16.(iv) above that the trades were executed between them as a mode to transfer money from mother to son as they were in need of funds. I am of the view that the Stock Exchange platform should not be used for executing non genuine trades such as in the instant case.  I note that the Adjudicating Officer, SEBI, vide Order dated August 26,2015 had already imposed a penalty of Rs.2.50 crores on all the Noticees including Ms. Geeta Patel, Mr. Shantibhai M Chanchpara and Ms. Madhuben M Chanchpara jointly and severally. Considering the same, I am inclined to take a lenient view and warn the Noticees viz., Ms. Geeta Patel, Mr. Shantibhai M Chanchpara and Ms. Madhuben M Chanchpara to be cautious while executing trades in the securities markets in future.

16. This Order shall come into force with immediate effect.

Place: Mumbai S. RAMAN September 06, 2017 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA