Order in respect of Rudra Securities & Capital Ltd. in the matter of Platinum Corporation Limited.

WTM/SR/SEBI/EFD/ 63 /12 /2016

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: SHRI. S RAMAN, WHOLE TIME MEMBER ORDER Disposal of Representation filed by Rudra Securities & Capital Ltd. in the matter of Platinum Corporation Ltd.

1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) passed an order dated August 12, 2016 against Platinum Corporation Ltd. and 39 other entities including Rudra Securities & Capital Ltd. for the violation of Section 12A (a), (b) and (c) of SEBI Act read with Regulation 3(a), 3(b), 3(c), 3(d), 4(1), 4(2)(e), (f), (k) and (r) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (PFUTP Regulations, 2003) and Regulation 8(3) and Regulation 10 of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 (SAST Regulations, 1997).

2. Vide the aforesaid Order, SEBI inter alia directed as under:

 Rudra Securities & Capital Ltd. and Ors are prohibited from accessing the securities market directly or indirectly, and are prohibited from buying, selling or otherwise dealing in securities, directly or indirectly for a period of 3 years from the date of the Order for conniving and conspiring with Platinum Corporation and its directors/promoters and offloading shares in the wake of false and misleading Corporate Announcements thereby making illegal profit/gain,  Rudra Securities & Capital Ltd. to disgorge the entire profit, i.e ₹21, 59, 971/- (with simple interest @12% per annum from February 2007 till the date of payment), unlawfully gained by it, by offloading the shares in the wake of false and misleading Corporate Announcements by the Company and its directors,  Rudra Securities & Capital Ltd. and Ors are prohibited from accessing the securities market directly or indirectly, and are prohibited from buying, selling or otherwise dealing in securities, directly or indirectly for a period of 5 years from the date of the Order for its involvement in the fraudulent preferential allotment made by the company without infusion of funds.

3. Rudra Securities & Capital Ltd. and its directors viz. Mr. Ketan D. Sorathiya, Mr. Nileshkumar T. Kava, Mr. Vipul Shantilal Trivedi and Mr. Manish Muchhala challenged the aforesaid order of SEBI before the Hon’ble Securities Appellate Tribunal (“Hon’ble SAT”) vide Appeal No. 297 of 2016.

.

4. Thereafter, Rudra Securities & Capital Ltd. (hereinafter referred to as “the applicant” ) vide letter dated October 7, 2016 made a representation before SEBI. The details are as under:

“The aforesaid appeal came up for hearing on 7.10.2016 for consideration of interim reliefs. The Ld. Sr. Counsel appearing for SEBI advised that the Appellants should make a representation to SEBI for reliefs required by them and that SEBI will consider the same. We request you to issue necessary instructions to permit the Appellants to sell and dispose off shares from the following demat accounts and after retaining Rs.2159971/- the balance sale proceeds be released to the Appellants for their uses and purposes. DP Name Demat BOID Mangal Keshav Securities Limited 1202470000331400 Stock Holding Corporation of India Ltd 30407639

Further instructions be issued to defreeze their accounts immediately”

5. Thereafter, the Hon’ble SAT, vide common Order dated November 16, 2016 inter alia directed SEBI to consider the aforesaid representation filed by the applicant on October 7, 2016 and pass appropriate Order thereon as expeditiously as possible.

6.1 Pursuant to the directions of the Hon’ble SAT, the aforesaid representation made by the applicant has been perused.

6.2 I note that the applicant in its representation has prayed that the demat accounts (frozen by SEBI’s Order, the details of which are mentioned in the representation) be de-frozen and that they be allowed to “use the sale proceeds for their purposes”. In addition to this, they have also submitted that amount of ₹21,59,971/- (the amount (equal to the profits earned by them) directed to be disgorged by SEBI vide order dated August 12, 2016) be retained and the balance sale proceeds be released for their uses and purposes.

6.3 There are mainly two directions in the Order dated August 12, 2016 passed against the applicant, i.e.

 Debarment from the securities market for a period of 5 years from the date of the Order

 Disgorgement of unlawful gain of ₹21,59,971/- made by the applicant, along with simple interest @12% per annum from February 2007 till the date of payment.

6.4 I note that the aforesaid order dated August 12, 2016 has been passed by SEBI after consideration of all the replies/submissions made by the entities including the aforesaid applicant. The entities including the aforesaid applicant were also granted sufficient opportunity of personal hearing (on January 13, 2016 and also on February 12, 2016) before passing the Order dated August 12, 2016. Further, the role of the applicant in the entire scheme and the reasons for issuance of the said directions have been clearly brought out in the said order. The demat accounts of the applicant including the accounts held jointly by the aforesaid applicant with other entities have been frozen pursuant to the aforesaid directions issued by SEBI vide Order dated August 12, 2016.

6.5 I further note that the applicant has not given any reasons in support of its request to defreeze the demat accounts. In this regard, it is relevant to note that as per SEBI directions, the applicant is liable to disgorge an amount of ₹21,59,971/- along with simple interest @12% per annum from February 2007 till the date of payment. If the demat accounts of the applicant are de-frozen (as per the representation made by the applicant) and if the applicant is allowed to use the balance sale proceeds thereof for its own purposes, the same would tantamount to revocation of the directions issued by SEBI and would render the order of SEBI otiose.

6.6 It is therefore, clarified that if the applicant undertakes to disgorge the aforesaid amount along with the interest @12% per annum from February 2007 till the date of payment, then it would be allowed to sell the shares lying in its demat accounts to the extent of making payments towards the disgorgement amount along with the interest imposed by SEBI. Further, the sale has to be done through a SEBI registered broker, who inturn shall ensure that the entire illegal gain of ₹21,59,971/- along with simple interest @12% per annum from February 2007 till the date of payment, is recovered and sent to SEBI. It is further clarified that it is only for the purpose of making payment of the amount to be disgorged that the applicant is allowed to sell the shares available in its demat account. Further, barring this limited purpose of effecting sale of shares for making payment of the amount to be disgorged along with the interest, the applicant is prohibited from accessing the securities market directly or indirectly, and are prohibited from buying, selling or otherwise dealing in securities, directly or indirectly for a period as mentioned in the Order dated August 12, 2016.

7. The representation made by Rudra Securities & Capital Ltd. vide letter dated October 7, 2016 in this regard is accordingly disposed of.

Sd/- Date : December 08, 2016 S. RAMAN Place : Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA