Order in respect of Vashi Constructions Pvt. Ltd., Ms. Bhavana Rajesh Shah and Mr. Rajesh Chandrakant Shah in the matter of Platinum Corporation Limited.

WTM/SR/SEBI/EFD/ 64 /12 /2016

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: SHRI. S RAMAN, WHOLE TIME MEMBER ORDER Disposal of Representation filed by Vashi Constructions Pvt. Ltd., Ms. Bhavana Rajesh Shah and Mr. Rajesh Chandrakant Shah 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 Vashi Corporation Ltd., Ms. Bhavana Rajesh Shah and Mr. Rajesh Chandrakant Shah 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:

 Vashi Constructions Pvt. Ltd. and others 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,  Vashi Constructions Pvt. Ltd. is directed to to disgorge the entire profit, i.e Rs. 23,89,873/- (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,  Vashi Constructions Pvt. Ltd., Ms. Bhavana Rajesh Shah, Mr. Rajesh Chandrakant Shah and others are also 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. Vashi Constructions Pvt. Ltd., Ms. Bhavana Rajesh Shah and Mr. Rajesh Chandrakant Shah challenged the aforesaid order of SEBI before the Hon’ble Securities Appellate Tribunal (“Hon’ble SAT”) vide Appeal No. 298 of 2016.

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4. Thereafter, Vashi Constructions Pvt. Ltd., Ms. Bhavana Rajesh Shah and Mr. Rajesh Chandrakant Shah (hereinafter referred collectively as “the applicants” and individually by their respective names) 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 relief. 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 redeem mutual funds units and after retaining Rs.2389873.00 – the balance sale proceeds be released to the Appellants for their uses and purposes

Vashi Constructions Pvt. Ltd - Appellant No.1 DP Name Demat BOID/Folio No. Shah Investor's Home Ltd. 10716308 Birla Sun Life 1017744193

Bhavana Rajesh Shah - Appellant No.2

DP Name Demat BOID Monetonic Financial Services Pvt. Ltd Mutual Fund Account Prabhudas Liladhar Pvt. Ltd 1201130000627280

Rajesh Chandrakant Shah- Appellant No. 3

DP Name Demat BOID R. D. Shah Brokers Pvt. Ltd 1204130000017230 Monetonic Financial Services Pvt. Ltd Mutual Fund Account

Urvi Rajesh Shah/Harsh Rajesh Shah

Name of Joint DP Name Holders Demat BOID Urvi Rajesh Shah and Monetonic Financial Services Pvt. Bhavana Rajesh Shah Ltd (Appellant no.2) Mutual Fund Acount Harsh Rajesh Shah and Monetonic Financial Services Pvt. Bhavana Rajesh Shah Ltd (Appellant no.2) Mutual Fund Acount Harsh Rajesh Shah and Bhavana Rajesh Shah Prabhudas Liladhar Pvt. Ltd (Appellant no.2) 120113000091602 Urvi Rajesh Shah and Bhavana Rajesh Shah Prabhudas Liladhar Pvt. Ltd (Appellant no.2) 1201130000627450 Harsh Rajesh Shah and Bhavana Rajesh Shah HDFC Bank (Appellant no.2) IN301549/375329242 Harsh Rajesh Shah and Anand Rathi Share and Bhavana Rajesh Shah Stock Brokers Limited (Appellant no.2) 1201060002361980

As no direction is there against these parties (Urvi Shah /Harsh Shah) in the order, and their accounts are freezed on account of Bhavana and Rajesh being their parents, appellants as joint holders in their demat accounts, instructions be issued to defreeze their accounts immediately. Further restrictions put on mutual funds units /certificates, if any of these parties be also lifted with immediate effect.” 5. Thereafter, the Hon’ble SAT, vide Order dated November 16, 2016 inter alia directed SEBI to consider the aforesaid representation (dated October 7, 2016) filed by the applicants 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 applicants have been perused. In this regard:

6.2 I note that the applicants in their 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 amounts of ₹23,89,873/- (the amount (equal to the profits earned by Vashi Constructions Ltd.) 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 applicants, i.e.  Debarment from the securities market for a period of 5 years from the date of the Order  Disgorgement of unlawful gain of ₹23,89,873/- made by Vashi Corporation Ltd., 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 applicants. The entities including the aforesaid applicants 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 applicants 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 applicants 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 applicants have not given any reasons in support of their request to defreeze the demat accounts. In this regard, it is relevant to note that as per SEBI directions, Vashi Corporation Ltd. (one of the applicants) is liable to disgorge an amount of ₹23,89,873/- along with simple interest @12% per annum from February 2007 till the date of payment. If the demat accounts of the applicants are de-frozen (as per the representation made by the applicant) and if the applicants are allowed to use the balance sale proceeds thereof for their 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 applicants undertake to disgorge the aforesaid amount along with the interest @12% per annum from February 2007 till the date of payment, then they 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 ₹23,89,873/-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 applicants are 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 applicants 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 as mentioned in the Order dated August 12, 2016.

7. The representation made by Vashi Constructions Pvt. Ltd., Ms. Bhavana Rajesh Shah and Mr. Rajesh Chandrakant Shah 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