Order in the matter of dealings in the shares of Goldstone Technologies Limited[SAT Appeal No.:261/2015]

WTM/RKA/EFD-DRA-II/43/2015 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA ORDER Under Section 11B read with Section 11(4) of the Securities and Exchange Board of India Act, 1992 in respect of:

Sl. No. Name of the Noticees PAN 1. Mr. Bhavesh Pabari AKGPP8679N 2. Mr. Bipin Jayant Thaker ABYPT4984H 3. Mr. Kishore Chauhan AFPPC9703G 4. Mr. Prem Mohanlal Parikh ALHPP3489N 5. Mr. Hemant Madhusudan Seth ANOPS8607E 6. Ms. Mala Hemant Seth AZXPS0694J 7. Mr. Ankit Sanchaniya BLNPS3316L 8. Mr. Bhupesh Rathod AACPR3785K 9. Mr. Bipinkumar Gandhi AJHPG6989J 10. Mr. Bharat Shantilal Thakkar AAZPT9542R

In the matter of dealings in the shares of Goldstone Technologies Limited

Appearances: Mr. Bhavesh Pabari – in Person.

1. Goldstone Technologies Limited (hereinafter referred to as ‘GTL/company’), is a company listed at Bombay Stock Exchange Limited (BSE) and the National Stock Exchange (NSE). Securities and Exchange Board of India (hereinafter referred to as 'SEBI') initiated investigation into the trading in certain scrips including GTL pursuant to the detection of a huge rise in the traded volumes and/or price of the shares of these companies during the years 2008, 2009 and 2010. 2. Upon analysis of the trading activity in the above scrips, it was prima facie observed that certain entities had indulged in creating artificial volume by trading among themselves, in a synchronized manner, carrying out off-market transfers among themselves for the purpose of meeting settlement obligations of another and thus contributing to the price rise in these scrips.

In the matter of dealings in the shares of Goldstone Technologies Limited

3. In view of the above, in order to protect the interests of investors and to preserve the safety and integrity of the market, SEBI passed an interim order dated February 02, 2011 (“interim order”) restraining 39 persons/entities including Mr. Bhavesh Pabari, Mr. Bipin Jayant Thaker, Mr. Kishore Chauhan, Mr. Prem Mohanlal Parikh, Mr. Hemant Madhusudan Seth, Ms. Mala Hemant Seth, Mr. Ankit Sanchaniya, Mr. Bhupesh Rathod, Mr. Bipinkumar Gandhi and Mr. Bharat Shantilal Thakkar from accessing the securities market and further prohibited them from buying, selling or dealing in securities in any manner whatsoever, till further directions. The said interim order later confirmed by SEBI vide order dated July 08, 2011 (“Confirmatory Order”) but did not deal with the abovementioned 10 entities. 4. SEBI initiated an investigation relating to buying, selling or dealing in the shares of the scrip of GTL to inter alia ascertain the violation of the provisions of the Securities and Exchange Board of India Act, 1992, Rules and Regulations. The period of investigation was taken as January 21, 2009 to April 13, 2010 (hereinafter referred to as ‘Investigation Period'). The investigations, inter alia, revealed that: (i) Certain connected/related entities had traded significantly in the said scrips during 2008, 2009 and 2010. The relationship/connection between the entities were determined based on at least one of the following parameters: (a) Similarities in the particulars/details in the KYC documents such as common telephone number, addresses, e-mail addresses, etc.; (b) Trading activity in terms of buy/sell among the group and the frequency and off-market transfers between them; (c) Fund transfers between the members of the said group.

(ii) On the basis of the said criteria, one group was identified as the 'Pabari-Parikh' group (the PPG). The members of the group and the basis of relationship/connection amongst them is as follows:

Sl. Client Name KYC Relation Fund Share movement No. Movement through off market transaction 1. Bhupesh Rathod Introduced entities at sl. nos. With entity at - 11, 10, 9, 7 for trading a/c sl. No. 16. and knows sl. No. 14. 2. Ketan Babulal - - With entity at sl. Shah no.10. 3. Bharat Shantilal Entity at sl. no. 9 is his With entities With entity at sl. no. Thakkar nephew. at sl. nos. 9, 9. Same address with sl. no.9. 10, 16. Entity at sl. no. 9 is his nominee.

Joint a/c with entity at sl. no. 9. Business relations with entities at sl. nos. 4, 6, 7, 10, 11, 16, 17. 4. Bipin Jayant Same Tel. no. with entity at With entity at With entities at sl. Thaker sl. no. 9. sl. no. 9. nos. 12, 6, 9, 10, 11. Business relations with entities at sl. nos. 3, 6, 7, 9, 10, 11, 16, 17. 5. Bharat G Vaghela Same address & Tel. no. as With entity at -entity at sl. no. 8 who has sl. no. 6. share movement with entity at sl.no. 9. Entity at sl. No. 6 is nephew of entity at sl. no. 9 and shares same Tel. no. with entity at sl. no. 9. 6. Chirag Rajnikant Same Tel. no. with entity at With entities With entity at sl. no. Jariwala sl.no.9. at sl. nos. 9, 4. Entity at sl. no. 9 is his uncle. 11, 5. Business relations with entities at sl. nos. 3, 4, 7, 9, 11, 16, 17. 7. Kishore Chauhan Joint a/c with entity at sl. no. With entities With entities at sl. 9. at sl. nos. 9, nos. 9, 10, 11, 17. Entities at Sl. nos. 9 & 11 are 10, 11. witness for demat a/c. Business relations with entities at sl. nos. 3, 4, 6, 9, 10, 11, 16. 8. Bipinkumar - - With entity at sl. no. Gandhi 9. 9. Bhavesh Pabari Entity at sl. no. 3 is his uncle - With entities at sl. & entity at sl. no. 17 is his nos. 10, 11, 3, 4, 16, brother in law. 17, 8. Entity at sl. no. 10 is cousin of entity at sl. no. 9. Entities at sl. nos. 9 & 11 both directors of Rajnandi Yarns Pvt. Ltd. Share common Tel. no. with entities at sl. nos. 16, 17, 4. Entity at sl. no. 1 introduced him for trading a/c. Business relations with entities at sl. nos. 4, 6, 7, 10, 11, 14, 16. 10. Prem Mohanlal Entity at sl. no. 10 is cousin With entities With entities at sl. Parikh of entity at sl. no.9. at sl. nos. 9, nos. 9, 11, 7, 3, 4, Common email with entities 11, 7. 12, 16, 17. at sl. 16, 10 & 17. Entity at sl. no. 11 is nominee of entity at sl. no.10. Business relations with entities at sl. nos. 3, 4, 6, 7, 9,

11, 16, 17. 11. Hemant Entities at Sl. nos. 9 & 11 With entities With entities at sl. Madhusudan both directors of Rajnandi at sl. nos. 9, nos. 9, 10, 7, 14, 16, Sheth Yarns Pvt. Ltd. 10, 7. 17, 12, 4. Same email with entity at sl. no. 17. Business relations with entities at 1, 3, 10, 16, 17, 4, 6, 7 & sl. no. 14 is his wife & sl. no. 15 is his nephew. 12. Jigar Praful - - With entities at sl. Ghoghari nos. 4, 10, 11, 16. 13. Vipul Hiralal - With Kaushik With entity at sl. Shah Rajnikant no.9. Mehta who has off-market transaction with entity at sl. No. 9. 14. Mala Hemant Entity at sl. no. 14 is the wife With entities With entity at sl. no. Sheth of entity at sl. no. 11 and at sl. nos. 9, 11, entity at sl. no. 15 is the 10. nephew. 15. Gaurang Ajit Seth Has common address & Tel. - -no. with entity at sl. no. 11 & entities at sl. no. 11 and 9 both directors of Rajnandi Yarns Pvt. Ltd. 16. Ankit Sanchaniya Same Tel. no. with entity at With entities With entities at sl. sl. no. 10 and also shares Tel. at sl. nos. 9, nos. 9, 10, 11, 6, 12, no. with entity at sl. no. 9 10. 17. who is the nominee for his a/c. Business relations with entities at sl. nos.3, 4, 6, 7, 9, 10, 11, 17. 17. Vivek Kishanpal Entity at sl. no. 9 is the With entity at With entities at sl. Samant brother in law & shares sl. no. 11. nos. 9, 11, 6, 7, 10, common Tel. no. & entity at 16. sl.no. 9 is the nominee of sl. no. 17 for trading a/c & bank a/c. Shares email with entity at sl. no. 11. Shares email with entity at sl. no. 10. (iii) On BSE, 17 group entities including the above mentioned 10 entities, (‘PPG entities’) traded through 25 stock brokers, purchasing 1,30,91,871 shares accounting for 40.57% of the total volume traded during the period under investigation and sold 1,28,10,113 shares accounting for 39.70% of the total volume traded during the period under investigation.

(iv) Several of the trades were synchronised amongst the PPG entities in the scrip of GTL during the investigation period. Further, out of the total trading of 1,18,39,849 shares within the group entities, for 51,99,929 shares accounting for 16.11% of the market volume the buy and sale orders were placed within one minute of each other 51,99,929 shares constituting 39.72% of the total buy of the PPG entities and 40.59% of the total sale of the PPG entities.

(v) Out of these 51,99,929 shares, it was observed that with respect to 9,09,391 shares accounting for 2.82% of the total market volume the buy and sale orders were placed in such a manner that the time difference between the buy order and sale order was within one minute with matching price and quantity. These 9,09,391 shares constituted 6.95% of the total buy of the PPG entities and 7.10% of the total sale of the PPG entities.

(vi) Certain entities among the PPG entities including Mr. Bharat Shantilal Thakkar, Mr. Kishorbhai Balubhai Chauhan, Mr. Bhabesh Prakash Pabari, Mr. Prem Mohanlal Parikh, Mr. Hemant Madhusudan Sheth, Ms. Mala Hemant Sheth and Mr. Ankit Rajendra Sanchaniya also indulged in self trades on the BSE (i.e., buy client as well as the sell client for a given trade was the same resulting in no change of beneficial ownership). In all these self trades mentioned above, the buy and sell stock brokers were also same. The detail of the same is presented as under:

% of % % of Self trade Total Total Market No of Self Name of the entity Total buy Total sale qty Buy Sale Volume trades Bharat Shantilal Thakkar 6,51,250 8,38,432 25,000 3.84 2.98 0.08 1 Kishorbhai Balubhai Chauhan 13,81,255 14,26,051 8,878 0.64 0.62 0.03 4 Bhabesh Prakash Pabari 18,13,258 22,42,150 1,54,337 8.51 6.88 0.48 24 Prem Mohanlal Parikh 28,63,884 23,56,356 5,49,150 19.18 23.31 1.70 63 Hemant Madhusudan Sheth 34,22,459 31,33,816 5,29,009 15.46 16.88 1.64 94 Mala Hemant Sheth 3,15,103 3,15,504 35,197 11.17 11.16 0.11 3 Ankit Rajendra Sanchaniya 12,48,798 14,48,990 72,305 5.79 4.99 0.22 15 Grand Total 1,16,96,007 1,17,61,299 13,73,876 11.75 11.68 4.26 204 (vii) The price volume data shows that the shares of GTL were traded for 297 trading days during the Investigation Period on the BSE. Out of 297 trading days, the PPG entities, traded among themselves on 108 days. It was observed that the volume of trades undertaken by the PPG entities, contributed significantly to the daily market volume in the scrip on BSE during the investigation period ranging from 0.13% on January 21, 2009 to 93.35% on November 17, 2009. Out of the 108 trading days on which the PPG entities traded amongst themselves, on 68 trading days PPG entities, contributed to more than 50% of the total market volume.

(viii) Out of 108 trading days in which the PPG entities traded amongst themselves, on 78 trading days the PPG entities, including the above mentioned 10 entities, executed synchronised trades.

(ix) The synchronised trades were executed by the PPG entities, contributing significantly to the daily market volume, ranging from 0.13% on January 21, 2009 to 83.07% on September 15, 2009. Out of 78 trading days, on 17 trading days the PPG entities contributed to more than 50% of the total market volume through synchronised trades.

(x) Out of 78 trading days, on 26 trading days the trades executed by the PPG entities were such that not only both buy and sell orders were placed within a time difference of one minute but the order quantity and price of the orders exactly matched. These kinds of perfectly synchronised trades were executed amongst the PPG entities contributing significantly to the total market volume ranging from 0.23% on February 12, 2009 to 67.26% on April 23, 2009 and on 3 trading days by contributing to more than 50% of the market volume.

(xi) Out of 1,23,760 trades in the scrip of GTL on BSE during the investigation period, 24,047 trades took place at a price less than the Last Traded Price (LTP) and 76,324 trades took place at a price equal to LTP and 23,388 trades at a price greater than LTP. Out of these 1,23,760 trades, the 17 PPG entities dealing through multiple brokers entered into 5,163 buy transactions. Out of these 5,163 trades 588 trades took place at a price less than LTP (contributing a gross fall in price by `67.84), 3,394 trades took place at a price equal to LTP and 1,211 trades at a price greater than LTP (contributing a gross increasing in price by `162).

(xii) During the period under investigation, the price of the scrip opened at `22.65 on BSE and touched a high of `47.75, i.e. there was increase of `25.10.

(xiii) The trade log of the entities trading on the NSE revealed that on NSE, 12 PPG entities trading through multiple stock brokers purchased 20,76,282 shares accounting for 6.19% of the total volume traded in the scrip of GTL on NSE during the period under investigation and sold 20,65,506 shares accounting for 6.16% of the total volume traded in the scrip of GTL on NSE during the period under investigation.

(xiv) The 12 PPG entities who traded in the scrip of GTL on NSE were Mr. Ketan Babulal Shah, Mr. Bipin Jayant Thaker, Mr. Bharat G. Vaghela, Mr. Chirag Rajnikant Jariwala, Mr. Kishore Chauhan, Mr. Bhavesh Pabari, Mr. Prem Mohanlal Parikh, Mr. Hemant Madhusudan Sheth, Mr. Asif Ilyas Shaikh, Ms. Mala Hemant Sheth, Mr. Ankit Sanchaniya and Mr. Vivek Kishanpal Samant. On the NSE, out of the 12 PPG entities, 11 PPG entities, traded in 13,14,087 shares constituting 3.92% of the total market volume in the scrip and accounted for 63.29% of the total purchase of the group and 63.62 % of the total sale of the group.

(xv) Certain entities among the PPG entities, i.e., Mr. Prem Mohanlal Parikh, Mr. Hemant Madhusudan Sheth and Mr. Ankit Rajendre Sanchaniya also indulged in self trades on the NSE (i.e., buy client as well as the sell client for a given trade was the same resulting in no change of beneficial ownership).

(xvi) The PPG entities had indulged in off-market transfer of 11,22,836 shares of GTL amongst themselves during the period January 01, 2009 and January 31, 2011 which further support the connection among the group.

(xvii) Thus, large scale trading amongst the PPG entities was noted most of which were synchronized in nature and also resulted in no change in ownership, and created an artificial demand in the scrip of GTL leading to price rise which was misleading and disadvantageous to the genuine investors in the securities market. The self trades executed among the PPG entities did not reveal any real change in ownership of shares traded among them and the same was for the purpose of increasing volume of trading or influencing the price.

5. The afore-discussed actions on the part of the above mentioned 10 entities, i.e., execution of synchronized and self trades, creation of artificial volume and price manipulation which not only distorted market equilibrium but were also found to be fraudulent in nature, were alleged to have violated the provisions of regulations 3 (a), (b),(c),(d), 4(1), 4(2) (a),(b) (e) and (g) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (the PFUTP Regulations). 6. Consequently, separate Show Cause Notices (SCN) all dated November 13, 2014 were issued to Mr. Bhavesh Pabari, Mr. Bipin Jayant Thaker, Mr. Kishore Chauhan, Mr. Prem Mohanlal Parikh, Mr. Hemant Madhusudan Seth, Mr. Mala Hemant Seth, Mr. Ankit Sanchaniya, Mr. Bhupesh Rathod, Mr. Bipinkumar Gandhi and Mr. Bharat Shantilal Thakkar (hereinafter collectively referred to as ‘the noticees’ and individually by their respective names), calling upon them to show cause as to why suitable directions under section 11B read with section 11(4) of the Securities and Exchange Board of India Act, 1992 (the SEBI Act, 1992) should not be issued against them for the alleged violation of the provisions of regulations 3(a), (b),(c),(d), 4(1), 4(2) (a),(b) (e) and (g) of the PFUTP

Regulations, 2003. The provisions of the regulations alleged to be contravened by the noticees are reproduced hereunder: Regulation 3. Prohibition of certain dealings in securities “3. No person shall directly or indirectly (a). buy, sell or otherwise deal in securities in a fraudulent manner; (b). use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of the Act or the rules or the regulations made there under; (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; (d). engage 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 which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made there under.

Regulation 4. Prohibition of manipulative, fraudulent and unfair trade practices 4. (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; (c) .................................................................................................................................... (d) .................................................................................................................................... (e) any act or omission amounting to manipulation of the price of a security; (f) ................................................................................................

(g) entering into a transaction in securities without intention of performing it or without intention of change of ownership of such security;” 7. Vide separate letters dated November 26, 2014 and November 27, 2014 Mr. Bhavesh Pabari, Mr. Bharat Shantilal Thakkar, Mr. Hemant Madhusudan Seth and Ms. Mala Hemant Seth sought copies of certain documents which were provided to them vide letters dated December 16, 2014. While some of the aforementioned noticees replied to the respective SCNs issued to them, the others did not submit any reply as mentioned in the following table:

Sl. No. Name of the Noticees Date of Reply 1. Mr. Bhavesh Pabari January 31, 2015 2. Mr. Bipin Jayant Thaker February 02, 2015 3. Mr. Kishore Chauhan No reply 4. Mr. Prem Mohanlal Parikh February 02, 2015 5. Mr. Hemant Madhusudan Seth February 02, 2015 6. Ms. Mala Hemant Seth January 31, 2015 7. Mr. Ankit Sanchaniya February 02, 2015 8. Mr. Bhupesh Rathod February 02, 2015 9. Mr. Bipinkumar Gandhi No reply 10. Mr. Bharat Shantilal Thakkar January 31, 2015

8. An opportunity of personal hearing was granted to the noticees on February 03, 2015. During the hearing, Mr. Bhavesh Pabari appeared in person and reiterated the submissions made vide his letter dated January 31, 2015. As regards, Mr. Kishor Chauhan, it has been brought to my notice that during the adjudication proceedings in the same matter, one Ms. Rupal K. Chauhan, claiming to be wife of Mr. Kishore Chauhan, has informed SEBI that the said noticee had passed away on May 29, 2013 and had enclosed a certified copy of the death certificate as issued by the Department of Health and Family Welfare, Government of Gujarat, in support thereof. None of the remaining noticees appeared in person. Other than Mr. Kishor Chauhan and Mr. Bipinkumar Gandhi all the remaining noticees have filed their written submissions. These noticees have inter alia made following submissions as follows: (i) Mr. Bhavesh Pabari: (a). Pursuant to the investigation in the matter, in addition to the instant proceedings, adjudication proceedings were also initiated against the noticee. and a show cause notice was issued to him. (b). The noticee has already submitted his reply to the said show cause notice issued by the Adjudicating Officer. Hard copies of trade logs and order logs were provided in CD format and there was difficulty to purify/sort the data which was in whole. The action proposed report was not enclosed with the documents provided. (c). As regards allegation regarding his acquaintance with Narendra Ganatra is concerned, the Hon’ble Securities Appellate Tribunal (the Hon’ble SAT), vide its order dated July 29, 2011 in the matter of Narendra Ganatra v. SEBI has held as under: “The connection of the appellant with other group entities is also restricted to his brother

Nimesh Ganatra and Mr. Bhavesh Pabari. The fact that the appellant shares common address with his brother Nimesh Ganatra or has introduced Bhavesh Pabari to broker is not sufficient evidence to prove the charge of connivance in executing circular trades.” Therefore, he should not be charged with one charge repeatedly as the Hon’ble SAT had already put aside the said allegation. (d). There is no denial that this noticee was not a director in Rajnandi Yarns Private Limited but the decision of investment of Rajnandi Yarns Private Limited was taken in company board meeting and not at an individual level. (e). This noticee does not have any business relationship with certain other noticees involved. (f). The documents furnished have failed to provide any documentary evidence to prove the relationship with other noticees. (g). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty of `5,00,000/- on the noticee which has been appealed against before the Hon’ble SAT. (h). The noticee is aggrieved by the interim order and the confirmatory order passed against him making him unable to have any financial means and capacity to take service of legal consultation and represent his case in the present proceedings.

(ii) Mr. Bipin Jayant Thaker: (a). Pursuant to the investigation in the matter, in addition to the instant proceedings, adjudication proceedings were also initiated against the noticee and a show cause notice was issued to him. (b). The noticee has already submitted his reply to the said show cause notice issued by the Adjudicating Officer. The action proposed report was not enclosed with the documents provided. (c). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty of `5,00,000/- on the noticee which has been appealed against before the Hon’ble SAT. (d). The noticee is aggrieved by the interim order and the confirmatory order passed against him making him unable to have any financial means and capacity to take service of legal consultation and represent his case in the present proceedings. (iii) Mr. Prem Mohanlal Parikh: (a). Pursuant to the investigation in the matter, in addition to the instant proceedings, adjudication proceedings were also initiated against the noticee and a show cause notice was issued to him. (b). The noticee has already submitted his reply to the said show cause notice issued by the Adjudicating Officer.

(c). The action proposed report was not enclosed with the documents provided. (d). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty of `5,00,000/- on the noticee which has been appealed against before the Hon’ble SAT. (e). The noticee is aggrieved by the interim order and the confirmatory order passed against him making him unable to have any financial means and capacity to take service of legal consultation and represent his case in the present proceedings. (iv) Mr. Hemant Madhusudan Seth: (a). A preliminary reply was already submitted through reply dated November 27, 2014 against the show cause notice. (b). Pursuant to the investigation in the matter, in addition to the instant proceedings, adjudication proceedings were also initiated against the noticee and a show cause notice was issued to him. (c). The noticee has already submitted his reply to the said show cause notice issued by the Adjudicating Officer. (d). Hard copies of trade logs and order logs were provided in CD format and there was difficulty to purify the data which was in whole. The action proposed report was not enclosed with the documents provided.

(e). The noticee does not deny that he was not a director in Rajnandi Yarns Private Limited but the decision of investment of Rajnandi Yarns Private Limited was taken in company board meeting and not at an individual level. (f). The documents furnished have failed to provide any documentary evidence to prove the relationship. (g). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty of `5,00,000/- on the noticee which has been appealed against before the Hon’ble SAT. (h). The noticee is aggrieved by the interim order and the confirmatory order passed against him making him unable to have any financial means and capacity to take service of legal consultation and represent his case in the present proceedings. (v) Ms. Mala Hemant Seth: (a). A preliminary reply was already submitted through reply dated November 27, 2014 against the Show Cause Notice. (b). Pursuant to the investigation in the matter, in addition to the instant proceedings, adjudication proceedings were also initiated against the noticee and a show cause notice was issued to her. (c). The noticee has already submitted her reply to the said show cause notice issued by the Adjudicating Officer.

(d). Hard copies of trade logs and order logs were provided in CD format and there was difficulty to purify the data which was in whole. The action proposed report was not enclosed with the documents provided. (e). Financial transactions with Mr. Prem Mohanlal Parikh are admitted. (f). While it is true that she is the wife of Mr. Hemant Madhusudan Seth, she denies having any business/professional connection with him and submits that she is living an independent life and is taking her own independent decisions. (g). She has not received the copy of bank statement evidencing transactions with Mr. Prem Mohanlal Parikh and a copy of her letter dated July 08, 2012 has not been received by her. (h). The noticee has no business relationship with other noticees and documents furnished have failed to provide any documentary evidence to prove the relationship. (i). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty of `5,00,000/- on the noticee which has been appealed against before the Hon’ble SAT. (j). The noticee is aggrieved by the interim order and the confirmatory order passed against her making her unable to have any financial means and capacity to take service of legal consultation and represent her case in the present proceedings.

(vi) Mr. Ankit Sanchaniya: (a). Pursuant to the investigation in the matter, in addition to the instant proceedings, adjudication proceedings were also initiated against the noticee and a show cause notice was issued to him. (b). The noticee has already submitted his reply to the said show cause notice issued by the Adjudicating Officer. (c). The action proposed report was not enclosed with the documents provided. (d). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty of `5,00,000/- on the noticee which has been appealed against before the Hon’ble SAT. (e). The noticee is aggrieved by the interim order and the confirmatory order passed against him making him unable to have any financial means and capacity to take service of legal consultation and represent his case in the present proceedings. (vii) Mr. Bhupesh Rathod: (a). The noticee was not implicated by the interim order and the confirmatory order. (b). The noticee had carried out share trading activity in the normal and ordinary course of business activity through a well recognised SEBI registered stock broker.

At the relevant time and even thereafter till date, no grievance or complaint of any nature has been raised by any of the aforesaid broker or the stock exchange on whose trading terminal the impugned transactions were carried out. (c). The noticee had bought 10,000 shares and sold 10,000 shares at BSE on delivery basis during January 21, 2009 to April 13, 2010. The noticee had not done any trading of shares at NSE. Hence, all the trades were genuine and bona fide. (d). Pursuant to the investigation in the matter, in addition to the instant proceedings, adjudication proceedings were also initiated against the noticee and a show cause notice was issued to him. (e). The noticee has already submitted his reply to the said show cause notice issued by the Adjudicating Officer and seeks to rely on the same in the instant proceedings. (f). The action proposed report was not enclosed with the documents provided. (g). The noticee had no off market transactions in the scrip of GTL with the persons mentioned in the SCN. The noticee had no linkages or relation to the market trades executed by them or by him on the trading platform of the stock exchange.

(h). It is incomprehensible to hold or bind the noticee as belonging to any group or connected entities as alleged in the SCN. The allegation which is not supported by any evidence necessarily leads to prove and establish that it is factually incorrect and legally unsustainable and merely based on surmises and conjectures and hence lacks credentials. (i). The alleged connection on the basis of which the noticee is roped into the present proceedings was that he had introduced Mr. Bhavesh Pabari, Mr. Kishore Chauhan, Mr. Prem Mohanlal Parikh and Mr. Hemant Madhusudan Seth for trading account. (j). The noticee has further clarified in his reply to the Adjudicating Officer that the introduction was sought by the noticee’s broker S.P. Jain Securities Limited for merely the sake of introduction of their identity, (k). The noticee had not undertaken any risk responsibility and liability for carrying out any transaction. The noticee had not taken any profit or income. (l). It was an undisputed fact that noticee had neither carried out any transaction nor was instrumental for the transaction carried out by those persons in the market.

(m). Introduction of some person to his stock broker cannot mean that the noticee associates or carries out share trading activity with them jointly. Introduction of every client to broker is mandatory and therefore broker normally insists introduction from good existing client before registering new person as client. (n). The noticee has no business relationship with other noticees and documents furnished have failed to provide any documentary evidence to prove the relationship. (o). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty of `5,00,000/- on the noticee which has been appealed against before the Hon’ble SAT. (p). The noticee is aggrieved by the interim order and the confirmatory order passed against him making him unable to have any financial means and capacity to take service of legal consultation and represent his case in the present proceedings. (viii) Mr. Bharat Shantilal Thakkar: (a). A preliminary reply was already submitted through reply dated November 26, 2014 against the SCN. (b). The interim order and confirmatory order passed against the noticee directed SEBI to complete the investigation by December 31, 2011 which was further extended to July 31, 2012 but it appears that the case has still not been completed.

(c). The noticee denies all allegations made in the SCN except to the extent specifically admitted by him. (d). The noticee submits that six different show cause notices have been issued to him for trading in five different scrips. These six show cause notices have been issued in and around the same time and the investigation period of the five scrips is also of around the same time which is really perplexing to understand. (e). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty of `5,00,000/- on the noticee which has been appealed against before the Hon’ble SAT. (f). The noticee is aggrieved by the interim order and the confirmatory order passed against him making him unable to have any financial means and capacity to take service of legal consultation and represent his case in the present proceedings. 9. At the outset, I find that the principles of natural justice have been followed in so far that all the noticees were given an opportunity to file written submission and attend hearing to present their case in the present proceedings. It is to be noted that the adjudication proceedings and the present proceedings are different.

The noticees have mentioned in their submissions that they are not in a position to attend personal hearing and present their case before me. I, therefore, proceed to deal with the replies/submission of the noticees before me. The noticees have contended that they are aggrieved by the interim order and confirmatory order passed against them. However, I note that the said confirmatory order does not implicate any of the noticees. 10. The noticees have submitted that the action proposed chart had not been provided to them and that the trade logs and order logs were provided in a CD format due to which the noticees were unable to purify the data pertaining to them. I have perused through the documents sought by the entities and the documents furnished to them. I note that all such relevant documents that were relied upon in the SCN have been duly provided to the noticees. Further, due to the voluminous nature of the trade logs and order logs, the same was given through a compact disc. Ms. Mala Hemant Seth has also stated that certain bank statement and letter has not been provided to her.

From the documents issued to her, I note that said documents were duly provided through letter dated December 16, 2014. I, therefore, find that all the relevant documents that have been relied upon in the SCN or that have been sought by the noticees have been furnished to them. Further, none of the noticees have disputed the trade logs, order logs or bank statements pertaining to the instant matter. 11. I will now proceed to deliberate on the submissions made by the noticees. I note that Mr. Bhavesh Pabari has denied his relationship/connection with Mr. Narendra Ganatra and in this regard has relied upon the Hon’ble SAT order dated July 29, 2011 in the matter of Narendra Ganatra v. SEBI. I note that vide his letter to SEBI dated July 13, 2012, Mr. Bhavesh Pabari has admitted that Mr. Narendra Ganatra is his friend. A copy of the said letter was also furnished to Mr. Bhavesh Pabari during the instant proceedings. However, the said letter or its contents have not been disputed by Mr. Bhavesh Pabari. I, therefore, reject the contention of Mr. Bhavesh Pabari regarding his relationship with Mr. Narendra Ganatra.

12. Mr. Bhavesh Pabari and Mr. Hemant Madhusudan Seth have contended that though they were directors in Rajnandi Yarns Private Limited, the decision regarding investment of Rajnandi Yarns Private Limited was taken in company board meeting and not at an individual level. In this regard I note that several off market transactions have been entered into between the noticees and Rajnandi Yarns Private Limited the details of which are as under:

Date Client Name Counterparty Client Name No. of Shares 15/02/2010 Kishor Balubhai Chauhan Raj Nandi Yarns Private Limited 24500 30/04/2010 Ankit R Sanchaniya Raj Nandi Yarns Private Limited 3000 30/04/2010 Prem Mohanlal Parikh Raj Nandi Yarns Private Limited 3000 Raj Nandi Yarns Private 30/04/2010 Limited Ankit R Sanchaniya 3000 Raj Nandi Yarns Private 30/04/2010 Limited Prem Mohanlal Parikh 3000 13. Such transactions clearly depict that Rajnandi Yarns Private Limited first bought shares from Mr. Prem Mohanlal Parikh and Mr. Ankit Sanchaniya and on the same day sold those shares back to them. Further, it is noted from the KYC of Mr. Bhavesh Pabari that he and Mr. Ankit Sanchaniya are cousins. Mr. Hemant Madhusudan Seth and Mr. Prem Mohanlal Parikh have fund movements as well as off market securities movement. Therefore, it is too much of a coincidence to assume that the Mr. Bhavesh Pabari and Mr. Hemant Madhusudan Seth had no role in the investment of Rajnandi Yarns Private Limited. 14. Ms. Mala Hemant Seth has admitted to fund transactions with Mr. Prem Mohanlal Parikh. Ms. Mala Hemant Seth has further contended that while it is true that she is the wife of Mr. Hemant Madhusudan Seth, she denies having any business/professional connection with him and submits that she is living an independent life and is taking her own independent decisions.

I note that Ms. Mala Hemant Seth also has fund market movements and off market transactions with Mr. Bhavesh Pabari and Mr. Prem Mohanlal Parikh. Vide her letter dated July 8, 2012, Ms. Mala Hemant Seth has admitted that the transactions in the securities market in her name were handled by her husband Mr. Hemant Madhusudan Seth. A copy of the said letter has been provided to Ms. Mala Hemant Seth. The said letter has not been disputed by Ms. Mala Hemant Seth. I, therefore, do not find any merit in the contention of Ms. Mala Hemant Seth regarding her business/professional connection with her husband Mr. Hemant Madhusudan Seth. 15. With respect to the submissions made by Mr. Bhupesh Rathod, I note that to introduce a client to a stock broker is a role of utmost responsibility in which the introducer claims that the person being introduced will trade responsibly. I do not agree that Mr. Bhupesh Rathod would have introduced Mr. Bhavesh Pabari, Mr. Kishore Chauhan, Mr. Prem Mohanlal Parikh and Mr. Hemant Madhusudan Seth without any existing relationship between them. I also note from the trading of Mr. Bhupesh Rathod that he entered into 59 trades, out of which 14 trades were above the Last Traded Price and the trades at Last Traded Price were 44. In view of these facts and circumstances, I reject the contention of Mr. Bhupesh Rathod that his trades were genuine and bona fide.

16. I note that the details of the relationship amongst the noticees, their trade logs and their off market transactions have been sufficiently proved and were also furnished to the noticees along with the SCN. Such relations and transactions have not been disputed. Considering the factors as described in the SCN, I note that the noticees are apparently related/connected to each other on the basis of relationship, common addresses, e-mails, telephone numbers, fund transfer, etc. However, some of the noticees have disputed those factors/basis of connections/relation amongst them. In this regard, I note that the Hon'ble SAT has, in many cases such as Classic Credit Ltd. vs. SEBI (SAT Appeal no. 68/2003, Order dated December 8, 2006), Classic Credit Ltd. vs. SEBI (SAT Appeal no. 76/ 2003, Order dated January 9, 2007) and Veronica Financial Services Ltd. vs. SEBI (SAT Order dated August 24, 2012), held that connection/relations can be established on the basis of such factors. In view of these facts and circumstances, the noticees are connected to each other as described in the SCN. 17. Placing of the sell orders with same counterparties for same quantity of shares at the same price within nil or too negligible time difference repeatedly over a period of time are clear indication that those trades of the noticees were synchronised/structured.

In this regard, the following observations of the Hon’ble SAT in its order dated July 14, 2006 in the matter of Ketan Parekh vs. Securities and Exchange Board of India, is worth mentioning: “.......... A synchronised transaction will, however, be illegal or violative of the Regulations if it is executed with a view to manipulate the market or if it results in circular trading or is dubious in nature and is executed with a view to avoid regulatory detection or does not involve change of beneficial ownership or is executed to create false volumes resulting in upsetting the market equilibrium. Any transaction executed with the intention to defeat the market mechanism whether negotiated or not would be illegal. Whether a transaction has been executed with the intention to manipulate the market or defeat its mechanism will depend upon the intention of the parties which could be inferred from the attending circumstances because direct evidence in such cases may not be available. The nature of the transaction executed, the frequency with which such transactions are undertaken, the value of the transactions, whether they involve circular trading and whether there is real change of beneficial ownership, the conditions then prevailing in the market are some of the factors which go to show the intention of the parties.

This list of factors, in the very nature of things, cannot be exhaustive. Any one factor may or may not be decisive and it is from the cumulative effect of these that an inference will have to be drawn.” 18. In this case, I note that several synchronized transactions amongst these noticees were in the nature of self–trade wherein one or the other noticee was on either side of the transaction. These self-trades clearly did not involve change in beneficial ownership of traded shares and were, therefore, illegal. It is relevant to mention that with regard to the nature and effect of self-trades the Hon’ble SAT, in the matter of M/s. Jayantilal Khandwala & Sons Pvt. Ltd. vs. SEBI (Appeal no. 24 of 2011 decided on June 8, 2011), has held that : “one cannot buy and sell shares from himself. Such transactions are obviously fictitious and meant only to create false volumes on the trading screen of the exchange.” 19. In light of the above, I note that the noticees are in fact related to each and have connived amongst themselves for execution of synchronized and self trades, creation of artificial volume and price manipulation which not only distorted market equilibrium but was also found to be fraudulent in nature, and have therefore violated the provisions of regulations 3 (a), (b), (c), (d), 4(1), 4(2) (a), (b), (e) and (g) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003. 20. I note that the noticees have contended that based on the same set of facts and transactions as in the instant case monetary penalties were imposed against the noticees by the adjudicating officer vide his separate orders and the noticees have challenged the said orders before the Hon’ble SAT.

However, I am satisfied that the contraventions as found in this case are grave and have the potential to disturb the market integrity and disturb the fair, equitable and efficient functioning of the securities market. In the instant case, the proceedings under sections 11 and 11B of the SEBI Act have been initiated against the noticees in addition to the adjudication proceedings against them as the charges against the entities are grave and have larger implications on the safety and integrity of the securities market. In my view, for the serious contraventions as found in the instant case, monetary penalty alone would not be sufficient to safeguard the market integrity. In this regard, the following observations of the Hon’ble SAT in the order dated December 02, 2010, in the matter of Appeal no. 70 of 2010 – Yashraj Containeurs Ltd. vs SEBI are worth mentioning:

“.... we cannot resist observing that in view of the serious allegations made against the appellants which stand established during the course of the adjudication proceedings, the Securities and Exchange Board of India (for short the Board) should not have been content with initiating only adjudication proceedings against the appellants in which only a monetary penalty could be levied. This is a fit case where the Board should have considered initiating proceedings under Sections 11 and 11B of the Securities and Exchange Board of India Act, 1992 for issuing appropriate directions against the appellants to protect the integrity of the market and the interests of the investors............................................................ This is, indeed a very serious market illegality/irregularity and, in our view, imposing a monetary penalty alone on the company and its promoters will not meet the ends of justice. We are constrained to make these observations because the lenient view taken by the Board does not, in our opinion, protect the integrity of the market and not even the interest of the investors which is its primary duty.

This kind of a lenient view will not be a deterrent for others and would send a wrong signal that the delinquent could continue with their nefarious activities by paying a monetary penalty.” 21. I note that vide the interim order dated February 02, 2011 SEBI had restrained, inter alia, the noticees herein from accessing the securities market and further prohibited them from buying, selling or dealing in securities in any manner whatsoever, till further directions. The directions in the interim order qua these noticees is still in force. I also note from the material on record that Mr. Kishore Chauhan has passed away on May 29, 2013 and, therefore, the proceeding against him is abated and the SCN dated November 13, 2014 as against him is disposed off accordingly. 22. Considering the above, I, in order to protect the interest of investors and the integrity of the securities market, in exercise of the powers conferred upon me under section 19 of the Securities and Exchange Board of India Act, 1992 read with sections 11 and 11B thereof and regulation 11 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 hereby restrain the following entities from accessing the securities market and further prohibit them from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for the period as mentioned in the following table:

Sl. No. Name of the Noticees PAN Period 1. Mr. Bhavesh Pabari AKGPP8679N 5 Years 2. Mr. Bipin Jayant Thaker ABYPT4984H 5 Years 3. Mr. Prem Mohanlal Parikh ALHPP3489N 5 Years 4. Mr. Hemant Madhusudan Seth ANOPS8607E 5 Years 5. Ms. Mala Hemant Seth AZXPS0694J 5 Years

6. Mr. Ankit Sanchaniya BLNPS3316L 5 Years 7. Mr. Bhupesh Rathod AACPR3785K 5 Years 8. Mr. Bipinkumar Gandhi AJHPG6989J 5 Years 9. Mr. Bharat Shantilal Thakkar AAZPT9542R 5 Years

23. The period of prohibition already undergone by the noticees pursuant to the interim order dated February 02, 2011, shall be taken into account for the purpose of computing the period of prohibition imposed in this order. The SCNs issued to the noticees are disposed of accordingly. 24. A copy of this order shall be served on all recognized stock exchanges and depositories to ensure that the direction given in the above para are complied with. 25. This order shall come into force with immediate effect.

Sd/-

DATE: MAY 13th, 2015 RAJEEV KUMAR AGARWAL PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA