Order in the matter of dealings in the shares of Polytex India Ltd., KGN Enterprises Ltd. and Gemstone Investments Ltd.

WTM/RKA/ISD/02/2014

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA ORDER Under sections 11(1), 11(4) and 11B of the Securities And Exchange Board of India Act, 1992 in the matter of dealings in the shares of Polytex India Ltd., KGN Enterprises Ltd. and Gemstone Investments Ltd. In respect of (1) Mr. Jigar Praful Ghoghari (PAN – ASFPG8598L), (2) Mr. Kiran Bhiku Bhanaes (PAN – AQUPB0853G), (3) Mr. Jinal Apurval Rawal (PAN – ATHPR5041C), (4) Mr. Janak Chimanlal Dave (PAN – AEPPD9110D), (5) Mr. Dilipkumar Pukhraj Jain (PAN – AACPJ5643C), (6) Mr. Bhupesh Harischandra Rathod (PAN – AACPR3785K), (7) Mr. Kishan Balaram Shigvan (PAN – BAWPS1264D), (8) Mr. Kiran Madhusudan Sheth (PAN – ALJPS1874Q), (9) M/s Shree Shagun Financial Services (PAN – ABTFS0353F), (10) M/s Oliwonders Financial Services Pvt. Ltd. (PAN – AABCO2030J) and (11) M/s Neevan Capital Markets Private Ltd. (PAN- AACCN7650G) Appearances: For Jigar Praful Ghoghari : Shri Bhaskar B. Upadhaya, Company Secretary For Shri Bhupesh H Rathore: 1. Shri Dhrumil Shah, Company secretary, and 2. Kiran M sheth For SEBI: 1. Mr. Santosh Shukla, Joint Legal Adviser 2. Mr. K. Saravanan, Deputy General Manager 3. Mr. Durgesh Thakur, Asst.

Legal Adviser, and 4. Mr. Raj Kumar Das, Asst. General Manager 1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’), undertook preliminary examination in the trading of scrips of Polytex India Ltd (PIL), KGN Enterprises Ltd (KGN) and Gemstone Investments Ltd (Gemstone). Pursuant to the same, vide its ad interim ex-parte order dated May 10, 2013 (interim order), SEBI restrained Mr. Jigar Praful Ghoghari, Mr. Kiran Bhiku Bhanaes, Mr. Jinal Apurval Rawal, Mr. Janak Chimanlal Dave, Mr. Dilipkumar Pukhraj Jain, Mr. Bhupesh Harischandra Rathod, Mr. Kishan Balaram Shigvan, Mr. Kiran Madhusudan Sheth (hereinafter collectively referred to as "Jigar Group"), M/s Shree Shagun Financial Services (SSFS), M/s Oliwonders Financial Services Pvt. Ltd. (OFSPL) and M/s Neevan Capital Markets Private Limited (NCMPL) {hereinafter collectively referred to as the "noticees"} from accessing the securities market and further prohibited them from buying, selling or dealing in securities in any manner whatsoever, till further directions. The interim order gave opportunity to the noticees to file their objection, if any, within twenty one days from the date thereof.

2. Except OFSPL, none of the noticees submitted their replies pursuant to the interim order. Accordingly, an opportunity of personal hearing was also granted to the noticees on August 27, 2013, which also they did not avail. Considering the facts and circumstances of the case, another opportunity of personal hearing was granted to the noticees on November 19, 2013, when authorized representatives of Shri Jigar P. Ghoghari, Shri Bhupesh H. Rathore and Kiran M. Sheth, appeared and requested for 'trade and order log' and 'best buy and sell' details relied upon in the matter, which was provided to them vide SEBI's letters dated November 26, 2013. The authorized representatives also requested 20 days time to file replies of these noticees in the matter. However, SEBI has not received their reply, till date. The other noticees did not avail this opportunity of personal hearing too. Keeping the facts of the case in consideration and also in the interest of principles of natural justice, a last opportunity of personal hearing was granted to the noticees on December 18, 2013 which again the noticees failed to avail.

However, NCMPL and SSFS vide their letters received on December 12, 2013 and December 13, 2013, respectively submitted their reply on the lines of reply of OFSPL submitted by it vide it's letter dated June 20, 2013 pursuant to the interim order. 3. I note that apart from NCMPL, OFSPL and SSFS, all other noticess have failed to file any reply or make any oral submissions in the matter. I am of the opinion that sufficient opportunities for filing reply in the matter and for personal hearing have been granted to the noticees in this case. I, therefore, proceed in the matter on the basis of material available on record. 4. The limited issue for consideration at this stage is, whether, based on the material available on record, the directions issued by vide interim order need to be continued, revoked or modified in any manner. I have carefully considered the allegations in the interim order against the noticees and replies of NCMPL, OFSPL and SSFC.

5. I note that the interim order has been passed on the basis of prima facie finding that the entities of Jigar Group by their trading created artificial demand which led to artificial rise in the price of the scrip of PIL, Gemstone and KGN. I also note that the entities of Jigar Group received funds from NCMPL, OFSPL and SSFS in the manner as described in interim order. NCMPL, OFSPL and SSFS are prima facie connected / related to Pabari- Parikh Group, who have been debarred from buying, selling or dealing in securities vide SEBI order dated February 02, 2011. These funds were in turn transferred on the date of receipt itself to the respective stock brokers of Jigar Group for the purpose of meeting pay-in obligations with regard to the trading of the entities of Jigar Group in the scrips of PIL, Gemstone and KGN. Further, the funds received from the stock brokers of Jigar Group were transferred to the entities of Jigar Group, who in turn transferred funds, in part, to NCMPL, OFSPL and SSFS. As per the interim order such fund transfers, besides being a factor to prima facie conclude connection/relation between Jigar Group and NCMPL, OFSPL and SSFS, also indicate that they were acting in concert with each other having prior understanding under a premeditated plan/device or artifice to create artificial volume in the respective scrips and manipulate their prices. It has been prima facie found in the interim order that connected / related entities of Jigar Group had acted as conduit / front of Pabari – Parikh Group.

6. I note that in their replies NCMPL, OFSPL and SSFL have not disputed the fund transfers and charges as alleged in the interim order and have submitted that they have not traded in the said scrips and they do not even have trading account with any stock brokers till date. I note that the direction against them have been issued by the interim order for the reason that they are prima facie connected / related to Pabari- Parikh Group, who have been restrained from buying, selling or dealing in securities and from vide SEBI order dated February 02, 2011 and they have funded the trading of Jigar Group. It is trite to mention that trading account is not required for transferring funds as found in this case and undisputed by the noticees. I, therefore, do not find any basis in these arguments of NCMPL, OFSPL and SSFL.

7. It is undisputed fact that the liquidity in the scrips of PIL Gemstone and KGN had increased substantially only after the entities of Jigar Group started trading in those scrips. I note that the price of scrips of PIL, Gemstone and KGN has moved from ₹ 136.5 to ₹ 252 (87%), ₹ 9 to ₹ 19.7 (122%) and ₹ 186.55 to ₹ 807.45 (333%), respectively during the examination periods. Further, during the examination period, the traded volume in the scrip of PIL, Gemstone and KGN had increased drastically. It has been prima facie found that the trading behaviour of entities of Jigar Group that was acting as a conduit / front of Pabari Parikh Group suggest their malafide motive to create artificial demand which led to artificial rise in the price of these scrips. The acts and omission of the noticees in this case has been prima facie found to be fraudulent and in contravention of the provisions of regulations 3(a), (b), (c) and (d) and 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 and section 12A(a), (b) and (c) of the SEBI Act. 8. I find that the allegations and charges in the interim order remain undisputed and unchallenged by the noticees and they have not been able to make any plausible defence. I, therefore, find that the noticees have not been able to make out a case for revocation or modification of the interim order. I further note that investigation in the matter is going on. I, therefore, am of the considered view that no intervention is called for, at this stage, in either vacating or modifying the directions contained in the interim order. 9. I, therefore, 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(1), 11(4) and 11B thereof, hereby confirm the directions issued vide the interim order dated May 10, 2013 against the following entities.

Sr. No Name of entity Permanent Account Number 1 Jigar Praful Ghoghari ASFPG8598L 2 Kiran Bhiku Bhanaes AQUPB0853G 3 Jinal Apurva Rawal ATHPR5041C 4 Janak Chimanlal Dave AEPPD9110D 5 Dilipkumar Pukhraj Jain AACPJ5643C 6 Bhupesh Harishchandra Rathod AACPR3785K 7 Kishan Balaram Shigvan BAWPS1264D 8 Kiran Madhusudan Sheth ALJPS1874Q 9 Shree Shagun Finanacial Services ABTFS0353F 10 Oliwonders Financial Services Pvt. Ltd AABCO2030J 11 Neevan Capial Markets Private Limited AACCN7650G

10. The directions issued vide para 30 of the interim order dated May 10, 2013 shall remain in force till further directions. 11. A copy of this order shall be served on all recognized stock exchanges and depositories to ensure compliance with above directions.

DATE: January 07th, 2014 RAJEEV KUMAR AGARWAL PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA