Order in the matter of Jay Energy and S. Energies Ltd.

Under Sections 11 and 11B of the Securities and Exchange Board of India Act, 1992 and Regulation 44 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 read with Regulation 32 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

In respect of: Noticee no. Name of the Noticee PAN 1. Mr. Amish Rameshbhai Desai AICPD5628H 2. Mr. Bhrugesh Pankaj Mehta APCPM5911M 3. Mr. Bhupendra M. Soni Not Available 4. Mr. Bhupesh Kashinath Mehta Not Available 5. Ms. Garishma Girish Jansari AGYPJ9834B 6. Mr. Girish Somabhai Jansari ABFPJ6283L 7. Ms. Palak Premal Trivedi AIVPT4786B 8. Ms. Pinal Rajeshbhai Mehta AITPM2959F 9. Mr. Premal Yogendra Trivedi ABRPT3117B 10. Mr. Rajesh Rajnikant Mehta ADAPM1822B 11. Ms. Rinku Saurin Kavi ALHPK1163C 12. Mr. Sawan Ajit Joshi ADYPJ8991L 13. Mr. Shirish Rameshbhai Desai AICPD5629G 14. Mr. Shiv Navinchandra Raval AMDPR3856J The aforesaid entities are hereinafter referred to individually, by their respective names/ Noticee numbers and collectively as “the Noticees”.

In the matter of Jay Energy and S. Energies Ltd 1. The present proceedings have emanated from a show cause notice dated September 28, 2015 (hereinafter referred to as “SCN”) issued by Securities and Exchange board of India (hereinafter referred to as “SEBI”) to the 14 Noticees alleging that the Noticees had violated Regulation 10 of the SEBI (Substantial

Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as the “SAST Regulations, 1997”) by acquiring shares in excess of 15% of the share capital of Jay Energy and S. Energies Limited (hereinafter referred to as “the Target Company”) without making a public announcement for open offer as stipulated under the said regulations. In the SCN, the Noticees had been called upon to show cause as to why suitable directions under Sections 11 and 11B of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act, 1992”) and Regulation 44(f) and 44(i) of the SAST Regulations, 1997 read with corresponding provisions of Regulation 32 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (hereinafter referred to as “SAST Regulations, 2011”) should not be issued against them for the aforesaid alleged violations.

2. The facts of the case, as narrated in the SCN, are as follows:

2.1. The Target Company is having its registered office at 9 GF, Payal Flats, Behind National Handloom, Near Law Garden, Ahmedabad- 380 006 and its securities are listed on the Bombay Stock Exchange Ltd. (BSE). The trading in shares of the Target Company was suspended on BSE from November 30, 2007 due to non compliance of the listing agreement. The suspension was revoked on September 29, 2010 by BSE.

2.2. SEBI conducted an investigation into the dealings in the scrip of the Target Company for the period September 29, 2010 to January 5, 2011 (''investigation period''). Wherever necessary, reference has been made to the period outside the investigation period. During the investigation period, the scrip price moved from Rs. 48.00 (open price as on September 29, 2010) to Rs. 203.45 (High price as on January 05, 2011) with an average volumes of 19345 shares. 2.3. During the investigating period, the directors of the Target Company and the share holding pattern in the Target Company were as follows:

Directors of the Company

Name Designation SaurinKavi Chairman & MD Mukesh K Shah Director Jimit D Sanghvi Director Rajesh C Sutaria Director Mihirbhai S Parikh Director

Shareholding Pattern

Particular Quarter ended June Quarter ended Sep 2010 Quarter ended Dec 2010 2010 No. of No. of No. of No. Of No. Of No. Of share % share % share % shares shares shares holders Holders holders Promoter 15 2250000 33.10 16 2250000 33.10 16 2250000 33.10 Holding Non 1087 4547700 66.90 1087 4547700 66.90 1212 4547700 66.90 Promoter HTootladli ng 1102 6797700 100.00 1103 6797700 100.00 1228 6797700 100.00 share capital 2.4. As per shareholding pattern for June 2010 quarter, as disclosed to the BSE, 15 promoters were holding 33.10% shares of the Target Company. Out of these 15 promoters, 11 promoters (namely, Chandravadan Shah, Hasmukhbhai Soni, Sohanlal Shah, Mahendra M Patel, Mathur Patel, Nileshbhai Patel, Purushottam Hanselwal, Rajesh Bhai Shah, Rajubhai Purohit, Rakesh Bhai Patel and Satishbhai Patel)together were holding 15.23% shares of the Target Company during June 2010 quarter.

2.5. Subsequently, as per shareholding pattern of the Target Company, as disclosed to BSE, for the September 2010 quarter, 14 new promoters namely, Amish Rameshbhai Desai, Bhrugesh Pankaj Mehta, Bhupendra M Soni, Bhupesh

Kashinath Mehta, Garishma Girish Jansari, Girish Somabhai Jansari, Palak Premal Trivedi, Pinal Rajeshbahi Mehta, Premal Yogendra Trivedi, Rajesh Rajnikant Mehta, Rinku Saurin Kavi, Sawan Ajit Joshi, Shirish Rameshbhai Desai and Shiv Navinchandra Raval (the Noticees herein) together acquired 15.23%, shares of the Target Company from these aforesaid 11 promoters as detailed in Table 1 and 2 below: Table -1 Sr No Jun-10 Sep 2010 –Dec 2010 No. of No. of Name of the Shares % Name of the Shares % Shareholder held holding Shareholder held holdings 1 Chandravadan 84,200 1.24 Amish Rameshbhai 100,000 1.47 Shah Desai 2 Hasmukhbhai Soni 100,000 1.47 Bhrugesh Pakaj 50,000 0.74 Mehta 3 Sohanlal Shah 149,000 2.19 Bhupendra M Soni 25,100 0.37 4 Jyotinder N Kavi 258,185 3.8 Bhupesh Kashinath 55,100 0.81 Mehta 5 Mahendra M Patel 100,000 1.47 Garishma Girish 13,115 0.19 Jansari 6 Mathur Patel 25,100 0.37 Girish Somabhai 91,900 1.35 Jansari 7 Nileshbhai Patel 13,115 0.19 Palak Premal 130,000 1.91 Trivedi 8 Purushottam 91,900 1.35 Pinal Rajeshbahi 50,000 0.74 Hanselwal Mehta 9 Rahoo N Kavi 127,400 1.87 Premal Yogendra 150,000 2.21 Trivedi 10 Rajesh Bhai Shah 280,000 4.12 Rajesh Rajnikant 100,000 1.47 Mehta 11 Rajubhai Purohit 36,500 0.54 Rinku Saurin Kavi 84,200 1.24 12 Rakesh Bhai Patel 55,100 0.81 Sawan Ajit Joshi 100,000 1.47 13 Satishbhai Patel 100,000 1.47 Shirish 49,000 0.72 Rameshbhai Desai

14 Saurin J Kavi 379,500 5.58 Shiv Navinchandra 36,500 0.54 Raval 15 Jayesh N Kavi 450,000 6.62 Jayesh N Kavi 200,000 2.94 16 Saurin J Kavi 1,015,085 14.93 Total 22,50,000 33.10 22,50,000 33.10

Table -2

Sr Sr No. Jun-10 No. Sep 2010 -Jun 2011 No. of % No. of Name of the Shares holdi Name of the Shares % Shareholder held ngs Shareholder held holdings 1 Jyotinder N Kavi 258,185 3.8 1 Jayesh N Kavi 2,00,00 2.94 0 2 Rahoo N Kavi 127,400 1.87 2 Saurin J Kavi 10,15,0 14.93 85 3 Saurin J Kavi 379,500 5.58 4 Jayesh N Kavi 450,000 6.62 Total of Above 12,15,0 17.87 Total of Above 12,15,0 17.87 Entities 85 Entities 85 5 Others (11 10,34,9 15.23 3 Others(14 new 10,34,9 15.23 Promoters) 15 Promoters-the 15 Noticees) Total 22,50,0 33.10 22,50,0 33.10 00 00

2.6. It is observed from the disclosures made by Shri Saurin J Kavi and the Target Company to BSE that Shri Saurin J Kavi acquired 14.93% shares of the Target Company in the September 2010 quarter, as per following details:

Table-3 Details of Transfer of Shares During September 2010 Quarter between certain Promoters

Sr Name Name Date of Mode ofN o of N o of No of No Of of Transfer Transfer shares Shares of Shares Acquire Seller Transferre acquirer acquirer r d (% of (% to share (% to share share capital) capital) capital) before After transfer transfer 1 Saurin J Not 26.07.20 Trans 385585 379,500 765085 Kavi Mentio 10 missio (5.67%) (5.58%) (11.25%) ned n 2 Saurin J Jayesh 30.07.20 Inter- 2,50,000 765085 10,15,085 Kavi Kavi 10 se (3.68%) (11.25%) (14.93%)

2.7. It is observed from the disclosures madeby aforesaid 11 promoters for the quarter ending June 30, 2010 on BSE, shareholding pattern of the Target Company for the quarter ending September 30, 2010, replies of Target Company's earlier Registrar and Transfer Agent, PurvaSharegistry (I) Pvt. Ltd. (hereinafter referred to as ''Purva''), NSDL and CDSL that 10,34,915 (15.23%) shares of the Target Company were transferred to the Noticees as per following details in Table 4 below: Table 4

Details of off-market Transfer of Shares During September 2010 by exiting promoters

Sr Name of Sellers Date of Mode of Transfer No of shares No Transfer Transferred(% of share capital) 1 Chandravadan Shah, 1.9.2010 Off -Market 10,34,915 (15.23%) Hasmukhbhai Soni, (Physical Shares Sohanlal Shah, transfer processed Mahendra M Patel, in house by the Company)

Mathur Patel, Nileshbhai Patel, Purushottam Hanselwal, Rajesh Bhai Shah, Rajubhai Purohit, Rakesh Bhai Patel and Satishbhai Patel

2.8. Summons dated March 13, 2015 and a reminder letter dated March 18, 2015 were sent to the Target Company seeking details of transfers of shares during September 2010 quarter. It is observed that the Target Company has not furnished the complete details sought by aforesaid letter and summons. Further, there was no open offer made during FY 2010-11 in the Target Company. It is observed that there was no change in promoter holding and promoter group composition, in the Target Company, between September 2010 and December 2010 quarter.

2.9. Letter dated November 11, 2014, summons dated January 13, 2015 and reminder letter dated January 22, 2015 were sent to the Noticees seeking information/details/documents in respect of aforesaid change in shareholding pattern. In reply to summons dated January 13, 2015 and a subsequent reminder letter dated January 22, 2015, Ms. GarishmaJansari and Shri GirishJansari, vide their letter dated March 11, 2015 have inter-alia replied that they have not acquired any shares in the Target Company in acting in concert with any other person. These entities have also stated that their name seems to have been included inadvertently, mistakably and through oversight without any intention to acquire shares or voting rights or control in excess of 15% shares.

2.10. Since the above entities were part of promoter group from quarter of September 2010 till quarter of September 2011, it is alleged that aforesaid two entities alongwith other Noticees acting as PAC have acquired in excess of 15% shares of the Target Company.

2.11. In response to summons dated January 13, 2015 and subsequent reminder letter dated January 22, 2015, Ms. Rinku Kavi vide an undated letter received by SEBI on March 17, 2015 had replied that her acquisition of 84,200 shares of the Company are covered under Regulation 3(1)(e) iii(b) of SEBI(SAST) Regulation 1997 as she is wife of Shri Saurin J Kavi. Further, on behalf of Ms. Rinku Kavi, the soft copy of the aforesaid undated letter was also received from her husband, Shri Saurin J Kavi vide his email dated March 13, 2015. However, it is observed that she has not explicitly stated from whom she has purchased those shares. Subsequently, an email dated March 19, 2015 regarding the seller of aforesaid shares was sent to Shri Saurin J Kavi but no reply has been received from him in this regard.

2.12. Further, it is observed from the disclosures made by Shri Saurin J Kavi as stated in Table 3 above that he had only received shares during September 2010 quarter through inter-se transfer and transmission mode and hence, it is observed that Shri Saurin J Kavi has not transferred any shares to Ms. Rinku Kavi. In view of the above and based on available information, it is alleged that the acquisition of above said shares by Ms. Rinku Kavi is not covered under 3(1)(e) iii(b) of SAST Regulations, 1997, as claimed by her. The non-cooperation from Ms. Rinku Kavi/Shri Saurin J Kavi has hampered the fact finding process during the investigation.

2.13. From the disclosures made by aforesaid 11 promoters on the BSE, It is observed that their shares were sold to the Noticees in an off-market transaction on September 1, 2010. Further, it was seen from off-market data provided by NSDL and CDSL vide email dated September 30, 2014 that there were no off-market transfers of shares on NSDL or CDSL between January 1, 2010-September 27, 2010 in respect of aforesaid 11 promoters. To ascertain the date of acquisition of shares by the Noticees from the aforesaid 11 promoters, an email query dated January 20, 2015 was sent to Purva. In response to the aforesaid query, Purva has vide its email dated January 20, 2015 stated that it had processed demat requests post September 3, 2010 on receipt of data from the Target Company and until then, the Target Company had processed requests in-house without intimation to them.

2.14. Since depositories' (NSDL and CDSL) data do not contain off-market sale of aforesaid 11 promoters to the Noticees on September 1, 2010, it is alleged that the shares were in physical form and transfer for such shares were processed in-house by the Target Company. SEBI vide its letter dated March 13, 2015 and a reminder letter dated March 18, 2015 had sought information about all these transfers done by promoters during June 2010-September 2010 from the Target Company but no response has been received in this regard from it. This has hampered the fact finding process about the exact date of acquisition of shares by the Noticees from aforesaid 11 promoters.

2.15. Therefore, based on available information from disclosures on BSE by the aforesaid 11 promoters about transfer of shares on September 1, 2010 and shareholding statement of September-2010 quarter reflecting the Noticees' holding collectively at 15.23%, the date of acquisition of shares by the Noticees has been taken as September 1, 2010.

2.16. Being part of promoter group, the Noticees were persons acting in concert and hence were required to make public announcement to acquire shares of the Target Company in accordance with regulation 10 of SAST Regulations, 1997. Therefore, it is alleged that the Noticees, who acquired combined shareholding of 15.23% as on September 1, 2010, being persons acting in concert, failed to make public announcement in accordance with Regulation 10 of SAST Regulations, 1997.

3. In view of the above, SCN as referred to in para 1 above was issued to the Noticees calling upon them to show cause as to why suitable directions under Sections 11 and 11B of the SEBI Act, 1992 and Regulation 44(f) and 44(i) of SAST Regulations, 1997 read with the corresponding provisions of SAST Regulations, 2011 should not be issued against them for the aforesaid alleged violations.

Replies and Personal Hearing:

4. Since no reply was received form the Noticees, a personal hearing was granted to the Noticees on February 26, 2018. Meanwhile, the SCNs issued to the Noticees returned undelivered and the Western Regional Office of SEBI at Ahmedabad was requested to effect delivery of the SCNs. The Western Regional Office of SEBI effected service of the SCN through affixture at the last known address for all Noticees except Bhupendra M. Soni (Noticee no. 3) and Bhupesh Kashinath Mehta (Noticee no. 4). Thereafter an opportunity of hearing was granted on December 18, 2018 to all the Noticees, however due to some internal official exigencies the hearing notices were not issued. In view of the same, another opportunity of hearing was granted to all the Noticees on July 9, 2019. However, before the hearing could take place the matter was transferred internally and assigned to the undersigned Whole Time Member of SEBI on October 31, 2019 and a fresh date of hearing was granted on November 26, 2019. In response to the hearing notice for the said hearing date, the Noticee nos. 5 and 6, i.e. Ms. Garishma Girish Jansari and Mr. Girish Somabhai Jansari, vide their emails dated November 14, 2019, sought adjournment of hearing.

5. On the hearing dated November 26, 2019 the Authorizer Representative (hereinafter referred to as “AR”) appeared on behalf of Noticee nos. 1, 2, 3, 7, 8, 9, 10, 12, 13 and 14 and made submissions.

6. Vide separate letters all dated December 16, 2019, the Noticee nos. 1, 2, 3, 7, 8, 9, 10, 12, 13 and 14 have submitted their replies to the SCN on similar lines. The main submissions of these Noticees are as follows:

i. These Noticees were unemployed or had no regular income or were into jobs with low salaries. Ms. Palak Premal Trivedi and Mr. Premal Yogendra Trivedi are teachers. ii. They did not acquire any shares of the Target Company in the quarter September 2010 to December 2010 from the erstwhile promoters of the Target Company whose names had been mentioned in the SCN. iii. They did not know the old promoters of the Target Company and they did not execute any share purchase agreement or MoU and that they did not make any payment of consideration nor did they receive any shares of the Target Company in their name. iv. Mr. Saurin J. Kavi who was the Chairman and Managing Director of the Target Company had misused their names and without their consent shown these transfers of shares on paper through off-market route in physical shares to their names. All these Noticees are relatives of Mr. Saurin J. Kavi. v. They did not sign any papers or transfer form nor did they receive physical shares in their names. They were not aware of any transactions in their names and have not received any benefit in their name. vi. All activities/ dealing/ signatures wherever appearing were by means of forged documentation. vii. They cannot be a promoter group entity not a promoter nor a person acting in concert since they had never bought any shares of the Target Company. No document or transfer deed had been provided to them by SEBI along with their sign to show their consent to acquisition of shares. An entity does not become a promoter of a company merely because the company in its disclosure has submitted the same. viii. No statement of the old promoters have been recorded by SEBI to corroborate the transfer of shares from them to the Noticees. ix. The Target Company affected transfers in house by off market mode and reported such disclosures to BSE therefore, they the Noticees were kept completely in the dark about such transfers.

x. After receipt of correspondence/ summons from SEBI the Noticees approached Mr. Saurin J. Kavi then he admitted his wrongdoing and accepted full responsibility and confirmed that he will appear before that Adjudicating Officer. All these facts are recorded in the minutes of the proceedings before the Adjudicating Officer. xi. None of these Noticees had any financial means to purchase the shares. Even now they are not in a position to pay any monetary penalty. xii. The Noticees denied that they were acquirers of shares of the Target Company or the promoter group entity or a person acting in concert therefore they also denied that they were required to make a public announcement or that they had violated provisions of Regulation 10 of SAST Regulations, 1997. xiii. The Noticees had filed an appeal (No.112 of 2018) along with others before the Hon’ble Securities Appellate Tribunal (hereinafter referred to as “Hon’ble SAT”) challenging the order of the Adjudicating Officer of SEBI dated March 31, 2018 in terms of which monetary penalties were imposed on the Noticees and the Hon’ble SAT vide its order dated September 04, 2019 had set aside the order and remanded the matter back for reconsideration. During the course of the adjudication proceedings Mr Saurin J. Kavi appeared before the Adjudicating Officer and admitted before him and owned up responsibility that he was the kingpin and misused the names of family members including the Noticees, forged the signatures carried out by falsification and by wrongful activities committed foul play on them. Mr Saurin J. Kavi passed away on December 06, 2017.

7. Considering the request for adjournment received from Noticee nos. 5 and 6 and the fact that the notices had been undelivered to Noticee no.4, another opportunity of hearing was granted to Noticee nos. 4, 5 and 6 on January 13, 2020. The hearing notice to Noticee no. 4 was delivered through publication in newspapers namely Times of India and Sandesh, Ahmedabad dated December 30, 2019 and the hearing notices to Noticee nos. 5 and 6 were delivered via email. However, on the date of hearing these three Noticees did not appear and no request for adjournment was received from these Noticees.

8. Subsequently, there was an outbreak of COVID-19 and consequential lock down was imposed. Accordingly, the SCN issued against the Noticees herein after giving an opportunity of personal hearing and filing of written submissions following the principles of natural justice, is being dealt with in the present order.

Consideration of submissions and findings:

9. I have considered the allegations made against the Noticees in the SCN, replies submitted by Noticee nos. 1, 2, 3, 7, 8, 9,10,12,13 and 14, the submissions made by the AR of these Noticees during the personal hearing and other material available on record.

10. At the outset, it would be relevant to refer to the provisions of law mentioned in the SCN which the Noticees have been alleged to have violated:

Relevant extracts of the provisions of SAST Regulations, 1997:

“Definitions. 2. (1) In these Regulations, unless the context otherwise requires:- (a)……… (b) "acquirer" means any person who, directly or indirectly, acquires or agrees to acquire shares or voting rights in the target company, or acquires or agrees to acquire control over the target company, either by himself or with any person acting in concert with the acquirer; ……………………… (e) person acting in concert" comprises, - (1) persons who, for a common objective or purpose of substantial acquisition of shares or voting rights or gaining control over the target company, pursuant to an agreement or understanding (formal or informal),directly or indirectly co-operate by acquiring or agreeing to acquire shares or voting rights in the target company or control over the target company. (2) Without prejudice to the generality of this definition, the following persons will be deemed to be persons acting in concert with other persons in the same category, unless the contrary is established:

(i) a company, its holding company, or subsidiary of such company or company under the same management either individually or together with each other;

(ii) a company with any of its directors, or any person entrusted with the management of the funds of the company;

(iii) directors of companies referred to in sub-clause(i) of clause (2) and their associates;

(iv) mutual fund with sponsor or trustee or asset management company;

(v) foreign institutional investors with sub account(s);

(vi) merchant bankers with their client(s) as acquirer;

(vii) portfolio managers with their client(s) as acquirer;

(viii) venture capital funds with sponsors;

(ix) banks with financial advisers, stock brokers of the acquirer, or any company which is a holding company, subsidiary or relative of the acquirer.

Provided that sub-clause (ix) shall not apply to a bank whose sole relationship with the acquirer or with any company, which is a holding company or a subsidiary of the acquirer or with a relative of the acquirer, is by way of providing normal commercial banking services or such activities in connection with the offer such as confirming availability of funds, handling acceptances and other registration work.

(x) any investment company with any person who has an interest as director, fund manager, trustee, or as a shareholder having not less than 2% of the paid-up capital of that company or with any other investment company in which such person or his associate holds not less than 2% of the paid up capital of the latter company.

Note: For the purposes of this clause `associate' means:

(a) any relative of that person within the meaning of section 6 of theCompanies Act, 1956 (1 of 1956); and (b) family trusts and Hindu Undivided Families.

Acquisition of fifteen or more of the shares or voting rights of any company. 10. No acquirer shall acquire shares or voting rights which (taken together with shares or voting rights, if any, held by him or by persons acting in concert with him), entitle such acquirer to exercise fifteen percent or more of the voting rights in a company, unless such acquirer makes a public announcement to acquire shares of such company in accordance with the Regulations.”

Directions by the Board.

44. Without prejudice to its right to initiate action under Chapter VIA and section 24 of the Act, the Board may, in the interest of securities market or for protection of interest of investors, issue such directions as it deems fit including: - (a) directing appointment of a merchant banker for the purpose of causing disinvestment of shares acquired in breach of regulations 10, 11 or 12 either through public auction or market mechanism, in its entirety or in small lots or through offer for sale;

(b) directing transfer of any proceeds or securities to the investors protection Fund of a recognised stock exchange;

(c) directing the target company or depository to cancel the shares where an acquisition of shares pursuant to an allotment is in breach ofregulations10,11 or 12;

(d) directing the target company or the depository not to give effect to transfer or further freeze the transfer of any such shares and not to permit the acquirer or any nominee or any proxy of the acquirer to exercise any voting or other rights attached to such shares acquired in violation of regulations 10, 11or 12;

(e) debarring any person concerned from accessing the capital market or dealing in securities for such period as may be determined by the Board;

(f) directing the person concerned to make public offer to the shareholders of the target company to acquire such number of shares at such offer price as determined by the Board;

(g) directing disinvestment of such shares as are in excess of the percentage of the shareholding or voting rights specified for disclosure requirement under the regulations 6,7 or 8;

(h) directing the person concerned not to dispose of assets of the target company contrary to the undertaking given in the letter of offer;

(i) directing the person concerned, who has failed to make a public offer or delayed the making of a public offer in terms of these Regulations, to pay to the shareholders, whose shares have been accepted in the public offer made after the delay, the consideration amount along with interest at the rate not less than the applicable rate of interest payable by banks on fixed deposits.”

Relevant extracts of the provisions of SAST Regulations, 2011: Power to issue directions. 32.(1) Without prejudice to its powers under Chapter VIA and section 24 of the Act, the Board may, in the interest of investors in securities and the securities market, issue such directions or any other order as it deems fit under section 11 or section 11B or section 11D of the Act, including- (a) directing divestment of shares acquired in violation of these regulations, whether through public auction or in the open market, or through an offer for sale under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, and directing the appointment of a merchant banker for such divestiture; (b) directing transfer of the shares, or any proceeds of a directed sale of shares acquired in violation of these regulations to the Investor Protection and Education Fund established under the Securities and Exchange Board of India (Investor Protection and Education Fund) Regulations, 2009; (c) directing the target company or any depository not to give effect to any transfer of shares acquired in violation of these regulations; (d) directing the acquirer or any person acting in concert, or any nominee or proxy not to exercise any voting or other rights attached to shares acquired in violation of these regulations; (e) debarring any person who has violated these regulations from accessing the capital market or dealing in securities for such period as may be directed, having regard to the nature and gravity of the violation; (f) directing the acquirer to make an open offer for acquiring shares of the target company at such offer price as determined by the Board in accordance with these regulations; (g) directing the acquirer not to cause, and the target company not to effect, any disposal of assets of the target company or any of its subsidiaries contrary to the contents of the letter of offer, where the conditions set out in the proviso to sub-regulation (2) of regulation 25 are not met; (h) directing the acquirer who has failed to make an open offer or has delayed the making of an open offer, to make the open offer and to pay interest at such rate as considered appropriate by the Board along with the offer price; (i) directing the acquirer who has failed to make payment of the open offer consideration to shareholders, not to make any open offer or enter into any transaction that would attract the obligation to make an open offer in respect of shares of any target company for such period as the Board may deem fit; (j) directing the acquirer who has made an open offer but has delayed making payment of the open offer consideration to shareholders, to pay interest at such rate as considered appropriate by the Board for the delayed period; (k )directing any person to cease and desist from exercising control acquired over any target company without complying with the requirements under these regulations;(l) directing divestiture of such number of shares as would result in the shareholding of an acquirer and persons acting in concert with him being limited to the maximum permissible non-public shareholding or below.

(2) In any proceedings initiated by the Board, the Board shall comply with principles of natural justice before issuing directions to any person. (3)The Board may, for failure to carry out the requirements of these regulations by any intermediary registered with the Board, initiate appropriate proceedings in accordance with applicable regulations.

11. The SCN notes that as per the shareholding statement of the Target Company for June 2010 quarter filed with BSE by the Target Company under Clause 35 of the Listing Agreement, 15 promoters were holding 33.10% of the share capital of the Target Company. Out of this 15 promoters, the 11 erstwhile promoters were together holding 15.23% of the share capital of the Target Company during the quarter ended June 2010. As per the shareholding pattern of the Target Company for the next quarter ended September 2010 filed with BSE by the Target Company under Clause 35 of the Listing Agreement, these 11 erstwhile promoters mentioned above were replaced by the 14 Noticees who have been shown as promoters by the Target Company. Based on the filing of the Target Company with BSE under Clause 35 of the Listing Agreement, the SCN alleges that the Noticees together acquired 15.23% of the share capital of the Target Company from these erstwhile 11 promoters, during the quarter ending September 2010 as detailed in Table 2 and 3 below:

Table -2 Sr No Jun-10 Sep 2010 –Dec 2010 % Name of the No. of holding Name of the No. of % Shareholder Shares held s Shareholder Shares held holdings 1 Chandravadan Shah 84,200 1.24 Amish Rameshbhai 100,000 1.47 2 Hasmukhbhai Soni 100,000 1.47 DBhersuagi esh Pakaj 50,000 0.74 3 Sohanlal Shah 149,000 2.19 MBheuhptae ndra M Soni 25,100 0.37 4 Jyotinder N Kavi 258,185 3.8 Bhupesh Kashinath 55,100 0.81 5 Mahendra M Patel 100,000 1.47 MGaerhistah ma Girish 13,115 0.19 6 Mathur Patel 25,100 0.37 JGairnissha rSi omabhai 91,900 1.35 7 Nileshbhai Patel 13,115 0.19 JPaanlaska rPi remal Trivedi 130,000 1.91 8 Purushottam 91,900 1.35 Pinal Rajeshbahi 50,000 0.74 Hanselwal Mehta 9 Rahoo N Kavi 127,400 1.87 Premal Yogendra 150,000 2.21 10 Rajesh Bhai Shah 280,000 4.12 TRraivjeesdhi Rajnikant 100,000 1.47 11 Rajubhai Purohit 36,500 0.54 MRienhktua Saurin Kavi 84,200 1.24 12 Rakesh Bhai Patel 55,100 0.81 Sawan Ajit Joshi 100,000 1.47 13 Satishbhai Patel 100,000 1.47 Shirish Rameshbhai 49,000 0.72 14 Saurin J Kavi 379,500 5.58 DSheisva Ni avinchandra 36,500 0.54 15 Jayesh N Kavi 450,000 6.62 RJaayveasl h N Kavi 200,000 2.94 16 Saurin J Kavi 1,015,085 14.93 Total 22,50,000 33.10 22,50,000 33.10 Table -3 Sr Sr No. Jun-10 No. Sep 2010 -Jun 2011 Name of the No. of % Name of the No. of Shareholder Shares holdi Shareholder Shares % holdings 1 Jyotinder N Kavi 25h8,e1l8d5 n3g.8s 1 Jayesh N Kavi 2,0h0e,0ld0 0 2.94 2 Rahoo N Kavi 127,400 1.87 2 Saurin J Kavi 10,15,08 14.93 3 Saurin J Kavi 379,500 5.58 5 4 Jayesh N Kavi 450,000 6.62 Total of Above 12,15,08 17.87 Total of Above 12,15,08 17.87 Entities 5 Entities 5 5 Others (11 10,34,91 15.23 3 Others(14 new 10,34,91 15.23 Promoters) 5 Promoters-the 5 Noticees) Total 22,50,00 33.10 22,50,00 33.10 0 0

12. From the above table, the SCN also observed that Mr. Saurin J Kavi, another promoter of the Target Company also acquired 14.93% share capital of the Target Company in the quarter ending September 2010, detail of which is as follows:

Table-4

Details of transfer of Shares during September 2010 Quarter between certain Promoters

Sr Name Of Name Date of Mode ofN o of N o of No of No Acquirer of Transfer Transfer shares Shares of Shares Seller Transferre acquirer (% acquirer (% d (% of to share to share share capital) capital) capital) before After transfer transfer 1 Saurin J Not 26.07.201 Transmis 385585 379,500 765085 Kavi Mentio 0 sion (5.67%) (5.58%) (11.25%) ned 2 Saurin J Jayesh 30.07.201 Inter-se 2,50,000 765085 10,15,085 Kavi Kavi 0 (3.68%) (11.25%) (14.93%)

13. The BSE website also contains the corresponding disclosure by the erstwhile promoters under Regulation 7(1A) SAST Regulations and the same is also available on record and as per the said disclosure the erstwhile 11 promoters disposed of their holding on September 01, 2010 in off market transaction. Therefore, SCN infers that the Noticees acquired these shares on the said date i.e. September 01, 2010.

14. The SCN notes that the off-market data provided by NSDL and CDSL did not reflect any transfers of shares of the Target Company on NSDL or CDSL between January 1, 2010-September 27, 2010 in respect of aforesaid 11 promoters. Therefore, to ascertain the date of acquisition of shares by the Noticees from the aforesaid 11 promoters, an email query dated January 20, 2015 was sent to the Target Company’s earlier Registrar and Transfer Agent, Purva Sharegistry (I) Pvt. Ltd. (hereinafter referred to as “Purva”). In response to the aforesaid query, Purva had vide its email dated January 20, 2015 stated that it had processed demat requests post September 3, 2010 on receipt of data from the Target Company and until then, the Target Company had processed requests in-house without intimation to them. Moreover, the SCN also notes that summons dated March 13, 2015 and a reminder letter dated March 18, 2015 were sent to the Target Company seeking details of transfers of shares during September 2010 quarter and that the Target Company had not furnished the complete details sought by aforesaid letter and summons. Since depositories' data did not contain off-market sale of shares of the Target Company from the aforesaid 11 promoters to the Noticees on September 1, 2010, the SCN infers that the shares were in physical form and transfer for such shares were processed in-house by the Target Company.

15. Therefore, based on the disclosures made by aforesaid erstwhile 11 promoters during June 2010 quarter on BSE under Regulation 7 (1A) of the SAST Regulations, 1997, shareholding statement of the Target Company for September 2010 quarter filed with BSE under Clause 35 of the Listing Agreement, replies of Purva, NSDL and CDSL, the SCN has alleged that 10,34,915 (15.23%) shares of the Target Company were transferred to the Noticees from the sellers mentioned in Table 5 below:

Table 5 Details of off-market transfer of Shares during quarter ended September 2010 to Noticees

N a m e o f S e ll e r s Date of Mode of Transfer No of shares Sr Transfer Transferred(% of share No capital) 1 Chandravadan Shah, 1.9.2010 Off -Market 10,34,915 (15.23%) Hasmukhbhai Soni, (Physical Shares Sohanlal Shah, Mahendra M transfer processed in Patel, Mathur Patel, house by the Nileshbhai Patel, Company) Purushottam Hanselwal, Rajesh Bhai Shah, Rajubhai Purohit, Rakesh Bhai Patel and Satishbhai Patel 16. The SCN alleges that, since the Noticees were all part of the promoter group of the Target Company from quarter of September 2010 till quarter of September 2011 so they were person acting in concert (hereinafter referred to as “PAC”) while acquiring 15.23% of the share capital of the Target Company without making a public announcement as required under Regulation 10 of the SAST Regulations, 1997 on September 01, 2010, and thus violated Regulation 10 of the SAST Regulations, 1997.

17. In this regard the Noticee nos. 2, 3, 7, 8, 9,10,12,13 and 14 have submitted that they did not acquire any shares of the Target Company in the quarter ended September 2010 to December 2010 from the erstwhile promoters of the Target Company whose names had been mentioned in the SCN and also denied that they were promoters of the Target Company or they were acting in concert with each other or the remaining promoters of the Target Company. The Noticees have submitted in their reply that just because the Target Company in the disclosure of shareholding pattern disclosed them as promoters of the Target Company they do not become so. These Noticees have also submitted that they did not know the old promoters of the Target Company and they did not execute any share purchase agreement or MoU and that they did not make any payment of consideration nor did they receive any shares of the Target Company in their name. These Noticees have also submitted that Mr. Saurin J. Kavi who was the Chairman and Managing Director of the Target Company had misused their names and without their consent shown these transfers of shares on paper through off-market route in physical shares to their names and also shown them as promoters. All these Noticees are relatives of Mr. Saurin J. Kavi. These Noticees have stated that all activities/ dealing/ signatures wherever appearing were by means of forged documentation and that they cannot be said to be a promoter group entity not a promoter nor a person acting in concert of the Target Company since they had never bought any shares of the Target Company.

18. Noticee nos. 5 and 6 have not submitted any replies to the SCN. However, during the course of the investigation, they had submitted that they had acquired 0.19% and 1.35% of the share capital of the Target Company, respectively, during the September 2010 quarter but they were not the ‘promoters’ or part of the ‘promoter group’ of the Target Company and that they were not acting in concert with the other Noticees and therefore their acquisition cannot be clubbed with the remaining Noticees. The entities vide their letter dated March 11, 2015 have inter-alia replied that they had not acquired any shares acting in concert with any other person. The Noticee nos. 5 and 6 have stated that they had not acquired any shares acting in concert with any other person nor had they entered into formal or informal agreement or understanding for acquisition of shares or voting rights of the Target Company or for deciding on acquisition of shares or voting rights so as to invoke provision of Regulation 10 of SAST Regulations, 1997. Noticee nos. 5 and 6 have also stated that their name seems to have been included inadvertently, mistakably and through oversight without any intention to acquire shares or voting rights or control in excess of 15% shares. Based on these contentions these two Noticees had submitted that they had not violated Regulation 10 of the SAST Regulations, 1997.

19. I note that the allegation against all the Noticees arise from a disclosure of shareholding pattern made by the Target Company under Clause 35 of the Listing Agreement on the Bombay Stock Exchange pertaining to the quarter ended September 2010 wherein the Noticees are shown as promoters of the Target Company together holding 15.23%of the share capital of the Target Company and thereafter inferences have been drawn regarding the date of acquisition and the mode of acquisition. Moreover, I note that the date of acquisition has been inferred from the disclosure under Regulation 7(1A) of the SAST Regulations filed by the erstwhile promoters on the BSE. As per Regulation 7(1A) of the SAST Regulations, any acquirer who has acquired shares or voting rights of a company under regulation 11 (1) (i.e. consolidated shareholding of acquirer and PAC is more than 15% but less than 55% of the share capital of the Targets Company), shall disclose purchase or sale aggregating two percent or more of the share capital of the target company to the target company, and the stock exchanges where shares of the target company are listed within two days of such purchase or sale.

Since the erstwhile promoters were together holding more than 15% but less than 55% of the shareholding in the Target Company they had filed the disclosure under Regulation 7 (1A) of the SAST Regulations when they sold their shares and as per format of disclosure the erstwhile promoters have disclosed their sale as well as pre and post sale shareholding in the Target Company and mode of sale. The said format did not require them to disclose the name of the buyer/ acquirer and therefore no such information was included in the format. I note that the date of acquisition of shares by the Noticees has been inferred from this filing. However, I find that the Noticees have denied buying any shares of the Target Company from the erstwhile promoters. It further appears that neither the Target Company nor the Registrar and Share Transfer Agent has been able to provide any further details or confirmation of the transfer of shares from the erstwhile promoters of the Target Company to the Noticees such as copy of the physical transfer deed, copy of share certificate, date of lodging the transfer deed along with share certificate, change in register of members of the Target Company, etc. I also note that some of the Noticees have been also declassified from the promoter group of the Target Company in the subsequent quarters.

20. I also note that the from the disclosure of shareholding pattern made by the Target Company under Clause 35 of the Listing Agreement on the Bombay Stock Exchange pertaining to the quarter ended September 2010, wherein the Noticees are shown as promoter of the Target Company, the SCN infers that the Noticees were acting in concert. I note that the SCN alleges that there was an off market transaction of shares of the Target Company from the erstwhile promoters to the Noticees. However, the Noticees have disputed and denied the same. I note that the Target Company has shown the Noticees as promoters in their filings pertaining to quarter ending September 2010 before the BSE. As the shares are said to be in physical form therefore confirmation was sought by the Investigating Authority from the previous RTA of the Target Company and the Target Company itself as to whether these shares were transferred in the name of the Noticees in the records of Register of members of the Target Company, but they have been unable to confirm the same. Moreover, I note that no disclosure under Regulation 8(2) and (3) of the SAST Regulations, 1997 which stipulates that promoters are to disclose their shareholding annually to the Target Company and the Target Company in turn is required to disclose the same to the stock exchange, has been made by the Noticees.

21. Thus from the above, it is observed that the Target Company has stated in its disclosure filed with the BSE pertaining to the quarter ending September 2010 under Clause 35 of the Listing Agreement that the Noticees were the promoters of the Target Company which has been denied by the Noticees. Further, previous RTA and the Target Company, when asked by the Investigating Authority for any supporting documents with respect to the transfer date or transfer of shares in the name of the Noticees, have failed to produce any documents such as copy of share certificate, copy of transfer deed, register of members etc. However, in the case under consideration, it is observed that the SCN has been issued for violation of Regulation 10 of the SAST Regulations, 1997 stating that these Noticees, being promoters of the Target Company and thus acting in concert, have acquired 15.23% ( i.e. more than 15%) of the share capital of the Target Company on September 01, 2010. The question of breach of 15% will arise if the Noticees in question are PAC within the meaning of Regulation 2 (1)(e) and thus their acquisition of shares of the Target Company was with a common objective or purpose of acquiring the shares or voting right or control in the Target Company. In the present case Noticee nos. 2,3, 7,8,9,10,12,13 and 14 have denied that they are promoters of the Target Company and PAC and also denied having acquired any shares of the Target Company and Noticee no. 5 and 6 who acquired 0.19% and 1.35% of the shareholding of the Target Company, have denied being PAC with the other Noticees.

22. With respect to the determination of whether the Noticees are PAC, I will refer to the judgment of the Hon’ble Supreme Court of India in Daiichi Sankyo Company Ltd. v. Jayaram Chigurupati & Ors. [2010] 157 Comp Cas 380 (SC) which has observed as follows:

“44. The other limb of the concept requires two or more persons joining together with the shared common objective and purpose of substantial acquisition of shares etc. of a certain target company. There can be no "persons acting in concert" unless there is a shared common objective or purpose between two or more persons of substantial acquisition of shares etc. of the target company. For, dehors the element of the shared common objective or purpose the idea of "person acting in concert" is as meaningless as criminal conspiracy without any agreement to commit a criminal offence. The idea of "persons acting in concert" is not about a fortuitous relationship coming into existence by accident or chance. The relationship can come into being only by design, by meeting of minds between two or more persons leading to the shared common objective or purpose of acquisition of substantial acquisition of shares etc. of the target company. It is another matter that the common objective or purpose may be in pursuance of an agreement or an understanding, formal or informal; the acquisition of shares etc. may be direct or indirect or the persons acting in concert may cooperate in actual acquisition of shares etc. or they may agree to cooperate in such acquisition. Nonetheless, the element of the shared common objective or purpose is the sin qua non for the relationship of "persons acting in concert" to come into being. …. 48……… In other words, persons who are deemed to be acting in concert must have the intention or the aim of acquisition of shares of a target company. It is the conduct of the parties that determines their identity. Whether a person is or is not acting in concert with the acquirer would depend upon the facts of each case. In order to hold that a person is acting in concert with the acquirer or with another person it must be established that the two share the common intention of acquisition of shares of some target company….”

23. In this regard, I note that Noticee nos. 2,3, 7,8,9,10,12,13 and 14 have all submitted that they are relatives of late Shri Saurin J. Kavi and it is also an admitted fact that Noticee no. 11 is the wife of late Shri Saurin J. Kavi. These Noticees have claimed that they never received any shares of the Target Company, never paid any consideration and the transfers were based on forged documents, all orchestrated by late Shri Saurin J. Kavi and they became aware of the same in 2014 when adjudication proceedings were taking place against them for failure to reply to summons issued by SEBI, and they have challenged the order of the Adjudicating Officer dated December 31, 2018, before the Hon’ble SAT. Be that as it may, it appears that, apart from the disclosure made by the Target Company before BSE there is nothing on record to confirm the acquisition of the shares of the Target Company by the Noticees or their promotership in the Target Company. I also note that some of the Noticees have been also declassified from the promoter group of the Target Company in the subsequent quarters.

From an analysis of the shareholding patterns disclosed by the Target Company to BSE, it is seen that the names of the Noticees appear under the heading ‘shareholding belonging to category promoter and promoter group’ till the quarter ending June 2011. In the shareholding pattern for the quarter ending September 2011, 5 Noticees i.e. Mr. Amish Rameshbhai Desai ( Noticee no.1), Mr. Pinal Rajeshbhai Mehta, (Noticee no. 8), Mr. Sawan Ajit Joshi (Noticee no. 12), Mr. Sirish Rameshbai Desai (Noticee no. 13), Mr. Shiv Navinchandra Raval (Noticee no.14) do not appear under the categpry of promoter group and Noticee no. 1 and 12 appear in the category of ‘shareholding of securities (including shares, warrants, convertible securities) of persons belonging to the category Public and holding more than 1% of the total number of shares’. For the quarter ending December 2011 only the shareholding of Ms. Palak Premal Trivedi (Noticee no.7), Mr. Premal Yogendra Trivedi ( Noticee no.9) and Rinku S. Kavi (Noticee no.11) have been declared under the heading of promoter group and Rajesh R. Mehta (Noticee no. 10) and Girish S. Jansari (Noticee no. 6) appear in the category of ‘shareholding of securities (including shares, warrants, convertible securities) of persons belonging to the category Public and holding more than 1% of the total number of shares’.

For the quarter ending March 2012, Mr. Premal Trivedi (Noticee no. 9) has been removed from the promoter category and a corresponding disclosure under Regulation 7(1) of SAST Regulations, 1997 is available on the BSE website stating that he had sold his holding of 2.21% of the share capital of the Target Company. Currently none of these Noticees’ names appear in the promoter category of the Target Company on BSE. The basis of declassification is not clear and it is not known whether some of these Noticees continued to hold shares in the Target Company or they had disposed of their holdings. Further, Noticees nos. 5 and 6 who acquired the shares of the Target Company have denied that they were acting in concert with the other Noticees.

24. I also note that during the course of Appeal No.112 of 2018 filed by the Noticees challenging the order of the Adjudicating Officer ( hereinafter referred to as “AO”) dated January 31, 2018 which dealt with the failure of the Noticees to reply to summons issued by SEBI in the same matter, the Hon’ble SAT has recorded as follows: “It has also come on record from a perusal of the adjudication proceedings dated 18th September, 2017 that Saurin Kavi appeared before the Adjudicating Officer and stated that when SEBI sought information from the appellants in November, 2014 and January, 2015 the said appellants communicated to Saurin Kavi and informed him that they did not have any information as they were not dealing with the matter. Saurin Kavi categorically stated before the Adjudicating Officer that the appellants do not know anything about the proceedings and that Saurin Kavi owns full responsibility for these proceedings. 7. In view of the aforesaid it was apparently clear that Saurin Kavi took upon himself the responsibility of the proceedings that was initiated by SEBI. He also categorically informed SEBI that the appellants have nothing to do in the matter.” From the above, it can be inferred that late Shri Saurin J. Kavi was managing the affairs of the Target Company and Noticee nos. 2,3, 7,8,9,10,12,13 and 14, were his relatives who have denied any involvement in the affairs of the Target Company.

25. In view of the above facts and circumstances, it will not be possible to ascribe promotership of the Target Company on Noticee nos. 2,3, 7,8,9,10,12,13 and 14 as it is not possible to conclude that they had acquired shares of the Target Company or not in absence of any documentary evidence with respect to the transfer of shares of the Target Company in the name of the Noticees. Some of the Noticees have been also declassified from the promoter group of the Target Company in the subsequent quarters. Even if for the sake of argument they are treated as promoters it would not be possible to ascribe a shared common objective or purpose to these Noticees in order to establish them as PAC.

26. Further, I note that the two remaining Noticees i.e. Noticee no. 5 and 6 acquired shares of the Target Company on September 01, 2010. However, there is nothing on record which connects these Noticees to Noticee nos. 2,3, 7,8,9,10,11, 12,13 and 14 and the Noticee nos. 5 and 6 have denied that they have any connection with the other Noticees. Thus I find that these two Noticees do not share any common objective or purpose of acquiring shares or voting rights or control in the Target Company with the other Noticees or were acting in concert with the other Noticees. Moreover, I also note that, from the quarter ending December 2011, Noticee no. 5 and 6 have been removed from the ‘shareholding belonging to category promoter and promoter group’ where they were appearing in the quarter ending September 2010 and Noticee no. 6 appear in the category of ‘shareholding of securities (including shares, warrants, convertible securities) of persons belonging to the category Public and holding more than 1% of the total number of shares’. The reason for declassification is not known. Similarly, other Noticees have also been declassified from the promoter category from the quarter ending June 2011 onwards.

27. Based on the discussions above, I conclude that the material available on record is not sufficient to establish that the Noticees, while allegedly acting in concert, acquired more than 15% of the share capital of the Target Company on September 01, 2010. Consequently, the allegation of violation of Regulation 10 of the SAST Regulations, 1997 by the Noticees on September 01, 2010 by failing to make a public announcement for open offer does not stand established.

28. I also note that the shares of the Target Company have been suspended from trading by the BSE with effect from February 06, 2018 until further notice, by categorising it under the heading ‘Listed Shell Companies’. I also note that the BSE website states that the Target Company has not paid Annual Listing Fees and is in violation of exchange and SEBI Regulations.

Directions

29. In view of the aforesaid observations and findings, I, in exercise of the powers conferred upon me under Sections 11 and 11B read with Section 19 of the Securities and Exchange Board of India Act, 1992 hereby dispose of the present proceedings against the Noticees without any directions.

30. This order shall come into force with immediate effect.

31. A copy of this order shall be served on the Noticee, recognized stock exchanges and depositories.

Date: June 23, 2020 ANANTA BARUA Place: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA