Order in the matter of R M MOHITE TEXTILES LTD. AND ATLAS CYCLES (HARYANA) LTD,

1. Securities and Exchange Board of India (“SEBI”) conducted investigation in the scrips of R M Mohite Textiles Ltd. (hereinafter referred to as “RMTL”) and Atlas Cycle Haryana Ltd. (hereinafter referred to as “ACL”) for the periods from November 07, 2007 to December 20, 2007 and November 01, 2007 to December 04, 2007, respectively. During the aforesaid periods of investigation, the shares of RMTL were listed only on Bombay Stock Exchange Limited (“BSE”), whereas the shares of ACL were listed on BSE, Delhi Stock Exchange Ltd (“DSE”) and National Stock Exchange of India Ltd. (“NSE”). 2. Pursuant to the investigation a show cause notice February 24, 2012 was issued to Mr. Amit N Joshi (hereinafter referred to as the “Noticee”) calling upon him to show cause as to why appropriate directions under sections 11B of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”) including restraining him from buying, selling or dealing in securities for a specified period should not be issued. It was alleged in the SCN that the Noticee has violated regulations 3(a), 4(1) and 4 (2) (a) and (b) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (“FUTP Regulations”) and section 12(1) of SEBI Act read with regulation 3 of SEBI (Portfolio Managers) Regulations, 1993. The facts and circumstances forming the basis of the charges against the Noticee in the SCN and the allegations levelled therein are as under: a) The Noticee acted as a dealer of Pegasus Stocks & Shares Pvt. Ltd. (“Pegasus”), and in concert with other related entities namely, Nitin R Gordia, Rita Gordia and Parin Shah entered into non-genuine transactions which had the effect of creating an artificial market to mislead the genuine investors. b) Pegasus, Nitin R Gordia and Rita Gordia traded in the scrip of RMTL and ACL during the investigation period and contributed significant volumes ranging from 2.6% to 66.1%

Order in the matter of R M Mohite Textiles Ltd. and Atlas Cycles (Haryana) Ltd to the total market volume at a traded price that was significantly away from the Last traded Price (“LTP”) which ranged from -5.59% to 22.50% across both the scrips. c) The trading details of Pegasus, Nitin R Gordia and Rita Gordia in the scrip of RMTL are provided as under:

Client Member Buy Qty % contrib Sell Qty % gross % Name Name ution contribut volum e contribut ion e n Pegasus India 7752 1.98 8592 2.19 16344 2.08 Stocks Capital & Shares Markets Pvt. Ltd. Pvt. Ltd. Rita Kotak 2500 0.64 2500 0.64 5000 0.64 Goradia Securitie sLtd.

Nitin R. N. 6050 1.54 6050 1.54 12100 1.54 Rasiklal Patwa Goradia Shares & Stock Total 16302 4.16 17142 4.37 33444 4.27 d) As a dealer of Pegasus, Noticee along with Nitin R Gordia and Rita Gordia had bought and sold 16302 shares (4.16%of the total traded volume) and 17142 shares (4.37% of the total traded volume), respectively in the scrip of RMTL and on the gross basis, collectively contributed to 4.27% of the gross volume traded. The inter-se trading details between the Pegasus, Nitin R Gordia and Rita Gordia in the scrip of RMTL are provided as under:

Sell Client Nitin Rita Pegasus Stocks Grand % Rasiklal Goradia & Shares Pvt. Total contribution Goradia Ltd. Buy Client Nitin Rasiklal 6050 6050 1.54 Goradia Rita Goradia 2500 2500 0.64

Pegasus Stocks 5200 2500 7700 1.96 & Shares Pvt. Ltd.

Grand Total S200 2500 8550 16250 4.14 e) Nitin R Gordia and Rita Gordia were the counter parties of Pegasus, of which Noticee was a dealer and when Pegasus was buying Nitin R Gordia and Rita Gordia were selling and vice versa. Furthermore, Noticee, as a dealer of Pegasus, along with Nitin R Gordia and Rita Gordia traded 16250 shares of the RMTL amongst themselves which was 99.68% of the group's total purchase and 94.79% of the group's total sale. f) Out of 2327 number of trades executed in RMTL constituting 3,92,055 shares during the investigation period, Noticee, as a dealer of Pegasus, along with Nitin R Gordia and Rita Gordia executed 17 trades contributing to the volume of 16,250 shares. Moreover, Noticee, as a dealer of Pegasus, along with Nitin R Gordia and Rita Gordia entered into 12 first trades out of the 17 trades. g) Further, out of the 16250 shares (resulting out of 17 trades), trades for 8200 shares (resulting out of 10 trades) were done in a synchronized manner in the sense that both the buy and sell order quantities as well as the price were the same and orders were placed with a time difference of less than one minute. h) In respect of trades entered into by Noticee on behalf of Pegasus and by Nitin R Gordia and Rita Gordia in the scrip of RMTL on 11 days out of 15 days on which Noticee and the connected entities traded during the period, Noticee had hit the highest / lowest trade prices. i) Noticee, as a dealer of Pegasus, was responsible for the increase in the price of the share of RMTL by ₹ 74.65 in 8 trades purchasing while 7700 shares, where the counter parties were Nitin R Gordia and Rita Gordia.

On 7 occasions Noticee, as a dealer of Pegasus, had bought shares at the higher price against sell order that was available before its buy order placed by Nitin R Gordia and Rita Gordia. Similarly, by virtue of placing of buy orders by Nitin R Gordia and Rita Gordia at a lesser price, on a net basis the price was reduced by ₹30.85 in trades, where Pegasus was the counter party. All these buy orders were placed earlier than the sell orders placed by Noticee as a dealer of Pegasus. Thus by virtue of executing these trades, on the whole, Noticee along with the related entities had increased the price of share of RMTL by ₹ 43.8 on a net basis. By trading in the afore-said manner, Pegasus incurred a loss of ₹ 1, 28,551 against the gains made by Nitin R Gordia and Rita Gordia.

j) It was alleged that Noticee had entered into fictitious trades under the guise of normal trades of purchase and sale of securities on the exchange platform to admittedly settle his financial transactions with related counter party clients. k) On analysis of the price volume data of RMTL during the investigation period, it was noted that the scrip of RMTL was traded on 32 trading days during the investigation period with an average daily volume of 12,251 shares. Out of the 32 trading days during the period under investigation, Noticee, as a dealer of Pegasus, along with Nitin R Gordia and Rita Gordia traded on 15 trading days and the average daily volume traded was around 15,141 shares during these 15 trading days, which were much higher than the average daily volume of 9,702 shares, traded during the remaining 17 trading days when the Notice and the related entities had not traded. It was noted that during the 15 trading days the contribution of group entities ranged from around 2.61% to 64.71% of the volume traded on the day. Noticee, as a dealer of Pegasus, along with Nitin R Gordia and Rita Gordia as a group contributed around 8.24% of the total volume traded during these 15 trading days. l) The trading details of Pegasus, Nitin R Gordia and Parin Shah in the scrip of ACL are provided as under:

Client Member Buy % Sell % gross % Name Name Qty contribution Qty contribution volume contribution

Pegasus India 15231 10.70 15152 10.64 30383 10.71 Capital Pvt. Ltd. Parin Kotak 2591 2.07 2591 2.07 5902 2.08 Shah Securities Ltd.

Nitin R. N. 11990 8.42 11875 8.34 23865 8.42 Rasiklal Patwa Gordia Shares & Stock Total 30172 21.19 29978 21.05 60150 21.21 m) Noticee, as a dealer of Pegasus along with Nitin R Gordia and Parin Shah had bought and sold 30,172 shares (21.19%of the total traded volume) and 29,978 shares (21.05% of the total traded volume) respectively and on a gross basis collectively contributed 21.21%o of the gross volume traded.

n) The inter-se trading details between the Pegasus, Nitin R Gordia and Parin Shah in the scrip of ACL is provided as under:

Sell Client Nitin Rasiklal Parin Shah Pegasus Grand 0/ Gordia Total /o Buy Client contribution

Nitin Rasiklal 11990 11990 8.42 Gordia Parin Shah 2951 2951 2.07 Pegasus 11875 2950 14825 10.41 Grand Total 11875 2950 14941 29766 20.91 o) Nitin R Gordia and Parin Shah were counter parties of Pegasus in such a manner that when Pegasus was buying, Nitin R Gordia and Parin Shah were selling and vice versa. Furthermore, Noticee, as a dealer of Pegasus, along with Nitin R Gordia and Parin Shah traded 29,766 shares of ACL amongst themselves which is 98.65% of the group's total purchase and 99.29% of the group's total sell. p) Out of 2001 trades executed in the scrip of ACL constituting 1,42,386 shares, Noticee, as a dealer of Pegasus, along with Nitin R Gordia and Parin Shah had traded for 10 trades contributing to a volume of 29,766 shares. Further alleged that Noticee, as a dealer of Pegasus, along with Nitin R Gordia and Parin Shah entered into 3 first trades out of the 10 trades and that out of the 29766 shares (resulting out of 10 trades) trades for 8851 shares (resulting out of 3 trades), accounting for 6.21% of the gross volume traded, were done in synchronized manner in the sense that both the buy and sell order quantities as well as the price were same and orders were placed with a time difference of less than one minute. q) On analysis of the LTPs entered by Pegasus, Nitin R Gordia and Parin Shah in the scrip of ACL, it was observed that on 8 days out of 10 days on which Noticee and the connected entities traded during the period, Noticee was found to have hit the highest / lowest trade prices.

It was observe that Noticee, as a dealer of Pegasus, was responsible for the increase in the price of share of ACL by ₹ 29.25 in 5 trades by purchasing 14,825 shares, where the counter parties were Nitin R Gordia and Parin Shah. On all the 5 occasions Noticee, as a dealer of Pegasus, had bought shares of ACL at the higher price as there was a sell order available before his buy order. Similarly, Pegasus acting on the sale side on a net basis reduced the price by ₹ 40.4, where the counter parties were Nitin R Gordia and Parin Shah. On 4 occasions, buy orders were placed earlier than the sell orders by Noticee, as a dealer of Pegasus. By trading in the aforesaid manner, Pegasus incurred a loss of ₹3,15,796/- against the gain of Nitin R Gordia and Parin Shah. r) It is alleged that the Noticee entered into fictitious trade in the scrip of ACL in the guise of normal trade of purchase and sale of securities on the exchange platform to admittedly settle Noticee’s financial transaction with related counter party clients. s) The price volume data of ACL during the investigation period suggested that the scrip was traded on 24 trading days with an average daily volume of 5932 shares.

Out of the 24 trading days during the period under investigation Noticee, as a dealer of Pegasus, along with Nitin R Gordia and Parin Shah traded on 10 trading days and the average daily volume traded was around 7816 shares, which were much higher than the average daily volume of 4587 shares, traded during the remaining 14 trading days when Noticee and the group entities had not traded. It was also observed that during the 10 trading days, the daily trade contribution of the group entities was around 21.87% to 66.11% of the total volume traded on the said days and Noticee, as a dealer of Pegasus, along with Nitin R Gordia and Parin Shah as a group contributed around 38.07% of the total volume traded during these 10 trading days. t) While acting as an authorized person for Pegasus, Noticee executed trades in the aforesaid manner, knowing that the counter party would be Nitin Gordia and his wife Rita Gordia with a view to liquidate his outstanding debt amounting to ₹ 4.5 lacs - ₹ 5 lacs due to Nitin Gordia. u) Thus, it was alleged that by virtue of the nexus existing between Noticee, as a dealer of Pegasus, acting in concert with Nitin R Gordia and Rita Gordia in the scrip of RMTL and with Nitin R Gordia and Parin Shah in the scrip of ACL, Noticee entered into non genuine transactions which had the effect of creating artificial market to mislead the genuine investors. v) This appears to have been facilitated by the agreement dated August 10, 2007 that Noticee entered with Pegasus for dealing in shares and securities on its behalf in terms of which the profit and loss arising out of such dealing would be shared between both the parties as mutually agreed.

Thus in addition to the aforesaid allegations, it was alleged that Noticee also acted an unregistered portfolio manager while dealing in the scrips of RMTL and ACL on behalf of Pegasus. 3. It is noted that the Noticee filed a consent application dated August 17, 2015 for settlement of the present proceedings initiated pursuant to the aforesaid SCN dated February 12, 2012 as well as for settlement of adjudication proceedings which were also initiated against the Noticee for his dealings in the scrips of RMTL and ACL. The said consent application filed by the Noticee was rejected by the High Power Advisory Committee as the consent terms proposed by the Noticee were not in accordance with the settlement terms calculated under the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014. The same was also communicated to the Noticee. 4. Pursuant to rejection of the consent application, the Noticee was granted an opportunity of personal hearing on April 13, 2016. However, Noticee vide email dated April 06, 2016 waived the said opportunity and, inter alia, submitted as under: a) The matter is very old.

I do not have access to papers/documents relating to that period and hence am unable to give a proper reply. I am no more involved in the stock market since several years now. I am also out of town for my work on the scheduled date. b) I have only to state that considering that the matter is very old, for which data is not available, and considering also the mental agony and effective punishment I have already gone through including having to leave securities markets, I have to only request that no further adverse action be taken against me.

c) I also request you to look at the facts and the small amounts involved. I have actually suffered a loss. There are no complaints against me. This is in any case a one time case. Hence, I repeat that any adverse action against me is not warranted on facts and law.

d) Considering that for these very reasons, I have dropped all activities in the stock market since years, there is no concern for SEBI that I would do any wrong in the future. The fact that I have lost stock market as an occupation and years of experience gone waste and also having to start afresh, ought to be punishment enough for any perceived wrongs by me.

e) Accordingly, I once again request that proceedings be dropped against me without any further action. As I do not have anything further to say, I waive the personal hearing and request you to kindly close the matter on the basis of this reply. 5. I have considered the allegations levelled against the Noticee in the SCN, his reply / submissions and other material available on record. 6. I note that there are primarily two charges against the Noticee in the present case. One charge is that the Noticee acted as an unregistered portfolio manager on behalf of Pegasus while he dealt on its behalf in the scrips of RMTL and ACL. The other charge is that the Noticee, in concert with other persons known to him and acting on behalf of Pegasus as a dealer, entered into non-genuine transactions which had the effect of creating artificial market to mislead the genuine investors.

7. In his reply/submissions, the Noticee has not disputed any of the allegations levelled in the SCN. The Noticee has however submitted that the matter is very old and he does not have access to papers/documents relating to that period and hence he is unable to give a proper reply, The Noticee has further submitted that he has been out of the securities market for many years and therefore he will not do any further harm to the securities market. Citing the above, the Noticee has prayed that the proceedings against him may be dropped and no directions be issued against him. In this regard, I note that the acts of the Noticee have been clearly brought out in the SCN and the Noticee has not provided any material / documents to refute the same nor has he denied committing those acts. It is also important to note that if the Noticee did not have the necessary documents pertaining to the period of investigation, he could have approached SEBI for obtaining the copies of documents relied upon by SEBI, but the same was never done by the Noticee. Further, the Noticee cannot be exonerated for his violations and misconduct solely on the ground that there has been delay in conclusion of these proceedings.

In view of the foregoing, I reject the prayer of the Noticee in this regard. 8. As regards the charge of acting as an unregistered portfolio manager I note that admittedly the Noticee entered into an agreement dated August 10, 2007 with Pegasus for dealing in shares and securities on its behalf in terms of which the profit and loss arising out of such dealings would be shared between both the parties as mutually agreed. It is also an undisputed fact that the Noticee entered into buy and sell transactions on behalf of Pegasus during the investigation period the particulars whereof have been mentioned in the SCN. The Noticee in his statement dated November 26, 2009 (recorded before the Investigating Authority during investigation) also admitted that he was acting as authorized person to trade on behalf of Pegasus with a limit of approximately ₹ 5 lacs and the profit sharing / commission was not finalized at that time. In light of the above facts, it is clear that the Noticee agreed with Pegasus for managing its portfolio with a mutual understanding as to sharing the profits. I, therefore, find that the Noticee was acting as a portfolio manager on behalf of Pegasus without holding a valid certificate of registrations from SEBI as such.

The said act of the Noticee is in contravention of section 12(1) of SEBI Act, 1992 and regulation 3 of the SEBI (Portfolio Managers) Regulations, 1993. 9. As regards the allegation of entering into fictitious trades in the guise of normal trades in the scrips of ACL and RMTL, it is noted that the SCN clearly mentions how all the trades on behalf of Pegasus in the scrips of ACL and RMTL were executed by the Noticee in synchronization with related entities. The Noticee in his statement dated November 26, 2009 also admitted that he entered into trades in the scrips of ACL and RMTL knowing fully well that the counterparties to his trades were Nitin R Gordia and Rita Gordia. The Noticee also admitted that he owed around ₹ 4.5 lacs - ₹ 5 lacs to Nitin Gordia and he entered into trades in such a manner that his counterparties i.e. Nitin R Gordia and Rita

Gordia stood benefited. I also note that the SCN clearly brings out the particulars of the trades executed by the Noticee (acting as the dealer for Pegasus) and other persons related / connected to him. Admittedly, these trades were executed by the Noticee to settle his personal financial dealings with the counterparties to his trades who were related /connected to him. The SCN also mentions how the Noticee and related / connected entities entered into non-genuine transactions which had the effect of creating an artificial market to mislead the genuine investors. It is pertinent to note here that none of the allegations levelled in the SCN have been disputed by the Noticee. In light of the aforesaid observations, I find that, apart from the violations detailed above, the Noticee had also acted in a fraudulent and deceitful manner in violation of provisions of regulation 3 (a), 4(1), 4(2)(a) and (b) of the PFUTP Regulations, 2003. 10. I, therefore, in order to protect the interests of investors and the integrity of the securities market, in exercise of the powers conferred upon me by virtue of section 11B read with sections 11 and 19 of the SEBI Act and the provisions of regulations 11 of PFUTP Regulations, 2003, hereby restrain Mr. Amit N. Joshi from accessing the securities market and also prohibit him from buying, selling, and otherwise dealing in securities market, directly or indirectly, in any manner whatsoever, for a period of three years from the date of this order. 11. A copy of this Order shall be served upon the Noticee, Stock Exchangers and Depositories for ensuring compliance with the above directions. 12. This Order shall come into force with immediate effect.

Sd/-

Date: June 13th, 2016 RAJEEV KUMAR AGARWAL Place: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA