Order passed in the matter of Soundcraft Industries Ltd, Kolar Biotech Ltd and Adam Comsoft Ltd

Securities And Exchange Board Of India2 January 2012

Order No.WTM/PS/50/IVD/ID-4/JAN/2012

Ratio decidendi

The rule this decision rests on

Where an investigation into the dealings of named entities in the scrips is complete and records no adverse findings against an entity, continuing an interim restraint on that entity's dealings in those scrips is not warranted. Such an entity's interim directions under Sections 11, 11B and 11(4) may be revoked, while directions against entities with adverse findings continue. Where an entity's dealings in one scrip have been dealt with in separate proceedings, and its dealings in the other scrips show no adverse findings, the interim restraint on it is revoked. The revocation rests on the absence of adverse findings in the scrips under investigation, not on the separate outcome.

Written by Miss Lucy from the judgment below, not taken from a headnote.

Judgment

As delivered

WTM/PS/50/IVD/ID-4/JAN/2012 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER IN THE MATTER OF SOUNDCRAFT INDUSTRIES LTD., KOLAR BIOTECH LTD. AND ADAM COMSOF LTD. ORDER Under Sections 11, 11(4) and 11 B of the Securities and Exchange Board of India Act, 1992

1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’), initiated investigations in certain scrips namely Kolar Biotech Ltd (hereinafter referred to as ‘KBL’), Soundcraft Industries Ltd. (hereinafter referred to as ‘SIL’) and Adam Comsof Ltd. (hereinafter referred to as ‘ACL’) (hereinafter collectively referred to as the ‘companies’) following complaints from various entities of fraudulent practices therein. Examination in the scrips of the companies revealed that several favourable announcements were made by KBL alongside the non-disclosure of adverse developments to the stock exchange. Irregularities were also observed in the scrips of associate companies of KBL, i.e., ACL and SIL.

2. Pursuant to the preliminary investigation, SEBI vide an ad interim ex-parte Order dated September 30, 2004 (hereinafter referred to as the ‘interim order’), issued under Sections 11 and 11B of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘SEBI Act’), directed 58 entities not to buy, sell or deal in any other manner in the shares of the companies, i.e., ACL, KBL and SIL. The entities were given time to file replies as well as opportunity for personal hearing thereafter. Upon considering the replies of those entities that chose to reply and the material available on record, SEBI passed an order dated February 18, 2005 confirming the interim order dated September 30, 2004 against all the entities covered therein.

3. Pursuant to the completion of investigations in all the three scrips, I note that there are no adverse findings and hence no action is recommended in relation to the following entities: Sl. No. Name of Entity i. Reshma Plastics Pvt. Ltd.- – major shareholder, Kolar Biotech Ltd. ii. RVSK Information Technology Ltd.- major shareholder, Adams Comsof Ltd iii. Glorious Investrade P. Ltd. - major shareholder, Adams Comsof Ltd iv. Sh. Pradeep Rathi – Promoter, Adam Comsof Ltd v. Sh. Indramal S. Jain - Promoter, Adam Comsof Ltd. vi. Sh. Nazir N. Desai - Promoter, Kolar Biotech Ltd. vii. Sh. Maqbool A.G. Matwankar - Promoter, Kolar Biotech Ltd viii. Sh. Kiran Bansal - Major selling client ix. Steel Traders P Ltd. - Major selling client M/s Shree Satyanand Investments (Shyam Sunder Jhunjhunwala) - Major selling x. client xi. M/s Subhlaxmi (Ramkishore Jhujhunwala) - Major selling client xii. Suvik Finvest & Cons P Ltd. - Major selling client xiii. Sh. Pushpa Mahadik – Director, Kolar Biotech Ltd. xiv. Sh. Prithvijit Debnath – Director, Kolar Biotech Ltd. xv. Sh. Anil Bhaskar Tambe – Director, Kolar Biotech Ltd. xvi. Sh. Jayendra Pragji Thakkar – Director, Kolar Biotech Ltd. xvii. Sh Nirmal N Kotecha - Major selling client

4. Further, in the case of Manorama Trading Ltd., one of the entities against whom the interim order was passed, proceedings under Section 11B of the SEBI Act were intiated with respect to its dealings in SIL. SEBI passed an order dated October 16, 2009, inter alia, against Manorama Trading Ltd debarring it for a period of 1 year in view of its role in the manipulation in the scrip of SIL in violation of Section 12A(a) to (c) of the SEBI Act, Regulations 3(a) to (d), 4(1) and 4(2)(f), (k) and (r) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities

Market) Regulations, 2003, Regulation 7(1A) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997, Regulation 13(4) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 and Clause 15.1.6 of the SEBI (Disclosure and Investor Protection) Guidelines, 2000. I also note that, with respect to the dealings of Manorama Trading Ltd. in the scrips of ACL and KBL, there are no adverse findings and hence no action is recommended in relation to Manorama Trading Ltd.

5. In view of the foregoing, I do not find it appropriate to continue with the directions passed by SEBI, vide interim order dated September 30, 2004, which was subsequently confirmed, vide order dated February 18, 2005 as against the entities mentioned in para 3 and 4 above.

6. Accordingly, I, in exercise of the powers conferred upon me under Section 19 of the SEBI Act read with Sections 11, 11B and 11(4) thereof, do hereby revoke the interim directions issued vide ad interim ex-parte order dated September 30, 2004 and confirmatory order dated February 18, 2005 against the following entities: Sl. No. Name of Entity i. Reshma Plastics Pvt. Ltd.- – major shareholder, Kolar Biotech Ltd. ii. RVSK Information Technology Ltd.- major shareholder, Adams Comsof Ltd iii. Glorious Investrade P. Ltd. - major shareholder, Adams Comsof Ltd iv. Sh. Pradeep Rathi – Promoter, Adam Comsof Ltd v. Sh. Indramal S. Jain - Promoter, Adam Comsof Ltd. vi. Sh. Nazir N. Desai - Promoter, Kolar Biotech Ltd. vii. Sh. Maqbool A.G. Matwankar - Promoter, Kolar Biotech Ltd viii. Sh. Kiran Bansal - Major selling client ix. Steel Traders P Ltd. - Major selling client M/s Shree Satyanand Investments (Shyam Sunder Jhunjhunwala) - Major selling x. client xi. M/s Subhlaxmi (Ramkishore Jhujhunwala) - Major selling client xii. Suvik Finvest & Cons P Ltd. - Major selling client xiii. Sh. Pushpa Mahadik – Director, Kolar Biotech Ltd. xiv. Sh. Prithvijit Debnath – Director, Kolar Biotech Ltd. xv. Sh. Anil Bhaskar Tambe – Director, Kolar Biotech Ltd. xvi. Sh. Jayendra Pragji Thakkar – Director, Kolar Biotech Ltd. xvii. Sh Nirmal N Kotecha - Major selling client xviii. Manorama Trading Ltd - Promoter, Kolar Biotech Ltd

7. Copy of this Order shall be forwarded to both the depositories i.e., the National Securities Depository Limited and the Central Depository Services (India) Limited, and they are advised to lift the restrictions imposed by SEBI vide its Orders dated September 30, 2004, and February 18, 2005, on the persons/entities mentioned in Paragraph 6 above.

8. It is further clarified that the restrictions imposed by SEBI vide its Orders dated September 30, 2004, and February 18, 2005, against the other entities covered therein, shall continue.

9. A copy of this order shall be served on all recognized stock exchanges and depositories.

DATE : 2/JANUARY/2012 PRASHANT SARAN PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA

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