Order under Sections 11 and 11B against Acme Craft P. Ltd. and its Directors, viz. Mr. Jigar Jagdish Pandya and Mr. Akash Ganachari

WTM/SR/IVD/ID-4/ 71 /09/2014 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: S. RAMAN, WHOLE TIME MEMBER ORDER Under Sections 11 and 11B of the Securities and Exchange Board of India Act, 1992 read with Regulation 11 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 against Acme Craft P. Ltd. (PAN: AAECA8833C) and its Directors, viz. Mr. Jigar Jagdish Pandya (PAN: AFDPP5295C) and Mr. Akash Ganachari (PAN: AHIPG4734C) in the matter of manipulative trading in the scrips of Temptation Foods Ltd., Bang Overseas Ltd., Confidence Petroleum India Ltd. and Cals Refineries Ltd. 1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') vide its ad interim ex parte order dated June 4, 2009, inter alia restrained a group of 26 entities including Acme Craft P. Ltd. (hereinafter referred to as 'ACPL') from accessing the securities market and further prohibited them from buying, selling or dealing in securities market, directly or indirectly till further orders, as these entities including ACPL were prima facie found to be instrumental in manipulating the trading in the scrips of five companies including Temptation Foods Ltd. (hereinafter referred to as 'Temptation'), Bang Overseas Ltd. (hereinafter referred to as 'Bang'), Confidence Petroleum India Ltd. (hereinafter referred to as 'Confidence') and Cals Refineries Ltd. (hereinafter referred to as 'Cals'), during the following investigation periods- (a) 'Temptation' - for the period August 01, 2007 to February 28, 2009, (b) 'Bang' - for the period March 01, 2008 to February 28, 2009, (c) 'Confidence' - for the period January 01, 2008 to February 28, 2009; and (d) 'Cals' - for the period June 01, 2008 to February 28, 2009.

The aforesaid ad interim ex parte order was later confirmed, vide Order dated September 30, 2009 against ACPL. 2. The alleged manipulations in the scrips of Temptation, Bang, Confidence and Cals during the investigation period by a group of connected entities namely, Chandra Financial Services P. Ltd. ('CFSPL'), Kundan Leasing and Finvest P. Ltd. ('KLFPL'), Jay Investrade P. Ltd. ('JIPL'), HSM Financial Services P. Ltd. ('HSM'), Shanti Financial Services P. Ltd. ('SFSPL'), Maruti Securities Ltd. ('MSL') and ACPL (hereinafter referred collectively as 'connected entities' and individually by their respective names) were detected during routine market surveillance by SEBI. The preliminary examination of the trade data relating to these four scrips i.e. Temptation, Bang, Confidence and Cals, revealed inter-linkages among the 'connected entities', including ACPL, in the form of 'off-market' transactions as well as synchronized deals in the market. These 'connected entities' including ACPL were found to have traded in large concentration in these four scrips and a substantial portion of their trading amongst themselves in synchronized manner was found to have contributed to the increase in the market volume in these four scrips.

3. SEBI conducted a detailed investigation into the trading in the scrips of Temptation, Bang, Confidence and Cals for the respective investigation period. Upon completion of the investigation, separate show cause notices (SCNs) dated July 8, 2011 were issued to ACPL and its directors, viz. Mr. Jigar Jagdish Pandya and Mr. Akash Ganachari, who were the directors in charge of and responsible for the conduct of business of ACPL during the period of investigation, for the alleged violation of Regulation 3(a), (b), (c) and (d) and Regulation 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 (hereinafter referred to as 'PFUTP Regulations') read with Section 12A(a), (b) and (c) of the SEBI Act, 1992 in respect of the manipulative trading in the aforesaid four scrips. ACPL, Mr. Jigar Jagdish Pandya and Mr. Akash Ganachari, hereinafter together referred to as "Noticees" and individually by their respective names. Following were the allegations leveled against the Noticees in the SCN:

(i) ACPL executed synchronized trades / reversal trades / circular trades in the scrips of Temptation, Bang, Confidence and Cals.

(ii) ACPL manipulated the price of the scrips of Bang and Cals.

(iii) Therefore, ACPL and its directors viz. Mr. Jigar Jagdish Pandya and Mr. Akash Ganachari, who were in charge of the day-to-day management of ACPL during the relevant period, have indulged in acts, which led to the creation of false or misleading appearance of trading in the scrips of Temptation, Bang, Confidence and Cals with no intention of transfer of beneficial ownership and also manipulated the price of the scrips of Bang and Cals.

4. I note that despite several letters and reminders from SEBI, the Noticees have neither filed their reply to SEBI's SCN dated July 8, 2011 nor have availed the opportunity for personal hearing which was communicated to them vide letter dated March 26, 2013. I observe that SEBI, vide letter dated March 26, 2013 advised the Noticees to indicate before April 15, 2013 whether they would like to avail the opportunity of personal hearing in the matter. I note that the Noticees, have neither submitted any reply nor availed the opportunity of personal hearing. From the above, it is observed that the Noticees have been provided with enough opportunity to submit their reply and to avail the opportunity of personal hearing. In view of this, I am constrained to proceed with the matter ex parte on the basis of the materials and information available on record.

CONSIDERATION OF ISSUES AND FINDINGS

5. I have considered the SCNs dated July 8, 2011 issued by SEBI and other materials available on record. In light of the same, I shall now proceed to deal with the charges alleged against the Noticees in the SCNs. It is alleged that the Noticees, along with the connected entities, have indulged in acts, which led to the creation of false and misleading appearance of trading in the scrips of Temptation, Bang, Confidence and Cals with no intention to transfer beneficial ownership of shares and manipulated the price of the scrips of Bang and Cals. The issues that arise for consideration in the instant case are, i. Whether the Noticees have indulged in synchronized trades/circular trades/reversal trades, which created false and misleading appearance of trading in the scrips of Temptation, Bang, Confidence and Cals, ii. Whether the Noticees have manipulated the price of the scrips of Bang and Cals.

6. Before proceeding further, the relevant provisions of the Regulations alleged to have been violated by the Noticees may be reproduced for reference purpose.

PFUTP Regulations, 2003 Regulation 3 3. Prohibition of certain dealings in securities No person shall directly or indirectly— (a) buy, sell or otherwise deal in securities in a fraudulent manner;

(b) use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of the Act or the rules or the regulations made there under; (c) employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange; (d) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made there under. Regulation 4 4. Prohibition of manipulative, fraudulent and unfair trade practices (1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities. (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely:— (a) indulging in an act which creates false or misleading appearance of trading in the securities market; (b) dealing in a security not intended to effect transfer of beneficial ownership but intended to operate only as a device to inflate, depress or cause fluctuations in the price of such security for wrongful gain or avoidance of loss; (e) any act or omission amounting to manipulation of the price of a security; (g) entering into a transaction in securities without intention of performing it or without intention of change of ownership of such security;

7. FINDINGS

CONNECTION AMONGST THE ENTITIES

7.1. I note that- (a) CFSPL, KLFPL, JIPL, HSM and SFSPL have common directors namely Mr. Harsh Shirish Maniar and Mr. Jay Shirish Maniar and have common address at Achal Bhuvan, 3rd Floor, 21 Modi Street, Fort, Mumbai. Hence, these entities are related to each other and have been collectively referred to as 'Maniar Group'.

(b) ACPL, Maniar Group and MSL had financial dealings and off-market transfer of shares with each other leading to the credence that they knew each other. Further, all these entities have traded mostly through trading members viz.; M/s. Krishvi Securities P. Ltd. ('Krishvi') and M/s. Chandravadan J. Dalal ('CJ Dalal'), both are trading members of Bombay Stock Exchange (BSE).

(c) Mr. Deepak Chandravadan Dalal (proprietor of CJ Dalal) and Ms. Anita Deepak Dalal (Director of Krishvi) are husband and wife. Thus, trading members CJ Dalal and Krishvi are connected /related to each other.

7.1.1. From the above, it is clear that the aforesaid entities including ACPL are connected to one another and together form a group. I, now proceed to examine, in the following paragraphs, the details of the trades in the scrips of Temptation, Bang, Confidence and Cals during relevant investigation period in order to deal with charges leveled against the Noticees in the SCN.

7.2. TRADING BY “CONNECTED ENTITIES”

7.2.1. From the material available on record, the summary of data relating to trading by “connected entities” during the investigation period in the scrip of Cals, Confidence, Bang and Temptation is tabulated as under:-

Scrip Vol. Total Vol. Connected Connected Connected Connected Entities Connected Entities Vol. (Period) Concentration (BSE) Entities Buy Entities Sell Entities Vol. amongst with others Qty. Qty. Total themselves Traded Vol. Cals (Jun- No. of shares 85,78,47,441 33,00,91,382 30,65,41,597 63,66,32,979 19,94,92,130 43,71,40,849 08 to Feb-09) % of mkt. 100.00 38.48 35.73 74.21 23.25 50.96 vol. Confidence No. of shares 15,27,32,567 3,54,49,213 4,99,32,506 8,53,81,719 2,21,05,531 6,32,76,188 (Jan-08 to % of mkt. 100.00 23.21 32.69 55.90 14.47 41.43 Feb-09) vol. Bang (Mar- No. of shares 2,65,70,064 1,14,48,495 1,08,32,221 2,22,80,716 70,43,514 1,52,37,202 08 to Feb- % of mkt. 100.00 43.11 40.78 83.89 26.55 57.34 09) vol. Temptation No. of shares 53,88,533 63,23,928 1,17,12,461 20,57,465 96,54,996 (Aug-07 to % of mkt. 100.00 23.36 27.41 50.77 8.92 41.85 Feb-09) vol.

7.2.2.From the above data, it may be seen that “connected entities” had substantial trading concentration ranging from 50.77% (in Temptation) to 83.89 % (in Bang). They had done substantial buying as well as selling. Further, a good portion of the above trades done by “connected entities” were amongst themselves i.e. they were buying and selling shares amongst themselves thereby contributing to the increase in market traded volume. Many of the trades amongst “connected entities” were synchronized in nature.

7.2.3.In the scrip of Temptation, it is observed that the “connected entities” have contributed 50.77% to the total market volume out of which the buy volume and sell volume contribution were 23.36% and 27.41% to the total market volume. Out of the total traded volume of 1,17,12,461 shares (50.77%) contributed by the "connected entities", the volume of 96,54,749 shares (41.85%) were contributed by the trades executed between “connected entities” and other entities during the period and the remaining volume of 20,57,712 shares (8.92%) were contributed by the trades executed among the “connected entities”.

7.2.4.In the scrip of Bang, it is observed that the “connected entities” have contributed 83.89% to the total market volume out of which the buy volume and sell volume contribution were 43.11% and 40.78% to the total market volume. Out of the total traded volume of 2,22,80,716 shares (83.89%) contributed by the "connected entities", the volume of 1,52,37,202 shares (57.34%) were contributed by the trades executed between “connected entities” and other entities during the period and the remaining volume of 70,43,514 shares (26.55%) were contributed by the trades executed among the “connected entities”.

7.2.5.In the scrip of Confidence, it is observed that the “connected entities” have contributed 55.90% to the total market volume out of which the buy volume and sell volume contribution were 23.21% and 32.69 to the total market volume. Out of the total traded volume of 8,53,81,719 shares (55.90%) contributed by the "connected entities", the volume of 6,32,76,188 shares (41.43%) were contributed by the trades executed between “connected entities” and other entities during the period and the remaining volume of 2,21,05,531 shares (14.47%) were contributed by the trades executed among the “connected entities”.

7.2.6.In the scrip of Cals, it is observed that the “connected entities” have contributed 74.21% to the total market volume out of which the buy volume and sell volume contribution were 38.48% and 35.73% to the total market volume. Out of the total traded volume of 63,66,32,979 shares (74.21%) contributed by the "connected entities", the volume of 43,71,40,849 shares (50.96%) were contributed by the trades executed between “connected entities” and other entities during the period and the remaining volume of 19,94,92,130 shares (23.25%) were contributed by the trades executed among the “connected entities”.

7.2.7. The details of the circular, synchronized and reversed trades executed by the connected entities including ACPL in the scrips of Temptation, Bang, Confidence and Cals are as follows:

7.3. TRADING IN THE SCRIP OF TEMPTATION

A. Circular Trades a) During November 7 – 20, 2008

7.3.1. The SCN alleges that ACPL along with connected entities viz. CFSPL, KLFPL, JIPL and MSL had indulged in circular trading through 'market' as well as in 'off-market' transactions. During November 07, 2008 to November 20, 2008 they traded in this scrip through trading members CJ Dalal, Krishvi and Lalkar Securities P. Ltd. ('Lalkar') as described in the following Tables:- Table I - Market Transactions:

Trade Date Sell Client Sell Member Buy Member Buy Client Quantity Name Name Name Name 07-Nov-08 ACPL Krishvi CJ Dalal CFSPL 8,500 10-Nov-08 ACPL Krishvi CJ Dalal KLFPL 3,125 11-Nov-08 CFSPL Krishvi CJ Dalal MSL 8,500 12-Nov-08 KLFPL CJ Dalal Krishvi JIPL 3,125 14-Nov-08 MSL Lalkar CJ Dalal KLFPL 8,500 18-Nov-08 CFSPL Lalkar CJ Dalal MSL 11,625 20-Nov-08 MSL Lalkar CJ Dalal ACPL 11,250

Table II - Off Market Transactions:

Execution Date Seller Name Buyer Name Quantity 18-Nov-08 JIPL CFSPL 3,125 18-Nov-08 KLFPL CFSPL 8,500

7.3.2. The above trades are pictorially presented as follows:-

7.3.3. From the above transactions, it is noted that ACPL sold 8,500 shares on November 7, 2008 to CFSPL and 3,125 shares on November 10, 2008 to KLFPL (i.e. a total of 11,625 shares). Subsequently, through circular transfer of shares amongst the connected entities, (viz. CFSPL, KLFPL,MSL and JIPL), ACPL received back 11,250 shares on November 20, 2008 from MSL.

b) During November 25, 2008 – December 4, 2008

7.3.4. During the November 25, 2008 to December 04, 2008, ACPL along with connected entities, viz. CFSPL, KLFPL, JIPL and MSL had indulged in circular trading through 'off-market' and the 'market' transactions. The details are as under:-

Table - III Off-Market Transactions: Execution Date Seller Name Buyer Name Quantity 25-Nov-08 ACPL CFSPL 11,250

Table - IV Market Transactions:

Trade Date Sell Client Sell Member Buy Member Buy Client Quantity Name Name Name Name 25-Nov-08 CFSPL Lalkar CJ Dalal MSL 11,250 28-Nov-08 MSL Krishvi CJ Dalal JIPL 11,250 01-Dec-08 JIPL Krishvi CJ Dalal CFSPL 11,250 02-Dec-08 CFSPL Krishvi CJ Dalal MSL 11,226 03-Dec-08 MSL Krishvi CJ Dalal KLFPL 11,324 04-Dec-08 KLFPL CJ Dalal Krishvi ACPL 11,325

7.3.5. These trades are pictorially presented as under:-

7.3.6. From the above transactions, it is noted that ACPL transferred in 'off-market' 11,250 shares on November 25, 2008 to CFSPL. Subsequently, through circular transfer of shares amongst the connected entities, (viz. MSL, JIPL, CFSPL and KLFPL) in market, ACPL received back 11,325 shares on December 4, 2008 from KLFPL.

c) During January 7, 2009 – January 12, 2009

7.3.7. The SCN alleges that during the January 7, 2009 to January 12, 2009 ACPL along with the connected entities viz. CFSPL and JIPL, had indulged in circular trading through 'off-market' and the 'market' transactions. The details are as under:-

Table - V Market and Off-Market Transactions:

Execution Date Seller Name Buyer Name Quantity Market/Off market 07-Jan-09 ACPL CFSPL 26,750 Off market CFSPL(through JIPL (through broker 07-Jan -09 broker Lalkar) CJ Dalal) 26,750 Market 12-Jan-09 JIPL CFSPL 26,750 Off-market CFSPL(through ACPL (through broker Market 12-Jan -09 broker Lalkar) CJ Dalal) 26,750

7.3.8. These trades are pictorially presented as under:-

7.3.9. From the above transactions, it is noted that on January 7, 2009, ACPL transferred 26,750 shares in off market to CFSPL and CFSPL, sold these shares in market to JIPL. On January 12, 2009, JIPL sold these shares back to CFSPL in off-market and CFSPL inturn sold these shares to ACPL in market.

7.3.10. From the above transactions, a clear pattern of circular trading is evident in the trades amongst the above clients, viz; CFSPL, KLFPL, JIPL, MSL and ACPL in the manner:- A>B>C>D>A. I note that such pattern of circular trading in the scrip of Temptation continued for 23 trading days during the months of November and December 2008 amongst these entities and they traded for 4,47,831 shares (circular quantity) in 230 trades which constituted 14% of total traded volume in these two months i.e. 30,44,625 shares. I further note that such pattern of circular trading in this scrip continued for 20 trading days during January and February 2009 amongst these entities wherein they traded for 2,91,706 shares (circular quantity) in 50 trades which constituted 9.54% of the total traded volume in these two months i.e. 30,56,312 shares.

SYNCHRONIZED TRADES

7.3.11. I also note that in the SCN it has been alleged that ACPL has entered into synchronized trades with the connected entities namely CFSPL, KLFPL and MSL in the scrip of Temptation during the month of December 2008. On analyzing the "summary of trades" pertaining to the said period annexed along with the SCN, it is observed that ACPL along with the connected entities had placed buy and sell orders for the same number of shares, for the same price and almost at the same time and thus had indulged in synchronized trades. The group of connected entities have involved in the synchronized orders, in terms of price, quantity and order time, of around 2,03,250 shares. The instances of synchronized trades executed by ACPL, observed during the period is as follows:-

Table-VII Details of Synchronized Trades:

Trade Trade Trade Order Order Order Buy Buy Sell Sell Traded CP CP CP Time Qty Rate Date Rate Time Time Qty Rate Client Client Client Client Qty Order Order Order Diff Diff Diff Name Member Member Name Time Qty Rate Name Name 11-Dec-08 166.75 15:25:44 15:25:40 5000 166.75 ACPL Krishvi CJ Dalal MSL 5000 15:25:42 5000 166.75 0:00:02 0 0.00 15-Dec-08 167.70 14:29:40 14:29:39 30000 167.70 ACPL Krishvi Lalkar CFSPL 30000 14:29:39 30000 167.7 0:00:00 0 0.00 15-Dec-08 167.75 14:55:47 14:55:46 5000 167.75 KLFPL Krishvi CJ Dalal ACPL 5000 14:55:43 5000 167.75 0:00:03 0 0.00 15-Dec-08 167.75 14:56:00 14:55:59 7000 167.75 KLFPL Krishvi CJ Dalal ACPL 7000 14:55:55 7000 167.75 0:00:04 0 0.00 19-Dec-08 154.00 11:31:42 11:31:41 10000 154.00 ACPL Krishvi Lalkar CFSPL 10000 11:31:39 10000 154 0:00:02 0 0.00 19-Dec-08 154.00 11:32:03 11:32:02 10000 154.00 ACPL Krishvi Lalkar CFSPL 10000 11:32:00 10000 154 0:00:02 0 0.00 19-Dec-08 150.25 13:42:25 13:42:24 10000 150.25 ACPL Krishvi Lalkar CFSPL 10000 13:42:22 10000 150.25 0:00:02 0 0.00 19-Dec-08 150.25 13:42:40 13:42:37 10000 150.25 ACPL Krishvi Lalkar CFSPL 10000 13:42:39 10000 150.25 0:00:02 0 0.00 19-Dec-08 150.25 13:42:58 13:42:57 10000 150.25 ACPL Krishvi Lalkar CFSPL 10000 13:42:57 10000 150.25 0:00:00 0 0.00 19-Dec-08 149.75 13:43:28 13:43:27 17500 149.75 ACPL Krishvi Lalkar CFSPL 17500 13:43:27 17500 149.75 0:00:00 0 0.00

7.3.12. From the above transactions, I find that the Noticees along with the connected entities has indulged in 10 synchronized trades during the month of December and a total of 1,14,500shares were synchronized in terms of price, quantity and order time. The aforesaid trades clearly indicate that ACPL along with the connected entities executed the trades with a pre-determined plan to match their trades which were not indicative of genuine transactions since it did not result into transfer of beneficial ownership.

7.4. TRADING IN THE SCRIP OF BANG

A. Price Manipulation during the period October 1, 2008 to December 31, 2008

7.4.1. From the SCN, it is noted that the price of the scrip of Bang decreased from `267/- to `151/- a decline of `116 i.e. 43.45% in 55 trading session with 15,61,178 shares traded in 1,474 trades. It was alleged that the buy trades of MSL, Maniar Group and ACPL had impact of `84.75, `220.10 and `47.30 respectively. During the period, there were totally 417 buy trades which were executed at a price higher than last traded price (LTP), 216 buy trades were executed by the aforesaid connected entities.

7.4.2. In view of the aforesaid allegations in respect of price manipulation, the entity-wise details like gross purchases, net impact of buy trades, number of buy trades at price above/at/below LTP etc. as given in the Annexure to the SCN have been analyzed. I find that the total trades executed by ACPL in the scrip of Bang at the price higher than LTP are less than the total trades executed by them at price lower than LTP and at the LTP. For instance, during the period, I note that ACPL had traded in 1,66,070 shares in 38 trades which were executed at LTP or at price lower than LTP as compared to 90,950 shares in 26 trades at price higher than LTP. From these facts, I find that ACPL placed more shares and orders at LTP or at price lower than LTP, than at price higher than LTP. Hence, I am of the considered view that there is no substantial evidence in the SCN to establish the allegation of price manipulation. I, therefore, find that the charge of price manipulation in the scrip of Bang under Regulation 4(2) (b) and (e) of PFUTP Regulations, is not conclusively established against ACPL as observed above.

B. Circular Trades

7.4.3. I note that during October 2008 to December 2008, the total traded volume in the scrip of Bang on BSE was 15,61,178 shares. The trading volume of connected entities viz; CFSPL, KLFPL, JIPL, MSL and ACPL ranged between 86.86% to 99.91% of the total volume on BSE during this period. Further, as described in the SCNs these entities had indulged in 'market' as well as in 'off-market' transactions in the scrip during October 2008 to December 2008 through trading members CJ Dalal, Krishvi and Lalkar. Some of those 'market' and the 'off-market' transactions done by these entities in this scrip for the period October 31, 2008 to November 18, 2008 as the "summary of circular trades" annexed along with the SCN are as under:-

Table – VIII Market Transaction Trade Date Sell Client Sell Member Name Buy Member Name Buy Client Quantity Name Name 31-Oct-08 MSL CJ Dalal CJ Dalal ACPL 2256 3-Nov-08 MSL Krishvi CJ Dalal JIPL 20000 5-Nov-08 JIPL Krishvi CJ Dalal ACPL 11000 6-Nov-08 ACPL Krishvi CJ Dalal KLFPL 3800 6-Nov-08 CFSPL Krishvi CJ Dalal KLFPL 500 6-Nov-08 JIPL Krishvi CJ Dalal KLFPL 6000 6-Nov-08 MSL Krishvi CJ Dalal KLFPL 37803 7-Nov-08 ACPL Krishvi CJ Dalal CFSPL 11770 7-Nov-08 MSL Krishvi CJ Dalal CFSPL 15000 10-Nov-08 KLFPL Krishvi CJ Dalal CFSPL 48468 11-Nov-08 CFSPL Krishvi CJ Dalal JIPL 27820 12-Nov-08 CFSPL CJ Dalal Krishvi ACPL 30000 12-Nov-08 CFSPL CJ Dalal Pravin V Shah JIPL 10000 14-Nov-08 CFSPL Lalkar CJ Dalal KLFPL 21000 14-Nov-08 JIPL Krishvi CJ Dalal KLFPL 6999 17-Nov-08 ACPL CJ Dalal Krishvi MSL 22000 17-Nov-08 JIPL CJ Dalal Krishvi MSL 8000 17-Nov-08 CFSPL CJ Dalal SPS MSL 4500 17-Nov-08 JIPL CJ Dalal SPS MSL 2000 17-Nov-08 ACPL CJ Dalal Pravin V Shah MSL 8000 18-Nov-08 CFSPL Lalkar CJ Dalal MSL 32973

Table – IX Off Market Transaction Execution Date Seller Name Buyer Name Quantity 14-Nov-08 JIPL CFSPL 11,000 14-Nov-08 JIPL CFSPL 10,000 18-Nov-08 KLFPL CFSPL 28,973 7.4.4. These trades are pictorially presented as under:-

7.4.5. From the above transactions, a clear pattern of circular trading is evident in the trades amongst the above clients, viz; CFSPL, KLFPL, JIPL, MSL and ACPL in the manner:- A>B>C>D>A. I find that these entities traded (159 trades in 35 trading days) for 13,76,266 shares through circular trading, which constituted 88% of the total traded volume in the scrip during October to December 2008. I also note that their day-wise contribution ranged from 42.80% to 100%.

During January 12, 2009 – January 16, 2009

7.4.6. The SCN alleges that during the January 12, 2009 to January 16, 2009 ACPL along with connected entities viz. CFSPL and KLFPL, had indulged in circular trading through 'market' and 'off-market' transactions. The details are as under:-

Table - X Off - Market Transactions: Execution Date Seller Name Buyer Name Quantity 12-Jan-09 CFSPL ACPL 34,044 13-Jan-09 KLFPL CFSPL 24,352

Table - XI Market Transactions: Trade Sell Client Sell Member Name Buy Member Name Buy Client Name Quantity Date Name 12-Jan-09 ACPL Krishvi CJ Dalal KLFPL 34,044 13-Jan-09 CFSPL Lalkar CJ Dalal ACPL 24,352 15-Jan-09 ACPL Krishvi CJ Dalal CFSPL 24,279 7.4.7. These trades are pictorially presented as under:-

7.4.8. From the above transactions, a clear pattern of circular trading is evident in the trades amongst the above clients, viz; KLFPL and CFSPL and the noticee in the manner:- A>B>C>D>A. I find that these entities traded (161 trades in 33 trading days) for 15,33,751 shares through circular trading, which constituted 88% of the total traded volume in the scrip during January to February 2009.

C. Synchronized Trades

7.4.9. I also note that in the SCNs it has been alleged that ACPL has entered into synchronized trades with the connected entities namely CFSPL and KLFPL in the scrip of Bang during the month of January 2009:-

Table - XII Details of Synchronized Trades:

Trade Trade Trade Order Order Order Buy Buy Sell Sell Trade CP CP CP Time Qty Rate Date Rate Time Time Qty Rate Client Client Client Client Qty Order Order Order Diff Diff Diff Name Member Member Name Time Qty Rate Name Name 13-Jan-09 124.45 13:55:20 13:55:20 5000 124.45 ACPL CJ Dalal Lalkar CFSPL 5000 13:55:16 5000 124.45 0:00:04 0 0.00 21-Jan-09 138.50 15:25:58 15:25:58 20000 138.50 ACPL CJ Dalal Lalkar CFSPL 20000 15:25:55 20000 138.5 0:00:03 0 0.00 23-Jan-09 140.50 12:48:05 12:48:05 4000 140.50 CFSPL CJ Dalal Krishvi ACPL 4000 12:47:58 4000 140.5 0:00:07 0 0.00 23-Jan-09 150.00 15:03:21 15:03:21 15000 150.00 KLFPL CJ Dalal Krishvi ACPL 12907 15:03:10 15000 150 0:00:11 0 0.00 23-Jan-09 150.00 15:03:29 15:03:29 15000 150.00 KLFPL CJ Dalal Krishvi ACPL 2089 15:03:10 15000 150 0:00:18 0 0.00 23-Jan-09 150.00 15:03:29 15:03:29 15000 150.00 KLFPL CJ Dalal Krishvi ACPL 12411 15:03:22 15000 150 0:00:06 0 0.00 28-Jan-09 136.25 13:18:12 13:18:12 7500 136.25 ACPL Krishvi Lalkar CFSPL 7499 13:18:08 7500 136.25 0:00:04 0 0.00 28-Jan-09 137.75 14:20:47 14:20:46 7500 137.75 ACPL Krishvi Lalkar CFSPL 7500 14:20:45 7500 137.75 0:00:01 0 0.00

7.4.10. From the above transactions, I find that ACPL had placed buy and sell orders for the same number of shares, for the same price and almost at the same time and thus had indulged in synchronized trades.

7.4.11. From the aforesaid details of circular and synchronized trades by the connected entities in the scrips Bang and Temptation, I find that the pattern of trades adopted by the connected entities are similar in both the scrips. I, therefore, hold the same view with respect to the circular trades in the scrip of Bang as in the case of Temptation.

7.5. TRADING IN THE SCRIP OF 'CONFIDENCE'

7.5.1. I note that the total traded volume in the scrip of Confidence during the investigation period (January 01,2008 to February 28,2009) was 15,27,32,567 shares out of which CFSPL, KLFPL, JIPL, MSL and ACPL had traded 6,71,72,730 shares i.e. 43.98% of the total traded volume.

Further, these five connected entities including ACPL had traded amongst themselves for 1,89,27,230 shares i.e. 28.17% of their total traded volume and 12.40% of the total market volume in the scrip during the investigation period.

A. Circular Trades

7.5.2. During October 2008 to December 2008, the total traded volume in the scrip was 3,64,53,486 shares. As described in the SCNs CFSPL, KLFPL, JIPL, MSL and ACPL had indulged in 'market' as well as in 'off-market' transactions in the scrip during October 2008 to December 2008. Some of those 'market' and the 'off-market' transactions done by these entities in this scrip as noted from the "summary of circular trades" annexed along with the SCN are reproduced as under:-

Table - XIII 'Market' Transactions:

Trade Date Sell Client Name Sell Member Name Buy Member Buy Client Quantity Name Name 27-Oct-08 MSL Lalkar CJ Dalal ACPL 7,65,608 29-Oct-08 ACPL Krishvi CJ Dalal MSL 4,86,897 31-Oct-08 ACPL CJ Dalal Krishvi KLFPL 1,49,587 3-Nov-08 MSL Lalkar CJ Dalal JIPL 7,00,000 5-Nov-08 JIPL Krishvi CJ Dalal ACPL 9,93,295 7-Nov-08 ACPL Krishvi CJ Dalal CFSPL 9,64,294 11-Nov-08 CFSPL Lalkar CJ Dalal MSL 9,75,000

Table –XIV 'Off-Market' Transactions:

Execution Date Seller Name Buyer Name Quantity 4-Nov-08 ACPL MSL 68,374 4-Nov-08 KLFPL MSL 1,43,481

7.5.3. These trades can be pictorially presented as under:-

7.5.4. From the above transactions, a clear pattern of circular trading is evident in the trades amongst the above clients, viz; CFSPL, KLFPL, JIPL, MSL and ACPL in the manner:- A>B>C>D>A.

7.5.5. I find that these trades amongst five connected entities were done in 100 trades on 30 trading days for 1,02,55,515 shares which constituted 28.80% of total traded volume during October 2008 to December 2008. It is noted from above transactions that a pattern of circular trading is clearly observed amongst these clients in this scrip similar to that noticed in the scrips of Temptation and Bang. I, therefore, hold the same view with respect to the circular trades in this scrip also as in respect of the scrips of Temptation and Bang.

B. Synchronized Trades

7.5.6. I also note that ACPL and KLFPL had also executed following synchronized trade that matched in terms of order time, quantity and price. The trade details are as under:-

Table - XV Details of Synchronized Trades: Trade Trad Trade Trade Order Orde Orde Buy Buy Sell Sell Traded CP CP CP Time Qty Rate Date e Rate Time Time r r Clien Client Client Clien Qty Order Orde Order Diff Dif Diff No Qty Rate t MembeMembe t Time r Qty Rate f Nam r Name r Name Nam e e 31-Oct-08 303 9.37 15:13:07 15:13:05 149587 9.37 KLFPL Krishvi CJ Dalal ACPL 149587 15:13:06 149587 9.37 00:00:01 0 0 7.5.7. I find that the above trade was a synchronized one with respect to price, quantity and time.

7.6. TRADING IN THE SCRIP OF CALS

A. Price Manipulation during the period June 2, 2008 to February 27, 2009

7.6.1. From the SCN, it is noted that the price of the scrip of Cals decreased from `6.55/- on June 2, 2008 to `0.45/- on February 27, 2009. It was alleged that the buy trades of MSL, Maniar Group and ACPL had impact of `10.87, `5.04 and `1.42 respectively.

7.6.2. In view of the aforesaid allegations in respect of price manipulation, the entity-wise details like gross purchases, net impact of buy trades, number of buy trades at price above/at/below LTP etc. as given in the Annexure to the SCN have been analyzed. I find that the total trades executed by ACPL in the scrip of Cals at the price higher than LTP are less than the total trades executed by them at price lower than LTP and at the LTP. For instance, during the period, I note that ACPL had traded in 3,53,94,982 shares in 481 trades which were executed at LTP or at price lower than LTP as compared to 35,72,067 shares in 81 trades at price higher than LTP. From these facts, I find that ACPL placed more shares and orders at LTP or at price lower than LTP, than at price higher than LTP. Hence, I am of the considered view that there is no substantial evidence in the SCN to establish the allegation of price manipulation. I, therefore, find that the charge of price manipulation in the scrip of Cals under Regulation 4(2) (b) and (e) of PFUTP Regulations, is not conclusively established against ACPL as observed above.

B. Reversed Trades

7.6.3. The total traded quantity in this scrip during the investigation period (June 01, 2008 to February 28, 2009) was 85,78,47,441 shares out of which the connected entities including ACPL traded for 57,82,62,980 shares i.e. 67.41% of the total traded volume through trading members CJ Dalal and Krishvi. These entities had traded amongst themselves for 18,44,54,844 shares i.e. 31.90% of their total traded volume.

7.6.4. It is noted from the SCN that during the investigation period, CFSPL, KLFPL, JIPL, MSL and ACPL had indulged in reversal trades in 'market' as well as in 'off-market' transactions in the scrip. Few instances of those 'market' and the 'off-market' transactions done by the connected entities including ACPL in this scrip are as under:-

Table - XVI Market Transactions:

Trade Date Sell Client Name Buy Client Name Quantity Market/off-market 15-Oct-08 JIPL(through Krishvi) ACPL (through CJ Dalal) 52,29,686 Market 20-Oct-08 ACPL(through Krishvi) JIPL (through CJ Dalal) 50,08,808 Market 23-Oct-08 JIPL MSL 50,00,000 off-market 23-Oct-08 MSL (through Lalkar) ACPL (through CJ Dalal) 48,39,008 Market 27-Oct-08 ACPL (through Krishvi) MSL (through CJ Dalal) 50,00,000 Market

7.6.5. These trades can be pictorially presented as under:-

7.6.6. From the above table, it is observed that on October 15, 2008, JIPL sold 52,29,686 shares to ACPL which was subsequently reversed wherein 50,08,808 shares were sold by ACPL to JIPL on October 20, 2008. Subsequently, on October 23, 2008 JIPL transferred in off-market50,00,000 shares to MSL. On October 23, 2010 MSL sold 48,39,008 shares to ACPL which was reversed wherein 50,00,000 shares were sold by ACPL to MSL on October 27, 2008. The aforesaid trades, which indicates a clear pattern of reversal of trades by the connected entities manifestly establish the complicity of ACPL in creating false and misleading appearance of trading in the scrip of Cals with no intention of transfer of beneficial ownership of shares.

C. Synchronized Trades

7.6.7. It is noted from the SCN that CFSPL, KLFPL, JIPL, MSL and ACPL had entered into synchronized trades in the scrip of Cals during November 25, 2008 to December 30, 2008. From the "summary of synchronized trades" annexed along with the SCN, it is noted that ACPL entered into following trades and the counter party to the said trades was one of the "connected entities", viz. MSL:-

Table - XVII Details of Synchronized Trades:

Trade Trade Trade Order Orde Orde Buy Buy Sell Sell Traded CP CP CP Time Qty Rate Date Rate Time Time r r Clien Client Client Clien Qty Order Orde Order Diff Dif Diff Qty Rate t MembeMembe t Time r Qty Rate f Nam r Name r Name Nam e e 11-Jul-08 4.17 15:51:38 15:51:34 300000 4.17 ACPL Krishvi CJ Dalal MSL 299500 15:51:38 300000 4.17 0:00:03 0 0.00 23-Oct-08 3.27 14:31:37 14:31:37 500000 3.27 ACPL CJ Dalal Lalkar MSL 476114 14:30:59 500000 3.27 0:00:38 0 0.00 23-Oct-08 3.27 14:31:42 14:31:42 500000 3.27 ACPL CJ Dalal Lalkar MSL 23886 14:30:59 500000 3.27 0:00:43 0 0.00 23-Oct-08 3.27 14:31:42 14:31:42 500000 3.27 ACPL CJ Dalal Lalkar MSL 476114 14:31:14 500000 3.27 0:00:28 0 0.00 23-Oct-08 3.27 14:31:48 14:31:47 500000 3.27 ACPL CJ Dalal Lalkar MSL 23885 14:31:14 500000 3.27 0:00:33 0 0.00 23-Oct-08 3.27 14:31:48 14:31:47 500000 3.27 ACPL CJ Dalal Lalkar MSL 476115 14:31:30 500000 3.27 0:00:18 0 0.00 23-Oct-08 3.27 14:31:53 14:31:53 500000 3.27 ACPL CJ Dalal Lalkar MSL 23885 14:31:30 500000 3.27 0:00:23 0 0.00 23-Oct-08 3.27 14:31:53 14:31:53 500000 3.27 ACPL CJ Dalal Lalkar MSL 476115 14:31:45 500000 3.27 0:00:08 0 0.00

7.6.8. From the above transactions, I find that, in those trades the difference in the quantity and price was zero and difference in time between buy and sell orders was almost negligible, i.e. maximum being 45 seconds. Hence, these trades executed amongst the connected entities were synchronized with respect to quantity, price and time.

7.7. From the trading pattern executed by ACPL, along with the connected entities, as has been detailed in the forgoing paragraphs, I observe that there were repeated instances of circular and synchronized trading over a period of time(during the respective investigation periods) amongst connected entities including ACPL in the scrips of Temptation, Bang, Confidence and Cals. The trading pattern as has been explained pictirially in the forgoing paragraphs clearly indicate that the shares sold by one connected entity were brought by another connected entity, which inturn were received back by the seller through circular trades. In the facts and circumstances of this case, both 'market' as well as 'off-market' transactions need to be taken into account to understand the nature of the transactions. I also observe that these entities have transferred shares in 'off-market' to camouflage the nature of circular transactions by attempting to break the chain of circular transfer of shares in 'market' transactions. In case of synchronized trades, as explained above, the shares ultimately remained with one or the other connected client, hence, there was no intention to transfer of beneficial ownership of shares. I also observe that ACPL has executed reversed trades with the connected entities in the scrip of Cals during the period of October 2008.

7.8. The Hon'ble Securities Appellate Tribunal in Ketan Parekh Vs. SEBI, (Appeal No. 2/2004 decided on July 14, 2006) observed "Whether a transaction has been executed with the intention to manipulate the market or defeat its mechanism will depend upon the intention of the parties which could be inferred from the attending circumstances because direct evidence in such cases may not be available. The nature of transactions executed, the frequency with which such transactions are undertaken, the value of the transactions, ........., the conditions then prevailing in the market are some of the factors which go to show the intention of the parties. This list of factors, in the very nature of things, cannot be exhaustive. Any one factor may or may not be decisive and it is from the cumulative effect of these that an inference will have to be drawn."

7.9. In the instant matter, the nature of transactions, volume of the transactions etc. undertook by the connected entities, including ACPL lead to the reasonable conclusion that such repeated matching of time, rate and quantity in anonymous screen based trading cannot be considered as mere coincidence. Such transactions are possible only through concerted and willful effort on the part of the connected entities including ACPL to match trades and to create false and misleading appearance of trading in the scrips of Temptation, Bang, Confidence and Cals, without the intention to transfer of beneficial ownership. The connection/relation amongst the connected entities including ACPL as has been explained in the Paragraph No. 7.1 above, has to be seen in line with the similar trading patterns adopted by these entities in all the four scrips. This drives home the fact that their activities are collusive, in coordination with each other and meant to create false and misleading appearance of trading in the said scrips, having an adverse impact on the interests of unsuspecting investors.

8. In view of the observations and findings as brought out supra, it can be concluded that the dealings of ACPL in the scrips of Temptation, Bang, Confidence and Cals, by entering into synchronized, circular and reversed trades with the connected entities with no intention of transfer of beneficial ownership in these scrips, were fraudulent and manipulative in nature and created artificial volumes in the said scrips. Such activities seriously affect the normal price discovery mechanism of securities market and disturbs the market equilibrium. Executing matching trades with a prior understanding is by itself a serious violation, which jeopardizes the integrity of the market (Chirag

Pujara vs. SEBI; 2008 Indlaw SAT 60). Mr. Jigar Jagdish Pandya and Mr. Akash Ganachari, were the directors in charge of and responsible for the conduct of business of ACPL during the period of investigation and is, therefore, liable and responsible for all the acts and commissions of ACPL. The aforementioned fraudulent and unfair practice of creating false or misleading appearance of trading in the scrips of Temptation, Bang, Confidence and Cals perpetrated by the connected entities including the ACPL, are in violation of Regulation 3(a), (b), (c) and (d) and Regulation 4(1), 4(2) (a), (b) and (g) of the PFUTP Regulations, 2003 read with Section 12A(a), (b) and (c) of the SEBI Act, 1992.

9. ACPL was restrained from accessing the securities market and further prohibited from buying, selling or dealing in securities market, directly or indirectly, till further orders, vide ad interim ex parte Order dated June 4, 2009 (later confirmed through the Confirmatory Order dated September 30, 2009). ACPL has already undergone the prohibition for almost five years. Considering the active participation of ACPL in the whole scheme of manipulation in the four scrips during the investigation periods and also the quantum of transactions done by ACPL along with the connected entities, (as clearly brought out in the forgoing Paragraphs), I am of the considered view that restraining ACPL from accessing the securities market and prohibiting it from buying, selling or dealing in securities market for a period of eight years would be commensurate with the gravity of violations committed by it. It is noted that the directors of ACPL viz. Mr. Jigar Jagdish Pandya and Mr. Akash Ganachari, were neither included in the aforesaid interim order nor in the subsequent confirmatory order passed against ACPL. In view of this, restraining the aforesaid Directors of ACPL from accessing the securities market and prohibiting it from buying, selling or dealing in securities market for a period of three years from the date of this Order would be appropriate.

10. In view of the forgoing, I, in exercise of the powers conferred upon me by virtue of Section 19 read with Section 11 and 11B of the SEBI Act, 1992 and Regulation 11 of the PFUTP Regulations, 2003, hereby- i. restrain, Acme Craft Pvt. Ltd. (PAN: AAECA8833C), from accessing the securities market and further prohibit it from buying, selling or dealing in securities market, directly or indirectly, for a period of eight years. The period of prohibition already undergone by Acme Craft P. Ltd pursuant to the SEBI's ad interim ex parte Order dated June 4, 2009 shall be taken into account for the purpose of computing the eight years of prohibition imposed in this Order.

ii. restrain, Mr. Jigar Jagdish Pandya (PAN: AFDPP5295C) and Mr. Akash Ganachari (PAN: AHIPG4734C); the Directors of Acme Craft P. Ltd., from accessing the securities market and further prohibit him from buying, selling or dealing in securities market, directly or indirectly, for a period of three years from the date of this Order as they were not covered in the aforesaid interim Order dated June 4, 2009 passed by SEBI.

11. This Order shall come into force with immediate effect.

12. The copy of the said Order shall be forwarded to the concerned Stock Exchanges and Depositories.

Place: Mumbai S. RAMAN Date: September 24, 2014 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA