BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. EAD-2/ AO/ DSR/ RG/BKM/276-306/2014]
UNDER SECTION 15 I OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT,
1992 READ WITH RULE 5 OF SECURITIES AND EXCHANGE BOARD OF INDIA
(PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY
ADJUDICATING OFFICER) RULES, 1995
In respect of:
1. Shri Amar Premchand Walmiki (PAN: AAUPW9971A)
2. Shri Kishore Chauhan (PAN: AFPPC9703G)
3. Shri Bhavesh Pabari (PAN: AKGPP8679N)
4. Shri Anand Kalu Marathe(PAN: AKWPM0699M)
5. Shri Prem Mohanlal Parikh (PAN: ALHPP3489N )
6. Shri Hemant Madhusudan Sheth (PAN: ANOPS8607E)
7. Ms Manisha Navneetlal Gandhi(PAN: AOSPG7834A)
8. Ms Mala Hemant Sheth (PAN: AZXPS0694J)
9. Shri Ankit Sanchaniya (PAN: BLNPS3316L)
10. Spectrum Chemicals Pvt. Ltd (PAN: AAICS2382L)
11. Shri Manish Suresh Joshi (PAN: AFTPJ5897A)
12. Shri Samir Sureshbhai Shah (PAN: AGEPS0157L)
13. Shri Nareshbhai Devabhai Patel (PAN: AMFPP7028N)
14. Shri Bharatkumar Baldevbhai Parmar (PAN: ARTPP9101B)
15. Shri Rajesh Pravin Bhanushali (PAN: AABPB2744H)
16. Shri Bhupesh Rathod (PAN: AACPR3785K)
17. Shri Bharat Shantilal Thakkar (PAN: AAZPT9542R)
18. Shri Bipin Jayant Thaker (PAN: ABYPT4984H)
19. Shri Manoj Bhandari (PAN: AGQPB7879L)
20. Shri Bipin Kumar Gandhi(PAN: AJHPG6989J)
21. Shri Vivek Kishanpal Samant (PAN: BRSPS0294N)
22. Shri Chirag Rajnikant Jariwala (PAN: AFMPJ7543L)
23. Shri Jignesh C Shah (PAN: AIPPS9125H)
24. Shri Shalin Kirti Kumar Parikh (PAN: AJAPP5421B)
25. Ms Rekha Bhandari (PAN: ALHPB9175D)
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26. Shri Devendra Suresh Gupta (PAN:ALLPG9738R)

27. Shri Ashok Kumar Bhikalal Parmar (PAN: AOJPP8746B)
28. Ms Pandya Yaminiben M (PAN: APGPP6166F)
29. Shri Pandya Hardik M (PAN: ARJPP6330Q)
30. Shri Gaurang Ajit Sheth (PAN: BGEPS6596Q)
31. Shri Navneetlal Jeevanlal Gandhi (PAN: ACTPG8728N)

In the matter of Gemstone Investments Limited

1.

Securities and Exchange Board of India (hereinafter referred to as SEBI),

pursuant to the detection of a huge rise in the traded volumes and/or price of the
shares

of

Gemstone

Investments

Limited

(hereinafter

referred

to

as

GIL/company), a company listed at Bombay Stock Exchange Limited (BSE),

conducted an investigation into the alleged irregularity in the trading in the shares
of GIL and into the possible violation of the provisions of the Securities and
Exchange Board of India Act 1992 (hereinafter referred to as the Act) and
various Rules and Regulations made there under during the period from January
06, 2009 to December 30, 2009. It was observed that the price of the scrip
unusually increased from Rs 21.20 to Rs. 78.35 and the daily high-low traded
volume was 1 share to 2,46,015 shares.

2.

SEBI vide its interim Order dated February 2, 2011, had restrained 39
persons/entities from accessing the securities market and further, had prohibited
from buying, selling or dealing in securities in any manner whatsoever, till further
directions, in various scrips including GIL. The said order was later confirmed by
SEBI vide its order dated July 8, 2011.

3.

The investigation, inter alia, revealed that certain entities namely, 1) Shri Amar
Premchand Walmiki, 2) Shri Kishore Chauhan, 3) Shri Bhavesh Pabari, 4) Shri
Anand Kalu Marathe,

5) Shri Prem Mohanlal Parikh,

6) Shri Hemant

Madhusudan Sheth, 7) Ms Manisha Navneetlal Gandhi, 8) Ms Mala Hemant

Sheth, 9) Shri Ankit Sanchaniya, 10) Spectrum Chemicals Pvt. Ltd, 11) Shri
Manish Suresh Joshi, 12) Shri Samir Sureshbhai Shah, 13) Shri Nareshbhai
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Devabhai Patel,

14) Shri Bharatkumar Baldevbhai Parmar, 15) Shri Rajesh

Pravin Bhanushali, 16) Shri Bhupesh Rathod, 17) Shri Bharat Shantilal Thakkar,
18) Shri Bipin Jayant Thaker, 19) Shri Manoj Bhandari, 20) Shri Bipin Kumar
Gandhi, 21) Shri Vivek Kishanpal Samant, 22) Shri Chirag Rajnikant Jariwala,
23) Shri Jignesh C Shah, 24) Shri Shalin Kirtikumar Parikh, 25) Ms Rekha
Bhandari, 26) Shri Devendra Suresh Gupta,

27) Shri Ashok Kumar Bhikalal

Parmar, 28) Shri Pandya Yaminiben M, 29) Pandya Hardik M, 30) Shri Gaurang
Ajit Sheth and 31) Shri Navneetlal Jeevanlal Gandhi (hereinafter referred to as
Noticee No. 1 to 31 and collectively referred to as the Noticees), connected to
each other by one way or the other, had dealt in the scrip of GIL through multiple
brokers, in a fraudulent and manipulative manner, without real change in
ownership of shares, by indulging in synchronized trades thereby, creating
artificial volumes and price rise in the scrip.

4.

It was further observed that the certain Noticees had also indulged in trades
which were self trades in nature thereby, creating artificial volumes which gave a
false and misleading appearance of trading in the scrip of GIL.

5.

SEBI has, therefore, initiated adjudication proceedings against Noticees for the
alleged violation of the provisions of Regulations 3(a), (b), (c), (d), 4(1) and
4(2)(a) (b) (e) & (g) of the SEBI (Prohibition of Fraudulent and Unfair Trade
Practices relation to Securities Market) Regulations, 2003 (hereinafter referred to
as the PFUTP Regulations).
Appointment of Adjudicating Officer

6.

I have been appointed as Adjudicating Officer, in place of the previous

Adjudication Officer, vide order dated August 29, 2013 under Section 15 I of the
SEBI Act read with Rule 3 of the SEBI (Procedure for Holding Inquiry and
Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to
as Rules) to inquire into and adjudge under Section 15HA of the Act against the
Noticees for the alleged violation of the provisions of PFUTP Regulations.

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Show Cause Notice, Reply and Personal Hearing

7.

The Noticees were issued a common show cause notice (hereinafter to as

SCNs) dated November 01, 2013 in terms of Rule 4(1) of the said Rules to
show cause as to why an inquiry should not be held and why penalty be not
imposed on them for the aforesaid violations. The SCNs were sent by Registered
Post Ack. Due and were duly delivered to the Noitcees except in case of Noticee
Nos 4, 9, 10, 15 and 20 as the same were returned undelivered. Therefore, the
said SCNs were affixed at the last known addresses of the said Noticees and the
report thereof is available on record.

8.

Vide letter dated November 08, 2013 one Ms Rupal K. Chauhan, wife of Noticee
No. 2 informed that the Noticee No. 2 (Shri Kishore Chauhan) passed away on
May 29, 2013 and enclosed a copy of the death certificate of Noticee No. 2 as
issued by the Department of Health and Family Welfare, Government of Gujarat,
in support thereof. In view of the same, the adjudication proceedings initiated
against Noticee No. 2 stand abated. However, I shall examine the role of Noticee
No. 2 for the limited purpose of examining the role and findings against the other
Noticees in the matter.

9.

Further, the Noticee No. 1 vide letter dated November 21, 2013 submitted his
reply in the matter. Vide letter dated November 25, 2013 the Noticee No. 7 filed
her reply in the matter. The Noticee No. 12, 27, 28 and 29 vide their separate but
identical letters dated November 25, 2013 requested time till December 20, 2013
to file their replies to the SCN. Accordingly, the Noticee No. 12 vide his letter
dated December 23, 2013 filed his detailed reply to the SCN. Further, Noticee
Nos. 27, 28 and 29 filed their replies vide separate letters dated December 21,
2013. The Noticee No. 11 vide letter dated April 30, 2014 filed his reply. The
Noticee No. 13 vide letter dated November 27, 2013 also filed his reply in the
matter. Further vide letter dated November 21, 2013 the Noticee No. 14 replied
to the SCN. The Noticee Nos. 23 and 24 vide separate but identical letters dated
November 25, 2013 replied to the SCN. The Noticee No. 25 vide letter dated
January 08, 2014 filed her reply to the SCN. The Noticee No. 30 vide letter
dated November 08, 2013 also filed his reply to the SCN. Further the Noticee No.
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31 vide letter dated November 25, 2013 filed his reply to the SCN. The other
Noticees did not file any replies in the matter.

10.

Therefore, in the interest of natural justice and in order to conduct an inquiry as

per rule 4(3) of the Rules, vide separate notices dated March 12, 2014 an
opportunity of personal hearing was granted to the Noticee Nos. 4 and 15 on
April 10, 2012 and to the Noticee Nos. 9, 10 and 20 on April 07, 2014 vide
separate notices dated March 07, 2014. The said notices were delivered to
Noticee Nos. 4, 15 and 20 but returned undelivered in case of Noticee Nos. 9
and 10. Therefore, the said notices were affixed at their last known addresses,
report of affixture is available on record. I note that the Noticee Nos. 4, 9, 10, 15
and 20 did not attend the said hearing on the scheduled date.

11.

Further, an opportunity of personal hearing was granted on August 13, 2014 to

all the Noticees including Noticee Nos. 4, 9, 10, 15 and 20 vide separate notices
dated July 24, 2014. The said hearing notices were duly delivered to the
Noticees except for Noticee Nos. 9, 10, 14, 15 and 20 as the same were returned
undelivered. The said notice was affixed at the last known address of Noticee
Nos. 9 and the report is available on record. Further, another opportunity of
personal hearing was granted to Noticee Nos. 15 and 20 on November 10, 2014
and to Noticee No. 10 on November 14, 2014. The said notices were affixed at
the last known addresses of the Noticees and the report thereof is available on
record. Further, another opportunity of personal hearing was granted to Noticee
No. 14 on November 27, 2014 at 11:30 a.m. and the same was affixed at the last
known address of the Noticee, the report thereof is available on record. However,
the Noticee No. 14 did not attend the scheduled hearing.

12.

The Noticee Nos. 3 and 6 attended the hearing on August 11, 2014 and made
oral submissions denying the allegations levelled against them in the said SCN.
Further, the Noticees sought one week time for filing replies in the matter.
Accordingly, the Noticees were advised to file replies on or before August 19,
2014 in the matter. The Noticee No. 3 vide letter dated October 30, 2014 and the
Noticee No. 6 vide letter dated November 6, 2014 filed their replies in the matter.
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Further, the Noticee Nos.13 and 23 attended the hearing on August 13, 2014 and
reiterated the submissions made earlier vide letters dated November 27, 2013
and November 25, 2013 respectively. With respect to the Noticee Nos. 1, 4, 7,
12, 24, 25, 26, 27, 28, 29 and 31, the respective Authorized Representatives
(ARs) attended the hearing on August 13, 2014 and reiterated the submissions
made by them separately vide their letters dated mentioned in Para 9 above.
With respect to Noticee Nos. 1, 4, 12, 25, 26, 27, 28 and 29, the AR requested
one weeks time to file additional submissions in the matter. Accordingly, the said
Noticees were advised to file their replies on or before August 21, 2014. The
Noticee No. 1, 4, 25 and 26 filed their additional replies vide separate letters
dated August 21, 2014. Further, vide separate letters dated August 14, 2014, the
Noticee Nos. 12, 27, 28 and 29 also filed their respective replies in the matter.

13.

The other Noticees did not attend the hearing on the scheduled date. However,
vide separate letters dated August 08, 2014 and August 11, 2014, the Noticee
Nos. 3, 5, 9, 17, 18, 21 and 22 submitted their preliminary replies to the SCN and
further requested time to file detailed replies in the matter. Accordingly, vide letter
dated November 08, 2014 and November 06, 2014, the Noticee Nos. 5 and 17
submitted their additional replies in the matter. Further, the Noticee Nos. 18 and
22, vide separate letters dated October 05, 2014 filed their replies in the matter.
Also, the Noticee No. 21 vide letter dated November 04, 2014 submitted his
additional reply. I note that the Noticee No. 9 did not file any further reply.
Further, the Noticee Nos. 8 and 16 vide their separate letters dated August 11,
2014 filed their replies in the matter.

14.

In view of the above, with respect to Noticee Nos. 10, 15 and 20 I note that
ample opportunities and time was granted to them for filing their replies and
presenting their case in the matter. Further, with respect to Noticee Nos. 9 and
19, I note that the said Noticees have been granted sufficient time to file their
replies in the matter as the SCN in the present case was issued on November
01, 2013 i.e. more than 1 year ago. Therefore, I am proceeding further against
the said Noticees on the basis of material available on record in the matter.

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Consideration of Issues, Evidence and Findings

15.

I have carefully perused the charges levelled against the Noticees in the SCN,
written submissions made and all the documents available on record. In the
instant matter, the following issues arise for consideration and determination:

a.

Whether the Noticee Nos. 1 and 3 to 31 have violated Regulations 3(a),

(b), (c), (d), 4(1) and 4(2)(a), (b), (e) and (g) of the PFUTP Regulations?

b. Does the violation, if any, on the part of the Noticees attract monetary
penalty under Section 15 HA of the Act?

c.

If so, what would be the quantum of monetary penalty that can be

imposed on the Noticees taking into consideration the factors mentioned
in Section 15J of the Act?

16.

Before proceeding further, I would like to refer to the relevant provisions of the
PFUTP Regulations which reads as under:

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

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on a recognized stock exchange in contravention of the provisions of the

Act or the rules and the regulations made there under.
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;
(c).............
(d).............
(e) any act or omission amounting to manipulation of the price of a scrip
(g) entering into a transaction in securities without intention of performing
it or without intention of change of ownership of such security.
17.

I find from the SCN that GIL is a company listed on the BSE. On analysis of the
trading activity in the scrip of GIL, it was noticed that a group of entities identified
as the Pabari-Parikh group in the investigation report, including Noticees, who
were all connected to each other in one way or the other, had traded heavily in
the scrip of GIL through multiple brokers. The relationship between the entities is
detailed as under:
KYC Relation

Client
Name
1.Rajesh
Pravin
Bhanushali
2.Bhupesh
Rathod

Sl. no.1, 16 & Narendra

Ganatra have common
office address.
Introduced sl. no.22, 19,
16, 9 for trading a/c
and knows sl. No. 28

Fund
Movem
ent

With Sl.
No. 30

Share
movemen
t through
off
market

Client
Name
17.Anand
Kalu
Marathe
18.Rekha
Bhandari

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KYC Relation

Fund
Movem
ent

Sl. no. 4 is witness in

nomination form.

With Sl.
No. 19,
26, 4.
With Sl.
No. 26,
4.

Common contact no.

as that of Sunil
Bhandari.

Share
moveme
nt
through
off
market

With Sl.
No. 4,

3.Spectru
m
Chemicals
Pvt. Ltd

Common address as
that
of
Khodiyar
Industry
(Ramniklal
Patel). Ramniklal Patel
has same address as
that of sl.no. 15 who
has share and fund
movement with sl. no.
16.

4.Amar
Premchand
Walmiki

5.Bharat
Shantilal
Thakkar

Sl. no. 16 is his nephew.

Same address with sl.
no.16.
Sl. no. 16 is his
nominee.
Joint a/c with sl. no. 16.
BR* with sl. no. 6, 8, 9,
19, 22, 30, 31.
Same Tel. no. with sl.
no. 16.
BR* with sl. no. 5, 8, 9,
16, 19, 22, 30, 31,

19.Prem
Mohanlal
Parikh
With Sl.
No. 12,
17, 16,
11, 18,
26, 25,

With Sl.
No. 16, 7,
11, 12, 24,
27,

With sl.
no. 16,
19, 30.

With
sl.
no. 16, 12.

21.Naresh
bhai
Devabhai
Patel
With sl.
no. 16.

With
sl.
no. 8, 16,
19, 22.

22.Heman
t
Madhusu
dan Sheth

6.Bipin
Jayant
Thaker
Sl. no. 26 introduced
him for trading a/c.

With
sl.
no. 4, 11,
20, 21, 24,

7.Navneetl
al
Jeevanlal
Gandhi

8.Chirag
Rajnikant
Jariwala

9.Kishore
Chauhan

20.Deven
dra
Suresh
Gupta

Same Tel. no. with

sl.no.16.
Sl. no. 16 is his uncle.
BR* with sl. no. 5, 6, 9,
16, 22, 30, 31.
Join a/c with sl. no. 16
Sl. no. 16 & 22 are
witness for demat a/c.
BR* with sl. no. 5, 6, 8,
16, 19, 22, 30.

10.Manish
Suresh
Joshi

With sl.
no. 16,
22.

With
no. 6

With sl.
no. 16,
19, 22.

With
sl.
no. 16, 19,
22, 31.

23.Ashok
kumar
Bhikhalal
Parmar

sl.
24.Manis
ha
Navneetla
l Gandhi
25.Pandy
a
Yaminibe
nM

26.Pandy
a Hardik
M

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Sl. no. 18 is the wife

of Sunil Bhandari.
Sl. no. 19 is cousin of
sl. no.16.
Common email with
sl. 30, 19 & 31.
Sl. no. 22 is nominee
of sl. no.19.
BR* with sl. no. 5, 6,
8, 9, 16, 22, 30, 31.
Has traded with sl.
no. 2, 5, 19 & 30, who
all have off market
share
and
fund
movement with sl.
no. 16.
sl. no. 21 is the client
of Samir Shah, who
has
off
market
transfer with Amar
Premchand Walmiki
and who in turn has
off market transfer
with sl. no. 16.
Sl. no. 16 & 22 both
directors of Rajnandi
Yarns Pvt. Ltd.
Same email with sl.
no. 31.
BR* with 2, 5, 19, 30,
31, 6, 8, 9, & sl. no.
28 is his wife & sl. no.
29 is his nephew.
Sl. no. 11 introduced
him for trading a/c.
He knows sl.no. 11
who is a stock broker.
Sl. No.
Sl. No. 4 has off
market transactions
with sl. No. 16 & has
fund movement with
sl. No. 26.
Same address with sl.
No. 26.
Knows sl. No. 11 & sl.
No. 26 is his relative.
Having common Tel.
no. with sl. no. 11.
Sl. No. 11 is the
promoter of Samir
Shah & Co. and sl. No.
26 is one of its

With sl.
no. 16,
22, 9.

With sl.
no. 16,
22, 9, 5,
6, 22, 30,
31.

With sl.
no. 16,
19, 9.

With sl.
no. 16,
19, 9, 28,
30, 31, 6,
26.

With sl.
no. 26,
11,

With sl.
no. 11,
25, 26,

With sl.
no. 4, 11,
7,

With sl.
no. 26,
11, 31,

With sl.
no. 11,
23, 26,

With
no.
18,
11,
25,

With sl.
no. 11,
23, 25,
16, 22.

sl.
12,
4,
17,

11.Samir
Sureshbhai
Shah

Sl. No. 7 is his father.

Sl. no. 6, 13, 14, 21, 23,
25, 24 are his clients.
Sl. No. 4, 12, 15, 26, 17,
are
Paras
Chaplot
friend. He came in
touch
with
Paras
Chaplot as a stock
broker.

13.Jignesh
C. Shah

14.Shalin
Kiritkumar
Parikh

With
sl.
no. 4, 7,
14, 21, 23,
24, 25, 26,
27,

With
sl.
no. 4, 5,
16, 30, 9,

Sl. no. 26 introduced

him for trading a/c.
Sl. No. 26 has off market
transactions with sl. No.
16 & 22.
Sl. no. 11 introduced
him for trading a/c and
sl. No. 11 has off market
transactions with sl. No.
4 & sl. No. 4 has off
market
transactions
with sl. No. 16.

28.Mala
Hemant
Sheth

29.Gaura
ng Ajit
Seth
With
sl.
no. 11

30.Ankit
Sanchaniy
a
With
sl.
no. 16.

15.Bipinku
mar
Gandhi

16.Bhaves
h Pabari

31.Vivek
Kishanpal
Samant
Sl. no. 5 is his uncle & sl.
no. 31 is his brother in
law.
Sl. no. 19 is cousin of sl.
no.16
Sl. no. 16 & 22 both
directors of Rajnandi
Yarns Pvt. Ltd.
Share common Tel. no.
with sl. no. 30, 31, 6.
Sl. no. 2 introduced him
for trading a/c.
BR* with sl. no. 6, 8, 9,
19, 22, 28, 30.

With
sl.
no. 4, 12,
25, 19, 22,
5, 6, 30,
31, 15.

*BR - Business relation.

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With sl.
no. 4, 11.

27.Bharat
kumar
Baldevbh
ai Parmar
With sl.
no. 4,
11, 26.

12.Manoj
Bhandari

employees.
Knows sl. No. 11 & sl.
No. 25 is his relative.
Having common Tel.
no. with Rameshbhai
Parmar.

Sl. no. 28 is the wife

of sl. no. 22 and sl.
no. 29 is the nephew.
Has common address
& Tel. no. with sl. no.
22. & sl. no. 22 and
16 both directors of
Rajnandi Yarns Pvt.
Ltd.
Same Tel. no. with sl.
no. 19 and also shares
Tel. no. with sl. no. 16
who is the nominee
for his a/c.
BR* with sl. no.5, 6, 8,
9, 16, 19, 22, 31.
Sl. no. 16 is the
brother in law &
shares common Tel.
no. & sl.no. 16 is the
nominee of sl. no. 31
for trading a/c & bank
a/c.
Shares email with sl.
no. 22.
Shares email with sl.
no. 19.

With sl.
no. 16,
19.

With sl.
no. 22.

With sl.
no. 16,
19.

With sl.
no. 16,
19, 22, 8,
31.

With sl.
no. 22.

With sl.
no. 16,
22, 8, 9,
19, 30.

18.

In addition to the above, it was revealed that the Noticee Nos 1 to 31 had
indulged in certain off-market transfers for 23, 37,086 shares of GIL amongst
themselves during the relevant period. These off-market transfers among the
group further allegedly established the relationship/connection between the
group.

19.

From the trade log analysis, I find that the group of entities, as mentioned in
above paras, had purchased 19, 67,956 shares accounting for 39.67% of the
total traded volume and sold 3424824 shares accounting for 69.05% of the total
traded volume during the relevant period. Out of the total purchases and sales,
the Noticee Nos. 1 to 31 traded for 1241518 shares (25.03% of the market
volume) accounting for 63.09 % of the total purchase of the group and 36.25 %
of the total sale of the group within Pabari-Parikh Group entities and 25.03% of
the market volume from within the group entities. Out of the 1241518 shares
traded within the group entities, the buy and sell orders for 256661 shares,
constituting 13.04% of the market volume, were placed within one minute time
difference. Further, it was noted that 256661 shares constituted 13.04% of the
total purchase of Pabari Parikh Group entities and 7.49% of the total sale of the
Pabari Parikh Group entities.

20.

Further, out of 256661 shares, for 84749 shares which accounted for 1.71% of
the total market volume, the buy and sale orders were allegedly placed in
synchronised manner (i.e. difference between placement of order by buyer and
seller within one minute and order rate as well as order quantity of buy side and
sale side being same) by Noticee Nos. 1 to 14.

The said 84749 shares

accounted for 4.31% of the total purchase of Pabari-Parikh Group entities and
2.47% of the total sale of the Pabari-Parikh Group entities. The summary of the
said synchronized trades entered into by the Noticee Nos 1 to 14 is as under:

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PANNO

Client Name
Spectrum Chemicals
Pvt. Ltd (Noticee No.
AAICS2382L
10)
Amar Premchand
AAUPW9971A Walmiki (Noticee No. 1)
Kishore Chauhan
AFPPC9703G
(Noticee No. 2)
Manish Suresh Joshi
AFTPJ5897A
(Noticee No. 11)
Samir Sureshbhai Shah
AGEPS0157L
(Noticee No. 12)
Bhavesh Pabari
AKGPP8679N
(Noticee No. 3)
Anand Kalu Marathe
AKWPM0699M (Noticee No. 4)
Prem Mohanlal Parikh
ALHPP3489N
(Noticee No. 5)
Nareshbhai Devabhai
AMFPP7028N
Patel (Noticee No. 13)
Hemant Madhusudan
ANOPS8607E
Sheth (Noticee No. 6)
Manisha Navneetlal
AOSPG7834A
Gandhi (Noticee No. 7)
Bharatkumar
Baldevbhai Parmar
ARTPP9101B
(Noticee No. 14)
Mala Hemant Sheth
AZXPS0694J
(Noticee No. 8)
Ankit Sanchaniya
BLNPS3316L
(Noticee No. 9)
Grand Total

21.

% of
% of
sync
sync
to
to
total
total
buy
% of
sale
Synchronised by
Market Synchronised by
buy trade
client Volume sale trade
client

0.00

0.00

10000 100.00

0.20

7000

17.11

0.14

15150

20.43

0.31

0.00

0.00

4000

4.35

0.08

0.00

0.00

10000

31.83

0.20

6850

24.46

0.14

0.00

0.00

37000

9.36

0.75

1000

0.15

0.02

11300

21.20

0.23

14000 130.85

0.28

1600

0.36

0.03

0.00

0.00

4999

49.99

0.10

0.00

0.00

0.00

0.00

600

0.10

0.01

0.00

0.00

4999

8.13

0.10

7000

31.82

0.14

7000

31.82

0.14

4000

5.51

0.08

5000

1.88

0.10

5000

1.79

0.10

13000

3.48

0.26

84749

4.31

1.71

84749

2.47

1.71

I also find that the 3, 5, 6 and 21 had allegedly indulged in certain trades which
were self trades in nature while trading through multiple brokers. The details of
the said fictitious trades are as under:

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% of
Market
Volume

PAN

Name of the entity

Bhavesh Prakash Pabari
AKGPP8679N (Noticee No. 3)
Prem Mohanlal Parikh
ALHPP3489N (Noticee No. 5)
Hemant Madhusudan
ANOPS8607E Sheth (Noticee No. 6)
Vivek Kishanpal Samant
BRSPS0294N (Noticee No. 21)
Grand Total

22.

Total
buy

Total
sale

Self
trade
qty

% of
Total
Buy

%
Total
Sale

6.38

% of
No of
Market Self
Volume trades

395464

683133

25233

3.69

0.51

17

449439

554399

56982 12.68 10.28

1.15

19

143503

612700

14322

9.98

2.34

0.29

30000
16000
1018406 1866232

2180
98717

7.27 13.63
9.69 5.29

0.04
1.99

1
41

From the price volume data analysis, I note that the scrip of GIL was traded on
226 days. Out of 226 trading days, the Noticee Nos. 1 to 31 traded among
themselves on 90 days, i.e. 25% of the total number of days the scrip was traded
during the period under investigation. It was noted that the Pabari-Parikh Group
entities had contributed 100% to the daily market volume on January 06, 2009
and February 12, 2009. Further, the said Noticees contributed to the daily market
volume ranging from 0.09% on April 09, 2009 to 99.61% on July 23, 2009. It was
further alleged in the SCN that out of 90 trading days, the Noticee Nos. 1 to 31
had traded amongst themselves, on 44 trading days and thereby had contributed
more than 50% of the total market volume traded in the scrip during the relevant
period.

23.

On further examination, I find that out of 90 trading days on which the PabariParikh Group had entered into trades in the scrip of GIL, on 40 trading days both
buy and sell orders were placed within time difference of one minute. It was,
therefore, alleged in the SCN that the Noticee Nos. 1 to 31, had contributed to
daily market volume of the scrip in the range from 0.06% on February 26, 2009 to
94.89% on April 23, 2009. Out of 40 trading days, on 7 trading days the Noticee
Nos. 1 to 31 had contributed more than 50% to the total market volume by
placing both the buy and sale order within one minute time difference. It was also
alleged that out of 40 trading days, on 13 trading days the trades executed by
Noticee Nos. 1 to 31 were synchronized in nature. By executing synchronized

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trades among the group entities, Pabari-Parikh Group entities contributed to total
market volume ranging from 1.90% on April 02, 2009 to 82.84% on May 27,
2009. Further, on four trading days by entering into synchronized trades the
group entities had contributed more than 50% to the market volume traded in the
scrip during the relevant period.

24.

I further note that the price of the scrip opened at Rs. 28.20 and touched a high
of Rs. 82.25 i.e. increase of Rs. 54.05. It was noted that on 20 trading days and
43 occasions a new high price was discovered. Further, out of the 43 occasions
on 12 occasions (i.e. on 6 days out of the 20 days), it was noted that the Noticee
Nos. 3, 9, 18 and 21 had contributed to the increase by Rs. 9.50 (out of a total
increase of Rs. 54.05).

25.

It was, therefore, alleged in the SCN that the Noticee Nos. 1 to 31, by indulging in
the manipulative trade practices as mentioned above, had violated Regulations
3(a), (b), (c), (d), 4(1) and 4(2)(a), (b), (e) & (g) of the PFUTP Regulations
thereby, created artificial volumes and price in the scrip of GIL.

Submissions made by the Noticees:

Noticee Nos. 1:

26.

The Noticee No. 1, vide his letter dated November 21, 2013 denied all the
charges leveled against him in the SCN. The Noticee submitted that during the
relevant period his trades ranged from Rs. 22 to Rs. 24.30 and therefore, did not
have any impact on the price of the scrip. All the trades executed by him
changed the beneficial ownership. He had purchased shares in the scrip of GIL
between February 04, 2009 to February 12, 2009 and further sold the shares
only on a single day i.e. on April 08, 2009. Further, vide letter dated August 21,
2014 the Noticee Nos. 1 submitted his additional reply in the matter. The Noticee
denied being part of the alleged Pabari-Parikh group entities and further
submitted that he had not carried out any off market transfers with any of the said
entities. He submitted that synchronized trades per se are not illegal in nature
and therefore, the charge of executing fictitious trades is not acceptable. The
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Noticee No. 1 stated that except 6 trades, the other trades had remained pending
in the system from 1 minute time difference to 2 hours before they finally got
executed. He stated that he had entered into trades in the said scrip only on 10
trading days out of the 226 trading days.

Noticee No. 4:

28. Vide letter dated August 21, 2014, the Noticee No. 4 submitted his reply to the
SCN. The Noticee denied being part of the alleged group entities and further
submitted that he had no fund movements or off market transactions with any of
the said entities. He stated that his trades were in the price range of Rs. 22 to Rs.
25 except in one trade which was executed for Rs. 28. Further, the Noticee
contended that he did not execute any trades after April 21, 2009. Out of the total
trading days of 226 days, he had traded in the scrip of GIL only on 12 days. The
Noticee No. 4 submitted that he may be related to the group entities directly or
indirectly which does not make him liable for violating the PFUTP Regulations.

Noticee No. 3, 5, 6, 9, 17, 18, 21 and 22

27.

The Noticee No. 3, 5, 6, 9, 17, 18, 21 and 22 vide their separate replies dated
August 08, 2014 and August 11, 2014 submitted that they have been debarred
from buying, selling and dealing in the securities market vide SEBI order dated
February 02, 2011. Further, the said Noticees stated that as the investigation
period is 4 years old, they are in a process of collating the data and file their
detailed reply in the matter.

28.

The Noticee No. 3 vide his letter dated October 30, 2014 submitted his detailed
reply and stated that initiation of adjudication proceedings in the matter (although
the earlier debarment being still in force) is a "double jeopardy". The Noticee
stated that he is basically a cloth merchant and has joined the stock market only
in 1996 as an investor, jobber cum trader and arbitrager. Further, the Noticee No.
3 submitted that he has traded in the scrip of GIL on the prevailing market price
and after the price rise and after the fall price. The Noticee submitted that he has
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traded in many other scrips in addition to GIL during the said period. He
confirmed that he had bought 3, 95,464 shares and sold only 6, 83,133 shares of
GIL during the relevant period. However, the said purchase and sale of shares
accounted only for 7.97% and 13.77%, respectively, of the total traded volume in
GIL during the relevant period which is very miniscule quantity to arrive at a
conclusion that the said transactions created artificial volumes in the scrip. The
Noticee further admitted having purchased 2,03,164 shares and sold 2,39,139
shares accounting for 4.10% and 4.82% respectively of the group trades. He
submits that only 0.75% of the market volume traded by him on the buy side was
in the form of synchronised trading and only 0.02% of the market volume traded
by him on the sell side was in the form of synchronised trading. He submitted that
the said trades were entered by his broker on the anonymous trading platform on
the exchange and therefore, he did not know the counter party with whom the
trades were getting executed. Further, there are very few trades out of his total
trading wherein the time difference was less than 1 minute and he submitted that
majority of trading the time difference was more than 1 for the shares purchased
by him and ranging from few seconds to more than 5 hours for the shares sold by
him.

29.

The Noticee No. 5 vide his letter dated November 08, 2014 submitted his
detailed reply and stated that initiation of adjudication proceedings in the matter
(although the earlier debarment being still in force) is a "double jeopardy". The
Noticee submitted that he has traded in lot of other scrips including GIL both prior
and after to the investigation period. The Noticee denied being part of the alleged
Pabari Parikh Group and further denied having any business connections with
any of the said entities. He stated that he had bought 4, 49,439 shares and sold
only 5, 54,399 shares though multiple brokers which accounted for 9.06% and
11.18% respectively of the total traded volume in GIL during the relevant period
which is very miniscule quantity to arrive at a conclusion that the said
transactions created artificial volumes in the scrip. The Noticee further submitted
that his total buy volume within the group is 5.20% and total sale volume within
the group is 4.27% of the total traded volume. With respect to the synchronized
trade he has stated that only 0.03% of the market volume is in of synchronized
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manner. Further the trades wherein the Noticee and the other persons of the
group had bought shares account only for 0.39% of the total market volume. With
respect to the self trades the Noticee submitted that only one self trade was
executed for a total of 56982 shares that adjusted the debit and credit with two
different brokers which was negligible in volume.

30.

The Noticee No. 6 vide letter dated November 6, 2014 submitted his detailed
reply and stated that initiation of adjudication proceedings in the matter (although
the earlier debarment being still in force) is a "double jeopardy". Further, the
Noticee also submitted that his demat account is still frozen. The Noticee
submitted that he has bought 1,43,500 shares and sold 6,12,700 shares and
therefore on net basis he has sold 4,69,200 shares which were all traded on
delivery basis accounting for 2.89% and 12.35% respectively of the total traded
volume in GIL and therefore, it is the case of the Noticee that the same were not
manipulative and huge in volume. With respect to the alleged relationship, the
Noticee submitted the Noticee No. 8 (Ms. Mala Hemant Sheth) is his wife and
that he is not having any business/professional connection with the Noticee No.
30 i.e. Gaurang Sheth, his nephew. He further stated that he is living an
independent life and takes his own investment decisions. The address of the
Noticee No. 30 is also not same as Noticee No. 30 stays on 3rd floor and Noticee
No. 6 stays on 2nd floor independently. He submits that only 1.21% of the market
volume traded by him on the buy side and only 4.77% of the market volume
traded by him on the sell side was in the form of synchronised trading. Further,
there are very few trades out of his total trading wherein the time difference was
less than 1 minute and that majority of trading was ranging in the time difference
of more than 1 minute ranging from few seconds to more than three and a half
hours for the shares purchased by him and ranging from few seconds to around
1hr 11 minutes for the shares sold by him. With respect to the alleged self trades,
the Noticee submitted that the 4 self trades had taken place only on three days
out of total investigation period of one year and three months which again was for
minuscule volume if compared to the total market volume & that the difference in
time with respect to the said trades ranged from 4 minutes to more than 2 hours
and 29 minutes and quantity ordered at three places was also different.
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31.

The Noticee No. 9 vide letter dated November 13, 2014 submitted his detailed
reply and stated that initiation of adjudication proceedings in the matter (although
the earlier debarment being still in force) is a "double jeopardy". With respect to
the relationship of the Noticee with other group entities, the Noticee No. 9
submitted that he may be knowing few group entities from the alleged PabariParikh group but the same has nothing to do with his decision to trade in the
scrip of GIL. The Noticee denied having any fund movements with Noticee Nos.
3 and 5 (Mr. Bhavesh Pabari and Shri Prem Parikh). The Noticee stated that the
off market transfers are out of the purview of the trading mechanism and
therefore cannot be said to have affected the market mechanism. The Noticee
admitted receiving and transferring 4425 shares and 18425 shares respectively
of GIL in off market during the period under consideration. The Noticee submitted
that he had bought 2, 79,790 shares and sold only 3, 73,142 shares. which
accounted for 5.64% and 7.52% respectively of the total traded volume in GIL
during the relevant period which is very miniscule quantity to arrive at a
conclusion that the said transactions created artificial volumes in the scrip. With
respect to synchronized trades, the Noticee submitted that only 0.10% of the
market volume traded by him on the buy side and only 0.26% of the market
volume traded by him on the sell side was in the form of synchronised
trading. Further, there are only couple of trades out of his total trading wherein
the time difference was less than 1 minute and he submitted that majority of
trading was in the time difference of more than 1 minute ranging from few
seconds to more than 5 hours for the shares purchased by him to more than 1
hour and 35 minutes for the shares sold by him. The trades wherein the Noticee
No. 9 had sold shares and the other group entities had bought shares was only
2.18% of the total market volume and the trades wherein the Noticee No. 9 had
bought shares and the other group entities had sold was only 3.40% of the total
traded volume in the scrip of GIL.

32.

The Noticee No. 17 vide letter dated November 6, 2014 submitted his additional
reply in the matter. The Noticee submitted that he does not form part of the
alleged Pabari-Parikh group and that he trades in the market based on his own
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decision and research, fundamentals and market news. The Noticee submitted
that he may be knowing few group entities from the alleged Pabari-Parikh group
but the same has nothing to do with his decision to trade in the scrip of GIL. The
Noticee denied having any fund movements with Noticee Nos. 3 (Mr. Bhavesh
Pabari) and other group entities. The Noticee stated that the off market transfers
are out of the purview of the trading mechanism and therefore cannot be said to
have affected the market mechanism. He further submitted that he had traded in
many other scrips including GIL during the relevant period and also prior and
after the investigation period. Also, the Noticee stated that initiation of
adjudication proceedings in the matter (although the earlier debarment being still
in force) is a "double jeopardy".

The Noticee submitted that he had bought

10,500 shares and sold only 85,387 shares which accounted for 0.21% and
1.72%, respectively, of the total traded volume in GIL during the relevant period
which is very miniscule quantity to arrive at a conclusion that the said
transactions created artificial volumes in the scrip. He submits that his trading
within the group was only 0.14% of the market volume and that on the sell side
only 0.38% of the volume traded by him was within the group which was
negligible.

33.

The Noticee No. 18 vide letter dated October 05, 2014 submitted that he is a
small time trader and carried out jobbing and arbitrage business on BSE and
NSE. Also, the Noticee stated that initiation of adjudication proceedings in the
matter (although the earlier debarment being still in force) is a "double jeopardy".
Further, the Noticee submitted that he is not connected to the alleged PabariParikh group and that he did not carry out any fund transfers with any of the said
entities. With respect to the off market transfers, the Noticee submitted that he
had not carried out any such transactions. He had bought 52,890 shares and
sold only 43,450 shares which accounted for 1.07% and 0.88%, respectively, of
the total traded volume in GIL during the relevant period which is very miniscule
quantity to arrive at a conclusion that the said transactions created artificial
volumes in the scrip. His total buy within the group was 0.56% and total sale was
0.24% of the total market volume which was negligible. With respect to the

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synchronised trades, he submitted that only 0.10% of the market volume traded
by him was in the form of synchronised trade.

34.

The Noticee No. 21 vide letter dated November 04, 2014 submitted that he had
come across certain jobbers/traders/arbitragers who used to earn Rs. 5,000 to
Rs. 10,000 a day just by punching trades and the Noticee started trading on the
platform provided by the exchanges to earn money. Also, the Noticee stated that
initiation of adjudication proceedings in the matter (although the earlier
debarment being still in force) is a "double jeopardy". Further, the Noticee
submitted that he is not connected to the alleged Pabari-Parikh group. The
Noticee denied carrying out any off market transfers with any of the said group
entities. The Noticee submitted that he had bought 30,000 shares and sold only
16,000 shares which accounted only for 0.60% and 0.32%, respectively, of the
total traded volume in GIL during the relevant period which is very miniscule
quantity to arrive at a conclusion that the said transactions created artificial
volumes in the scrip. His total buy within the group was 0.13% and total sale was
0.32% of the total market volume which was negligible. Further, he submitted
that in very few trades out of his total trading the time difference was less than 1
minute and majority of trading was ranging in the time difference of more than 1
minute and in one trade the time difference is more than 53 minutes for the
shares purchased by him and further, for the shares sold by him, only in one or
two instances the time difference is less than one minute and in majority of the
trades it was more than one minute with maximum time difference being 1 hour
and 23 minutes. With respect to the self trades, the Noticee submitted that only
on one day his buy order for 4250 shares got matched with his sell order of 3500
shares and trade for 2180 shares got executed. The same was sheer
coincidence considering the time and price difference. Further, the same cannot
be said to have created artificial volume as the volume is miniscule.

35.

The Noticee No. 22 vide letter dated October 05, 2014 submitted that he does
not form part of the alleged group entities and that he has traded independently
in the scrip of GIL. The Noticee also submitted that he has not carried out any off
market transfers with any of the group entities. Further, the Noticee stated that he
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has traded in many other scrips apart from trading in the scrip of GIL during the
relevant period. Also, the Noticee submitted that initiation of adjudication
proceedings in the matter (although the earlier debarment being still in force) is a
"double jeopardy". The Noticee further submitted that he had bought 19,550
shares and sold only 19,550 shares which accounted for 0.39% and 0.39%
respectively of the total traded volume in GIL during the relevant period which is
very miniscule quantity to arrive at a conclusion that the said transactions created
artificial volumes in the scrip. With respect to the synchronised trades, the
Noticee stated that only 0.10% of the market volume traded by him was in the
form of synchronised trade. Further, the trades wherein he had bought the
shares and the group entities had sold the shares accounted for 0.39% and the
trades where he had sold the shares of GIL and the group entities had purchased
the shares accounted for NIL of the total market volume.
Noticee Nos. 7 and 31
36.

The Noticee Nos. 7 and 31 vide their separate but identical letters dated
November 25, 2013 have denied the allegation levelled against them in the SCN
and submitted that they on the advice of certain well wishers (Noticee No. 12 i.e.
Samir Sureshbhai Shah) had opened demat accounts and had allowed third party
to use the said accounts for monetary consideration which in turn gave monetary
benefits to the said Noticees. The Noticee Nos. 7 and 31 submitted that they later
found out that their account was operated by one Mr. Paras Chaplot, a market
operator from Mumbai. The Noticees stated that they do not know the said person
or his firm. The Noticees received a sum of Rs 3000/- on each account (monthly
basis) for the said arrangement and Noticee No. 12 earned brokerage for the said
trades.

Noticee No. 8
37.

The Noticee No. 8 vide her letter dated August 11, 2014 submitted that vide SEBI
order dated July 08, 2013 the Noticee is still debarred from trading in the
securities market and her demat account stands frozen. The Noticee states that
initiation of adjudication proceedings in the matter (although the earlier
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debarment being still in force) is a "double jeopardy". She further submits that
she had traded in many scrips during and prior to the relevant period and GIL
was one of the scrips. The Noticee No. 8 admits that she is the wife of Noticee
No. 6 i.e. Shri Hemant Madhusudhan Sheth however, denied having any
business or professional connection with him and stated that she takes
independent trading decisions. The Noticee further denied having made any fund
transactions with Noticee Nos. 3 and 5 (Shri Bhavesh pabari and Shri Prem
Mohanlal Parikh). The Noticee No. 8 submitted that she is not connected with
any of the entities forming part of the Pabari-Parikh Group and had dealt in the
shares of GIL independently. Further, she stated that she had bought 72,566
shares and sold only 2, 65,721 shares which accounted for 1.46% and 5.36%
respectively of the total traded volume in GIL during the relevant period which is
very miniscule quantity to arrive at a conclusion that the said transactions created
artificial volumes in the scrip. The Noticee No. 8 has admitted the fact that she
had given 73,579 shares of GIL in an off market transaction to Noticee No. 6, her
husband, which was only once during the relevant period. She further submitted
that only 0.32% of the market volume traded by her on the buy side and only
3.63% of the market volume traded by her on the sell side was in the form of
synchronised trading. The volume of synchronised trades as alleged in the SCN
i.e. 1.46% on the buy side and 5.36% on the sell side is a miniscule volume and
cannot impact the equilibrium of the scrip. Further, there are very few trades out
of her total trading wherein the time difference was less than 1 minute and she
submitted that majority of trading were ranging in the time difference of more
than 1 minute to 53 minutes for the shares purchased by her and from one
minute to more than 1 hour and 23 minutes for the shares sold by her.

38.

While trading within the group, Noticee No. 8 submitted that the trades wherein
she had sold shares to the persons belonging to the group constituted only
0.32% of the total market volume of the scrip and the trades wherein she had
bought shares from the group entities constituted only 1.73% of the total market
volume traded in the scrip of GIL. Further, one of the buy transaction for 4,000
shares executed by Noticee No. 8 had matched with the buy transaction of
Noticee No. 2 i.e. Shri Kishore Balubhai Chauhan which is only 0.08% of the total
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market volume. Further, one of the sale transaction for 5,000 shares executed by
Noticee No. 8 had matched with the buy transaction of Noticee No. 9 i.e.
Shri Ankit Sanchaniya which is only 0.10% of total market volume. The Noticee
submitted that the said transactions cannot be said to have created artificial
volumes in the said scrip. With respect to the self trades allegation, the Noticee
No. 8 denied having entered into any self trades.

Noticee No. 11
39.

The Noticee No. 11 vide letter dated April 30, 2014 submitted that his only and
single-handed alleged connection with the alleged Pabari Parikh group is that
one Mr Narendra Ganatra introduced him to one of his brokers Ford Brother
Capital Services Ltd. The Noticee No. 11 submitted that out of his total sale order
of 31416 shares, only 20000 shares got matched with the alleged group entities.
Further, he stated that his trades accounted for a meagre 0.63% of the total
market volume of 49, 60,252 shares during the investigation period is miniscule
so as to have any impact on the price. He stated that a single sell order of 10000
shares got synced with Noticee No. 3 (Shri Bhavesh Pabari) on May 12, 2009
which is mere 0.20% of the market volume which is insignificant so as to have
any impact in the market.

Noticee Nos. 12:

40.

The Noticee No 12 vide his letter dated December 23, 2013 submitted his reply
to the SCN and denied the allegation levelled against him. He submitted that he
is not involved in any of the alleged transactions and that the whole fraud was
done by one Mr. Paras Chaplot, a market operator from Mumbai. The said
person is now not available / traceable. He further stated that he is not connected
or related with any of the group entities alleged to be Pabari-Parikh group in the
SCN. Further, vide letter dated August 14, 2014, the Noticee submitted his
additional reply in the matter wherein he reiterated his earlier submissions and
further stated that all the transactions were carried out by Mr. Paras Chaplot.
Further, with respect to the off market transfers, the Noticee stated that the same
would have been carried out by Paras Chaplot for the purpose of closing the deal
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without change of price or for settlement of dues/loans through delivery of shares

of equivalent value.
Noticee No. 13
41.

Vide letter dated November 27, 2013, Noticee No. 13 submitted that on the
advice of some well wisher, one Shri Rakesh G. Patel, he had opened Demat
Account and allowed its use by third parties on the instuctions of one Mr. Paras
Chaplot against monetary consideration which gave him income for some
period. He got a sum of Rs 4000/- per month for the use of the said account
during the aforesaid period. Therefore, the Noticee stated that none of the
transactions executed in his demat account and off market transactions have
been carried out by him nor he gave any instructions for such operations at any
point of time.

Noticee No. 14
42. Vide letter dated November 21, 2013, Noticee No. 14 submitted his reply in the
matter and denied the allegation levelled against him in the SCN. He submitted
that his trade had not resulted into price manipulation. He stated that his trades
were in the price range of Rs. 22 to Rs. 25. Further, the Noticee stated that he
had not carried out any trades in the scrip of GIL after April 08, 2009 when the
price actually went up. Further he submitted that the trade executed by him had
changed the beneficial ownership.
Noticee No. 16
43. The Noticee No. 16 vide letter dated August 11, 2014 denied the allegation
levelled against him. The Noticee while denying the connection with the group
entities submitted that certain persons were merely named for the sake of
introduction of their identity by his broker S. P. Jain Securities Private Ltd. as the
said Noticee was already holding a trading account with the said broker. The
Noticee further submitted that he is a cloth merchant and during the course of his
business he came in contact with the Noticee No. 9 ( Shri Ankit Sanchanya). The

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Noticee No. 16 had carried out few business transaction with Noticee No.9 but did
not share any trading activity with him. With respect to Synchronized trade the
Noticee stated that he had traded in the scrip of GIL which accounted for
miniscule quantity and has not indulged in any synchronized trading with any of
the group entities.

Noticee Nos. 23 & 24

44. The Noticee Nos. 23 and 24 vide their separate but identical letters dated
November 25, 2013 submitted that on the advice of their friend i.e. Noticee No. 12
(Shri Samir Shah) they had opened demat accounts and allowed their use by
Noticee No. 12 who in turn earned brokerage for the said transactions. Further, the
Noticees denied carrying out any off market transactions.

Noticee No. 25
45.

The Noticee No. 25, vide letter dated January 8, 2014, denied the allegation
levelled against her and submitted that out of 226 trading days she had traded
only for 4 days during investigation period and therefore, her trades were very
insignificant i.e. 1.77% of total market volume. Further, the Noticee denied being
connected to any of the group entities by way of common address or telephone
numbers. The Noticee also denied carrying out any off market transfers within
the group. The Noticee submitted that she has not indulged in any synchronised
trades and that she has not carried out any fictitious trades in the form of self
trades. Further, vide letter dated August 21, 2014, the Noticee 25 reiterated the
submissions made vide her earlier reply dated January 08, 2014. The Noticee
submitted that one Shri. Sunil Bhandari is her husband and stated that the fund
movement with Noticee Nos. 1 and 29 have no relation with any manipulation in
the market. The Noticee submitted that all her trades were bonafide and her
trades during the relevant period merely accounted for 0.63% of market volume
in case of buy trades and 0.61% in case of sell trades. The Noticee also
submitted that she had carried out trades in the scrip of GIL only through one
broker i.e. Arihant Capital Markets Limited and not through multiple brokers.
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Noticee No. 26
46.

Vide letter dated August 21, 2014, the Noticee No. 26 denied each of the
allegations contained in the SCN issued to him and submitted that he had bought
4000 shares and sold 5484 shares during the Investigation Period. He further
submitted that he had traded only 2 days out of total 226 trading days and all the
trades executed were delivery based. His trades were in the price range of Rs.
24 to Rs. 24.75. The Noticee had not executed any trades after March 27, 2009.
He had executed only 7 trades out of total 5453 trades executed during the
Investigation Period. Therefore, the Noticee submitted that his total trading in the
scrip of GIL was very negligible. The Noticee further denied being a part of the
alleged Pabari-Parikh group entities and he had no financial connection with any
of the alleged group. It was nothing but a coincidence that few of his trades got
matched with that of the group entities and therefore, the Noticee submitted that
he is not a party to many manipulation in the scrip of GIL. Further, the Noticee
submitted that 5 trades out of 7 trades entered by him remained pending from 1
minute to 1 hour and 20 minutes before they finally got executed. Only 2 trades
out of 7 trades remained pending for less than one minute before execution. The
Noticee also stated that he has not entered into any self trades during the
relevant time.

Noticee Nos. 27, 28 and 29

47.

Vide letter separate but identical letters dated December 21, 2013, the Noticee
Nos. 27, 28 and 29 submitted their replies to the SCN and denied the allegation
levelled against them. They submitted that they are not involved in any of the
alleged transactions and that the whole fraud was done by one Mr. Paras
Chaplot, a market operator from Mumbai. The said person is now not available /
traceable. Further, vide separate but identical letters dated August 14, 2014, the
Noticees reiterated the submissions made by they in their earlier reply and
further they got a sum of Rs 6000/- per month for the purpose of third party use
of their demat accounts. As regards GIL is concerned, Noticee No. 27 has
submitted that there were only two transactions carried into his account - one

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being buy of 9000 shares @Rs 22.85 on June 10, 2009 and second being sale of
9026 shares @Rs. 38.30. As the Noticees did not have their own email IDs, Mr.
Pars Chaplot used to send emails on Noticee No. 12's (i.e. Mr. Samir Shah)
email ID to inform about the transactions carried out in the said demat accounts.

48.

Further, the Noticee No. 28 submitted that she is a housewife aged around 63
years with no literacy/knowlwdge of capital market. Her son, Mr. Hardik Pandya
(Noticee No. 29) was employed with Mr. Paras Chaplot (Mobile No.
09819842584, 09987394637, 09004092584, 09892554433) and Mr. Rakesh
Sanghvi (Mobile No. 09320633133, 09867433247) having their office at Wealth
Hub, 3rd Floor, 24, Onlooker Building, Opp. Axis Bank Main Branch, Sir P. M.
Road, Mumbai for their share business activities in Vadodara. Mr. Paras Chaplot,
by influencing Noticee No. 29 had made him open demat accounts in her name
and fraudulently carried out transactions in it without their knowledge and
information.

Noticee No. 30
49.

The Noticee No. 30 vide his reply dated November 08, 2013 denies being
connected/ related with Noticee No. 6 by way of having same address and
telephone numbers. The Noticee also denied having executed any synchronised
or self trades in the scrip of GIL. Further, vide letter dated August 11, 2014, the
Noticee submitted his additional reply and reiterated the submissions made by
him in his earlier reply. He further submitted that he has not dealt in any off
market transactions in the scrip of GIL and had traded independently. The
Noticee states that the synchronised trades which have alleged in the SCN are
miniscule in quantity. The Noticee inter-alia submitted that he is not staying with
Noticee No. 6 i.e. Shri Hemant Madhusudan Sheth and also is not sharing a
common telephone number. The Noticee stated that he has not entered into any
fund or off market transactions with Noticee No. 3 i.e. Shri Bhavesh Pabari.
Further, the Noticee submitted that Noticee No. 6 and 3 are directors of Rajnandi
Yarns (P) Ltd but the said fact does not bring out his connection with both the

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parties. He had bought 18087 shares and sold 15042 shares in scrip of GIL
during the period from May 29, 2009 to April 30, 2010.

FINDINGS:

50.

I find from the SCN and the material available on record that during the relevant
period, the Noticee Nos. 1 to 31 who were all connected to each other and
referred to as the Pabari-Parikh Group entities in the investigation report, had
traded significantly in the shares of GIL i.e. purchased 19, 67,956 shares
constituting 39.67% and sold 34, 24,824 shares constituting 69.05%,
respectively, of the total traded volume in the scrip. I find that the relationship
table as mentioned in para 17 above clearly shows that the said Noticees were
connected to each other either by way of having similar addresses / telephone
numbers, relatives, business associates and/or having fund movements between
themselves except in case of Noticee No. 11. Further, the relationship of the
Noticees is established by way of off market transactions between them as
mentioned in para 18 above. However, on perusal of the data, I note that the
Noticee No. 11 had not carried out any such transactions. I note that the
Noticees had traded for 12,41,518 shares (i.e. 25.03% of the market volume)
accounting for 63.09 % of the total purchase of the group entities and 36.25% of
the total sale of the said group within the said Pabari-Parikh Group entities in the
scrip of GIL on the exchange platform. Out of the 12,41,518 shares traded within
the group entities, the buy and sell orders for 2,56,661 shares, constituting 5.17%
of the market volume, were placed within one minute time difference. Further, I
find that 2,56,661 shares constituted 13.04% of the total purchase of group
entities and 7.49% of the total sale of the said Group entities. The quantity of
shares and the pattern of trading indulged into by the Noticees within the group
further substantiates the fact that they all had a meeting of minds and traded in
the scrip of GIL in collusion with each other. Therefore, I do not find any merit in
the submissions made by the Noticees that they had no relationship with each
other and had traded in the scrip of GIL independently and in the ordinary course
of business. However, I conclude that in case of the Noticee No. 11,

no

relationship has been established with the other group entities either by way of
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having common addresses/telephone numbers/relatives or by way of carrying on

off market transactions/ fund flows and therefore, he does not form a part of the
Group.

51.

I further find that the Noticee Nos. 1 to 14 had indulged in certain synchronised
trades in the shares of GIL thereby, creating false and misleading appearance of
trading in the scrip. I note that out of 2,56,661 shares traded by the Noticees for
84,749 shares, which accounted for 1.71% of the total market volume, the buy
and sell orders were placed in synchronised manner. 84,749 shares constituted
for 4.31% of the total purchases made by Pabari-Parikh Group entities and for
2.47% of the total sales done by the said Group entities. On perusal of the details
of synchronised trades as given in para 20 above and the order and trade log, I
find that the Noticee Nos. 1 to 14 did indulge in manipulative activities in the said
scrip and traded in a synchronised manner within the group without any intention
of change in beneficial ownership of shares and I don't find merit in the
contentions made by the Noticees. Further, I find that the Noticee No. 11 who
does not form a part of the Pabari-Parikh Group entities has also executed
certain trades which have matched with the group entities. However, I find that
just because the said trades got matched with the group entities does not make
him liable of violating the provisions of PFUTP Regulations as his individual
connection with the said group does not stand established.

52.

I find that during the relevant period the shares of GIL were traded on 226 trading
days. Out of 226 trading days, the Noticee Nos. 1 to 31 had traded among
themselves on 90 days, i.e. 25% of the total numbers of days the scrip was
traded. The said group entities had by trading among themselves contributed to
daily market volume of the scrip in the range from 0.09% on April 09, 2009 to
99.61% on July 23, 2009. Further, out of the 90 days, I find that on 44 trading
days, the Noticee Nos. 1 to 31 by trading amongst themselves had contributed
for more than 50% to the total traded volumes in the scrip.

53.

Also, I find that out of 90 trading days on which the Pabari-Parikh Group entities
had entered into trades in the scrip of GIL, on 40 trading days both the buy and
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sell orders were placed within time difference of one minute. By executing trades
in the said manner, the Noticee Nos. 1 to 31 had collectively contributed to daily
market volume of the scrip in the range from 0.06% on February 26, 2009 to
94.89% on April 23, 2009. Further, out of 40 trading days, on 7 trading days the
Noticee Nos. 1 to 31 had contributed more than 50% to the total market volume
by placing both the buy and sell order within one minute time difference. On
further analysis, out of 40 trading days, on 13 trading days the trades executed
by the Noticee Nos. 1 to 31 were synchronised trades by which they had
contributed to total market volume of the scrip in the range from 1.90% on April
02, 2009 to 82.84% on May 27, 2009.

54.

In view of the above, I do not find any merit in the contention of the Noticees that
they had entered into trades individually and synchronised trades indulged in by
the Noticees were insignificant / miniscule in volume if compared to the total
volumes traded in the scrip of GIL. I find that the manipulative trading practices
indulged in by the Noticees cannot be viewed independently and have to be
viewed collectively as the overall impact of the synchronised trading done by the
Noticee Nos. 1 to 31 in the scrip of GIL was quiet significant. Further, I also find
that such pattern of trading cannot be executed without prior meeting of minds
and prior understanding between the said Noticees. However, as Noticee No. 11
does not form a part of the group entities, therefore, Noticee No. 11 cannot be
held guilty of the said manipulative trades or creating artificial volumes in the
scrip of GIL.

55.

I find from para 21 above that Noticee Nos. 3, 5, 6 and 21 had even entered into
certain self trades i.e. fictitious trades wherein the entity appears on both the buy
and sell side of the trade. The said Noticees had executed a total of 41 self
trades for a quantity of 98,717 shares thereby, inflated the volumes in the scrip
by 1.99%. The Noticee Nos. 3, 5, 6 and 21 had executed the said fictitious trades
through multiple brokers. Therefore, I find that by executing the self trades,
Noticee Nos. 3, 5, 6 and 21 had further created a false market and gave a
misleading appearance of trading in the scrip.

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56.

I further find that the price of the scrip had opened at `28.20 and touched a high
of ` 82.25, i.e. there was an increase of ` 54.05. I find that on 20 trading days
and on 43 occasions a new high price was discovered. Out of the 43 occasions,
on 12 occasions (i.e. on six days out of the 20 days), Noticee Nos. 3, 9, 18 and
21 had contributed to the increase in the price by ` 9.50 (out of a total increase of
`54.05). I find that the same is sufficient to establish that the price of the scrip
increased because of placing of the orders by the said Noticees in a manipulative
manner. Therefore, I do not find merit in the submissions made by the said
Noticees and I conclude that the trading done by Noticee Nos. 3, 9, 18 and 21 is
in violation of Regulation 4(2)(e) of the PFUTP Regulations.

57.

I note that certain Noticees have in their submissions stated that they have been
restrained from trading in the securities market vide SEBI order dated February
02, 2011 which was confirmed on July 08, 2011 and the said debarment order is
still in force. Further, I also note that certain Noticees in their submissions have
contended that the present adjudication proceedings are double jeopardy as
SEBI has already vide its order, debarred the Noticees from trading in the market
for the same violations. At this juncture, I rely on judgement of the Hon'ble High
Court of Bombay in the case of SEBI Vs. Cabot International Capital
Corporation (2004) wherein it was observed that "the adjudication for imposition
of penalty by Adjudication Officer, after due inquiry, is neither a criminal nor a
quasi criminal proceeding. The penalty leviable under this Chapter or under
these sections is penalty in cases of default or failure of statutory obligation or in
other words, breach of civil obligation. The provisions and scheme of penalty
under SEBI Act and the regulations, there is not element of criminal offence or
punishment as contemplated under criminal proceedings." In view of this, I do not
find merit in the contention of the said Noticees.

58.

Also, I note that some of the Noticees had requested for a copy of the entire
investigation report and certain documents which were relied upon while issuing
the SCN in the matter. Here, I note that the relevant extract of the investigation
report formed part of the SCN. I further note that the following information was

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provided to the Noticees along with the SCN in a CD form. (a) Order appointing
the Adjudicating Officer (Annexure I)
BSE trading:
(b) Details of purchase and sale of 31 Pabari-Parikh Group entities dealing
through multiple brokers (Annexure A and B)
(c) Details of off market transfers (Annexure DD)
(d) Trading details of 31 Pabari-Parikh entities (Annexure C)
(e) Trade and Order details of trading within Pabari-Parikh Group entities
(Annexure D)
(f) Trading among 31 entities (Annexure E)
(g) Trade and Order details of synchronized Trades (Annexure F)
(h) Details of Trade and Order log containing self trades (Annexure G)
(i) Details of day wise volume contribution to the total volume traded (Annexure
H).
Therefore, I find that the material relevant in the present matter was already
provided to the Noticees.

59.

From the foregoing, I find that the Noticee Nos. 1 to 10 and 12 to 31 by trading
amongst themselves had indulged in synchronised trades on numerous
occasions, resulting in no change of beneficial ownership thereby, created
artificial volume in the scrip of GIL which gave a false and misleading
appearance of trading in the said scrip. Further, I also conclude that the Noticee
Nos. 3, 5, 6 and 21 had entered into self trades and inflated the volumes in the
market thereby, giving a false and misleading appearance of trading in the scrip
of GIL. Also, the Noticee Nos. 3, 9, 18 and 21

by executing trades (which

created new high price) manipulated the price of the scrip of GIL and violated
the provisions of Regulation 4(2)(e) of the PFUTP Regulations. Therefore, I
conclude that the Noticee Nos. 1 to 10 and 12 to 31 have violated the provisions
of Regulation 3(a), (b), (c), (d), 4(1) and 4(2)(a), (b)

& (g) of the PFUTP

Regulations thus, liable for monetary penalty as prescribed under Section 15HA
of the Act which reads as under:
Penalty for fraudulent and unfair trade practices

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15HA. If any person indulges in fraudulent and unfair trade practices relating to
securities, he shall be liable to a penalty of twenty-five crore rupees or three
times the amount of profits made out of such practices, whichever is higher.

60.

Here, it is important to refer to the observation of the Honble Supreme Court of

India in the matter of SEBI Vs. Shri Ram Mutual Fund [2006] 68 SCL 216(SC)
wherein it was held that:
In our considered opinion, penalty is attracted as soon as the contravention of
the statutory obligation as contemplated by the Act and the Regulations is
established and hence the intention of the parties committing such violation
becomes wholly irrelevant.

61.

While determining the quantum of penalty under Sections 15HA, it is important

to consider the factors stipulated in Section 15J of SEBI Act, which reads as
under:-

15J - Factors to be taken into account by the adjudicating officer While

adjudging quantum of penalty under section 15-I, the adjudicating officer shall
have due regard to the following factors, namely:(a) the amount of disproportionate gain or unfair advantage, wherever
quantifiable, made as a result of the default;
(b) the amount of loss caused to an investor or group of investors as a result of
the default;
(c) the repetitive nature of the default.

62.

I observe that from the material available on record, it is not possible to quantify
any gain or unfair advantage accrued to the Noticees or the extent of loss
suffered by the investors as a result of the default of the Noticees. However, I
find that the defaults were repetitive in nature. Further, the Noticees traded in the
scrip in a manner meant to create artificial volumes and liquidity which is an
important criterion capable of misleading the investors while making an
investment decision. In fact, liquidity/volumes in particular scrip raise the issue of
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demand in the securities market. The greater the liquidity, the higher is the
investors attraction towards investing in that scrip. Hence, anyone could have
been carried away by the unusual fluctuations in the volumes and induced into
investing in the said scrip. Besides, this kind of activity seriously affects the
normal price discovery mechanism of the securities market. People who indulge
in manipulative, fraudulent and deceptive transactions should be suitably
penalized for the said acts of omissions and commissions.

ORDER

63.

In view of the above, after considering all the facts and circumstances of the case
and exercising the powers conferred upon me under Section 15-I (2) of the SEBI
Act read with Rule 5 of the Adjudication Rules, I conclude that the proceedings
against Noticee No. 2 i.e. Shri Kishor Chauhan stand abated. Also, I find that the
charges leveled against the Noticee No. 11 i.e. Shri Manish Suresh Joshi do not
stand established. Further, I hereby impose the following monetary penalties on
the other Noticees:

Sr.
No.

Name of the Noticee

Shri

Amar

Premchand

Penal
provisions
as
per the SEBI
Act, 1992

Walmiki 15HA

(Noticee No. 1)
2

Shri Bhavesh Pabari

6,00,000
(Rupees Six Lakh Only)

15HA

5,00,000
(Rupees Five Lakh Only)

15HA

5,00,000
(Rupees Five Lakh Only)

Shri Hemant Madhusudan Sheth 15HA

5,00,000
(Rupees Five Lakh Only)

Shri Anand Kalu Marathe

(Noticee No. 4)

Shri Prem Mohanlal Parikh

(Noticee No. 5)

(Noticee No. 6)
6

5,00,000
(Rupees Five Lakh Only)

15HA

(Noticee No. 3)
3

Penalty Amount
(in `)

Ms

Manisha

Navneetlal

Gandhi 15HA

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5,00,000
(Rupees Five Lakh Only)

(Noticee No. 7)
7

Ms Mala Hemant Sheth

15HA

5,00,000
(Rupees Five Lakh Only)

15HA

6,00,000
(Rupees Six Lakh Only)

(Noticee No. 8)
8

Shri Ankit Sanchaniya

(Noticee No. 9)

M/s Spectrum Chemicals Pvt. Ltd 15HA

(Noticee No. 10)

10

Shri

Samir

Sureshbhai

Shah 15HA

(Noticee No. 12)

11

Shri Nareshbhai Devabhai Patel

Shri

Bharatkumar

5,00,000
(Rupees Five Lakh Only)

Baldevbhai 15HA

5,00,000
(Rupees Five Lakh Only)

Parmar (Noticee No. 14)

13

Shri Rajesh Pravin Bhanushali

15HA

5,00,000
(Rupees Five Lakh Only)

15HA

5,00,000
(Rupees Five Lakh Only)

15HA

5,00,000
(Rupees Five Lakh Only)

15HA

6,00,000
(Rupees Six Lakh Only)

15HA

5,00,000
(Rupees Five Lakh Only)

15HA

5,00,000
(Rupees Five Lakh Only)

15HA

6,00,000
(Rupees Six Lakh Only)

15HA

5,00,000
(Rupees Five Lakh Only)

15HA

5,00,000
(Rupees Five Lakh Only)

15HA

5,00,000
(Rupees Five Lakh Only)

15HA

5,00,000
(Rupees Five Lakh Only)

(Noticee No. 15)

14

Shri Bhupesh Rathod

(Noticee No. 16)

15

Shri Bharat Shantilal Thakkar

(Noticee No. 17)

16

Shri Bipin Jayant Thaker

(Noticee No. 18)

17

Shri Manoj Bhandari

(Noticee No. 19)

18

Shri Bipin Kumar Gandhi

(Noticee No. 20)

19

Shri Vivek Kishanpal Samant

(Noticee No. 21)

20

Shri Chirag Rajnikant Jariwala

(Noticee No. 22)

21

Shri Jignesh C Shah

(Noticee No. 23)

22

Shri Shalin Kirti Kumar Parikh

(Noticee No. 24)

23

Ms Rekha Bhandari
(Noticee No. 25)

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5,00,000
(Rupees Five Lakh Only)

15HA

(Noticee No. 13)

12

5,00,000
(Rupees Five Lakh Only)

24

Shri Devendra Suresh Gupta

15HA

5,00,000
(Rupees Five Lakh Only)

Shri Ashok Kumar Bhikalal Parmar 15HA

5,00,000
(Rupees Five Lakh Only)

(Noticee No. 26)

25

(Noticee No. 27)

26

Ms Pandya Yaminiben M

15HA

5,00,000
(Rupees Five Lakh Only)

15HA

5,00,000
(Rupees Five Lakh Only)

15HA

5,00,000
(Rupees Five Lakh Only)

15HA

5,00,000
(Rupees Five Lakh Only)

(Noticee No. 28)

27

Shri Pandya Hardik M

(Noticee No. 29)

28

Shri Gaurang Ajit Sheth

(Noticee No. 30)

29

Shri Navneetlal Jeevanlal Gandhi

( Noticee No. 31)

TOTAL

64.

1,49,00,000
(Rupees One Crore Forty
Nine Lakh Only)

In my view, the penalties imposed on the Noticees are commensurate with the
defaults committed by them.

65.

The penalty amounts as mentioned above shall be paid by the Noticees through
duly crossed demand drafts drawn in favour of SEBI Penalties Remittable to
Government of India and payable at Mumbai, within 45 days of receipt of this
order. The said demand drafts should be forwarded to the Division Chief,
Enforcement Department (DRA-II), SEBI Bhavan, Plot No. C4-A, G Block,
Bandra Kurla Complex, Bandra (E), Mumbai 400 051.

66.

In terms of Rule 6 of the Rules, copies of this order are sent to the Noticees and
also to the Securities and Exchange Board of India.

Date: November 28, 2014

D. SURA REDDY
GENERAL MANAGER &

Place: Mumbai

ADJUDICATING OFFICER

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