Adjudication Order Against 27 Entities in The Matter of Spectacle Infotek Ltd.

Page 1 of 42
BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA
[ADJUDICATION ORDER NO. EAD-2/AO/DSR/RG/222- 248 /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. Gemstone Investments Limited [PAN: AAACG1483A]
2. Shri Ketan Babulal Shah [PAN: AACPS0667F]
3. Shri Bharat Shantilal Thakkar (PAN:AAZPT9542R)
4. Shri Bipin Jayant Thaker (PAN: ABYPT4984H)
5. Shri Bharat G Vaghela (PAN: ADYPV0844N )
6. Shri Chirag Rajnikant Jariwala (PAN: AFMPJ7543L)
7. Shri Kishore Chauhan (PAN: AFPPC9703G)
8. Shri Bipin Kumar Gandhi [PAN: AJHPG6989J]
9. Shri Bhavesh Pabari (PAN: AKGPP8679N)
10. Shri Prem Mohanlal Parikh (PAN: ALHPP3489N )
11. Shri Santosh Maruti Patil [PAN: AMAPP2722N]
12. Shri Hemant Madhusudan Sheth (PAN: ANOPS8607E)
13. Shri Jigar Praful Ghoghari (PAN: ASFPG8598L )
14. Shri Vipul Hiralal Shah (PAN: AZCPS9537P)
15. Ms Mala Hemant Sheth (PAN: AZXPS0694J)
16. Shri Ankit Sanchaniya (PAN: BLNPS3316L)
17. Shri Vivek Kishanpal Samant (PAN:BRSPS0294N)
18. Shri Bhupesh Rathod [PAN: AACPR3785K]
19. Rajnandi Yarns Private Limited [PAN: AADCR0099J]
20. Shri Vasudev Ramchandra Kamat (PAN: ADCPK2552N)
21. Shri Narendra Prabodh Ganatra [PAN: AEMPG4315C]
22. Shri Manish Suresh Joshi [PAN: AFTPJ5897A]
23. Shri Santosh Vishram Ghadshi [PAN: AHNPG0002C]
24. Shri Kaushik Karsanbhai Patel [PAN: AKOPP9620R]
25. Shri Kaushik Rajnikant Mehta [PAN: ANNPM6298A]
26. Shri Gaurang Ajit Seth (PAN: BGEPS6596Q)
27. M/s Arcadia Share & Stock Brokers Pvt. Ltd. (PAN:AAACA4562G)

In the matter of
SPECTACLE INFOTEK LIMITED

Brought to you by http://StockViz.biz
Page 2 of 42

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 Spectacle Infotek Limited (hereinafter referred to as
SIL/company), a company listed at Bombay Stock Exchange Limited (BSE)
and the National Stock Exchange (NSE), conducted an investigation into the
alleged irregularity in the trading in the shares of SIL 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 May 29, 2009 to April 30, 2010. It
was observed that the price of the scrip unusually increased from ` 41.00 to `
122.62 and the daily high-low traded volume was 36,724 shares to 23,45,153
shares.

2. SEBI vide its interim order dated February 02, 2011 had restrained 39
persons/entities from accessing the securities market and further, had
prohibited them from buying, selling or dealing in securities in any manner
whatsoever, till further directions. The said interim order was later confirmed
by SEBI vide order dated July 08, 2011.

3. The investigation, inter alia, revealed that certain entities namely,
1) Gemstone Investments Limited, 2) Ketan Babulal Shah, 3) Bharat Shantilal
Thakkar, 4) Bipin Jayant Thaker, 5) Bharat G Vaghela, 6) Chirag Rajnikant
Jariwala, 7) Kishore Chauhan, 8) Bipinkumar Gandhi, 9) Bhavesh Pabari,
10) Prem Mohanlal Parikh, 11) Santosh Maruti Patil, 12) Hemant
Madhusudan Sheth, 13) Jigar Praful Ghoghari, 14) Vipul Hiralal Shah,
15) Mala Hemant Sheth, 16) Ankit Sanchaniya, 17) Vivek Kishanpal Samant,
18) Bhupesh Rathod, 19) Rajnandi Yarns Pvt. Ltd, 20) Vasudev Ramchandra
Kamat, 21) Narendra Prabodh Ganatra, 22) Manish Suresh Joshi,
23) Santosh Vishram Ghadshi, 24) Kaushik Karsanbhai Patel, 25) Kaushik
Rajnikant Mehta, 26) Gaurang Ajit Seth (hereinafter referred to as Noticee
Nos. 1 to 26 and collectively referred to as the Noticees), connected to each
other by one way or the other, had dealt in the scrip of SIL through multiple
Page 3 of 42

brokers, in a fraudulent and manipulative manner, without real change in
ownership of shares, by indulging in number of synchronized trades and
heavily traded amongst themselves thereby, creating artificial volumes and
price rise in the scrip. The Noticee Nos. 1 to 26 were also observed to have
done off-market transactions among themselves for the purpose of meeting
the settlement obligations of one another.

4. It was further observed that certain Noticees had also indulged in trades
which were self trades in nature, while trading on both the exchanges i.e.
BSE and NSE, through multiple brokers one of them being Arcadia Share
and Stock Brokers Private Limited (hereinafter referred to as Noticee No. 27),
a registered intermediary with SEBI thereby, creating artificial volumes which
gave a false and misleading appearance of trading in the scrip of SIL on the
exchanges.

5. SEBI has, therefore initiated adjudication proceedings against Noticee Nos. 1
to 26 for the alleged violation of the provisions of Regulation 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) and against Noticee No.
27 for the alleged violation of the provisions of Clause A(1), (2) & (3) of the
Code of Conduct as specified under Schedule II of the SEBI (Stock Brokers
and Sub-Brokers) Regulations, 1992 (hereinafter referred to as Broker
Regulations) read with Regulation 7 of the said Regulations.

Appointment of Adjudicating Officer
6. I have been appointed as the Adjudicating Officer, in place of the previous
Adjudicating 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 the Rules) to inquire into and adjudge under Section 15HA of the Act
against the Noticee Nos. 1 to 26 for the alleged violation of the provisions of
Page 4 of 42

PFUTP Regulations and under Section 15HB of the Act against Noticee No.
27 for the alleged violation of the Broker Regulations.

Show Cause Notice, Reply and Personal Hearing

7. The Noticees were issued a common show cause notice (hereinafter to as
SCNs) dated October 10, 2013 in terms of Rule 4(1) of the 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 Noticees except in
case of Noticee Nos. 5, 8, 19 and 24 as the same were returned undelivered.
In view of the same, vide letter dated December 18, 2013, the SCNs were
sent again to Noticee Nos. 19 and 24. The same were delivered in the
second attempt. Further, with respect to Noticee Nos. 5 and 8, attempts were
made to deliver the SCNs and finally were affixed at the last known address/s
of the said Noticees, reports thereof are available on record.

8. Vide letter dated October 22, 2013 one Ms. Rupal K. Chauhan, wife of
Noticee No. 7 informed that the Noticee No. 7 had passed away on May 29,
2013 and enclosed certified copy of death certificate of Noticee No. 7 as
issued by the Department of Health and Family Welfare, Government of
Gujarat, in support thereof. In view of the same, the adjudication proceeding
initiated against Noticee No. 7 stands abated. However, I shall examine the
role of Noticee No. 7 for the limited purpose of examining the role and
findings against the other Noticees in the matter.

9. Vide letter dated October 21, 2013, Noticee No. 26 filed its reply to the SCN.
Further, vide letter dated November 01, 2013, Noticee No. 27 requested for 3
weeks time to file its reply in the matter and accordingly, vide letter dated
November 21, 2013, Noticee No. 27 replied to the SCN. With respect to
Noticee Nos. 1 and 21, vide separate individual letters dated May 23, 2014
and June 04, 2014 respectively, the said Noticees filed their replies to the
SCN. The other Noticees did not file any replies in the matter.

Page 5 of 42

10. Thereafter, in the interest of natural justice and in order to conduct an inquiry
as per Rule 4(3) of the Rules, an opportunity of personal hearing was granted
to the Noticee Nos. 5 and 8 on April 07, 2014 vide separate notices dated
March 07, 2014. The said notices were also affixed at the last known
addresses of the said Noticees and report of affixture is available on record.
However, the Noticee Nos. 5 and 8 did not attend the said hearing on the
scheduled date. Also, an opportunity of personal hearing was granted to
Noticee No. 24 on April 10, 2014 vide notice dated March 12, 2014. The said
notice was duly delivered to Noticee No. 24, however, he did not attend the
hearing on the scheduled date. Further, all the Noticees, including Noticee
Nos. 5, 8 and 24, were granted an opportunity of personal hearing on August
11, 2014 vide separate notices dated July 24, 2014. Vide separate letters
dated August 05, 2014, Noticee Nos. 23 and 25 stated that vide their
respective letters dated November 21, 2013 and December 07, 2013, they
had filed their replies in the matter and enclosed a copy of the said replies for
records. Further, with respect to Noticee Nos. 5, 8, 11 and 19 the hearing
notices were returned undelivered and therefore, the same were affixed at
the last known addresses of the said Noticees, the report thereof is available
on record.

11. With respect to Noticee No. 1, the Authorized Representative attended the
hearing on the scheduled date and reiterated the submissions made by the
Noticee in its reply dated May 23, 2014. Further, Noticee Nos. 9 and 12
attended the hearing in person and submitted their separate replies dated
August 11, 2014. Further, the said Noticees requested for time to file their
additional replies in the matter. Accordingly, they were advised to file their
replies on or before August 19, 2014. Vide letters dated August 17&18,
2014, respectively, the said Noticees filed their detailed replies in the matter.
With respect to Noticee Nos. 23 and 25, a common authorised representative
attended the hearing on the scheduled date for the said Noticees and
requested for one week time to file detailed replies in the matter. Accordingly,
time till August 19, 2014 was granted to the Noticees to file their replies and
vide separate letters dated August 19, 2014, the said Noticees filed their
detailed replies in the matter. The Authorised representative for Noticee No.
Page 6 of 42

27 attended the hearing on the scheduled date and reiterated the
submissions made by the Noticee in its reply dated November 21, 2013.

12. Noticee Nos. 14 and 22 did not avail the opportunity of personal hearing
granted to them on August 11, 2014 nor did they make any correspondence
in the matter. With respect to Noticee Nos. 3, 4, 6, 10, 13, 16 and 17, it is
noted that the said Noticees did not attend the hearing but vide separate but
identical letters dated August 08, 2014 they all filed their preliminary replies
denying the charges and further requested time to file detailed replies in the
matter. However, only Noticee No. 13 filed his detailed reply vide letter dated
August 14, 2014. With respect to Noticee Nos. 2, 15, 18, 19, 20 and 26, the
said Noticees vide their separate letters dated August 11, 2014 filed their
replies in the matter. Further, Noticee No. 19 filed its additional reply vide
letter dated August 22, 2014. Also, Noticee No. 21 vide his letter dated
August 12, 2014 filed reply in the matter.

13. In view of the above, with respect to Noticee Nos. 5 and 8, I note that ample
opportunities and time was granted to them for filing their replies and to
present their case in the matter. Further, with respect to Noticee Nos. 3, 4, 6,
10, 16 and 17, 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 October 10, 2013 i.e. appx more than 10 months back. Therefore, I am
proceeding further against the said Noticees on the basis of material
available on record in the matter.

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

a) Whether the Noticee Nos. 1 to 6 and 8 to 26 have violated
Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a), (b), (e) & (g) of the
PFUTP Regulations?
Page 7 of 42

b) Whether the Noticee No. 27 has violated Clauses A(1), (2) and (3) of
the Code of Conduct for Stock Brokers as specified under Schedule
II read with Regulation 7 of Broker Regulations?

c) Does the violations, if any, on the part of the Noticees attract
monetary penalty under Sections 15HA and 15HB of the SEBI Act?

d) If so, what would be the quantum of monetary penalty that can be
imposed on the Noticees taking into consideration the factors as
mentioned under Section 15J of the SEBI Act?

15. Before proceeding forward, I would like to refer to the relevant provisions of
the PFUTP Regulations and the Brokers Regulations, which read as under:
Relevant provisions of PFUTP Regulations
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

4. Prohibition of manipulative, fraudulent and unfair trade
practices
() !ithout pre"udice to the provisions of regulation #, no person shall
indulge in a fraudulent or an unfair trade practice in securities
(!) $ealing 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;
Page 8 of 42

(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;

Relevant provisions of the "ro#er Regulations
$toc# bro#ers to abide b% &ode of &onduct.
'. (he stock broker holding a certificate shall at all times abide by the
)ode of )onduct as specified in *chedule ++

$&()*U+) ,,
&-*) -F &-.*U&T F-R $T-&/ "R-/)R$
0Regulation '1

2. 3eneral.
() +ntegrity% A stock,broker, shall maintain high standards of integrity,
promptitude and fairness in the conduct of all his business
(!) -xercise of due skill and care% A stock,broker shall act with due
skill, care and diligence in the conduct of all his business
(3).anipulation% A stock,broker shall not indulge in manipulative,
fraudulent or deceptive transactions or schemes or spread rumours
with a view to distorting market e/uilibrium or making personal gains

16. I find from the SCN that SIL is a company listed on the BSE and NSE. On
analysis of the trading activity in the scrip of SIL on BSE, it was noticed that a
group of 28 entities identified as the Pabari-Parikh group in the investigation
report, including Noticee Nos. 1 to 26, who were all connected to each other
in one way or the other, had traded heavily in the scrip of SIL through multiple
brokers, one of them being Noticee No. 27. The relationship between the 28
entities is detailed as under:

Client
Name
KYC Relation Fund
Move
ment

Share
moveme
nt
through
Client
Name
KYC Relation Fund
Movem
ent

Share
movem
ent
through
Page 9 of 42

off
market
off
market
1.Gemston
e
Investment
s Ltd
Sl. no.10 is the
director in sl. No.1.
Sl. no.10 & 17 have
common office
address.
Sl. no.10 introduced
sl. no.17 for trading
a/c.

15.Santos
h
Vishram
Ghadshi
Has off market
share and fund
movement with
Amar Premchand
Walmiki, who has
off market share
and fund
movement with sl.
no. 17.

2.Bhupesh
Rathod
Introduced sl. no.22,
19, 17, 12 for trading
a/c and knows sl.
No. 25
With
Sl. No.
27

16.Bipink
umar
Gandhi
With sl.
no. 17.
3.Ketan
Babulal
Shah
With sl.
no.19
17.Bhave
sh Pabari
Sl. no.10 & 17
have common
office address.
Sl. no.10
introduced sl.
no.17 for trading
a/c.
Sl. no. 5 is his
uncle & sl. no. 28
is his brother in

law.
Sl. no. 19 is cousin
of sl. no.17
Sl. no. 17 & 22
both directors of
Rajnandi Yarns
Pvt. Ltd.(sl.no.4)
Share common
Tel. no. with sl. no.
27, 28, 6.
Sl. no. 2
introduced him for
trading a/c.
BR* with sl. no. 6,
11, 12, 19, 22, 25,
27
With sl.
no. 19,
22, 4, 5,
6, 27,
28, 16,
4.Rajnandi
Yarns
Private
Limited
Sl. no. 17 & 22 both
directors of Rajnandi
Yarns Pvt.
Ltd.(sl.no.4)
With sl.
no. 5, 6,
11, 12,
17, 19,
22, 23,
27, 28,
18.Kaushi
k
Karsanbh
ai Patel
With sl.
no. 17.
With sl.
no. 28.
5.Bharat
Shantilal
Thakkar
Sl. no. 17 is his
nephew.
Same address with
sl. no.17.
Sl. no. 17 is his
nominee.
Joint a/c with sl. no.
17.
BR* with sl. no. 6,
11, 12, 19, 22, 27,
28
With
sl. no.
17, 19,
27
With sl.
no. 17, 7,
4,
19.Prem
Mohanlal
Parikh
Sl. no. 19 is cousin
of sl. no.17.
Common email
with sl. 27, 19 &
28.
Sl. no. 22 is
nominee of sl.
no.19.
BR* with sl. no. 5,
6, 11, 12, 17, 22,
27, 28.
With sl.
no. 17,
22, 12.
With sl.
no. 17,
22, 12,
4, 5, 6,
22, 23,
27, 28.
Page 10 of 42

6.Bipin
Jayant
Thaker
Same Tel. no. with
sl. no. 17.
BR* with sl. no. 5,
11, 12, 17, 19, 22,
27, 28,
With
sl. no.
4, 17.
With sl.
no. 4, 23,
11, 17,
19, 22. 20.Santos
h Maruti
Patil
Sl. no.10
introduced sl.
no.20 for opening
a/c with the
member Comfort
Securities.
With sl.
no. 10.

7.Vasudev
Ramchand
ra Kamat
Sl. no. 5 share the
same address with
sl. no.17.
With sl.
no.5

21.Kaushi
k
Rajnikant
Mehta
With sl.
no. 24,
15.
With sl.
no. 17,
24.
8.Bharat G
Vaghela
Same address &
Tel.no. as sl. no. 16
who share
movement with sl.no.
17.
Sl. No. 11 is nephew
of sl. no. 17 and
shares same Tel. no.
with sl. no. 17.
With
sl. no.
11.

22.Heman
t
Madhusu
dan
Sheth
Sl. no. 17 & 22
both directors of
Rajnandi Yarns
Pvt. Ltd.
Same email with
sl. no. 28.
BR* with 2, 5, 19,
27, 28, 6, 11, 12,
& sl. no. 25 is his
wife & sl. no. 26 is
his nephew.
With sl.
no. 17,
19, 12.
With sl.
no. 17,
19, 12,
4, 25,
27, 28,
23, 6,
9.Sagar
Janak
Vyas
Similar address as
sl.no. 19.

23.Jigar
Praful
Ghoghari
With sl.
no. 4, 6,
19, 22,
27.
10.Narendr
a Prabodh
Ganatra

Sl. no.10 is the
director in sl. No.1.
Sl. no.10 was a
director in Spectacle
(resigned from the
said company on
June 01, 2010).
Sl. no.10 & 17 have
common office
address.
a/c.

24.Vipul
Hiralal
Shah

Sl. No. 21 has off-
market transaction
with sl. No. 17.

With sl.
No. 21.

With sl.
no.17.

11.Chirag
Rajnikant
Jariwala
Same Tel. no. with
sl.no.17.
Sl. no. 17 is his
uncle.
BR* with sl. no. 5, 6,
12, 17, 22, 27, 28.
With
sl. no.
17, 22,
8, 4
With sl.
no. 4, 6
25.Mala
Hemant
Sheth
Sl. no. 25 is the
wife of sl. no. 22
and sl. no. 26 is
the nephew.

With sl.
no. 17,
19..
With sl.
no. 22,
12.Kishore
Chauhan
Joint a/c with sl. no.
17
Sl. no. 17 & 22 are
witness for demat
a/c.
11, 17, 19, 22, 27.
With
sl. no.
17, 19,
22
With sl.
no. 4, 17,
19, 22,
28,
26.Gaura
ng Ajit
Seth
Has common
address & Tel. no.
with sl. no. 22. &
sl. no. 22 and 17
both directors of
Rajnandi Yarns
Pvt. Ltd.(sl.no.4)

13.Manish
Suresh
Joshi
a/c.
27.Ankit
Sanchani
ya
Same Tel. no. with
sl. no. 19 and also
shares Tel. no.
with sl. no. 17 who
is the nominee for
With sl.
no. 17,
19.
With sl.
no. 4,
17, 19,
22, 11,
23, 28.
Page 11 of 42

his a/c.
BR* with sl. no.5,
6, 11, 12, 17, 19,
22, 28,
14.Kaushik
Gangaram
Rathod
Same Tel. no. with
sl. no. 16.
Sl. no.
16 has
fund
move
ment
with
sl.no.
17.
Sl. no. 16
has off-
market
transfers
with sl.
no. 17.
28.Vivek
Kishanpal
Samant
Sl. no. 17 is the
brother in law &
shares common
Tel. no. & sl.no. 17
is the nominee of
sl. no. 28 for
trading a/c & bank
a/c.
Shares email with
sl. no. 22.
Shares email with
sl. no. 19.
With sl.
no. 22.
With sl.
no. 4,
17, 22,
11, 12,
19, 27.
*BR - Business relation.

17. In addition to the above, it was revealed that the Pabari-Paikh Group entities,
including Noticee Nos. 1 to 26, had indulged in certain off-market transfers for
5,53,54,390 shares of SIL amongst themselves during the period January 01,
2009 and January 31, 2011. These off-market transfers among the group
further confirmed the relationship / connection between the said group.

18. From the trade log analysis, I find that the group of entities, as mentioned in
above paras, had purchased 12,91,93,874 shares and sold 10,61,95,225
shares, respectively. Out of the 28 Pabari-Parikh Group entities, Noticee Nos.
1 to 26 had traded for 8,82,03,123 shares (i.e. 52.28% of the market volume)
accounting for 68.27 % of the total purchases of the group and 83.06 % of
the total sales of the group within Pabari-Parikh Group entities and 52.28% of
the market volume from within the group entities. Out of 8,82,03,123 shares
traded within the group entities, the buy and sell orders for 3,25,89,257
shares, accounting for 19.32% of the market volume, were placed within one
minute time difference. Further, it was noted that 3,25,89,257 shares
constituted for 25.23% of the total purchases and 30.69% of the total sales of
the Pabari-Parikh Group entities.

19. Further, out of 3,25,89,257 shares, for 46,50,808 shares, which accounted for
2.76% of the total market volume, the buy and sell orders were placed in a
synchronized 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
Page 12 of 42

side and sale side being same) by Noticee Nos. 1 to 17. The volume of
46,50,808 shares constituted 5.27% of the total purchases and 4.38% of the
total sales of the Pabari-Parikh Group entities. The summary of the said
synchronized trades entered into by the Noticee Nos. 1 to 17 while trading on
BSE is as under:
PANNO Client Name
Synchronised
!y trade
" o#
$ar%et
&ol!me
" o#
sync
to
total
!y
y
client
Synchronised
sale trade
" o#
$ar%et
&ol!me
" o#
sync
to
total
sale
y
client
AAACG1483A
Gemstone
Investments Ltd
(Noticee No. 1) 0.00 0.00 0.00 1000 0.00 0.28
AACPS0!"
#etan $a%&'a' S(a(
(Noticee No. 2) 1)00 0.00 3.)8 0 0.00 0.00
AA*P+,)42-
$(a.at S(anti'a'
+(a//a.
(Noticee No. 3) 4!2)!, 0.28 !.8 03!!! 0.3 .3)
A$0P+4,841
$i2in 3a4ant +(a/e.
(Noticee No. 4) 340208 0.20 !.1) 123!,0 0.0! 3.24
A50P60844N
$(a.at G 6ag(e'a
(Noticee No. )) 43203 0.2 10.,0 4)020 0.38 ,.1!
A"7P3!)43L
C(i.ag -a8ni/ant
3a.i9a'a
(Noticee No. ) 18400 0.01 0.!) )4380 0.03 3.0!
A"PPC,!03G
#is(o.e C(a&(an
(Noticee No. !) 2881 0.1! 4.84 !)83, 0.40 8.3,
A31PG,8,3
$i2in/&ma. Gand(i
(Noticee No. 8) 14,8 0.01 2.4) 113!) 0.01 1.18
A#GPP8!,N
$(aves( Pa%a.i
(Noticee No. ,) 48)21 0.2, ).20 ))01!! 0.33 2.
AL1PP348,N
P.em 7o(an'a'
Pa.i/(
(Noticee No. 10) 3)13, 0.21 3.88 31)428 0.1, 4.11
A7APP2!22N
Santos( 7a.&ti Pati'
(Noticee No. 11) !)84 0.00 3.04 143, 0.01 ).00
AN:PS80!;
1emant
7ad(&s&dan S(et(
(Noticee No. 12) 8)3)1 0.)1 4.2! 84)!4 0.41 3.0
AS"PG8),8L
3iga. P.af&' G(og(a.i
(Noticee No. 13) 433)) 0.03 4.3 2!400 0.02 4.!1
A*CPS,)3!P
6i2&' 1i.a'a' S(a(
(Noticee No. 14) 2)000 0.01 .8) 24800 0.01 10.48
A*<PS0,43
7a'a 1emant S(et(
(Noticee No. 1)) 28,00 0.02 ).!, 8!2! 0.01 1.3,
$LNPS331L An/it Sanc(ani4a )!220, 0.34 ).)0 2,)844 0.18 2.,
Page 13 of 42

(Noticee No. 1)
$-SPS02,4N
6ive/ #is(an2a'
Samant
(Noticee No. 1!) ,3)4) 0.41 ).)3 12238 0.3 ).08
G.and +ota' 4)0808 2.! ).2! 4)0808 2.! 4.38

20. I also find that Noticee Nos. 3 to 14, 16 and 17 had indulged in certain trades
which were self trades in nature while trading through their multiple brokers
including Noticee No. 27. The details of the said fictitious trades indulged into
on BSE by the said Noticees are as under:

PANNO Client Name 'otal (!y 'otal Sale
Sel#
trade
)ty
" o#
'otal
(!y
"
'otal
Sale
" o#
$ar%et
&ol!me
No o#
Sel#
trades
AA*P+,)42-
$(a.at S(anti'a'
+(a//a.
(Noticee No. 3) 104!03)! ,)02811 23)3!4 2.2) 2.48 0.14 11)
A$0P+4,841
$i2in 3a4ant +(a/e.
(Noticee No. 4) 3181 3822,2 2232 3.41 ).,2 0.13 )!
A50P60844N
$(a.at G 6ag(e'a
(Noticee No. )) )3232) !033, !!008 1.3! 1.0, 0.0) ,4
A"7P3!)43L
C(i.ag -a8ni/ant
3a.i9a'a
(Noticee No. ) 30,0!81 1!,2,0 3,!00 1.28 2.24 0.02 2
A"PPC,!03G
#is(o.e C(a&(an
(Noticee No. !) ,!21840 80)83) 1,!023 2.03 2.44 0.12 102
A31PG,8,3
$i2in/&ma. Gand(i
(Noticee No. 8) 13,328 ,2338 ,121 0.) 0.,) 0.01 3!
A#GPP8!,N
$(aves( Pa%a.i
(Noticee No. ,) 1408)43 20!0!340 120384 11.)0 !.83 0., 430
AL1PP348,N
P.em 7o(an'a'
Pa.i/(
(Noticee No.1 0) 12!232) !!044) )3118 4.18 .,3 0.32 1)2
A7APP2!22N
(Noticee No. 11) 328)1 328)1 1333 4.0! 4.0! 0.01 4
AN:PS80!;
1emant
7ad(&s&dan S(et(
(Noticee No. 12) 2,,2411 223)1!3 32!42! 10.,3 14.) 1.,4 !1
AS"PG8),8L
3iga. P.af&'
G(og(a.i
(Noticee No. 13) ,4!!18 )8220 ,,,0 1.0) 1.!2 0.01 1
A*CPS,)3!P
6i2&' 1i.a'a' S(a(
(Noticee No. 14) 43,11, 2300 24800 ).) 10.48 0.01 1
$LNPS331L
An/it Sanc(ani4a
(Noticee No. 1) 1)4!81,, ,,84834 4!1282 3.04 4.!2 0.28 4!0
$-SPS02,4N
6ive/ #is(an2a'
Samant 13))1) 120),,8 1028!) .2, 8.)3 0.1 102
Page 14 of 42

(Noticee No. 1!)
G.and +ota' 12!20!02 10)0!)841 !!),408 .10 !.38 4.0 23!0

21. For the above fictitious trades, it was noted that the brokers mentioned in the
table below were appearing on both the sides of the trade i.e. acted as broker
and counter party broker. The number of instances wherein the Noticee No.
27 had executed self trades on behalf of its clients was significant and the
details of the same are as under:

Buy and Sale Member Name Client Name Traded Quantity
No. of
Trades
Ami Stoc/ and S(a.e $.o/e.s Pvt. Ltd.
$i2in/&ma. Gand(i
(Noticee No. 8) ,121 3!
Ami Stock and Share Brokers Pvt. Ltd. Total !"! #$
A.cadia S(a.e = Stoc/ $.o/e.s Pvt. Ltd
An/it -a8end.a Sanc(ani4a
(Noticee No. 1) 10282 21
$(a.at G 6ag(e'a
(Noticee No. )) !!008 ,4
$(a.at S(anti'a' +(a//a.
(Noticee No. 3) 8413, !1
$(aves( Pa%a.i
(Noticee No. ,) ,8!) 1)
$i2in 3a4ant +(a/e.
(Noticee No. 4) 8)3 1
1emant 7ad(&s&dan S(et(
(Noticee No. 12) ,2)0 1)
#is(o.e C(a&(an
(Noticee No. !) )2233 84
Arcadia Share % Stock Brokers Pvt. Ltd Total "&!#&' #!(
Comfo.t Sec&.ities Pvt. Ltd.
(Noticee No. 11) 1!,8
Comfort Securities Pvt. Ltd. Total !$) (
"ai.9ea't( Sec&.ities Ltd.
(Noticee No. 1) )211 12
*air+ealth Securities Ltd. Total &"!! !"
-e'iga.e Sec&.ities Ltd.
6ive/ #is(an2a' Samant
(Noticee No. 1!) )000 1
,eli-are Securities Ltd. Total &''' !
S.P.3ain Sec&.ities Pvt. Ltd.
$i2in 3a4ant +(a/e.
(Noticee No. 4) 10000 1
S.P..ain Securities Pvt. Ltd. Total !'''' !
S(.i.am Insig(t S(a.e $.o/e.s Ltd.
(Noticee No. 11) 30! 1,
Shriram /nsi-ht Share Brokers Ltd. Total #'$( !
+.ans2a.ent S(a.es = Sec&.ities Pvt.
Ltd.
C(i.ag -a8ni/ant 3a.i9a'a
(Noticee No. ) 1)000 1
Page 15 of 42

Trans0arent Shares % Securities Pvt. Ltd. Total !&''' !
1rand Total #''&&( ##

22. From the price volume data analysis at BSE, I note that the scrip of SIL was
traded on 228 trading days on BSE. Out of 228 trading days, the group
entities, including the Noticee Nos. 1 to 26, had traded among themselves on
223 days, i.e. 98% of the total number of days the scrip was traded during the
period under investigation. It was noted that the Group entities had
contributed to the daily market volume of the scrip in the range from 4.94%
on May 29, 2009 to 81.15% on April 30, 2010. It was further alleged in the
SCN that out of 223 trading days, on 130 trading days the Pabari-Parikh
Group entities, including the Noticee Nos. 1 to 26, had traded among
themselves, thereby, contributing more than 50% to the total market volume
in the scrip during the relevant period.

23. On further examination, I find that out of 223 trading days on which the
Pabari-Parikh Group had entered into trades in the scrip of SIL, on 215
trading days, both the buy and sell orders were placed within time difference
of one minute. It was, therefore, alleged in the SCN that the Pabari-Parikh
Group entities, including the Noticee Nos. 1 to 26, had contributed to daily
market volume of the scrip in the range from 3.52% on May 29, 2009 to
83.56% on March 09, 2010. Out of 215 trading days, on 149 trading days, the
trades executed by the Pabari-Parikh Group entities, including the Noticee
Nos. 1 to 26, were synchronized in nature. By executing synchronised trades
among the group entities, the Pabari-Parikh Group entities including Noticee
Nos. 1 to 26 had contributed to total market volume of the scrip in the range
from 0.73% on May 29, 2009 to 28.69% on March 18, 2010.

24. I further find that the price of the scrip opened at ` 73.50 and touched a high
of ` 130.00 i.e. there was an increase of ` 56.50. I note that out of 21
occasions, on 9 occasions (i.e. on 4 days out of 5 days), Noticee Nos. 3, 5,
12 and 16, had contributed to the increase in the price by ` 0.55 (out of a
total increase of ` 56.50).

Page 16 of 42

25. I find from the analysis of the trading activity in the scrip of SIL on NSE that a
group of 14 Pabari-Parikh Group entities i.e. Noticee Nos. 3 to 10, 12, 13, 15
to 17 and 19, connected to one another in one way or the other and dealing
through multiple brokers, had purchased 1,70,31,741 shares which
accounted for 75.55% of the total volume traded and sold 1,84,78,829 shares
which accounted for 81.97% of the total volume traded in the scrip of SIL
during the period under investigation. Further, as mentioned in para 17
above, the group entities had also done certain off-market transactions which
further confirm the nexus between the said entities. The relationship between
the 14 entities i.e. Noticee Nos. 3 to 10, 12, 13, 15 to 17 and 19, is detailed
as under:
Client
Name
KYC Relation Fund
Move
ment

Share
moveme
nt
through
off
market
Client
Name
KYC Relation Fund
Movem
ent

Share
movem
ent
through
off
market
1.Rajnan
di Yarns
Private
Limited
Sl. no. 8 & 10 both
directors of Rajnandi
Yarns Pvt. Ltd.
With sl.
no. 2, 3,
5, 6, 8, 9,
10, 11,
13, 14,
8.Bhave
sh
Pabari
Sl. no. 2 is his uncle
& sl. no. 14 is his
brother in law.
Sl. no. 9 is cousin of
sl. no.8.
Sl. no. 8 & 10 both
directors of
Rajnandi Yarns Pvt.
Ltd.(sl.no.1)
Share common Tel.
no. with sl. no. 13,
14, 3.
6, 9, 10, 12, 13.
With sl.
no. 9,
10, 1, 2,
3, 13,
14, 7.
2.Bharat
Shantilal
Thakkar
Sl. no. 8 is his
nephew.
Same address with sl.
no.8.
Sl. no. 8 is his
nominee.
Joint a/c with sl. no. 8.
6, 9, 10, 13, 14
With
sl. no.
8, 9,
13.
With sl.
no. 8, 1.
9.Prem
Mohanla
l Parikh
Sl. no. 9 is cousin of
sl. no.8.
Common email with
sl. 13, 9 & 14.
Sl. no. 10 is
nominee of sl. no.9.
5, 6, 8, 10, 13, 14.
With sl.
no. 8,
10, 6.
With sl.
no. 8,
10, 6, 1,
2, 3, 10,
11, 13,
14.
3.Bipin
Jayant
Thaker
Same Tel. no. with sl.
no. 8.
6, 8, 9, 10, 13, 14.
With
sl. no.
1, 8.
With sl.
no. 1, 11,
5, 8, 9,
10.
10.Hema
nt
Madhus
udan
Sheth
Sl. no. 8 & 10 both
directors of
Rajnandi Yarns Pvt.
Ltd.(sl.no.1)
Same email with sl.
no. 14.
BR* with 2, 9, 13,
14, 3, 5, 6 & sl. no.
12 is his wife.
With sl.
no. 8, 9,
6.

With sl.
no. 8, 9,
6, 1, 12,
13, 14,
11, 3.
4.Bharat
G
Same address &
Tel.no. as sl. no. 7
With
sl. no.
11.Jigar
Praful
With sl.
no. 1, 3,
Page 17 of 42

Vaghela who has share
movement with sl.no.
8.
Sl. No. 5 is nephew of
sl. no. 8 and shares
same Tel. no. with sl.
no. 8.
5. Ghoghar
i
9, 10,
13.
5.Chirag
Rajnikant
Jariwala
Same Tel. no. with
sl.no. 8.
Sl. no. 8 is his uncle.
6, 8, 10, 13, 14.
With
sl. no.
8, 10,
4, 1
With sl.
no. 1, 3.
12.Mala
Hemant
Sheth
Sl. no. 12 is the wife
of sl. no. 10.
With sl.
no. 8, 9.
With sl.
no. 10.
6.Kishore
Chauhan

Join a/c with sl. no. 8.
Sl. no. 8 & 10 are
witness for demat a/c.

5, 8, 9, 10, 13.

With
sl. no.
8, 9,

10.

With sl.
no. 1, 8,
9, 10, 14.
13.Ankit
Sanchan
iya

Same Tel. no. with
sl. no. 9 and also
shares Tel. no. with

sl. no. 8 who is the
nominee for his a/c.
BR* with sl. no.2, 3,
5, 6, 8, 9, 10, 14.

With sl.
no. 8, 9.

With sl.
no. 1, 8,
9, 10, 5,

11, 14.
7.Bipinku
mar
Gandhi
With sl.
no. 8.
14.Vivek
Kishanp
al
Samant
Sl. no. 8 is the
brother in law &
shares common
Tel. no. & sl.no. 8 is
the nominee of sl.
no. 14 for trading
a/c & bank a/c.
Shares email with
sl. no. 10.
Shares email with
sl. no. 9.
With sl.
no. 10.
With sl.
no. 1, 8,
10, 5, 6,
9, 13.
*BR - Business relation.

26. I find that during the relevant period, the abovementioned 14 group entities
had purchased and sold a total of 17031741 shares and 18478829 shares,
respectively on NSE. Out of 14 Pabari-Parikh Group entities, 13 Pabari-
Parikh Group entities i.e. Noticee Nos. 3 to 10, 12, 13, 16, 17 and 19 had
traded for 1,52,05,631 shares (i.e. 67.45% of the total market volume),
accounting for 89.28% of the total purchases of the group and 82.29% of the
total sales of the group, within the group entities. Out of 1,52,05,631 shares
traded in the scrip of SIL within the group entities, for 68,08,891 shares
constituting 30.20% of the market volume, the buy and sell orders were
placed within one minute time difference. 68,08,891 shares constituted for
39.98% of the total purchases and 36.85% of the total sales of the 14 Pabari-
Parikh Group entities. Further, it was noted that out of 68,08,891 shares, for
Page 18 of 42

15,63,314 shares constituting 6.93% of the total market volume, the buy and
sell orders were placed in synchronized 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). 15,63,314
shares constituted for 9.18% of the total purchases and 8.46% of the total sell
of the 14 Pabari-Parikh Group entities. The summary of the said
synchronized trades entered into by the stated Noticees while trading on NSE
is as under:
PANNO Client Name
Synchronised
!y trade
" o#
$ar%et
&ol!me
" o#
sync
to
total
!y
y
client
Synchronised
sale trade
" o#
$ar%et
&ol!me
" o#
sync
to
total
sale
y
client
AA5C-00,,3
-a8nandi 0a.ns
P.ivate Limited
(Noticee No. 1,) 488) 0.22 32.03 0 0.00 0.00
AA*P+,)42-
$(a.at S(anti'a'
+(a//a.
(Noticee No. 3) 1)0328 0.! 18.! 28,, 0.12 4.02
A$0P+4,841
$i2in 3a4ant +(a/e.
(Noticee No. 4) !)0) 0.33 4.00 8!22 0.30 3.48
A50P60844N
$(a.at G 6ag(e'a
(Noticee No. )) 380)!8 1., 12.)4 22)))) 1.00 .!1
A"7P3!)43L
C(i.ag -a8ni/ant
3a.i9a'a
(Noticee No. ) 8,123 0.40 !.4) 44!34 0.20 3.))
A"PPC,!03G
#is(o.e C(a&(an
(Noticee No. !) 1)!814 0.!0 13., 100,)) 0.4) ,.),
A31PG,8,3
$i2in/&ma. Gand(i
(Noticee No. 8) 0 0.00 0.00 0000 0.2! 24.1
A#GPP8!,N
$(aves( Pa%a.i
(Noticee no. ,) 1034,1 0.4 3,.! 28120 0.12 !.44
AL1PP348,N
P.em 7o(an'a'
Pa.i/(
(Noticee No. 10) 2,10 0.28 .1 ),!0 0.2 13.22
AN:PS80!;
1emant
7ad(&s&dan S(et(
(Noticee No. 12) 12!1! 0.) ).0 3)41, 1.)! 12.88
AS"PG8),8L
(noticee No. 13) 343,, 0.1) ).,3 !8! 0.34 13.11
$LNPS331L
An/it Sanc(ani4a
(Noticee No. 1) 1,242 0.8! ,.1 1,,28, 0.88 8.8
$-SPS02,4N
6ive/ #is(an2a'
Samant 13!)12 0.1 ).), 31!8!) 1.41 ,.38
Page 19 of 42

(Noticee No. 1!)
G.and +ota' 1)3314 .,3 ,.18 1)3314 .,3 8.4

27. It was also observed that Noticee Nos. 3, 4, 7, 10, 12, 13 and 16 had
indulged in certain trades which were self trades in nature while trading
through their multiple brokers including Noticee No. 27. The details of the
said fictitious trades indulged into on NSE by the said Noticees are as under:
PANNO Client Name 'otal (!y
'otal
Sale
Sel#
trade
)ty
" o#
'otal
(!y
"
'otal
Sale
" o#
$ar%et
&ol!me
No o#
Sel#
trades
AA*P+,)42-
(Noticee No. 3) 80)11, 8,38 48)) 0.0 0.!3 0.02 8
A$0P+4,841
$i2in 3a4ant +(a/e.
(Noticee No. 4) 18!!18! 1,!!2)! ))03, 2.,3 2.!8 0.24 24
A50P60844N
$(a.at G 6ag(e'a
(Noticee No. )) 3033!2, 33),143 4881 0.1 0.1) 0.02 32
A"PPC,!03G
#is(o.e C(a&(an
(Noticee No. !) 11)2)4 10)2,8, 1120 0.,! 1.0 0.0) 18
AL1PP348,N
P.em 7o(an'a' Pa.i/(
(Noticee no. 10) ,)142! 4)1)00 1)000 1.)8 3.32 0.0! 2
AN:PS80!;
1emant 7ad(&s&dan
S(et(
(Noticee No. 12) 2)11!3 2!)3!43 )834 0.23 0.21 0.03 3
AS"PG8),8L
(Noticee No. 13) )!,,! )82)0 10000 1.!3 1.!1 0.04 1
$LNPS331L
An/it Sanc(ani4a
(Noticee No. 1) 2042411 22)0)38 1321 .4, ).8, 0.), 33
G.and +ota' 12,)38,! 131003)8 23,431 1.8) 1.83 1.0 121

28. For the above fictitious trades, it was noted that the brokers mentioned in the
table below were appearing on both the sides of the trade i.e. acted as broker
and counter party broker. The number of instances wherein the Noticee No.
27 had executed self trades on behalf of its clients was significant and the
details of the same are as under:

Buy and Sale Member Name Client Name Total Traded Qty No. of Trades
A.cadia S(a.e = Stoc/ $.o/e.s Pvt.
Ltd.
(Noticee No. 1) 18, 11

$(a.at G 6ag(e'a
(Noticee No. )) 4881 32

(Noticee No. 3) !2 3

$i2in 3a4ant +(a/e.
(Noticee No. 4) 300, 14
Page 20 of 42

1emant 7ad(&s&dan S(et(
(Noticee No. 12) 34 1

#is(o.e C(a&(an
(Noticee No. !) 3!0 14
Arcadia Share % Stock Brokers Pvt. Ltd. Total !2')! $&
1rand Total !2')! $&

29. From the price volume data analysis on NSE, I note that the scrip of SIL was
traded on 36 trading days at NSE. Out of 36 trading days, the group entities
had traded among themselves on all the days the scrip was traded. By
trading amongst themselves, the group entities had contributed to daily
market volume traded in the scrip in the range from 91.87% on March 09,
2010 to 84.33% on April 30, 2010. Out of 36 trading days on which the group
entities traded among themselves, on 27 trading days the 14 Pabari-Parikh
Group entities contributed for more than 50% to the total market volume of
the scrip during the relevant period.

30. Further, out of 36 trading days on which the 14 Pabari-Parikh Group traded, I
note that on all the trading days both buy and sell orders were placed within
time difference of one minute. By trading amongst themselves, the group
entities contributed to daily market volume of the scrip in the range from
88.56% on March 09, 2010 to 20.39% on April 30, 2010. I also note that out
of 36 trading days, on 4 trading days the Pabari-Parikh Group entities
contributed for more than 50% to the total market volume by placing both buy
and sell order within one minute time difference. On further examination, it
was also noted that out of 36 trading days, on 30 trading days the trades
executed by the Pabari-Parikh Group entities were synchronized in nature.
By executing synchronized trades among themselves, Pabari-Parikh Group
entities contributed to total market volume in the ranged from 13.97% on
March 09, 2010 to 0.37% on April 29, 2010.

31. It was, therefore, alleged in the SCN that the Noticee Nos. 1 to 26, 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 SIL and further alleged that the Noticee No. 27, by executing the
Page 21 of 42

manipulative trades on behalf of Noticee Nos. 1 to 26, had violated Clauses
A(1), (2) and (3) of the Code of Conduct for Stock Brokers as specified under
Schedule II read with Regulation 7 of the Broker Regulations.

Submissions made by the Noticees:
Noticee No. 1:
32. The Noticee No. 1 vide its reply dated May 23, 2014 submitted that it is into
the business of investing in stock market and consulting major companies on
merger and acquisition, financing, buy-out and capital placement. Further, it
denied having any connection with the Pabari-Parikh Group except that Shri
Narendra Ganatra i.e. Noticee No. 21 is its Director. Further, it also stated
that vide SEBI order dated July 08, 2013 the Noticee is still debarred from
trading in the securities market. It is submitted by the Noticee that by initiating
adjudication proceedings in the matter although the earlier debarment is still
in force, the same amounts to multiple proceedings and therefore, it is
prejudicial.

33. Further, the Noticee No. 1 submitted that during the relevant period it had
bought 6,26,395 shares and sold 3,51,395 shares of SIL. However, out of the
said traded quantity, merely 3,99,286 shares on the buy side and 3,47,193
shares on the sell side had allegedly matched with the Pabari -Parikh group
entities. The said volume of shares constituted for 0.24% on the buy side and
0.21% on the sell side to the total market volume which was a miniscule
percentage to the market volume of shares traded in the scrip of SIL. It is the
case of the Noticee that at the time of placing orders, it was not aware of the
counter party broker / client with whom its shares were getting matched. It is
submitted by the Noticee that the type, nature and pattern of its trading in the
scrip of SIL during the investigation period was similar to and in lines with the
trading carried out by it in various other scrips and therefore, the trading
activity cannot be treated as manipulative in nature. Further, on August 28,
2009, 1000 shares had got matched with one Mr. Bipin Gandhi i.e. Noticee
No. 8 out of the total 30,000 shares sold by the Noticee No. 1 on the trading
platform. The transactions carried out in the scrip of SIL were all delivery
based and therefore, were genuine in nature.
Page 22 of 42

Noticee No. 2:
34. Vide letter dated August 11, 2014, the Noticee No. 2 submitted that he is
basically a goldsmith and a small time investor in the capital market. The
decision of trading and investment is completely taken independently by the
Noticee and is not influenced by any other person. The Noticee denied being
part of the Pabari-Parikh Group. Further, he submitted that all the trades
were executed by him through one broker viz. Globe Capital Market Limited
and were delivery based and therefore, there cannot be any question of the
said trades being synchronised or circular in nature. He had bought 1,11,045
shares in his account and sold 18,045 shares of SIL. The said transactions
were delivery based.

35. The Noticee further submitted that in the course of his goldsmith business he
had come across one Mr. Prem Parikh i.e. Noticee No. 10 and he used to get
the ornaments sample for sale in the market as broker from various
manufacturers from various sectors. During the relevant period as the
Noticee No. 2 had to make payment to Noticee No. 10 for the sample
ornaments, he had done a barter system of payment by giving 93,000 shares
of SIL to Noticee No. 10 in an off market transfer.

Noticee No. 3, 4, 6, 10, 13, 16 and 17:
36. Vide separate but identical letters dated August 08, 2014, the Noticee Nos. 3,
4, 6, 10, 13, 16 and 17 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 will be filing their
detailed reply in the matter. However, no replies were received from the said
Noticees till date except Noticee No. 13.

37. The Noticee No. 13 vide letter dated August 14, 2014, submitted that he is
into the business of jobbing and arbitrage activities in the market. Further, the
Page 23 of 42

Noticee admitted the off market transactions done by him with Noticee Nos.
4, 10, 12, 16 & 19. The Noticee stated that it was a mere coincidence that
few of his orders in the scrip of SIL had got synchronized with the group
entities and that he had no knowledge of the counter party broker / client with
whom the orders were getting matched. Out of his total buy volume of
9,47,718 shares, only 43,355 shares were synchronised and out of the total
sell volume of 5,82,260 shares only 27,400 shares were synchronised. The
volume of the synchronized trade was also insignificant if compared to the
total volume which was traded in the scrip of SIL during the relevant period.
The Noticee further denied having any linkages / connection with the Pabari-
Parikh entities.

38. With respect to the self trades alleged to have been indulged in by Noticee
No. 13, he submitted that 10,000 shares had coincidentally got matched on a
single day. On perusal of the order log file, he stated that instead of putting
another buy order of 10,000 shares he had punched in a sell order by
mistake and therefore, it got matched.

Noticee No. 9:
39. Vide letter dated August 11, 2014, the Noticee No. 9 submitted that he has
been debarred from buying, selling and dealing in the securities market vide
SEBI order dated February 02, 2011. Further, the Noticee stated that as the
investigation period is 4 years old, he is in a process of collating the data and
file his detailed reply in the matter. Accordingly, vide letter dated August 17,
2014, the Noticee No. 9 submitted his detailed reply and stated that he had
dealt in the shares of SIL in the normal and ordinary course of business and
had carried out trading in various other scrips during the period under
investigation. The Noticee further submitted that he is basically a cloth
merchant and his main motto is to earn brokerage or commission by dealing
in huge volumes of trade in cloth. Only in 1996 the Noticee joined the stock
market as an investor, jobber cum trader and arbitrager. The Noticee also
stated the fact that he has been debarred from buying, selling and dealing in
the securities market vide SEBI order dated February 02, 2011.
Page 24 of 42

40. While denying being part of the Pabari-Parikh group, with respect to the
allegation of synchronised trading carried out by the Noticee No. 9, he stated
that the said trades were miniscule in volumes when compared to the total
volume traded in the scrip of SIL during the relevant period. As submitted by
him, on BSE the buy side synchronised trades entered into by him
constituted 0.29% and on NSE the same constituted 0.46% of the market
volume traded in the scrip. Further, with respect to sell side synchronised
trades, the same constituted 0.33% on BSE and 0.12% on NSE of the
market volume traded in the scrip. The said transactions were delivery based
on net basis on both the exchanges. The Noticee admits being a director of
Noticee No. 19 along with Noticee No. 12. However, the investment
decisions taken by the Noticee are independent and not influenced by any
other person. The Noticee further submitted that the relationship with
Noticee No. 18 is because of his name filled in as introducer while filing KYC
document by one of the brokers through whom Noticee No. 9 had traded.
Therefore, Noticee No. 9 denied being related to Noticee No. 18.

41. With regard to off market dealings with some of the group entities, the
Noticee submitted that the same were carried out for meeting urgent fund
requirements. With regard to the off market transaction carried out with
Noticee No. 12 and 19, the Noticee stated that the same was in the nature of
temporary loans. The Noticee submitted that he had not manipulated the
price of the scrip and had sold all the shares available with him during the
investigation period. He denied making any gains or taking advantage of
fluctuations of the price in the scrip.

Noticee No. 12:
42. Vide letter dated August 11, 2014 the Noticee No. 12 submitted that he has
investigation period is 4 years old, he is in a process of collating the data and
Page 25 of 42

2014 the Noticee No. 12 submitted his detailed reply and stated that he is
into the business of jobbing and arbitrage activities on the stock market.

43. With respect to the off market transactions carried out by the Noticee, he
stated that the off market deals with Noticee No. 19, 10 , 16, 4 & 15 were
carried out by paying and receiving consideration. He had carried out an off
market deal with his wife i.e. Noticee No. 15 which was a family arrangement.
The Noticee admitted being a Director of Noticee No. 19 along with Noticee
No. 9. However, it is the case of the Noticee that the investment decisions
are taken independently by him without any influence. Therefore, Noticee No.
12 denied being related to any of the group entities. Further, with respect to
the synchronised trades, the Noticee submitted that the same were mere
coincidence and without knowledge of counterparty broker / client. The
synchronised volume of shares traded by the Noticee on BSE is stated to be
8,65,351 shares on the buy side accounting to 0.51% and 6,84,574 shares
on the sell side accounting to 0.41% of the market volume. Further, the
synchronised trade volume traded by the Noticee on NSE is stated to be
1,27,167 shares on the buy side accounting to 0.56% and 3,54,619 shares
on the sell side accounting to 1.57% of the market volume traded in the scrip
of SIL. Therefore, the Noticee stated that volume of the said synchronised
trades was insignificant if compared to the total volume traded in the scrip.

44. With respect to the self trades, Noticee No. 12 submitted that the same were
executed by different brokers during the course of his arbitrage and jobbing
business. The Noticee further submitted that when buying member, selling
member, order quantity, order time, order rate were different from executed
traded quantity, trade time, trade rate and only small quantity resulted into
self trade, it would not have disturbed the market equilibrium. The
transactions carried out by the Noticee were all delivery based on both
exchanges.

Page 26 of 42

Noticee No. 15:
45. The Noticee No. 15 vide letter dated August 11, 2014 submitted that during
the investigation period she had traded in the scrip of SIL along with many
other scrips. The Noticee further stated that she has been debarred from
buying, selling and dealing in the securities market vide SEBI order dated
February 02, 2011 and that by initiating adjudication proceedings in the
matter, although the earlier debarment is still in force, it amounts to "double
jeopardy". The Noticee further stated that she is the wife of Noticee No. 12
but denies having any business / professional connection with him. The
Noticee also denied fund transactions with Noticee Nos. 5 & 10. The off
market transfer of shares between Noticee No. 15 and Noticee No. 12 was
carried out to meet urgent fund requirements. She stated that she had bought
8,18,384 shares and sold 6,25,863 shares which constituted only 0.49% and
0.39%, respectively, of the total market volume traded in the scrip of SIL
during the relevant period. The said volumes were miniscule and therefore,
the same cannot be considered to have created artificial volumes in the scrip.

46. She further submitted that her buy volume within the group was only 0.30%
of the total market volume and sell volume within the group was 0.29% of the
market volume. Very few trades out of the total trades were carried out
wherein the time difference was less than one minute and in majority of the
trades the time difference was more than one minute. With regard to the
synchronised trading carried out by the Noticee, she submitted that her buy
trade volume which synchronised accounted to 0.02% of the market volume
and the sell trade volume accounted to 0.01% of the market volume. With
respect to her trading on NSE in the scrip of SIL, she stated that she had
bought 400 shares and sold 1,03,574 shares which were insignificant in
volume.

Noticee No. 18:
47. Vide letter dated August 11, 2014, the Noticee No. 18 submitted that he does
not belong to any of the Pabari-Parikh Group entities and had traded in his
account independently. The relationship of Noticee No. 18 with Noticee No. 9
Page 27 of 42

was merely because of Noticee No. 18's name being filled in as introducer
while filling KYC document by one of the brokers through whom Noticee No.
18 had traded. Therefore, Noticee No. 18 denied being related to Noticee No.
9. The Noticee further submitted that he is basically a cloth merchant and
earns brokerage or commission by dealing in huge volumes of trade in cloth
and has dealership of many reputed textile companies. Further, in the course
of his cloth business he had come across one Mr. Ankit R. Sanchaniya i.e.
Noticee No. 16 and had business dealings for cloth.

48. The Noticee's trading in the scrip of SIL was insignificant and therefore, could
not have created any artificial volume in the scrip. Further the Noticee denied
carrying out any circular / synchronised / reverse trades and stated that all
the transactions were delivery based. The said transactions were carried out
at prevailing market price and therefore, he was not a party to price
manipulation in the said scrip.

Noticee No. 19:
49. Vide letter dated August 11, 2014 the Noticee No. 19 submitted that it has
investigation period is 4 years old, it is in a process of collating the data and
2014, the Noticee submitted its additional reply in the matter. The Noticee
reiterated the submissions made by it in the previous reply and further stated
that its demat account is still frozen. The Noticee further stated that by
initiating adjudication proceedings in the matter, although the earlier
debarment being still in force, is nothing but "double jeopardy". The Noticee
admitted that the Noticee Nos. 9 & 12 are its Directors and the company had
carried out certain off market transfers with the said Directors. The Noticee
denied being connected to any of the entities in Pabari-Parikh group.
Further, at BSE the Noticee had bought 50,500 shares through one broker
i.e. Religare Securities Ltd which constituted 0.03% of the total market
volume traded in the scrip. It is the Noticee's contention that the said volume
Page 28 of 42

cannot be treated to have created artificial volumes. Further the Noticee
denied entering into any circular / synchronised / reverse trades and stated
that all the transactions were delivery based. At NSE, the Noticee stated that
it had bought 1,52,000 shares which accounted for 0.67% of the total market
volume which again was a miniscule percentage.

Noticee No. 20:
50. The Noticee No. 20 submitted his reply vide letter dated August 11, 2014.
The Noticee stated that he is a doctor by profession and Noticee No. 3
(Bharat Shantilal Thakkar), being one of his patients, had advised him to deal
in capital markets. Noticee No. 20 and 3 were clients of the broker Angel
Share Broking but the investment decisions were taken independently by
him. The Noticee No. 20 denied being part of the alleged Pabari-Parikh
Group. Further, he stated that he had received 2,500 shares and 20,000
shares of SIL in off market transaction from Noticee No. 3 on September 10,
2009 against which consideration was paid by Noticee No. 20 to Noticee No.
3. The details of cheque payments made have been listed by the Noticee.

51. During the relevant period, the Noticee No. 20 had bought 20,000 shares of
SIL from Noticee No. 3 which were sold in the market during the period from
November 23, 2009 to December 09, 2009 in various tranches. Thereafter,
only on March 08, 2010 he had purchased 3,000 shares from the market.
The said transaction was the only transaction carried out by Noticee No. 20 in
the scrip of SIL during the relevant period. The Noticee also stated that his
dealing was negligible in volume to have created artificial volume in the scrip.

Noticee No. 21
52. Vide letter dated June 04, 2014 Noticee No. 21 denied being connected to
the Pabari-Parikh Group except that he was the Director of Noticee No. 1.
The Noticee further stated that he and Noticee No. 9 i.e. Mr. Bhavesh Pabari
have common office address and that Noticee No. 21 had introduced Noticee
No. 9 to his broker while opening the trading account. The Noticee, therefore,
Page 29 of 42

submitted that the same amounted to a mere introduction of a person and
nowhere in the KYC form it was stated or mentioned or declared that he was
related /group/connected person which is a normal practice in case of related
/ connected / group accounts opened by the broker. With respect to the
common address shared by the Noticee No. 21 with Noticee No. 9, it is
clarified that the said common address was the office of Stock Broker Ami
Stock and Share Brokers Pvt. Ltd and neither belongs to Noticee No. 21 nor
does he have any office at the said premises. Noticee No. 21 also stated that
he was a director of SIL.

53. Noticee No. 21 was also appointed as an Independent Director of Noticee
No. 1 on August 01, 2007. Incidentally on August 27, 2008, Mr. Premchand
Shah, the then Managing Director of Noticee No. 1 resigned due to ill health
and to fill in the vacancy, Noticee No. 21 was appointed as an Managing
Director of Noticee No. 1 by passing special resolution in the Annual general
Meeting held on September 29, 2008. Noticee No. 21 resigned as a Director
of Noticee No. 1 w.e.f January 19, 2012. He was the Director of SIL for a
limited period i.e. from September 05, 2009 to June 2010.

54. With respect to the trading in the scrip of SIL, the Noticee stated that on BSE,
during the relevant period, he had bought and sold 13,538 shares constituting
0.01% of the market volume. The said volume was negligible and cannot be
treated to be manipulated to create artificial volume in the scrip. Merely
because Noticee no. 21's single sell order for 307 shares got matched with
Noticee No. 9 the said allegation has been framed against the Noticee. It is
the case of the Noticee that out of his buy and sell quantity of 13,538 shares
only 307 shares got matched with the group entities. He stated that he was
not aware of the names of the counter party brokers / clients and the said
matching of order took place while trading online. He further submitted that
none of his trades in the scrip of SIL were synchronized or self trades in
nature. Additionally, he also stated that he has not done any off market
transaction in the scrip of SIL. Further, the Noticee submitted that he had
placed orders only at the then prevailing market price and hence, his trading
in SIL did not result in any new high price or new low price. All the
Page 30 of 42

transactions were carried out through the Stock Exchange mechanism during
trading hours. Vide letter dated August 12, 2014 the Noticee reiterated the
submission made by him vide his previous reply.

Noticee No. 23
55. Vide letter dated November 21, 2013, the Noticee No. 23 submitted that he
had not executed any synchronised and self trades in the scrip as alleged in
the SCN. The Noticee further submitted that he had traded only for 199
shares in the scrip of SIL during the investigation period. Vide letter dated
August 19, 2014 the Noticee submitted his detailed reply wherein he stated
that he had bought and sold 500 shares of SIL during the relevant period.
The said transaction was not synchronised in nature. Out of the 500 shares
traded in the said scrip, only 199 shares on the sell side were traded within
the group which were minuscule in nature. The Noticee submitted that he had
not done any off market transfers with any of the Pabari-Parikh group entities
in the scrip of SIL.

Noticee No. 25
56. Vide letter dated August 05, 2014 the Noticee stated that he had filed a reply
dated December 07, 2013 to the SCN. Further, upon perusal of the said
letter it is noted that the Noticee had made a request to provide all the
documents which were relied upon while issuing the said SCN including the
investigation report. Vide letter dated August 19, 2014, the Noticee No. 25
submitted his detailed reply in the matter. The Noticee while denying all the
allegations levelled against him in the SCN stated that he had bought and
sold 10,000 shares in the scrip of SIL during the investigation period. The
said volume of shares was insignificant if compared to the total traded
volume in the said scrip. Further, he stated that only on the basis of off
market shares movement with Noticee No. 9 and 14 it has been alleged in
the SCN that he is a part of the group entities. Therefore, the Noticee denied
being connected with the so called Pabari-Parikh Group entities.

Page 31 of 42

Noticee No. 26
57. Vide letter dated October 21, 2013, the Noticee No. 26 submitted his
preliminary reply stating that he is not sharing his address with any of the
alleged entities and therefore, cannot be clubbed with the Pabari-Parikh
group. Further, vide letter dated August 11, 2014 the Noticee submitted his
detailed reply and stated that he had bought 18,087 shares and sold 15,042
shares in the scrip of SIL during the period from May 29, 2009 to April 30,
2010. The Noticee denied carrying out any off market transfer of shares with
any of the group entities. Further, he submitted that he has not indulged in
synchronized or self trades in the scrip. The transactions in the scrip of SIL
were carried out in the normal and ordinary course of trading and executed at
the then prevailing market price.

Noticee No. 27:
58. Vide letter dated November 21, 2013, the Noticee No. 27 submitted that it is
a stock broker and had traded in the scrip of SIL in the normal and ordinary
course of the stock broking business. The trades were executed in the then
existing clients account on receipt of their instructions and authorization. The
Noticee submitted that it had no knowledge of any pattern or method of
placing orders and that the clients were inter connected with each other. As
on date, the Noticee submitted that it has stopped dealing for the said clients
and has improved its monitoring, control and surveillance systems to ensure
that no such activities are carried out by its clients through any of its
terminals. Further, the Noticee vide letter dated September 02, 2014 stated
that the transactions mentioned in the SCN were carried out through SEBI
registered sub broker Mr. Chirag R Jariwala affiliated with the Noticee since
March 2008.

FINDINGS:
59. I find from the SCN and the material available on record that during the
relevant period the Noticee Nos. 1 to 26 along with other entities, 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 SIL
Page 32 of 42

i.e. purchased 12,91,93,874 shares and sold 10,61,95,225 shares,
respectively on BSE and the Noticee Nos. 3 to 10, 12, 13, 15 to 17 and 19,
connected to one another in one way or the other and dealing through
multiple brokers, had purchased 1,70,31,741 shares which accounted for
75.55% of the total volume traded and sold 1,84,78,829 shares which
accounted for 81.97% of the total volume traded in the scrip of SIL on NSE. I
find that the relationship table as mentioned in para 16 and 25 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. Further, the relationship
of the Noticee Nos. 1 to 26 is established by way of off market transactions
between them as mentioned in para 17 above.

60. I note that the Noticee Nos. 1 to 26 had traded for 8,82,03,123 shares (i.e.
52.28% of the market volume) accounting for 68.27 % of the total purchases
of the group and 83.06 % of the total sales of the group, within Pabari-Parikh
Group entities and 52.28% of the market volume from within the group
entities on the BSE. Out of 8,82,03,123 shares traded on BSE within the
group entities, the buy and sell orders for 3,25,89,257 shares, accounting for
19.32% of the market volume, were placed within one minute time difference.
I note that 3,25,89,257 shares constituted for 25.23% of the total purchases
and 30.69% of the total sales of the Pabari-Parikh Group entities.

61. Further, on NSE, I note that Noticee Nos. 3 to 10, 12, 13, 16, 17 and 19 had
traded for 1,52,05,631 shares (i.e. 67.45% of the total market volume),
accounting for 89.28% of the total purchases of the group and 82.29% of the
total sales of the group, within the group entities. Out of 1,52,05,631 shares
traded on NSE in the scrip of SIL within the group entities, for 68,08,891
shares constituting 30.20% of the market volume, the buy and sell orders
were placed within one minute time difference. 68,08,891 shares constituted
for 39.98% of the total purchases and 36.85% of the total sales of the 14
Pabari-Parikh Group entities. I find from the above that, the quantity of shares
traded by the Noticee Nos. 1 to 26 within the group on BSE and by Noticee
Nos. 3 to 10, 12, 13, 16, 17 and 19 on NSE further substantiate the fact that
Page 33 of 42

they all had a meeting of minds and traded in the scrip of SIL 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 SIL independently, without any knowledge of the counterparty client /
broker and in the ordinary course of business.

62. I further find that the Noticee Nos. 1 to 17 had indulged in certain
synchronised trades in the shares of SIL on BSE thereby, creating false and
misleading appearance of trading in the scrip. Out of 3,25,89,257 shares, for
46,50,808 shares, which accounted for 2.76% of the total market volume, the
buy and sell orders were placed in a synchronized manner. The volume of
46,50,808 shares constituted 5.27% of the total purchases and 4.38% of the
total sales of the Pabari-Parikh Group entities. Further, I also note that on
NSE, 14 Pabari-Parikh Group entities had indulged in certain synchronised
trades in the shares of SIL. Out of 68,08,891 shares traded amongst the
group entities on NSE, for 15,63,314 shares constituting 6.93% of the total
market volume, the buy and sell orders were placed in synchronized manner.
15,63,314 shares constituted for 9.18% of the total purchases and 8.46% of
the total sell of the 14 Pabari-Parikh Group entities.

63. On perusal of the details of synchronised trades as given in para 19 (on BSE)
and 26 (on NSE) above and the order and trade log, I find that the Noticee
Nos. 1 to 17(on BSE) and Noticee Nos. 3 to 10, 12, 13, 16, 17 and 19 (on
NSE) did indulge in manipulative activities in the said scrip on BSE and NSE,
respectively and traded in a synchronised manner within the group without
any intention of change in beneficial ownership of shares and I do not find
merit in the contentions of the Noticees.

64. I find that during the relevant period the shares of SIL were traded on BSE on
228 trading days. Out of 228 trading days, the group entities, including the
Noticee Nos. 1 to 26, had traded among themselves on 223 days, i.e. 98% of
the total number of days the scrip was traded during the period under
investigation. I find that the Group entities by trading in the said scrip had
contributed to the daily market volume of the scrip in the range from 4.94%
Page 34 of 42

on May 29, 2009 to 81.15% on April 30, 2010. Further, out of 223 trading
days, on 130 trading days the Pabari-Parikh Group entities, including the
Noticee Nos. 1 to 26, by trading amongst themselves had contributed for
more than 50% to the total traded volumes in the scrip. Out of 223 trading
days, on 215 trading days, both the buy and sell orders were placed within
time difference of one minute. The Pabari-Parikh Group entities, including the
Noticee Nos. 1 to 26, by trading in the scrip of SIL had contributed to daily
market volume of the scrip in the range from 3.52% on May 29, 2009 to
83.56% on March 09, 2010. Further, out of 215 trading days, on 149 trading
days, the trades executed by the Pabari-Parikh Group entities, including the
Noticee Nos. 1 to 26, were synchronized in nature. By executing
synchronised trades among the group entities, the Pabari-Parikh Group
entities including Noticee Nos. 1 to 26 had contributed to total market volume
of the scrip in the range from 0.73% on May 29, 2009 to 28.69% on March
18, 2010.

65. Further, the scrip of SIL was traded on 36 trading days on NSE. The 14
Pabari-Parikh group entities had traded in the scrip of SIL on NSE on all the
36 trading days. By trading amongst themselves, the 14 group entities had
contributed to daily market volume traded in the scrip in the range from
91.87% on March 09, 2010 to 84.33% on April 30, 2010. Out of 36 trading
days on which the group entities traded among themselves, on 27 trading
days the 14 Pabari-Parikh Group entities contributed for more than 50% to
the total market volume of the scrip during the relevant period. Out of 36
trading days on which the 14 Pabari-Parikh Group traded, I note that on all
the trading days both buy and sell orders were placed within time difference
of one minute. By trading amongst themselves, the group entities contributed
to daily market volume of the scrip in the range from 88.56% on March 09,
2010 to 20.39% on April 30, 2010. I also note that out of 36 trading days, on
4 trading days the Pabari-Parikh Group entities contributed for more than
50% to the total market volume by placing both buy and sell order within one
minute time difference. Further, out of 36 trading days, on 30 trading days the
trades executed by the Pabari-Parikh Group entities were synchronized in
nature. By executing synchronized trades among themselves, Pabari-Parikh
Page 35 of 42

Group entities contributed to total market volume in the ranged from 13.97%
on March 09, 2010 to 0.37% on April 29, 2010.

66. In view of the above, I do not find any merit in the contentions of the Noticees
that the Noticees had entered into trades individually and that the
synchronised trades indulged into by the Noticees were insignificant /
miniscule in volume if compared to the total volumes traded in the scrip of
SIL. 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 26
on the market in the scrip of SIL 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 Noticee Nos. 1 to 26.

67. I find from Paras 20 and 21 (BSE trading) and Paras 27 and 28 (NSE trading)
above that Noticee Nos. Nos. 3 to 14, 16 and 17 on BSE and Noticee Nos.
Nos. 3, 4, 7, 10, 12, 13 and 16 on NSE had entered into certain trades which
were self trades in nature i.e. totally fictitious trades wherein the entity
appears on both the buy and sell side of the trade. On BSE, the said
Noticees had executed 2370 self trades for a quantity of 7759408 shares
thereby, inflated the volumes in the scrip by 4.60%. On NSE, Noticee Nos.
Nos. 3, 4, 7, 10, 12, 13 and 16 had entered into 121 self trades for a quantity
of 239431 shares thereby, inflated the volumes in the scrip by 1.06%. I
further find that the said Noticees had executed the said fictitious trades on
both the exchanges through multiple brokers. However, the Noticee No. 27
was the broker who had executed significant number of self trades i.e. 316
self trades for 2,51,350 shares for the Noticee Nos. 3, 4, 5, 7, 9, 12 and 16 on
BSE and 75 self trades for 14,081 for the Noticee Nos. 3, 4, 5, 7, 12 and 16
on NSE. I do not find any merit in the submissions of the Noticee No. 27 that
the said trades were executed on behalf of the clients without any knowledge
of manipulation and were only executed upon the instructions of the clients. I
find that the number of occasions on which the Noticee No. 27 appeared as
the broker and counter-party broker in the fictitious trades during the period
under investigation was significant and cannot be said to be an innocent act.
Page 36 of 42

Therefore, I find that by executing the self trades, the Noticee Nos. 3, 4, 5, 6,
8, 9, 10, 11, 12, 13, 14, 16 and 17 had further created a false market and
gave a misleading appearance of trading in the scrip and Noticee No. 27 had
not acted in accordance with the code of conduct as prescribed under the
Broker Regulations.

68. I further find that the price of the scrip had opened at ` 73.50 and touched a
high of ` 130.00 i.e. there was an increase of ` 56.50. Out of 21 occasions,
on 9 occasions (i.e. on 4 days out of 5 days), I note that Noticee Nos. 3, 5, 12
and 16, had contributed to the increase in the price by ` 0.55 (out of a total
increase of ` 56.50). However, on perusal of the documents available on
record, I find that the same are insufficient to establish that the price of the
scrip increased because of placing the orders by the said Noticees in a
manipulative manner. Therefore, I conclude that the trading done by Noticee
Nos. 1 to 26 was not in violation of Regulation 4(2)(e) of the PFUTP
Regulations.

69. 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 by SEBI on July 08, 2011 and the
said debarment order is still in force. Further, I also note that these Noticees
have submitted that the present adjudication proceedings are double
jeopardy in nature. At this juncture, I rely on the 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 Noticees.
Page 37 of 42

70. 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 provided to the Noticees along with the SCN in a CD form.
(a) Order appointing the Adjudicating Officer (Annexure I)
On BSE trading:
(b) Details of purchase and sale of 28 Pabari-Parikh Group entities dealing
through multiple brokers (Annexure A and B)
(c) Details of off market transfers (Annexure BB)
(d) Trading details of 28 Pabari-Parikh entities (Annexure C)
(e) Trade and Order details of trading within Pabari-Parikh Group entities
(Annexure D)
(f) Trading among 26 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)
On NSE trading:
(j) Details of purchase and sale of 28 Pabari-Parikh Group entities dealing
through multiple brokers (Annexure A and B)
(k) Trading details of 14 Pabari-Parikh entities (Annexure C)
(l) Trade and Order details of trading within Pabari-Parikh Group entities
(Annexure D)
(m) Trading among 13 entities (Annexure E)
(n) Trade and Order details of synchronized Trades (Annexure F)
(o) Details of Trade and Order log containing self trades (Annexure G)
(p) Details of day wise volume contribution to the total volume traded
(Annexure H) Therefore, I find that all the material relevant in the present
matter was already provided to the Noticees.

71. Further, the Noticee No. 27 vide its letter dated September 02, 2014 had
requested for an opportunity of inspection of documents in the matter.
However, I note that SCN was issued on October 10, 2013 i.e. almost a year
Page 38 of 42

back and vide letter dated November 01, 2013 the Noticee had sought for 3
weeks time to submit its reply. Further, vide letter dated November 21, 2013
the Noticee submitted its preliminary reply in the matter and requested
transaction wise details of the self trades. However, the trade and order log
containing the self trades entered by the Noticees through the broker were
already provided to the Noticee along with the SCN. I also note that an
opportunity of personal hearing was granted to the Noticee on August 11,
2014 wherein the Authorised Representative appeared for the Noticee and
reiterated its earlier submissions without requesting for any specific
documents or inspection thereof. A request for inspection being made vide
letter dated September 02, 2014 is nothing but a delaying tactic adopted by
the said Noticee to prolong the present proceedings. Therefore, I find that all
the relevant documents (in a CD form) relied upon while issuing the SCN
were already provided to the Noticee and I don't find any merit in the request
for inspection of documents at this stage i.e. after the conclusion of personal
hearing in the matter.

72. From the foregoing, I find that the Noticee Nos. 1 to 26 by trading amongst
themselves indulged in synchronised trades on numerous occasions,
resulting in no change of beneficial ownership thereby, created artificial
volume in the scrip of SIL which gave a false and misleading appearance of
trading in the said scrip. Further, I also conclude that the Noticee Nos. 3 to
14, 16 and 17 (on BSE) and Noticee Nos. 3, 4, 7, 10, 12, 13 and 16 (on NSE)
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 SIL.
Therefore, I conclude that the Noticee Nos. 1 to 26 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
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
Page 39 of 42

rupees or three times the amount of profits made out of such practices,
whichever is higher.

73. I note that the code of conduct prescribed under the Broker Regulations
mandates that a stock broker shall maintain high standards of integrity,
promptitude and fairness and shall act with due skill, care and diligence in the
conduct of his business. The code further mandates that the Broker shall not,
inter alia, indulge in manipulative transactions with a view to distort the
market equilibrium. Therefore, I conclude that the Noticee No. 27 by
executing fictitious trades, in the nature of self and synchronised trades, on
behalf of its clients has violated the provisions as mentioned under Clause
A(1), (2) & (3) of the Code of Conduct as specified under schedule II read
with Regulation 7 of the Broker Regulations thus, liable for monetary penalty
as prescribed under Section 15HB of the Act which reads as under:
Penalty for contravention where no separate penalty has been
provided
15HB. Whoever fails to comply with any provision of this Act, the rules
or the regulations made or directions issued by the Board thereunder for
which no separate penalty has been provided, shall be liable to a penalty
which may extend to one crore rupees.

74. 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:
0+n our considered opinion, penalty is attracted as soon as the
contravention of the statutory obligation as contemplated by the Act
and the 1egulations is established and hence the intention of the
parties committing such violation becomes wholly irrelevant23

75. While determining the quantum of penalty under Sections 15HA and 15HB, it
is important to consider the factors stipulated in section 15J of SEBI Act,
which reads as under:-
Page 40 of 42

456 , Factors to be ta#en into account b% the ad7udicating
officer
!hile ad"udging /uantum of penalty under section 45,+, the
ad"udicating officer shall have due regard to the following factors,
namely%,
&a' the amount of disproportionate gain or unfair advantage, wherever
/uantifiable, 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 default3

76. I observe, from the material available on record, that 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. In fact, liquidity/volumes in a particular scrip raise the issue of
demand in the securities market. The greater the liquidity, the higher is the
investors attraction towards investing in that scrip. Hence, any investor 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 on the stock exchange
platform. People who indulge in manipulative, fraudulent and deceptive
transactions should be suitably penalized for the said acts of omissions and
commissions.

ORDER

77. 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. 7 i.e. Shri Kishor Chauhan stand abated.
Page 41 of 42

Further, I hereby impose the following monetary penalties on the other
Noticees:

Sr.
No.
Name of the Noticee Penal
provisions as
per the SEBI
Act, 1992
Penalty Amount
(in ` `` `)
1. Gemstone Investments
Limited (Noticee No. 1)
15HA 5,00,000/-
(Rupees Five Lakh Only)
2. Shri Ketan Babulal Shah
(Noticee No. 2)
15HA 5,00,000/-
3. Shri Bharat Shantilal
Thakkar (Noticee No. 3)
15HA 5,00,000/-
4. Shri Bipin Jayant Thaker
(Noticee No. 4)
15HA 5,00,000/-
5. Shri Bharat G Vaghela
(Noticee No. 5)
15HA 5,00,000/-
6. Shri Chirag Rajnikant
Jariwala (Noticee No. 6)
15HA 5,00,000/-
7. Shri Bipin Kumar Gandhi
(Noticee No. 8)
15HA 5,00,000/-
8. Shri Bhavesh Pabari
(Noticee No. 9)
15HA 5,00,000/-
9. Shri Prem Mohanlal Parikh
(Noticee No. 10)
15HA 5,00,000/-
10. Shri Santosh Maruti Patil
(Noticee No. 11)
15HA 5,00,000/-
11. Shri Hemant Madhusudan
Sheth (Noticee No. 12)
15HA 5,00,000/-
12. Shri Jigar Praful Ghoghari
(Noticee No. 13)
15HA 5,00,000/-
13. Shri Vipul Hiralal Shah
(Noticee No. 14)
15HA 5,00,000/-
14. Ms Mala Hemant Sheth
(Noticee No. 15)
15HA 5,00,000/-
15. Shri Ankit Sanchaniya
(Noticee No. 16)
15HA 5,00,000/-
16. Shri Vivek Kishanpal
Samant (Noticee No. 17)
15HA 5,00,000/-
17. Shri Bhupesh Rathod
(Noticee No. 18)
15HA 5,00,000/-
18. Rajnandi Yarns Private 15HA 5,00,000/-
Page 42 of 42

Limited (Noticee No. 19)
19. Shri Vasudev Ramchandra
Kamat (Noticee No. 20)
15HA 5,00,000/-
20. Shri Narendra Prabodh
Ganatra (Noticee No. 21)
15HA 5,00,000/-
21. Shri Manish Suresh Joshi
(Noticee No. 22)
15HA 5,00,000/-
22. Shri Santosh Vishram
Ghadshi (Noticee No. 23)
15HA 5,00,000/-
23. Shri Kaushik Karsanbhai
Patel (Noticee No. 24)
15HA 5,00,000/-
24. Shri Kaushik Rajnikant
Mehta (Noticee No. 25)
15HA 5,00,000/-
25. Shri Gaurang Ajit Seth
(Noticee No. 26)
15HA 5,00,000/-
26. Arcadia Share & Stock
Brokers P. Ltd
(Noticee No. 27)
15HB 2,00,000/-
(Rupees Two Lakh Only)
TOTAL 1, 27,00,000/-
(Rupees One Crore
Twenty Seven Lakh Only)

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

79. 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, IVD-9,
Securities and Exchange Board of India, SEBI Bhavan, Plot No. C4-A, G Block,
Bandra Kurla Complex, Bandra (E), Mumbai 400 051.

80. 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: September 26, 2014 D. SURA REDDY
Place: Mumbai ADJUDICATING OFFICER

Adjudication Order Against 27 Entities in The Matter of Spectacle Infotek Ltd.

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Page 1 of 42

BEFORE THE ADJUDICATING OFFICER

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