DIVISION CHIEF
INVESTIGATIONS DEPARTMENT
IVD/ID7/SD/TN/ /2004
November 4, 2004
To,
Mr. Ashwin Patel,
Director, Monarch Project & Finmarkets Ltd.
C/o Kamlesh Shah
Prem Jyot Apartments
5th Floor
Near Subhash Chowk
Drive in Road
Ahmedabad
Sub:- Show cause notice for issuing directions u/s 11(4) read with 11B of the SEBI Act, 1992 for violation of Regulation 4 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Markets) Regulations, 1995.
Investigations were initiated by Securities and Exchange Board of India (SEBI) into the affairs of M/s Dhanlaxmi Lease Finance Ltd, (hereinafter referred to as the Company) pertaining to the public issue of 31,00,000 equity shares of Rs. 10/- each of the company which opened for public subscription on November 21, 1995 and closed on November 24, 1995, being the earliest closing day. The said investigation was initiated on the basis of complaints received by SEBI, alleging several malpractices in the public issue such as making of multiple, fictitious and benami applications, acceptance of applications after the closure of the issue, as well as price rigging in the scrip and the possibility of the violation of the provisions of Securities and Exchange Board of India Act, 1992 and various regulations made thereunder viz. the SEBI (Insider Trading) Regulations, 1992 and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995.
In the said issue M/s Monarch Project and Finmarkets Ltd. of which you are one of the Directors had acted as the Lead Manager to the issue.
The issue closed on November 24, 1995, the earliest closing date. However, several malpractices in the public issue such as making of multiple, fictitious and benami applications, acceptance of applications after the closure of the issue were alleged. Your company as the Lead Manager of the issue should have ensured that the fund collected is kept in a separate account and that applications are not accepted by the Bankers after the due date. The 3 Day Monitoring Report dated November 27, 1995 submitted by your company mentions that the issue closed on November 24, 1995 and the amount collected was Rs 590 lacs whereas, 78 Days Monitoring Report submitted by your company says that the amount received was Rs 819.39 lacs. This discrepancy in the Reports submitted by your company clearly indicates that applications were accepted after the closure of the Issue. Hence, had you exercised due care and diligence when this discrepancy was noticed, your company could have ensured identification and elimination of multiple/benami applications.
As per the Due-Diligence Certificate dated August 02, 1995, it is your responsibility to:
· Follow up with the Bankers to the Issue to get quick estimates of collections and advising the Issuer about the closure of the Issue, based on the correct figures.
· Follow up the post issue activities including ensure compliance of listing of instruments and dispatch of certificates and refunds, with the various agencies connected with the work such as Registrars to the issue and the bank handling refund business. Even if, many of these activities would be handled by other intermediaries, your company as Lead Manager are responsible for ensuring that these agencies fulfill their functions timely enabling you to discharge your responsibility through suitable arrangements with the issuer company.
· Comply with stipulated requirements and completion of prescribed formalities with Stock Exchanges, Registrar of Companies and SEBI.
Further, as per Section 73(3) and 3(A) of the Companies Act 1956, a Lead Manager should ensure that all the moneys received from the applicants towards purchase of shares are kept in a separate account maintained with a scheduled bank until listing permission is obtained from the concerned stock exchanges and that moneys standing in such separate account are not utilized for any purpose other than the following purpose:
- adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus; or
- repayment of moneys received from applicants in pursuance of the prospectus, where shares have not been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus, as the case may be, or where the company is for any other reason unable to make the allotment of share.
As per clauses 1, 2 and 9 of the Code of Conduct prescribed under Schedule III of Regulation 13 of SEBI (Merchant Bankers) Regulations, 1992, a Merchant Banker shall observe high standards of integrity and fairness in all his dealings and shall render at all times high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgement and shall abide by the provisions of the Act, Rules and Regulations and which may be applicable/relevant to the activities carried on by the Merchant Banker.
Regulation 3 of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 clearly provides that no person shall buy, sell or otherwise deal in securities in a fraudulent manner.
By failing to identify and eliminate the benami/multiple applications, you have violated clauses 1, 2 and 9 of the Code of Conduct prescribed under Schedule III of Regulation 13 of SEBI (Merchant Bankers) Regulations, 1992, and also Regulation 3 of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995.
Your company also failed to ensure compliance with Section 73 of Companies Act for keeping the total application money amounting to Rs 819.39 lacs in a separate bank account after the date of closure of the issue announced by the company i.e. November 24, 1995. This is evident from the fact that out of Rs. 819.39 lacs, Rs. 330 lacs was received by the bankers to the issue only after December 8, 1995.
In view of the above, you are called upon to show cause, as to why directions in terms of Section 11B of SEBI Act read with Sec 11(4) (b) of the SEBI Act and Regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003, including debarring the Company and its directors from accessing the securities market.
Your reply together with documents, if any, should reach SEBI within 15 days of the date of this notice failing which SEBI shall be constrained to initiate action as aforesaid apart from any other action that it deems fit in the interest of investors and the securities market including initiation of prosecution under Section 24 of SEBI Act for violation of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
In case you desire any personal hearing, the same shall be granted upon request from you.
SANJIV DUTT
DIVISION CHIEF
INVESTIGATIONS DEPARTMENT
IVD/ID7/SD/TN/ /2004
May 17, 2004
To,
Mr. R.K.Patel,
Director, Monarch Project & Finmarkets Ltd.
403, Sumeu Apartments,
St. Xavier’s School Road, Navrangpura
Ahmedabad – 380 009
Sub:- Show cause notice for issuing directions u/s 11(4) read with 11B of the SEBI Act, 1992 for violation of Regulation 4 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Markets) Regulations, 1995.
Investigations were initiated by Securities and Exchange Board of India (SEBI) into the affairs of M/s Dhanlaxmi Lease Finance Ltd, (hereinafter referred to as the Company) pertaining to the public issue of 31,00,000 equity shares of Rs. 10/- each of the company which opened for public subscription on November 21, 1995 and closed on November 24, 1995, being the earliest closing day. The said investigation was initiated on the basis of complaints received by SEBI, alleging several malpractices in the public issue such as making of multiple, fictitious and benami applications, acceptance of applications after the closure of the issue, as well as price rigging in the scrip and the possibility of the violation of the provisions of Securities and Exchange Board of India Act, 1992 and various regulations made thereunder viz. the SEBI (Insider Trading) Regulations, 1992 and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995.
In the said issue M/s Monarch Project and Finmarkets Ltd. of which you are one of the Directors had acted as the Lead Manager to the issue.
The issue closed on November 24, 1995, the earliest closing date. However, several malpractices in the public issue such as making of multiple, fictitious and benami applications, acceptance of applications after the closure of the issue were alleged. Your company as the Lead Manager of the issue should have ensured that the fund collected is kept in a separate account and that applications are not accepted by the Bankers after the due date. The 3 Day Monitoring Report dated November 27, 1995 submitted by your company mentions that the issue closed on November 24, 1995 and the amount collected was Rs 590 lacs whereas, 78 Days Monitoring Report submitted by your company says that the amount received was Rs 819.39 lacs. This discrepancy in the Reports submitted by your company clearly indicates that applications were accepted after the closure of the Issue. Hence, had you exercised due care and diligence when this discrepancy was noticed, your company could have ensured identification and elimination of multiple/benami applications.
As per the Due-Diligence Certificate dated August 02, 1995, it is your responsibility to:
· Follow up with the Bankers to the Issue to get quick estimates of collections and advising the Issuer about the closure of the Issue, based on the correct figures.
· Follow up the post issue activities including ensure compliance of listing of instruments and dispatch of certificates and refunds, with the various agencies connected with the work such as Registrars to the issue and the bank handling refund business. Even if, many of these activities would be handled by other intermediaries, your company as Lead Manager are responsible for ensuring that these agencies fulfill their functions timely enabling you to discharge your responsibility through suitable arrangements with the issuer company.
· Comply with stipulated requirements and completion of prescribed formalities with Stock Exchanges, Registrar of Companies and SEBI.
Further, as per Section 73(3) and 3(A) of the Companies Act 1956, a Lead Manager should ensure that all the moneys received from the applicants towards purchase of shares are kept in a separate account maintained with a scheduled bank until listing permission is obtained from the concerned stock exchanges and that moneys standing in such separate account are not utilized for any purpose other than the following purpose:
a. adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus; or
b. repayment of moneys received from applicants in pursuance of the prospectus, where shares have not been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus, as the case may be, or where the company is for any other reason unable to make the allotment of share.
As per clauses 1, 2 and 9 of the Code of Conduct prescribed under Schedule III of Regulation 13 of SEBI (Merchant Bankers) Regulations, 1992, a Merchant Banker shall observe high standards of integrity and fairness in all his dealings and shall render at all times high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgement and shall abide by the provisions of the Act, Rules and Regulations and which may be applicable/relevant to the activities carried on by the Merchant Banker.
Regulation 3 of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 clearly provides that no person shall buy, sell or otherwise deal in securities in a fraudulent manner.
By failing to identify and eliminate the benami/multiple applications, you have violated clauses 1, 2 and 9 of the Code of Conduct prescribed under Schedule III of Regulation 13 of SEBI (Merchant Bankers) Regulations, 1992, and also Regulation 3 of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995.
Your company also failed to ensure compliance with Section 73 of Companies Act for keeping the total application money amounting to Rs 819.39 lacs in a separate bank account after the date of closure of the issue announced by the company i.e. November 24, 1995. This is evident from the fact that out of Rs. 819.39 lacs, Rs. 330 lacs was received by the bankers to the issue only after December 8, 1995.
In view of the above, you are called upon to show cause, as to why directions in terms of Section 11B of SEBI Act read with Sec 11(4)(b) of the SEBI Act and Regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003, including debarring the Company and its directors from accessing the securities market.
Your reply together with documents, if any, should reach SEBI within 15 days of the date of this notice failing which SEBI shall be constrained to initiate action as aforesaid apart from any other action that it deems fit in the interest of investors and the securities market including initiation of prosecution under Section 24 of SEBI Act for violation of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
In case you desire any personal hearing, the same shall be granted upon request from you.
SANJIV DUTT
DIVISION CHIEF
INVESTIGATIONS DEPARTMENT
IVD/ID-7/SD/ /2003
December 23, 2003
To,
Mr. Yogesh J Shah
Director, Monarch Project & Finmarkets Ltd.
5, Deshna Apartment,
Mirambica Road,
Ahmedabad – 380 013
Sub:- Show cause notice for issuing directions u/s 11(4) read with 11B of the SEBI Act, 1992 for violation of Regulation 4 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to the Securities Markets) Regulations, 1995.
Investigations were initiated by Securities and Exchange Board of India (SEBI) into the affairs of M/s Dhanlaxmi Lease Finance Ltd, (hereinafter referred to as the Company) pertaining to the public issue of 31,00,000 equity shares of Rs. 10/- each of the company which opened for public subscription on November 21, 1995 and closed on November 24, 1995, being the earliest closing day. The said investigation was initiated on the basis of complaints received by SEBI, alleging several malpractices in the public issue such as making of multiple, fictitious and benami applications, acceptance of applications after the closure of the issue, as well as price rigging in the scrip and the possibility of the violation of the provisions of Securities and Exchange Board of India Act, 1992 and various regulations made thereunder viz. the SEBI (Insider Trading) Regulations, 1992 and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995.
In the said issue M/s Monarch Project and Finmarkets Ltd. of which you are one of the Directors had acted as the Lead Manager to the issue.
The issue closed on November 24, 1995, the earliest closing date. However, several malpractices in the public issue such as making of multiple, fictitious and benami applications, acceptance of applications after the closure of the issue were alleged. Your company as the Lead Manager of the issue should have ensured that the fund collected is kept in a separate account and that applications are not accepted by the Bankers after the due date. The 3 Day Monitoring Report dated November 27, 1995 submitted by your company mentions that the issue closed on November 24, 1995 and the amount collected was Rs 590 lacs whereas, 78 Days Monitoring Report submitted by your company says that the amount received was Rs 819.39 lacs. This discrepancy in the Reports submitted by your company clearly indicates that applications were accepted after the closure of the Issue. Hence, had you exercised due care and diligence when this discrepancy was noticed, your company could have ensured identification and elimination of multiple/benami applications.
As per the Due-Diligence Certificate dated August 02, 1995, it is your responsibility to:
· Follow up with the Bankers to the Issue to get quick estimates of collections and advising the Issuer about the closure of the Issue, based on the correct figures.
· Follow up the post issue activities including ensure compliance of listing of instruments and dispatch of certificates and refunds, with the various agencies connected with the work such as Registrars to the issue and the bank handling refund business. Even if, many of these activities would be handled by other intermediaries, your company as Lead Manager are responsible for ensuring that these agencies fulfill their functions timely enabling you to discharge your responsibility through suitable arrangements with the issuer company.
· Comply with stipulated requirements and completion of prescribed formalities with Stock Exchanges, Registrar of Companies and SEBI.
Further, as per Section 73(3) and 3(A) of the Companies Act 1956, a Lead Manager should ensure that all the moneys received from the applicants towards purchase of shares are kept in a separate account maintained with a scheduled bank until listing permission is obtained from the concerned stock exchanges and that moneys standing in such separate account are not utilized for any purpose other than the following purpose:
c. adjustment against allotment of shares, where the shares have been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus; or
d. repayment of moneys received from applicants in pursuance of the prospectus, where shares have not been permitted to be dealt in on the stock exchange or each stock exchange specified in the prospectus, as the case may be, or where the company is for any other reason unable to make the allotment of share.
As per clauses 1, 2 and 9 of the Code of Conduct prescribed under Schedule III of Regulation 13 of SEBI (Merchant Bankers) Regulations, 1992, a Merchant Banker shall observe high standards of integrity and fairness in all his dealings and shall render at all times high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgement and shall abide by the provisions of the Act, Rules and Regulations and which may be applicable/relevant to the activities carried on by the Merchant Banker.
Regulation 3 of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 clearly provides that no person shall buy, sell or otherwise deal in securities in a fraudulent manner.
By failing to identify and eliminate the benami/multiple applications, you have violated clauses 1, 2 and 9 of the Code of Conduct prescribed under Schedule III of Regulation 13 of SEBI (Merchant Bankers) Regulations, 1992, and also Regulation 3 of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995.
Your company also failed to ensure compliance with Section 73 of Companies Act for keeping the total application money amounting to Rs 819.39 lacs in a separate bank account after the date of closure of the issue announced by the company i.e. November 24, 1995. This is evident from the fact that out of Rs. 819.39 lacs, Rs. 330 lacs was received by the bankers to the issue only after December 8, 1995.
In view of the above, you are called upon to show cause, as to why directions in terms of Section 11B of SEBI Act read with Sec 11(4)(b) of the SEBI Act and Regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003, including debarring the Company and its directors from accessing the securities market.
Your reply together with documents, if any, should reach SEBI within 15 days of the date of this notice failing which SEBI shall be constrained to initiate action as aforesaid apart from any other action that it deems fit in the interest of investors and the securities market including initiation of prosecution under Section 24 of SEBI Act for violation of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.
In case you desire any personal hearing, the same shall be granted upon request from you.
SANJIV DUTT