DEPUTY GENERAL MANAGER
INVESTIGATION DEPARTMENT
IVD/ID6/BM/DM/ /05
October 14, 2005
Zenet Softwares Ltd.
Upper Ground Floor, Dolly chambers,
Nr.Stadium Circle, Navrangpura,
Ahmedabad-380009
Sub: Notice to show cause under section 11(4) read with sections 11 & 11B of Securities and Exchange Board of India Act, 1992 in the case of Genus Commutrade Limited.
Securities and Exchange Board of India (hereinafter referred to as SEBI) conducted investigations on the dealings in the scrip of Genus Commutrade Ltd. (hereinafter referred to as company) for the period 1st May 2002 to 31st September 2002.
- The company issued a color advertisement in seven newspapers- Gujarat Samachar (08 July 2002), Mumbai Samachar (08 July 2002), Sandesh (08 July 2002), Business Standard (09 July 2002), Financial Express (09 July 2002), Economic Times (09 July 2002) and Hindu Business line (10 July 2002); mentioning that Board of Directors of the company was going to meet on 18.07.02 on the proposal to buy back shares (for the purpose of allotting to FIIs) from the public at a price of Rs.11/- per share. It was further observed that there was a sharp increase in the volumes traded prior to the issuance of advertisements and sharp increase in traded volumes subsequent to issuance of the advertisements. The share price /volume history indicated that the shares were very thinly traded. It is important to note that the law does not require such advertisement prior to the board meeting. The company confirmed having issued the above advertisements. When queries were raised about the reasons for the issue of the advertisements, the company informed SEBI vide letter dated October 21, 2002 that the advertisement was issued as per the decision taken by Board of Directors in informal meeting held on 1st July 2002 comprising members Shri.Hitesh R Bhatt, Shri.Pritesh B Shah, Ms.Rinku J Shah, and Shri.Kalpesh R Sheth.
- Later, the company vide their letter dated 18 January 2003, stated that, the board meeting held on 18 July 2002 decided to-
“Amend the articles of association of the company and after the completion of the procedural formalities and also seek the approval of the shareholders for buyback of securities at appropriate time. The board also decided to convene an Extra Ordinary General Meeting or an Annual General Meeting for amendment of articles and to all such other procedures”.
Even the wording of the decision of the Board meeting appears to be attempting to prolong the process, than to go ahead with the proposal of buyback. It appears that the advertisement about the proposal was put just to create an interest in the investing public than to honor the proposal. It was also observed that no shares were allotted to any FIIs as was mentioned in the advertisement. It is pertinent to note that the company had recorded a net profit of Rs.16000/- in the quarter ended 30 June 2002. The total expenditure incurred by the company during the said quarter was a meagre Rs.2.65/- Lakhs. They had not kept any provisions for depreciation or tax during the previous to two quarters prior to the advertisement. It is highly improbable that such a company will spent Rs.4,10,728/-, which almost 155% of the total expenditure on the just concluded quarter, on an advertisement that is not legally binding. A statement of un-audited financial position of the company for the quarter ending June 30, 2002 and a copy of the ledger page of the company showing the cash flow to Garima Communications (the advertising agency) on account of the said advertisement are enclosed herewith as Annexure 1 and 2 respectively.
- It is observed that the buyback of 1823310 (18%) shares at Rs. 11/- per share was proposed when the share price of the company in the market was around Rs.2.40/-During the quarter prior to the advertisement the company had recorded a meager net profit of Rs.16000/-. There was no significant underlying fundamental that could justify such a bold decision from the company. It may be pertinent to note that the articles of association of the company do not permit such buybacks.
- It is seen that from February 2002, to May 2002 the number of shares traded as well as the number of trades executed were meager. In June 2002, the volumes as number of trades had shown exponential growth. From the meager 301 shares traded in four trades in May 2002, it went upto 11.30 lakh shares and 16364 trades in June 2002. The price of the scrip also had a similar spurt just prior to the advertisement. From Rs.2.50/- on 24 May 2002 it reached a high point of Rs.5.95 on 13 June 2002, before closing at Rs.2/- share on June 28, 2002. on 5 July 2002, the day previous to the advertisements the price of the scrip was Rs.2.8/- and the volume was 161625. After the advertisement the volume spurted again but the prices fell. Volume reached the peak of 11.78 lakhs on 10 July 2002 but apparently the scrip failed to hold on to this momentum and the prices as well as volumes fell sharply after that. In July the prices went as low as Rs.0.80/- from a high of and the closing price of the month was Rs.0.90/-. A statement of price-volume data is enclosed herewith as Annexure 3.
5. Charge I
The company and its directors (S/Shri. Hitesh Bhatt, Pritesh B Shah, Kalpesh R Sheth and Ms.Rinku J Shah) have violated Regulation 5(1) (a) & (b) and 6 (a) of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 by issuing a mis-guiding advertisement about proposed buy-back of shares by the company to allot to FIIs, at the proposal stage itself, while there was no provision in Articles of Association of the company for buy-back of shares.
a. The company issued an advertisement in seven newspapers- Gujarat Samachar (08 July 2002), Mumbai Samachar (08 July 2002), Sandesh (08 July 2002), Business Standard (09 July 2002), Financial Express (09 July 2002), Economic Times (09 July 2002) and Hindu Business line (10 July 2002); all color advertisements saying that Board of Directors of the company was going to meet on 18.07.02 on the proposal to buy back shares (for the purpose of allotting to FIIs) from the public at a price of Rs.11/- share. It was further observed that there was a sharp increase in the volumes traded prior to the issuance of advertisements and sharp increase in traded volumes subsequent to issuance of the advertisements. The share price /volume history indicated that the shares were very thinly traded. It is important to note that the law does not require such advertisement prior to the board meeting. When queries were raised about the reasons for the issue of the advertisements, the company informed SEBI vide letter dated October 21, 2002 that the advertisement was issued as per the decision of Board of Directors (informal meeting held on 1st July 2002 comprising members- S/Shri. Hitesh R Bhatt, Pritesh B Shah, Rinku J Shah, and Kalpesh R Sheth). Later, the company vide their letter dated 18 January 2003, addressed to SEBI stated that, the board meeting held on 18 July 2002 decided to-
“Amend the articles of association of the company and after the completion of the procedural formalities and also seek the approval of the shareholders for buyback of securities at appropriate time. The board also decided to convene an Extra Ordinary General Meeting or an Annual General Meeting for amendment of articles and to all such other procedures”.
The copy of the advertisements is provided as Annexure 4.
b Even the wording of the decision of the Board meeting appears to be attempting to prolong the process, than to go ahead with the proposal of buyback. It appears that the advertisement about the proposal was put just to create an interest in the investing public than to honour the proposal. It was also observed that no shares were allotted to any FIIs as was mentioned in the advertisement. It is pertinent to note that the company had recorded a net profit of Rs.16000/- in the quarter ended 30 June 2002. The total expenditure incurred by the company during the said quarter was a meagre Rs.2.65/- Lakhs. They had not kept any provisions for depreciation or tax during the previous to two quarters prior to the advertisement. It is highly improbable that such a company will spent Rs.4,10,728/-, which almost 155% of the total expenditure on the just concluded quarter, on an advertisement that is not legally binding.
c. It is observed that the buyback of 1823310 (18%) shares at Rs. 11/- per share was proposed when the share price of the company in the market was around Rs.2.40/-During the quarter prior to the advertisement the company had recorded a meagre net profit of Rs.16000/-. There was no significant underlying fundamental that could justify such a bold decision from the company. It may be pertinent to note that the articles of association of the company do not permit such buybacks.
d. From the foregoing, it is observed that the advertisement was a ploy to mislead the investors by benchmarking price of the scrip at Rs.11/- when the share was trading for less than Rs.3/-. By way of announcing buy-back of shares, even when the articles of association of the company does not have a provision for buyback, and the company’s subsequent withdrawal might have resulted in a pecuniary loss to the investors who could have been influenced to purchase shares on the basis of the advertisement. The motive for such an advertisement appears to be to offload the promoter holding in the company to gullible investors. This is clear from the fact that the company going for the advertisement when the articles of association of the company did not have a provision for buyback; and the subsequent withdrawal from the proposed action. Thus it is seen that the company and its directors (S/Shri. Hitesh Bhatt, Pritesh B Shah, Kalpesh R Sheth and Rinku J Shah) had violated Regulation 5(1) (a) & (b) and 6 (a) of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995.
6. Charge II
The director of the company Shri. Pritesh B Shah along with the Persons acting in concert (S/Shri. Rajesh Kumar V Patel, Kirtiben R Patel), entities related to the promoters of the company (Galaxy appliances, Zenet softwares, Mahendra k Sutaria) and associated persons (noticees 11 to 22) had violated Regulations 3, 4(a), (b), (c) & (d) and 6(a) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations 1995 by offloading the huge promoter holding in the artificially inflated market ( created through the mis-guiding advertisement issued by the company) and later buying back a part of these shares from the market once the investor interest subsided.
a. Investigations revealed that, persons acting in concert to the promoters of the company (S/Shri. Rajesh Kumar V Patel, Kirtiben R Patel) and associated entities to the company viz, Galaxy appliances, Zenet softwares Ltd., Paresh Kumar Patel and Hemaben P Patel (both related to of Shri.Rajesh Kumar V Patel) transferred the shares to Shri Rakesh Ramniklal Sheth. Shri. Rakesh Ramniklal Sheth in turn transferred these shares to different entities, which offloaded the shares in part to the market. The shares transferred among the entities were offloaded in the market mainly by S/Shri Piyush Jhavey and Sanjay Gaykwad and Rakesh Ramniklal Sheth himself. Shri. Pritesh B Shah, Director Genus Commutrade Ltd. received shares from few persons acting in concert with the promoters of the company Viz Galaxy appliances, Mahendra Sutaria and Paresh Kumar Patel. These shares were finally transferred to Atul H Shah through Atul B Shah. Shri Piyush Jhavey, Sanjay Gaykwad,Raju B Shah, Shah Maheshbhai (Mahesh M Shah) and Jyotish Bhogilal Shah also transferred some shares to Shri.Atul H Shah. Shri.Raju B Shah also transferred 1075000 shares to Shri.Atul H Shah through Shri.Atul B Shah. On September 13 and 14, 2002; Shri.Atul B Shah transferred these Shares to Shri.Rakesh Ramniklal Sheth in an Off-Market deal. The details of the security flow from the group associated companies and persons acting in concert with the promoters are shown as flow chart in two stages. The greyed boxes show the promoter related entities.
Chart 1- Details of the security flow from the group associated companies.
Galaxy 472750 on 26 June 02
|
PIPL 472474 on 2,3,4 July 02
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Tushar Jhavery 156000 on 20/6, 9,15,30 July 2002
|
Kirti Patel 775000 on 5/6 and 6/7
|
Zenet soft 313400 on 9/7/2
|
R.K. Patel.
2744900 on 5/6,21/6,25/6,5/7
|
J Bhogilal
937393 on 11/6/02,12/6,14/6,
20/6,18/7, 31/7/02
|
Paresh K patel-839800 on 2,4,9,10 July &8/6
|
Among the entities who transferred shares to Sri. RR Sheth, it is important to note that four entities are related to promoters.
1. R.K Patel ( Rajesh Kumar V Patel)-Person acting in concert with promoters
2. Kirti R Patel- Person acting in concert to promoters
3. Galaxy Appliances Ltd- Group/Associate Company
4. Zenet Softwares Ltd- Group/Associate Company.
These entities together effected a net transfer of about 4308050 (roughly 42%) shares of the company to Rakesh Ramniklal Sheth. These transfers were effected in the months of June-July 2002. The details are as follows.
Table 1: Details of transfers effected in the months of June-July 2002
|
|
Received by RR Sheth
|
|
|
Date
|
From
|
No Of Shares
|
|
5-Jun-02
|
Kirtiben R Patel
|
500000
|
|
5-Jun-02
|
Patel Rajesh Kumar
|
500000
|
|
21-Jun-02
|
Patel Rajesh Kumar
|
500000
|
|
25-Jun-02
|
Patel Rajesh Kumar
|
1027250
|
|
26-Jun-02
|
Galaxy Appliances(Khand-10003249)
|
472750
|
|
5-Jul-02
|
Patel Rajesh Kumar
|
717650
|
|
6-Jul-02
|
Kirti R Patel
|
275000
|
|
9-Jul-02
|
Zenet Software Ltd (Khand-10003329)
|
313400
|
|
Total
|
|
4306050
|
b. Shri. Rakesh Ramniklal Sheth (RR Sheth) in-turn transferred these shares to the following entities through similar Off-Market deals. The flow of securities as well as the number of shares transferred from his account is shown in the Chart II. The number of shares shown is the net transfer between the entities.
Chart II : Details of Flow of Securities
Raju B Shah 1300000+ 400000 (Pritesh shah)
|
Atul H Shah total received 2854221 shares
|
RR Sheth on 13,14 sep 02 received 27,99,000 shares from Atul Shah
|
Mahendra K Sutaria
152300 6/7/02
|
Bharatumn Patel 145200 on 6/7
|
Paresh Kumar Patel 145200 on 6/7
|
c. Pritesh B shah was the director of Genus Commutrade Ltd. during June-July 2002. He was the person who placed the order to the advertiser and approved the release of advertisement as per the details provided by Genus Commutrade Ltd. He was also involved in off-market deals just prior to and after the particular advertisement. The shares thus received by Shri.Pritesh B Shah were transferred mainly to Shri.Raju B Shah. Shri.Raju B Shah transferred the shares to Athul H Shah through Atul B Shah. Finally Shri.Atul B Shah transferred the shares (More than 27 Lakhs shares received similarly) to Shri.Rakesh Ramniklal Sheth, completing a full circle of inter se transfers in which the shares offloaded in the market were repurchased at a possibly low price by these entities and finally transferring them back to Shri.Rakesh Ramniklal Sheth. It is seen that Shri.Pritesh B Shah was actively involved in the manipulative scheme of things as shown in the previous pages, by acting as a source of shares for the people. Further it may be noted that Shri.Pritesh B Shah was the person who had placed the advertisement for the company, and was a participant in the informal board meeting that decided for placing the advertisement as stated by the company. It is important to note that all the off-market deals done by him were immediately before or after the publishing of the advertisement.
Chart 3: Pritesh Shah’s and the Involvement
Paresh Kr Patel on 6/July/2 gave 1,45,200 shares
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Rakesh Ramniklal Sheth received on 9/7/2 54950 shares
|
Raju B Shah on 8 July received 400000 shares
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Jyodish Bhogilal received on 12/6/2 9500 shares
|
Rakesh Ramniklal Sheth on 6/6/2 gave 9500 shares
|
Galaxy Appliances
On 6 July 02
38650 shares
|
Mahendra H Sutaria on 6/July/2 gave 152300 shares
|
Bharatumn Patel (Khand/10006344) gave 145200 shares on 6 July
|
d. It is seen from the examination of the transaction statements of the promoter/related entities obtained from NSDL/CDSL that there were several off-Market transactions from the promoters, which resulted in the changes in the share holding. But the details of shareholding submitted by Genus Commutrade Ltd. dated 10 August 2002 does not reflect these changes in share holding (as on June 30, 2002). It appears that the company was purposefully trying to mislead the investigation.
e. It is observed that the promoter associated entities and persons acting in concert with the promoters of the company were related to each other as shown in the following table.
Table 2: Relationship observed among promoter related entities
|
Sr.no.
|
First holder
|
Address 1
|
Address 2
|
Address 3
|
Address 4
|
Pin
|
|
1
|
Galaxy appliances limited
|
Upper ground floor
|
Dolly chambers
|
Nr. Stadium circle, navrangpura
|
Ahmedabad
|
380009
|
|
2
|
Zenet software ltd.
|
Upper ground floor
|
Dolly chambers
|
Near stadium circle, navrangpura
|
Ahmedabad
|
380009
|
|
3
|
Mahendra k Sutaria
|
Uipper ground floor
|
Dolly chambers
|
Nr. Stadium circle, navrangpura
|
Ahmedabad
|
|
Table 3: Relationship observed among promoter related entities and associated entities
|
First holder
|
Address 1
|
Address 2
|
Address 3
|
Address 4
|
Pin
|
|
Patel Rajesh Vithalbhai
|
5, Shivam setelite society
|
Bodakdev
|
Vastrapur
|
Ahmedabad
|
380015
|
|
Patel Kirti
|
5, Shivam setelite co. Op. Society
|
Bodakdev
|
Vastrapur
|
Ahmedabad
|
380015
|
|
Kirtiben Rajeshkumar Patel
|
5, Shivam satelite,
|
Bodakdev,
|
|
Ahmedabad.
|
380015
|
|
Rajesh Kumar Vithalbhai Patel
|
5 Shivam satellite society
|
B/h Kadamb Bunglow
|
Vastrapur
|
Ahmedabad
|
380015
|
|
Pareshkumar Rasikbhai Patel
|
5 Shivam satellite society
|
B/h Kadamb Bunglow
|
Nr. Chinmay crystal tower, vastrapur
|
Ahmedabad
|
380015
|
|
Hema Pareshkumar Patel
|
5, Shivam satelite society
|
B/h. Kadamb Bunglow
|
Nr. Chinmay crystal tower, vastrapur
|
Ahmedabad
|
380015
|
|
Kirtiben Rajeshkumar Patel
|
5 Shivam satellite society
|
B/h Kadamb Bunglow
|
Vastrapur
|
Ahmedabad
|
380015
|
Note: Repeated names means the entity was operating through different DP accounts.
f. It is seen that the entities viz Galaxy Home Appliances, Zenet Softwares Ltd, Smt. Kirti R Patel (Kirtiben Rajesh Kumar Patel), Shri.Pareshkumar Rasikbhai Patel, Ms.Hema Pareshkumar Patel and Shri.Mahendra Sutaria are related to each other and to the company as discussed in the previous pages. They were actively involved in the manipulative scheme of things that is discussed in Paras 5 & 6, and there by violated Regulations 3, 4(a), (b), (c) & (d) and 6(a) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations 1995.
g. Shri.Piyush Jhavery received shares through Off-Market deals from Shri.Rakesh Ramniklal Sheth (3202794), Shri.Tushar Jhaveri(284229), Shri.Raju B Shah(100300) and from the DP Id HDFC 12345314 (75000). He also purchased 793905 shares from the market during the months of June-July 2002. In turn Shri.Piyush Jhavery delivered these shares to Shri.Santosh Gaykwad (578506), DP A/c Khandwala/10014119(127601) and the DP A/c 10002352(45805) (all off market deals). Shri.Santosh Gaykwad in turn transferred 578456 of these shares to Atul H Shah. He also sold 31,74,722 shares in the market through the broker P.Suryakanth Share and Stock Brokers Pvt Ltd. The market deals by Shri.Piyush Jhavery are shown as Annexure 5. It appears that Piyush Jhavery was acting as a front entity of Rakesh Ramniklal Sheth.
h. Shri.Santosh Gaykwad received 589146 shares from Shri.Piyush Jhavery, 1055240 shares from RR Sheth and 20000 shares from Shah Maheshbhai M. He also purchased 326650 shares from the market during June-July 2002. He sold 12,05,890 shares in the market, mostly in June 2002 taking advantage of the higher price prevailing in the market during the period. Santosh Gaykwad vide his letter dated 21/06/03 had also accepted doing transactions on behalf of Rakesh Ramniklal Sheth. It is observed that Shri Santosh Gaykwad was acting as a front entity in the scheme of things in which the key person was Rakesh Ramniklal Sheth. The details of market & off-market transactions of Santosh Gaykwad are given as Annexure 6.
i. Raju. B Shah received a total of 13 lakh shares from Rakesh Ramniklal Sheth and 400000 shares from DP Id Khandwala/10030226. He also received 400000 shares from Pritesh B Shah, Director of Genus Commutrade Ltd., on July 6, 2002 i.e., just two days prior to the advertisement. (It may be pertinent to note that Pritesh B Shah was the director who was authorised by the Board of Directors to publish the advertisement). Raju B Shah transferred 1,00,300 shares to Piyush Jhaveri and 3,98,729 shares to Tushar Jhaveri. He also transferred 10,75,000 shares to Atul B Shah on 1 Aug 2002 and 75,171 shares to Atul H Shah on August 7, 2002. Shri Atul B shah in turn transferred the 10,75,000 shares on August 7, 2002 to Atul H Shah; all in Off-Market deals. Shri. Raju B Shah in his letter dated 26/06/03 to SEBI had stated that he had received as well as delivered 1075000 shares on behalf of Rakesh Ramniklal Sheth. It appears that Shri.Raju B Shah has played an active role in helping the promoters and related entities to offload their huge holding in Genus Commutrade Ltd.
j. Sri Rajesh Kumar Patel, Kirti R Patel, Paresh Kumar Patel and Hema P Patel together transferred 10 lakh shares to Sri Urvish Vora on 17 June 2002. Urvish Vora offloaded these 10 lakh shares in the market through the broker Parklight Investment Pvt Ltd during June-July 2002. It appears that Shri Urvish Vora was acting as a front entity for Shri. Rajesh Kumar Patel, who was banned from operating in the securities market by the order of SEBI.
k. It is seen that Piyush Jhavery, Santosh Gaykwad, Raju B Shah, Shah Maheshbhai M, Atul B Shah, Paresh Kumar Patel, Tushar Jhavery, Ramilaben Patel, Hema Paresh Kumar Patel, Urvish Vora, Atul H Shah and Rakesh Ramniklal Sheth; by acting as the front entities in the manipulative process as described in Para 1-17 has violated Regulations 3, 4(a), (b), (c) & (d) and 6(a) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations 1995.
l. Shri.Rakesh Ramniklal Sheth was involved in the affairs well prior to the advertisements; also in publishing the advertisement as brought out by the statement of Dinesh Singh of Garima, the advertising agency. Shri. Dinesh Singh of Garima Communications had stated in his statement dated October 03, 2002 (given as Annexure 7) that the order was placed and the advertisement was approved by Shri. Rakesh Sheth, Director of Genus Commutrade Ltd. He also stated that the contact person from the company was Rakesh Ramniklal Sheth (however the company had stated that the contact person was Pritesh B Shah). Well prior to the advertisement he acquired large quantities of shares of the subject scrip through off-market deals. He was acting as the central figure in the manipulative scheme of things that were happening on the scrip Genus Commutrade Ltd., following the misleading advertisement. He was channelling the offloading of promoter associated entities shares in a market. Shri.Rajesh Kumar V Patel, person acting in concert to the promoters of the company, was banned by SEBI in dealing in securities in any particular manner for a period of one year with effect from 1st March 2002 by the order of Chairman dated February 19, 2002. Even then Shri Rajesh Kumar Patel had dealt in securities market by way of Off-Market deals. Shri. Rakesh Ramniklal Sheth was apparently helping him to deal in the market by acting as a front entity for him and his family members. Shri Atul H Shah in his submission to SEBI dated 26/06/03 to SEBI has stated that he has received and delivered 1075000 shares on behalf of Rakesh Ramniklal Sheth. He had also provided other instances when he was operating on behalf of Shri. Rakesh Ramniklal Sheth. Similarly, Shri. Raju B Shah in his letter dated 26/06/03 to SEBI had stated that he had received as well as delivered 1075000 shares on behalf of Rakesh Ramniklal Sheth. Santosh Gaykwad vide his letter dated 21/06/03 had also accepted doing transactions on behalf of Rakesh Ramniklal Sheth. (copies of letters of S/Shri. Raju B Shah (dated 26/06/2003), Atul H Shah (dated 26/06/2003) and Santosh Gaykwad (dated 21/06/2003) and the transaction statements of Shri. Rakesh Sheth are enclosed herewith as Annexure 8 and Annexure 9 respectively. It is seen that these entities were acting as front entities in the scheme of things in which the key person was Rakesh Ramniklal Sheth. In doing so Shri. Rakesh Ramniklal Sheth has violated Regulations 3, 4(a),(b), (c) & (d) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations 1995.
m. It is observed that Atul H Shah was involving in transactions on behalf of Rakesh Ramniklal Sheth who was playing a major role in chanalising the promoter holding into the market taking advantage of the artificially created market conditions. He was instrumental in many off-the market transactions in which the promoter entities initially offloaded the shares and then bought back the shares at lower prices. It appears that Atul H Shah was acting as a front entity in the manipulative scheme of things charted out by Rakesh Ramniklal Sheth. In doing so Atul H Shah has violated Regulations 3, 4(a),(b) & (c) and 6(a) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations 1995.
In view of the above you are hereby called upon to show cause as to why suitable actions under section 11 and section 11B of SEBI Act, 1992 should not be initiated against you, including directions restraining / debarring you from accessing capital market in any manner for a suitable period should not be issued.
Your reply along with the documentary evidence, if any, should reach us within 21 days of the date of receipt of this notice. While replying you may also indicate whether you desire to be personally heard in this case so as to give you an opportunity of personal hearing. In case no reply is received from you, within the above specified period, it shall be presumed that you have no further explanations/submissions to offer in this regard and the matter shall be dealt with as per law.
Barnali Mukherjee
Annexures a/a
1. A copy of un-audited financial statement of the company for the quarter ending June 30, 2002
2. The ledger page of Genus Commutrade Ltd. showing the cash flow to Garima Communications on account of the advertisement.
3. Price volume data for the investigation period.
4. A copy of the advertisement.
5. Market deals by Piyush Jhavery.
6. Market and off-market deals by Santhosh Gaykwad.,
7. Copy of statement of Dinesh Singh of Garima-Advertisement agency.
8. A copy of letters of Atul H Shah, Raju B Shah and Santosh Gaykwad.
9. A copy of transaction statements of Shri.Rakesh Ramniklal Sheth.