Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Entity
Mr. Purshottam Khandelwal
PAN
ADZPK9831B
2.
AAHPG4700E
3.
4.
AAACC3529P
AAACM6050D
5.
6.
AAACA5715D
AAACM2047A
Page 1 of 25
Buy
Sell
Total
Count
of Buy
Orders
Count
of Buy
Trades
Total
Buy Qty
Count
of Sell
Orders
Count
of Sell
Trades
Total
Sell Qty
Total
Orders
Total
Trades
Praveen
Poddar
39
39
269841
21
21
113970
60
60
383811
Mefcom
49
49
195284
27
27
144458
76
76
339742
ISF
28
28
171623
28
28
136717
56
56
308340
Sunita
Gupta
30
30
176813
17
17
74205
47
47
251018
Cosmo
22
22
170236
20
20
120451
42
42
290687
Purshottam
Khandelwal
36
36
152555
97
97
636508
133
133
789063
Avisha
49999
49999
Vishvas
39958
39958
210
210
1226309
210
210
1226309
420
420
2452618
Total
Total
Trade
Qty
(c) Most of the aforesaid alleged synchronized trades were transacted by Vishvas Group
entities. On some of the days, the alleged synchronized quantity of shares traded by
Page 2 of 25
Vishvas Group constituted more than 15% of the total traded volume. For example, on
May 30, 2006, the total traded volume was 31,756 shares out of which 19,416 shares
(61.14% shares) were synchronized by the eight connected entities of Vishvas Group. It
was also observed that out of total 37 trading days during the investigation period, on 26
trading days, these entities indulged in synchronized trading. The details of 26 trading
days at BSE are given in the following table:Table 2
Date
(A)
SN
Total
mkt.
Volume
(B)
Total
Day
Synchronised
Volume
(C)
Synchronized
trading by eight
entities
(D)
Synch.
Trade
volume of eight
entities vs. total
synch.
trade
volume in %
(D/C*100)
(E)
30-05-2006
31756
19416
19416
100.00
61.14
31-05-2006
48722
23824
23804
99.92
48.86
18-05-2006
337055
125725
124887
99.33
37.05
12-05-2006
349076
121904
118404
97.13
33.92
21-04-2006
276438
60799
60000
98.69
21.70
28-04-2006
363073
78521
74981
95.49
20.65
11-05-2006
409252
89785
83755
93.28
20.47
29-04-2006
168693
32510
32510
100.00
19.27
09-05-2006
494413
119125
85935
72.14
17.38
10
16-05-2006
342392
76559
57955
75.70
16.93
11
02-05-2006
473324
78888
77614
98.39
16.40
12
10-05-2006
488420
107963
77924
72.18
15.95
13
08-05-2006
113772
22115
17000
76.87
14.94
14
04-05-2006
642628
87974
86302
98.10
13.43
15
29-05-2006
58042
8485
7485
88.21
12.90
16
25-05-2006
71468
10858
8820
81.23
12.34
17
24-05-2006
108555
14131
13200
93.41
12.16
18
23-05-2006
426111
161773
50215
31.04
11.78
19
19-05-2006
316863
66195
33911
51.23
10.70
20
15-05-2006
370350
46294
38454
83.06
10.38
21
25-04-2006
482177
64699
47571
73.53
9.87
22
26-05-2006
161280
26975
14123
52.36
8.76
23
17-05-2006
287561
34115
18724
54.88
6.51
24
27-04-2006
368587
30830
23660
76.74
6.42
25
24-04-2006
354385
24770
22710
91.68
6.41
26
22-05-2006
238886
7379
6949
94.17
2.91
Page 3 of 25
(d) On 25 days out of aforesaid 26 days, the synchronized trades of Vishvas Group were
more than 50% of total market synchronized trades. Also the contribution of volumes
through such synchronized trades by the above entities was more than 60% of total
traded volume on May 30, 2006 and it was more than 48% on May 31, 2006. On 12 days
out of total 26 days, the alleged synchronized trades of the group entities constituted
more than 15% to the total market volume.
(e) The entity-wise traded quantity of Vishvas Group through synchronized trading during
the investigation period at BSE is given below:
Table 3
Particula
rs
Buyer
Name
Praveen
Poddar
Mefcom
ISF
Sunita
Gupta
Cosmo
Purshott
am
Khandel
wal
Avisha
Vishvas
Total
Seller Name
Purshott
am
Khandel
wal
Prave
en
Podda
r
Sunita
Gupta
Mefcom
Cosmo
Avisha
Vishva
s
ISF
Total
189069
00
14774
29621
36377
00
00
00
269841
123830
99968
16999
19990
15455
5500
00
17146
6500
29019
00
00
00
00
32500
00
195284
171623
47858
14240
00
38951
24367
00
00
51397
176813
101825
15900
23811
21700
00
00
00
7000
170236
46841
14665
37040
14188
00
00
39820
152555
49999
23958
00
00
11397
0
00
00
00
00
00
10000
00
00
00
00
00
6000
49999
39958
74205
144458
120451
00
00
136717
1226309
636508
(f) Similarly, at NSE, during the investigation period, Cosmo and Master Finlease, together
with five other connected entities of Vishvas Group viz. Ishita VSL, Quantum, Mefcom
and ISF, indulged in 312 synchronized trades for 12,01,751 shares (82.95% of total
alleged synchronized quantity and 17.63% of total market quantity). The entity-wise
details of synchronized trades at NSE are given in the following table:
Table 4
Client
Name
Buy
Count
of Buy
Orders
Ishita
51
Co
unt
of
Buy
Tra
des
70
Sell
Total
Total Buy
Qty
Count
of Sell
Order
s
Coun
t of
Sell
Trade
s
Total Sell
Qty
Total
Orders
Total
Trades
296041
65
92
372986
116
162
Total
Trade
Qty
Page 4 of 25
669027
Client
Name
Buy
Count
of Buy
Orders
Mefcom
ISF
62
32
Co
unt
of
Buy
Tra
des
102
42
Quantum
Cosmo
VSL
Master
Total
33
36
4
3
221
51
40
4
3
312
Sell
Total
Total Buy
Qty
Count
of Sell
Order
s
Coun
t of
Sell
Trade
s
Total Sell
Qty
Total
Orders
Total
Trades
Total
Trade
Qty
318875
161362
58
23
68
23
310826
133759
120
55
170
65
629701
295121
168456
229898
21315
5804
1201751
31
31
8
2
218
40
68
19
2
312
176205
166330
34645
7000
1201751
64
67
12
5
439
91
108
23
5
624
344661
396228
55960
12804
2403502
(g) Most of the aforesaid synchronized trading were transacted by Vishvas Group. On some
of the days, the synchronized quantity of shares traded by Vishvas Group constituted
more than 15% of the total day traded volume. For example, on May 24, 2006, the total
traded volume was 1,35,845 shares out of which 56,862 shares (41.86% shares) were
synchronized by the seven connected entities of Vishvas Group. It was also observed
that out of total 37 trading days during the investigation period, on 24 trading days, these
entities indulged in synchronized trading at NSE as detailed in the following table :
Table 5
S
N
1
2
3
4
5
6
7
8
9
10
11
Date
(A)
24-May-06
31-May-06
23-May-06
18-May-06
12-May-06
10-May-06
2-May-06
28-Apr-06
19-May-06
17-May-06
30-May-06
Total
Day
Total mkt. Synchronised
Volume
Volume
(B)
(C)
135845
82466
55827
22000
361836
156445
286480
99989
325936
149093
508209
172281
190824
48813
242491
73740
305545
82810
315704
95451
65199
14500
Synchronized
trading
by
seven entities
(D)
56862
21500
133145
98859
107579
164890
48713
60240
72810
73386
14500
Synch.
Trade
volume of
seven
entities vs.
total synch.
trade
volume in %
(D/C*100)
(E)
68.95
97.73
85.11
98.87
72.16
95.71
99.80
81.69
87.92
76.88
100.00
Synch. trade
volume of
seven
entities vs.
total market
volume in %
(D/B)*100
(F)
41.86
38.51
36.80
34.51
33.01
32.45
25.53
24.84
23.83
23.25
22.24
Page 5 of 25
S
N
12
13
14
15
16
17
18
19
20
21
22
23
24
Date
(A)
11-May-06
29-Apr-06
22-May-06
24-Apr-06
4-May-06
15-May-06
25-May-06
26-May-06
21-Apr-06
29-May-06
9-May-06
25-Apr-06
16-May-06
Total
Day
Total mkt. Synchronised
Volume
Volume
(B)
(C)
294423
70414
138336
26199
104358
19310
174534
39239
455206
60161
186596
21941
105903
52028
98820
10950
149401
15490
56729
6150
373563
47046
480062
48796
291367
17675
Synchronized
trading
by
seven entities
(D)
64487
25845
19310
30475
59350
21368
12028
10950
15000
5500
33574
38905
12475
Synch.
Trade
volume of
seven
entities vs.
total synch.
trade
volume in %
(D/C*100)
(E)
91.58
98.65
100.00
77.67
98.65
97.39
23.12
100.00
96.84
89.43
71.36
79.73
70.58
Synch. trade
volume of
seven
entities vs.
total market
volume in %
(D/B)*100
(F)
21.90
18.68
18.50
17.46
13.04
11.45
11.36
11.08
10.04
9.70
8.99
8.10
4.28
(h) It was observed that on 23 days out of aforesaid 24 days, the alleged synchronized trades
of Vishvas Group was more than 50% of total market synchronized trades. Also the
contribution of volumes through alleged synchronized trades by the above entities was
more than 40% of total traded volume on 24/05/2006 and it was more than 38% on
31/05/2006. On 15 days out of total 24 days, the alleged synchronized trades of the
Vishvas Group constituted more than 15% to the total market volume. The entity-wise
traded quantity of Vishvas Group through alleged synchronized trading during the
investigation period at NSE is given below:
Table 6
Particular
s
Buyer
Name
Mefcom
Seller Name
Ishita
12273
8
Quant
um
VSL
Mefcom
Cosmo
Master
Finlease
ISF
Total
73820
5000
00
56927
53390
7000
318875
73439
00
136008
42150
44444
00
296041
Cosmo
00
11065
7
4975
00
81341
00
32925
00
229898
Quantum
68063
00
27653
41787
29953
1000
00
168456
ISF
67724
18996
1992
35350
37300
00
00
161362
Ishita
Page 6 of 25
Particular
s
Buyer
Name
VSL
Master
Finlease
Total
Seller Name
Ishita
Quant
um
VSL
Mefcom
Cosmo
Master
Finlease
ISF
Total
00
4975
00
16340
00
00
00
21315
3804
37298
6
00
00
00
00
2000
00
5804
176205
34645
310826
166330
133759
7000
1201751
(i) Analysis of trade log at both BSE and NSE reflected that there were substantial number
of trades in which parties and counterparties to the trade were entities which belong to
Vishvas Group. Thus, the Noticees were creating an artificial volume in the market by
trading among themselves i.e. by circular trading.
(j) At BSE, the Noticees together with three other connected entities of Vishvas Group viz.
Mr. Praveen Poddar, Mefcom, and ISF, allegedly indulged in 2,138 circular trades in 29
trading days out of 37 trading days during the investigation period and created artificial
volume of 26,90,184 shares (30.08% of total market volume) by buying and selling
among themselves. Further, out of 29 days wherein alleged circular trades were observed,
on 26 days, these alleged circular trades were entered through 210 alleged synchronized
trades for 12,26,309 shares, the details of which are given in the previous paragraphs.
The summary of circular trades among these nine entities at BSE during the investigation
period is given below:Table 7
Circular
Trade
Buyers
Vishvas
Avisha
Cosmo
Sunita
Gupta
Master
Finlease
Mefcom
Purshotta
m
Khandelw
al
ISF
Praveen
Poddar
Grand
Total
Cosmo
Sunita
Gupta
Master
Finlease
Sellers
Purshottam
Mefco
Khandelwa
m
l
Pravee
n
Poddar
ISF
Grand
Total
10000
00
5672
8000
00
43875
00
00
00
00
00
59535
54509
50000
259186
6000
00
7000
19597
00
49152
98106
50000
424420
38031
00
00
43901
82808
94132
29928
288800
00
9500
00
36059
00
00
10000
00
13399
180381
00
45579
4000
52274
27399
323793
72446
35602
150814
19965
8386
10000
108126
21041
65025
215666
124694
00
187160
38990
716651
341264
61559
29674
00
32044
279473
17001
00
419751
232810
288387
18386
274647
1200447
294406
381101
2690184
Page 7 of 25
(k) The day-wise circular trades among the aforesaid nine entities at BSE during the
investigation period is given below:
Table 8
Sr.
No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
Date
(A)
31-05-2006
30-05-2006
11-05-2006
25-05-2006
29-05-2006
12-05-2006
18-05-2006
21-04-2006
16-05-2006
02-05-2006
26-05-2006
10-05-2006
28-04-2006
29-04-2006
15-05-2006
19-05-2006
04-05-2006
09-05-2006
05-05-2006
25-04-2006
27-04-2006
24-04-2006
24-05-2006
08-05-2006
17-05-2006
23-05-2006
26-04-2006
22-05-2006
03-05-2006
Circular Trades by
group
(B)
39260
24662
264716
41824
32885
196999
167150
135898
155579
193963
59835
174481
125220
51768
109551
90663
179516
135161
28946
115087
87898
77899
18260
19124
47493
63535
27118
22316
3377
% of circular to
Total trades
(B/C*100)
80.58%
77.66%
64.68%
58.52%
56.66%
56.43%
49.59%
49.16%
45.44%
40.98%
37.10%
35.72%
34.49%
30.69%
29.58%
28.61%
27.93%
27.34%
24.42%
23.87%
23.85%
21.98%
16.82%
16.81%
16.52%
14.91%
10.23%
9.34%
1.61%
(l) The aforesaid circular trades of these nine entities constituted significant volume of total
traded volume in the scrip. For example, the alleged circular trades of these nine entities
constituted 80.58%, 77.66% and 64.68% of total traded volume on May 31, 2006, May
30, 2006 and May 11, 2006, respectively and on 10 days, the percentage of alleged
circular trade volume of these entities to the total market volume was more than 40%.
(m) At NSE, Cosmo and Master Finlease together with five other connected entities of
Vishvas Group viz. Ishita, VSL, Quantum, Mefcom and ISF indulged in 2,419 alleged
circular trades in 29 trading days out of 37 trading days during the investigation period
and created artificial volume of 23,56,185 shares (34.56% of total market volume) by
buying and selling among themselves. Further, out of 29 days wherein circular trades
Order in the matter of Gangotri Textiles Limited
Page 8 of 25
were observed, on 24 days, these alleged circular trades were entered through 312
synchronized trades for 12,01,751 shares, the details of which are given in the previous
paragraphs. The details of circular trades among these seven entities at NSE during the
investigation period is given in the following table:
Table 9
Circular
Trades
Buyers
ISF
Mefcom
VSL
Cosmo
Ishita
Master
Finlease
Quantum
Grand
Total
Sellers
625
68254
26258
36925
157329
Mefcom
110961
550
24142
123702
188865
VSL
6552
5000
497
00
2570
Cosmo
68158
102992
100
00
183095
Ishita
157108
231230
5022
143512
92185
Master
Finlease
00
7040
00
00
29825
Quantum
33458
100574
14980
27975
107776
Grand
Total
376862
515640
70999
332114
761645
2000
2000
00
76917
00
48823
00
59751
7841
101533
00
00
00
60
9841
289084
293391
525137
63442
414096
738431
36865
284823
2356185
ISF
(n) The day-wise circular trades among these seven entities at NSE during the investigation
period is given in the following table:
Table 10
Sr. No.
Date
(A)
Circular
group
(B)
31-May-06
49259
55827
% to Total
Market Volume
(B/C*100)
88.24
29-May-06
42472
56729
74.87
11-May-06
206314
294423
70.07
26-May-06
66609
98820
67.40
10-May-06
306955
508209
60.40
24-May-06
76547
135845
56.35
21-Apr-06
78993
149401
52.87
12-May-06
146837
325936
45.05
28-Apr-06
101720
242491
41.95
10
30-May-06
27070
65199
41.52
11
29-Apr-06
53560
138336
38.72
12
23-May-06
139929
361836
38.67
13
17-May-06
120652
315704
38.22
14
25-Apr-06
180850
480062
37.67
15
2-May-06
69401
190824
36.37
16
18-May-06
100523
286480
35.09
17
25-May-06
35953
105903
33.95
18
4-May-06
146256
455206
32.13
Trades
by
Page 9 of 25
Sr. No.
Date
(A)
Circular
group
(B)
Trades
by
19
15-May-06
52917
186596
% to Total
Market Volume
(B/C*100)
28.36
20
9-May-06
101367
373563
27.14
21
19-May-06
74995
305545
24.54
22
22-May-06
22174
104358
21.25
23
3-May-06
42159
223203
18.89
24
24-Apr-06
32830
174534
18.81
25
27-Apr-06
29939
197354
15.17
26
16-May-06
40058
291367
13.75
27
8-May-06
4848
49250
9.84
28
26-Apr-06
4997
77999
6.41
29
5-May-06
21712
0.00
(o) The aforesaid alleged circular trades of these seven entities constituted significant
volume of total traded volume in the scrip. For example, the alleged circular trades of
these seven entities constituted 88.24%, 74.87% and 70.07% of total traded volume on
May 31, 2006, May 29, 2006 and May 11, 2006, respectively and on 10 days, the
percentage of alleged circular trade volume of these entities to the total market volume
was more than 40%.
(p) At BSE, during the investigation period, Mr. Purshottam Khandelwal and Cosmo, in
addition to synchronized and circular trades also indulged in self trades (wherein the
buyer and seller was the same person) as described in the following table:
Table 11
Name of the entity
Number of trades
Traded Qty
711
2
713
65025
5672
70697
(q) During the investigation period, the price of the scrip has decreased between April 7,
2006 to April 20, 2006 (Patch 1), increased in the period between April 21, 2006 to May
5, 2006 (Patch 2), and then again decreased between May 8, 2006 to May 31, 2006 (Patch
3) as described in the table below:
Table 12
Exchange
BSE
Opening
price
(April
07,
2006)
53.25
Closing price
(April 20, 2006)
Trading
days
% Change in
price of the
scrip
Average Daily
Traded
Volume
15.96%
Page 10 of 25
70713
NSE
56.00
44.40
8 Days
(Decrease)
20.70%
(Decrease)
68005
46.00
66.55
11 Days
NSE
46.00
66.90
11 Days
BSE
64.50
NSE
63.55
18 Days
44.70%
(Increase)
45.40%
(Increase)
338391
31.20%
(Decrease)
28.60%
(Decrease)
258554
213738
217866
(r) It was also observed that all the entities belonging to Vishvas Group had traded only
during Patch 2 (i.e., the period of price rise) and Patch 3 (i.e., the period of price fall) and
had been instrumental to the respective price rise and fall by contributing significant
positive and negative LTP variation during the respective Patch.
(s) At BSE, total cumulative positive and negative LTP variation was `1130.40 and
`1139.25, respectively during the investigation period wherein noticees together with
three other connected entities of Vishavs Group viz. Praveen Poddar, Mefcom Securities
Ltd, and ISF Securities Ltd. contributed `718.05 and `468.65, respectively. The details
of alleged contribution of these nine entities belonging to Vishvas Group to cumulative
positive and negative LTP variation is given in the table below:
Table 13
Sr. No.
Client Name
1
Purshottam Khandelwal
2
Mefcom
3
Praveen Poddar
4
Sunita Gupta
5
ISF
6
Cosmo
7
Avisha
8
Vishvas
9
Master Finlease
Sum of LTP variation by Vishvas Group
Cumulative LTP variation during the
period
% of LTP variation by Vishvas Group
63.52%
41.14%
(t) At NSE, total cumulative positive and negative LTP variation was ` 995.25 and
`1007.25, respectively during the investigation period wherein Master Filease Ltd. and
Cosmo Corporate Services Ltd. together with five other connected entities of Vishvas
Group viz. Ishita, Mefcom, VSL, Quantum and ISF allegedly contributed `489.05 and
Order in the matter of Gangotri Textiles Limited
Page 11 of 25
49.14%
30.57%
(u) An analysis of new high price (NHP) for the period under investigation revealed that at
BSE, in total 85 instances, price of the scrip increased by `17.70. During Patch 2, the
price rose by `13.85 in 69 instances. Vishvas Group entities contributed `5.45 (39.35%
of total increase) in 41 instances as given in the table below:Table 15
NHP Analysis
Details
Patch II (April 21, 2006 to May 05, 2006)
Total Price Rise (In 69 Instances)
`13.85
Contribution by Vishvas Group (In 41 Instances)
` 5.45 Purshottam Khandelwal : `5.25 in 39
Instances
Cosmo: `0.20 in 2 Instances
Contribution by other Scattered Entities (In 28 `.8.40
Instances)
% Contribution by Vishvas Group
39.35%
(v) Analysis of NHP for the period under investigation revealed that at NSE, in total 50
instances, price of the scrip increased by `15.05. During patch 2, the price rose by `13.90
in 43 instances. Vishvas Group entities contributed `4.80 (34.53% of total increase) in 14
instances as given in the table below:Table 16
NHP Analysis
Details
Patch II (April 21, 2006 to May 05, 2006)
Total Price Rise (In 43 Instances)
13.90
Contribution by Vishvas Group (In 14 Instances)
4.80
Ishita : 4.75 in 13 Instances
ISF : 0.05 in 1 Instance
Contribution by other Scattered Entities (In 29 9.10
Instances)
% Contribution by Vishvas Group
34.53%
Page 12 of 25
4. In view of the observations mentioned in the above paragraphs, it has been alleged in the SCN
that the Noticees, in concert with eight other connected entities of Vishvas Group ( viz; have
indulged in large number of synchronized trading, circular trading and price manipulation in the
shares of the Company which created an artificial volume and false or misleading appearance of
trading in the securities market. It is also alleged that those trades were only a device to inflate,
depress or fluctuate the price of the scrip. It is, therefore, alleged in the SCN that the Noticees
have committed following violations:
(a) that the Noticees have indulged in fraudulent and unfair trade practices and violated the
provisions of section 12A (a), (b), (c) of Securities and Exchange Board of India Act, 1992
and regulations 3(a), (b(c), (d), 4(1), and 4(2) (a), (e) of the Securities and Exchange Board of
India (Prohibition of Fraudulent and Unfair Trade practices relating to Securities Market),
Regulations 2003 ( hereinafter referred to as "the PFUTP Regulations")
(b) that Mr. Purshottam Khandelwal and Cosmo had indulged in self trades without an
intention of performing those trades or change of ownership of shares of the Company and
therefore have violated the provisions of regulation 4(2)(g) of the PFUTP Regulations.
5. The aforesaid provisions are reproduced hereunder:
SEBI Act, 1992
(a) use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be
listed on a recognized stock exchange, any manipulative or deceptive device or contrivance in
contravention of the provisions of this Act or the rules or the regulations made thereunder;
(b) employ any device, scheme or artifice to defraud in connection with issue or dealing in securities which
are listed or proposed to be listed on a recognised stock exchange;
(c) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon
any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on
a recognised stock exchange, in contravention of the provisions of this Act or the rules or the regulations
made there under;"
PFUTP Regulations
Page 13 of 25
(b) use or employ, in connection with issue, purchase or sale of any securities 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."
Page 14 of 25
Page 15 of 25
Master Finlease. On the same issue as that in the SCN, SEBI has already imposed a penalty and
as such proceedings qua it be quashed. It had bought only 50,000 shares during the investigation
period, which is not sufficient to have resulted in the creation of any artificial volume or any
price manipulation.
Vishvas
13. It has submitted that it had no relation with any entity of the Vishvas Group. On the same issue
as that in the SCN, SEBI has already imposed a penalty and as such proceedings qua it be
quashed. It had bought only 39,958 shares during the investigation period, which is not
sufficient to have resulted in the creation of any artificial volume or any price manipulation.
14. I have carefully considered the common SCN issued to the respective Noticees, their
replies/submissions and relevant material available on record. I note that the common SCN has
been issued to all the Noticees on the basis of same set of facts and circumstances. I, therefore,
deem it appropriate to deal with the SCN issued to all the Noticees herein by way of this
common order. It is further noted that the SCN has alleged that the Noticees, in concert with
eight other connected entities of Vishvas Group (viz; Ishita, Quantum, ISF, Mr. Praveen
Poddar, Anupama Communications Pvt. Ltd., Mefcom, VSL and SIC) indulged in the alleged
creation of artificial volume, false or misleading appearance of trading and price manipulation in
the scrip during the investigation period. However, these alleged 8 connected entities of Vishvas
Group are not Noticees in this SCN and as mentioned therein separate and independent
proceedings have been initiated against them. Hence, nothing in this order shall be construed as
any finding against them on merits.
15. Before dealing with the merits of the case, I deem it necessary to deal with technical objections
of the Noticees namely Ms. Sunita Gupta, Master Finlease, Avisha and Vishvas who have
contended that for the same set of alleged violations SEBI has imposed monetary penalty in
adjudication proceedings against them and the instant proceedings should be quashed on this
ground as it amounts to double jeopardy. In this regard, I note that the principle of double
jeopardy flows from the fundamental right enshrined in Article 20(2) of the Constitution of
India. I note that it is judicially settled position that in order to claim the protection of Article
20(2) it is necessary to show that - (a) there was a previous prosecution, (b) as a result of which
the accused was punished, and (c) the punishment was for the same offence. Unless all the three
conditions are fulfilled, Article 20 (2) of the Constitution of India is not attracted.
16. The words 'offence', 'prosecution' and 'punishment' in the context of Article 20(2) of the Constitution
of India contemplate proceedings of criminal nature before a court of law. The Hon'ble High
Order in the matter of Gangotri Textiles Limited
Page 16 of 25
Court of Bombay in the matter of SEBI Vs. Cabot International Capital Corporation (2004) to Comp L J
held 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." The Hon'ble Supreme Court in Shriram Mutual
Fund & Anr. {Appeal (civil) 9523-9524 of 2003}, has also held that adjudication proceedings
under SEBI Act are civil proceedings. Further the present proceedings are also civil proceedings.
Therefore, in my view, principle of double jeopardy do not apply to the present civil proceedings
and the earlier adjudication proceedings that were settled by the order dated July 21, 2008, do
not bar the civil actions by way of directions under section 11 and 11B of the SEBI Act. In this
regard, the order of the Honble SAT dated December 02, 2010, in the matter of Appeal no. 70
of 2010 Yashraj Containeurs Ltd. vs SEBI is also worth mentioning:
...After arguing these appeals for some time, the learned counsel appearing for the appellants pray that they
may be allowed to withdraw the appeals. While granting this prayer, we cannot resist observing that in view of
the serious allegations made against the appellants which stand established during the course of the adjudication
proceedings, the Securities and Exchange Board of India (for short the Board) should not have been content
with initiating only adjudication proceedings against the appellants in which only a monetary penalty could be
levied. This is a fit case where the Board should have considered initiating proceedings under Sections 11 and
11B of the Securities and Exchange Board of India Act, 1992 for issuing appropriate directions against the
appellants to protect the integrity of the market and the interests of the investors.
17. I, therefore, am of the view that the directions contemplated under sections 11(1), 11(4)(b),
11A(1)(b) and 11B of the SEBI Act and imposition of monetary penalty under the SEBI Act are
civil actions and imposition of monetary penalty would not bar additional civil action by way of
directions as contemplated in the SCN.
18. Having addressed the aforesaid technical objections, I now proceed to deal with the merits of
the case. I note that all the Noticees have disputed their connections with Vishvas Group
entities except Master Finlease and Avisha who have admitted connections amongst themselves.
I note that such Noticees have made ipse dixit denials in this regard and have not been able to
substantiate their contentions on the basis of any material. In fact the SCN clearly brings out the
connections of the Noticees with Vishvas Group entities on the basis of following factors which
none of the Noticees have disputed-
Page 17 of 25
Table 18
Sr.
No
Entity Name
(Brokers Name)
Master Finlease
(SIC)
Cosmo
(Integrated Master Securities Ltd.)
(Parasram Holdings)
5
Avisha
19.24%
19. It is noted from the SCN that during investigation period, Mr. Purshottam Khandelwal had
bought 29,27,835 shares and sold 28,82,486 shares of the Company during investigation period.
Out of the total 420 synchronized trades in the scrip during the investigation period, 133 trades
were entered into by Mr. Purshottam Khandelwal. Out of the total shares bought by the him, his
buy orders for total 1,52,555 shares were synchronized with sell orders of Ms. Sunita Gupta,
Cosmo and the entities of Vishvas Group viz; Mr. Praveen Poddar, Mefcom and ISF. Further,
his sell orders for 6,36,508 shares were synchronized with buy orders of Ms. Sunita Gupta,
Cosmo, Avisha, Vishvas and the entities of Vishvas Group viz; Mr. Praveen Poddar, Mefcom,
and ISF. He had bought 7,16,651 shares of the Company through circular trades with Ms. Sunita
Gupta, Cosmo, Master Finlease and the entities of Vishvas Group viz; Mr. Praveen Poddar,
Mefcom and ISF. Further, he had sold 12,00,447 shares through circular trades with remaining 5
Noticees and the entities of Vishvas Group viz; Mr. Praveen Poddar, Mefcom and ISF. He had
also indulged in 711 self trades (for 65,025 shares) in the scrip during investigation period. His
trades had also contributed in LTP/NHP manipulation as described in the SCN.
20. Mr. Purshottam Khandelwal has not denied these transactions. However, he has claimed that
one Mr. Nirmal Jain had entered into the trades his name and he had nothing to do with the
Order in the matter of Gangotri Textiles Limited
Page 18 of 25
alleged manipulative trades. It is noted that Mr. Purshottam Khandelwal has not initiated any
legal action against Mr. Nirmal Jain so as to prove his innocence in the matter. He has failed to
establish any of his claims on the basis of any evidence and the documents shared with him deny
his claim. it is noted that such contention of Mr. Purshottam Khandelwal has been considered
during investigation in the matter and the SCN has clearly brought out that he himself had
opened his trading account and had received a cheque from the Company and he was thus aware
that shares of the Company were credited in his account. In absence of any legal action by him
against Mr. Nirmal Jain he had been charged in the SCN that his submissions were a ploy and an
afterthought to avoid regulatory actions. Despite such clear allegations based on the factors
which Mr. Purshottam Khandelwal is privy to, he has failed to substantiate his claim. I,
therefore, do not find any reason to differ with the charges and the allegations against him in the
SCN.
21. It has been alleged in the SCN that Ms. Sunita Gupta had indulged in synchronized trades and
circular trades. Out of the 3,42,246 shares of the Company bought by Ms. Sunita Gupta trades
for 1,76,813 shares were synchronized with trades of Mr. Purshottam Khandelwal, Cosmo and
the entities of Vishvas Group viz; Mr. Praveen Poddar, Mefcom and ISF. Further, out of
3,42,246 shares sold by her, trades for 74,205 shares were synchronized with trades of Mr.
Purshottam Khandelwal, Cosmo and the entities of Vishvas Group viz; Mr. Praveen Poddar,
Mefcom and ISF. Further, out of 3,42,246 shares of the Company bought by Ms. Sunita Gupta
during the investigation period 2,88,800 shares were involved in circular trading with Mr.
Purshottam Khandelwal, Cosmo and the entities of Vishvas Group viz; Mr. Praveen Poddar,
Mefcom and ISF and out of the 3,42,246 shares sold by her 288,387 shares were involved in
circular trading with Mr. Purshottam Khandelwal, Cosmo, Vishvas and the entities of Vishvas
Group viz; Mr. Praveen Poddar, Mefcom and ISF. Her trades had also contributed in
LTP/NHP manipulation as described in the SCN. Ms. Sunita Gupta has not given any plausible
explanation to these types of trades with connected entities rather she has admitted to have
indulged in those trades as sub- broker and has claimed her transactions to be bona fide. Thus, by
her own admissions, she has not only admitted her alleged trades but also to be acting as subbroker which requires registration with SEBI. I, therefore, reject her contentions.
22. It has been alleged in the SCN that Cosmos had indulged in synchronized trades and circular
trades in the scrip during the investigation period. Its buy orders for 1,70,236 shares were
synchronized with sell orders of Mr. Purshottam Khandelwal, Ms. Sunita Gupta and the entities
of Vishvas Group viz; Mr. Praveen Poddar, Mefcom and ISF. Its sell orders for 1,20,451 shares
were synchronised with buy orders of Mr. Purshottam Khandelwal, Ms. Sunita Gupta, Vishvas
and the entities of Vishvas Group viz; Mr. Praveen Poddar, Mefcom and ISF. Further, it had
Order in the matter of Gangotri Textiles Limited
Page 19 of 25
bought 4,24,420 shares of the Company through circular trading from Mr. Purshottam
Khandelwal, Ms. Sunita Gupta, and the entities of Vishvas Group viz; Mr. Praveen Poddar,
Mefcom and ISF. Further, Cosmo had sold 2,32,810 shares of the Company through circular
trades from Mr. Purshottam Khandelwal, Ms. Sunita Gupta, Vishvas and the entities of Vishvas
Group viz; Mr. Praveen Poddar, Mefcom and ISF. It had also indulged in self trades for 5,672
shares of the Company during the investigation period. Its trades had also contributed in
LTP/NHP manipulation as described in the SCN. Cosmo has not filed any reply and has also
failed to avail the opportunity of personal hearing. I, therefore, find that it has no explanations
to the allegations and charges as leveled in the SCN.
23. As alleged in the SCN, Master Finlease had bought 38,000 shares and 20,500 shares of the
Company at BSE and NSE, respectively, and sold 18,386 shares and 1,11,400 shares of the
Company at BSE and NSE, respectively. Master Finlease had indulged in synchronized trades
and circular trades. At BSE, out of the 38000 shares bought by it, 27399 shares were involved in
circular trading with other entities of the Vishvas Group; viz; Mr. Praveen Poddar, and Mefcom
and all of 1,83,868 shares sold by it were involved in circular trading with other entities of the
Vishvas Group. Further, at NSE, out of the 20,500 shares bought by Master Finlease, 9,841
shares were involved in circular trading with other entities of the Vishvas Group and out of
1,11,400 shares sold by it, 36,865 shares were involved in circular trading with other entities of
the Vishvas Group. Further, out of 439 synchronized trades at NSE, Master Finlease indulged in
5 synchronised trades. At NSE, its buy orders for 5804 shares were synchronized with the sell
orders of the entities of Vishvas Group viz; Ishita and ISF. Its sell orders for 7,000 shares were
synchronised with buy orders of the entity of Vishvas Group namely, Mefcom. Further, at BSE,
it had bought 27,399 shares of the Company through circular trading with Mr. Purshottam
Khandelwal and the entities of Vishvas Group viz; Mr. Praveen Poddar and Mefcom. Similarly,
at NSE, it had bought 9,841 shares of the Company through circular trading with the entities of
Vishvas Group viz; ISF and Ishita. Further, at BSE, Master Finlease had sold 18,386 shares of
the Company through circular trades with Mr. Purshottam Khandelwal and the entity of Vishvas
Group, viz; ISF. At NSE, Master Finlease had sold 36,865 shares of the Company through
circular trades with the entities of Vishvas Group, viz; Mefcom and Ishita. Its trades had also
contributed in LTP/NHP manipulation as described in the SCN. These trading data are based
on order log/ trade log annexed in the Annexures to the SCN. Master Finlease has not disputed
this data and has contended that it had bought only 5,804 shares and sold 7,000 shares during
the investigation period. In view of established data in order log/trade log, I find the
submissions of Master Finlease without any basis.
24. Further, as per the SCN, Avisha had bought 50,000 shares of the Company at BSE during
Order in the matter of Gangotri Textiles Limited
Page 20 of 25
investigation period. Total 49,999 shares were bought by Avisha through synchronized
transaction with Mr. Purshottam Khandelwal. Further, Vishvas had bought 100000 shares of the
Company at BSE during investigation period and had indulged in 5 synchronized trades with
other entities of the Vishvas Group for 39958 shares. Out of the total shares bought by it, 98106
shares were involved in circular trading with other entities of the Vishvas Group. Avisha and
Vishvas have not disputed their trades and have claimed that their respective trades are not
sufficient to result in the creation of any artificial volume or any price manipulation. In my view,
when seen in isolation, individual transaction may look small. However, when seen holistically the non-genuine synchronized and circular trades in the same pattern and in close proximity of
time with the other transacting parties as part of plan of entire group to manipulate the volume
and price of the scrip, such trades also contribute to manipulation. I, therefore, do not agree
with the contentions of Master Finlease, Avisha and Vishvas.
25. In view of the above discussions, I find that none of the Noticees have filed any plausible
reply/explanation on merits of the case. It is pertinent to mention that there is no scale to
measure fraudulent, deceptive and manipulative device, plan and artifice or its impact and the
findings in that regard always depend on inferences drawn from a mass of factual details.
Findings in this regard can also be gleaned from patterns of transactions/dealings of connected
parties, their conduct/behaviour, proximity of time in placing orders, frequency of trades, etc. In
the instant case, a clear pattern of synchronised and circular trading is evident in the trades
amongst the respective Noticee and counter parties entities of Vishvas Group with same or
different combination of the Noticees and these Vishvas Group entities. Placing of the sell
orders with same counterparties for same quantity of shares at the same price within nil or too
negligible time difference repeatedly over a period of time in bulk of such transactions with
almost the same set of counterparties, as brought out in the SCN and its Annexures are clear
indication that those trades were synchronised as a pre-planned device, artifice and contrivance.
In this regard, the following observations of the Honble SAT in Ketan Parekh Vs. SEBI, Appeal
no. 2/2004 decided on July 14, 2006, are worth mentioning :
.......... A synchronised transaction will, however, be illegal or violative of the Regulations if it is executed
with a view to manipulate the market or if it results in circular trading or is dubious in nature and is
executed with a view to avoid regulatory detection or does not involve change of beneficial ownership or is
executed to create false volumes resulting in upsetting the market equilibrium. Any transaction executed with
the intention to defeat the market mechanism whether negotiated or not would be illegal. Whether a
transaction has been executed with the intention to manipulate the market or defeat its mechanism will
depend upon the intention of the parties which could be inferred from the attending circumstances because
direct evidence in such cases may not be available. The nature of the transaction executed, the frequency with
which such transactions are undertaken, the value of the transactions, whether they involve circular trading
Order in the matter of Gangotri Textiles Limited
Page 21 of 25
and whether there is real change of beneficial ownership, the conditions then prevailing in the market are some
of the factors which go to show the intention of the parties. This list of factors, in the very nature of things,
cannot be exhaustive. Any one factor may or may not be decisive and it is from the cumulative effect of these
that an inference will have to be drawn.
26. In the screen based trading the manipulative or fraudulent intent can be inferred from various
factors such as conduct of the party, pattern of transactions, etc. Such intention may be
demonstrated from the attending circumstances as observed by the Hon'ble SAT in Ketan Parekh
case in the following words"The nature of transactions executed, the frequency with which such transactions are undertaken, the value of
the transactions, ........., the conditions then prevailing in the market are some of the factors which go to show
the intention of the parties. This list of factors, in the very nature of things, cannot be exhaustive. Any one
factor may or may not be decisive and it is from the cumulative effect of these that an inference will have to be
drawn."
27. In this regard, I have taken into account the following observations of the Hon'ble SAT in its
order dated December 13, 2010 in Appeal no. 190/2010 - Ajmera Associates Pvt. Ltd. Vs. SEBI :
"... It is not in dispute that the trading system that we have on the stock exchanges is a blind trading system
which maintains complete anonymity of the persons trading. The broker while executing an order (buy or sell)
cannot possibly know at the time of placing the order through the system as to who the counter party is or even
the counter party broker. In other words, the trading system does not permit the buyers and the sellers to have
any interaction between them except through the trading system. A buy order placed on the system matches
with a sell order and a trade comes to be executed and this matching is done by the system on a price time
priority basis. Despite the anonymity of the system, we have seen market players and the intermediaries like
the brokers executing manipulative trades by defeating the system and this is usually done by placing the buy
and sell orders simultaneously for the same amount and at the same price. Such matching orders usually
result in trades in comparatively less liquid scrips. This being the system, it sometimes becomes difficult to find
out whether the brokers who execute the trades of their clients and who are expected to carry out their
directions are also a party to the mischief. If the broker knew at the time of executing the trade what the client
was upto, then obviously he is a party to the mischief. Since the trading system maintains complete anonymity,
brokers always plead that they were ignorant about the counter party or his broker. In such a situation one
has to look to the trading pattern and if the trades match too often or if the matching of the trades is noticed
day after day and trade after trade, one can infer that the matching was done not by the system but by
manipulating the same....."
28. As brought in the SCN and its Annexures, substantial number of synchronised transactions and
circular transactions in the scrip were entered into by each of the Noticees with other Noticees
and Vishvas Group entities being counter parties to their trades. In the instant case, the basis of
connection amongst concerned Noticees and their counter parties -Vishvas Group entities have
Order in the matter of Gangotri Textiles Limited
Page 22 of 25
not been disputed by them. Even otherwise, considering the frequency and pattern of
transactions, I am of the opinion that the above trades of the Noticees, who are found to be
acting in league with counter parties, are of too much of a coincidence in anonymous screen
based trading system. Such transactions are possible only through coordinated and deliberate
synchronization of orders by the involved parties. I find that such repeated matching of time,
rate and quantity in anonymous screen based trading could be possible only with the
involvement of the Noticees under a pre-meditated plan, device and artifice to create nongenuine and artificial volume.
29. I further note that apart from synchronised and circular transactions as found above, Cosmo had
done 2 self trades for 5672 and Mr. Purshottam Khandelwal had indulged in several number
(711) of self trades for substantially high quantity (65025 shares); wherein the same entity was
buying party as well as selling party. Those self-trades clearly did not involve change in beneficial
ownership of traded shares and were, therefore, illegal. It is relevant to mention that with regard
to the nature and effect of self-trades the Honble SAT, in the matter of M/s. Jayantilal Khandwala
& Sons Pvt. Ltd. vs. SEBI (Appeal no. 24 of 2011 decided on June 8, 2011), has held that: one
cannot buy and sell shares from himself. Such transactions are obviously fictitious and meant only to create false
volumes on the trading screen of the exchange.
30. In the instant case, the nature of transactions, volume of the transactions and the frequency with
which these transactions were undertaken by the Noticees acting in concert with counter parties
connected entities of Vishvas Group cannot but lead to the conclusion that the aforesaid
transactions in the scrip of the Company were undertaken by the Noticees for creation of
artificial volume to give false or misleading appearance of trading in the scrip without intention
of change in beneficial ownership. I find that indulgence in non-genuine synchronized, circular
trades and illegal self-trades, repeatedly, with connected entities without intending to change
beneficial ownership of traded shares clearly establishes creation of artificial volume as alleged in
the SCN.
31. I further find that entering into such synchronized, circular and self-trades was an attempt to
tamper with the free, fair and transparent price discovery system of the stock exchange. Such
practices where the transactions are put in with a premeditated understanding, have potential to
distort the price discovery process at the stock exchange and disturbs the market equilibrium.
This apart, the undisputed overt and covert acts and substantial contribution of the Noticees in
LTP variation and establishing NHP in the scrip during respective Patch of price rise and fall at
BSE and NSE both clearly establish their involvement in price manipulation in the scrip as
described in the SCN.
Order in the matter of Gangotri Textiles Limited
Page 23 of 25
32. I, therefore, find that the Noticees have used and employed manipulative and deceptive device
or contrivance in their transactions in shares of the Company in contravention of provisions of
section 12A(a) (b) and (c) of the SEBI Act and regulations 3(a)(b) (c) (d) and regulation 4(1)(2)
(a) and (e) of the PFUTP Regulations as they had indulged in creation of artificial volume and
price manipulation as described in the SCN. Mr. Purshottam Khandelwal and Cosmo have also
contravened provisions of regulation 4(2)(g) of the PFUTP Regulations as they indulged in
illegal self- trades apart from non-genuine synchronised and circular trades as found in this case.
33. It is relevant to mention that in the matter of Sumeet Industries Limited, vide order dated May
21, 2014 Mr. Purshottam Khandelwal has been restrained by SEBI from accessing the securities
market and has been further prohibited from buying, selling or otherwise dealing in securities,
directly or indirectly, or being associated with the securities market in any manner, whatsoever,
for a period of three years. He has also been directed by the said order to disgorge the wrongful
gain made by him from his contraventions, as described in that order, with simple interest @
12% per annum from March 12, 2007 till the date of payment. I further note that in that matter,
in adjudication proceedings varying monetary penalties were imposed against other 5 entities
who are Noticees in the instant matter also. In case of Vital Communications Limited, vide
order dated July 31,2014 SEBI has restrained Cosmo and Master Finlease from accessing the
securities market and has further prohibited them from buying, selling or otherwise dealing in
securities, directly or indirectly, or being associated with the securities market in any manner,
whatsoever, for the period of three years. Vide ex-parte ad interim order dated June 29,2015 Avisha
Credit Capital Ltd. has been restrained from accessing the securities market and from buying,
selling or dealing in securities, either directly or indirectly, in any manner, till further directions.
These orders are still in operation.
34. It is, thus, noted that the Noticees have repetitively indulged in manipulations in the securities
market and have manipulated the volumes and prices of other scrips in addition to the instant
one. In my view, repeated fraudulent acts and delinquent behaviour of the erring Noticees does
not bode well for the integrity, orderly development and smooth functioning of the securities
market. It, therefore, becomes incumbent to deal with contraventions, digression and
demeanour of the erring Noticees sternly and take appropriate actions for effective deterrence.
While considering appropriate directions in this regard, I further note that there is no allegation
of any unlawful gain or avoidance of loss by the Noticees or loss caused to the investors and
nothing has been brought on record in this respect. However, it is noted that magnitude and
quantum of contribution of each of the Noticees are varying and the same can be a mitigating
factor for the purpose of appropriate direction.
Order in the matter of Gangotri Textiles Limited
Page 24 of 25
35. Considering the above facts and circumstances, I, in order to protect the interest of investors
and the integrity of the securities market, in exercise of the powers conferred upon me under
section 19 of the Securities and Exchange Board of India Act, 1992 read with sections 11 and
11B thereof and regulation 11 of the Securities and Exchange Board of India (Prohibition of
Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 hereby
restrain the following entities from accessing the securities market and further prohibit them
from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated
with the securities market in any manner, whatsoever, for the period as mentioned in the
following table:
Table 19
Sl. No.
1.
Entity
Mr. Purshottam Khandelwal
PAN
ADZPK9831B
Period
5 years
2.
3.
4.
AAHPG4700E 3 years
AAACC3529P 5 years
AAACM6050D 5 years
5.
6.
AAACA5715D
AAACM2047A
1 year
1 year
36. With regard to Mr. Purshottam Khandelwal, Cosmo Corporate Services Ltd., Master Finlease
Ltd. and Avisha Credit Capital Ltd. who are debarred/restrained/prohibited pursuant to the
respective orders dated May 21,2104 July 31,2014 and June 29,2015, the directions in the said
orders and the directions in the instant order shall run concurrently.
37. A copy of this order shall be served on all the recognized stock exchanges and the depositories
to ensure that the direction given herein are complied with.
38. This order shall come into force with immediate effect.
Page 25 of 25