Securities Appellate Tribunal
Sebi vs Shri. Parag P Jhaveri, Shri Kamal P ... on 9 May, 2007
ORDER
G. Anantharaman, Member 1.0 BACKGROUND 1.1 Securities and Exchange Board of India (hereinafter referred to as SEBI) conducted an investigation into the buying, selling or dealing in the shares issued through Initial Public Offerings (IPOs) of companies during the period 2003-2005. The investigation conducted by SEBI found that, many demat accounts in fictitious/benami names were opened by certain entities (hereinafter referred to as the "Key Operators") and these entities had cornered/acquired the shares of various companies allotted in the IPOs, by making applications in fictitious/benami names with each of the applications being of small value so as to make it eligible for allotment under the retail category. The aforesaid demat accounts are here in after referred to as "afferent accounts" for the sake of brevity. The investigation conducted by SEBI further revealed that subsequent to the allotment of IPO shares of various companies, the fictitious/benami allottees had transferred the said shares to their principals which were identified by SEBI as key operators/master account holders. The modus operandi as detailed above led to the prima facie view that the thousands of entities in whose names demat accounts and bank accounts had been opened and IPO applications made, were either benami, name lenders or non existent.
1.2 In the above facts and circumstances, SEBI vide an ad interim ex parte order dated April 27, 2006 inter alia directed three key operators namely Shri Kamal P Jhaveri, Shri Parag P Jhaveri and Sugandh Estate and Investments Pvt. Ltd. (hereinafter collectively referred to as the Jhaveri group) not to buy, sell or deal in the securities market including in IPO's, directly or indirectly till further directions as it was found that they had prima facie violated the provisions of Depositories Act, 1996, Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, Regulation 3 of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as the FUTP Regulations) and the provisions of Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000.
1.3 In the aforesaid order, it was inter alia observed "Further if the entities, as prima facie found to be instrumental in tilting the IPO allotment process to their favour by the intricate modus operandi as clearly seen in the findings of this order, are allowed to operate in the market any more, the same is fraught with immense mischief and incalculable damage to IPO allotment process besides undermining the confidence of the retail investors who are urging for a fair deal in the market free of such manipulators. Also SEBI has to reckon with the present booming market while formulating a course of action as decided in this order." It was further directed to treat the said interim order as show cause notice against the entities named therein and an opportunity was also provided to the said entities to file their objections, if any.
1.4 The aforesaid order was challenged by Shri Kamal P Jhaveri among others before the Hon'ble High Court of Gujarat. The Hon'ble Court vide order dated July 17, 2006 dismissed the said writ petition inter alia with the following observation:
In the result, in view of the aforesaid discussion, this Court is of the opinion that SEBI having deemed fit has passed the order, it has passed the order, being expert on the subject. It is for the expert to decide as to out of the available course, which course is to be adopted. This Court will not only be slow but will not like to interfere in the discretion exercised by an expert on the subject. In the result these petitions failed and summarily dismissed.
1.5 Shri Kamal P Jhaveri has not filed any appeal against the above mentioned order dated July 17, 2006. In the facts and circumstances, I now proceed to deal with the matter considering the submissions of the Jhaveri group and the available material on record, as mentioned below.
2.0 REPLY RECEIVED FROM THE JHAVERI GROUP
2.1 Shri Kamal P Jhaveri vide letter dated December 16, 2006 inter alia stated that he had not acted in concert with any of the groups and that he did not have any relationship with the Panchal group. He admitted that he was the director of Arth Stock Broking Pvt. Ltd. and a shareholder and director of Arth Realty Pvt. Ltd. He admitted that he had received 2,34,878 shares of Infrastructure Development Finance Company Ltd. (IDFC) from several demat accounts in his demat accounts {client ID 10004626 maintained with the depository participant, Karvy Stcok Broking Limited (KSBL)}. However, he claimed that he had not received any gain out of the said transaction. In view of the aforesaid solitary instance, he claimed that he could not be treated as a master account holder/Key operator. He also claimed that his account had been used as a conduit by the parties to circumvent the process of IPO and in the process he had become the scapegoat. He denied having any transaction (of funds or securities) with Panchal group. He further stated that he had not opened any afferent accounts and the same were opened by KSBL for the reasons best known to them. He further claimed that his name has been included as a key operator merely because he happened to be the brother of Shri. Parag Jhaveri with whom he shared a common address and because of his directorship in Arth Stock Broking Pvt. Ltd. and Arth Reality Pvt. Ltd.
2.2 Shri Parag P Jhaveri vide letter dated January 18, 2007, admitted that he Page 4 of 50 had received 5,54,078 shares of IDFC from several demat accounts and clarified that he had not received any gain due to the said transfer. He stated that he had purchased 8200 shares of FCS Software Solutions Ltd. and 2375 shares of Sasken Communications Technologies Ltd from SEIPL and that out of the said 8200 shares of FCS, he had sold 6500 shares in the market and the remaining FCS shares and all Sasken Communications Ltd shares were lying in his account. In view of the above, Shri Parag P Jhaveri contended that he could not be master account holder/key operator.
2.3 He contended that there was no gain made by him and that his account had been used as a conduit by persons/entities to circumvent the process of IPO and in the process he had become the scapegoat.
2.4 He denied the allegation that he was linked to the Panchal group and that there was no transfer of funds or securities in any of the IPO shares to the Panchal group or from the Panchal group. He contended that there was no transfer of funds from Shri Kantibhai as alleged. He added that he had delivered the shares of IDFC to the alleged financier's demat account at the allotment rate of Rs. 34 per share. In view of the above submissions he requested that the proceedings initiated against him be dropped.
3.0 HEARING 3.1 An opportunity of hearing was granted to Shri Kamal P Jhaveri on January 3, 2007. Shri Ravi Kumar Varanasi, advocate appeared on behalf of Shri Kamal Jhaveri and made submissions on the lines of Shri Kamal P Jhaveri's letter dated December 16, 2006. Shri Kamal P Jhaveri was also present at the time of the hearing. An opportunity of hearing was granted to Shri Parag Jhaveri and SEIPL on January 22, 2007 and in connection with the said hearing, Shri Ravi Kumar Varanasi, advocate alongwith Shri Parag Jhaveri appeared and made submissions on behalf of Shri Parag Jhaveri and on behalf of SEIPL.
3.2 Pursuant to the above hearing, Sugandh Estate and Investments Pvt. Ltd. (SEIPL) vide letter dated February 6, 2007 admitted that it was involved in 7 IPOs out of 21 IPOs during the relevant period and further stated that the arrangements in the IPOs existed prior to its involvement. SEIPL contended that there were 5 IPOs prior to the aforesaid 7 IPOs in which some of the financiers (Roopalben Nareshbhai Panchal) and depository participants were involved. SEIPL admitted that it had received shares from several demat account/afferent accounts and that the shares were transferred on the same day in respect of the seven IPOs. It stated that SEIPL was used as a conduit and there was no gain made by it, except the fund management fees received from the financiers. SEIPL admitted that that its account has been used as conduit by persons / entities to circumvent the process of IPO. SEIPL denied having any relationship with any of the groups mentioned in the interim order dated April 27, 2006. SEIPL clarified that there was no transfer of funds or securities of any of the IPO shares to the Panchal group or from Panchal group till date. In short, the reply of SEIPL carries the same refrain as that of the other two.
4.0 CONSIDERATION OF ISSUES AND FINDINGS 4.1 I have perused the replies filed by the Jhaveri group and other materials available on record. Since their activities are in concert and interconnected, further reinforced by a swathe of personal and business relationship and since the issues and responses are common, all the three cases are dealt with in a common order. In the facts and circumstances of the case and taking into account the reply filed by the aforesaid entities, the issue for consideration is whether the aforesaid persons have opened demat accounts for the purpose of receipts / transfer of shares to various persons in order to circumvent the IPO allotment process by cornering the retail portion of IPOs and thereby prima facie violated the provisions of FUTP Regulations and the investor protection guidelines as mentioned above.
4.2 I note that 24 key operators / master account holders received off market credit of shares of 500 or more dematerialsed account holders in respect of 21 IPO's having certain commonalties. In the SEBI interim order dated April 27, 2006, these 24 entities were identified as master account holders/key operators. Three entities belonging to the Jhaveri group were amongst 24 key operators. The role of Jhaveri group has to be seen in the context of the large scale cornering of IPO shares during the period that majorly interfered with the allotment process.
4.3 I further note that the Jhaveri group received IPO shares from various afferent demat accounts in line with the modus operandi detailed earlier and the details of such credits are as follows:
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Sr. Name of the Client ID Name of the IPO's No. of No. of
Client Depository Participant Shares shares
accounts received
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1 SEIPL Karvy Stock 14405199 Infrastructure Development 10194 2712402
Broking Ltd.(KSBL) Finance Company Ltd.(IDFC)
National Thermal Power 3322 710882
Corporation Ltd.(NTPC)
Tata Consultancy Services 3197 57332
Ltd (TCS)
ILFS Investmart 2135 106750
FCS Software Solutions Ltd. 1624 162400
Yes Bank Ltd. 1315 197250
Sasken Communication 816 20400
Technologies Ltd.
2 Shri Parag P 10004600 Infrastructure Development 2083 554078
Jhaveri KSBL Finance Company Ltd.(IDFC)
3 Shri Kamal P 1004626 Infrastructure Development 883 234878
Jhaveri KSBL Finance Company Ltd.(IDFC)
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4.4 At the outset, I note that the Jhaveri group had not denied the receipt of shares/transactions in their dematerialized accounts as indicated in the table above. The contentions of the Jhaveri group are that their accounts were used and they were made scapegoat in the entire IPO matter. They have admitted that they had received IPO shares through off-market transactions from various dematerialized accounts during the period prior to the listing of the IPO shares and that they in turn had transferred/sold the shares to other entities. I note that upon receipt of allotment, the Jhaveri group allegedly (in many of instances) transferred the allotted shares prior to listing to the alleged financiers, considered to be the ultimate beneficiaries of the cornering of IPO shares. No written agreements/documents have been produced by the Jhaveri group evidencing their arrangement with the so called financiers. There is no credible explanation whatsoever for the funding excepting the ipse dixit, uncorroborated and unsubstantiated in material particulars. Apparently the arrangements, if any, were oral and could have been anything to benefit both the parties to the transaction. In any event, in this order, the focus is on their role as key operators in cornering shares, through fictitious afferent accounts.
4.5 When confronted with the tell-tale strands of their role in a well-crafted plan of action executed with consummate perfection which appears to suggest a strong nexus with other players (key operators) engaged in similar gameplan of cornering shares at about the same time, it is but natural for them to seek an escape route by building up an edifice of self- serving construction of the gamut of events and the same definitely needs to be discounted totally not only for want of a screed of proof, but also as an afterthought in justification. Given the fact that there was a large-scale manipulation, it stands to reason that any attempt to give a different spin to the same with weird concoctions is inconsistent with what had happened and needs to be dismissed in limine. Therefore, the contentions of Jhaveri group in this regard deserves to be dismissed as an after thought to wriggle out of the consequences of their crafty manipulative design to corner shares to the detriment of lay investors. Further there is prima facie evidence to demonstrate that they were the key operators in operationalising the grandiose scheme of cornering IPO shares.
4.6 I note that, in order to justify, the Jhaveri group have enclosed details of purported transactions with various financiers on whose behalf they had cornered the retail portion of IPO shares and have claimed that their gain was only to the extent of receipt of management fees. However, the said claim with various financiers is not supported by documentary evidence in the form of agreements, bank statements, ledgers, records etc. In the absence of any material to prove their claim, I am not inclined to accept the contentions of the Jhaveri group in this regard merely on the basis of their submissions. (Ipse dixit). I also note that the concerned financiers also have treated the transaction as a normal trading transaction and not as an arrangement to finance, which is not germane to the issue of the role of the Jhaveri group as "key operators".
4.7 As the Jhaveri group has admitted their role in cornering of the IPO shares, it is immaterial whether they committed the irregularity at the behest of someone else and the only issue to be considered in the instant proceedings is whether, based on the available records and considering the submissions of the parties, the directions issued vide ad interim ex parte order dated April 27, 2006 need to be continued, revoked or modified in any manner.
4.8 I observe that the Jhaveri group opened bank account with Vijaya Bank, Ambawadi, Ahmedabad branch and opened various demat accounts with Karvy Stockbroking Ltd. (Karvy DP) using the said bank accounts. In this context, I note the submission of Shri Parag Jhaveri that his account was used and he was made a scapegoat. I observe that the Jhaveri group held numerous bank accounts with Vijaya Bank, Ambawadi, Ahmedabad Branch. An examination of the account opening forms of some these bank accounts revealed the following:
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Bank Name of Address of Name of Date of Additional Features Account account account introducer account Number holder holder opening
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CA-2051 Parag Jhaveri & A/3 Embassy Apts Kamal Jhaveri P 17-Aug2004 At the request of
Tushar Shah Dr. V.S. Road, Shri Parag Jhaveri
Ahmedabad 380015 the following 10
names were added as
joint holders
1. Bunty Bhupesh
2. Dimple Bhupesh
3. Nandu Kirtibhai
4. Babita Kirtibhai
5. Rubin Yashwant
6. Abhinav Yashwant
7. Ashmi Vinodbhai
8. Abhita Vinodbhai
9. Akhil Vinodbhai
10. Lokesh Bhavanbhai
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CA-2052 Parag Jhaveri & A/3 Embassy Apts Kamal Jhaveri P 17-Aug2004 At the request of Shri
Tushar Shah Dr. V.S. Road, Parag Jhaveri the
Ahmedabad 380015 following 10 names were
added as joint holders
1. Ishika Bhavanbhai
2. Balvant Manilal
3. Vaman Manilal
4. Ulka Manikant
5. Baldev Manikant
6. Arjun Manikant
7. Kapoor Prabhakar
8. Mukta Prabhakar
9. Vidya Nilkanth
10. Kamna Nilkanth
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CA-2053 Parag Jhaveri & A/3 Embassy Apts Kamal Jhaveri P 17-Aug2004 At the request of Shri
Tushar Shah Dr. V.S. Road, Parag Jhaveri the
Ahmedabad 380015 following 10 names were
added as joint holders
1. Binit Nilkanth
2. Ambuj Motilal
3. Kirtan Motilal
4. Badal Motilal
5. Vandana Motilal
6. Kush Bhaskarbhai
7. Harita Bhaskarbhai
8. Prabhav Bhaskarbhai
9. Mahima Bharatbhai
10. Rajika Bharatbhai
----------------------------------------------------------------------------------------------------- CA-2054 Parag Jhaveri & A/3 Embassy Apts Kamal Jhaveri P 17-Aug2004 At the request of Shri Tushar Shah Dr. V.S. Road, Parag Jhaveri the Ahmedabad 380015 following 10 names were added as joint holders
1. Nishad Yogeshbhai
2. Raxa Yogeshbhai
3. Manini Yogeshbhai
4. Ratan Vyomesh
5. Mukund Vyomesh
6. Yatin Vyomesh
7. Manek Nathanlal
8. Bhagini Nathalal
9. Dhiru Jayantibhai
10. Gordhan Jayantibhai
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CA-2055 Parag Jhaveri & A/3 Embassy Apts Kamal Jhaveri P 17-Aug2004 At the request of Shri Tushar Shah Dr. V.S. Road, Parag Jhaveri the Ahmedabad 380015 following 10 names were added as joint holders
1. Khushal Jayantibhai
2. Dhimant Nagjibhai
3. Saroj Nagjibhai
4. Sudesh Nagjibhai
5. Garima Dhimant
6. Jugnu Dhimant
7. Sahil Dhimant
8. Khyati Dhimant
9. Dharini Fakirchand
10. Shriraj Fakirchand
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CA-2056 Parag Jhaveri & A/3 Embassy Apts Kamal Jhaveri P 17-Aug2004 At the request of Shri
Tushar Shah Dr. V.S. Road, Parag Jhaveri the
Ahmedabad 380015 following 10 names were
added as joint holders
1. Gulab Fakirchand
2. Digish Ganpatbhai
3. Jaydev Ganpatbhai
4. Chintu Ganpatbhai
5. Samita Sahdev
6. Dhrupad Sahdev
7. Chirag Sureshbhai
8. Samrat Sureshbhai
9. Khanjari Sureshbhai
10. Chetak Ravjibhai
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CA-2057 Parag Jhaveri & A/3 Embassy Apts Kamal Jhaveri P 17-Aug2004 At the request of Shri
Tushar Shah Dr. V.S. Road, Parag Jhaveri the
Ahmedabad 380015 following 10 names were
added as joint holders
1. Akshar Ravjibhai
2. Anali Ravjibhai
3. Vibhut Punjalal
4. Kalpen Punjalal
5. Bokshi Punjalal
6. Kajri Govindlal
7. Vatsal Govindlal
8. Ashni Govindlal
9. Vasu Hemantbhai
10. Mauli Hemantbhai
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CA-2058 Parag Jhaveri & A/3 Embassy Apts Kamal Jhaveri P 17-Aug2004 At the request of Shri
Tushar Shah Dr. V.S. Road, Parag Jhaveri the
Ahmedabad 380015 following 10 names were
added as joint holders
1. Hitendra Hemantbhai
2. Payal Madhukar
3. Trishul Madhukar
4. Roshan Madhukar
5. Mohan Rajnikant
6. Namita Rajnikant
7. Hansi Rajnikant
8. Kuber Yashraj
9. Yaman Yashraj
10. Nirmal Yashraj
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CA-2059 Parag Jhaveri & A/3 Embassy Apts Kamal Jhaveri P 17-Aug2004 At the request of Shri
Tushar Shah Dr. V.S. Road, Parag Jhaveri the
Ahmedabad 380015 following 10 names were
added as joint holders
1. Pritam Shridhar
2. Bhudar Shridhar
3. Narpat Nanjilal
4. Madhur Nanjilal
5. Dhara Nanjilal
6. Jivan Manekdas
7. Surya Manekdas
8. Jadav Manekdas
9. Sugriv Gomjibhai
10. Dhanesh Gomjibhai
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CA-2060 Parag Jhaveri & A/3 Embassy Apts Kamal Jhaveri P 17-Aug2004 At the request of Shri
Tushar Shah Dr. V.S. Road, Parag Jhaveri the
Ahmedabad 380015 following 10 names were
added as joint holders
1. Shruti Gomjibhai
2. Harshita Bhagirath
3. Shekhar Bhagirath
4. Snehal Bhagirath
5. Nikul Chunilal
6. Shrenik Chunilal
7. Parmesh Chunilal
8. Divyesh Ramniklal
9. Champak Ramniklal
10. Pavan Champaklal
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4.9 The extract of a letter of Shri Parag Jhaveri requesting for addition of the above names as joint holders is reproduced below:
From Parag P. Jhaveri To The Branch Manager Vijaya Bank Ambavadi, Ahmedabad 380015 Dear Sir, Reg: Current A/c No. 2059 With reference to above referred A/c. I request you to add the following Names as Joint Holder.
Sr. Name
1. PRITAM SHRIDHAR
2. BHUDAR SHRIDHAR
3. NARPAT NANJILAL
4. MADHUR NANJILAL
5. DHARA NANJILAL
6. JIVAN MANEKDAS
7. SURYA MANEKDAS
8. JADAV MANEKDAS
9. SUGRIV GOMJIBHAI
10. DHANESH GOMJIBHAI Specimen Signature Card is enclosed herewith.
Thanking You.
Yours faithfully, Parag P Jhaveri 4.10 I observe that 10 photos allegedly of the above mentioned persons are stapled to the above letter. It is seen that many of the photos carry an impression 'Shaad'. An examination of the photos at the matrimonial website 'shaadi.com' shows that the photos displayed at the website carry an impression 'Shaadi.com'. It is noted that the font and style of the impression as contained in the photos attached to the letter and as appearing on the website of 'Shaadi.com' appear to be the same. This indicates the possible source of the photographs attached to Shri. Parag Jhaveri's letter and shows the dubious design of Jhaveri group in opening bank account in fictitious/benami names probably without even the knowledge of the persons whose photographs were abused in such manner.
4.11 In the Income Tax declaration Form 60 submitted to Vijaya Bank, the signatures of the joint account prima facie appeared to have been made with the same writing instrument and all the joint account holders have apparently written their first name as their signature. The striking similarities of calligraphic features cast a serious doubt as to the genuineness of the joint account holders. I note that in respect of Shri Parag Jhaveri and Shri Tushar Shah, documents towards proof of identity and proof of address have been submitted in the form of copies of Permanent Account Number Card and driving license respectively. No such document appears to have been submitted in respect of the other joint account holders. Instead, Shri Parag Jhaveri had requested Vijaya Bank to indicate his address as correspondence address for the joint account holders. An extract of one such letter signed by Shri Parag Jhaveri is reproduced below.
To, The Manager Vijaya Bank Ambavadi Branch, Ahmedabad 380 015 Dear Sir, This it to inform you that Mr. PRITAM SHRIDHAR S/o SHRIDHAR is friend/relative/employee. My address is kept as their correspondence address for administrative purpose. Kindly acknowledge the same.
Thanking you.
Yours faithfully Parag P Jhaveri 4.12 Thus it may be seen that there were 10 current accounts (Account numbers CA-2051 to CA-2060) with Vijaya Bank Ambawadi, Ahmedabad branch wherein Shri Parag Jhaveri and Shri Tushar Shah were joint account holders. All these bank accounts have been introduced by Shri Kamal Jhaveri. In each of these accounts, 10 other account-holder names were added without any proof of address based on letters issued by Shri Parag Jhaveri and the address of the Jhaveri group were indicated as the address of the joint account holders in the bank accounts. From the documents submitted by Vijaya Bank, Ambawadi, Ahmedabad branch, it is seen that Jhaveri group had adopted the same modus operandi of including additional account holder names in respect of the following bank accounts maintained by them with Vijaya Bank, Ambawadi, Ahmedabad:
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Bank Name of account Address of account Name of Date of Names of joint Account holder holder introducer account holders Number opening included
----------------------------------------------------------------------------------------------------
CA-2026 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 02-Aug2004 1. Ashok Keyur Kamal P. Jhaveri Dr. V.S. Road, 2. Govind Manubhai Ahmedabad 380015 3. Jagdish Manubhai
4. Anant Shantilal
5. Mamta Shantilal
6. Ratan Shantilal
7. Murli Arunbhai
8. Mohan Manubhai
9. Prakash Manubhai
10. Dilip Mayurbhai
----------------------------------------------------------------------------------------------------
CA-2027 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 02-Aug2004 1. Mahesh Babubhai Kamal P. Jhaveri Dr. V.S. Road, 2. Pushpa Bhupendra Ahmedabad 380015 3. Rajesh Bhupendra
4. Sudama Ratilal
5. Dhumil Manubhai
6. Namdev Manubhai
7. Umesh Chandra kant
8. Ramila Chandrakant
9. Saroj Suryakant
10. Arun Ratilal
---------------------------------------------------------------------------------------------------- CA-2028 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 02-Aug2004 1. Vivek Suryakant Kamal P. Jhaveri Dr. V.S. Road, 2. Sonal Mahendra Ahmedabad 380015 3. Jay Kantilal
4. Pritesh Dhiresh
5. Litesh Rajendra
6. Vijay Ashish
7. Sanjay Ajit
8. Sandip Ilesh
9. Anita Ajit
10. Palak Ajit
---------------------------------------------------------------------------------------------------- CA-2029 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 02-Aug2004 1. Bakul Babubhai Kamal P. Jhaveri Dr. V.S. Road, 2. Sejal Tusharra Ahmedabad 380015 3. Deven Hasmukhlal
4. Akhilesh Narharibhai
5. Gunvant Mahendrabhai
6. Viresh Arunbhai
7. Nidhi Mahendrabhai
8. Jigar Jitendra
9. Subodh Tushar
10. Kusum Hasmukhlal
---------------------------------------------------------------------------------------------------- CA-2030 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 02-Aug2004 1. Neha Madhusudan Kamal P. Jhaveri Dr. V.S. Road, 2. Nilesh Madhusudan Ahmedabad 380015 3. Manoj Madhusudan
4. Shreyas Madhusudan
5. Vyomesh Devendra
6. Mukesh Hariprasad
7. Nalin Devendra
8. Rita Mahendra
9. Nitin Devendra
10. Pankaj Arunbhai
---------------------------------------------------------------------------------------------------- CA-2031 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 02-Aug2004 1. Saunak Suresh Kamal P. Jhaveri Dr. V.S. Road, 2. Hetal Mahendra Ahmedabad 380015 3. Jigen Hasmukhlaln
4. Yogini Mithalal
5. Chirag Bharat
6. Vimala Anubhai
7. Shila Anubhai
8. Dushyant Anubhai
9. Rohit Anubhai
10. Ranjan Rashmi
---------------------------------------------------------------------------------------------------- CA-2032 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 02-Aug2004 1. Mayank Manubhai Kamal P. Jhaveri Dr. V.S. Road, 2. Alpa Ratilal Ahmedabad 380015 3. Sujal Sureshlaln
4. Kaushik Shantilal
5. Tarun Jayntilal
6. Tina Bhupendra
7. Jailesh Babubhai
8. Pallavi Bhadresh
9. Vimal Shantilal
10. Vikram Rupal
---------------------------------------------------------------------------------------------------- CA-2033 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 02-Aug2004 1. Yogesh Babubhai Kamal P. Jhaveri Dr. V.S. Road, 2. Nipa Ajay Ahmedabad 380015 3. Sweta Hasmukhlal
4. Dinesh Mahendra
5. Hasit Kantilal
6. Nirav Jayesh
7. Hemaxi Suryakant
8. Pavan Ajit
9. Pranav Anubhai
10. Ankit Suresh
---------------------------------------------------------------------------------------------------- CA-2034 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 02-Aug2004 1. Sharad Jayesh Kamal P. Jhaveri Dr. V.S. Road, 2. Rahul Manubhai Ahmedabad 380015 3. Ragini Kalyanbhai
4. Vikas Kalyanbhai
5. Bhavin Babubhai
6. Nitin Madhusudan
7. Vipul Paresh
8. Darshan Bharatbhai
9. Nutan Anubhai
10. Nrupesh Ajaybhai
---------------------------------------------------------------------------------------------------- CA-2035 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 02-Aug2004 1. Jatin Suresh Kamal P. Jhaveri Dr. V.S. Road, 2. Hemendra Subhash Ahmedabad 380015 3. Manish Amit
4. Mahipat Surendra
5. Mona Sanjay
6. Kapil Surendra
7. Milind Madhusudan
8. Janak Madhusudan
9. Malti Rameshbhai
10. Arvind Pravinbhai
---------------------------------------------------------------------------------------------------- CA-2037 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 03-Aug2004 1. Sumit Keyur Kamal P. Jhaveri Dr. V.S. Road, 2. Dhiren Manubhai Ahmedabad 380015 3. Manish Manubhai
4. Girish Shantilal
5. Vipul Shantilal
6. Sarang Shantilal
7. Hiren Arunbhai
8. Sunder Manubhai
9. Narendra Manubhai
10. Alpesh Mayurbhai
---------------------------------------------------------------------------------------------------- CA-2038 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 03-Aug2004 1. Alkesh Babubhai Kamal P. Jhaveri Dr. V.S. Road, 2. Milesh Bhupendra Ahmedabad 380015 3. Jayant Bhupendra
4. Prashant Ratilal
5. Jignesh Manubhai
6. Raju Manubhai
7. Rajeev Chandrakant
8. Bhavna Chandrakant
9. Monika Suryakant
10. Mita Ratilal
---------------------------------------------------------------------------------------------------- CA-2039 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 03-Aug2004 1. Shilpa Suryakant Kamal P. Jhaveri Dr. V.S. Road, 2. Harish Mahendra Ahmedabad 380015 3. Bhupesh Kantilal
4. Rajan Dhiresh
5. Kanti Rajendra
6. Shanti Ashish
7. Mahendra Ajit
8. Jasuben Nilesh
9. Jitendra Ajit
10. Devendra Ajit
---------------------------------------------------------------------------------------------------- CA-2040 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 03-Aug2004 1. Aneri Babubhai Kamal P. Jhaveri Dr. V.S. Road, 2. Deepali Tushar Ahmedabad 380015 3. Shrujal Hasmukhlal
4. Deval Narharibhai
5. Ravindra Mahendrabhai
6. Ritesh Arunbhai
7. MauleshMahendrabhai
8. Darpit Jitendra
9. Harmesh Tushar
10. Sanjeev Hasmukhlal
---------------------------------------------------------------------------------------------------- CA-2042 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 03-Aug2004 1. Jigish Suresh Kamal P. Jhaveri Dr. V.S. Road, 2. Jigar Mahendra Ahmedabad 380015 3. Jitu Hasmukhlal
4. Nina Mithalal
5. Bhanu Bharat
6. Rakesh Anubhai
7. Roshan Anubhai
8. Aman Anubhai
9. Kusum Anubhai
10. Jyoti Rashmi
---------------------------------------------------------------------------------------------------- CA-2043 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 03-Aug2004 1. Seema Manubhai Kamal P. Jhaveri Dr. V.S. Road, 2. Javed Ratilal Ahmedabad 380015 3. Aditya Suresh
4. Anokhi Shantilal
5. Shyam Jayantilal
6. Rushit Bhupendra
7. Haren Babubhai
8. Indira Bhadresh
9. Saurabh Shantilal
10. Sauren Rupal
---------------------------------------------------------------------------------------------------- CA-2044 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 03-Aug2004 1. Rajesh Babubhai Kamal P. Jhaveri Dr. V.S. Road, 2. Rupesh Ajay Ahmedabad 380015 3. Sapan Hasmukhlal
4. Shaila Mahendra
5. Amola Kantilal
6. Ekta Jayesh
7. Gaman Suryakant
8. Jhanvi Ajit
9. Kush Anubhai
10. Alay Suresh
---------------------------------------------------------------------------------------------------- CA-2045 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 03-Aug2004 1. Alok Jayesh Kamal P. Jhaveri Dr. V.S. Road, 2. Avinash Manubhai Ahmedabad 380015 3. Kaushal Kalyanbhai
4. Akruti Kalyanbhai
5. Ahuj Babubhai
6. Arihant Madhusudan
7. Riya Paresh
8. Lilavati Bharatbhai
9. Shivam Manubhai
10. Uttam Ajaybhai
---------------------------------------------------------------------------------------------------- CA-2046 Parag P. Jhaveri & A/3 Embassy Apts Tushar Shah 03-Aug2004 1. Radhika Suresh Kamal P. Jhaveri Dr. V.S. Road, 2. Montu Subhash Ahmedabad 380015 3. Dipu Amit
4. Maunank Surendra
5. Kanji Sanjay
6. Pratima Surendra
7. Nirali Madhusudan
8. Jaimin Madhusudan
9. Pravina Rameshbhai
10. Ashok Pravinbhai
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4.13 From the above table, it can be seen that Shri Parag Jhaveri and Shri. Kamal Jhaveri were joint holders in the above 19 current accounts held with Vijaya Bank. In each of these accounts, 10 account-holder names were added with a view to facilitate the opening of individual dematerialized accounts in the names of each of the joint holders and make IPO applications in the individual names. The signatures of the joint account holders as indicated in the specimen signature cards prima facie appear to have been made with the same writing instrument and all the joint account holders have apparently written their first name as their signatures. The act of opening accounts on the same day in succession with successive account numbers and introduction of additional 10 names in those accounts systematically form a pattern and such a design with whatever happened subsequently through such accounts in ornering IPO shares appear to have created a make-believe of existence of several account holders.
4.14 I note that a similar modus operandi was adopted while opening the demat accounts. It appears that names of joint account holders were added to each of the bank account to facilitate the opening of demat accounts in the names of these account holders. These demat accounts were opened with Karvy Stockbroking Ltd.(Karvt DP) and were used for applying in various IPOs. For instance, 250 demat accounts were opened with Karvy DP on October 18 - 19, 2004 indicating the Vijaya bank account No. as 2026/1, 2026/2 and so on going upto 2026/250. Thus 250 demat accounts were opened with each of the following bank accounts maintained by the Jhaveri group making use of sub-numbers of 250 under each account. The details are as below:
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Sr. Bank Bank & branch Name Name of No. of Remarks
No. Account the DP Demat
Number Accounts
------------------------------------------------------------------------------------
1. 2026 Vijaya Bank, Ambawadi, Karvy DP 250 All demat account holders Ahmedabad branch share the same address of Jhaveri group i.e. C/0 SEIPL804 ABHIJEET-1 MITHAKHALI CIRCLE ELLISBRIDGE AHMEDABAD 380006
2. 2027 Same as above Karvy DP 250 Same as above
3. 2028 Same as above Karvy DP 250 Same as above
4. 2029 Same as above Karvy DP 250 Same as above
5. 2030 Same as above Karvy DP 250 Same as above
6. 2031 Same as above Karvy DP 250 Same as above
7. 2032 Same as above Karvy DP 250 Same as above
8. 2033 Same as above Karvy DP 250 Same as above
9. 2034 Same as above Karvy DP 250 Same as above
10. 2035 Same as above Karvy DP 250 Same as above
11. 2037 Same as above Karvy DP 250 Same as above
12. 2038 Same as above Karvy DP 250 Same as above
13. 2039 Same as above Karvy DP 250 Same as above
14. 2040 Same as above Karvy DP 250 Same as above
15. 2041 Same as above Karvy DP 250 Same as above
16. 2042 Same as above Karvy DP 250 Same as above
17. 2043 Same as above Karvy DP 250 Same as above
18. 2044 Same as above Karvy DP 250 Same as above
19. 2045 Same as above Karvy DP 250 Same as above
20. 2046 Same as above Karvy DP 250 Same as above
21. 2051 Same as above Karvy DP 250 Same as above
22. 2052 Same as above Karvy DP 250 Same as above
23. 2053 Same as above Karvy DP 250 Same as above
24. 2054 Same as above Karvy DP 250 Same as above
25. 2055 Same as above Karvy DP 250 Same as above
26. 2056 Same as above Karvy DP 250 Same as above
27. 2057 Same as above Karvy DP 250 Same as above
28. 2058 Same as above Karvy DP 250 Same as above
29. 2059 Same as above Karvy DP 250 Same as above
30. 2060 Same as above Karvy DP 250 Same as above
31. 2062 Same as above Karvy DP 250 Same as above
32. 2063 Same as above Karvy DP 250 Same as above
33. 2064 Same as above Karvy DP 250 Same as above
34. 2071 Same as above Karvy DP 250 Same as above
35. 2072 Same as above Karvy DP 250 Same as above
36. 2073 Same as above Karvy DP 250 Same as above
37. 2074 Same as above Karvy DP 250 Same as above
38. 2075 Same as above Karvy DP 250 Same as above
39. 2076 Same as above Karvy DP 250 Same as above
40. 2077 Same as above Karvy DP 250 Same as above
41. 2078 Same as above Karvy DP 250 Same as above
42. 2079 Same as above Karvy DP 250 Same as above
43. 2080 Same as above Karvy DP 250 Same as above Total 10,750
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4.15 From the above table, it can be seen that the Jhaveri Group had opened 10,750 dematerialized accounts with Karvy DP using the 43 bank accounts held with Vijaya Bank, Ambawadi, Ahmedabad branch. For the purpose of opening 250 demat accounts against one bank account, the Jhaveri group has utilized the 10 names included as additional holders. The name of the each of the additional bank account holder has been used in different permutations and combinations by attaching various surnames for opening 25 demat accounts against each name. For instance, as noted earlier, in the bank account no.2059 held in the name of Shri. Parag Jhaveri and Page 21 of 50 Shri. Tushar Shah (introducer Shri Kamal Jhaveri), the name of Pritam Sridhar was added as joint holder at the request of Parag Jhaveri. The details of NSDL demat accounts opened with Karvy DP using the name of Pritam Sridhar in different permutations and combinations is given below:
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NAME OF THE CLIENT DP-ID DATE OF DATE OF NAME OF THE DS BANK BANK BANK
DEMATERIALIZED ID OPENING CLOSURE BANK AS PER ADDRESS ADDRESS ACCOUNT
ACCOUNT HOLDER OF DEMAT OF DEMAT DP RECORD NUMBER
ERIALIZED ERIALIZED
ACCOUNT ACCOUNT
---------------------------------------------------------------------------------------------------------------- PRITAM SHRIDHAR 14542909 IN300394 10/18/2004 12/29/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 21 PRITAM S SHAH 14540900 IN300394 10/18/2004 12/28/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 1 SHAH PRITAM S 14541907 IN300394 10/18/2004 12/29/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 11 PRITAM S RAVAL 14551909 IN300394 10/19/2004 12/29/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 111 RAVAL PRITAM S 14552902 IN300394 10/18/2004 12/27/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 121 PRITAM S SUTARIA 14553905 IN300394 10/18/2004 12/27/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 131 SUTARIA PRITAM S 14554908 IN300394 10/18/2004 12/27/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 141 PRITAM S DARJI 14555904 IN300394 10/18/2004 12/29/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 151 DARJI PRITAM S 14556903 IN300394 10/18/2004 12/28/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 161 PRITAM S LODHA 14557906 IN300394 10/18/2004 12/27/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 171 LODHA PRITAM S 14558909 IN300394 10/18/2004 12/29/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 181 PRITAM S MUNIM 14559900 IN300394 10/18/2004 12/29/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 191 MUNIM PRITAM S 14560902 IN300394 10/18/2004 12/27/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 201 PRITAM S MEHTA 14561905 IN300394 10/19/2004 12/27/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 211 MEHTA PRITAM S 14562908 IN300394 10/18/2004 12/28/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 221 PRITAM S DALAL 14563904 IN300394 10/18/2004 12/30/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 231 DALAL PRITAM S 14564903 IN300394 10/18/2004 12/28/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 241 PRITAM S SHETH 14543902 IN300394 10/18/2004 12/29/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 31 SHETH PRITAM S 14544905 IN300394 10/18/2004 12/28/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 41 PRITAM S DESAI 14545908 IN300394 10/18/2004 12/28/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 51 DESAI PRITAM S 14546904 IN300394 10/19/2004 12/29/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 61 PRITAM S JOSHI 14547903 IN300394 10/18/2004 12/29/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 71 JOSHI PRITAM S 14548906 IN300394 10/18/2004 12/29/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 81 PRITAM S BHAVSAR 14549909 IN300394 10/18/2004 12/28/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 91 BHAVSAR PRITAM S 14550907 IN300394 10/18/2004 12/28/2005 VIJAYA BANK AMBAWADI BRANCH AHMEDABAD 2059 101
-----------------------------------------------------------------------------------------------------------------
4.16 The address of account holders in respect of all the above demat accounts is indicated as "C O SEIPL 804 ABHIJEET MITHAKHALI CIRCLE ELLISBRIDGE AHMEDABAD 380009".
4.17 Another such instance of opening of 25 demat accounts against one name which had been added as an additional holder is narrated below. This relates to the Vijaya Bank account no.2046 held in the joint names of Shri. Parag Jhaveri and Shri. Kamal Jhaveri. In the said bank account, the name of 'Radhika Suresh' had been added as an additional account holder. It is seen that using the name of 'Radhika Suresh' in various permutations and combinations by means of attaching various surnames to the name of 'Radhika' 25 demat accounts had been opened with Karvy DP as detailed below:
--------------------------------------------------------------------------------------------------------
NAME OF THE CLIENT DP-ID DATE OF DATE OF NAME OF THE DS BANK BANK BANK
DEMATERIALIZED ID OPENING CLOSURE BANK AS PER ADDRESS ADDRESS ACCOUNT
ACCOUNT HOLDER OF DEMAT OF DEMAT DP RECORD NUMBER
ERIALIZED ERIALIZED
ACCOUNT ACCOUNT
--------------------------------------------------------------------------------------------------------
RADHIKA SURESH 14326498 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/11 RADHIKA S TRIVEDI 14336499 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/111 RADHIKA S KANSARA 14338490 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/131 RADHIKA S GAJJAR 14340495 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/151 RADHIKA S CHOPRA 14344499 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/191 RADHIKA S DAVE 14334494 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/91 RADHIKA S BHUTA 14624727 IN300394 10/16/2004 12/28/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/231 RADHIKA S BAVISI 14622723 IN300394 10/15/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/211 RADHIKA S PARIKH 14330493 IN300394 8/18/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/51 RADHIKA S PATEL 14325495 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/1 RADHIKA S KOTHARI 14342494 IN300394 8/16/2004 12/30/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/171 RADHIKA S DOSHI 14328497 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/31 RADHIKA S MODY 14332495 IN300394 8/18/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/71 TRIVEDI RADHIKA S 14337499 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/121 KANSARA RADHIKA S 14339492 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/141 GAJJAR RADHIKA S 14341498 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/161 CHOPRA RADHIKA S 14345499 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/201 DAVE RADHIKA S 14335497 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/101 BHUTA RADHIKA S 14625720 IN300394 10/16/2004 12/29/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/241 BAVISI RADHIKA S 14623726 IN300394 10/15/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/221 PARIKH RADHIKA S 14331496 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/61 PATEL RADHIKA S 14327494 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/21 KOTHARI RADHIKA S 14343497 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/181 DOSHI RADHIKA S 14329499 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/41 MODY RADHIKA S 14333498 IN300394 8/16/2004 12/27/2005 VIJAYA BANK AMBAWADI AHMEDABAD 2046/81
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4.18 The address of account holders in respect of all the above demat accounts is indicated as "C O SEIPL 804 ABHIJEET MITHAKHALI CIRCLE ELLISBRIDGE AHMEDABAD 380009".
4.19 The number game was vastly facilitated through the ploy of sub-numbers for each account and playing on names in a free wheeling and dealing exercise. Thus the Jhaveri group entities used 43 bank accounts held with Vijaya Bank, Ambawadi, Ahmedabad branch to open 10,750 demat accounts with Karvy DP. The stratagem employed by Jhaveri group can be reduced to a mathematical equation as under: 43 (bank accounts) X 10 (joint holders per bank account) X 25 (demat accounts per joint holder through derivatives on underlying names) = 10,750 demat accounts 4.20 The above mentioned 10,750 dematerialized accounts were used for making applications in various IPOs. This clearly demonstrates how the whole scheme was cleverly and systematically designed and operationalised with mathematical precision.
4.21 I note that SEIPL had received IPO shares through off-market transfers prior to listing from the various demat accounts which had been opened using the above gameplan. In this context, the profile of SEIPL based on information obtained from Registrar of Companies, Gujarat is given below:
4.22 SEIPL has mentioned following details in the Annual Return dated September 30, 2005 filed with ROC:
Registered office: 1st Floor, Urja House, Swastik Char Rasta, Navrangpura, Ahmedabad 380009. Total issued number of shares: 10000 of Rs. 10/ each.
-------------------------------------------------------------------------------
Name Address No of shares held
-------------------------------------------------------------------------------
Directors Jhaveri A/3 Embassy Apartment, Dr. V S Road, 5
Parag Priyakant Ambawadi, Ahmedabad-15
Rajhans Mukund M D 53 Premdan, Hudco, Ahmednagar,414003 -
Jadhav Jayant E 63/3, Tambatkar Mala, opp. -
Mamta Gas, Gulmohar Road,
Ahmednagar, 414003
Solanki Hitesh M B-9, Shubh Appartment, Nr. Avishkar
Road House, Bopal, Ahemedabad, 380015 -
Shah Tushar H 8, Nalkunj Society, Camp Road,
Shahibaug, Ahmedabad, 380004 -
Shareholders Karia B/3 Embassy Apartment, Dr. V S Road, 5
Ramniklal Suresh Ambawadi, Ahmedabad-15
Iris Growell Bhavnav Apartment 1&2, Dr. 2500
Pvt. Ltd. Shirgaorkar Road, Panjim, Goa
Greenwood Agrofarm Bhavnav Apartment 1&2, Dr. 2500
Pvt. Ltd. Shirgaorkar Road, Panjim, Goa
Greensward 1st floor, Urja House, Navrangpura, 2490
Agrofarm Pvt. Ltd. Ahmedabad, 380009
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4.23 From the above, it may be seen that Shri Parag Jhaveri and Shri Tushar Shah are amongst the directors of SEIPL. It may be recalled that they were the joint holders in various bank accounts held with Vijaya Bank and in each of these bank accounts, names of 10 joint holders were added which were used to open numerous demat accounts for cornering of IPO shares. It may also be mentioned that the address of SEIPL was mentioned as correspondence address for the afferent demat account- holders, while the IPO shares cornered using such demat accounts found their way to the demat account of the key operator SEIPL in a predictable sequential order. Further SEIPL also has used certain common afferent accounts alongwith Shri Parag Jhaveri and Shri Kamal Jhaveri for receiving and transferring shares in IPOs.
4.24 Based on records, it is seen that Jhaveri group had utilized the bank accounts and demat accounts opened, through dubious means, with Vijaya Bank and Karvy DP respectively, for making applications and receiving allotment & refunds in various IPOs. The details of applications made and allotments received by SEIPL in certain IPOs are narrated below:
a) Tata Consultancy Services Ltd. IPO (Issue Period : July 29, 2004 - August 5, 2004) SEIPL made 4000 applications in TCS IPO with each application for value of Rs. 44,100-. Thus the value of shares applied for by SEIPL in TCS IPO works out to Rs. 17.64 crores (Rs.44100 * 4000 applns). Based on the examination of dematerialized account transactions featuring off-market transfers from afferent accounts to the Key Operators SEIPL, Parag Jhaveri and Kamal Jhaveri, as obtained from NSDL, it is seen that 3999 afferent accounts had made off- market transfers of 17 shares each aggregating to 67,983 shares to the dematerialized account of SEIPL (BO ID: 14405199) held with Karvy DP. Reckoning the allotment price of Rs. 850/-per share, the value of shares cornered through the afferent accounts works out to Rs. 5,77,85,550/-. 214 afferent accounts had made off-market transfers of 17 shares each aggregating to 3689 shares to the dematerialized account of Kamal Jhaveri (BO ID: 10004626) held with Karvy DP. 224 afferent accounts had made off-market transfers of 17 shares each aggregating to 3808 shares to the dematerialized account of Parag Jhaveri (BO ID: 10004600) held with Karvy DP.
b) National Thermal Power Corporation Ltd. IPO (Issue Period: October 7, 2004 - October 14, 2004) Upon perusal of the Vijaya Bank account No. CA-2036 of SEIPL, it is seen that SEIPL had made 3700 applications in NTPC IPO with each application being for Rs. 49,600/-so as to qualify for allotment in the retail category. Based on the examination of dematerialized account transactions in which the afferent accounts had made off-market transfers to the Key Operators SEIPL, Parag Jhaveri and Kamal Jhaveri as obtained from NSDL, it is seen that 3697 afferent accounts had made off-market transfers of 214 shares each aggregating to 7,91,158 shares to the dematerialized account of SEIPL (BO ID: 14405199) held with Karvy DP. Reckoning the issue price of Rs.62 per share, the value of shares received through off-market transfers from the afferent accounts works out to Rs. 4,90,51,796/-. 281 afferent accounts had made off-market transfers of 214 shares each to the dematerialized account of Kamal Jhaveri (BO ID: 10004626) held with Karvy DP. 289 afferent accounts had made off-market transfers of 214 shares each to the dematerialized account of Parag Jhaveri (BO ID: 10004600) held with Karvy DP.
c) Yes Bank Ltd. IPO (Issue Period June 16, 2005 - June 21, 2005) The Vijaya Bank account (no. 730200300002036) statement of SEIPL shows that SEIPL had made 1900 applications of Rs.47,250/- each in the Yes Bank IPO. Reckoning the issue price of Rs. 45/- per share, it follows that each application was for 1050 shares. The value of application money works out to Rs. 897.75 lakhs (Rs.47,250*1900nos.). Based on the examination of dematerialized account transactions in which the afferent accounts had made off-market transfers to the Key Operators SEIPL, Parag Jhaveri and Kamal Jhaveri as obtained from NSDL, it is seen that 1317 afferent accounts had made off-market transfers of 150 shares each aggregating to 1,97,550 shares to the dematerialized account of SEIPL (BO ID: 14405199) held with Karvy DP. Reckoning the issue price of Rs.45/- per share, the value of shares received by SEIPL through off-market transfer works out to Rs. 88,89,750/-. 99 afferent accounts had made off-market transfers of 150 shares each aggregating to 14,850 shares to the dematerialized account of Kamal Jhaveri (BO ID: 10004626) held with Karvy DP. 111 afferent accounts had made off-market transfers of 150 shares each aggregating to 16,650 shares to the dematerialized account of Parag Jhaveri (BO ID: 10004600) held with Karvy DP.
d) IL& FS Investsmart Ltd. IPO (Issue Period: July 4, 2005 - July 8, 2005) Upon perusal of statement of Bank A/c No. 730200300002036 of SEIPL held with Vijaya Bank, Ambawadi, Ahmedabad branch, it is seen that on 13th July, 2005, there were 51 withdrawals in the bank account and the amount withdrawn in each case was Rs. 43,75,000/-. Based on the narration in the bank account statement, it is seen that these 51 withdrawals were for making 5100 applications in the IL& FS IPO. The value of each application was for Rs. 43,750/-. Based on the examination of dematerialized account transactions in which the afferent accounts had made off-market transfers to the Key Operators SEIPL, Parag Jhaveri and Kamal Jhaveri as obtained from NSDL, it is seen that 2135 afferent accounts had made off-market transfers of 50 shares each aggregating to 1,06,750 shares to the dematerialized account of SEIPL (BO ID: 14405199) held with Karvy DP. Reckoning the issue price of Rs.125 per share, the value of shares received by SEIPL through off-market transfers from afferent accounts works out to Rs. 1,33,43,750/-. 27 afferent accounts had made off-market transfers of 50 shares each aggregating to 1350 shares to the dematerialized account of Kamal Jhaveri (BO ID: 10004626) held with Karvy DP. 31 afferent accounts had made off-market transfers of 50 shares each aggregating to 1550 shares to the dematerialized account of Parag Jhaveri (BO ID: 10004600) held with Karvy DP.
e) Infrastructure Development Finance Company Ltd. IPO (Issue Period: July 15, 2005 - July 22, 2005) From the statement of Bank Account No. 730200300002036 of SEIPL held with Vijaya Bank, Ambawadi, Ahmedabad branch, it is seen that on July 27, 2005, payment of Rs. 38,56,07,600/-had been made for making 8101 applications in the IDFC IPO. The value of each application was Rs. 47,600. Reckoning the issue price of Rs. 34/-it follows that each application was made for 1400 shares. Though the payment for all the 8101 applications was made from the bank account of SEIPL, the IPO allotments were received in various afferent dematerialized accounts. Based on the off-market transfers made by the afferent accounts to the dematerialized accounts of SEIPL, Parag Jhaveri and Kamal Jhaveri as obtained from NSDL, it is seen that 10,203 afferent accounts had made off-market transfers of 266 shares each aggregating to 27,13,998 shares to the dematerialized account of SEIPL (BO ID: 14405199) held with Karvy DP. Reckoning the issue price of Rs. 34 per share, the value of shares received by SEIPL through off-market transfers from afferent accounts works out to Rs. 9,22,75,932/-. 883 afferent accounts had made off-market transfers of 266 shares each aggregating to 2,34,878 shares to the dematerialized account of Kamal Jhaveri (BO ID: 10004626) held with Karvy DP. 2089 afferent accounts had made off-market transfers of 266 shares each aggregating to 5,55,674 shares to the dematerialized account of Parag Jhaveri (BO ID: 10004600) held with Karvy DP.
f) FCS Software Solutions Ltd. IPO (Issue Period: August 22, 2005 - August 26, 2005) Upon perusal of statement of bank account No. 2036 of SEIPL held with Vijaya Bank, Ambawadi, Ahmedabad branch, on September 01, 2005 SEIPL had made payment for 11501 applications of Rs. 22500 each in the FCS IPO. The issue price was Rs. 50, therefore the number of shares applied per application works out to 450 shares. Based on the off-market transfers made by the afferent accounts to the dematerialized accounts of SEIPL, Parag Jhaveri and Kamal Jhaveri as obtained from NSDL, it is seen that 1350 afferent accounts had made off-market transfers of 100 shares each aggregating to 1,35,000 shares to the dematerialized account of SEIPL (BO ID: 14405199) held with Karvy DP. Reckoning the issue price of Rs. 50 per share, the value of shares received by SEIPL through off-market transfers works out to Rs. 67,50,000. 27 afferent accounts had made off-market transfers of 100 shares each aggregating to 2700 shares to the dematerialized account of Kamal Jhaveri (BO ID: 10004626) held with Karvy DP. 21 afferent accounts had made off-market transfers of 100 shares each aggregating to 2100 shares to the dematerialized account of Parag Jhaveri (BO ID: 10004600) held with Karvy DP.
g) Sasken Communication Technologies Ltd. IPO (Issue Period: August 11, 2005 - August 17, 2005) Upon perusal of statement of bank account No. 2036 of SEIPL held with Vijaya Bank, Ambawadi, Ahmedabad branch, on August 22, 2005 and August 23, 2005 SEIPL had made payment for 5000 applications of Rs. 45,500 each in the FCS IPO. The issue price was Rs. 260, therefore the number of shares applied per application works out to 175 shares. Based on the off-market transfers made by the afferent accounts to the dematerialized accounts of SEIPL, Parag Jhaveri and Kamal Jhaveri as obtained from NSDL, it is seen that 830 afferent accounts had made off-market transfers of 25 shares each aggregating to 20,750 shares to the dematerialized account of SEIPL (BO ID: 14405199) held with Karvy DP. 203 afferent accounts had made off-market transfers of 25 shares each aggregating to 5075 shares to the dematerialized account of Kamal Jhaveri (BO ID: 10004626) held with Karvy DP. 96 afferent accounts had made off-market transfers of 25 shares each aggregating to 2400 shares to the dematerialized account of Parag Jhaveri (BO ID: 10004600) held with Karvy DP.
4.25 I note that one of the submissions made by Kamal Jhaveri before me was that he was not involved in the IPO irregularities. I do not accept the submissions of Kamal Jhaveri in this regard for the following reasons:
4.26 Admittedly, his name, bank account and dematerialized account were used as conduits by others for cornering the IPO shares. I note that Shri Kamal P Jhaveri and Shri Parag P Jhaveri are brothers and share a common address i.e. A/3, Embassy Appt. Dr. V S Road, Ambavadi, Ahmedabad - 380015 which is also the address of SEIPL. In certain instances, the Vijaya Bank accounts in which fictitious names were added as joint holders were introduced by Shri Kamal P Jhaveri. Also, certain Vijaya Bank accounts in which fictitious names were added as joint holders were held jointly by Shri Parag Jhaveri and Shri Kamal Jhaveri. Further, it is also observed that Shri Kamal Jhaveri had signed the cheques of Vijaya Bank bearing Nos. 909822, 909823 and 909827 issued by SEIPL. Thus, it is seen that Shri Kamal P Jhaveri had operated the bank account of SEIPL. Further Shri Parag Jhaveri who is a brother of Shri Kamal P Jhaveri is a director of SEIPL. I note that Shri Parag Jhaveri is a Chartered Accountant with ICAI membership number 39190.
4.27 Further, one of the demat accounts (clinet ID:10004600) used for pooling the shares cornered through afferent accounts was held by Shri Kamal Jhaveri as joint Holder. In addition Shri Kamal P Jhaveri and Shri Parag P Jhaveri jointly hold the following demat accounts:
a. Bo Id 10427856 held jointly by Shri Kamal Jhaveri (first holder), Shri Parag Jhaveri (Second Holder) and Bela Jhaveri (Third Holder) b. BO Id: 11565112 held jointly by Shri Kamal Jhaveri (first holder), Shri Parag Jhaveri (Second Holder) 4.28 I further note that Shri Parag Jhaveri and Shri Kamal Jhaveri hold the following joint bank accounts with Vijaya Bank, Ambawadi, Ahmedabad branch):
a. 2051 b. 2052 c. 2053 d. 2054 e. 2055 f. 2056 g. 2057 h. 2058 i. 2059 j. 2060 4.29 It may be mentioned that 10 names were added as joint holders in each of the above bank accounts and using various derivatives of the names, 250 demat accounts were opened with Karvy DP. The shares cornered using the above demat accounts were transferred to the demat account (client ID: 14405199) of the key operator SEIPL. Similarly in respect of 10 bank accounts held jointly in the names of Shri Parag Jhaveri and Shri Tushar Shah (directors of SEIPL), Kamal Jhaveri had acted as an introducer. In each of these bank accounts, 10 names were added as joint holders. These bank accounts and the names of joint holders in various permutations were used to open 250 demat accounts and these 250 demat accounts served as conduits for the key operator SEIPL. 4.30 In view of the above, it is seen that the activities of Shri Kamal Jhaveri interlocked and interlaced with those of Shri Parag Jhaveri and SEIPL. Shri Kamal Jhaveri was also an essential part in the execution of the gameplan for opening of bank accounts, adding joint-holder names, opening of demat accounts using various derivatives of the joint names and cornering of IPO shares through these demat accounts. His protestations of innocence and claims of being made a scapegoat for actions of someone else are in stark contrast to his active role in the whole scheme as detailed above and do not stand scrutiny.
4.31 Further, I note that Shri Kamal Jhaveri, Shri Parag Jhaveri and SEIPL were using common afferent demat accounts for cornering IPO shares in various IPOs ( out of 21 examined) The details of the common demat accounts that served as conduits for these three key operators is listed below:
--------------------------------------------------------------------------------------- Sr. Common Afferent Common Afferent Common Afferent Common Afferent accounts used by accounts used by accounts used by accounts used by No. Parag & SEIPL Parag & Kamal Kamal & SEIPL Parag Kamal & SEIPL
----------------------------------------------------------------------------------------
1. 13950307 12982124 14300550 14300550
2. 13950330 12982132 14301370 14301370
3. 13950374 12982149 14301427 14301427
4. 13950509 12982157 14301469 14301469
5. 13950534 12982165 14301494 14301494
6. 13950639 12982173 14301559 14301559
7. 13950647 12982180 14301568 14301568
8. 13950769 12982199 14302472 14302472
9. 13950809 12982204 14636929
10. 13950825 12982212 14637220
11. 13950833 12982229 14637264
12. 13950840 12982237 14637289
13. 13950859 12982245 14637449
14. 13950884 12982253 14637465
15. 13950964 12982260 14637473
16. 13951037 12982279 14637480
17. 13951045 12982288 14637499
18. 13951107 12982296 14637623
19. 13951115 12982307 14637834
20. 13951123 12982315 14637955
21. 13951238 12982323 14637998
22. 13951254 12982330 14638013
23. 13951295 12982349 14638144
24. 13951318 12982358 14638265
25. 13951342 12982366 14638299
26. 13951390 12986300 14638304
27. 13951470 12986319 14638345
28. 13951569 12986328 14638595
29. 13951578 12986336 14638634
30. 13951586 12986344 14638690
31. 13951633 12986352 14638763
32. 13951668 12986369 14638770
33. 13951676 12986377 14638984
34. 13951684 12986385 14639049
35. 13951705 12986408 14639057
36. 13951756 12986615 14639065
37. 13951772 12986623 14639249
38. 13951800 12986630 14639274
39. 13951819 12986787 14639506
40. 13951885 12986795 14639539
41. 13951949 12986809 14639547
42. 13951957 12986818 14639555
43. 13951980 12986826 14639563
44. 13952007 12986834 14639570
45. 13952030 12986842 14639669
46. 13952049 12986859 14639768
47. 13952129 12986867 14639993
48. 13952226 12986875 14640059
49. 13952242 12986883 14640308
50. 13952259 12987216 14640365
51. 13952314 12987224 14640399
52. 13952355 12987232 14640412
53. 13952486 12987273 14640515
54. 13952620 12987280 14640822
55. 13952664 12987299 14640870
56. 13952700 12987304 14640950
57. 13952793 12987312 14640994
58. 13952808 12987329 14641044
59. 13952824 12987337 14641052
60. 13952849 12987345 14641149
61. 13952873 12987609 14641173
62. 13952880 12987618 14641253
63. 13952945 12987626 14641288
64. 13952988 12987763 14641429
65. 13953067 12987770 14641567
66. 13953090 12987789 14641614
67. 13953106 12987798 14641769
68. 13953114 12987802 14641833
69. 13953170 12987819 14641892
70. 13953250 12987827 14641905
71. 13953309 12987835 14641939
72. 13953325 12987843 14642107
73. 13953333 12987886 14642149
74. 13953376 12987894 14642174
75. 13953384 13118000 14642262
76. 13953405 13118019 14642295
77. 13953448 13118028 14642318
78. 13953472 13118036 14642375
79. 13953616 13118044 14642390
80. 13953632 13118052 14642447
81. 13953649 13118069 14642470
82. 13953712 13118077 14642489
83. 13953737 13118085 14642527
84. 13953760 13118093 14642569
85. 13953823 13118108 14642578
86. 13953938 13118116 14642617
87. 13954019 13118429 14642713
88. 13954043 13118438 14642720
89. 13954078 13118446 14642797
90. 13954117 13118454 14642980
91. 13954289 13118462 14643058
92. 13954300 13118479 14643179
93. 13954319 13118487 14643267
94. 13954352 13118495 14643339
95. 13954393 13118509 14643363
96. 13954449 13118518 14643509
97. 13954504 13118526 14643697
98. 13954537 13118534 14643929
99. 13954607 13118689 14643953
100. 13954630 13118698 14643996
101. 13954658 13118702 14644026
102. 13954666 13118743 14644042
103. 13954682 13118750 14644198
104. 13954842 13118769 14644202
105. 13954859 13118956 14644632
106. 13954875 13118964 14644657
107. 13955005 13118972 14644673
108. 13955039 13118989 14644712
109. 13955089 13118997 14644745
110. 13955097 13119004 14644753
111. 13955128 13119012 14644815
112. 13955177 13119029 14644830
113. 13955216 13119037 14644874
114. 13955224 13119045 14644954
115. 13955265 13119359 14645050
116. 13955299 13119367 14645117
117. 13955430 13119375 14645176
118. 13955499 13119383 14645213
119. 13955562 13119390 14645344
120. 13955587 13119406 14645649
121. 13955798 13119414
122. 13955869 13119422
123. 13955984 13119439
124. 13956065 13119447
125. 13956073 13120094
126. 13956104 13120109
127. 13956179 13120117
128. 13956207 13120125
129. 13956223 13120133
130. 13956266 13120140
131. 13956274 13120159
132. 13956299 13120168
133. 13956362 13120176
134. 13956475 13120184
135. 13956547 13120192
136. 13956602 13120205
137. 13956619 13120213
138. 13956643 13120220
139. 13956686 13120239
140. 13956717 13120248
141. 13956776 13120256
142. 13956848 13120264
143. 13956889 13120272
144. 13956897 13120289
145. 13956900 13120297
146. 13956936 13120300
147. 13956944 13120319
148. 13956985 13120328
149. 13956993 13120336
150. 13957054 13121097
151. 13957159 13121100
152. 13957206 13121119
153. 13957247 13121128
154. 13957350 13121136
155. 13957425 13121144
156. 13957459 13121152
157. 13957513 13121169
158. 13957556 13121177
159. 13957628 13121185
160. 13957716 13121193
161. 13957804 13121208
162. 13957837 13121216
163. 13957845 13121224
164. 13957853 13121232
165. 13957915 13121249
166. 13957930 13121257
167. 13958055 13121265
168. 13958135 13121273
169. 13958150 13121280
170. 13958217 13121299
171. 13958356 13121304
172. 13958364 13121312
173. 13958428 13121329
174. 13958452 13121337
175. 13958508 13159580
176. 13958532 13160004
177. 13958565 13160012
178. 13958599 13160029
179. 13958629 13160037
180. 13958653 13160045
181. 13958660 13160053
182. 13958715 13160060
183. 13958782 13160079
184. 13958879 13160088
185. 13958887 13160096
186. 13958909 13160107
187. 13958926 13160115
188. 13959017 13160123
189. 13959025 13160130
190. 13959040 13160149
191. 13959084 13160158
192. 13959148 13160166
193. 13959156 13160174
194. 13959189 13160182
195. 13959200 13160199
196. 13959244 13160203
197. 13959316 13160210
198. 13959349 13160229
199. 13959373 13160238
200. 13959412 13160246
201. 13959445 13160262
202. 13959610 13160463
203. 13959709 13160659
204. 13959726 13160705
205. 13959759 13160836
206. 13959863 13160844
207. 13959919 13160932
208. 13959927 13161007
209. 13959943 13161015
210. 13959986 13161023
211. 13960074 13161030
212. 13960082 13161049
213. 13960138 13161058
214. 13960146 13161066
215. 13960195 13161074
216. 13960218 13161082
217. 13960314 13161099
218. 13960339 13161103
219. 13960389 13161110
220. 13960398 13161129
221. 13960450 13161138
222. 13960494 13161146
223. 13960559 13161154
224. 13960568 13161162
225. 13960576 13161179
226. 13960613 13161187
227. 13960697 13161195
228. 13960728 13161209
229. 13960736 13161218
230. 13960744 13161226
231. 13960793 13161234
232. 13960808 13161242
233. 13960899 13161322
234. 13960937 14300359
235. 13960953 14300367
236. 13960979 14300375
237. 13961018 14300383
238. 13961034 14300390
239. 13961059 14300406
240. 13961083 14300414
241. 13961106 14300422
242. 13961114 14300439
243. 13961147 14300447
244. 13961155 14300455
245. 13961170 14300463
246. 13961202 14300470
247. 13961250 14300489
248. 13961269 14300498
249. 13961278 14300502
250. 14295359 14300519
251. 14295375 14300527
252. 14295383 14300535
253. 14295439 14300543
254. 14295447 14300550
255. 14295463 14300569
256. 14295578 14300578
257. 14295586 14300586
258. 14295617 14300594
259. 14295640 14301355
260. 14295772 14301363
261. 14295836 14301370
262. 14295957 14301389
263. 14295980 14301398
264. 14296066 14301402
265. 14296082 14301419
266. 14296154 14301427
267. 14296179 14301435
268. 14296187 14301443
269. 14296218 14301450
270. 14296306 14301469
271. 14296314 14301478
272. 14296355 14301486
273. 14296363 14301494
274. 14296389 14301509
275. 14296419 14301517
276. 14296486 14301525
277. 14296509 14301533
278. 14296559 14301540
279. 14296584 14301559
280. 14296648 14301568
281. 14296728 14301576
282. 14296769 14301584
283. 14296785 14301592
284. 14296793 14302359
285. 14296808 14302368
286. 14296937 14302376
287. 14296960 14302384
288. 14297067 14302392
289. 14297075 14302405
290. 14297083 14302413
291. 14297106 14302420
292. 14297189 14302439
293. 14297235 14302448
294. 14297269 14302456
295. 14297286 14302464
296. 14297376 14302472
297. 14297413 14302489
298. 14297420 14302497
299. 14297439 14302500
300. 14297456 14302519
301. 14297472 14302528
302. 14297519 14302536
303. 14297593 14302544
304. 14297649 14302552
305. 14297729 14302569
306. 14297737 14302577
307. 14297796 14302585
308. 14297815 14302593
309. 14297849
310. 14297866
311. 14297979
312. 14297987
313. 14298050
314. 14298069
315. 14298159
316. 14298289
317. 14298297
318. 14298385
319. 14298416
320. 14298465
321. 14298473
322. 14298553
323. 14298615
324. 14298658
325. 14298666
326. 14298787
327. 14298809
328. 14298914
329. 14298970
330. 14299048
331. 14299152
332. 14299177
333. 14299232
334. 14299312
335. 14299345
336. 14299482
337. 14299546
338. 14299634
339. 14299667
340. 14299675
341. 14299843
342. 14300229
343. 14300279
344. 14300550
345. 14300764
346. 14300877
347. 14301015
348. 14301030
349. 14301058
350. 14301074
351. 14301179
352. 14301283
353. 14301370
354. 14301427
355. 14301469
356. 14301494
357. 14301559
358. 14301568
359. 14302075
360. 14302269
361. 14302325
362. 14302333
363. 14302472
364. 14302632
365. 14302665
366. 14302729
367. 14302830
368. 14302849
369. 14302866
370. 14303205
371. 14303213
372. 14303424
373. 14303504
374. 14303529
375. 14303579
376. 14303607
377. 14303674
378. 14303682
379. 14303699
380. 14303710
381. 14303883
382. 14303906
383. 14303963
384. 14304119
385. 14304249
386. 14304299
387. 14304499
388. 14304609
389. 14305016
390. 14305073
391. 14305080
392. 14305104
393. 14305129
394. 14305153
395. 14305160
396. 14305274 4.32 From the above, it may be seen that 396 afferent accounts were used commonly by both Shri Parag Jhaveri & SEIPL, 308 afferent accounts were commonly used by Shri Parag Jhaveri & Shri Kamal Jhaveri and 120 afferent accounts were used commonly by Shri Kamal Jhaveri & SEIPL for cornering the shares of some of the IPOs out of 21 examined. Further, eight afferent accounts were commonly used by all the three key operators namely SEIPL, Shri Parag Jhaveri and Shri Kamal Jhaveri. The details of IPOs in which these eight afferent accounts were used is given below:
--------------------------------------------------------------------------------------------------------
Sr. Afferent demat Name of Demat IPOs in which IPOs in which IPOs in which
No. account client Holder used by SEIPL used by Parag used by Kamal
ID. Jhaveri Jhaveri
---------------------------------------------------------------------------------------------------------
1. 14300550 DARJI TARAK S FCS Software Infrastructue Development National Thermal Solutions Ltd. Finance Co. Ltd. Power Corporation Ltd.
2. 14301370 MAYA M LODHA FCS Software Infrastructue Development National Thermal Solutions Ltd. Finance Co. Ltd. Power Corporation Ltd.
3. 14301427 LALIT M LODHA FCS Software Infrastructue Development National Thermal Solutions Ltd. Finance Co. Ltd. Power Corporation Ltd.
4. 14301469 NAINI B MANIAR FCS Software Infrastructue Development National Thermal Solutions Ltd. Finance Co. Ltd. Power Corporation Ltd.
5. 14301494 KALA M LODHA FCS Software Infrastructue Development National Thermal Solutions Ltd. Finance Co. Ltd. Power Corporation Ltd.
6. 14301559 TARAK S LODHA FCS Software Infrastructue Development National Thermal Solutions Ltd. Finance Co. Ltd. Power Corporation Ltd.
7. 14301568 KALPESH M KOTHARI FCS Software Infrastructue Development National Thermal Solutions Ltd. Finance Co. Ltd. Power Corporation Ltd.
8. 14302472 MANIAR RASIK B FCS Software Infrastructue Development National Thermal Solutions Ltd. Finance Co. Ltd. Power Corporation Ltd.
-----------------------------------------------------------------------------------------------------------
4.33 I also note that the Jhaveri group has inter-linkages with the Panchal Group for the following reasons.
4.34 Dipakbhai Panchal and Bhargav Ranchodlal Panchal who belong to the Panchal group and Kamal Priyakant Jhaveri who belongs to the Jhaveri group are common directors in Arth Stock Broking P Ltd., a broker of Ahmedabad Stock Exchange. Also, Arth Realty P Ltd. (which has the same address as that of SEIPL) and Devangi Dipakbhai Panchal are the two largest shareholders in Arth Stockbroking P Ltd. Further Grace Consultancy C\O Dipak J Panchal, Arth Realty P Limited (which has the address same as SEIPL), Purshottam Budhwani and Manoj Seksaria are all sub-brokers of Karvy-DP and are amongst the top four sub-brokers in terms of number of applications for demat accounts procured for Karvy-DP.
4.35 As directed by me, SEBI obtained various documents relating to Arth Stock Broking Pvt Ltd (demat client account ID 10007166) from ASE Capital Markets Ltd. On the basis of documents provided by ASE Capital Markets Ltd., additional linkages between Jhaveri group and Panchal group, as narrated below, were noticed:
Shri Kamal P Jhaveri/Deepak Panchal have either singly or jointly signed all the documents as director(s) of Arth Stock Broking Pvt. Ltd.
Kamal P Jhaveri, Parag P Jhaveri, Dipak J Panchal and Bhargav R Panchal are the directors of the company.
Shri Kamal P Jhaveri is a director of Arth Stock Broking Pvt. Ltd. since January 10, 2000 as per the form 32 filed with ROC.
As per the latest Board Resolution dated June 1, 2005, Shri Kamal P Jhaveri was designated as Chairman/director of Arth Stock Broking Pvt. Ltd and had also signed as chairman of Arth Stock Broking Pvt. Ltd.
The address of Arth Stock Broking Pvt. Ltd is 804, Abhijeet Building, Mithakhali Six Road, Navrangpura, Ahmedabad. - 380009 which is the same as Sugandh Estates Pvt. Ltd.
4.36 Based on information obtained from Karvy DP and Vijaya Bank, Ambawadi, Ahmedabad branch, it is seen that Jhaveri group had made payments towards demat account charges for numerous afferent accounts as detailed below:
------------------------------------------------------------------------------------------------
Sr. Name of the Bank Account Cheque No. Date of Cheque Amount No. of demat
No. Account Holder No. Cheque (Rs.) accounts for which
charges paid
-------------------------------------------------------------------------------------------------
1. Kamal P Jhaveri OD-7008 500376 08.01.04 15000.00 150
2. Parag P Jhaveri OD-7006 604590 08.01.04 14900.00 149
3. SEIPL CA-2036 909880 11.08.04 250000.00 2500
4. SEIPL CA-2036 909888 18.11.04 80000.00 800
5. SEIPL CA-2036 891948 31.03.05 122322.00 4150
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4.37 From the above, it is seen that SEIPL, Parag Jhaveri and Kamal Jhaveri made bulk payments towards charges for maintaining numerous demat accounts. Thus, it appears that these demat account-holders were merely name-lenders for SEIPL, Shri Parag Jhaveri and Shri Kamal Jhaveri and the said three key operators had conceived and controlled these demat accounts which is further evidenced by the synchronized off-market transfers of IPO shares prior to listing from the afferent dematerialized accounts to the dematerialized accounts of the said three key operators. The application money for the IPOs had been paid from the bank accounts of SEIPL/Shri Parag Jhaveri/Shri Kamal Jhaveri on behalf of the afferent dematerialized account-holders/IPO applicants. Thus, it prima facie appears that SEIPL, Shri Parag Jhaveri and Shri Kamal Jhaveri had complete control over the bank accounts and dematerialized accounts held in the names of fictitious/benami entities and that such fictitious/benami entities were merely name-lenders.
4.38 The contention that the Jhaveri group was not involved in the manipulation will not hold good as the transactions were executed according to the plan evolved by the people (including those who were connected) with the help of certain other persons. Admittedly, the afferent accounts over which Jhaveri group had full control have been used for the share transactions for the purpose of cornering IPO shares. Proof of manipulation almost always depends on inferences drawn from a mass of factual details. Findings must be gathered from patterns of trading data and the nature of the transactions etc. Several circumstances of a determinative character coupled with the inference arising from the conduct of the parties in a major market manipulation could reasonably lead to conclusion that the Broker was responsible in the manipulation. The evidence, direct or circumstantial, should be sufficient to raise a presumption in its favour with regard to the existence of a fact sought to be proved. As pointed out by Best in "Law of Evidence", the presumption of innocence is no doubt presumptio juris; but everyday practice shows that it may be successfully encountered by the presumption of guilt arising from circumstances, though it may be a presumption of fact. Since it is exceedingly difficult to prove facts which are especially within the knowledge of parties concerned, the legal proof in such circumstances partakes the character of a prudent man's estimate as to the probabilities of the case. In this regard, the Hon'ble Securities Appellate Tribunal has observed in the matter of Ketan Parekh v. SEBI:
...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....
4.39 It is exceedingly difficult to prove facts which are especially within the knowledge of the parties proceeded against and in that view the findings would be inferential from the conduct of the parties. Presumption plays a critical role in coming to a finding as to the involvement or otherwise of a market participant in any manipulation. While appraising the conduct of Page 48 of 50 any market participant, the same has to be viewed in the overall context of the happenings in the market at the material point of time and can not be viewed in isolation. Also any suggestion attributing innocence to the parties involved in such transactions would give rise to an untenable situation where certain other third persons/entities (as contended by the Jhaveri group) alone would be responsible for the manipulation and none else. Admittedly, the afferent accounts over which Jhaveri group had full control have been used for the share transactions for the purpose of cornering IPO shares and the same prima facie establishes the role of the above key operators in cornering IPO shares to the detriment of lay investors in retail quota.
4.40 In view of the above conclusions with regard to the activities of the Jhaveri group, it is prima facie seen that they have played a major role in cornering the shares and inter alia thereby prima facie violated the provisions of FUTP Regulations and DIP Guidelines.
5.0 ORDER
5.1 Therefore, in exercise of the powers delegated to me in terms of Section 19 read with Sections 11, 11B and 11(4) of the Securities and Exchange Board of India Act, 1992, I hereby confirm the ad interim order dated April 27, 2006 against Shri Kamal P Jhaveri, Shri Parag P Jhaveri and Sugandh Estate and Investments Pvt. Ltd.
5.2 It is clarified that this order is passed for a limited purpose of confirming the ad interim ex-parte order dated April 27, 2006 against Shri Kamal P Jhaveri, Shri Parag P Jhaveri and Sugandh Estate and Investments Pvt. Ltd. and the same shall not in any way influence the proceedings pending before the Adjudicating Officer, SEBI against the aforesaid persons.
5.3 This order shall come into force with immediate effect.