SEBI Vs. JYOTI RESINS & ADHESIVES LTD
LAWS(SB)-2003-4-14
SECURITIES APPELLATE TRIBUNAL
Decided on April 10,2003

Appellant
VERSUS
Respondents

JUDGEMENT

G.N.Bajpai, - (1.) JYOTI Resins & Adhesives Ltd. (hereinafter referred to as JRAL) was incorporated as Public Limited Company on December 7, 1993. The Company is engaged in production of Resins and Adhesives. The company was promoted by Smt. JYOTIka Jagdish Patel, Shri Dinesh Nathalal Patel. Shri Harshad Govindbhai Patel and Shri Chandulal C. Patel. The company came out with a public issue of 29.8 lac equity shares of Rs. 10/- each for cash at par aggregating to Rs. 29.8 lacs. The public issue came in the month of Sept. 94 and was over-subscribed by 1.53 times. The shares got listed at Vadodara (Regional), Ahmedabad, Cochin and Bombay Stock Exchanges.
(2.) In the preliminary investigations conducted by SEBI, it was observed that there was abnormal and steep rise in price volume movements in the scrip of JRAL, especially during August 22, 1995 to October 6, 1995, when the price rose from Rs.15/- to Rs.181/-. This abnormal price was accompanied with large volumes, which touched a figure of around 5 lakh shares a day. The unusual jump in prices was noticed during September 18 to October 6, during which the price moved from Rs.50/- to Rs.181/- per share. Similar trend in price-volume was observed at VSE & ASE. It was revealed that majority of brokers dealt on behalf of one client called Uditta Inverted Pvt. Ltd. (hereinafter referred to as "UIPL") which on preliminary investigations revealed that was connected with the promoter/management of JRAL. Investigations by SEBI prima facie revealed that Shri Devendra Kantilal Dalal in connivance with the promoters of JRAL heavily dealt in the scrip to manipulate the price of the scrip. It was also noticed that funds of JRAL and Jyoti Cosmetics Ltd. (hereinafter referred to as "JCL", a group company of JRAL) were also utilized for this purpose. Further, it was revealed that shares, during this period, were purchased in large volumes by UIPL (to an extent of 13,69,500 shares) through various brokers and sub brokers. It started buying shares from 14.8.95 when the price was Rs.10/- and continued to purchase shares when the price moved to Rs.181/-. Investigations against UIPL and its Director, Shri Sunil K. Patel brought out that orders for purchase of shares of JRAL were given by Shri Devendra Kantilal Dalal.
(3.) A show cause notice under Section 11 and 11B of SEBI Act, 1992 read with Regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 1995 dated 30.9.02 was issued to JRAL and its promoters viz. Jyotika Jagdish Patel, Shri Dinesh Nathalal Patel, Shri Harshad Govindbhai Patel and Shri Chandulal C. Patel, stating the findings of the investigation report, to show cause as to why suitable directions in the interest of investors and securities market should not be issued against them alleging interalia that 4.1 The promoters of the company convinced with Shri D.K. Dalal and manipulated the scrip. 4.2 The funds of JRAL and JCL were utilized for this ulterior purpose. 4.3 UIPL, whose promoters are some that of JRAL, purchased 13,69,500 shares during the relevant period, thereby by cornered the shares. 4.4 JRAL had given funds to UIPL for this purpose.;


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