SEBI Vs. KAMAL OVERSEAS LTD
SECURITIES APPELLATE TRIBUNAL
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(1.) PURSUANT to the investigations conducted by Securities and Exchange Board of India (hereinafter referred to as "SEBI") into the affairs relating to the irregularities noticed in preferential allotment made by M/s Kamal Overseas Ltd. (hereinafter referred to as "KOL"), in October 1994, show cause notice dt. 31.08.02 was issued to Shri Himanshu Mehta, a local non-executive director of the company. In the said show cause notice, it was alleged inter-alia that collusive trades by way of circular trading done by the entities related to Shri Himanshu Mehta, gave a misleading appearance of trading in the securities and therefore, there was an attempt to manipulate the market. It was also alleged interalia that Shri Himanshu Mehta, a director of KOL, acted in concert with stock brokers i.e. M/s Anagram, Kinglet Finlease, Rahil Investments, Prompt Investments, Shri Kalpesh Chawla, Shri. Piyush Avlani, to manipulate the market. It was further alleged that there was no intention on the part of buyer i.e. M/s Kinglet Finlease & Securities Ltd to meet pay-in obligation. It was also alleged that as the trades routed through Exchange are guaranteed by the Clearing Corporation, the trades were routed through the exchange to ensure payment to seller brokers who were acting as front entities of KOL.
(2.) A personal hearing was given to Shri Himanshu Mehta before me on 05.03.03 which was attended by him along with Shri Jayant Thakker, CA. During the said personal hearing, Shri Himanshu Mehta while referring to his reply dt. 17.09.02 to the show cause notice dt. 31.08.02 submitted that he has already replied to the charges and he does not wish to add anything further.
I have perused the show cause notice, reply of Shri Himanshu Mehta, the statement of Shri Himanshu Mehta recorded during the investigation and the findings of the Investigations Report. I have also examined the evidence adduced in support of the charges levelled against Shri Himanshu Mehta in the show cause notice.
(3.) IN his statement recorded by SEBI and his reply to the show cause notice issued by SEBI Shri Himanshu Mehta interalia submitted that he was neither the buyer nor the seller of the shares of KOL. He is a trader in iron and steel business and was only a non-executive director of the company for a very limited purpose of looking after the Bombay operation of company. He has also stated that he had no stake whatsoever in the company and therefore had nothing to gain or lose in the whole affair. He further stated that he neither bought nor sold even a single share of the company and he was not having any concern or connection with any of the buyer or seller of shares of the company.;
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