SEBI Vs. VRUSHTI FINANCIAL SERVICES PVT LTD AND ITS DIRECTORS
LAWS(SB)-2003-7-15
SECURITIES APPELLATE TRIBUNAL
Decided on July 10,2003

Appellant
VERSUS
Respondents

JUDGEMENT

- (1.) JYOTI Resins & Adhesives Ltd. (hereinafter referred to as JRAL) was incorporated as Public Limited Company on December 7, 1993. 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 reportedly over-subscribed by 1.53 times. The shares got listed at Vadodara (Regional), Ahmedabad, Cochin and Bombay Stock Exchanges.
(2.) 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/- and 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 Invertrade Pvt. Ltd. (hereinafter referred to as "UIPL") which was prima-facie found to be connected with the promoter/management of JRAL. It is found that the promoters of the company connived with Shri Devendra Kantilal Dalal and manipulated the scrip of JRAL. Further, it is pertinent here to mention that Chairman, SEBI vide order dated 10.4.2003 directed JRAL and its promoters viz. Smt. Jyotika Jagdish Patel, Shri Dinesh Nathalal Patel, Shri Harshad Govindbhai Patel and Shri Chandulal C Patel to disassociate themselves in every respect from the capital market related activities and not to access the capital market for a period of one year. Investigations by SEBI prima facie revealed that one 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.) THE modus operandi as stated by Mr. Sunil Patel of UIPL was confirmed by investigations with Vrushti Financial Services Pvt. Ltd. (Shri Kayur Bakshi and Shailesh Thakkar). Investigations revealed that large funds for purchases of shares made by Shri D.K. Dalal, including shares of JRAL were coming from the account of Vrushti. Statements of Shri Kayur Bakshi and Shailesh Thakkar, the two directors of the company confirm the same.;


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