SEBI Vs. RAJ INVESTMENTS AND ITS PARTNERS
SECURITIES APPELLATE TRIBUNAL
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(1.) M/s Raj Investments is a partnership firm in investment business. Ms. Praveena C Shah, Ms. Sandhya S Shah, Ms. Suniti N Shah, Ms. Sheetal J Shah and Mr. Jignesh N Shah are partners of Raj Investments. SEBI conducted investigations against M/s Raj Investments in dealing with shares of M/s Jyothi Resins & Adhesives Ltd. (hereinafter referred to as JRAL). 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. Raj Investments was one of the entities through which Shri Dalal had dealt with shares of JRAL. The role of Raj Investments and the role of Shri Devendra Kanthilal Dalal in manipulating the price in the scrip of JRAL were also investigated into.
(2.) 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, in Sept. 94 and was over-subscribed by 1.53 times. The shares got listed at Vadodara (Regional), Ahmedabad, Cochin and Bombay Stock Exchanges.
Investigations 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. UIPL 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. Raj Investments was one of the entities through which the above trades took place.
(3.) A show cause notice, dated September 30, 2002, 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 Raj Investments and its partners alleging interalia that
4.1 DK Dalal manipulated the price in the scrip of JRAL in connivance with the promoters and directors of JRAL.
4.2 Huge quantity of shares of JRAL were purchased by DK Dalal through Raj Investments which is one of the entities through which DK Dalal purchased shares of JRAL, and therefore Raj Investments is involved in the manipulation.;
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