Order in The Matter of Dealings in The Shares of Goldstone Technologies Limited

WTM/RKA/EFD-DRA-II/43/2015
BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER
Under Section 11B read with Section 11(4) of the Securities and Exchange Board of India
Act, 1992 in respect of:
Sl. No.
Name of the Noticees
PAN
1.
Mr. Bhavesh Pabari
AKGPP8679N
2.
Mr. Bipin Jayant Thaker
ABYPT4984H
3.
Mr. Kishore Chauhan
AFPPC9703G
4.
Mr. Prem Mohanlal Parikh
ALHPP3489N
5.
Mr. Hemant Madhusudan Seth
ANOPS8607E
6.
Ms. Mala Hemant Seth
AZXPS0694J
7.
Mr. Ankit Sanchaniya
BLNPS3316L
8.
Mr. Bhupesh Rathod
AACPR3785K
9.
Mr. Bipinkumar Gandhi
AJHPG6989J
10.
Mr. Bharat Shantilal Thakkar
AAZPT9542R
In the matter of dealings in the shares of Goldstone Technologies Limited

Appearances:
Mr. Bhavesh Pabari in Person.
1. Goldstone Technologies Limited (hereinafter referred to as GTL/company), is a

company listed at Bombay Stock Exchange Limited (BSE) and the National Stock
Exchange (NSE). Securities and Exchange Board of India (hereinafter referred to as
'SEBI') initiated investigation into the trading in certain scrips including GTL pursuant to
the detection of a huge rise in the traded volumes and/or price of the shares of these
companies during the years 2008, 2009 and 2010.
2. Upon analysis of the trading activity in the above scrips, it was prima facie observed that
certain entities had indulged in creating artificial volume by trading among themselves, in a
synchronized manner, carrying out off-market transfers among themselves for the purpose
of meeting settlement obligations of another and thus contributing to the price rise in
these scrips.
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Page 1 of 19
3. In view of the above, in order to protect the interests of investors and to preserve the
safety and integrity of the market, SEBI passed an interim order dated February 02, 2011
(interim order) restraining 39 persons/entities including Mr. Bhavesh Pabari, Mr. Bipin
Jayant Thaker, Mr. Kishore Chauhan, Mr. Prem Mohanlal Parikh, Mr. Hemant
Madhusudan Seth, Ms. Mala Hemant Seth, Mr. Ankit Sanchaniya, Mr. Bhupesh Rathod,
Mr. Bipinkumar Gandhi and Mr. Bharat Shantilal Thakkar from accessing the securities
market and further prohibited them from buying, selling or dealing in securities in any
manner whatsoever, till further directions. The said interim order later confirmed by SEBI
vide order dated July 08, 2011 (Confirmatory Order) but did not deal with the
abovementioned 10 entities.
4. SEBI initiated an investigation relating to buying, selling or dealing in the shares of the
scrip of GTL to inter alia ascertain the violation of the provisions of the Securities and
Exchange Board of India Act, 1992, Rules and Regulations. The period of investigation
was taken as January 21, 2009 to April 13, 2010 (hereinafter referred to as Investigation
Period'). The investigations, inter alia, revealed that:
(i)
Certain connected/related entities had traded significantly in the said scrips during
2008, 2009 and 2010. The relationship/connection between the entities were
determined based on at least one of the following parameters:
(a) Similarities in the particulars/details in the KYC documents such as common
telephone number, addresses, e-mail addresses, etc.;
(b) Trading activity in terms of buy/sell among the group and the frequency and
off-market transfers between them;
(c) Fund transfers between the members of the said group.
(ii)
On the basis of the said criteria, one group was identified as the 'Pabari-Parikh'
group (the PPG). The members of the group and the basis of
relationship/connection amongst them is as follows:
Sl.
No.
Client Name
1.
Bhupesh Rathod
2.
Ketan Babulal
Shah
3.
Bharat Shantilal
Thakkar
KYC Relation
Share movement
through off market
transaction
Introduced entities at sl. nos. With entity at
11, 10, 9, 7 for trading a/c sl. No. 16.
and knows sl. No. 14.
With entity at sl.
no.10.
Entity at sl. no. 9 is his With entities With entity at sl. no.
nephew.
at sl. nos. 9, 9.
Same address with sl. no.9.
10, 16.
Entity at sl. no. 9 is his
nominee.
Fund
Movement
Page 2 of 19
4.
Bipin Jayant
Thaker
5.
Bharat G Vaghela
6.
Chirag Rajnikant
Jariwala
7.
Kishore Chauhan
8.
Bipinkumar
Gandhi
9.
Bhavesh Pabari
10. Prem Mohanlal

Parikh
Joint a/c with entity at sl. no.

9.
Business
relations
with
entities at sl. nos. 4, 6, 7, 10,
11, 16, 17.
Same Tel. no. with entity at
sl. no. 9.
Business
relations
with
10, 11, 16, 17.
Same address & Tel. no. as
entity at sl. no. 8 who has
share movement with entity
at sl.no. 9.
Entity at sl. No. 6 is nephew
of entity at sl. no. 9 and
shares same Tel. no. with
entity at sl. no. 9.
sl.no.9.
Entity at sl. no. 9 is his uncle.
Business
relations
with
11, 16, 17.
Joint a/c with entity at sl. no.
9.
Entities at Sl. nos. 9 & 11 are
witness for demat a/c.
Business
relations
with
10, 11, 16.
-
With entity at
sl. no. 6.
With entities With entity at sl. no.

at sl. nos. 9, 4.
11, 5.
With entities With entities at sl.

at sl. nos. 9, nos. 9, 10, 11, 17.
10, 11.
Entity at sl. no. 3 is his uncle

& entity at sl. no. 17 is his
brother in law.
Entity at sl. no. 10 is cousin
of entity at sl. no. 9.
Entities at sl. nos. 9 & 11
both directors of Rajnandi
Yarns Pvt. Ltd.
Share common Tel. no. with
entities at sl. nos. 16, 17, 4.
Entity at sl. no. 1 introduced
him for trading a/c.
Business
relations
with
11, 14, 16.
Entity at sl. no. 10 is cousin With entities
of entity at sl. no.9.
at sl. nos. 9,
Common email with entities 11, 7.
at sl. 16, 10 & 17.
Entity at sl. no. 11 is nominee
of entity at sl. no.10.
Business
relations
with
entities at sl. nos. 3, 4, 6, 7, 9,
With entity at With entities at sl.

sl. no. 9.
nos. 12, 6, 9, 10, 11.
With entity at sl. no.

9.
With entities at sl.
nos. 10, 11, 3, 4, 16,
17, 8.

nos. 9, 11, 7, 3, 4,
12, 16, 17.
Page 3 of 19
11. Hemant
Madhusudan
Sheth
12. Jigar Praful

Ghoghari
13. Vipul Hiralal
Shah
14. Mala Hemant

Sheth
15. Gaurang Ajit Seth
16. Ankit Sanchaniya
17. Vivek Kishanpal

Samant
(iii)
11, 16, 17.

Entities at Sl. nos. 9 & 11 With entities
both directors of Rajnandi at sl. nos. 9,
Yarns Pvt. Ltd.
10, 7.
Same email with entity at sl.
no. 17.
Business
relations
with
entities at 1, 3, 10, 16, 17, 4,
6, 7 & sl. no. 14 is his wife &
sl. no. 15 is his nephew.
-
With Kaushik
Rajnikant
Mehta who
has
offmarket
transaction
with entity at
sl. No. 9.
Entity at sl. no. 14 is the wife With entities
of entity at sl. no. 11 and at sl. nos. 9,
entity at sl. no. 15 is the 10.
nephew.
Has common address & Tel.
no. with entity at sl. no. 11 &
entities at sl. no. 11 and 9
both directors of Rajnandi
Yarns Pvt. Ltd.
sl. no. 10 and also shares Tel.
no. with entity at sl. no. 9
who is the nominee for his
a/c.
Business
relations
with
entities at sl. nos.3, 4, 6, 7, 9,
10, 11, 17.
Entity at sl. no. 9 is the
brother in law & shares
common Tel. no. & entity at
sl.no. 9 is the nominee of sl.
no. 17 for trading a/c & bank
a/c.
Shares email with entity at sl.
no. 11.
Shares email with entity at sl.
no. 10.

nos. 9, 10, 7, 14, 16,
17, 12, 4.

nos. 4, 10, 11, 16.
With entity at sl.
no.9.
With entity at sl. no.

11,
With entities With entities at sl.

at sl. nos. 9, nos. 9, 10, 11, 6, 12,
10.
17.
With entity at With entities at sl.

sl. no. 11.
nos. 9, 11, 6, 7, 10,
16.
On BSE, 17 group entities including the above mentioned 10 entities, (PPG

entities) traded through 25 stock brokers, purchasing 1,30,91,871 shares accounting
for 40.57% of the total volume traded during the period under investigation and
sold 1,28,10,113 shares accounting for 39.70% of the total volume traded during the
period under investigation.
Page 4 of 19
(iv)
Several of the trades were synchronised amongst the PPG entities in the scrip of
GTL during the investigation period. Further, out of the total trading of 1,18,39,849
shares within the group entities, for 51,99,929 shares accounting for 16.11% of the
market volume the buy and sale orders were placed within one minute of each other
51,99,929 shares constituting 39.72% of the total buy of the PPG entities and
40.59% of the total sale of the PPG entities.
(v)
Out of these 51,99,929 shares, it was observed that with respect to 9,09,391 shares
accounting for 2.82% of the total market volume the buy and sale orders were
placed in such a manner that the time difference between the buy order and sale
order was within one minute with matching price and quantity. These 9,09,391
shares constituted 6.95% of the total buy of the PPG entities and 7.10% of the total
sale of the PPG entities.
(vi)
Certain entities among the PPG entities including Mr. Bharat Shantilal Thakkar, Mr.
Kishorbhai Balubhai Chauhan, Mr. Bhabesh Prakash Pabari, Mr. Prem Mohanlal
Parikh, Mr. Hemant Madhusudan Sheth, Ms. Mala Hemant Sheth and Mr. Ankit
Rajendra Sanchaniya also indulged in self trades on the BSE (i.e., buy client as well
as the sell client for a given trade was the same resulting in no change of beneficial
ownership). In all these self trades mentioned above, the buy and sell stock brokers
were also same. The detail of the same is presented as under:
Name of the entity

Bharat Shantilal Thakkar
Total buy
Total sale
Self trade
qty
% of
Total
Buy
%
Total
Sale
% of
Market
Volume
No of Self
trades
6,51,250
8,38,432
25,000
3.84
2.98
0.08
Kishorbhai Balubhai Chauhan
13,81,255
14,26,051
8,878
0.64
0.62
0.03
Bhabesh Prakash Pabari
18,13,258
22,42,150
1,54,337
8.51
6.88
0.48
24
Prem Mohanlal Parikh
28,63,884
23,56,356
5,49,150
19.18
23.31
1.70
63
Hemant Madhusudan Sheth
34,22,459
31,33,816
5,29,009
15.46
16.88
1.64
94
3,15,103
3,15,504
35,197
11.17
11.16
0.11
12,48,798
14,48,990
72,305
5.79
4.99
0.22
15
1,16,96,007
1,17,61,299
13,73,876
11.75
11.68
4.26
204
Mala Hemant Sheth

Ankit Rajendra Sanchaniya
Grand Total
(vii)
The price volume data shows that the shares of GTL were traded for 297 trading
days during the Investigation Period on the BSE. Out of 297 trading days, the PPG
entities, traded among themselves on 108 days. It was observed that the volume of
trades undertaken by the PPG entities, contributed significantly to the daily market
Page 5 of 19
volume in the scrip on BSE during the investigation period ranging from 0.13% on
January 21, 2009 to 93.35% on November 17, 2009. Out of the 108 trading days on
which the PPG entities traded amongst themselves, on 68 trading days PPG
entities, contributed to more than 50% of the total market volume.
(viii) Out of 108 trading days in which the PPG entities traded amongst themselves, on
78 trading days the PPG entities, including the above mentioned 10 entities,
executed synchronised trades.
(ix)
The synchronised trades were executed by the PPG entities, contributing

significantly to the daily market volume, ranging from 0.13% on January 21, 2009 to
83.07% on September 15, 2009. Out of 78 trading days, on 17 trading days the PPG
entities contributed to more than 50% of the total market volume through
synchronised trades.
(x)
Out of 78 trading days, on 26 trading days the trades executed by the PPG entities
were such that not only both buy and sell orders were placed within a time
difference of one minute but the order quantity and price of the orders exactly
matched. These kinds of perfectly synchronised trades were executed amongst the
PPG entities contributing significantly to the total market volume ranging from
0.23% on February 12, 2009 to 67.26% on April 23, 2009 and on 3 trading days by
contributing to more than 50% of the market volume.
(xi)
Out of 1,23,760 trades in the scrip of GTL on BSE during the investigation period,
24,047 trades took place at a price less than the Last Traded Price (LTP) and 76,324
trades took place at a price equal to LTP and 23,388 trades at a price greater than
LTP. Out of these 1,23,760 trades, the 17 PPG entities dealing through multiple
brokers entered into 5,163 buy transactions. Out of these 5,163 trades 588 trades
took place at a price less than LTP (contributing a gross fall in price by `67.84),
3,394 trades took place at a price equal to LTP and 1,211 trades at a price greater
than LTP (contributing a gross increasing in price by `162).
(xii)
During the period under investigation, the price of the scrip opened at `22.65 on
BSE and touched a high of `47.75, i.e. there was increase of `25.10.
(xiii) The trade log of the entities trading on the NSE revealed that on NSE, 12 PPG
entities trading through multiple stock brokers purchased 20,76,282 shares
accounting for 6.19% of the total volume traded in the scrip of GTL on NSE
during the period under investigation and sold 20,65,506 shares accounting for
6.16% of the total volume traded in the scrip of GTL on NSE during the period
under investigation.
Page 6 of 19
(xiv) The 12 PPG entities who traded in the scrip of GTL on NSE were Mr. Ketan
Babulal Shah, Mr. Bipin Jayant Thaker, Mr. Bharat G. Vaghela, Mr. Chirag
Rajnikant Jariwala, Mr. Kishore Chauhan, Mr. Bhavesh Pabari, Mr. Prem Mohanlal
Parikh, Mr. Hemant Madhusudan Sheth, Mr. Asif Ilyas Shaikh, Ms. Mala Hemant
Sheth, Mr. Ankit Sanchaniya and Mr. Vivek Kishanpal Samant. On the NSE, out of
the 12 PPG entities, 11 PPG entities, traded in 13,14,087 shares constituting 3.92%
of the total market volume in the scrip and accounted for 63.29% of the total
purchase of the group and 63.62 % of the total sale of the group.
(xv)
Certain entities among the PPG entities, i.e., Mr. Prem Mohanlal Parikh, Mr.
Hemant Madhusudan Sheth and Mr. Ankit Rajendre Sanchaniya also indulged in
self trades on the NSE (i.e., buy client as well as the sell client for a given trade was
the same resulting in no change of beneficial ownership).
(xvi) The PPG entities had indulged in off-market transfer of 11,22,836 shares of GTL
amongst themselves during the period January 01, 2009 and January 31, 2011 which
further support the connection among the group.
(xvii) Thus, large scale trading amongst the PPG entities was noted most of which were
synchronized in nature and also resulted in no change in ownership, and created an
artificial demand in the scrip of GTL leading to price rise which was misleading and
disadvantageous to the genuine investors in the securities market. The self trades
executed among the PPG entities did not reveal any real change in ownership of
shares traded among them and the same was for the purpose of increasing volume
of trading or influencing the price.
5. The afore-discussed actions on the part of the above mentioned 10 entities, i.e., execution
of synchronized and self trades, creation of artificial volume and price manipulation which
not only distorted market equilibrium but were also found to be fraudulent in nature, were
alleged to have violated the provisions of regulations 3 (a), (b),(c),(d), 4(1), 4(2) (a),(b) (e)
and (g) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to
Securities Market) Regulations, 2003 (the PFUTP Regulations).
6. Consequently, separate Show Cause Notices (SCN) all dated November 13, 2014 were
issued to Mr. Bhavesh Pabari, Mr. Bipin Jayant Thaker, Mr. Kishore Chauhan, Mr. Prem
Mohanlal Parikh, Mr. Hemant Madhusudan Seth, Mr. Mala Hemant Seth, Mr. Ankit
Sanchaniya, Mr. Bhupesh Rathod, Mr. Bipinkumar Gandhi and Mr. Bharat Shantilal
Thakkar (hereinafter collectively referred to as the noticees and individually by their
respective names), calling upon them to show cause as to why suitable directions under
section 11B read with section 11(4) of the Securities and Exchange Board of India Act,
1992 (the SEBI Act, 1992) should not be issued against them for the alleged violation of
the provisions of regulations 3(a), (b),(c),(d), 4(1), 4(2) (a),(b) (e) and (g) of the PFUTP
Page 7 of 19
Regulations, 2003. The provisions of the regulations alleged to be contravened by the

noticees are reproduced hereunder:
Regulation 3. Prohibition of certain dealings in securities

3. No person shall directly or indirectly
(a). buy, sell or otherwise deal in securities in a fraudulent manner;
(b). use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed
in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention
of the provisions of the Act or the rules or the regulations made there under;
(c). employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities
which are listed or proposed to be listed on a recognized stock exchange;
(d). engage in any act, practice, course of business which operates or would operate as fraud or deceit upon
any person in connection with any dealing in or issue of securities which are listed or proposed to be
listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and
the regulations made there under.
Regulation 4. Prohibition of manipulative, fraudulent and unfair trade practices

4. (1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair
trade practice in securities.
(2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud
and may include all or any of the following, namely:
(a) indulging in an act which creates false or misleading appearance of trading in the securities market;
(b) dealing in a security not intended to effect transfer of beneficial ownership but intended to operate only
as a device to inflate, depress or cause fluctuations in the price of such security for wrongful gain or
avoidance of loss;
(c) ....................................................................................................................................
(d) ....................................................................................................................................
(e) any act or omission amounting to manipulation of the price of a security;
(f) ................................................................................................
(g) entering into a transaction in securities without intention of performing it or without intention of
change of ownership of such security;
7. Vide separate letters dated November 26, 2014 and November 27, 2014 Mr. Bhavesh
Pabari, Mr. Bharat Shantilal Thakkar, Mr. Hemant Madhusudan Seth and Ms. Mala
Hemant Seth sought copies of certain documents which were provided to them vide
letters dated December 16, 2014. While some of the aforementioned noticees replied to
the respective SCNs issued to them, the others did not submit any reply as mentioned in
the following table:
Page 8 of 19
Sl. No.
Date of Reply
1.
Mr. Bhavesh Pabari
January 31, 2015
2.
February 02, 2015
3.
Mr. Kishore Chauhan
4.
February 02, 2015
5.
February 02, 2015
6.
January 31, 2015
7.
February 02, 2015
8.
Mr. Bhupesh Rathod
February 02, 2015
9.
10.
No reply
No reply
January 31, 2015
8. An opportunity of personal hearing was granted to the noticees on February 03, 2015.
During the hearing, Mr. Bhavesh Pabari appeared in person and reiterated the submissions
made vide his letter dated January 31, 2015. As regards, Mr. Kishor Chauhan, it has been
brought to my notice that during the adjudication proceedings in the same matter, one Ms.
Rupal K. Chauhan, claiming to be wife of Mr. Kishore Chauhan, has informed SEBI that
the said noticee had passed away on May 29, 2013 and had enclosed a certified copy of the
death certificate as issued by the Department of Health and Family Welfare, Government
of Gujarat, in support thereof. None of the remaining noticees appeared in person. Other
than Mr. Kishor Chauhan and Mr. Bipinkumar Gandhi all the remaining noticees have
filed their written submissions. These noticees have inter alia made following submissions
as follows:
(i)
Mr. Bhavesh Pabari:

(a). Pursuant to the investigation in the matter, in addition to the instant proceedings,
adjudication proceedings were also initiated against the noticee. and a show cause
notice was issued to him.
(b). The noticee has already submitted his reply to the said show cause notice issued by
the Adjudicating Officer. Hard copies of trade logs and order logs were provided
in CD format and there was difficulty to purify/sort the data which was in whole.
The action proposed report was not enclosed with the documents provided.
(c). As regards allegation regarding his acquaintance with Narendra Ganatra is
concerned, the Honble Securities Appellate Tribunal (the Honble SAT), vide its
order dated July 29, 2011 in the matter of Narendra Ganatra v. SEBI has held as
under:
The connection of the appellant with other group entities is also restricted to his brother
Page 9 of 19
Nimesh Ganatra and Mr. Bhavesh Pabari. The fact that the appellant shares common
address with his brother Nimesh Ganatra or has introduced Bhavesh Pabari to broker is not
sufficient evidence to prove the charge of connivance in executing circular trades.
Therefore, he should not be charged with one charge repeatedly as the Honble
SAT had already put aside the said allegation.
(d). There is no denial that this noticee was not a director in Rajnandi Yarns Private
Limited but the decision of investment of Rajnandi Yarns Private Limited was
taken in company board meeting and not at an individual level.
(e). This noticee does not have any business relationship with certain other noticees
involved.
(f). The documents furnished have failed to provide any documentary evidence to
prove the relationship with other noticees.
(g). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty of
`5,00,000/- on the noticee which has been appealed against before the Honble
SAT.
(h). The noticee is aggrieved by the interim order and the confirmatory order passed against
him making him unable to have any financial means and capacity to take service of
legal consultation and represent his case in the present proceedings.
(ii)
Mr. Bipin Jayant Thaker:

adjudication proceedings were also initiated against the noticee and a show cause
(b). The noticee has already submitted his reply to the said show cause notice issued
by the Adjudicating Officer. The action proposed report was not enclosed with
the documents provided.
(c). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty
of `5,00,000/- on the noticee which has been appealed against before the
Honble SAT.
(d). The noticee is aggrieved by the interim order and the confirmatory order passed against
him making him unable to have any financial means and capacity to take service
of legal consultation and represent his case in the present proceedings.
(iii) Mr. Prem Mohanlal Parikh:

by the Adjudicating Officer.
Page 10 of 19
(c). The action proposed report was not enclosed with the documents provided.
(d). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty
Honble SAT.
(e). The noticee is aggrieved by the interim order and the confirmatory order passed against
(iv) Mr. Hemant Madhusudan Seth:
(a). A preliminary reply was already submitted through reply dated November 27,
2014 against the show cause notice.
(b). Pursuant to the investigation in the matter, in addition to the instant proceedings,
(c). The noticee has already submitted his reply to the said show cause notice issued
(d). Hard copies of trade logs and order logs were provided in CD format and there
was difficulty to purify the data which was in whole. The action proposed report
was not enclosed with the documents provided.
(e). The noticee does not deny that he was not a director in Rajnandi Yarns Private
Limited but the decision of investment of Rajnandi Yarns Private Limited was
taken in company board meeting and not at an individual level.
(f). The documents furnished have failed to provide any documentary evidence to
prove the relationship.
(g). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty
Honble SAT.
(h). The noticee is aggrieved by the interim order and the confirmatory order passed against
(v) Ms. Mala Hemant Seth:
2014 against the Show Cause Notice.
(b). Pursuant to the investigation in the matter, in addition to the instant proceedings,
notice was issued to her.
(c). The noticee has already submitted her reply to the said show cause notice issued
(d). Hard copies of trade logs and order logs were provided in CD format and there
was difficulty to purify the data which was in whole. The action proposed report
Page 11 of 19
(e).
(f).
(g).
(h).
(i).
was not enclosed with the documents provided.

Financial transactions with Mr. Prem Mohanlal Parikh are admitted.
While it is true that she is the wife of Mr. Hemant Madhusudan Seth, she denies
having any business/professional connection with him and submits that she is
living an independent life and is taking her own independent decisions.
She has not received the copy of bank statement evidencing transactions with Mr.
Prem Mohanlal Parikh and a copy of her letter dated July 08, 2012 has not been
received by her.
The noticee has no business relationship with other noticees and documents
furnished have failed to provide any documentary evidence to prove the
relationship.
In the adjudication proceedings, the Adjudicating Officer has imposed a penalty
Honble SAT.
(j). The noticee is aggrieved by the interim order and the confirmatory order passed against
her making her unable to have any financial means and capacity to take service of
legal consultation and represent her case in the present proceedings.
(vi) Mr. Ankit Sanchaniya:
(c). The action proposed report was not enclosed with the documents provided.
(d). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty
Honble SAT.
(e). The noticee is aggrieved by the interim order and the confirmatory order passed against
(vii) Mr. Bhupesh Rathod:
(a). The noticee was not implicated by the interim order and the confirmatory order.
(b). The noticee had carried out share trading activity in the normal and ordinary
course of business activity through a well recognised SEBI registered stock
broker. At the relevant time and even thereafter till date, no grievance or
complaint of any nature has been raised by any of the aforesaid broker or the
stock exchange on whose trading terminal the impugned transactions were
carried out.
(c). The noticee had bought 10,000 shares and sold 10,000 shares at BSE on delivery
Page 12 of 19
(d).
(e).
(f).
(g).
(h).
(i).
(j).
(k).
(l).
(m).
(n).
(o).
basis during January 21, 2009 to April 13, 2010. The noticee had not done any
trading of shares at NSE. Hence, all the trades were genuine and bona fide.
Pursuant to the investigation in the matter, in addition to the instant proceedings,
The noticee has already submitted his reply to the said show cause notice issued
by the Adjudicating Officer and seeks to rely on the same in the instant
proceedings.
The action proposed report was not enclosed with the documents provided.
The noticee had no off market transactions in the scrip of GTL with the persons
mentioned in the SCN. The noticee had no linkages or relation to the market
trades executed by them or by him on the trading platform of the stock exchange.
It is incomprehensible to hold or bind the noticee as belonging to any group or
connected entities as alleged in the SCN. The allegation which is not supported
by any evidence necessarily leads to prove and establish that it is factually
incorrect and legally unsustainable and merely based on surmises and conjectures
and hence lacks credentials.
The alleged connection on the basis of which the noticee is roped into the
present proceedings was that he had introduced Mr. Bhavesh Pabari, Mr. Kishore
Chauhan, Mr. Prem Mohanlal Parikh and Mr. Hemant Madhusudan Seth for
trading account.
The noticee has further clarified in his reply to the Adjudicating Officer that the
introduction was sought by the noticees broker S.P. Jain Securities Limited for
merely the sake of introduction of their identity,
The noticee had not undertaken any risk responsibility and liability for carrying
out any transaction. The noticee had not taken any profit or income.
It was an undisputed fact that noticee had neither carried out any transaction nor
was instrumental for the transaction carried out by those persons in the market.
Introduction of some person to his stock broker cannot mean that the noticee
associates or carries out share trading activity with them jointly. Introduction of
every client to broker is mandatory and therefore broker normally insists
introduction from good existing client before registering new person as client.
The noticee has no business relationship with other noticees and documents
furnished have failed to provide any documentary evidence to prove the
relationship.
In the adjudication proceedings, the Adjudicating Officer has imposed a penalty
Honble SAT.
(p). The noticee is aggrieved by the interim order and the confirmatory order passed against
Page 13 of 19

(viii) Mr. Bharat Shantilal Thakkar:
2014 against the SCN.
(b). The interim order and confirmatory order passed against the noticee directed SEBI to
complete the investigation by December 31, 2011 which was further extended to
July 31, 2012 but it appears that the case has still not been completed.
(c). The noticee denies all allegations made in the SCN except to the extent
specifically admitted by him.
(d). The noticee submits that six different show cause notices have been issued to
him for trading in five different scrips. These six show cause notices have been
issued in and around the same time and the investigation period of the five scrips
is also of around the same time which is really perplexing to understand.
(e). In the adjudication proceedings, the Adjudicating Officer has imposed a penalty
Honble SAT.
(f). The noticee is aggrieved by the interim order and the confirmatory order passed against
9. At the outset, I find that the principles of natural justice have been followed in so far that
all the noticees were given an opportunity to file written submission and attend hearing to
present their case in the present proceedings. It is to be noted that the adjudication
proceedings and the present proceedings are different. The noticees have mentioned in
their submissions that they are not in a position to attend personal hearing and present
their case before me. I, therefore, proceed to deal with the replies/submission of the
noticees before me. The noticees have contended that they are aggrieved by the interim
order and confirmatory order passed against them. However, I note that the said confirmatory
order does not implicate any of the noticees.
10. The noticees have submitted that the action proposed chart had not been provided to
them and that the trade logs and order logs were provided in a CD format due to which
the noticees were unable to purify the data pertaining to them. I have perused through the
documents sought by the entities and the documents furnished to them. I note that all
such relevant documents that were relied upon in the SCN have been duly provided to the
noticees. Further, due to the voluminous nature of the trade logs and order logs, the same
was given through a compact disc. Ms. Mala Hemant Seth has also stated that certain bank
statement and letter has not been provided to her. From the documents issued to her, I
note that said documents were duly provided through letter dated December 16, 2014. I,
therefore, find that all the relevant documents that have been relied upon in the SCN or
Page 14 of 19
that have been sought by the noticees have been furnished to them. Further, none of the
noticees have disputed the trade logs, order logs or bank statements pertaining to the
instant matter.
11. I will now proceed to deliberate on the submissions made by the noticees. I note that Mr.
Bhavesh Pabari has denied his relationship/connection with Mr. Narendra Ganatra and in
this regard has relied upon the Honble SAT order dated July 29, 2011 in the matter of
Narendra Ganatra v. SEBI. I note that vide his letter to SEBI dated July 13, 2012, Mr.
Bhavesh Pabari has admitted that Mr. Narendra Ganatra is his friend. A copy of the said
letter was also furnished to Mr. Bhavesh Pabari during the instant proceedings. However,
the said letter or its contents have not been disputed by Mr. Bhavesh Pabari. I, therefore,
reject the contention of Mr. Bhavesh Pabari regarding his relationship with Mr. Narendra
Ganatra.
12. Mr. Bhavesh Pabari and Mr. Hemant Madhusudan Seth have contended that though they
were directors in Rajnandi Yarns Private Limited, the decision regarding investment of
Rajnandi Yarns Private Limited was taken in company board meeting and not at an
individual level. In this regard I note that several off market transactions have been entered
into between the noticees and Rajnandi Yarns Private Limited the details of which are as
under:
Date
15/02/2010
30/04/2010
30/04/2010
Client Name
Kishor Balubhai Chauhan
Ankit R Sanchaniya
Raj Nandi Yarns Private
30/04/2010 Limited
Raj Nandi Yarns Private
30/04/2010 Limited
Counterparty Client Name

Raj Nandi Yarns Private Limited
No. of Shares
24500
3000
3000
Ankit R Sanchaniya
3000
3000
13. Such transactions clearly depict that Rajnandi Yarns Private Limited first bought shares
from Mr. Prem Mohanlal Parikh and Mr. Ankit Sanchaniya and on the same day sold those
shares back to them. Further, it is noted from the KYC of Mr. Bhavesh Pabari that he and
Mr. Ankit Sanchaniya are cousins. Mr. Hemant Madhusudan Seth and Mr. Prem Mohanlal
Parikh have fund movements as well as off market securities movement. Therefore, it is
too much of a coincidence to assume that the Mr. Bhavesh Pabari and Mr. Hemant
Madhusudan Seth had no role in the investment of Rajnandi Yarns Private Limited.
14. Ms. Mala Hemant Seth has admitted to fund transactions with Mr. Prem Mohanlal Parikh.
Ms. Mala Hemant Seth has further contended that while it is true that she is the wife of
Mr. Hemant Madhusudan Seth, she denies having any business/professional connection
with him and submits that she is living an independent life and is taking her own
independent decisions. I note that Ms. Mala Hemant Seth also has fund market
Page 15 of 19
movements and off market transactions with Mr. Bhavesh Pabari and Mr. Prem Mohanlal
Parikh. Vide her letter dated July 8, 2012, Ms. Mala Hemant Seth has admitted that the
transactions in the securities market in her name were handled by her husband Mr.
Hemant Madhusudan Seth. A copy of the said letter has been provided to Ms. Mala
Hemant Seth. The said letter has not been disputed by Ms. Mala Hemant Seth. I, therefore,
do not find any merit in the contention of Ms. Mala Hemant Seth regarding her
business/professional connection with her husband Mr. Hemant Madhusudan Seth.
15. With respect to the submissions made by Mr. Bhupesh Rathod, I note that to introduce a
client to a stock broker is a role of utmost responsibility in which the introducer claims
that the person being introduced will trade responsibly. I do not agree that Mr. Bhupesh
Rathod would have introduced Mr. Bhavesh Pabari, Mr. Kishore Chauhan, Mr. Prem
Mohanlal Parikh and Mr. Hemant Madhusudan Seth without any existing relationship
between them. I also note from the trading of Mr. Bhupesh Rathod that he entered into 59
trades, out of which 14 trades were above the Last Traded Price and the trades at Last
Traded Price were 44. In view of these facts and circumstances, I reject the contention of
Mr. Bhupesh Rathod that his trades were genuine and bona fide.
16. I note that the details of the relationship amongst the noticees, their trade logs and their
off market transactions have been sufficiently proved and were also furnished to the
noticees along with the SCN. Such relations and transactions have not been disputed.
Considering the factors as described in the SCN, I note that the noticees are apparently
related/connected to each other on the basis of relationship, common addresses, e-mails,
telephone numbers, fund transfer, etc. However, some of the noticees have disputed those
factors/basis of connections/relation amongst them. In this regard, I note that the
Hon'ble SAT has, in many cases such as Classic Credit Ltd. vs. SEBI (SAT Appeal no.
68/2003, Order dated December 8, 2006), Classic Credit Ltd. vs. SEBI (SAT Appeal no. 76/
2003, Order dated January 9, 2007) and Veronica Financial Services Ltd. vs. SEBI (SAT Order
dated August 24, 2012), held that connection/relations can be established on the basis of
such factors. In view of these facts and circumstances, the noticees are connected to each
other as described in the SCN.
17. Placing of the sell orders with same counterparties for same quantity of shares at the same
price within nil or too negligible time difference repeatedly over a period of time are clear
indication that those trades of the noticees were synchronised/structured. In this regard,
the following observations of the Honble SAT in its order dated July 14, 2006 in the
matter of Ketan Parekh vs. Securities and Exchange Board of India, is worth mentioning:
.......... A synchronised transaction will, however, be illegal or violative of the Regulations if it is
executed with a view to manipulate the market or if it results in circular trading or is dubious in
nature and is executed with a view to avoid regulatory detection or does not involve change of beneficial
Page 16 of 19
ownership or is executed to create false volumes resulting in upsetting the market equilibrium. Any
transaction executed with the intention to defeat the market mechanism whether negotiated or not
would be illegal. 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. The nature of the
transaction executed, the frequency with which such transactions are undertaken, the value of the
transactions, whether they involve circular trading and whether there is real change of beneficial
ownership, the conditions then prevailing in the market are some of the factors which go to show the
intention of the parties. This list of factors, in the very nature of things, cannot be exhaustive. Any one
factor may or may not be decisive and it is from the cumulative effect of these that an inference will have
to be drawn.
18. In this case, I note that several synchronized transactions amongst these noticees were in
the nature of selftrade wherein one or the other noticee was on either side of the
transaction. These self-trades clearly did not involve change in beneficial ownership of
traded shares and were, therefore, illegal. It is relevant to mention that with regard to the
nature and effect of self-trades the Honble SAT, in the matter of M/s. Jayantilal Khandwala
& Sons Pvt. Ltd. vs. SEBI (Appeal no. 24 of 2011 decided on June 8, 2011), has held that :
one cannot buy and sell shares from himself. Such transactions are obviously fictitious and meant only to
create false volumes on the trading screen of the exchange.
19. In light of the above, I note that the noticees are in fact related to each and have connived
amongst themselves for execution of synchronized and self trades, creation of artificial
volume and price manipulation which not only distorted market equilibrium but was also
found to be fraudulent in nature, and have therefore violated the provisions of regulations
3 (a), (b), (c), (d), 4(1), 4(2) (a), (b), (e) and (g) of the SEBI (Prohibition of Fraudulent and
Unfair Trade Practices Relating to Securities Market) Regulations, 2003.
20. I note that the noticees have contended that based on the same set of facts and transactions
as in the instant case monetary penalties were imposed against the noticees by the
adjudicating officer vide his separate orders and the noticees have challenged the said orders
before the Honble SAT. However, I am satisfied that the contraventions as found in this case
are grave and have the potential to disturb the market integrity and disturb the fair, equitable
and efficient functioning of the securities market. In the instant case, the proceedings under
sections 11 and 11B of the SEBI Act have been initiated against the noticees in addition to
the adjudication proceedings against them as the charges against the entities are grave and
have larger implications on the safety and integrity of the securities market. In my view, for
the serious contraventions as found in the instant case, monetary penalty alone would not be
sufficient to safeguard the market integrity. In this regard, the following observations of the
Honble SAT in the order dated December 02, 2010, in the matter of Appeal no. 70 of 2010
Yashraj Containeurs Ltd. vs SEBI are worth mentioning:
Page 17 of 19
.... we cannot resist observing that in view of the serious allegations made against the appellants which
stand established during the course of the adjudication proceedings, the Securities and Exchange Board of
India (for short the Board) should not have been content with initiating only adjudication proceedings
against the appellants in which only a monetary penalty could be levied. This is a fit case where the Board
should have considered initiating proceedings under Sections 11 and 11B of the Securities and Exchange
Board of India Act, 1992 for issuing appropriate directions against the appellants to protect the integrity
of the market and the interests of the investors............................................................
This is, indeed a very serious market illegality/irregularity and, in our view, imposing a monetary penalty
alone on the company and its promoters will not meet the ends of justice. We are constrained to make
these observations because the lenient view taken by the Board does not, in our opinion, protect the
integrity of the market and not even the interest of the investors which is its primary duty. This kind of a
lenient view will not be a deterrent for others and would send a wrong signal that the delinquent could
continue with their nefarious activities by paying a monetary penalty.
21. I note that vide the interim order dated February 02, 2011 SEBI had restrained, inter alia, the
noticees herein from accessing the securities market and further prohibited them from
buying, selling or dealing in securities in any manner whatsoever, till further directions.
The directions in the interim order qua these noticees is still in force. I also note from the
material on record that Mr. Kishore Chauhan has passed away on May 29, 2013 and,
therefore, the proceeding against him is abated and the SCN dated November 13, 2014 as
against him is disposed off accordingly.
22. Considering the above, I, in order to protect the interest of investors and the integrity of
the securities market, in exercise of the powers conferred upon me under section 19 of the
Securities and Exchange Board of India Act, 1992 read with sections 11 and 11B thereof
and regulation 11 of the Securities and Exchange Board of India (Prohibition of
Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003
hereby restrain the following entities from accessing the securities market and further
prohibit them from buying, selling or otherwise dealing in securities, directly or indirectly,
or being associated with the securities market in any manner, whatsoever, for the period as
mentioned in the following table:
Sl. No.
PAN
Period
1.
Mr. Bhavesh Pabari
AKGPP8679N
5 Years
2.
ABYPT4984H
5 Years
3.
ALHPP3489N
5 Years
4.
ANOPS8607E
5 Years
5.
AZXPS0694J
5 Years
Page 18 of 19
6.
BLNPS3316L
5 Years
7.
Mr. Bhupesh Rathod
AACPR3785K
5 Years
8.
AJHPG6989J
5 Years
9.
AAZPT9542R
5 Years
23. The period of prohibition already undergone by the noticees pursuant to the interim order
dated February 02, 2011, shall be taken into account for the purpose of computing the
period of prohibition imposed in this order. The SCNs issued to the noticees are disposed
of accordingly.
24. A copy of this order shall be served on all recognized stock exchanges and depositories to
ensure that the direction given in the above para are complied with.
25. This order shall come into force with immediate effect.
Sd/DATE: MAY 13th, 2015

PLACE: MUMBAI
RAJEEV KUMAR AGARWAL

WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA
Page 19 of 19

Order in The Matter of Dealings in The Shares of Goldstone Technologies Limited

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Order in The Matter of Dealings in The Shares of Goldstone Technologies Limited

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WTM/RKA/EFD-DRA-II/43/2015

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

Name of the Noticees

Mr. Bhavesh Pabari

Mr. Bipin Jayant Thaker

Mr. Kishore Chauhan

Mr. Prem Mohanlal Parikh

Mr. Hemant Madhusudan Seth

Ms. Mala Hemant Seth

Mr. Ankit Sanchaniya

Mr. Bhupesh Rathod

Mr. Bipinkumar Gandhi

Mr. Bharat Shantilal Thakkar

In the matter of dealings in the shares of Goldstone Technologies Limited

1. Goldstone Technologies Limited (hereinafter referred to as GTL/company), is a

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In the matter of dealings in the shares of Goldstone Technologies Limited

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10. Prem Mohanlal

Joint a/c with entity at sl. no.

With entities With entity at sl. no.

With entities With entities at sl.

Entity at sl. no. 3 is his uncle

In the matter of dealings in the shares of Goldstone Technologies Limited

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With entity at With entities at sl.

With entity at sl. no.

With entities at sl.

12. Jigar Praful

14. Mala Hemant

15. Gaurang Ajit Seth

16. Ankit Sanchaniya

17. Vivek Kishanpal

11, 16, 17.

With entities at sl.

With entities at sl.

With entity at sl. no.

With entities With entities at sl.

With entity at With entities at sl.

On BSE, 17 group entities including the above mentioned 10 entities, (PPG

In the matter of dealings in the shares of Goldstone Technologies Limited

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Name of the entity

Kishorbhai Balubhai Chauhan

Bhabesh Prakash Pabari

Prem Mohanlal Parikh

Hemant Madhusudan Sheth

Mala Hemant Sheth

In the matter of dealings in the shares of Goldstone Technologies Limited

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The synchronised trades were executed by the PPG entities, contributing

In the matter of dealings in the shares of Goldstone Technologies Limited

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Regulations, 2003. The provisions of the regulations alleged to be contravened by the

Regulation 3. Prohibition of certain dealings in securities

Regulation 4. Prohibition of manipulative, fraudulent and unfair trade practices

In the matter of dealings in the shares of Goldstone Technologies Limited

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Name of the Noticees

Mr. Bhavesh Pabari

January 31, 2015