sebi:15616

SEBI · SEBI · 1996-06-28 · G A K BATRA, Whole Time Member

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Prohibition order passed: noticees prohibited from buying, selling or dealing in securities for eighteen months

Provisions invoked

• s. 11B
• s. 11
• s. 19
• s. 24(1)

Regulations

• Reg. 11
• Reg. 2(c)
• Reg. 3
• Reg. 4

Parties

• Farookh Pavri
• Sangeeta Shah
• Darshana Shah
• Tejas Shah
• Sanjay Balkiwal
• Nazneen Ravji
• Delnaz Ravji
• Shirin Ravji

Holding

SEBI Whole Time Member held that Shri Farookh Pavri and associates, by obtaining predated stock invests in connivance with Arihant Finance Corporation and B K Finance and applying in the ISEL public issue after its closure, had perpetrated fraud on investors in violation of Regulation 3 read with Regulation 2(c) of the 1995 Regulations, and accordingly prohibited them from buying, selling or dealing in securities for eighteen months.

Full text

BACKGROUND 1. M/s Infoquest Software Exports Ltd. (hereinafter referred to as “ISEL”) came out with a public issue of 43,18,800 equity shares of Rs. 10/- each for cash at par aggregating to Rs. 431.88 lacs. The public issue opened on April 15, 1996 and closed on April 18,

brokers to manipulate the market in detriment to the interest of investors and the capital market. SHOW CAUSE NOTICE 5. Based on the findings thereon, a show cause notice was issued to Farookh Pavri & Associates, vide letter dated June 18, 2003 whereby violation of Regulation 3 and clause (a) and (e) of Regulation 4 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 were alleged against them. Vide the show cause notice, they were also asked to show cause as to why action should not be taken against them under Regulation 11 & 12 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 read with Section 11 and 11B of SEBI Act, 1992.

mentioned that he became aware of the wrong doing in obtaining predated stock invests, only during the investigation. f) he had no idea about the promoters’ intention of getting the issue over subscribed and that his application was only worth Rs.80 lacs. g) as soon as the allotment amount was received with interest thereon, he had handed over the shares to Arihant Finance Corporation along with transfer deeds fully signed. Therefore, he said that there cannot be an allegation of cornering of the shares when he had never kept the shares with him. h) his books of accounts did not show any purchase or sale of the shares of ISEL through any stock broker and hence, the allegation of having connived with stock brokers in the manipulation of the shares of ISEL was incorrect. i) his business was arranging for finance and it was not possible for him to know the genuineness of the borrowers, when he had arranged for Rs.1.69 crores in an issue which was already over subscribed. As a financier, his concern was safety of the funds and he only financed issues which had strong public support. In view of the above, he requested SEBI to withdraw the Show Cause Notice issued against him.

Source: SecMarx — sebi:15616. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.