sebi:15701

SEBI · SEBI · 2001-04-28 · A.K. Batra, Whole Time Member

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Facts / Headnote

Prohibition order - Shetal S. Shah prohibited from associating with any corporate body in accessing the capital market and from buying, selling or dealing in securities, directly or indirectly, for a period of 2 years

Provisions invoked

• s. 11B
• s. 11
• s. 11(4)
• s. 19

Regulations

• Reg. 11
• Reg. 3
• Reg. 13
• Reg. 6
• Reg. 6(d)

Parties

• Shri Shetal S. Shah

Holding

Shri Shetal S. Shah, being a director of Sawaca Business Machines Limited during the relevant period, was found not to be a fit and proper person and was prohibited from associating with any corporate body in accessing the capital market and from buying, selling or dealing in securities for a period of 2 years.

Full text

AGAINST SHRI SHETAL S. SHAH, IN THE MATTER OF SAWACA BUSINESS MACHINES LIMITED. BACKGROUND Satish R Shah Shetal S Shah Vishal S. Shah Jyotsna S. Shah As per the records of the Office of Registrar of Companies, Gujarat, the following persons were shown as the Directors of the company (as on 30/11/2001). Satish R. Shah Shetal S. Shah Hitesh J. Sanghvi Mahendra Shah Jalas Batra It was observed that the company had not complied with the listing requirements, inasmuch as that it has failed to submit distribution schedule and financial results to BSE. As against last three years distribution schedules asked by the investigating team, the company vide its letter dated 28/04/01, submitted only one distribution schedule dated December 22, 2000. The company was issued reminders dated February 6, 2001, March 7, 2001, July 17, 2001 which indicates that the company has not been complying with the Regulatory requirements. Investigations revealed that one Shri Mahendra A. Shah, along with entities such as Harvic Management Services Ltd., Mayekar Investment Pvt. Ltd., and Rajesh N. Jhaveri were the predominant traders in the scrip of the company, during the period under investigation. Investigations have established that trading by these persons, by and large, contributed to the initial price rise in the scrip. It was also seen that after they created investor interest in the scrip, they started selling the shares, which they were already holding and/or had purchased from the management. Dur

basis, on January 05, 2000, to various investors, including the promoter group. Perusal of the bank account statement of the company revealed that the company had resorted to ‘fictitious book entry’ for showing subscription towards preferential allotment. It was further observed that the company had shown a credit of only Rs. 4.80 crores in the bank account, as against Rs. 5.20 crores required to have been received (52 lac shares @ Rs 10 per share), leading to an apprehension that the allotment of shares to these investors was irregular and improper and that there was no genuine infusion of funds into the account of the company. Thus, the whole process of funding towards the preferential allotment was shown as a ‘book entry’ and shares were allotted to various investors, including promoter group, without actual infusion of funds. The net balance in the company’s account had remained almost constant, even after the last credit entry pursuant to preferential issue. Further, it is observed from the extract of statement of bank account of the company, that all these transactions have been reflected on the same day i.e. January 5, 2000, the details of which are re-produced hereunder : Date Cheq. No Particulars Debit Credit Balance 5.1.00 By Trf 40,00,000 40,11,911.05 5.1.00 600812 To Transfer 40,00,000 11,911.05 5.1.00 By Trf 40,00,000 40,11,911.05 5.1.00 600813 To transfer 40,00,000 11,911.05 5.1.00 By trf 30,00,000 30,11,911.05 5.1.00 600814 To transfer 30,00,000 11,911.05 5.1.0

5.1.00 600824 To transfer 10,00,000 11,911.05 5.1.00 By trf 40,00,000 40,11,911.05 5.1.00 600816 To transfer 40,00,000 11,911.05 5.1.00 By trf 40,00,000 40,11,911.05 5.1.00 600817 To transfer 40,00,000 11,911.05 5.1.00 By trf 40,00,000 40,11,911.05 5.1.00 600818 To transfer 40,00,000 11,911.05 5.1.00 By trf 40,00,000 40,11,911.05 5.1.00 600819 To transfer 40,00,000 11,911.05 5.1.00 By trf. 40,00,000 40,11,911.05 5.1.00 600820 To transfer 40,00,000 11,911.05 5.1.00 By trf 40,00,000 40,11,911.05 5.1.00 600821 To transfer 40,00,000 11,911.05 5.1.00 By trf 40,000,000 40,11,911.05 5.1.00 600823 To transfer 30,00,000 10,11,911.05 5.1.00 By trf 40,00,000 50,11,911.05 5.1.00 600822 To transfer 40,00,000 10,11,911.05 5.1.00 By trf 10,00,000 20,11,911.05

Source: SecMarx — sebi:15701. 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.