sebi:CO/58/ISD/10/2004

SEBI · SEBI · 2001-08-07 · G.N. Bajpai, Chairman, Securities and Exchange Board of India

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Facts / Headnote

Entities associated with Dinesh Dalmia prohibited from accessing the securities market and dealing in securities for 10 years; DSQ Software Ltd prohibited from accessing capital market for one year or completion of investigation, whichever is later; Shri Dinesh Dalmia debarred from dealing in securities for one year or completion of investigation, whichever is later.

Provisions invoked

Regulations

Parties

Holding

Nine entities associated with Dinesh Dalmia, including the two trusts, New Vision entities, DSQ Holdings, Hulda Properties, Powerflow, Radha Dalmia and DSQ Industries, were prohibited from accessing the securities market and dealing in securities for 10 years. DSQ Software Ltd was barred from accessing the capital market for one year or until completion of investigation, and Dinesh Dalmia was debarred from dealing in securities for one year or until completion of investigation, whichever is later.

Full text

Page 2 of 40 Chowringhee Terrace, Calcutta – 700 020 and corporate office address at 407-408, G.R. Complex, Anna Salai Nandanam, Chennai – 600 035. The address of the corporate office of DSQ Industries is the same as that of DSQ Software Ltd. M/s. Powerflow Holding & Trading Co., Pvt., Ltd. (hereinafter referred to as “Powerflow”), M/s. DSQ Holdings Ltd (hereinafter referred to as “DSQ Holding”) and Radha Dalmia wife of Dinesh Dalmia were also shown as promoters by the company vide in its letter dated 07.08.2001 to SEBI since the share holdings of the said entities as on 31.03.1999, 31.03.2000 and 30.06.2000 were shown under promoters’ share holding. The registered original addresses of Powerflow was given as 11/1A, Chowringhee Terrace, Calcutta – 700020 and the other addresses are 2B, Grant Lane, 4th Floor, Calcutta – 700 012 which are same that of DSQ Industries Ltd and Flat No.7, 106 B, North Avenue, Srinagar Colony, Saidapet, Chennai – 600 015. The address of DSQ Holdings Ltd was given as “407 /408, Anna Salai, Nandanam, Chennai 600 035” which is same that of DSQ Software Ltd. It was also observed from the promoter’s share holding details submitted vide company’s letter dated 09.05.2001 to SEBI that share holdings of M/s Hulda Properties & Trades (hereinafter referred to as “Hulda Properties”) as on 29.03.2001 were shown under Promoter’s share holding. The registered office address of Hulda Properties & Trades is at 11/1A, Chowringhee Terrace, Calcutta – 700 020 which is

Page 3 of 40 perusal of the Demat account opening form it was found that the address of Dinesh Dalmia Technology Trust was shown as 407, Anna Salai, G.R. Complex, Nandanam, Chennai – 600035 which is the same as the registered office address of DSQ Software Ltd. It was further seen that the authorized signatory to the account was Shri Dinesh Dalmia. DSQ Employees Stock Option Trust is a trust constituted under trust deed dated 24.10.2000 and in the said deed, the trust was called Softec Corporation and Shri Dinesh Dalmia, Shri Pawan Kumar and Dr. Suryanil Ghosh were shown as the trustees. On perusing the Demat account opening form and the Trust Deed, it was found that the address of the Trust was 407, Anna Salai, G. R. Complex, Nandanam, Chennai – 600 035 which was the same as the registered office address of DSQ Software Ltd. The authorised signatory to the account was Shri Dinesh Dalmia. As per the copy of the Trust deed filed with Depositary Participant the address of Dinesh Dalmia Technology Trust and Softec Corporation trust is No.407/408, G. R. Complex, Mount Road, Anna Salai, Nandanam, Chennai – 600 035. (Same that of DSQ Software Ltd.). Dinesh Dalmia is the Authorized signatory to these trusts and other trustees are 1. Pawan Kumar S/o.Indersen Garg, A-3, Ashok Aishvaryam, No.3, Bazullah Road, T. Nagar, Chennai 600 017. and 2. Dr. Suryanil Ghosh, S/o.Sushil Chandra Ghosh, B.S. 115, Salt Lake Sector 1, Calcutta 700 064. New Vision Investments Pvt. Ltd., Delhi is located

Page 4 of 40 1.4 A sharp fluctuation in the price of the scrip of the company was noted during the period October 1999 to March 2001. The price of the scrip increased from Rs.250/- in October 1999 to Rs.2,631/- in March 2000, but by March 2001, the price had fallen to a level of Rs.150/-. The said movements in price were also accompanied by large volumes (at times touching daily average volume of 10, 00,000 shares) on BSE, NSE and CSE. In the light of the above fluctuation in price and volumes, Securities and Exchange Board of India (hereinafter referred to as “SEBI”) initiated an investigation into the trades in the scrip of DSQ Software for the above periods vide order dated March 29, 2001. Based on prima facie findings of certain irregularities in the acquisition of Fortuna Technologies Inc., USA by the company, by allocating 1.40 crore shares on share swap basis, the following directions were passed by SEBI vide order dated July 20,2001:

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Source: SecMarx — sebi:CO/58/ISD/10/2004. 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.