sebi:MO/4/IVD/04/04

SEBI · SEBI · 2002-04-22 · A. K. BATRA, WHOLE TIME MEMBER

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Facts / Headnote

Debarred M/s Havemore Financial Services Ltd., Shri Hemanshu Chawalla, Shri Kalpesh Chawalla and Shri Hemang Jangla from buying and selling or dealing in securities in any manner for a period of two years, effective on expiry of 3 weeks from the date of the order.

Provisions invoked

• s. 11
• s. 19

Regulations

• Reg. 11
• Reg. 3
• Reg. 4
• Reg. 13
• Reg. 4(b)

Parties

• M/s Havemore Financial Services Ltd.
• Shri Hemanshu Chawalla
• Shri Kalpesh Chawalla
• Shri Hemang Jangla

Holding

The noticees indulged in structured/matched transactions in the scrip of Malvica Engineering Ltd. creating artificial volumes in the market, in violation of Regulations 4(b), 4(c) and 4(d) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995, and were debarred from dealing in securities for two years.

Full text

Malvica Engineering Ltd. (hereinafter referred to as ‘Malvica’) was incorporated as a Private Limited Company in 1989. The company’s principle business is of manufacturing pressed steel radiators. Shri P Y Jhala, Shri M P Jhala, Shri V B Desai, Shri R T Shah and Shri G C Joshi are the promoters of the company. Shri P Y Jhala is the Chairman and Managing Director of the company. The company came out with a public issue in June 1996 and issued 56,26,500 shares to the public. In March 1999, the company forfeited 37,63,500 shares held by the public on account of non-payment of call money. The company reissued 35,14,100 shares out of the 37,63,500 forfeited shares in December 1999 to 46 allottees. At present the company’s capital is Rs. 5,41,21,000/-. The company’s shares are listed at Vadodara Stock Exchange (Regional), Ahmedabad Stock Exchange and The Stock Exchange, Mumbai. After forfeiture of shares as above the company’s public holding was reduced to 3.29% of the issued, subscribed and paid up capital of the company (excluding NRI shareholders and in case NRI shareholders are treated as public the public holding becomes 15.15% of the capital). As per the distribution schedule submitted by the company, after the forfeiture of the shares, there were only 91 public shareholders. The 46 allottees to whom the shares were reissued are related to each other. During the period August 7, 2000 to August 31, 2000, the volume of the scrip increased to 1,19,500 shares on August 7, 2000 an

ii. K P Investment iii. Mayekar Investment Pvt. Ltd. iv. Shagufta Investments Pvt. Ltd. v. Dayanand Finance 4.1 The directors and proprietors of above entities who are relatives to each other subscribed to 8,50,000 shares in the reissue of forfeited shares in January, 2000. The persons who acted in concert in acquiring the shares of Malvica Engineering Ltd. and the relationship of the persons mentioned below with Mr Pankaj A Desai (one of the allottees) is as indicated in the bracket. i. Pankaj A Desai ii. Kirtida P Desai (Wife) iii. Anantrai L Desai (Father) iv. Mrs. Kanta A Desai (Mother) v. Praful A Desai (Brother) vi. Vrinda D Desai (Neice) vii. Sumit P Desai (Nephew) viii. Darshan P Desai (Nephew) ix. Devi D Desai (Sister –in-law) x. Dimple P Desai (Daughter) xi. Sneha P Desai (Daughter) Having been satisfied that there was a prima facie case for investigation, SEBI vide order dated 22.04.02 conducted investigation into the affairs of related to buying, selling and dealings in company’s scrip. The company and the promoters have allotted 1,64,100 shares and 1,50,000 shares respectively to M/s Harvic 5.

Management Services (I) Ltd. and M/s Havmore Financial Services (I) Ltd, which amounts to 3,14,100 shares which is 5.80% of the total issued and subscribed capital of the company. M/s Harvic Management Services (I) Ltd. is a sub-broker with BSE broker M/s B M Gandhi Securities Ltd. M/s Havmore Financial Services Ltd. is an investment company. Mr. Hemang Jangla and Mr. Kalpesh Chawalla are the directors in these companies who were allotted 1,00,000 shares each. Ms Sangita Chawalla and Ms. Vibha Jangla whose address is same as that of Mr. Kalpesh Chawalla were also allotted 1,00,000 shares each. Total acquisition of these four persons along with their two companies in the company amounts to 7,14,100 shares which was 13.19% of the issued and subscribed capital of the company. After submission of the Investigation Report by the Investigating Authority, a show cause notice dated 22.08.03 was issued to M/s Havemore Financial Services Ltd., Shri Hemanshu Chawalla, Shri Kalpesh Chawalla and Shri Hemang Jangla to show cause why appropriate action under Section 11 and 11B of the Securities and Exchange Board of India Act, 1992 read with Regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995. The allegations against M/s Havemore Financial Services Ltd., Shri Hemanshu Chawalla, Shri Kalpesh Chawalla and Shri Hemang Jangla in the said show cause notice are that they subscribed to the company’s forfeited and reissued sha

Source: SecMarx — sebi:MO/4/IVD/04/04. 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.