sebi:WTM/GA/156/IVD/3/07
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Facts / Headnote
BBL and its six directors debarred from accessing the capital market or buying, selling or dealing in securities directly or indirectly for seven years, with direction to make a buy-back / offer to investors saddled with unlisted shares in compliance so far as may be with Chapter III of the SEBI (Buyback of Securities) Regulations, 1998, payable within 90 days of public announcement.
Provisions invoked
- s. 15A
- s. 11C
Regulations
- Reg. 3
- Reg. 4
- Reg. 2(1)(c)
- Reg. 2
Parties
- Bonanza Biotech Ltd. (BBL)
- Shri Sharad Gujrathi
- Shri Amit Patel
- Shri Rakesh Pandya
- Smt. Druma Vaghela
- Shri Arvind Vaswani
- Shri Manish Ganeriwala
Holding
BBL and its directors violated Regulations 3 and 4 of the PFUTP Regulations, 1995 by dematerialising 10 crore unlisted DASL shares and offloading them on BSE through connected entities, and were debarred from the capital market for seven years with direction to provide an exit/buyback to defrauded investors.
Full text
2 (c) On the basis of listing permission given by MPSE, the Central Depositories Services Ltd. (CDSL), a depository registered with SEBI, dematerialized these DASL shares and credited them to the beneficial owner account of BBL. (d) BBL offloaded substantial portion of these unlisted shares of DASL on the trading platform of BSE through a network of entities. Offloading or trading of shares for which listing permission was not granted, is not permissible in terms of BSE Bye-laws and constitutes bad delivery thereunder. The BSE Clearing House or any other parties to the trades could not immediately detect the irregularity as these shares were in the dematerialized form and were fungible with the already existing and validly listed shares of DASL. As a result, a number of innocent investors were defrauded and saddled with unlisted shares of DASL which could not be legally transacted on the BSE. (e) When this came to the notice of SEBI and BSE, the demat account of BBL was frozen after recovering a portion of the shares that were offloaded by it. (f) Subsequently, investigations were initiated by SEBI to probe into the alleged malpractices committed by DASL, BBL and other entities.
3 1.3 The findings of investigation pointed to various violations including that of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices in the Securities Market) Regulations, 1995 (“the PFUTP Regulations”) by DASL, BBL and other entities suspected to be involved. SEBI, therefore issued show cause notices to DASL, BBL and other entities suspected to be involved in the transactions requiring them to show cause as to why appropriate directions should not be passed. The show cause notice (SCN) issued to BBL was dated June 30, 2005.
4 With the aforesaid observations the petition stands disposed of.” 1.6 In compliance with the directions of the Hon’ble Court, SEBI had disposed of DASL’s preliminary objections, including the jurisdictional question, by an
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Source: SecMarx — sebi:WTM/GA/156/IVD/3/07. 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.