sebi:WTM/GA/48/IS

SEBI · SEBI · 2005-10-04 · Madhukar, 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

confirmed ad interim order dated 28 September 2005 with modifications

Provisions invoked

• s. 11B
• s. 11(4)

Parties

• Minal Engineering Ltd
• J B Parikh
• Shrikant J Parikh
• J V Joshi
• Amul J Patel
• Vikram J Parikh
• Malay Karbhari
• Kamlesh Khandhor

Holding

The ad interim order dated 28 September 2005 restraining the promoters/directors of Minal Engineering Ltd from buying, selling or dealing in its securities is confirmed, subject to modifications permitting bonus issue and reissue of forfeited shares without further transfer.

Full text

2.0 Reply of the Company and directors: 2.1 Vide letter dated October 4,2005, Kanga & Co, Advocates & Solicitors, submitted inter alia on behalf of the company and its directors/promoters, namely J B Parikh, Shrikant J J V Joshi, Amul J Patel, Vikram J Parik as follows; 2.2 There was no mala fide or deceptive intention on the part of the Company or the promoters to make undue gains at the cost of investors taking advantage of artificial price false market in the shares of the company. 2.3 In respect of the financial result of the Company for the Year 2004-05, it was submitted that there was no increase in sales during the year. The company became partner in the M/s C. Mahendra Infojewels in the month of September 2004 having a share of 18.5% therein. The BoD of the Company decided to enter into the jewellery busin accordingly the Board Resolution was passed on September 1, 2004 for change of object clause subject to the approval of shareholders, At the Extraordinary General held on September 26, 2005, the shareholders of the company have confirmed the alteration of the object clause and have also approved the change of name of the com ‘Minal Jewels Limited’ subject to approval by the ROC, Gujarat. 2.4 In the Financial Year 2004-05, the Company received Rs.417.87 lakhs as its share in profit from the partnership firm M/s.C.Mahendra Infojewels(hereinafter referred to as CMIJ has a manufacturing unit at Seepz, SEZ near Mumbai with a turnover of Rs.103 Crores from export of diamo

3.2 In the personal hearing the company held that it had informed BSE about the partnership with CMIJ and produced a letter dated October 20, 2004 addressed to BSE. The sa forwarded to BSE seeking their comments. BSE wide letter dated November 29, 2005 replied that the Exchange had received 3 letters from the company during the m October, 2004 as under; Sr No Letter Date Date of Receipt by BSE Contents of the Letter 1 12/10/2004 25/10/2004 Various Compliances of quarter ended Sept 2004 2 20/10/2004 25/10/2004 Intimation regarding Board Meeting on 30/10/04 for quarterly results of the quarter ended Sept 2004 3 25/10/2004 30/10/2004 EDIFAR Registration It was further informed by BSE that the letter dated October 20,2004 containing the information that the company was joining partnership with firm called CMIJ with e September1, 20004 was not received by inward at BSE. 3.4 The said letter from BSE was forwarded to the company seeking their comments vide letter dated December 19, 2005. The company replied vide its letter dated December 2 enclosing therewith a copy of the letter addressed to BSE, Mumbai. The company had reiterated its earlier submissions before SEBI. 4.0 Findings: 4.1 I have carefully considered the materials on record including the oral and written submissions of the company, its directors/ promoters. My findings are as below: 4.2 The fundamentals of the company always remained weak and the company’s performance for the FY 2004-05 was made to look robust by includ

contradicted”. Since it is exceedingly difficult, if not absolutely impossible for the prosecution to prove facts which are especially within the knowledge of the opponen accused, it is not obliged to prove them as part of its primary burden. 4.10 In the instant case there are two strands of developments, namely, the abnormal price rise in the scrip in the market and the slew of activities and actions initiated by the p along side with it. Just because the promoter group could not take the plunge due to the interim order at the culmination of the preparatory exercise, the same would n that there was no intertwining of the two strands in a common cause and purpose. The serried happenings in the company’s front cannot be viewed in isolation f unprecedented rise of its share price in the market. There is a definite synergy between the two developments at once interrelated and connected by the runes of an design to make hay while the sun shines, which unfortunately came to be thwarted by the interim order. In such a backdrop I am unable to convince myself that these even fortuitous without any design, while the promoters, in beguiling innocence, embarked upon a course of action which otherwise has a distinct co-relation with the movement of the scrip. The seemingly disparate developments have a symbiotic relationship and to build “serendipity” as a factor into the same would forever validate an the concept of “non sequitur” on the causal relationship in the swathe of market trans

Source: SecMarx — sebi:WTM/GA/48/IS. 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.