sebi:WTM/KMA/IVD/236/03/2010
Facts / Headnote
Interim directions confirmed and continued
Provisions invoked
- s. 19
Parties
- Rakhi Trading Private Limited
- Peanence Commercial Private Limited
Holding
The directions issued against Rakhi Trading Private Limited and Peanence Commercial Private Limited vide the ad-interim ex-parte Order dated June 4, 2009 are confirmed and continued pending completion of investigation.
Full text
Page 2 of 7 further submissions in respect of the Order vide an undated letter. For the sake of convenience, RTPL and PCPL shall henceforth be collectively referred to as ‘the entities’ and individually by their respective names. The submissions of the entities made in their respective letters are considered in the Order. An opportunity of hearing was granted to RTPL and PCPL on July 7, 2009, when Mr. P.N. Modi, learned advocate represented the entities and made
Page 3 of 7 transactions with Kundan Leasing and Finance Private Limited (KLFPL), one of the Maniar Group entities as mentioned in the order. It was found that both RTPL & PCPL were having common directors and that both had received shares of Confidence Petroleum Limited (CPL) from KLFPL in off-market transfers. It was noticed that on January 24, 2008, KLFPL had transferred 5,00,000 shares of CPL through off-market to PCPL and on the very same day, had also transferred 20,00,000 shares of CPL to RTPL in off-market. RTPL interalia stated that it was engaged in the business of trading in the shares of various companies listed on the stock exchanges. It was admitted that RTPL and PCPL were ‘related concerns’ connected to one another and that they were promoted by Mr. Parag Bora and his brother Mr. Sourabh Bora. It stated that PCPL was also a company investing in shares. RTPL contended that it had traded in negligible quantities during the entire period (26 months) of investigation. As regards the transactions in the shares of CPL was concerned, RTPL stated that KLFPL had approached it for a loan of Rs.3.5 crores and as per their agreement, KLFPL was to be advanced an amount of Rs.3.5 crores as Inter Corporate Deposit (ICD) for a period of six months subject to KLFPL offering shares of CPL in sufficient quantity and double the value of the ICD to cover the interest of 21% per annum. It was stated that, pursuant to the said agreement, KLFPL had transferred a total of 37,50,000 sha
Page 4 of 7 unilaterally sold 12,930 shares of CPL on March 10, 2008 and 25,000 shares on March 24, 2008. It further submitted that the said sale was a ‘forced sale’ and the stock broker had unilaterally adjusted the sale proceeds towards its margin shortfall. RTPL submitted that as it was liable to return the said shares to KLFPL, it was constrained to purchase 38,000 shares of CPL through the stock broker (JHP Securities Private Limited) and stated that 37,12,070 shares were still lying with Indiabulls Securities Limited and the balance 38,000 shares were lying in its depository account maintained with ICICI Bank. It contended that 38,000 shares of CPL purchased by it were not from any of the connected clients and that it did not indulge in circular or synchronised trading. RTPL stated that it had requested India Bulls to give finance against the shares of CPL received from KLFPL. However, it has not provided any document towards the same. Further, I also note that no money was advanced to KLFPL by RTPL. It is surprising to note that the shares (of CPL) transferred by KLFPL have not been returned to KLFPL and still remains with RTPL. RTPL stated that KLFPL had informed that legal proceedings would be initiated for the delay in returning the said shares to it. However, no steps were taken by RTPL in this regard. Thus, prima facie the claimed ‘loan agreement’ seem to be a ploy to cover up their manipulative transaction. However, the same would come to light on the
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Source: SecMarx — sebi:WTM/KMA/IVD/236/03/2010. 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.