sebi:WTM/KMA/IVD/237/03/2010
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Facts / Headnote
Confirmed ad-interim ex-parte directions dated June 4, 2009 against Mr. Ashok Kumar Jain
Provisions invoked
- s. 19
Parties
- Mr. Ashok Kumar Jain
Holding
In exercise of powers under Section 19 read with Sections 11, 11(4) and 11B of the SEBI Act, 1992, the ad-interim ex-parte directions dated June 4, 2009 against Mr. Ashok Kumar Jain are confirmed pending conclusion of investigation.
Full text
Page 2 of 6 documents on July 3, 2009 and on being furnished with the copies of relevant documents to Mr. Sachin Chhadavva (authorized representative of Mr. Ashok Kumar Jain), Mr. Ashok Kumar Jain had filed his objections to the Order, vide letter dated August 11, 2009. Thereafter, an opportunity of personal hearing was granted to Mr. Ashok Kumar Jain on August 13, 2009, when he was represented by Mr. Ranjit Bhonsale and Mr. Rajesh Khandelwal, the learned advocates, who reiterated the objections made by Mr. Ashok Kumar Jain in his replies.
Page 3 of 6 shares and sold 2,04,197 shares of CPL in the market. Similarly, he had also purchased 2,55,000 shares and sold 1,58,910 shares of Bang Overseas Limited (BOL). In this regard, Mr. Ashok Kumar Jain in his objections stated that he was engaged in the business of trading in the shares in the capital market and that he carries on the said business in the name and style “Ashok Kumar Jain”. He stated that he had borrowed Rs.34,00,000/- from Ostwal Trading (I) Private Limited on January 22, 2008 which was transferred to his stock broker on January 23, 2008 towards his debit balance. According to him, Rs.18,00,000/-, remained to be paid to Ostwal Trading (I) Private Limited. He further stated that he had taken another loan of Rs.47,00,000/- from JPK Trading (I) Private Limited and the said sum was used for making part payments for his purchases of shares. Mr. Ashok Kumar Jain submitted that he was holding shares but as value of those shares were drastically fluctuating due to the volatile market conditions; his stock broker had required him to make payments and/or secure his positions. According to Mr. Ashok Kumar Jain , as he had to repay the loans taken from Ostwal Trading (I) Private Limited and JPK Trading (I) Private Limited, he had contacted various financial institutions/stock brokers/high networth individuals for borrowing money and that he was informed that they were not in a position to lend money but could lend securities of certain companies for a short perio
Page 4 of 6 the time frame specified by MSL, a debit note for an amount of Rs.44,48,500/- was sent by MSL towards the sale of 3,50,000 shares of CPL. In view of the same, it was stated that Mr. Ashok Kumar Jain had transferred the said shares to his stock broker and were sold by him on various days. Mr. Ashok Kumar Jain had submitted certain documents in order to substantiate his aforesaid claims. The case of Mr. Ashok Kumar Jain in respect of the off market receipt of 3,50,000 shares of CPL from MSL was that the same were transferred in lieu of money and that in case of default in returning the said shares, the transfer would be treated as a ‘sale’. Admittedly, there has been a default on the part of Mr. Ashok Kumar Jain. Thus, as per his contention, the off market transfer is a sale. In such a case, Mr. Ashok Kumar Jain was liable to pay the consideration to MSL for the shares of CPL transferred by it. However, from the submissions made, I note that no consideration appeared to have been paid to MSL in this regard. The same would only lead credence to the inference of SEBI that MSL and Mr. Ashok Kumar Jain were accommodating each other.
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Source: SecMarx — sebi:WTM/KMA/IVD/237/03/2010. 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.