WTM/SR/EFD DRA I/46/09/2016 BEFORE THE SECURITIES AND ... · Page 3 of 38 Observations contained in the Investigation Report and findings recorded in the SEBI Ex–Parte Ad–Interim

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WTM/SR/EFD–DRA–I/46/09/2016

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA, MUMBAI CORAM: S. RAMAN, WHOLE TIME MEMBER

ORDER

UNDER SECTIONS 11(1), 11(4) AND 11B OF THE SECURITIES AND EXCHANGE

BOARD OF INDIA ACT, 1992. IN THE MATTER OF EXELON INFRASTRUCTURE LIMITED – IN RESPECT OF –

1. EXELON INFRASTRUCTURE LIMITED [PAN: AAACM2862M]. 2. CEMENTEX (INDIA) PRIVATE LIMITED [PAN: AAACC9265A 3. MR. SRINIVASA RAO MARUPUDI [PAN: ACQPM0876L; BCDPM3124P]. 4. MR. GADDE BUTCHI TIRUPATI RAO [PAN: AHUPG9920A]. 5. MR. RAVI CHAKRAVATI [PAN: AJXPR4789F]. 6. MR. M. VISHNUVARDHAN RAO [PAN: ABYPM0993M]. 7. MR. P R K VENKATAMURTHI [PAN: AFQPP6066G]. 8. MR. SRINIVAS YADAV SHER [PAN: AUAPS8547G]. 9. MR. SHAIK AMEER BASHA [PAN: AEZPB3408A]. 10. MR. SREE LAKSHMI MARUPUDI [PAN: ALYPM2964Q]. 11. MR. HITEN VALLABHJI HARIA [PAN: AAAPH6890H]. 12. A. K. INVESTMENTS [PAN: AANFA6009Q]. 13. MR. NARENDRA OMPRAKASH DOGRA [PAN: AJMPD8729N]. 14. MR. KANTA ANANTRAI DESAI [PAN: AAEPD6006F]. 15. MR. ANJALI TUKARAM SOGAM [PAN: CGNPS1443N]. 16. MR. JITENDRA L. GANDHI [PAN: AACPG6473H]. 17. SHRI AMRIT L. GANDHI [HINDU UNDIVIDED FAMILY] [PAN: AAJHA4701R]. 18. MR. GANGADHARA RAO ILAPARTI [PAN: AANPI9650F]. 19. MR. HUSSAIN MOHAMMED SHAIKH [PAN: BSSPS2832P]. 20. MR. JIGNA MANISH SHAH [PAN: ANQPS6789P]. 21. MRS. SNEHA PANKAJ DESAI [PAN: AIBPD1454A]. 22. MR. NISHITA DANISH MERCHANT [PAN: AMHPM8133B]. 23. DHANA ENERGY PRIVATE LIMITED [PAN: AACCV7693M]. 24. MR. SRIKRISHNA VADLAMUDI [PAN: ADNPV5504C]. 25. MR. KANTILAL LAKSHMICHAND [PAN: ADSPK7577K]. 26. MR. GUDIMETLA H SUNDER [PAN: BMLPS9664N]. 27. MS. SHIVANGI JAGMOHAN SINGH [PAN: AOSPS5911E]. 28. MS. DIMPLE PANKAJ DESAI [PAN: AUQPD3909F]. 29. MR. PVS GANGADHARA RAO [PAN: AKYPP5600M]. 30. MR. SUNIL KUMAR H. PAL [PAN: BKSPP6938B]. 31. MR. VENKATA SUBBARAO YARRA [PAN: AAPPY4270P]. 32. SHRI AMRIT L. GANDHI [PAN: AACPG5265H]. 33. MRS. BHAVNABEN NIMESHBHAI MISTRY [PAN: ALIPM5347B].

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34. MR. YENTRAPATI RAVI [PAN: ABWPY6767F]. 35. MS. PARUL ANUPAM KHANNA [PAN: BCUPK8420R]. 36. MR. HITEN P. SHAH [PAN: AHAPS0889A]. 37. MS. PARVATHANENI MOUNISHA [PAN: BAOPP1399G]. 38. MS. SWAPNA SRI TUMMALA [PAN: ALDPT7720Q]. 39. MR. SATYA SURYA NARAYANA JONNAVITTULA [PAN: ACRPJ9665R]. 40. MR. PIYUSH NARESH KOTHARI [PAN: AEOPK1882L]. 41. MR. NRUPINI JAYESH MEHTA [PAN: BDTPM2261E]. 42. MR. MAHENDRA BHIKAJI CHILE [PAN: AHNPC8127G]. 43. MR. ELUBANDI SATYANARAYANA [PAN: DGCPS7022F]. 44. MR. RAMA KRISHNA MAKKENA [PAN: BCKPK1101P]. 45. MS. ANITHA YARLAGADDA [PAN: ACAPY5774B]. 46. MS. SALMA SHARAFAT KHAN [PAN: BVSPK9348F]. 47. MS. SEEMA GANDHI [PAN: AAEPG0960B] 48. MR. RONAK ASHWIN CHOKSI [PAN: ADDPC2938D]. 49. MR. VEERABHADRA DANDAMUDI [PAN: ABVPD6656R]. 50. MR. DIVYESH HARISH SURANA [PAN: DALPS0578H]. 51. MR. JAYESH HIMATLAL MEHTA [PAN: AIFPM2216D]. 52. MR. SHIVCHARAN SHREEDHAR KASHYAP [PAN: ATOPK6636K].

Background –

1.1 Exelon Infrastructure Limited (“Exelon”), a Public Listed Company involved in the development

of power and infrastructure projects, was originally incorporated on February 21, 1979, as a Private

Limited Company. Exelon became a deemed Public Limited Company on July 18, 1989 and

thereafter, was converted into a Public Limited Company on December 5, 1992. The shares of

Exelon are listed on the Bombay Stock Exchange (“BSE”).

1.2 An investigation in the scrip of Exelon was conducted by the Securities and Exchange Board of

India (“SEBI”), for the period from December 8, 2010 to January 20, 2012 (“Investigation

Period”), for ascertaining any possible violations inter alia of –

a. The SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities

Market) Regulations, 2003 (“PFUTP Regulations, 2003”);

b. The SEBI (Prohibition of Insider Trading) Regulations, 1992 (“PIT Regulations, 1992”)

read with the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations,

2015”);

c. The Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeover) Regulations, 1997 (“Takeover Regulations, 1997”), and

d. The Listing Agreement.

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Observations contained in the Investigation Report and findings recorded in the SEBI Ex–Parte

Ad–Interim Impounding Order dated June 7, 2016 –

1.3 During the Investigation Period, the shareholding pattern in Exelon for the quarters ending

September 2010; December 2010; March 2011; June 2011; September 2011; December 2011 and

March 2012 [Source–BSE website], were as follows –

SEPTEMBER 2010 DECEMBER 2010 MARCH 2011

NO. OF

SHAREHOLDERS

NO. OF

SHARES

% NO. OF

SHAREHOLDERS

NO. OF

SHARES

% NO. OF

SHAREHOLDERS

NO. OF

SHARES

%

PROMOTER 5 1335900 20.03 5 1193900 17.90 5 1875800 14.06

NON–

PROMOTER 1823 5332900 79.97 1786 5474900 82.10 1574 11461800 85.94

TOTAL 1828 6668800 100 1792 6668800 100 1580 13337600 100

JUNE 2011 SEPTEMBER 2011 DECEMBER 2011

NO. OF

SHAREHOLDERS

NO. OF

SHARES

% NO. OF

SHAREHOLDERS

NO. OF

SHARES

% NO. OF

SHAREHOLDERS

NO. OF

SHARES

%

PROMOTER 5 1734800 13.01 1 1728048 12.96 1 1651430 12.38

NON–

PROMOTER 1620 11602800 86.99 1981 11609552 87.04 2080 11686170 87.62

TOTAL 1626 13337600 100 1983 13337600 100 2082 13337600 100

MARCH 2012

NO. OF

SHAREHOLDERS

NO. OF

SHARES

%

PROMOTER 1 1467422 11.01

NON–

PROMOTER 2147 11870178 88.99

TOTAL 2149 13337600 100

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1.4 The shareholding details of the Promoters of Exelon for the quarters ending September 2010;

December 2010; March 2011; June 2011; September 2011; December 2011 and March 2012

[Source–BSE website], are provided below –

SR. NO. PROMOTER SHAREHOLDING SEP-10 SEP-10 DEC-10 DEC-10 MAR-11 MAR-11 JUN-11 JUN-11

QUANTITY % QUANTITY % QUANTITY % QUANTITY %

1. SHRADHA PARESHKUMAR MANIK 5000 0.07 5000 0.07 10000 0.07 10000 0.07

2. JAYANTILAL DAYABHAI MANIK 500 0.01 500 0.01 1000 0.01 1000 0.01

3. PARESH KUMAR D MANIK 200 0 200 0 400 0 400 0

4. SIDDHARTH S MANIK 200 0 200 0 400 0 400 0

5. CEMENTEX INDIA PVT LTD 1330000 19.94 1188000 17.81 1864000 13.98 1723000 12.92

TOTAL 1335900 20.02 1193900 17.89 1875800 14.06 1734800 13

SR. NO. PROMOTER SHAREHOLDING SEP-11 SEP-11 DEC-11 DEC-11 MAR-12 MAR-12

QUANTITY % QUANTITY % QUANTITY %

1. SHRADHA PARESHKUMAR MANIK

2. JAYANTILAL DAYABHAI MANIK

3. PARESH KUMAR D MANIK

4. SIDDHARTH S MANIK

5. CEMENTEX INDIA PVT LTD 1728048 12.96 1651430 12.39 1467422 11.01

TOTAL 1728048 12.96 1651430 12.39 1467422 11.01

1.5 The details of Directors in Exelon during the Investigation Period [Source–BSE website] are

provided below –

SR. NO. NAME DESIGNATION DATE OF APPOINTMENT DATE OF

CESSATION

1. Srinivasa Rao Marupudi Director, CEO & Compliance Officer 03.09.2007 -

2. Gadde Butchi Tirupati Rao Director 25.10.2006 27.10.2011

3. Ravi Chakravarti Director 03.09.2007 27.10.2011

4. M. Vishnuvardhana Rao Director 03.09.2007 27.10.2011

5. P. R. K. Venkatamurthi Director 03.09.2007 27.10.2011

6. Srinivas Yadav Sher Director 01.09.2010 -

7. Ravindra Deshpande Additional Director 20.07.2011 07.02.2012

8. Shaik Ameer Basha Managing Director 21.10.2011 17.09.2014

9. Miyati Gousal Adam Director 21.10.2011 21.04.2014

10. Rahul Koluguri Director 24.11.2011 09.08.2014

11. Nagendra Komera Director 24.11.2011 20.08.2014

12. Gandodi Shaikh Jilan Additional Director 10.01.2012 30.12.2012

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1.6 The relevant Major Corporate Announcements made by Exelon during the Investigation Period, are

detailed below –

SR. NO.

DATE AND TIME OF

ANNOUNCEMENT

DETAILS OF ANNOUNCEMENT AT BSE STATUS OF IMPLEMENTATION

1. February 10, 2011

(7:14 pm)

i. To issue upto 10 Crores equity shares of ₹10

each to the Promoters and others by way of

follow on public issue, rights issue, preferential

allotment, etc.

ii. To issue GDR and/or ADR convertible into

equity shares, FCCBs, warrants, convertible

into depository receipts on preferential basis

upto ₹100 Crores.

iii. To issue shares on Qualified Institutional

Placement (QIP) basis.

i. No information on

implementation

provided by Exelon.

ii. No information on

implementation

provided by Exelon.

iii. No information on

implementation

provided by Exelon.

2. February 23, 2011

(3:01 pm)

i. Proposal for setting up Coal based Thermal

Power Plant.

i. No information on

implementation

provided by Exelon.

3. March 07, 2011

(1:56 pm)

i. To sub-divide the equity shares from 1 equity

share of ₹10 each into 2 (two) equity shares of

₹5 each.

ii. To issue upto 20 Crores equity shares for the

purpose of preferential allotment, public issue,

rights issue, etc.

iii. To issue GDR and/or ADR convertible into

equity shares, QIBs, FCCBs, warrants

convertible into depository receipts on

preferential basis upto ₹200 Crores.

i. Implemented by

Exelon as per

disclosure available

on BSE website.

ii. No information on

implementation

provided by Exelon.

iii. No information on

implementation

provided by Exelon.

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1.7 During the period of the abovementioned Corporate Announcements, the Directors of Exelon were

as follows –

SR. NO. NAME

1. Srinivasa Rao Marupudi

2. Gadde Butchi Tirupati Rao

3. Ravi Chakravarti

4. M. Vishnuvardhana Rao

5. P. R. K. Venkatamurthi

6. Srinivas Yadav Sher

1.8 A perusal of the share capital of Exelon, reveals that only the Corporate Announcement pertaining

to the sub-division of share capital [Refer to point 3(i) of Table at paragraph 1.6] was implemented

by Exelon.

1.9 During the Investigation Period, the total income of Exelon increased from ₹76.49 Million

(Quarter ended December 2010) to ₹141.04 Million (Quarter ended March 2012). Similarly, the

Net Profit increased from ₹3.23 Million (Quarter ended December 2010) to ₹10.78 Million

(Quarter ended March 2012). The Profit & Loss Account reported by Exelon [Source–BSE

website] is provided below –

DESCRIPTION QUARTER ENDED YEAR ENDED

SEP.10 DEC 10 MAR 11 JUN 11 SEP 11 DEC 11 MAR 12 MAR 10 MAR 11 MAR 12

TOTAL INCOME 118.95 76.49 143.29 153.01 113.00 118.65 141.04 297.86 382.95 525.70

TOTAL EXPENDITURE 113.55 72.25 139.37 148.42 107.97 113.39 128.60 286.54 362.89 498.38

NET PROFIT/LOSS 4.05 3.23 3.42 4.09 4.53 4.76 10.78 11.18 17.52 24.16

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1.10.1 The Price Volume Analysis in the scrip of Exelon prior to, during and after the Investigation Period

is provided below –

A B C D E

PERIOD

NO. OF

TRADING

DAYS

PRICE &

VOLUME

OPENING

PRICE

(VOLUME) ON

FIRST DAY OF

THE PERIOD

(₹)

CLOSING

PRICE

(VOLUME) ON

LAST DAY OF

THE PERIOD

(₹)

LOWEST

PRICE

(VOLUME)

DURING THE

PERIOD

(₹)

HIGHEST

PRICE

(VOLUME)

DURING THE

PERIOD

(₹)

TOTAL

VOLUME

(AVG. NO. OF

SHARES

TRADED

DAILY DURING

THE PERIOD)

PRE

INVESTIGATION

01.10.10

TO

07.12.10

47

PRICE 31.7 20.5 19.05 32

2622498

(55798)

01.10.10 07.12.10 07.12.10 15.09.10

VOLUME

19868 45124 2830 170037

01.10.10 07.12.10 29.11.10 22.10.10

INVESTIGATION

08.12.10

TO

20.01.12

280

PRICE 19.50 11.01 10.50 112.85

37844655

(135156)

08.12.10 20.01.12 20.01.12 18.03.11

VOLUME 32694 30909 117 1189306

08.12.10 20.01.12 04.10.10 14.09.11

POST

INVESTIGATION

23.01.12

TO

30.03.12

54

PRICE 10.80 8.74 7.67 12.49

2524578

(52595)

23.01.12 30.03.12 07.03.12 03.02.12

VOLUME

20486 26783 4852 182255

23.01.12 30.03.12 15.03.12 28.03.12

1.10.2 The stock split of Exelon (in the ratio of 1:2) as mentioned at paragraph 1.8, occurred on March 23,

2011. Considering the aforesaid, the Price Volume Analysis in the scrip of Exelon was made in 2

patches –

A B C D E

PERIOD

NO. OF

TRADING

DAYS

PRICE &

VOLUME

OPENING

PRICE

(VOLUME) ON

FIRST DAY OF

THE PERIOD

(₹)

CLOSING

PRICE

(VOLUME) ON

LAST DAY OF

THE PERIOD

(₹)

LOWEST

PRICE

(VOLUME)

DURING THE

PERIOD

(₹)

HIGHEST

PRICE

(VOLUME)

DURING THE

PERIOD

(₹)

TOTAL VOLUME

(AVG. NO. OF

SHARES TRADED

DAILY DURING THE

PERIOD)

PATCH 1: PRE

SPLIT PATCH

08.12.10

TO

23.03.11

73 PRICE 19.50 103.60 18.75 112.85 77,01,534

(1,05,501) (08/12/10) (23/03/11) (09/12/10) (18/03/11)

VOLUME 32,694 1,80,401 7,923 4,31,913

(08/12/10) (23/03/11) (22/12/10) (02/02/11)

PATCH 2: POST

SPLIT PATCH

24.03.11

TO

13.06.11

55 PRICE 49.25 83.80 46.40 87.50 57,09,027

(1,03,982) (24/03/11) (13/06/11) (30/03/11) (13/06/11)

VOLUME 33,944 67,669 15,360 3,21,290

(24/03/11) (13/06/11) (27/05/11) (19/04/11)

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1.10.3 During the period December 8, 2010 to June 13, 2011, –

a. The scrip of Exelon opened at ₹19.50 as on December 8, 2010 and reached a high of ₹112.85

as on March 18, 2011;

b. On March 23, 2011, the scrip of Exelon closed at ₹103.60;

c. On March 24, 2011 (i.e. after stock split), the scrip of Exelon opened at ₹49.25 and closed at

₹83.80 on June 13, 2011.

1.10.4 As per the Investigation Report, certain entities who were alleged to be connected to Exelon, its

Promoters and Directors or were Group Entities of that company, were found to have traded during

the period between December 8, 2010–March 23, 2011 [Patch I: Pre–stock split] and the period

between March 24, 2011–June 13, 2011 [Patch II: Post–stock split].

1.10.5 The details of the aforementioned entities and the basis for their connection are provided as under

–

TABLE I

SR. NO. NAME CONNECTION WITH EXELON / OTHER ENTITIES OF GROUP

1. Exelon - Company

2. Cementex (India) Pvt. Ltd.

(Cementex)

- Cementex is promoter entity of Exelon,

- Cementex and Exelon have common directors (i.e. persons at Sr. no. 4, 5 and 8 in the

table),

- Cementex and Dhana Energy Pvt. Ltd. (entity at Sr. no. 10) have a common director

namely Srikrishna Vadlamudi (person at Sr. no. 9),

- The Company had off market transfers with persons at Sr. no. 8 and 31,

- Director of Cementex, Hiten P. Shah (person at Sr. no. 32) is the introducer to the

persons at Sr. no. 3, 8, 28, 30 and 31 (in the table) with Networth Stock Broking

Limited.

- Common e-mail ID with persons at Sr. no. 9, 13 and 19.

3. Srinivasa Rao Marupudi

- Director and CEO of Exelon.

- He had off market transfers with persons at Sr. no. 11, 13, 27 and 30.

- He has common address and mobile no. with entity at Sr. no. 11.

- He also has common address, mobile no. and bank a/c no. with entity at Sr. no. 9.

- Entity at Sr. No. 32 appeared as a witness in the KYC submitted by Networth Stock

Broking Limited.

4. Gadde Butchi Tirupati Rao - Director in Exelon

5. Ravi Chakravati - Director in Exelon

6. M. Vishnuvardhan Rao - Director in Exelon

7. P. R. K. Venkatamurthi - Director in Exelon

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8. Srinivas Yadav Sher - Director in Exelon and Cementex (entity at Sr. no. 2),

- He had off market transfers with entities at Sr. no. 2, 16, 17, 30, 31.

- He has been mentioned as reference in the KYC for entity at Sr. no. 30 at Networth

Stock Broking Limited.

- Entity at Sr. No. 32 appeared as a witness in the KYC submitted by Networth Stock

Broking Limited.

- He had off-market connections with entity at Sr. no. 22 and 23 prior to the

investigation period

- He had off-market connections with entity at Sr. no. 22, 23, 24 and 26 through I. K.

Projects Limited, in which he was a Director.

- He had off-market connections with entity at Sr. no. 52.

9. Srikrishna Vadlamudi

- Director of Cementex (Sr. no. 2) and Dhana (Sr. no. 10),

- He had off-market transactions with entity at Sr. no. 14,

- He has common e-mail ID i.e. [email protected] with entities at Sr. no. 2, 13 and

19,

- He had banking transactions with entities at Sr. no. 19.

10. Dhana Energy Pvt. Ltd. (Dhana)

- Entities at Sr. no. 9 and 11 are the directors of Dhana,

- It had off market transfers with entity at Sr. no. 15 and 27.

11. Marupudi Sree Lakshmi

- Director of Dhana (entity at Sr. no. 10),

- He has common address and mobile no. with entity at Sr. no. 3,

- He had off market transfers with entities at Sr. no. 3 and 19.



12. Rama Krishna Makkena - He had off-market transfers with entities at Sr. no. 27 and 32.



13. Anitha Yarlagadda

- She had off market transfers with entity at Sr. no. 3.

- She shares the e-mail ID i.e. [email protected] with entities at Sr. no. 2, 9 and 19.

14. Satya Surya Narayana

Jonnavittula

- He had off-market transfers with entity at Sr. no. 9.

15. Swapna Sri Tummala - She had off-market transfers with entity at Sr. no. 10.

16. Mahendra Bhikaji Chile - He had off-market transfers with entity at Sr. no. 8.

17. Gangadhara Rao Ilaparti - He had off-market transfers with entities at Sr. no. 8, 18, 20 and 21.

18. PVS Gangadhara Rao - He had off-market transfers with entities at Sr. no. 17, 19 and 49.

19. Veerabhadra Rao D. - He had off-market transfers with entities at Sr. no. 11 and 18.

- He shares same e-mail ID i.e. [email protected] with entities at Sr. no. 2, 9 and

13.

- He had banking transactions with entity at Sr. no. 9.

20. Elubandi Satyanarayana - He had off-market connections with entity at Sr. no. 17.

21. Yentrapati Ravi - He had off-market connections with entity at Sr. no. 17.

22. Dimple Pankaj Desai - She had off-market connections with entity at Sr. no. 8 prior to the investigation

period.

- She had off-market connections with one I.K. Projects Pvt. Ltd. in which the entities at

Sr. no. 8, 11 and 12 were the directors.

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23. Kanta Anantrai Desai - She had off-market connections with entity at Sr. no. 8 prior to the investigation

period.

- She had off-market connections with one I.K. Projects Pvt. Ltd. in which entities at Sr.

no. 8, 11 and 12 were the directors.

24. Sneha Pankaj Desai - She had off-market connections with entity at Sr. no. 25.

- She had off-market connections with one I.K. Projects Pvt. Ltd. in which entities at Sr.


25. Anjali Tukaram Sogam She had off-market connections with entity at Sr. no. 24.

26. Gudimetla H. Sunder - He had off-market connections with one I.K. Projects Pvt. Ltd. in which entities at Sr.



27. Shivcharan Shreedhar Kashyap - He had off-market transfers with entities at Sr. no. 3, 10, 12 and 32.

- In KYC documents submitted at TM Sanghavi, his introducer is Kamlesh Maisheri, a

Director of A.K. Investments (Sr. no. 35).

28. Jayesh Himatlal Mehta - He has common address with entity at Sr. no. 29.

- As per KYC, Ronak Choksi (Sr. no. 30) is his reference.

- Entity at Sr. No. 32 appeared as witness to him in the KYC submitted by Networth Stock

Broking Limited.

29. Nrupini Jayesh Mehta

- Wife of entity at Sr. no. 28 and share common address with him.

- As per KYC, Ronak Choksi (Sr. no. 30) is her reference.

30. Ronak Ashwin Choksi - He had off-market transfers with entities at Sr. no. 3, 8, 31 and 32.

- He has been mentioned as reference in the KYC while opening accounts of entities at

Sr. no. 3, 28, 29, 31 and 33.


Broking Limited.

31. Salma Sharafat Khan - She had off-market transfers with entities at Sr. no. 2, 8 and 30.

- As per KYC, Ronak Choksi (Sr. no. 30) is her reference.


Broking Limited.

32. Hiten P. Shah

- Director of Cementex (Sr. no. 2) (appointment on July 18, 2012)

- He had off-market transfers with entities at Sr. no. 12, 27 and 30.

- He has appeared as witness to entities at Sr. no. 3, 8, 28, 30, 31 in the KYC submitted

by Networth Stock Broking Limited.

- He has been mentioned as reference in the KYC while opening accounts of entity at Sr.

no. 34.

33. Sunil Kumar H. Pal - As per KYC, Ronak Choksi (Sr. no. 30) is his reference.

34. Hiten Vallabhji Haria

- As per KYC submitted by Networth Broking Limited, Hiten Shah (Sr. no. 32) is his

reference.

35. A. K. Investments - As per KYC submitted by TM Sanghavi Brothers Brokerage Limited, entities at Sr. no.

35, 36, 37 and 38 have common address B-35, Mahavir Apt., Ratan Nagar, Borivali (E),

Mumbai.

- In KYC documents submitted at TM Sanghavi, was introducer for entity at Sr. no. 27.

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36. Amrit L. Gandhi (HUF)

- As per KYC submitted by TM Sanghavi Brothers Brokerage Limited, entities at Sr. no.


Mumbai.

- Introduced by Kamlesh Maisheri, director of A.K. Investments (Sr. no. 35)

37. Amrit L. Gandhi

- As per KYC submitted by TM Sanghavi Brothers Brokerage Limited, entities at Sr. no.


Mumbai.

- Spouse of Sr. no. 38 as per ration card copy

- He shares common phone no. 9892526271 with entities at Sr. no. 38, 42 and 47.

38. Seema Gandhi - As per KYC submitted by TM Sanghavi Brothers Brokerage Limited, entities at Sr. no.


Mumbai.

- Spouse of Sr. no. 37 as per ration card copy.

- She shares common phone no. 9892526271 with entities at Sr. no. 37, 42 and 47.

- He had off-market transfers with entities at Sr. no. 27 and 43.

39. Narendra Omprakash Dogra

- In KYC documents submitted at TM Sanghavi, his introducer is Kamlesh Maisheri,

- He is the director of A.K. Investments (Sr. no. 35).

40. Jitendra L. Gandhi - In KYC documents submitted at TM Sanghavi, introducer is Kamlesh Maisheri,


41. Kantilal Lakshmichand

- In KYC documents submitted at TM Sanghavi, introducer is Kamlesh Maisheri.


42. Shivangi Jagmohan Singh

- In KYC documents submitted at TM Sanghavi, introducer is Kamlesh Maisheri,

- He is the director of A.K. Investments (Sr. no. 35),

- He shares common phone no. 9892526271 with entities at Sr. no. 37, 38 and 47.

43. Divyesh Harish Surana - In KYC documents submitted at TM Sanghavi, introducer is Kamlesh Maisheri,

- He is the director of A.K. Investments (Sr. no. 35),


44. Hussain Mohammed Shaikh - In KYC documents submitted at TM Sanghavi, introducer is Kamlesh Maisheri, director

of A.K. Investments (Sr. no. 35).

45. Parul Anupam Khanna

- In KYC documents submitted at TM Sanghavi, introducer is Kamlesh Maisheri, director


46. Jigna Manish Shah

- In KYC documents submitted at TM Sanghavi, introducer is Kamlesh Maisheri, director


- He shares common address with entity at Sr. no. 47.

47. Bhavnaben Nimeshbhai Mistry - As per UCC details uploaded at BSE by TM Sanghavi, Bhavnaben shares common

contact no. 9892526271 with entities at Sr. no. 37, 38 and 42.

48. Nishita Danish Merchant

- As per UCC details uploaded at BSE by TM Sanghavi, Nishita shares common contact

no. 9619191999 with entities at Sr. no. 37 and 41.

49. Venkata Subbarao Yarra - He had off market transfers with entity at Sr. no. 18.

50. Shaik Ameer Basha - He is director in Exelon appointed on October 21, 2011.

51. Parvathaneni Mounisha - He had off-market transfers with entity at Sr. no. 26.

52. Piyush Naresh Kothari - He had off-market connections with entity at Sr. no. 8.

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2.1.1 The Promoters/Directors of Exelon alongwith the group entities were prima facie found to have

devised a manipulative scheme, by using a two pronged approach, i.e. –

a. The Corporate Announcements made by Exelon during the period from February 10, 2011

to March 7, 2011 (mentioned at paragraph 1.6 of page 4), were in the nature of issue of fresh

securities (except for the announcement of stock split). However, from the Balance Sheet

alongwith shareholding pattern of Exelon for the Financial Years 2010–11 and 2011–12, it

was observed that the shareholding of the Company had not changed during the

Investigation Period, except for the change after the stock split effected on March 24, 2011.

Further, it is observed that Exelon and its Directors did not inform BSE about non–

implementation of decisions taken in the aforesaid two meetings (held on February 10, 2011

and on March 7, 2011). These facts suggests that Exelon did not implement any of the

Corporate Announcements other than the announcement pertaining to the splitting of

shares. Exelon and its 6 Directors [Refer to Table at paragraph 1.7], therefore, made separate

Corporate Announcements of a positive nature to BSE, which led to an increase in the price

of the scrip of that company; however, without any intention of implementing them.

b. The Group Entities connected to the Promoters/Directors of Exelon helped increase the

price of the scrip by establishing New High Price (“NHP”) mainly through repeated first

trades during the period from December 8, 2010–March 23, 2011 [Patch I: Pre–stock split]

and the period from March 24, 2011–June 13, 2011 [Patch II: Post–stock split]. During

the period from February 10, 2011 to March 7, 2011 i.e. when false and misleading Corporate

Announcements were made by Exelon and its 6 Directors, the Group/Connected Entities

[Refer to Table at paragraph 1.10.5] had traded in the scrip of that company. The Group

Entities connected to the Promoters/Directors of Exelon manipulated the price of the scrip

by contributing ₹71.05 to the NHP out of the total market NHP of ₹93.35 (i.e. 76.11% of

market NHP) during the period of December 8, 2010 to March 23, 2011 (i.e. the period of

price rise before the stock split) by trading in 67,454 shares (i.e. 0.87% of market volume

during that period). Further, these entities continued to manipulate the price of the scrip

even after the stock split and contributed ₹17.40 to NHP out of the total market NHP of

₹38.25 (i.e. 45.49% of market NHP), during the period from March 24, 2011 to June 13,

2011 (the period of price rise after stock split) by trading in 918 shares (0.02% of market

volume during that period).

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2.2 Upon a consideration of the Investigation Report, SEBI issued the following directions vide an

Ex–Parte Ad–Interim Order dated June 7, 2016 (“Impounding Order”), –

10. “As the alleged gains were made during December 2010 to June 2011, it becomes reasonable and necessary

to levy an interest at the rate of 12% simple interest per annum. The gains along with the interest are

calculated as follows:

TABLE – Q

SR. NO. NAME OF ENTITY PROFIT (₹)

INTEREST @12%P.A.* TOTAL (₹)

1. HITEN VALLABHJI HARIA 10,168,233 6,060,824 16,229,057

2. CEMENTEX (INDIA) P. LTD. 7,792,585 4,644,808 12,437,393

3. RONAK ASHWIN CHOKSI 9,186,988 5,475,948 14,662,936

4. A.K. INVESTMENTS 5,050,849 3,010,583 8,061,432

5. DIVYESH HARISH SURANA 5,681,121 3,386,259 9,067,380

6. SALMA SHARAFAT KHAN 3,904,108 2,327,062 6,231,170

7. JAYESH HIMATLAL MEHTA 2,855,426 1,701,990 4,557,416

8. NARENDRA OMPRAKASH DOGRA 1,999,847 1,192,018 3,191,865

9. KANTA ANANTRAI DESAI 1,799,766 1,072,759 2,872,525

10. ANJALI TUKARAM SOGAM 1,458,049 869,077 2,327,126

11. JITENDRA L. GANDHI 2,780,463 1,657,308 4,437,771

12. AMRIT L. GANDHI(HUF) 3,549,639 2,115,779 5,665,418

13. SEEMA GANDHI 1,777,251 1,059,339 2,836,590

14. ANITHA YARLAGADDA 1,322,130 788,062 2,110,192

15. GANGADHARA RAO ILAPARTI 1,178,231 702,290 1,880,521

16. HUSSAIN MOHAMMED SHAIKH 1,167,976 696,178 1,864,154

17. VEERABHADRA RAO DANDAMUDI 1,098,324 654,661 1,752,985

18. SHIVCHARAN SHREEDHAR KASHYAP 1,928,749 1,149,640 3,078,389

19. JIGNA MANISH SHAH 1,485,051 885,172 2,370,223

20. SNEHA PANKAJ DESAI 748,364 446,066 1,194,430

21. NISHITA DANISH MERCHANT 716,842 427,277 1,144,119

22. DHANA ENERGY P. LTD. 1,871,650 1,115,606 2,987,256

23. SRIKRISHNA VADLAMUDI 711,248 423,943 1,135,191

24. KANTILAL LAKSHMICHAND 687,900 410,026 1,097,926

25. GUDIMETLA H SUNDER 1,014,946 604,963 1,619,909

26. SHIVANGI JAGMOHAN SINGH 382,725 228,125 610,850

27. DIMPLE PANKAJ DESAI 380,557 226,833 607,390

28. PVS GANGADHARA RAO 375,729 223,955 599,684

29. SUNIL KUMAR H. PAL 543,271 323,819 867,090

30. VENKATA SUBBARAO YARRA 161,573 96,306 257,879

31. AMRIT L. GANDHI 141,936 84,602 226,538

32. BHAVNABEN NIMESHBHAI MISTRY 155,896 92,923 248,819

33. YENTRAPATI RAVI 124,305 74,093 198,398

34. PARUL ANUPAM KHANNA 101,561 60,536 162,097

35. HITEN P. SHAH 1,529,100 911,427 2,440,527

36. PARVATHANENI MOUNISHA 65,176 38,848 104,024

37. MARUPUDI SREE LAKSHMI 54,045 32,214 86,259

38. SWAPNA SRI TUMMALA 45,491 27,115 72,606

39. SATYA SURYA NARAYANA JONNAVITTULA 9,686 5,773 15,459

40. PIYUSH NARESH KOTHARI 4,614 2,750 7,364

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41. SHAIK AMEER BASHA 1,002 597 1,599

42. SRINIVAS YADAV SHER 577,834 344,421 922,255

43. RAMA KRISHNA MAKKENA 537,272 320,244 857,516

44. NRUPINI JAYESH MEHTA 524,191 312,447 836,638

45. SRINIVASA RAO MARUPUDI 463,517 276,282 739,799

46. MAHENDRA BHIKAJI CHILE 351,750 209,662 561,412

47. ELUBANDI SATYANARAYANA 154,469 92,072 246,541

TOTAL 78,621,436 46,862,682 12,54,84,118

From the above table, it can be observed that the above persons/ entities had made alleged illegal profits to

the tune of ₹12.54 Crores in aggregate including interest through trading in the scrip of Exelon.

…

12. Accordingly, as an interim measure, an ad-interim ex-parte Order for impounding such alleged profits under

Section 11(4)(d) of the Securities and Exchange Board of India Act, 1992 needs to be issued against–

TABLE – R

SR. NO. NAME PERMANENT ACCOUNT NUMBER

1. EXELON INFRASTRUCTURE LIMITED AAACM2862M

2. CEMENTEX (INDIA) PVT. LIMITED AAACC9265A

3. SRINIVASA RAO MARUPUDI ACQPM0876L, BCDPM3124P

4. GADDE BUTCHI TIRUPATI RAO AHUPG9920A

5. RAVI CHAKRAVATI AJXPR4789F

6. M. VISHNUVARDHAN RAO ABYPM0993M

7. P R K VENKATAMURTHI AFQPP6066G

8. SRINIVAS YADAV SHER AUAPS8547G

9. SHAIK AMEER BASHA AEZPB3408A

10. SREE LAKSHMI MARUPUDI ALYPM2964Q

11. HITEN VALLABHJI HARIA AAAPH6890H

12. A.K. INVESTMENTS AANFA6009Q

13. NARENDRA OMPRAKASH DOGRA AJMPD8729N

14. KANTA ANANTRAI DESAI AAEPD6006F

15. ANJALI TUKARAM SOGAM CGNPS1443N

16. JITENDRA L. GANDHI AACPG6473H

17. AMRIT L. GANDHI(HUF) AAJHA4701R

18. GANGADHARA RAO ILAPARTI AANPI9650F

19. HUSSAIN MOHAMMED SHAIKH BSSPS2832P

20. JIGNA MANISH SHAH ANQPS6789P

21. SNEHA PANKAJ DESAI AIBPD1454A

22. NISHITA DANISH MERCHANT AMHPM8133B

23. DHANA ENERGY P. LTD. AACCV7693M

24. SRIKRISHNA VADLAMUDI ADNPV5504C

25. KANTILAL LAKSHMICHAND ADSPK7577K

26. GUDIMETLA H SUNDER BMLPS9664N

27. SHIVANGI J. SINGH AOSPS5911E

28. DIMPLE PANKAJ DESAI AUQPD3909F

29. PVS GANGADHARA RAO AKYPP5600M

30. SUNIL KUMAR H. PAL BKSPP6938B

31. VENKATA SUBBARAO YARRA AAPPY4270P

32. AMRIT L. GANDHI AACPG5265H

33. BHAVNABEN NIMESHBHAI MISTRY ALIPM5347B

34. YENTRAPATI RAVI ABWPY6767F

35. PARUL ANUPAM KHANNA BCUPK8420R

36. HITEN P. SHAH AHAPS0889A

37. PARVATHANENI MOUNISHA BAOPP1399G

38. SWAPNA SRI TUMMALA ALDPT7720Q

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39. SATYA SURYA NARAYANA JONNAVITTULA ACRPJ9665R

40. PIYUSH NARESH KOTHARI AEOPK1882L

41. NRUPINI JAYESH MEHTA BDTPM2261E

42. MAHENDRA BHIKAJI CHILE AHNPC8127G

43. ELUBANDI SATYANARAYANA DGCPS7022F

44. RAMA KRISHNA MAKKENA BCKPK1101P

45. ANITHA YARLAGADDA ACAPY5774B

46. SALMA SHARAFAT KHAN BVSPK9348F

47. SEEMA GANDHI AAEPG0960B

48. RONAK ASHWIN CHOKSI ADDPC2938D

49. VEERABHADRA DANDAMUDI ABVPD6656R

50. DIVYESH HARISH SURANA DALPS0578H

51. JAYESH HIMATLAL MEHTA AIFPM2216D

52. SHIVCHARAN SHREEDHAR KASHYAP ATOPK6636K

13. In view of the foregoing, in order to protect the interest of the investors and the integrity of the securities

market, I, in exercise of the powers conferred upon me by virtue of section 19 read with sections 11(1),

11(4)(d) and 11B of the SEBI Act, 1992 (“SEBI Act”), hereby impound the alleged unlawful gains of

a sum of ₹12,54,84,118 (alleged gain of ₹7,86,21,436 + interest of ₹4,68,62,682 (from

14/06/2011 to 01/06/2016), jointly and severally from persons/entities tabulated in the paragraph

12 above.

14. The Banks are directed that no debits shall be made, without permission of SEBI, in respect of the bank

accounts held by all the persons/entities tabulated in paragraph 12 above, except for the purposes of transfer

of funds to the escrow account as directed in paragraph 13 above. Further, the Depositories are also directed

that no debit shall be made, without permission of SEBI, in respect of the demat accounts held by the above

said persons. However, credits, if any, into the accounts maybe allowed. The Banks and the Depositories

are directed to ensure that all the above directions are strictly enforced. Further, debits may also be allowed

for amounts available in the account in excess of the amount to be impounded. Banks are allowed to debit

the accounts for the purpose of complying with this Order.

15. The persons/ entities tabulated in paragraph 12 above are also directed not to dispose of or alienate any

of their assets/properties/securities, till such time the amounts mentioned in paragraph 13 are credited

to an escrow account [“Escrow Account in Compliance with SEBI Order dated June 07,

2016 – A/c (in the name of the respective persons/entities)”] created specifically for the

purpose in a Nationalized Bank. The escrow account/s shall create a lien in favour of SEBI and the

monies kept therein shall not be released without permission from SEBI. On production of proof by any of

the persons, mentioned in paragraph 14, that the said money is deposited in the escrow account, SEBI shall

communicate to the Banks and Depositories to defreeze the accounts.

16. Further, the persons/entities tabulated in paragraph 12 above are directed to provide, within 7 days of

this order, a full inventory of all their assets and properties and details of all their bank accounts, demat

accounts and holdings of shares/securities, if held in physical form and details of companies in which they

hold substantial or controlling interest.

17. The above direction shall come into force with immediate effect.

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18. This Order is without prejudice to the right of SEBI to take any other action that may be initiated against

the 52 persons/entities covered under this Order, in accordance with law. The persons/ entities against

whom this Order has been passed may file their replies to SEBI within 21 days from the date of receipt of

this order, if they so desire. They may also indicate in their replies whether they wish to avail an opportunity

of personal hearing in the matter.”

2.3 In compliance with paragraph 15 of the Impounding Order dated June 7, 2016, –

i. Corporation Bank vide letter dated June 21, 2016, informed SEBI that an amount of

approximately ₹2.26 Lakhs was debited from the bank account of Shri Amrit L. Gandhi, which

was thereafter kept in a fixed deposit under lien to SEBI. Subsequently, Corporation Bank also

defroze all accounts of Shri Amrit L. Gandhi with that Bank

ii. Similarly, vide another letter also dated June 21, 2016, Corporation Bank informed SEBI that

an amount of approximately ₹1.62 Lakhs was debited from the bank account of Ms. Parul

Anupam Khanna, which was thereafter kept in a fixed deposit under lien to SEBI. Subsequently,

Corporation Bank also defroze all accounts of Ms. Parul Anupam Khanna with that Bank.

Securities Appellate Tribunal Order dated July 15, 2016 –

3.1 Shri Amrit L. Gandhi [HUF]; Shri Amrit L. Gandhi; Ms. Shivangi J. Singh; Smt Bhavnaben

Nimeshbhai Mistry; Ms. Parul Anupam Khanna and Ms. Seema Gandhi challenged the Impounding

Order dated June 7, 2016, before the Hon’ble Securities Appellate Tribunal (“SAT”) in Appeal no.

207 of 2016. The Hon’ble SAT disposed of the aforesaid Appeal vide an Order dated July 15, 2016,

with the following directions –

1. “Appellants are aggrieved by the ex-parte ad-interim order passed by the Whole Time Member (‘WTM’ for

short) of Securities and Exchange Board of India (‘SEBI’ for short) on June 7, 2016. By the said Order,

several entities including the appellants herein have been directed to deposit an amount specified against their

names as set out in the impugned Order. The said Order directs the parties set out therein to file their replies

within 21 days from the date of the receipt of the said letter. It is the case of the appellants that by their letter

dated June 20, 2016 they had sought inspection of the documents; however, inspection is not yet given by SEBI.

2. Counsel for SEBI states that within one week from today requisite copies of the documents sought by the

appellants would be furnished to the appellants. Appellants would then be entitled to file their reply within one

week thereafter.

3. Within four weeks from the date of receiving reply from the appellants, SEBI is directed to pass an order after

giving an opportunity of hearing to the appellants.

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4. Appeal is disposed of in the above terms with no order as to costs.”

Proceedings pursuant to the SAT Order dated July 15, 2016 –

4.1 In compliance with paragraph 2 of the abovementioned SAT Order dated July 15, 2016, the

following entities vide a common letter dated July 15, 2016, requested for an opportunity to

conduct an inspection of documents relied upon in the Impounding Order dated June 7, 2016, –

TABLE II–A

SR. NO. NAME OF ENTITY DATE OF RECEIPT AT SEBI

OF REQUEST FOR

INSPECTION

INSPECTION GRANTED BY SEBI AND

AVAILED BY THE ENTITIES ON

1. AMRIT L GANDHI

18.07.2016

19.07.2016 & 26.07.2016

2. AMRIT L GANDHI (HUF) 19.07.2016 & 26.07.2016

3. PARUL ANUPAM KHANNA 19.07.2016 & 26.07.2016

4. BHAVNA N MISTRY 19.07.2016 & 26.07.2016

5. SHIVANGI JAGMOHAN SINGH 19.07.2016 & 26.07.2016

6. SEEMA GANDHI 19.07.2016 & 26.07.2016

4.2 Subsequent to inspection of documents relied upon in the Impounding Order dated June 7, 2016,

the following entities submitted their replies as under, –

TABLE II–B

SR. NO. NAME OF ENTITY DATE OF RECEIPT OF REPLY AT SEBI

1. AMRIT L GANDHI 27.07.2016

2. AMRIT L GANDHI (HUF) 27.07.2016

3. PARUL ANUPAM KHANNA 25.07.2016

4. BHAVNA N MISTRY 25.07.2016

5. SHIVANGI JAGMOHAN SINGH 25.07.2016

6. SEEMA GANDHI 25.07.2016

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4.3.1 In compliance with the abovementioned SAT Order dated July 15, 2016, an opportunity of

personal hearing was also granted to the entities at paragraph 4.2 as under –

TABLE II–C

SR. NO. NAME OF ENTITY DATE OF PERSONAL

HEARING

ATTENDANCE AT PERSONAL HEARING

1. AMRIT L GANDHI 12.08.2016

ENTITIES ATTENDED HEARING

2. AMRIT L GANDHI (HUF) 12.08.2016

3. PARUL ANUPAM KHANNA 12.08.2016

4. BHAVNA N MISTRY 12.08.2016

5. SHIVANGI JAGMOHAN SINGH 12.08.2016

6. SEEMA GANDHI 12.08.2016

4.3.2 In addition to the above, the following entities were also granted an opportunity to inspect

documents relied upon in the Impounding Order (where such request was made) alongwith an

opportunity of hearing as under –

TABLE III

SR. NO. NAME OF ENTITY DATE OF PERSONAL HEARING

STATUS OF REPLY TO IMPOUNDING ORDER ATTENDANCE AT PERSONAL HEARING

7. EXELON INFRASTRUCTURE LIMITED 14.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY DID NOT ATTEND HEARING

8. CEMENTEX (INDIA) PRIVATE LIMITED

14.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY ATTENDED HEARING ON 14/09/2016

9. SRINIVASA RAO MARUPUDI 14.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY ATTENDED HEARING ON 14/09/2016

10. GADDE BUTCHI TIRUPATI RAO 14.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY DID NOT ATTEND HEARING

11. RAVI CHAKRAVATI 14.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY DID NOT ATTEND HEARING

12. M. VISHNUVARDHAN RAO 14.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY DID NOT ATTEND HEARING

13. P. R. K. VENKATAMURTHI 14.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY DID NOT ATTEND HEARING

14. SRINIVAS YADAV SHER 14.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY ATTENDED HEARING ON 14/09/2016

15. SHAIK AMEER BASHA 14.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY ATTENDED HEARING ON 14/09/2016

16. SREE LAKSHMI MARUPUDI 14.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY ATTENDED HEARING ON 14/09/2016

17. HITEN VALLABHJI HARIA 12.08.2016 02.09.2016

ENTITY SUBMITTED REPLY ON 22/07/2016 ENTITY DID NOT ATTEND HEARING

18. A. K. INVESTMENTS 14.09.2016 ENTITY GRANTED INSPECTION ON 26/07/2016 ENTITY SUBMITTED REPLY ON 16/08/2016

ENTITY ATTENDED HEARING ON 14/09/2016

19. NARENDRA OMPRAKASH DOGRA 14.09.2016 ENTITY GRANTED INSPECTION ON 26/07/2016 ENTITY SUBMITTED REPLY ON 13/08/2016


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20. KANTA ANANTRAI DESAI 12.08.2016 02.09.2016

ENTITY GRANTED INSPECTION ON 25/07/2016 ENTITY SUBMITTED REPLY ON 11/08/2016 ENTITY DID NOT ATTEND HEARING ON

12/08/2016 & 02/09/2016

21. ANJALI TUKARAM SOGAM 12.08.2016 02.09.2016


12/08/2016 & 02/09/2016

22. JITENDRA L. GANDHI 14.09.2016 ENTITY GRANTED INSPECTION ON 26/07/2016 ENTITY SUBMITTED REPLY ON 08/08/2016


23. GANGADHARA RAO ILAPARTI 12.08.2016 02.09.2016

ENTITY SUBMITTED REPLY ON 27/06/2016 ENTITY DID NOT ATTEND HEARING

24. HUSSAIN MOHAMMED SHAIKH 14.09.2016 ENTITY GRANTED INSPECTION ON 26/07/2016 ENTITY SUBMITTED REPLY ON 13/08/2016


25. JIGNA MANISH SHAH 14.09.2016 ENTITY GRANTED INSPECTION ON 26/07/2016 ENTITY SUBMITTED REPLY ON 13/08/2016


26. SNEHA PANKAJ DESAI 12.08.2016 02.09.2016


12/08/2016 & 02/09/2016

27. NISHITA DANISH MERCHANT 14.09.2016 ENTITY GRANTED INSPECTION ON 26/07/2016 ENTITY SUBMITTED REPLY ON 05/08/2016


28. DHANA ENERGY P. LIMITED 14.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY ATTENDED HEARING ON 14/09/2016

29. SRIKRISHNA VADLAMUDI 15.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY ATTENDED HEARING ON 14/09/2016

30. KANTILAL LAKSHMICHAND 14.09.2016 ENTITY GRANTED INSPECTION ON 26/07/2016 ENTITY SUBMITTED REPLY ON 16/08/2016


31. GUDIMETLA H SUNDER 14.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY ATTENDED HEARING ON 14/09/2016

32. DIMPLE PANKAJ DESAI 12.08.2016 02.09.2016


12/08/2016 & 02/09/2016

33. P. V. S. GANGADHARA RAO 15.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY ATTENDED HEARING ON 14/09/2016

34. SUNIL KUMAR H. PAL 15.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY DID NOT ATTEND HEARING

35. VENKATA SUBBARAO YARRA 15.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY DID NOT ATTEND HEARING

36. YENTRAPATI RAVI 14.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY ATTENDED HEARING ON 14/09/2016

37. HITEN P. SHAH 15.09.2016 ENTITY SUBMITTED REPLY ON 30/08/2016 ENTITY ATTENDED HEARING ON 15/09/2016

38. PARVATHANENI MOUNISHA 15.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY ATTENDED HEARING ON 14/09/2016

39. SWAPNA SRI TUMMALA 15.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY DID NOT ATTEND HEARING

40. SATYA SURYA NARAYANA JONNAVITTULA

12.08.2016 02.09.2016

ENTITY SUBMITTED REPLY ON 06/09/2016 ENTITY ATTENDED HEARING ON 02/09/2016

41. PIYUSH NARESH KOTHARI 15.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY DID NOT ATTEND HEARING

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42. NRUPINI JAYESH MEHTA 12.08.2016 ENTITY SUBMITTED REPLY ON 01/09/2016 ENTITY ATTENDED HEARING ON 12/08/2016

43. MAHENDRA BHIKAJI CHILE 15.09.2016 ENTITY SUBMITTED REPLY ON 15/09/2016 ENTITY ATTENDED HEARING ON 15/09/2016

44. ELUBANDI SATYANARAYANA 02.09.2016 ENTITY SUBMITTED REPLY ON 30/06/2016 ENTITY DID NOT ATTEND HEARING

45. RAMA KRISHNA MAKKENA 15.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY ATTENDED HEARING ON 14/09/2016

46. ANITHA YARLAGADDA 15.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY ATTENDED HEARING ON 14/09/2016

47. SALMA SHARAFAT KHAN 15.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY DID NOT ATTEND HEARING

48. RONAK ASHWIN CHOKSI 12.08.2016 ENTITY SUBMITTED REPLY ON 25/07/2016 ENTITY ATTENDED HEARING ON 12/08/2016

49. VEERABHADRA DANDAMUDI 15.09.2016 ENTITY DID NOT SUBMIT REPLY ENTITY ATTENDED HEARING ON 14/09/2016

50. DIVYESH HARISH SURANA 14.09.2016 ENTITY GRANTED INSPECTION ON 26/07/2016 ENTITY SUBMITTED REPLY ON 01/08/2016


51. JAYESH HIMATLAL MEHTA 12.08.2016 ENTITY SUBMITTED REPLY ON 01/09/2016 ENTITY ATTENDED HEARING ON 12/08/2016

52. SHIVCHARAN SHREEDHAR KASHYAP 14.09.2016 ENTITY GRANTED INSPECTION ON 26.07.2016 ENTITY SUBMITTED REPLY ON 22.08.2016

ENTITY ATTENDED HEARING ON 14.09.2016

4.3.3 In respect of the entities at Sr. nos. 20 (Kanta Anantrai Desai), 21 (Anjali Tukaram Sogam), 26

(Sneha Pankaj Desai) & 32 (Dimple Pankaj Desai), as stated above, an opportunity for inspection

of documents relied upon in the Impounding Order was granted to them on July 25, 2016.

However, vide letters dated August 11, 2016, the aforesaid entities submitted that they were not

granted a complete inspection of documents as requested by them. Pursuant to a consideration

of the aforesaid correspondences, SEBI vide letter dated September 8, 2016, inter alia informed

the said entities that all relevant documents/information related to them was provided during the

inspection.

Submissions/Contentions raised by the entities at paragraph 4.2 –

5.1 I have considered the replies to the Impounding Order dated June 7, 2016 alongwith the

submissions made by the entities at paragraph 4.2 during the hearing held on August 12, 2016. I

have also considered all other relevant material available on record. In the light of the same, I

shall now proceed to deal with the matter.

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5.2 In their replies and submissions during the hearing held before me, the entities at paragraphs 4.2

inter alia raised the following common contentions –

i. “The Investigation Period considered is from 8.12.2010 to 20.01.2012. The (Impounding) Order dated

June 7, 2016 was issued after 5 years from the dates of settled trades and obligations … There is therefore,

a great delay in passing the (Impounding) Order.

ii. (We) deny having violated provisions of Regulation 3(a), (b), (c) & (d), 4(1), 4(2)(a) of PFUTP

Regulations, 2003, in the matter of trading in Exelon scrip.

iii. BSE’s BOLT trading platform is an online, real time computerized, price and time priority matching

trading system for orders keyed in different scrips through a large number of terminals spread throughout

the country. The trading module is therefore anonymous and its algorithm not known to anyone. … (Our)

orders/trades were separate, independent and stand alone and (we) had no connection with any other

investor in the matter of my dealings in the said scrip. In the circumstances, matching of orders was purely

system driven, technical, unintentional and of no consequence to (us).

iv. (We) sold shares after first buying them through (our) broker. (We) took delivery of shares and sold and

delivered also accordingly.

v. The scrip was in ‘T’ group with circuit filters as stated in Investigation Report on its price on a daily

basis.

vi. There was no creation of any false or misleading appearance of trading as deliveries of shares were

taken/given actually. The trading was real, genuine and not fictitious/artificial. (We) were not a benami

or impersonator or a dummy person.

vii. (We) submit that (our) trades were done in (our) name/code and for which (we) paid from (our) mapped

bank account. It appears that the trading in the scrip was in ‘T’ group. (We) remained invested. (Our)

profit was thus the outcome of delivery based investment (in Exelon scrip), which is a permissible activity.

The adverse finding of alleged illegal profits recorded against me on the basis of (purported) ‘connection’ is

erroneous. None was involved in (our) trading and settlement–pre trade, trade and post–trade and hence,

bunching, clubbing, lumping and including (us) in the said group and tying (us) with them in the matter

of (our) independent commercial transactions is wrong.

viii. (We) were not part of any scheme to make illegal gains and defraud the genuine investors as

alleged/inferred or otherwise. No particulars or details or features of purported scheme and (our) specific

role/involvement therein has been stated, leave alone established. No connection of (ours) with the company

or its Directors has been stated. (We) emphatically submit that roping (us) in on the basis of family

relationship or telephone number in some KYCs is totally wrong.

ix. The power to issue directions of impounding under section 11(1), 11(4) and 11B is a drastic power having

serious civil consequences and ramifications on the repute and livelihood of those against whom it is directed.

The aforesaid power is not available for retrospective application and such impounding results into penal

action.

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x. The scrip of Exelon is ‘T’ group and it is 100% delivery based volume. The trades were 5% price within

circuit and with 100% VAR Margin.

xi. SEBI is not entitled to levy and recover interest @ 12% p.a. as claimed or otherwise.

xii. WTM, SEBI is not a ‘Court’ under the Interest Act, 1978 and has no power to levy as well as recover

and also take coercive steps to enforce his own order of claim of interest. SEBI did not issue any notice in

this regard and demanded the alleged profit. Hence for this reason, interest cannot be claimed.”

5.3 In addition to the above, the entities at paragraph 4.2 have also individually raised the following

contentions vide their aforementioned replies and submissions during the personal hearing before

me, –

5.3.1 Amrit L. Gandhi –

i. “My trading volume in Exelon scrip in the investigation period of 13 months was delivery based. Profit

was not substantial considering my investment. My volume was –

No. of shares No. of shares

Patch 1 + 168294 – 142843 Patch 2 + 60140 – 111042

ii. I met all my obligations. There remained 98697 shares of Exelon as on 14.6.2012.

iii. I am wrongly treated as ‘connected’ with my wife Mrs. Seema Gandhi, Ms. Shivangi J. Singh and Ms.

Bhavnaben Nimeshbhai Mistry. My HUF is a separate and distinct entity in the eyes of law.

iv. SEBI has not followed regulatory mode, manner and procedure as followed in the case of Sarang Chemicals

Ltd. wherein for disgorgement of alleged unlawful gains of ₹1,60,76,904 – 13 parties involved have been

issued SCN dated 19.5.2016 and their accounts have not been frozen prior to issue to SCN. The said

SCN too is u/s 11B of SEBI Act and for alleged violations of provisions of PFUTP Regulations.”

5.3.2 Amrit L Gandhi (HUF) –

i. “My trading volume in Exelon scrip in the investigation period of 13 months was delivery based. Profit



Patch 1 + 39861 – 39861 Patch 2 + 835 – 835

ii. I am a partner of A. K. Investments. The very fact that even among family members, there is separate

and distinct trading pattern that shows non–uniform way/feature in the matter of trading, investment and

holding.

iii. I met all my obligations. There was nil holding of Exelon as on 14.6.2012.

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iv. I am wrongly treated as ‘connected’ with my wife Mrs. Seema Gandhi, Ms. Shivangi J. Singh and Ms.

Bhavnaben Nimeshbhai Mistry. My HUF is a separate and distinct entity in the eyes of law.”

5.3.3 Parul Anupam Khanna –

i. “It appears that Mr. Kamlesh Maisheri introduced me and signed my KYC to the broker Sanghavi Bros.

Brokerage Ltd., broker, as introduction is a requirement in KYC. I had no connection or relationship -

commercial, family, etc. - with him. I had no off-market … with him. My trades were done in my name

/ code and for which I paid from my mapped bank account. As I am a small person my volume in

Exelon was very small - 20,000 shares bought on 24.12.2010 for Rs. 6,02,022.49 (SEBI considered

Rs, 5,99,439/-) and I took deliveries'. (It appears that the trading in the scrip was in T group.) I

remained invested. Later on I sold on 5.1.2011- 20,000 shares for Rs. 6,98,036/- and earned a profit

of Rs. 96,014/- (SEBI has considered Rs. 1,01,561/-) on my investment My profit was thus the

outcome of deliveries based investment (in Exelon scrip) which is a permissible activity. Apart from this

single and stray buy and sale, no other trade was done in this scrip. The adverse finding of alleged illegal

profits recorded against me on the basis of (purported) 'connection' is erroneous. Mr. Kamlesh Maisheri

was not involved in my trading and settlement - pre-trade, trade and post-trade and hence bunching,

clubbing, lumping and including me in the said group and tying me with the said Mr. Kamlesh Maisheri

in the matter of my commercial transactions is wrong.

ii. Trading Details:

Date Quantity

24.12.2010 + 20,000

05.01.2011 - 20,000

iii. My trading was on 2 days (one day 24.12.2010 bought and on another day 5.1.2011 sold).

iv. No role of mine in the trading of A.K. Investments or their partners has been stated.”

5.3.4 Bhavna Nimeshbhai Mistry –

i. “It appears that Mr. Amrit L Gandhi introduced me in my KYC to the broker Sanghavi Bros.



/ code and for which I paid from my mapped bank account. As I am a small person my volume in

Exelon was very small - 23,301 shares bought and I took deliveries. (It appears that the trading in the

scrip was in T group.) I remained invested. I sold 21,601 shares SEBI has considered Rs. 1,55,896 as

profit on my investment. My profit was thus the outcome of deliveries based investment (in Exelon scrip)

which is a permissible activity. Apart from this small buy and sale, no other trade was done in this scrip.

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The adverse finding of alleged illegal profits recorded against me on the basis of (purported) 'connection' is

erroneous. Mr. Amrit L. Gandhi was not involved in my trading and settlement - pre-trade, trade and

post-trade and hence bunching, clubbing, lumping and including me in the said group and tying me with

the said Mr. Amrit Gandhi in the matter of my independent commercial transactions is wrong.

ii. Trading Details:


Patch 1 + 20601 – 20601 Patch 2 + 1000 – 1000

iii. No role of mine in the trading of A.K. Investments or their partners has been stated.”

5.3.5 Shivangi Jagmohan Singh –

i. “It appears that Mr. Kamlesh Maisheri introduced me in my KYC to the broker Sanghavi Bros.



/ code and for which I paid from my mapped account. As I am a small person my volume in Exelon was

very small – 34,904 shares bought and I took deliveries. (It appears that the trading in the scrip was in

‘T’ group.) I remained invested. I sold 34,304 shares and delivered. SEBI has considered Rs. 3,82,725

as profit on my investment. My profit was thus the outcome of deliveries based investment which is a

permissible activity. Apart from this small buy and sale, no other trade was done in this scrip. The adverse

finding of alleged illegal profits recorded against me on the basis of (purported) ‘connection’ is erroneous.

Mr. Kamlesh Maisheri. Mr. Amrit L Gandhi (partners of A.K. Investments) were not involved in my

trading and settlement – pre trade, trade and post – trade and hence, bunching, clubbing, lumping and

including me in the said group and tying me with the said Mr. Amrit L Gandhi on the basis of mobile

number in my KYC form in the matter of my independent commercial transactions is wrong.

ii. My trading volume was very small, on few days and deliveries based. Profit too was small.

Date Quantity

24.12.2010 + 14,395

03.01.2011 + 20,000

iii. I sold share after first buying them through my broker. I took deliveries of shares on a 100% basis and

sold and delivered also accordingly.

Date Quantity

30.12.2010 - 4530

17.01.2011 - 5,900

24.01.2011 - 20,000

28.01.2011 - 3,964

iv. No role of mine in the trading of A.K. Investments or their partners has been stated.”

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5.3.6 Seema Gandhi –

i. “Mr. Amrit L. Gandhi is my husband and mobile number is his. My off-market transactions have not

been considered as objectionable. (Para 9 of Investigation Report) My trades were done in my name / code

and for which I paid from my mapped bank account. My volume in Exelon was as under-shown in tables.

It appears that the trading in the scrip was in T group. I remained invested. My profit was thus the

outcome of deliveries based investment (in Exelon scrip) which is a permissible activity. The adverse finding

of alleged illegal profits recorded against me on the basis of (purported) 'connection' is erroneous. Mr.

Amrit L Gandhi not involved in my trading and settlement - pre-trade, trade and post-trade - and hence

bunching, clubbing, lumping and including me in the said group and tying me with them in the matter of

my independent commercial transactions is wrong.

ii. My trading volume in Exelon scrip in the investigation period of 13 months was delivery based. Profit



Patch 1 + 181250 170250

Patch 2 + 137962 124765

iii. My trading volume was mostly deliveries based. Profit was not substantial. As I could not sell 1,46,567

shares of Exelon as on 31.3.2012, I suffered losses.

iv. I am wrongly treated as "connected" with Mr. Amrit l Gandhi. I am a separate and distinct person in

the eyes of law. My trading was carried out in my name/code and I met settlement obligations from my

own funds and shares. My husband's mobile number appearing in KYC of some clients of broker has

nothing to do with my trading in Exelon scrip.”

Submissions/Contentions raised by some of the entities at paragraph 4.3.2 –

5.4.1 Hussain Mohammed Shaikh –

i. I submit that my trades were done in my name/code and for which I paid from my mapped bank account.

My volume in Exelon was as shown in tables - not substantial. The trading in the scrip was in ‘T' group.

I remained Invested. My profit was thus the outcome of deliveries based investment (in Exelon scrip) which is a

permissible activity and was genuine. The adverse finding of alleged illegal profits recorded against me on the

basis of (purported) 'connection' is erroneous. None was involved in my trading and settlement- pre-trade, trade

and post-trade - and hence bunching, clubbing, lumping and including me in the said group and tying me with them

in the matter of my independent commercial transactions is wrong.

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Patch 1 + 50000 -50000

Patch 2 + 6962 -

iii. I am wrongly treated as ‘connected’ with Mr. Kamlesh Maisheri, partner of A.K. Investments. His name

appearing in my KYC on account of he being shown as an introducer has nothing to do with my trading

in Exelon scrip

5.4.2 Jigna Manish Shah –



I remained invested. My profit was thus the outcome of deliveries based investment (in Exelon scrip) which

is a permissible activity. The adverse finding of alleged illegal profits recorded against me on the basis of

(purported) 'connection' is erroneous. None was involved in my trading and settlement - pre-trade, trade

and post-trade - and hence bunching, clubbing, lumping and including me in the said group and tying me

with them in the matter of my independent commercial transactions is wrong




Patch 1 + 22065 -12065

Patch 2 + 15000 -29000



in Exelon scrip

5.4.3 Jitendra L Gandhi –








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Patch 1 + 100000 -99990

Patch 2 + 89372 -49392



in Exelon scrip

5.4.4 Kantilal Lakshmichand –











Patch 1 + 38295 -38295

Patch 2 + 13046 -13046



in Exelon scrip

5.4.5 Narendra Omprakash Dogra –

i. I submit that my trades were done in my name / code and for which I paid from my mapped bank

account. My volume in Exelon was as shown in tables - not substantial. The trading in the scrip was in

‘T' group. I remained invested. My profit was thus the outcome of deliveries based investment (in Exelon

scrip) which is a permissible activity. The adverse finding of alleged illegal profits recorded against me on

the basis of (purported) 'connection' is erroneous. None was involved in my trading and settlement - pre-

trade, trade and post-trade - and hence bunching, clubbing, lumping and including me in the said group

and tying me with them in the matter of my independent commercial transactions is wrong

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Patch 1 + 96560 -87117

Patch 2 - -



in Exelon scrip

5.4.6 Nishita Danish Merchant –











Patch 1 + 57473 -57473

Patch 2 - -

iii. I am wrongly treated as ‘connected’ with Mr. Amrit L. Gandhi, partner of A.K. Investments and Mr.

Kantilal Lakshmichand. His telephone number 9619191999 appearing in my KYC on account of he

being shown as an introducer has nothing to do with my trading in Exelon scrip.

5.4.7 Shivcharan Shreedhar Kashyap –








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Patch 1 + 172417 -92833

Patch 2 +303057 -195693



in Exelon scrip.

5.4.8 Divyesh Harish Surana –











Patch 1 + 243660 -178932

Patch 2 +53992 -132466



in Exelon scrip.

5.4.9 A K Investments –

i. We are a partnership firm (Partners: Amrit L. Gandhi and Kamlesh Maisheri) and engaged as an

investor in capital market. We submit that my trades were done in my name/code and for which I paid

from my mapped bank account. Our volume in Exelon was as shown in tables - not substantial. The

trading in the scrip was in ‘T' group. We remained invested. Our profit was thus the outcome of deliveries

based investment (in Exelon scrip) which is a permissible activity. The adverse finding of alleged illegal

profits recorded against us on the basis of (purported) 'connection' is erroneous. No outside party was

involved in our trading and settlement - pre-trade, trade and post-trade - and hence bunching, clubbing,

lumping and including us in the said group and tying us with any party the matter of our independent

commercial transactions is wrong.

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ii. Our trading volume in Exelon scrip in the investigation period of 13 months was delivery based. Profit

was not substantial considering my investment. Our volume was –


Patch 1 + 353356 -353216

Patch 2 +10000 -10000

iii. We are wrongly treated as ‘connected’ with Mr. Kamlesh Maisheri - he is a partner of A.K. Investments.

Our another partner is Amrit L. Gandhi and his residential address is B-35, Mahavir Apartment,

Ratan Nagar, Borivali (E), Mumbai. Hence mere facts of partnership, address, mobile no. of partners

do not mean anything. Seema Gandhi is wife of Amrit L. Gandhi and her off-market transaction with

Divyesh Surana /Shivcharan Kashyap has not been found objectionable in the investigation report.

5.4.10 PVS Gangadhar Rao –

i. “I don’t have any submission to make at this point of time regarding the findings contains in the SEBI

Order dated June 7, 2016.

ii. I request this Authority to grant me time till January 2017 to make payment of unlawful gains without

interest as mentioned in the SEBI Order dated June 7, 2016.

iii. I request this Authority to grant a waiver of interest of the unlawful gains alleged have been made by me

in the SEBI Order dated June 7, 2016.”

5.4.11 Ms. Parvathaneni Mounisha (Represented by her father i.e. Mr. PVS Gangadhar Rao) –


Order dated June 7, 2016.

ii. I request this Authority to grant me time till January 2017 to make payment of unlawful gains without

interest as mentioned in the SEBI Order dated June 7, 2016.

iii. I request this Authority to grant a waiver of interest of the unlawful gains alleged have been made by me

in the SEBI Order dated June 7, 2016.”

5.4.12 Mahindra Bhikaji Chile –


order dated June 7, 2016.

ii. I submit that the unlawful gains made in the scrip was done by my sub broker (Networth Stock Broking)

and whatever profits earned in that scrip were transferred to Ms. Asha Singh account with blank cheque.

iii. Thereafter my salary account was frozen.”

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5.4.13 Satya Surya Narayana Jonnavittula –

i. “I transferred 5000 shares to Shri, Vadlamudi Srikrishna through off market transactions.

ii. I admit my mistake and it was not intentional and that mistake happened because I didn’t examine the

transaction thoroughly.”

5.4.14 Hiten P Shah –

i. “Mr. Srinivasa Rao Marupudi made me Director of Cementex because Mr. Marupudi had quite big

amount of debits to be cleared so I was behind him for clearance for the same.

ii. I don’t know anything about the said company nor have I attended any meeting.”

5.4.15 Anitha Yarlagadda –

i. As regards the charge/finding of Violations under undisclosed off market transfers, it is submitted that

the transactions shown are supported by stock market data may be right, however I never committed any

mistake and never done any fraudulent acts with an intention to cause harm to the common investors as

well as the market intermediaries and Regulatory mechanism.

ii. It is also submitted that the I did not transfer any shares with an intention to gain any financial benefit,

in fact client had transferred the shares with an intention to pledge them for meeting his financial needs,

but neither he gets his shares back nor money against the shares transferred to others through off market.

5.4.16 Veerabhadra Rao Dandamudi –

i. As regards the charge/finding of Violations under undisclosed off market transfers, it is submitted that

the transactions shown are supported by stock market data may be right, however I never committed any

mistake and never done any fraudulent acts with an intention to cause harm to the common investors as

well as the market intermediaries and Regulatory mechanism.




iii. It is also submitted that the Banking transactions done with Mr. Srikrishna Vadlamudi are normal

Financial Transaction trading for the Past few years i.e. scrip is not being traded actively.

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5.4.17 Gudimetla H Sunder –

i. As regards the charge/finding of Violations under undisclosed off market transfers, it is submitted

that the transactions shown are supported by stock market data may be right, however I never committed

any mistake and never done any fraudulent acts with an intention to cause harm to the common investors

as well as the market intermediaries and Regulatory mechanism.


in fact client had transferred the shares with an intention to pledge them for meeting his financial needs.

5.4.18 Ramakrishna Makkena –








5.4.19 Sree Lakshmi Marupudi –





ii. It is also submitted that the client did not transfer any shares with an intention to gain any financial

benefit, in fact client had transferred the shares with an intention to pledge them to bring the money in

to the company’s working capital, however efforts were not materialized and money could not be brought.

iii. It is also submitted that being wife of Mr. Srinivasa Rao Marupudi, she might have shared her

mobile No and address with Srinivasa Rao. But it does not mean that she done fraudulent acts.

5.4.20 Srinivasa Rao Marupudi –

i. As regards the first charge/finding of Violations under PFUTP Regulations, it is submitted that

the transactions shown under this Regulations supported by stock market data may be right, however

Mr. Srinivasa Rao Marupudi and other allegedly connected persons namely, Mrs. Srilakshmi

Marupudi, Mr. Sri Krishna Vadlamudi, Mr. Srinivas Yadav Sher, never committed any mistake

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and never done any fraudulent acts with an intention to cause harm to the common investors as well as

the market intermediaries and Regulatory mechanism.

ii. It is also submitted that Volume of transactions as shown in the SCN are result of Shifting of

Shares from Clients one account to other account. It is also submitted that the client did not shift any

shares with an intention to gain any financial benefit, in fact client had obliged to pay huge amount

by way of brokerage.

iii. It is submitted that Mr. Vadlamudi Srikrishna ( Noticee No-24), and Mr. Ramakrishna Makkena

( Noticee No-44), Mr. Gudimetla H Sunder (Noticee No.26), Ms Anitha Yarlagadda (Noticee

No.45), Mr. Veerabhadra Rao Dandamudi (Noticee No. 49) are known to Mr. Srinivasa Rao

Marupudi and they are not relatives, not in promoters group and not connected to company’s

management or administration, hence they can never be called persons acting in concert.

5.4.21 Jayesh Himatlal Mehta –

i. “I would like to mention that my name is included in the Group / Connected Entities wherein I have

no directly or indirectly connection with any of the entities on as mentioned names on in the Table-A.

ii. In this regards, I would like to mention that all the transaction are of normal business without involving

or referring anybody.

iii. In KYC Sr. 29 and mine having common address as mentioned on Table –A and I would like

mention that Sr. No. 29, Smt. Nrupini Mehta is my wife, therefore the address is common and Sr.

No. 30 Mr. Ronak Choksi as only as market friend and I have never dealt with any financial

transaction/stock market relation transaction with him.”

Consideration of Issue and Findings –

5.5.1 As observed from the preceding paragraphs, in their submissions, the entities at paragraph 4.2

alongwith the entities mentioned at paragraph 4.3.2, have disputed the basis of the Impounding

Order on the grounds that inter alia such Order did not consider correctly the individual trades of

the aforesaid entities or the basis for their connection with each other and to the other entities

mentioned therein.

5.5.2 As stated at paragraph 1.2 of this Order, an investigation in the scrip of Exelon was conducted

for the period from December 8, 2010 to January 20, 2012, for ascertaining violations of the

provisions of inter alia PFUTP Regulations, 2003; PIT Regulations, 1992 read with PIT

Regulations, 2015, etc. I note that the aforesaid investigation in the matter has since been completed

and the observations contained in the Investigation Report are subject to a final determination on

merits by the Competent Authority. In furtherance of the same, SEBI has decided to initiate

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proceedings under Sections 11(4) and 11B, etc. of the SEBI Act and Adjudication proceedings under

Sections 15HA and 15HB of the SEBI Act, against the entities mentioned at paragraph 12 of the

Impounding Order dated June 7, 2016. SEBI shall endeavour to complete the aforesaid

proceedings as expeditiously as possible, without being influenced by the observations and findings

in this Order.

5.6.1 For the aforementioned reasons, the issue for determination in the instant proceedings is limited

to whether the directions contained in the Impounding Order to the extent of liability for the

alleged unlawful gains being joint and several, require revocation in light of the submissions made

by the entities at paragraphs 4.2 and 4.3.2.

5.6.2 I note that under Section 11B read with Section 11(5) of the SEBI Act, SEBI has been entrusted

with the power to direct any person, who made profit or averted loss by indulging in any

transaction or activity in contravention of the provisions of that Act or Regulations made

thereunder, to disgorge an amount equivalent to the wrongful gain made or loss averted by such

contravention. It is pertinent to note that the aforesaid power has been entrusted upon SEBI to

exercise in the interest of investors and for orderly development of the securities market. In this

context, I note that vide the Impounding Order dated June 7, 2016, SEBI

Documents

WTM/SR/EFD DRA I/46/09/2016 BEFORE THE SECURITIES AND ... · Page 3 of 38 Observations contained in the Investigation Report and findings recorded in the SEBI Ex–Parte Ad–Interim