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BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA


ADJUDICATION ORDER NO. JJ/AM/AO-158/2014
__________________________________________________________________________________________
UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF INDIA
ACT, 1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING
INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES,
1995
In respect of:
Dhananjaya Money Management Services Private Limited
(PAN AABCD6158J)
In the matter of:
Dealings of Sanjay Dangi and other entities in various scrips
___________________________________________________________________________________________
BACKGROUND
1. Securities and Exchange Board of India (SEBI) had received a reference
from the Income Tax Department (ITD), containing certain findings in the
matter of Murli Industries Limited (MIL). The ITD had found certain
documents in the office of the company suggesting manipulation in the
share price of MIL and that ten entities were holding substantial shares of
MIL and the affairs of the ten companies were being looked after by Mr.
Amit Raja CA, who happened to be auditor of those ten companies. In light
of the aforesaid reference and documents received from the ITD regarding
manipulation in the shares of MIL and the profit sharing arrangement
between MIL and Mr. Sanjay Dangi, SEBI initiated a preliminary inquiry in
the matter to find as to whether there was any concentration of
shareholding of the company among the ten entities and whether there was
any attempt to manipulate the shares of the company before the Foreign
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Currency Convertible Bond (FCCB) issue of MIL. Based on the finding in


MIL that a Group was operating to offer its services to promoters, SEBI
examined similar patterns in the trading and price-volume of scrips of
other companies namely Hubtown Ltd. (Hubtown) (earlier known as
Ackruti City Ltd.); Welspun Corp Ltd. (earlier known as Welspun Gujarat
Stahl Rohren Ltd.) (WCL), Brushman (India) Ltd. (BIL) and RPG
Transmission Ltd. (RPG) that had issued FCCBs or in which the Group had
been found to have traded regularly, or both.
2. In view of the above findings in various scrips and noticing that such
operations were possibly continuing in the market to the detriment of the
investing public, SEBI vide ad-interim ex-parte order dated December 2,
2010, (interim Order) issued directions against Mr. Sanjay Dangi, his
associates & promoter entities of 4 companies i.e. MIL, Hubtown, WCL &
BIL. In the said order, 10 Dangi entities including Amit Business Ltd.
(ABL), Mentor Capital Ltd. (MCL) and 14 Ashika entities including Withal
Commercial Pvt. Ltd. (WCPL) were restrained from accessing the securities
market and further prohibited from buying, selling or dealing in securities
in any manner whatsoever, till further directions.
3. Subsequently, SEBI conducted detailed investigations in respect of dealings
in the five scrips including Hubtown. The investigation in the scrip of
Hubtown was carried on in two patches:
o June 2007 to February 2008 (Patch I)
o January 01, 2009 to March 19, 2009 (Patch II)
4. Further, apart from the aforesaid entities, the role of certain other entities
including Dhananjaya Money Management Services Private Limited
(hereinafter referred to as Noticee/DMMSPL) who had traded in the
scrip of Hubtown was also investigated. During investigation, it was
observed that DMMSPL had purchased 95,759 shares and sold 95,759
shares of Hubtown in Patch I and purchased 5,63,479 shares and sold
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3,90,780 shares of Hubtown in Patch II. It was also observed that DMMSPL
had created long positions in the scrip of Hubtown during Patch II and
DMMSPL was holding the highest net long position of 63,000 shares
accounting for 6.35% of Open Interest as on March 26, 2009. During
investigation it was observed that WCPL, MCL and ABL had certain fund
transfers with DMMSPL.
5. In order to conduct a thorough investigation and in order to ascertain the
exact role played by various entities including DMMSPL, vide summons
dated November 03, 2011 the Noticee was advised to furnish
details/information as mentioned in its Annexure. Vide letter dated
November 17, 2011 the Noticee sought extension of time and so vide
summons dated November 22, 2011 the Noticee was advised to submit the
said details/information. The Noticee vide its letter dated November 30,
2011 submitted its reply to summons dated November 22, 2011. However,
since no information regarding certain fund transfers were provided by the
Noticee, vide summons dated December 23, 2011 the Noticee was advised
to provide the necessary information and clarifications. It was alleged that
despite receiving the summons dated December 23, 2011; the Noticee
failed to submit its reply. It was alleged that the Noticee failed to submit
complete details/information as required vide the aforesaid summonses,
thereby violating the provisions of Section 11C(2) and 11C(3) of the SEBI
Act, 1992.
APPOINTMENT OF ADJUDICATING OFFICER
6. Shri Piyoosh Gupta was appointed as the Adjudicating Officer vide order
dated March 30, 2012 and the said appointment was conveyed vide
proceedings of the Whole Time Member dated April 11, 2012 to inquire
and adjudge under Section 15A(a) of the SEBI Act, 1992 alleged violations
of provisions of Section 11C(2) & 11C(3) of SEBI Act, 1992 committed by
the Noticee. Pursuant to the transfer of Shri Piyoosh Gupta, the
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undersigned has been appointed as Adjudicating Officer vide Order dated


November 08, 2013.
SHOW CAUSE NOTICE, HEARING & REPLY
7. Show Cause Notice (SCN) in terms of the provisions of Rule 4(1) of SEBI
(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating
Officer) Rules, 1995 (Adjudication Rules) was issued to the Noticee on
April 22, 2013, calling upon the Noticee to show cause why an inquiry
should not be held against it under Rule 4 of the Adjudication Rules for the
alleged violations and penalty.
8. The aforesaid SCN was duly sent to the Noticee by hand delivery which
returned undelivered. Subsequently, the SCN was delivered to the Noticee
on April 30, 2014 through its broker Systematix Shares and Stocks (I) Ltd.
(Systematix). Vide letter dated May 15, 2013 the Noticee, inter alia, made
the following submissions:
o With regard to observation in para 10-11 of the show cause notice, it is
submitted that the issuance of summons dated November 03, 2011 is a matter of
record. We have duly received the said summons through our broker Systematix
Shares & Stocks( India) Limited. In response to the said summons we had vide
our letter dated November 17, 2011 we had sought time till December 05, 2011
since our key person who could supply the relevant information as sought in the
summons was travelling. In the said letter we had also made the Investigating
Officer aware of our correspondence address. However, our request was not
acceded to, by the Investigating Officer and afresh summons dated November 22,
2011 was issued to us and we were required to submit the details sought by
November 30, 2011. Adhering to the dicta of the learned Investigating Officer
(who was travelling since the issuance of first summons dated November 03,
2011) we had no option but to call back our key official and to prepare the
details and information as sought by the Investigating Officer somehow.
o With regard to observations in para 12 of the show cause notice, it is submitted
that our reply dated November 30, 2011 is a matter of record. The details
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provided by us were absolutely correct. It is true that we are not connected with
Hubtown, its promoters/directors. Further, the statement in the reply that
except for the business transaction with Withal Commercial Pvt. Ltd., we are not
connected with other entities mentioned in the summons is also absolutely
correct. The findings with respect to receipt of funds from Pacific Corporate
Services Ltd. and Amit Business Ltd. and non disclosure of the same in our letter
dated November 30, 2011 was based on the details available in our books of
accounts. It is submitted that we received a sum of Rs. 13 crores into our Axis
bank account (through Pacific Corporate Services Ltd.) was actually a part
payment/advance against purchase of shares on behalf of Amkay Trading in an
unlisted company held by us, and therefore our books were reflecting the said
payment against Amkay Trading and Pacific Corporate Services Ltd. as alleged,
we have not received a sum of Rs. 13 crores. It is submitted that on March 06,
2009 we have accounted a sum of Rs. 13 crores in the account of Amkay Trading
and not from Pacific Corporate Services Ltd., however on instructions from
Amkay Trading the said fund was given to Pacific Corporate Services Ltd., since
post due diligence of the unlisted company Amkay Trading was not interested in
the acquisition of the shares of the said unlisted company since it had various
contingent liabilities and legal cases pending against it. We humbly request your
goodself to consider our submission dated December 27, 2011 which has been
inadvertently omitted at the end of the Investigating Officer, on perusal of the
same you will find that we have provided all the required information. With
regard to the receipt of funds of Rs. 1 crore from Amit Business Limited, it is
submitted that the said funds were actually received on behalf of M/s Mahaveer
Metal Corporation as the same was due from for long. At the time of submission
of reply we had checked our bank accounts vis a vis our own books of accounts
wherein this receipt of Rs. 1 crore (from Amit Business Limited) was marked
against M/s Mahaveer Metal Corporation. At the time of submission of reply we
could not cross verify the entities name (in the bank statement) from which the
funds were received.
o However it is pertinent to note that we had duly clarified both the above issues to
the Investigating Officer vide our letter dated December 27, 2011 submitted with
SEBI on December 28, 2011 in response to SEBI's summons dated December 23,

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2011, subsequently there was no further communication from the Investigation


team and therefore we presumed that all the queries raised by the learned
Investigating Officer have been duly replied to and that SEBI had no further
unresolved queries in this regard.
o With regard to observations in para 13 of the show cause notice, it is submitted
that there is a omission on part of the Investigating Officer to allege that we did
not submit the reply to summons dated December 23, 2011 and that we failed to
submit true and complete information/details as sought vide summons dated
November 03, 2011 and November 22, 2011 and also that the same led to
hampering of the investigation process of SEBI. It is submitted that the
allegation in some and substance against us in the Show Cause Notice is that we
failed to provide details for our transactions with Pacific Corporate Services Ltd.
and Amit Business Limited.
o As pointed out herein before we had duly submitted all the details sought in
summons dated November 03, 2011 and November 22, 2011 (both the summon
required us to submit the same details). The same was based on the records
existing in our books of accounts as explained hereinbefore. However on being
pointed out by SEBI about the alleged discrepancy we immediately vide our
letter dated December 27, 2011 provided a detailed clarification on the same.
This letter duly bears a stamp of SEBI inward department with inward number E
/14, the original of this letter is available with us and the same can be inspected
from us at any point of time. We would request you to consider the letter dated
December 27, 2011. From the copy of the said letter it is absolutely clear that we
had duly complied with summons dated December 23, 2011 which was received
by us on December 26, 2011 within two days of the receipt thereof. After sending
this reply we did not receive any communication from the Investigating Officer,
since we did not receive any communication from you, we presumed that the
Investigating Officer had duly received our letter dated December 27, 2011 and
that all his queries were duly replied to. Since there was no default in furnishing
information/document on our end it is inappropriate to allege that our non
furnishing of information/ document has hampered the investigation process of
SEBI.

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o From the above it is clear that in all three communications were issued by SEBI
to us which were duly replied by us at all times and we had duly sought
indulgence of SEBI at the time when we were not in a position to comply with the
deadline put forth by the Investigating Officer. It is once again clarified that all
the details pertaining to transactions with Pacific Corporate Services Ltd. and
Amit Business Limited were duly explained to the Investigating Officer with all
the pertinent details including purpose of the fund transfer, date of repayment
and collateral, if any and the reasons for discrepancy in the submissions made
vide our letter dated November 30, 2011, through our letter dated December 27,
2011 which was duly received by SEBI on December 28, 2011.

9. Subsequent to the appointment of the undersigned, vide Notice dated


August 27, 2014 the Noticee was given an opportunity of personal hearing
on September 10, 2014. However, vide letter dated September 10, 2014 the
Noticee requested for another opportunity of personal hearing.
Accordingly, vide Notice dated September 10, 2014 the Noticee was given
another opportunity of personal hearing on September 24, 2014. CA Parag
Jain of M/s. Bansi Jain & Associates, appeared as Authorised Representative
(AR) on behalf of the Noticee and reiterated the submissions made vide
letter dated May 15, 2013. During the course of personal hearing, the AR
also showed the copy of Noticees letter dated December 27, 2011 bearing
the original receipt stamp of SEBI. In addition, the AR submitted Noticees
letter dated September 24, 2014 vide which the Noticee made additional
submissions, salient points of which are as follows:
o We are a corporate investor, have been regularly trading and investing in
capital markets, in the cash market and derivative segment, under the
permissible limits of SEBI/Exchanges after adhering to settlement and margin
obligations.
o We refer to our trades which we had done in the scrip of Akruti City Limited
which was done in the normal course of our business of investing in the capital
markets, from our own funds, further our open interest in the scrip was well
within the limit prescribed by SEBI / stock exchanges. We have observed that we
have contributed to a miniscule % of the total exchange traded volumes which
are insignificant.
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o We have verified our records and on doing a comparative analysis of the


trading done in the scrip of Akruti City Limited we have made no
disproportionate gains, in-fact the trades have resulted for us heavy losses
amounting to approximately Rs. 9.2 crs spread across a period of approximately
3 years.
o We have received Rs. 13 crs in March 2009 into our Axis Bank account, as
advised by Amkay Trading Private Limited, which was towards part
payment/advance against purchase of shares by Amkay trading Private Limited
in an unlisted company held by us. The said amount was paid as advance and
subject to due diligence of the unlisted company and its financials by Amkay
Trading Private Limited / its representatives. We were advised by Amkay Amkay
Trading Private Limited that they were not interested in the acquisition of shares
on account of various contingent liabilities and legal cases in the target
company. As per their instructions, the said amount of Rs. 13 crores were
remitted to Pacific Corporate Services Ltd. From Amkay Amkay Trading Private
Ltd. As their share application money.

ISSUES FOR CONSIDERATION AND FINDINGS


10. On perusal of the material available on record and giving regard to the facts
and circumstances of the case, I record my findings hereunder.
ISSUE: Whether the Noticee has violated provisions of Section 11C(2) and
11C(3) of the SEBI Act, 1992?
11. The provisions of Section 11C(2) and 11C(3) of the SEBI Act, 1992 read as
under:
Section 11C(2) and Section 11C(3) of the SEBI Act, 1992
Section 11C(2): Without prejudice to the provisions of sections 235 to 241 of
the Companies Act, 1956 (1 of 1956), it shall be the duty of every manager,
managing director, officer and other employee of the company and every
intermediary referred to in section 12 or every person associated with the
securities market to preserve and to produce to the Investigating Authority or
any person authorised by it in this behalf, all the books, registers, other
documents and record of, or relating to, the company or, as the case may be,
of or relating to, the intermediary or such person, which are in their custody
or power.
Section 11C(3): The Investigating Authority may require any intermediary
or any person associated with securities market in any manner to furnish such

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information to, or produce such books, or registers, or other documents, or


record before him or any person authorised by it in this behalf as it may
consider necessary if the furnishing of such information or the production of
such books, or registers, or other documents, or record is relevant or
necessary for the purposes of its investigation.

12. From the material available on record, I note that summons dated
November 03, 2011, was issued to the Noticee by the Investigating
Authority (IA) asking it to furnish details/information as mentioned in its
Annexure. The said summons dated November 03, 2011 was duly delivered
to the Noticee through Systematix and vide letter dated November 17,
2011, the Noticee sought extension of time to submit reply. Thereafter, vide
summons dated November 22, 2011 the Noticee was advised to submit the
details/information by November 30, 2011. From the material available on
record, I note that the details/information sought vide summons dated
November 03, 2011 and summons dated November 22, 2011 were
identical.
13. Vide letter dated November 30, 2011, the Noticee provided information
and, inter alia, stated that its source of funds for trading was through own
sources/ loans from NBFCs and margin in the derivatives segment was
given by way of permissible mode of cash/ shares. The Noticee also stated
that it was not connected with Hubtown, its directors/promoters, etc. With
reference to the relation/ connection with other identified entities/ groups
as listed in the summons, the Noticee stated that except for business
transaction with one entity, WCPL, it was not connected with any of the
other entities. From the details provided by the Noticee, it was observed
that the Noticee had received Four Crore Rupees from WCPL in March 2009
as advance for purchase of unlisted shares. It was observed from the bank
statement of the Noticee (obtained from the bank) that it had also received
Thirteen Crore Rupees from Pacific Corporate Services Ltd. (now known as
MCL) on March 06, 2009 and One Crore Rupees from ABL in March 20,
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2009. However, no information in respect of the said transfers was


provided by the Noticee in its letter dated November 30, 2011.
14. Summons dated December 23, 2011 was sent to the Noticee asking the
following information:
From your bank statement of A/C no. 004010201373037 (Axis Bank), the
following funds transfers are observed:
i. Credit of Rs. 13 crores on March 06, 2009 from Pacific Corporate
Services Ltd. (now known as Mentor Capital Ltd.)
ii. Credit of Rs. 1 crore on March 20, 2009 from Amit Business Ltd.
In this regard, the following information may be provided:
a) Purpose of the aforesaid transfers
b) Date of repayment and collateral, if any (in case the transaction was in
the nature of a loan)
c) In your reply dated November 30, 2011 in respect of our summons dated
November 3, 2011, you have denied any relation/connection with the
Mentor Capital Ltd. and Amit Business Ltd. Further, you have not
provided details of the aforesaid funds transfers with these entities. In
this regard, the discrepancy in submissions made may be clarified.
The said summons dated December 23, 2011 was duly delivered to the
Noticee on December 26, 2011. The SCN alleged that despite duly receiving
the summons dated December 23, 2011, the Noticee failed to submit reply
to the IA. The SCN alleged that the Noticee failed to submit true and
complete information/details as sought vide SEBI summonses and that non
furnishing of information hampered the investigation process of SEBI.
15. From the material available on record, I note that the crux of the allegation
against the Noticee is that even though the Noticee in its reply dated
November 30, 2011, in response to SEBI summonses dated November 03,
2011 and November 22, 2011, had denied any relation/connection with
MCL and ABL; certain fund transfers were observed between the Noticee
with MCL and ABL. Hence, vide summons dated December 23, 2011 the
Noticee was advised to provide details regarding the fund transfers with

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MCL & ABL and clarify the discrepancy with its previous submissions, by
December 28, 2011.
16. In this regard, the Noticee has submitted that it had filed its reply to
summons dated December 23, 2011 by its letter dated December 27, 2011
(which was received by SEBI on December 28, 2011) vide which the
Noticee had made the following submissions:
We received Rs. 13 crores on March 2009 into our Axis Bank account, as
advised by Amkay Trading Pvt. Ltd., which was towards part pay payment /
advance against purchase of shares by Amkay Trading is an unlisted
company held by us. The said amount was paid as advance and subject to due
Diligence of the unlisted company and its financial by Amkay Trading / its
representatives.
We were advised by Amkay Trading Pvt. Ltd. that they were not interested in
the acquisition of shares on account of various contingent liabilities and legal
cases in the target company. As per their instructions, the said amount of Rs.
13 crores was remitted to pacific Corporate Services Ltd from Amkay Trading
Pvt. Ltd. as their share application money.
With respect to Rs. 1 crores received from Amit Business Limited, it was
received on behalf of old outstanding from M/s. Mahavir Metal Corporation
accordingly it is adjusted in their account and there was no direct dealing /
due of ours with M/s. Amit Business Limited.
As these transactions were not with respect to listed securities as well as
directly not accounted in the name of concerned parties as mentioned above
accordingly we have not provided these details in our earlier letter.
Trust this satisfies the issue raised by you.
17. From the submissions of the Noticee made vide letters dated May 15, 2013
and September 24, 2014 and also during the course of personal hearing, I
find that the Noticees letter dated December 27, 2011 bears the SEBI
acknowledgement stamp dated December 28, 2011. On enquiry, it is
observed that the said letter of the Noticee dated December 27, 2011 was
scanned and inwarded in SEBI vide reference number IW/123382/2011.
18. In view of the above I find that that the Noticee had corresponded to SEBI
in response to the summons dated December 23, 2011, vide its letter dated
December 27, 2011 providing its response within the stipulated time.
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Hence, I find that the charge against the Noticee for not submitting reply in
response to summons dated December 23, 2011, as alleged in the SCN, does
not stand established.
19. Since the reply of the Noticee dated December 27, 2011 was not considered
and taken on record before initiating the present Proceedings, I hold that
the allegation of violation of the provisions of Section 11C(2) and 11C(3) of
the SEBI Act, 1992 against the Noticee, as alleged in the SCN, is not
established.
ORDER
20. In view of my findings noted in the preceding paragraphs, I dispose of the
Adjudication Proceedings accordingly.
21. In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding
Inquiry and Imposing Penalties by Adjudicating Officer) Rules 1995, copies
of this Order are being sent to the Noticee and also to Securities and
Exchange Board of India.

Date: November 28, 2014


Place: Mumbai

Jayanta Jash
Adjudicating Officer

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