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WTM/RKA/EFD/DRA2/44/2016

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA


Order
Under sections 11(1), 11(4) and 11B of the Securities and Exchange Board of India
Act, 1992 in the matter of IndTra Deco Limited.
In respect of Mr. Bankim Jagdishchandra Patel, Mr. Jay Shah, Mr. Deepak
Chandrakant Shah, Mr. Chirag Shah, Ms. Dimple Chirag Shah and Galaxy Broking
Limited
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1. On noticing sudden and significant rise in the price and traded volumes in the shares of
Ind Tra Deco Limited (ITDL/the company) during the period between March 2005 and
September 2005, SEBI, vide its ex-parte ad interim order dated October 05, 2005, passed
under sections 11(1), 11(4)(b) and 11B of Securities and Exchange Board of India Act,
1992, pending investigation in the matter, had restrained:
a. the promoters/directors of ITDL, viz. Mr. Praful K Rokadia, Mr. Dipal P Rokadia,
Mr. Kaushika P Rokadia, Mr. Pradeep R Shroff, Ms. Uma A Shah and Mr. Arvind M
Shah;
b. the promoters of ITDL viz., New Dimension Finance & Investment Private Limited,
Rosa Construction Private Limited, Sun Flower Estate Private Limited and Krunal
Industrial Estate Development Private Limited;
c. the persons acting in concert viz. Varsha Industrial Township Organizers Private
Limited, Jignesh Industrial Land Developer Private Limited, Fours Walls Marketing
India Private Limited; and
d. the clients viz., Mr. Dimple Chirag Shah, Mr. Patel Bankim Jagdishchandra, Mr.
Chirag Vadilal Shah, Mr. Jay Shah and Mr. Dipak Kumar Chandrakant Shah,
from buying, selling or dealing in the securities of the company, directly or indirectly, till
further directions.
2. By the aforesaid ex-parte ad interim order dated October 05, 2005, the stock brokers, M/s.
J. N. Jhaveri, India Infoline Securities Private Limited, Galaxy Broking Limited and Fortis
Securities Limited were also directed not to buy, sell or deal in securities of the company,
directly or indirectly; till further directions.
3. Pending investigations in the matter, vide order dated June 20, 2006 the aforesaid interim
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directions were confirmed against all the aforesaid entities. On completion of the
investigation, vide order dated September 18, 2009, SEBI revoked the interim directions
in respect of all but 6 entities, namely, Mr. Bankim Jagdishchandra Patel, Mr. Jay Shah,
Deepak Chandrakant Shah, Mr. Chirag Shah, Ms. Dimple Chirag Shah and Galaxy
Broking Limited.
4. Pursuant to investigation, a Show Cause Notice dated January 21, 2010 ("SCN-1") was
issued to Mr. Bankim Jagdishchandra Patel, Mr. Jay Shah, Mr. Deepak Chandrakant
Shah, Mr. Chirag Shah and Ms. Dimple Chirag Shah for violation of section 12A of SEBI
Act, 1992 read with provisions of regulation 3 (a), (b),(c),(d) of the of the Securities and
Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating
to Securities Market) Regulations, 2003 ("PFUTP Regulations"). Another Show Cause
Notice dated December 11, 2015 ("SCN-2") was issued to Galaxy Broking Limited for
violation of provisions of regulations 3 (a),(b), 4 (2) (a),(b),(e),(g),(n) of PFUTP
Regulations. These SCNs were issued on the basis of following facts found during
investigations:
(a) Jignesh Industrial Land Developers P. Ltd (JILDPL), a promoter group entity had
transferred 2,50,000 shares each to Ms. Dimple Chirag Shah, Mr. Chirag Shah and
Mr. Bankim Jagdishchandra Patel. These shares were in turn transferred by these 3
entities to Mr. Jay Shah and Mr. Deepak Chandrakant Bhai Shah who had sold these
shares in the market. All these entities were related / connected to each other and to
the company ITDL. Further, Mr. Jay Shah had sold the shares in the market through
the broker Galaxy Broking Pvt. Limited who was observed to have contributed to
price rise in the scrip.
(b) During the period March 01, 2005 September 30, 2005, the price of the scrip had
moved from Rs. 2.75/- on 14th January, 2005 to Rs. 22.65/- on 1st September 2005.
On 2nd September 2005, the price of the scrip opened at Rs. 2.34/-, as there was a
sub-division of one share of Rs. 10/- into 10 shares of Re. 1.00/- each. Subsequently
the price fell and closed at Rs. 1.42/- on September 30, 2005.
(c) It was also observed that few promoter entities had sold the shares of ITDL during
the same period. From the demat statements of Mr. Bankim Jagdishchandra Patel,
Mr. Chirag Shah and Ms. Dimple Chirag Shah that they had got 250,000 shares each
on July 01, 2005 from Jignesh Industrial Land Developers Private Ltd ("JILDPL"),
who was shown as a promoter entity under the promoters shareholding pattern of
ITDL for the quarter ended 30th June 2005. These three entities had in turn
transferred the shares to Mr. Jay Shah and Mr. Deepak as depicted in the following
diagram:_______________________________________________________________________________
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(d) Mr. Jay Shah who had received 2,50,000 shares from Mr. Chirag Vadilal Shah
and Mr. Bankim Jagdishchandra Patel in off-market transfers had sold 1,50,000
shares in the market on July 05, 2005. Further, Shri Chirag Shah was the major seller
in the scrip and had executed both buy and sell transaction on August 12,
2005, August 18, 2005, August 19, 2005, August 22, 2005 and August 29, 2005 and
created artificial volumes on these days. Similarly, Mr. Deepak Shah who received
2,49,203 shares from Ms. Dimple Chirag Shah on July 06 & 07, 2005 sold the these
shares in the market as bulk deals on July 05 & 07, 2005. The total sale of shares by
Mr. Jay Shah and Mr. Dipak Kumar Chandrakant Shah on July 05, 2005 was 2,50,000
shares i.e. 82% of the day trading on BSE in the shares of the company. Mr.
Dipak Kumar Chandrakant Shah sold 1,50,000 shares on July 07, 2005 i.e. 40% of the
total trades shares on BSE.
(e) The noticees were related/connected to each other and in turn to ITDL. Ms. Dimple
Chirag Shah and Mr. Chirag Shah had common address and phone number which
was registered in the name of Mr. V B Shah. Since Ms. Dimple Chirag Shah, Mr.
Chirag Shah and Mr. Bankim Jagdishchandra Patel each received 250,000 shares in
off market transactions from JILDPL (person acting in concert), the three noticees
were connected /related to the company. Also, Mr. Jay Shah and Mr. Deepak
Chandrakant Shah received shares in off market from Chirag Shah / Dimple Shah
which they subsequently sold shares through member India Infoline Securities Pvt.
Ltd. and Fortis Securities Ltd., respectively in the market. These noticees had helped
the promoter entities in offloading the shares in the market and acted as a front to
them.
(f) From the trade and order log analysis, it was observed that Galaxy Broking Limited
had traded on behalf of its client Devanand Patil and had influenced the price of the
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scrip. Further, major price rise during the period March 02, 2005- March 07, 2005
was due to its clients trades. During this period, price had risen from Rs 5.81 to Rs
7.60/-.
(g) On analyzing the order book, it was observed that during the investigation period, the
valid buy orders placed by Galaxy Broking Limited far exceeded the valid sell orders
placed in the system. It was further observed that Galaxy accounted for around 54%
and 71% of the total valid buy orders placed in the system during the period prior
and after stock split respectively. Also, majority of the buy orders placed by it were
mainly on behalf of company related /connected entity Chirag Shah and were in the
nature of large orders of 1,00,000 shares and above, placed marginally away from the
prevailing market price. Only around 5% and 8 % of the large buy orders placed by
Galaxy during the period prior and after stock split respectively, were executed.
5. The SCNs were affixed at the last known address of the noticees on December 22, 2015,
however, except Mr. Deepak Chandrakant Shah, none of the noticees had replied to the
respective SCNs. In his reply dated February 08, 2016, Mr. Deepak Chandrakant Shah
has merely denied the charges without any supporting documents. Despite service of
notice for personal hearing, none of the noticees, except, Mr. Bankim Jagdishchandra
Patel, appeared for scheduled personal hearing in the matter on March 10, 2016. Mr.
Bankim Jagdishchandra Patel made oral as well as written submission during the hearing
and denied his role in the matter. He submitted that he was doing office work in the
office of one Mr. Mahendra Shah, who was the operator in the scrip during the relevant
time. He had left his job with Mr. Mahendra Shah in the year 2006. He further submitted
that it was Mr. Mahendra Shah who had opened the bank account and demat account in
the name of Mr. Bankim Jagdishchandra Patel and was operating the same.
6. I note that sufficient opportunities have been granted to the noticees. Mr. Jay Shah, Mr.
Chirag Shah, Ms. Dimple Chirag Shah and Galaxy Broking Limited are not keen to avail
the same. They have not even filed any written reply/submission to the SCN issued to
them. I deem it appropriate to proceed in the matter on the basis of material available on
record. I find that other than the ipse dixit denials, Mr. Deepak Chandrakant Shah and Mr.
Bankim Jagdishchandra Patel have not offered any plausible explanation to the allegations
and charges against them. As far as submission of Mr. Bankim Jagdishchandra Patel that
Mr. Mahendra Shah had opened and operated his bank account and demat account, is
concerned, I note that he has not submitted any evidence to support his contention. In
these facts and circumstances, I have no reason to differ from any of the allegations or
charges described in the respective SCNs.
7. Coming to the possible directions in the facts and circumstances of this case, I note the
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interim directions dated October 05, 2005 were confirmed on June 20, 2006 and
investigation in the matter was completed long back. The SCN-1 was issued to 5 noticees
on January 21, 2010 but to SCN-2 was issued to Galaxay Broking Limted much later i.e.,
only on December 11, 2015. It is also noted that the service of these SCNs have was
effected after long delay on December 22, 2015. On account of such delayed disposal,
the noticees have undergone the restraint for more than 10 years in terms of the interim
order dated October 12, 2005 and the restraint still continues. Considering the facts and
circumstances described in the SCNs and factors as aforesaid, I am of the view that such
restraint should not continue further. The SCN-1 and SCN-2 are accordingly disposed of.
8. This Order shall come into force with immediate effect. A copy of this Order shall also
be served upon the depositories and stock exchanges for necessary action.

th

Date: April 6 , 2016


Place: Mumbai

Sd/RAJEEV KUMAR AGARWAL


WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA

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