WTM/RKA/ISD/35/2015

SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER
UNDER SECTION 11(1), 11(4) AND 11B OF THE SEBI ACT, 1992 AND SECTION
12A OF THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 - IN THE
MATTER OF SMS TECHSOFT (INDIA) LIMITED.
In respect of:
Sl. No.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37

Name
SMS Techsoft (India) Limited
Akash Jagadish Vital
Jagadish Vital
Anita Srinivasabhatt Kadanthalai
Dashrathkumar Keshaji Khatri
Devaraj Siddiah Pera Naidu
Dilipbhai Jaswantlal Gajjar
Mr. Rajesh Ranka
K Rajagopal
S Rajaganesh
Bafna S R
Chhaya Umeshchandra Trivedi
Meenaben Natubhai Thakkar
Mitesh Kanaiyalal Thakkar
Mukeshbhai Shantilal Thakkar
Mulchand Ganeshmal Jain
Natubhai Shantilal Thakkar
Navinchandra Kanubhai Thakkar
Suresh Nenmalji Malvi
Vaishali Natvarlal Thakkar
Vinod Jain
Dharmendra Rikhavchand Shah
Kanubhai Narandas Thakkar
Alakaben Kirtibhai Shah
Himadri Kamleshbhai Shah
Himanshu Prafulchandra Shah
Kaliyaben Himansu Shah
Karan Kirtibhai Shah
Keval Kirtikumar Shah
Kirtikumar Rasiklal Shah
Minaben Prafulbhai Shah
Pruthvi Himanshu Shah
Vinit Kamleshkumar Shah
Nila Rajeshkumar Shah
Mahavirsingh N Chauhan
Maheshchandra Chunilal Shah
Manjulaben Maheshchandra Chunilal Shah

Order in the matter of SMS Techsoft (India) Ltd.

Brought to you by http://StockViz.biz

PAN
AAECA1954G
ATYPA8648K
ACJPJ5747L
ABUPA2184Q
ACFPK3128C
ACGPD9190G
ADVPG4094Q
ACUPR5573R
AGCPR8130L
ALBPR2586E
AFXPB6525P
AHDPT3058P
AHWPT5940M
AHQPT0178H
AJBPT8789M
ABBPJ6373M
AHWPT5944R
ADUPT1264A
AKMPM4951C
AMJPT1242N
AEDPJ4235P
AAEHD6246F
ADZPT3418R
CPAPS2335R
AZYPS5654H
ANEPS9445A
BFQPS1462A
BQYPS0082D
DFNPS6796L
AKQPS8463F
COYPS9153J
DCAPS6011N
BOIPS2506E
BSLPS2675B
AQOPC6330R
AIOPS3870Q
AFSPS6606M

Page 1 of 16

Appearances:
1. Mr. Rajesh Ranka
2. Mr. Dharmendra R. Shah
3. Mr. Dilip J. Gajjar
4. Mr. Himanshu Shah and Mr. Vishal Acharya (Advocate) representing Mr. Himanshu Shah
and 9 Family Members Entities from 24 to 33.

1. Vide ad interim ex-parte order dated November 05, 2013 (hereinafter referred to as the interim
order), SEBI restrained the below mentioned 37 entities, (hereinafter collectively referred to
as the "noticees" or individually by their respective names), from accessing the securities
market and further prohibited from buying, selling or dealing in securities or any instrument
exchangeable or convertible into securities, directly or indirectly, in any manner whatsoever,
till further directions:
Table 1: Noticees and their details
Sl. No.
1.
2.
3.
4.

5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.

Name

PAN
AAECA1954G

SMS Techsoft (India) Limited

Hereinafter referred to as "SMS Techsoft/company"
Mr. Akash Jagadish Vital
ATYPA8648K
Mr. Jagadish Vital
ACJPJ5747L
Ms. Anita Srinivasabhatt Kadanthalai
ABUPA2184Q
Entities at Sl. No. 2-4 hereinafter collectively referred to as "promoters" or individually by
their respective names; (of these, Mr. Akash Jagadish Vital and Mr. Jagadish Vital were the
promoters/directors)
Mr. Dashrathkumar Keshaji Khatri
ACFPK3128C
Mr. Devaraj Siddiah Pera Naidu
ACGPD9190G
Mr. Dilipbhai Jaswantlal Gajjar
ADVPG4094Q
Entities at Sl. No. 5-7 hereinafter collectively referred to as "independent directors" or
individually by their respective names
Mr. Rajesh Ranka
ACUPR5573R
Mr. K. Rajagopal
AGCPR8130L
Mr. S. Rajaganesh
ALBPR2586E
Mr. Bafna S. R.
AFXPB6525P
Ms. Chhaya Umeshchandra Trivedi
AHDPT3058P
Ms. Meenaben Natubhai Thakkar
AHWPT5940M
Mr. Mitesh Kanaiyalal Thakkar
AHQPT0178H
Mr. Mukeshbhai Shantilal Thakkar
AJBPT8789M
Mr. Mulchand Ganeshmal Jain
ABBPJ6373M
Mr. Natubhai Shantilal Thakkar
AHWPT5944R
Mr. Navinchandra Kanubhai Thakkar
ADUPT1264A
Mr. Suresh Nenmalji Malvi
AKMPM4951C
Ms. Vaishali Natvarlal Thakkar
AMJPT1242N
Mr. Vinod Jain
AEDPJ4235P
Mr. Dharmendra Rikhavchand Shah
AAEHD6246F
Mr. Kanubhai Narandas Thakkar
ADZPT3418R
Ms. Alakaben Kirtibhai Shah
CPAPS2335R
Mr. Himadri Kamleshbhai Shah
AZYPS5654H
Mr. Himanshu Prafulchandra Shah
ANEPS9445A

Order in the matter of SMS Techsoft (India) Ltd.

Brought to you by http://StockViz.biz

Page 2 of 16

27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.

Ms. Kaliyaben Himansu Shah

BFQPS1462A
Mr. Karan Kirtibhai Shah
BQYPS0082D
Mr. Keval Kirtikumar Shah
DFNPS6796L
Mr. Kirtikumar Rasiklal Shah
AKQPS8463F
Ms. Minaben Prafulbhai Shah
COYPS9153J
Mr. Pruthvi Himanshu Shah
DCAPS6011N
Mr. Vinit Kamleshkumar Shah
BOIPS2506E
Ms. Nila Rajeshkumar Shah
BSLPS2675B
Mr. Mahavirsingh N. Chauhan
AQOPC6330R
Mr. Maheshchandra Chunilal Shah
AIOPS3870Q
Entities at Sl. No. 8-36 hereinafter collectively referred to as "preferential allottees" or
individually by their respective names
Ms. Manjulaben Maheshchandra Chunilal Shah
AFSPS6606M

2. The interim order was passed taking into account facts as described therein and summarised
inter alia as under:(a) SEBI noticed an outburst of Short Text Messages (SMS) during February March 2013,
mentioning therein buy recommendation for the scrip of SMS Techsoft.
(b) It was noticed that on March 15, 2012, SMS Techsoft had made further issue of

(c)

(d)
(e)
(f)

(g)

3,00,00,000 equity shares of `10/- each at a price of `10/- each through preferential
allotment to the promoter Mr. V. Jagadish and his wife and son, namely, Ms. Anita
Srinivasbhatt Kadsanthalai and Mr. Akash Jagadish Vital who are also disclosed as
promoters of the company, and also to 28 other entities.
Majority of the allottees in the preferential allotment were Ahmedabad based entities.
From the respective KYC documents, it was noted that 27 out of the 28 allottees (i.e.,
except Mr. Dharmendra Rikhavchand Shah) had a common mobile number, i.e.,
'9825032074' and a common e-mail address, i.e., 'rajranka8@yahoo.com'. The said mobile
number and email address belong to Mr. Rajesh Mangilal Ranka;
The other allottee, i.e., Mr. Dharmendra Rikhavchand Shah had transferred 25 lac shares
of the company to another allottee, namely, i.e., Mr. Maheshchandra Chunilal Shah.
The said 28 allottees and Mr. Rajesh Ranka were connected with each other on the basis
of factors as described in the interim order.
Mr. Rajesh Ranka, an employee of SMS Techsoft, is the authorized signatory for its bank
account with ING Vysya Bank. He is, thus, connected with the company as its
employee. Shri Rajesh Ranka had funded the preferential allotment to all the allottees
including the three promoters.
Most of the 28 allottees (i.e., allottees other than the promoters) had opened their
respective accounts with ING Vysya Bank in the 1st week of March 2012, i.e., just
before the preferential allotment. These allottees did not have financial capabilities
commensurate with the amount purportedly paid towards the preferential allotment.

(h) On March 03, 2012, Mr. Rajesh Ranka had transferred `1,00,00,000/- from his bank
account number 139003201012322 with Nav Nirman Co-operative Bank to the bank
Order in the matter of SMS Techsoft (India) Ltd.
Brought to you by http://StockViz.biz

Page 3 of 16

account number 139003201016137 jointly held by Mr. Maheshchandra Chunilal Shah

and his wife Ms. Manjulaben Maheshchandra Chunilal Shah (hereinafter referred to as
"Manjulaben") with Nav Nirman Co-operative Bank. On the same day, Mr.
Maheshchandra Chunilal Shah transferred the same amount to the bank account
number 673011005933 of the company with ING Vysya Bank against which he was
allotted 10,50,000 preferential shares.
(i) On March 05, 2012, the company transferred back the same amount of `1,00,00,000/to Manjulaben (bank account number 673010029662 with ING Vysya Bank).
Manjulaben thereafter transferred the same or approximately same fund again and again
to 19 allottees (i.e., the three promoters and the entities from serial number 1 to 16
mentioned in the Table No. 3 of the interim order) from March 05, 2012 to March 13,
2012, i.e., just before the preferential allotment of shares on March 15, 2012.
(j) On receipt of the funds from Manjulaben, the respective allottee transferred the same to
the company. Each time the allottee made payment for his/her allotment to SMS
Techsoft, the same fund was transferred back by it to Manjulaben. Manjulaben again
transferred the fund to another allottee who in turn transferred the said amount to the
company. In this pattern, `1,00,00,000/- received by Manjulaben from Mr. Rajesh
Ranka through the company was circulated amongst Manjulaben, these 19 allotees and
SMS Techsoft repeatedly.
(k) In respect of preferential allotment to a set of other 10 allottees, (viz., entities from serial
no. 18 to 27 as mentioned in Table no. 3 of the interim order), it was noted that on March
12, 2012, the company transferred the requisite funds to Manjulaben who transferred
back the same to the company towards allotment of shares to these 10 allottees on the
same day. The fund transferred by the company to Manjulaben and then back to the
company was circulated again and again in the same manner with regard to the allotment
to said 10 allottees.
(l) On March 17, 2012, i.e., after the allotment of the equity shares, SMS Techsoft
transferred `1,00,00,000/- to the bank account number 139003201016137 jointly held
by Mr. Maheshchandra Chunilal Shah and his wife Ms. Manjulaben with Nav Nirman
Co-operative Bank. On March 19, 2012, `1,00,00,000/- was transferred from the said
joint account to the account of Mr. Rajesh Ranka.
(m) A different mode of fund circulation amongst the company and the allottee Ms. Nila R.
Shah was noted wherein:

On March 03, 2012, Mr. Rajesh Ranka had transferred `99,50,000/- to Ms. Nila R.
Shah who was allotted 9,95,000 shares by SMS Techsoft in its purported preferential
allotment;
On the same day Ms. Nila R. Shah transferred this money to the company;

On March 20, 2012, the company transferred back the said amount of `99,50,000/-

Order in the matter of SMS Techsoft (India) Ltd.

Brought to you by http://StockViz.biz

Page 4 of 16

to Ms. Nila R. Shah;

- On March 21, 2012, Ms. Nila R. Shah transferred this money back to Mr. Rajesh
Ranka.
(n) The preferential allotment was designed merely as a book entry wherein Mr. Rajesh
Ranka circulated `1,99,50,000/- back and forth between the company, other allottees in
the purported preferential allotment by the company. The scheme/plan was a
camouflage to give misleading impression that many people had subscribed to the shares
of SMS Techsoft by paying the consideration to the company. In fact, the entire
allotment money funded by Mr. Rajesh Ranka had been returned to him in the whole
plan without the company getting the proceeds of preferential allotment. Effectively,
3,00,00,000 new equity shares have been issued in the names of 31 allottees without
receipt of any consideration for the shares allotted in the purported preferential
allotment.
(o) The company had misrepresented annual reports for the financial years 2011-12 and
2012-13 that the proceeds of the purported preferential allotment has been utilised to
purchase land worth `30,00,00,000/-.
(p) Once the lock in period for the shares allotted under purported preferential allotment
expired on March 12, 2013, the entities related to Mr. Rajesh Ranka started creating
artificial volume in the scrip by trading amongst themselves and, thereafter, offloading
these shares to common investors.
(q) It was noted from the annual report of the company for the respective financial years
that for the financial year 2011-12, Mr. V. Jagdish, the promoter and managing director
of SMS Techsoft was also the Chairman of the Audit Committee and for the financial
year 2012-13, Mr. Akash Jagdish Kadandale, another promoter and director of SMS
Techsoft, was the Chairman of the Audit Committee in violation of clause 49 of the
Equity Listing Agreement which stipulates that the Chairman of the Audit Committee
shall be an independent director.
(r) Apart from the fact that SMS Techsoft does not physically exist at the
registered/corporate addresses as already explained above, it is observed that though the
company claims to have a web-site at www.aklsoft.com, the same is non-functional. As
such there is nothing on this web site except a spam page. This is non-compliance with
the requirements of the provisions of clause 54 of the Equity Listing Agreement which
requires that the company should maintain a functional web site containing basis
information about the company e.g. details of its business, financial information,
shareholding pattern, etc.
3. It was, thus, prima facie, observed that:
(s) The promoters/directors of the company were acting in concert with Mr. Rajesh Ranka
by issuing new equity shares of the company through preferential allotment to the
Order in the matter of SMS Techsoft (India) Ltd.
Brought to you by http://StockViz.biz

Page 5 of 16

aforesaid connected entities without receipt of full consideration. These connected

entities offloaded these shares in the market by indulging in trading in an artificial,
manipulative and unfair manner.
(t) Thus, the aforesaid entities have, prima facie, violated:
- Section 12A (b) and(c) of the SEBI Act and regulations 3(a), (b), (c) and (d), 4(1) and
(2)(a), (f) and (g) of the PFUTP Regulations;
- Regulation 77(1) of the ICDR Regulations; and
- Clauses 49, 54 of the Listing Agreement read with section 21 of Securities Contracts
(Regulation) Act, 1956.
4. Pursuant to the interim order, thirty four noticees (Serial Nos. 1 to 34) filed their replies. Vide
letter dated January 06, 2014, Mr. Himanshu Shah on behalf of himself and his 9 family
members, requested inspection of documents, which were relied upon by SEBI while
passing the aforesaid interim order. Inspection of the said documents was granted to him on
January 10, 2014. On the said date, Ms. Mamta (Advocate), the authorised representative of
Mr. Himanshu Shah and his 9 family members, inspected the said documents. Thereafter, at
her request, the copies of the documents inspected by her were provided.
5. With respect to Ms. Nila Rajeshkumar Shah, one Mr. Rajeshkumar Shah, claiming to be her
husband, replied that Ms. Nila R. Shah has passed away on February 26, 2012. He also
submitted copy of her death certificate issued by the Municipal Corporation of Ahmedabad.
6. An opportunity of hearing was granted to all the entities on January 13, 2014. Only Mr.
Rajesh Ranka appeared for the personal hearing. Mr. Himanshu Shah and his 9 family
members requested for inspection of documents which were relied upon by SEBI while
passing the interim order, cross examination of the concerned persons from Banks, viz. ING
Vysya Bank Limited and NavNirman Co-operative Bank and Monarch Research and
Brokerage Private Limited, and signature verification by Forensic Laboratory.
7. Another opportunity of hearing was granted to the noticees on February 06, 2014.
However, none of the noticees appeared for the said hearing. Thereafter, another
opportunity of hearing was granted to 26 entities (except Mr. Himanshu Shah and his 9
family members, and Ms. Nila R. Shah) on August 20, 2014. Mr. Rajesh Ranka, Mr.
Dharmendra R. Shah and Mr. Dilip J. Gajjar appeared for the hearing on the said date and
made their submissions.
8. An opportunity of personal hearing was also granted to Mr. Himanshu Shah and his 9
family members (noticees from serial no. 24 to 33 in the table given above) on December
11, 2014. Mr. Himanshu Shah alongwith Mr. Vishal Acharya (Advocate) appeared for the
said hearing and made his submissions.
Order in the matter of SMS Techsoft (India) Ltd.
Brought to you by http://StockViz.biz

Page 6 of 16

9. The submissions and replies of the noticees is summarised, inter alia, as under:
A. Sms Techsoft:
(i) SMS Techsoft submitted that its registered office at '325, Patel Road Ram Nagar,
Coimbatore-641009' is working.
(ii) On the day of inspection by BSE, none of the staff were present on the said
premises as they had gone out on picnic.
(iii) With respect to pricing of preferential allotment, SMS Techsoft contended that as
per SEBI regulations it could not issue the shares at a discount to the face value of
the shares and at the time of preferential allotment the face value of the shares of

(iv)
(v)

(vi)

(vii)

the company was `10/-. Therefore, it issued the preferential allotment at `10/- per
share.
Mr. Maheshchandra Shah, who is head of its Gujarat operations, is an appropriate
person to reply to the queries regarding preferential allotment.
With respect to utilisation of proceeds of preferential allotment, SMS Techsoft
contented that it had entered into an agreement with Mr. Prakash Thakkar for
acquisition of land for `30 crore subject to clearances from the concerned
government department. For the said deal, it entered into a tripartite agreement with
Ms. Manjulaben Shah and Mr. Prakash Thakkar, wherein it was decided that the
money for acquisition of land shall remain in the acccount of Ms. Manjulaben Shah
till the time Mr. Prakash Thakkar bring all the necessary clearances with respect to
the land. SMS Techsoft further stated that Mr. Prakash Thakkar failed to bring the
clearances and, therefore, the deal was cancelled in September 2013. Thereafter, it
decided to invest in database for development of IT enabled services.
It had not follow the Corporate Governance guidelines while constituting the audit
committee and its website was also not functional as per clause 54 of the Equity
Listing Agreement. However, it has reconstituted its new audit committee and also
made its website functional.
SMS Techsoft also admitted that it had wrongly mentioned in its Annual Report
2011-12 that it has a bank account in Standard Chartered Bank.

B. Promoters of SMS Techsoft:

(i)

Mr. V. Jagadish, vide his letter dated November 19, 2013, submitted that SMS
Techsoft wanted to expand its business in Gujarat. Since the company was facing
shortage of funds, Mr. V. Jagadish met Mr. Maheshchandra Shah for funding
requirement, who agreed to bring good amount of capital for the company and also
promised a large office space for the company on commission basis. Thereafter, Mr.

Order in the matter of SMS Techsoft (India) Ltd.

Brought to you by http://StockViz.biz

Page 7 of 16

Maheshchandra Shah was appointed as Business Head of Gujarat operations. Mr. V.

Jagadish also stated that since Mr. Maheshchandra Shah was delegated the task of
raising capital for SMS Techsoft and as Mr. V. Jagadish himself is from non finance
background, Mr. Maheshchandra Shah shall be in better position to answer queries
relating to capital raised.
(ii)

Further, Mr. V. Jagadish vide affidavit dated June 26, 2014 submitted that Mr.
Rajesh Ranka is merely an employee of the company and he is no where associated
with the preferential allotment made by the company. He Further submitted that the
mobile number 9825032074 and e-mail ID 'rajranka8@yahoo.com' belong to the
company and the same were used to correspond with Mr. Rajesh Ranka.

(iii)

Mr. Akash Jagadish Vittal and Ms. Anitha Srinivasabhatt Kadanthalai in their
respective replies have merely informed the number of shares they have subscribed
to the preferential allotment. They also stated that they have not sold any shares of
the company during the examination period.

C. Directors of SMS Techsoft:

The independent directors of the company, as mentioned at serial nos. 5 to 7 in the table
1 above, submitted that they know Mr. Maheshchandra Shah, who approached them
and requested them to become the independent director of the company with no
responsibility and liability. They have not signed any annual report or document since
the year 2007.
D. Mr. Rajesh Ranka:
(i)
(ii)
(iii)

(iv)

(v)

He is not related to any director, promoter and allottees of SMS Techsoft.

As regards fund transactions from his bank statement, he has given loan to Mr.
Maheshchandra Chunilal Shah and Ms. Nila R. Shah on interest.
With regard to the allegation of his E-mail ID and mobile number mentioned in the
KYCs of all the preferential allottees, he submitted that he does not know how his
E-mail ID and mobile number was mentioned by other entities. He has not
subscribed to the shares of the company nor he has traded in the scrip.
He is a part time employee of SMS Techsoft since last 15 years looking after
marketing of the company. He is an authorized signatory of the company with ING
Vysya Bank. However, he has not signed any cheque of the company.
During the hearing on January 13, 2014, Mr. Rajesh Ranka submitted that he had
arranged a loan of `1,99,50,000/- for Mr. Mahindra Shah from Jhaveri Trading
during the time of preferential allotment, which he has returned to Jhaveri Trading

Order in the matter of SMS Techsoft (India) Ltd.

Brought to you by http://StockViz.biz

Page 8 of 16

(vi)

after 15-20 days.

Further, during hearing on August 20, 2014, he submitted that he is holding an
account with Nav Nirman Co-operative bank. He also submitted that Mr.
Maheshchandra Shah is having the cheque book of his said bank account and Mr.
Maheshchandra Shah informed him that an amount of `1,99,50,000/- has been
transferred in his account.

E. Preferential Allottees:
The preferential allottees from serial nos. 9 to 33 mentioned in the table 1 above, made
the following submissions:
(i) The entities at serial nos. 9 and 10, as mentioned in table 1 above, submitted that
they subscribed to the preferential allotment of SMS Techsoft as they are long term
friends of the promoters of SMS Techsoft. They also submitted that they are still
holding the shares of the company.
(ii) The entities from serial nos. 11 to 23 submitted that they had rented their
demat/broking/bank accounts to Mr. Maheshchandra Shah for a sum of `15,000/per month. Hence, they are not aware as well as responsible of any activities taking
place in their accounts.
(iii) Entities from serial nos. 24 to 33, as mentioned in table 1 above, vide replies dated
November 20, 2013, January 06, 2014 and December 11, 2014, inter alia submitted
that they have not signed any account opening forms of Nav Nirman Co-operative
Bank, ING Vysya Bank and DP and broking account with Monarch Research and
Broking Private Limited (hereinafter referred to as Monarch). However, they
admitted that they had given the copies of their PAN card, address proof and photo
ID, with an intention to open a demat account, to their friend, Mr. Biren Dave, who
in turn gave these documents to a company secretary Mr. Anish Shah. Since they
had provided only the copies of their documents, they did not ask Mr. Biren Dave
to return their documents. They were not aware that the fictitious accounts have
been opened in their names and trading has taken place. There was no physical
verification by the bank staff while opening the account. they also contended that
the signatures on account opening forms are forged. They have also filed criminal
complaint with the Commissioner of Police, Ahmedabad against some entities,
namely, Monarch, ING Vysya Bank Limited, The Nav Nirman Co-operative Bank
Limited, Mr. Anish Shah and Mr. Biren Lalitkumar Dave for cheating and forgery
on January 04, 2014. They also requested for cross examination of the employees of
the stock broker and bank where the accounts have been opened and also requested
for forensic verification of the signatures. Further, vide letter dated November 21,
2013, they admitted that they received demat statement by post but they never
opened the said demat account.
Order in the matter of SMS Techsoft (India) Ltd.
Brought to you by http://StockViz.biz

Page 9 of 16

10. At the outset, I find that the principles of natural justice have been followed in so far that all
the noticees were given an opportunity to file written submission and attend hearing to
present their case in the present proceedings. I, therefore, proceed to deal with the
replies/submission of the noticees before me.
11. I am of the view that before proceeding in the matter on its merit, it would be in the fitness
of the thing to first decide the preliminary issue as to whether in view of the death of Ms.
Nila R Shah, the present proceedings against Ms. Nila R Shah, would continue or abate. In
Girijanandini Vs Bijendra Narain (AIR 1967 SC 2110), the Honble Supreme Court observed
that in case of personal actions, i.e., the actions where the relief sought is personal to the
deceased, the right to sue will not survive to or against the representatives and in such cases
the maxim actio personalis moritur cum persona (personal action dies with the death of the
person) would apply. It is also relevant to refer to the decision of Honble Securities
Appellate Tribunal (SAT) in Chandravadan J Dalal vs. SEBI (Appeal No. 35/2004 decided on
June 15, 2005) whwrein it was held as under:
The appeal abates since the appellant during the pendency of the appeal died on 29th November 2004. The
appeal accordingly abates. The penalty imposed on the original appellant being personal in nature also
abates.
12. The violations alleged to have been committed by Ms. Nila R. Shah relates to the period
from March 15, 2012 to October 18, 2013. The interim order was passed against the said
noticee on November 05, 2013, whereas Ms. Nila R. Shah died on February 26, 2012. Thus,
the proceedings were initiated against the personal acts of omission and commission of a
person who is no more to face the charges. In view of the foregoing, I am of the view that
the proceedings against Ms. Nila R Shah are liable to be abated without going into the
merits of the case.
13. I have carefully considered the allegations in the interim order in respect of other noticees and
their submissions. The limited issue to be considered in this order is as to whether the
directions issued vide the interim order need to be continued, revoked or modified in any
manner.
14. I note that SMS Techsoft has contended that its registered office at '325, Patel Road Ram
Nagar, Coimbatore' is working and that its employees had gone on picnic when the officials of
BSE had visited the premises. I note that the copy of the interim order dated November 05,
2013 and letter dated December 27, 2013, which were sent on its registered office, were
returned undelivered with remarks Party Shifted. With respect to its submissions with
regarding the purported land deal, I find that only after receipt of SEBI's e-mail dated
Order in the matter of SMS Techsoft (India) Ltd.
Brought to you by http://StockViz.biz

Page 10 of 16

September 11, 2013, SMS Techsoft disclosed to BSE on September 13, 2013 that it had
terminated the land deal due to title deficiency. Even if its argument that it intended to
utilize the proceeds of preferential allotment in buying a land were to be accepted, I find
that the amount worth `30 crore was not transfered back to the company from Ms.
Manjulaben Shah once the land agreement was cancelled. Further, the company has not
provided any documentary evidence in support of its claim that it had utilized the proceeds
of preferential allotment towards acquiring database for its business development. Hence,
this appears to be an afterthought in an attempt by SMS Techsoft to cover up for its
misdeeds. Moreover, the website 'www.aklsoft.com', which SMS Techsoft claimed to be
working, still appears to be non functional. In view of these facts, I find that the contentions
made by SMS Techsoft regarding its office, utilization of proceeds of preferential allotment
and working website are false and as such are rejected on merit.
15. The promoters of SMS Techsoft including Mr. V. Jagadish have claimed that they are not
from finance background and hence are not aware about the funding of preferential
allotment. I note that Mr. V. Jagadish was the Chairman of Audit Committee of the
company for the financial year 2011-12 when SMS Techsoft received the proceeds of
preferential allotment. Further, the submissions made by Mr. V. Jagadish, vide letters dated
November 19, 2013 and June 26, 2014, are contradictory in nature. On the one hand, Mr.
V. Jagadish claimed that he does not know anything about the funding of preferential
allotment and on the other hand, he admits that he had asked Mr. Rajesh Ranka to raise
around `2 crore for purchasing the land. However, as discussed in the interim order, the
company neither purchased the land nor the money was used for purchasing the land.
Instead the money was circulated between the company, Ms. Manjulaben Shah and the
preferential allottees including the promoters themselves for the purported preferential
allotment. In view of these facts, I reject the contentions of Mr. V. Jagadish, Mr. Akash
Jagadish and Ms. Anita Srinivasabhatt Kadanthalai.
16. With respect to the submissions made by the independent directors of SMS Techsoft (from
Serial Nos. 5 to 7) I note that by virtue of accepting the directorship of the company, the
entities have also taken the responsibility of the acts and omissions of the company. A
Company though a legal entity cannot act by itself, it can act only through its director. They
are expected to exercise their power on behalf of the company with utmost care, skill and
diligence. The Hon'ble Supreme Court, while describing what is the duty of a director of a
company, held in Official Liquidator v. P. A. Tendolkar (1973) 1 SCC 602 that:
"...a Director may be shown to be placed and to have been so closely and so long associated personally with
the management of the company that he will be deemed to be not merely cognizant of but liable for fraud in
the conduct of business of the company even though no specific act of dishonesty is provide against him
Order in the matter of SMS Techsoft (India) Ltd.
Brought to you by http://StockViz.biz

Page 11 of 16

personally. He cannot shut his eyes to what must be obvious to everyone who examines the affairs of the
company even superficially..."
17. In the instant case, Mr. V. Jagadish, Mr. Akash J. Vittal, Mr. Devaraj Siddiah Pera Naidu,
Mr. Dilip Gajjar and Mr. Dashrathkumar Khatri are not only the directors of the company
but also are the part of its Audit Committee. As per the listing agreement, the role of Audit
committee inter alia includes "Oversight of the companys financial reporting process and the disclosure of
its financial information to ensure that the financial statement is correct, sufficient and credible." In view of
these facts, I find that the directors of SMS Techsoft, including the independent directors,
were aware about the non-utilization of the proceeds of the preferential allotment for lan
purchase and as such have failed to perform their above mentioned duties and have allowed
the company to fabricate the figures in its Annual Reports and to make wrong disclosures,
which have already been illustrated in the interim order. Thus, the directors of SMS Techsoft
cannot escape from the obligation of the board of directors with regard to their fiduciary
duties towards SMS Techsoft and its shareholders. In this regard, the observation of the
Honble SAT in the matter of Mr. N. Narayanan vs SEBI (order dated October 05, 2012) is
worth mentioning:
With the changing scenario in the corporate world the concept of corporate responsibilities is also
rapidly changing day by day. The director of a company cannot confine himself to lending his name
to the company but taking light responsibility for its day to day management. While functions may
be delegated to professionals, the duty of care, diligence, verification of critical points by directors
cannot be abdicated. The directors are expected to have a hands on approach in the running of the
company and take up responsibility not only for the achievements of the company but also the
failings thereto.
18. With respect to the contentions made by Mr. Rajesh Ranka, I note that he circulated
approximately `1,00,00,000/- back and forth between the company, 27 preferential allottees
connected to him and the 3 promoters of the company, who were also acting hand-in-glove
with Mr. Rajesh Ranka, through Ms. Manjulaben in the purported preferential allotment by
the company. He also circulated `99,50,000/- through Ms. Nila R. Shah (who is also
connected with him) to the company and then back to him. Through this modus operandi by
circulating `1,99,50,000/- total 3,00,00,000 equity shares worth `30,00,00,000/- were
allotted by SMS Techsoft to 31 allottees including its three promoter. Further, the amounts
funded by Mr. Rajesh Ranka for the purpose of the said purported preferential allotment
had been returned to him. The flow of funds from Mr. Rajesh Ranka to Ms. Manjulaben
Shah and then among Ms. Manjulaben Shah, the company and the preferential allottees has
already been illustrated in the interim order. I also find that Mr. Rajesh Ranka has already
admitted that he is the authorised signatory of the company. With respect to the contention
Order in the matter of SMS Techsoft (India) Ltd.
Brought to you by http://StockViz.biz

Page 12 of 16

of Mr. Rajesh Ranka that he does not know any of the preferential allottees and he is not
aware how his e-mail ID and mobile number has been mentioned in the KYCs of the
preferential allottees, I note that vide its e-mail dated January 10, 2014 BSE has stated that
confirmation with regard to the trades executed by 20 clients, who had mentioned the e-mail
ID and mobile number of Mr. Rajesh Ranka, were sent to the mobile number and e-mail ID
of Mr. Rajesh Ranka. Hence, the claim of Mr. Rajesh Ranka that he does not know anyone
does not stand. In this regard, I note that the Hon'ble SAT has, in many cases such as Classic
Credit Ltd. vs. SEBI (SAT Appeal no. 68/2003, Order dated December 8, 2006), Classic Credit Ltd.
vs. SEBI (SAT Appeal no. 76/ 2003, Order dated January 9, 2007) and Veronica Financial Services
Ltd. vs. SEBI (SAT Order dated August 24, 2012), held that connection/relations can be
established on the basis of factors like relationship, common addresses, e-mails, telephone
numbers, fund transfer, etc. In view of these facts and circumstances, I find that Mr. Rajesh
Ranka is connected to the company, its promoters and the 27 preferential allottees are
connected to each other as described in the interim order.
19. Further, I find that the submissions made by Mr. Rajesh Ranka during the hearing dated
January 13, 2014 and August 20, 2014 are contradictory in nature. While making
submissions on January 13, 2014, Mr. Rajesh Ranka submitted that he had arranged loan of
`1,99,50,000/- for Mr. Maheshchandra Shah from Jhaveri Trading for few days, whereas on
August 20, 2014, Mr. Rajesh Ranka submitted that Mr. Maheshchandra Shah had the cheque
book of his Nav Nirman Co-operative bank and Mr. Maheshchandra Shah informed him
that an amount worth `1,99,50,000/- has been deposited in his bank account. Therefore,
the contentions made by Mr. Rajesh Ranka do not stand on merit. I, therefore, reject the
same.
20. I note that Mr. V. Jagadish vide affidavit dated June 26, 2014 has admitted that mobile no.
9825032074 and e-mail ID rajranka8@yahoo.com is mobile number and E-mail ID of the
company for making correspondence with Mr. Rajesh Ranka. I find that the said mobile
number and E-mail ID was also mentioned on the KYCs of all the preferential allottees and
the confirmation of trades was also sent on the same mobile number and e-mail ID by BSE.
I, therefore, find that SMS Techsoft, its promoters, directors, Mr. Maheshchandra Shah and
Mr. Rajesh Ranka, while acting together as a group, adopted fraudulent device and artifice to
defraud the genuine shareholders of the company by falsely portraying the transactions as a
genuine preferential allotment and by creating artificial volume in the shares of the
company. Hence, I reject the submissions made by SMS Techsoft, its promoters, directors
and Mr. Rajesh Ranka.
21. With respect to the contentions of Mr. K. Rajagopal and Mr. S. Rajaganesh that they do not
know the promoters of the company or Mr. Rajesh Ranka, I nte that not they are only
Order in the matter of SMS Techsoft (India) Ltd.
Brought to you by http://StockViz.biz

Page 13 of 16

known to the promoters of the company but also share common address with Mr. Rajesh
Ranka, who is the master mind of the whole scheme. Some of the noticees have contended
that they had given their demat/bank/broking account on rent. I note that renting of
demat/broking account is illegal. Further, even if these noticees had given their
demat/broking account on rent, it does not absolve them from any liability arising from
misuse of these accounts. Some of the preferential allottees, viz., Mr. Himanshu Shah and
his family members, have admitted that they had given their documents for opening a demat
account and that they were receiving demat statement by post. I, therefore, find that they
were aware that demat account has been opened in their name and is active. I also find that
they have taken action only when they received the copies interim order. In view of these facts
and circumstances, I reject the contentions of all the preferential allottees.
22. The allegation against the noticees in the interim order is that they had acted as a group, traded
amongst themselves and placed orders at a price higher than the last traded price (LTP) in
scrip of SMS Techsoft. I note that the noticees have not disputed their transactions as
alleged but have rather contended that they either have rented their demat/banking/broking
account to Mr. Mahindra Shah or have alleged that the accounts opened in their names are
forged. I find that renting of accounts is illegal in nature and hence, it does not absolve the
entities from the liability arising from misuse of the accounts. Further, the noticees who had
contended that their signatures were forged while opening the accounts, I note that the
noticees have admitted that the documents for opening the accounts had been provided by
them. Moreover, in such cases, the onus of proving their claim of forged documents lies on
such noticees. In view of these facts, I find that the noticees have acted in concert with each
other as a group and have manipulated the price as well as volume of the scrip by placing
trades at a price above LTP and by trading among themselves.
23. I note that Trading at LTP variation and trades among themselves are not illegal per se.
However, considering the relationship amongst the noticees, their activities need to be
viewed in totality which has been duly considered in the interim order. In view of these facts, I
find that the concerted trading amongst the connected/elated entities of Mr. Rajesh Ranka
group in the scrip had led to creation of artificial volume and unnatural increase in price of
the scrip as found in the interim order.
24. I note that, at this stage, noticees have failed to give any plausible reasoning/explanation for
their acts as dealt with in the interim order and have not been able to make out a prima facie
case for revocation or modification of the interim order. I also note that investigation in the
matter is going on and appropriate decision, in accordance with law, would be taken after
completion thereof. In this case, it has been inter alia found in the interim order that the Rajesh
Ranka Group acting in concert, indulged in fraudulent and manipulative trading by way of
Order in the matter of SMS Techsoft (India) Ltd.
Brought to you by http://StockViz.biz

Page 14 of 16

trading amongst themselves, trading at prices above LTP, etc. thereby creating unnatural
and artificial volumes in the scrip of SMS Techsoft and manipulated its price. As prima facie
found in the interim order, the concerted tradings of the connected entities under a
premeditated plan or strategy not only erode the market integrity but also are detrimental to
the interests of investors who might have been lured to invest in the scrip due to such
manipulative and fraudulent trading in the scrip and price movement trend.
25. In view of these facts and circumstances of the case, I find that the noticees have not been
able to make out a prima facie case for revocation or modification of the interim order and the
material available on record justifies the continuation of the directions passed against them
under the interim order.
26. I, therefore, in exercise of the powers conferred upon me under section 19 of the Securities
and Exchange Board of India Act, 1992 read with sections 11(1), 11(4) and 11B thereof and
section 12A of the the Securities Contracts (Regulation) Act, 1956, hereby confirm the
directions issued vide the ad interim ex-parte order dated November 05, 2013 against the
following entities:
S. No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.

Name
SMS Techsoft (India) Limited
Mr. Akash Jagadish Vital
Mr. Jagadish Vital
Ms. Anita Srinivasabhatt Kadanthalai
Mr. Dashrathkumar Keshaji Khatri
Mr. Devaraj Siddiah Pera Naidu
Mr. Dilipbhai Jaswantlal Gajjar
Mr. Rajesh Ranka
Mr. K. Rajagopal
Mr. S. Rajaganesh
Mr. Bafna S R
Ms. Chhaya Umeshchandra Trivedi
Ms. Meenaben Natubhai Thakkar
Mr. Mitesh Kanaiyalal Thakkar
Mr. Mukeshbhai Shantilal Thakkar
Mr. Mulchand Ganeshmal Jain
Mr. Natubhai Shantilal Thakkar
Mr. Navinchandra Kanubhai Thakkar
Mr. Suresh Nenmalji Malvi
Ms. Vaishali Natvarlal Thakkar
Mr. Vinod Jain
Mr. Dharmendra Rikhavchand Shah
Mr. Kanubhai Narandas Thakkar
Ms. Alakaben Kirtibhai Shah
Mr. Himadri Kamleshbhai Shah

Order in the matter of SMS Techsoft (India) Ltd.

Brought to you by http://StockViz.biz

PAN
AAECA1954G
ATYPA8648K
ACJPJ5747L
ABUPA2184Q
ACFPK3128C
ACGPD9190G
ADVPG4094Q
ACUPR5573R
AGCPR8130L
ALBPR2586E
AFXPB6525P
AHDPT3058P
AHWPT5940M
AHQPT0178H
AJBPT8789M
ABBPJ6373M
AHWPT5944R
ADUPT1264A
AKMPM4951C
AMJPT1242N
AEDPJ4235P
AAEHD6246F
ADZPT3418R
CPAPS2335R
AZYPS5654H
Page 15 of 16

26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.

Mr. Himanshu Prafulchandra Shah

Ms. Kaliyaben Himansu Shah
Mr. Karan Kirtibhai Shah
Mr. Keval Kirtikumar Shah
Mr. Kirtikumar Rasiklal Shah
Ms. Minaben Prafulbhai Shah
Mr. Pruthvi Himanshu Shah
Mr. Vinit Kamleshkumar Shah
Mr. Mahavirsingh N. Chauhan
Mr. Maheshchandra Chunilal Shah
Ms. Manjulaben Maheshchandra Chunilal
Shah

ANEPS9445A
BFQPS1462A
BQYPS0082D
DFNPS6796L
AKQPS8463F
COYPS9153J
DCAPS6011N
BOIPS2506E
AQOPC6330R
AIOPS3870Q
AFSPS6606M

27. Accordingly, the directions issued vide para 35 of the interim order dated November 05, 2013
shall remain in force till further directions. A copy of this order shall be served on all
recognized stock exchanges and depositories to ensure compliance with above directions.
Sd/-

DATE: MAY 7th, 2015

RAJEEV KUMAR AGARWAL

PLACE: MUMBAI

WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA

Order in the matter of SMS Techsoft (India) Ltd.

Brought to you by http://StockViz.biz

Page 16 of 16