WTM/SR/ SEBI/EFD/168 /10/2015

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

CORAM: S. RAMAN, WHOLE TIME MEMBER
ORDER
Under Section 11 and 11B of SEBI Act 1992 read with Regulation 11 of SEBI
(Prohibition of Fraudulent and Unfair Trade Practices relating to Securities
Market) Regulations, 2003 against Mr. Tushar S. Jhaveri (PAN: AACPZ7287J) in
the matter of Monalisa Infotech Ltd.
1. Securities and Exchange Board of India ("SEBI") conducted investigation into the
dealings in the shares of Monalisa Infotech Limited ("Monalisa"). Investigation revealed
that during the period September 19, 2000 to October 13, 2000, there was a
concentrated trading activity in the scrip at Ahmedabad Stock Exchange ("ASE") and
Bombay Stock Exchange ("BSE"), among certain clients viz. Mr. Tushar S. Jhaveri
(hereinafter referred to as 'Noticee'), Mr. Sanjay R Shah and certain other entities
connected with them viz. Classic Consultancy, Orbit Securities Ltd. and Mr. Sanjiv
Pravinchandra Shah.
2. Mr. Sanjay R Shah, Orbit Securities Ltd., Classic Consultancy, Mr. Sanjiv Pravinchandra
Shah and the Noticee sold the shares of Monalisa through various brokers of ASE/BSE
and simultaneously purchased shares through other brokers at ASE/BSE. The trades
thus executed were circular in nature and appear to have been executed with an intention
to create artificial market in the scrip at ASE and BSE. It was thus alleged that the
Noticee had violated Regulation 4(b), 4(d) and 6(a) of SEBI (Prohibition of Fraudulent
and Unfair Trade Practices relating to Securities Market) Regulations, 1995. Pursuant to
the repeal of 1995 Regulations, the corresponding provisions are contained in
Regulations 3(a), 4 (1), 4 (2) (a), (b) and (g) SEBI (Prohibition of Fraudulent and Unfair
Trade Practices relating to Securities Market) Regulations, 2003 ("PFUTP
Regulations").
3. In view of the above, a Show Cause Notice (SCN) dated January 7, 2010 was issued to
the Noticee under Section 11 and 11B of the SEBI Act, 1992 read with Regulation 11 of
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SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities

Market) Regulations, 2003 to show cause as to why appropriate action should not be
taken against him for the aforesaid alleged violations. However, the SCN issued to the
Noticee was returned undelivered by the postal authorities. Subsequently, a reminder
dated May 07, 2010 was issued by SEBI advising the Noticee to respond to the SCN. As
the SCN could not be served on the Noticee, SEBI once again forwarded the SCN to
the Noticee on February 12, 2014. The same was also returned undelivered. In view of
this, a copy of the SCN was affixed at Flat No. A/11, Lavaniya Apartment, Lavaniya
Society, Near Jaltharang Society, Vasna, Ahmedabad 380007 on June 23, 2014 and also
uploaded the same on SEBI website under the head "Unserved Summons/Notices".
Thereafter, vide separate letters dated December 03, 2014, SCN was also forwarded to
the Brokers of the Noticee viz., Mr. Hemant Jhaveri, Rajesh Jhaveri Stock Brokers
Private Limited, Amrut Securities Limited, SKSE Securities Limited and Galaxy Broking
Limited for getting the same served on the Noticee. However, SCN could not be served
on the Noticee by the brokers as the Noticee had shifted from the address available on
record.
4. It is also noted that the Noticee was granted opportunity of personal hearings on three
occassions. Vide hearing notice dated November 23, 2010 an opportunity of hearing on
December 16, 2010 was granted to the Noticee. Vide letter dated June 13, 2011 another
opportunity of hearing on July 12, 2011 was granted to the Noticee. Both the letters
were returned undelivered with the postal remarks "left". A final opportunity of hearing
to the Noticee was granted on June 25, 2015 vide hearing notice dated June 03, 2015. As
the said notice was once again returned undelivered, the same was affixed at the address
of the Noticee i.e. "A-22, Lavaniya Apartments, Lavaniya Society, Near Jaltharang Society,
Vasna, Ahmedabad 380007". However, the Noticee has neither appeared nor sent any
communication till date. In view of this and in the absence of any reply from the
Noticee, I am constrained to proceed the matter ex-parte on the basis of material available
on record.
5. Before dealing with the aforesaid charges in seriatim, the relevant legal provisions, the
contravention of which have been alleged in this case may be reproduced hereunder for
reference purpose:Page 2 of 9

PFUTP Regulations:
3. Prohibition of certain dealings in securities
No person shall directly or indirectly
(a) buy, sell or otherwise deal in securities in a fraudulent manner;

4. Prohibition of manipulative, fraudulent and unfair trade practices

(1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an
unfair trade practice in securities.
(2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves
fraud and may include all or any of the following, namely:
(a) indulging in an act which creates false or misleading appearance of trading in the
securities market;
(b) dealing in a security not intended to effect transfer of beneficial ownership but intended
to operate only as a device to inflate, depress or cause fluctuations in the price of such
security for wrongful gain or avoidance of loss;
...
(g) entering into a transaction in securities without intention of performing it or without
intention of change of ownership of such security;
6. The issue involved in the present case is whether the Noticee had created artificial
volumes in the scrip of Monalisa by way of circular trades and violated the provisions of
PFUTP regulations?
In this regard, I note7. SEBIs investigation into the dealings in the scrip of Monalisa revealed that during the
period September 19, 2000 to October 13, 2000 at ASE and BSE there was a
concentrated trading activity among the Noticee and Mr.Sanjay R Shah and other entities
connected with them viz., Classic Consultancy, Orbit Securities Ltd. and Mr.Sanjiv
Pravinchandra Shah.
8.

It is noted that in ASE, the scrip of Monalisa was illiquid as there was no trading
reported in the said scrip during the period December 1, 1999 to September 18, 2000.
Subsequently, the scrip gained momentum during the period September 19, 2000 to
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September 29, 2000 when the Noticee and the other connected entities traded in the
scrip.
9. It is noted that investigation also revealed that the Noticee Mr. Tushar Jhaveri, Mr.
Sanjay R. Shah, Orbit Securities Ltd., Classic Consultancy and Mr. Sanjiv Pravinchandra
Shah are linked to each other as Mr. Sanjay R. Shah and Mr. Rajiv R Shah (Proprietor of
Classic Consultancy) share the same address and there was substantial amount of share
transfer from the Noticee to other entities. The details are as under:
i.

On September 21, 2000 and September 23, 2000, the Noticee transferred
3,00,000 shares of Monalisa to Mr. Sanjay R. Shah having address at E-101,
Shubhalaxmi Tower, Opp. Sanghavi High School, Naranpura, Ahmedabad 380
013.

ii.

On September 29, 2000 the Noticee transferred 91,000 shares of Monalisa to

Classic Consultancy. Mr. Rajiv R. Shah is the proprietor of Classic Consultancy
and Mr. Sanjay R. Shah and Classic Consultancy share the same address viz., E101, Shubhalaxmi Tower, Opp. Sanghavi High School, Naranpura, Ahmedabad
380 013.

iii.

On September 27, 2000, the Noticee transferred 50,000 shares of Monalisa to

Orbit Securities Ltd.

iv.

On October 10, 2000, Mr. Sanjay R Shah transferred 1,00,000 shares to Mr.
Sanjiv P Shah.

10. During the investigation period i.e. from September 19, 2000 to September 29, 2000, the
price of the scrip of Monalisa at ASE opened at ` 28/- on September 19, 2000 and
closed at `39.90 on September, 2000, thereby registering an increase of price to the tune
of 39%.
The following are the settlement wise details of transactions done by the entities:
Date

Sett
No.

19/9/00

52

Buy Details
Name of ASE Name of
broker
client

Buy
Qty

Name
broker

Hemant Jhaveri

Tushar
Jhaveri

15000

Prerak Capital

Sanjay
R.Shah

10000

Ashok C. Shah

Page 4 of 9

of

Sell Details
ASE Name
client
Sanjay
R.Shah

of

Sell Qty
32500

Total no
of shares
traded at
ASE
32500

Date

Sett
No.

20/9/00

53

Buy Details
Name of ASE Name of
broker
client

Buy
Qty

Name
broker

Hemant Jhaveri

Tushar
Jhaveri

20000

Prerak Capital

Sanjay
R.Shah

40000

Total no
of shares
traded at
ASE
40000

Sanjay
R.Shah
Sanjay
R.Shah

20000
75000

Prerak Capital

Sanjay
R.Shah

60000

95000

Tushar
Jhaveri
Sanjay
R.Shah

15000

Rajesh Jhaveri Stock

35000

42000

Ashok C Shah

Sanjay
R.Shah
Sanjay
R.Shah

Rajendra
Chudgar

Sanjay
R.Shah

25000

Rajesh Jhaveri Stock

Sanjay
R.Shah

19000

Hemant Jhaveri

Tushar
Jhaveri
Sanjay
R.Shah

20000

15000

33000

Ashok C Shah

Tushar
Jhaveri
Orbit
Securities

Sanjay
R.Shah

15000

Rajendra Chudgar

Paresh Shah

Sanjay
R.Shah

35000

Ashok C. Shah

Sanjay
R.Shah

15000

Tushar
Jhaveri
Sanjay
R.Shah

8000

Paresh Shah

Sanjay
R.Shah

22600

Rajesh N.
Jhaveri

Prop A/c

17500

Ashok C. Shah

Sanjay
R.Shah

16000

Paresh Shah

Sanjay
R.Shah
Sanjay
R.Shah

11000

Sanjay
R.Shah

5000

Ashok C. Shah
Paresh R. Shah
21/9/00

54

22/9/00

55

Hemant Jhaveri
Paresh Shah

25/9/00

56

Paresh R. Shah
Rajendra
Chudgar

26/9/00

57

Hemant Jhaveri

27/9/00

58

28/9/00

59

29/9/00

60

Rajendra
Chudgar

Paresh Shah
Rajendra
Chudgar

of

Sell Details
ASE Name
client

Hemant Jhaveri

Rajesh Jhaveri Stoc

of

Sell Qty

52000

33000

87000

58000

15000
Sanjay
R.Shah
Aloni Ent.

55000

105000

Prerak Capital

49900

Rajesh Jhaveri Stoc

Orbit
Securities

30000

Aloni Ent.

80000

Sanjay
R.Shah

20000

Classic Cons

11000

11000

Classic Cons

80000

95000

141000

Ashok C. Shah

75000

Page 5 of 9

Khandwala
Finstock
Khandwala
Finstock

11. From the above transactions for the nine days at ASE , it is evident that almost the entire
trades at ASE during the said period were accounted by the Noticee Mr. Tushar Jhaveri
and Mr. Sanjay R Shah and other entities connected with them viz., Classic Consultancy,
Orbit Securities Ltd. and Mr. Sanjiv Pravinchandra Shah. It is noted that in most of these
transactions the same person or entity was appearing on buy and sell sides for the same
transactions through different brokers. It was also noticed that one Aloni Enterprise sold
the shares of Monalisa through broker Rajesh Jhaveri Stock Brokers Pvt. Ltd.
12. It was also observed that similar kind of trading activity was noticed at BSE too, during
the period September 25, 2000 to October 13, 2000. The Noticee and Mr.Sanjay R Shah
executed most of the trades in BSE during this period.
The details of transactions of Mr.Tushar Jhaveri and Mr.Sanjay R Shah are given below:

Date

Sett
No.

25/9/00

126

27/9/00

128

Buy Details
Name of Name
broker/su of client
b-broker

Buy
Qty

Sell Details
Name
of Name of Sell Qty
broker/sub client
-broker

Total
shares
traded
in the
market
52200

Galaxy
Broking

Tushar
Jhaveri

15000

Prabhudas
Liladher
through Jyotish
Bhogilal

Sanjay R.
Shah thru
Shree
Parshawa
Finance/
Rajesh
Jhaveri

28250

SKSE Sec
through subbroker
Amrut Sec

Sanjay R.
Shah/Tus
har Jhaveri

2500

Prabhudas
Liladher
through Jyotish
Bhogilal

Rajesh
Jhaveri thru
Shree
Parshawa
Finance

225

SKSE Sec
through subbroker
Amrut Sec

Sanjay R.
Shah/Tus
har Jhaveri

15000

Prabhudas
LiladherJyotish Bhogilal

Rajesh
Jhaveri thru
Shree
Parshawa
Finance

10763

Galaxy
Broking

Tushar
Jhaveri

10000

Page 6 of 9

45600

28/9/00

29/9/00

129

130

Galaxy
Broking

Tushar
Jhaveri

23900

SKSE
Securities
through subbroker
Amrut Sec

Sanjay R.
Shah/Tus
har Jhaveri

2500

SKSE
Sec
through subbroker
Amrut Sec

Sanjay R.
Shah
/Tushar
Jhaveri

10000

Sanjay R.
Shah
/Tushar
Jhaveri
Tushar
Jhaveri

46000

Tushar
Jhaveri

5/10/00

133

SKSE
Sec
throgh subbroker Anil
Gandhi
Galaxy
Broking

6/10/00

134

Galaxy
Broking

Prabhudas
Lila/Jyotish
Bhogilal

Rajesh
Jhaveri thru
Shree
Parshawa
Finance

3000

Lalkar Sec

Tushar
Jhaveri thru
Enpee
Securities

30000

Acme Shares

Tushar
Jhaveri thru
Mahavir
Inv

25300

81218

3100

Galaxy Broking

Tushar
Jhaveri

100

19610

11950

Galaxy Broking

Tushar
Jhaveri

100

54001

Lark Consul

Sanjay
R.Shah
Sanjay R.
Shah

19480

Tushar
Jhaveri

Lark Consul

135

Galaxy
Broking

53650

9/10/00
10/10/00

136

Galaxy
Broking

Tushar
Jhaveri

10450

Lark Consul

11/10/00

137

Galaxy
Broking

Tushar
Jhaveri

69600

12/10/00

138

Galaxy
Broking

Tushar
Jhaveri

19000

13/10/00

139

Galaxy
Broking

Tushar
Jhaveri

55000

60710

50000

119425

Sanjay
R.Shah

28600

90027

Lark Consul

Sanjay R.
Shah

37220

106692

Galaxy Broking

Tushar
Jhaveri

2000

30200

Prabhudas
Lila/Jyotish
Bhogilal

Sanjay R.
Shah thru
Shree
Parshawa
Finance/
Rajesh
Jhaveri
Sanjay R.
Shah thru
Shree
Parshawa
Finance/
Rajesh
Jhaveri

6100

Prabhudas
Lila/Jyotish
Bhogilal

Page 7 of 9

25548

92598

13. The abovementioned transactions clearly show that the Noticee along with Mr.Sanjay R.
Shah, Orbit Securities Ltd., Classic Consultancy and Mr. Sanjiv Pravinchandra Shah sold
the shares of Monalisa through various brokers of ASE/BSE and simultaneously
purchased shares through other brokers at ASE/BSE. These were circular in nature and
the pattern of trading clearly reveals the intention to create artificial market in the scrip at
ASE and BSE. It is also noted that shares sold by the Noticee Mr. Tushar Jhaveri and
Mr. Sanjay R. Shah were routed through Rajesh N. Jhaveri/Mr. Piyush Jhaveri
(proprietor of Shree Parshawa Finance) in a circuitous manner in order to avoid
detection and to create artificial volume in the scrip. It was observed that the Noticee
and Mr. Sanjay R. Shah had defaulted in making payments to their brokers Amrut
Securities Ltd., Mr. Anil Gandhi (on October 06, 2000) and Galaxy Broking (on October
16, 2000) for the large purchases in the scrip.
14. It is noted that the Investigating Authority of SEBI vide summons dated February 05,
2003 and March 03, 2003 required the Noticee to produce documents and to appear
before him. However, the Noticee failed to respond to the summons and also failed to
appear before the Investigating Authority.
15. In view of the facts and circumstances of the case and considering the fact that the
Noticee did not refute any of the transactions stated above, I find that the Noticee Mr.
Tushar S. Jhaveri has executed circular trades with an intention to create artificial market
in the scrip at ASE and BSE and thereby violated the provisions of Regulation 4(b), 4(d)
and 6(a) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to
Securities Market) Regulations, 1995 read with Regulations 3(a), 4 (1), 4 (2) (a), (b) & (g)
SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities
Market) Regulations, 2003.
16. It is pertinent to mention here that proceedings under Section 11 and 11B of the SEBI
Act were initiated against Mr. Sanjiv Pravinchandra Shah and Classic Consultancy which
culminated in their debarment for a period of six months vide separate Orders dated
January 09, 2009. Further, the Enquiry proceedings initiated against Orbit Securities
resulted in issuance of warning vide Order dated March 10, 2010 and proceedings
Page 8 of 9

initiated against Mr. Sanjay R. Shah resulted in Suspension of registration certificate for a
period of one month vide Order dated March 10, 2010 issued by SEBI.
It is a material fact that the Noticee Mr. Tushar Jhaveri played an important role in
the manipulation of the scrip of Monalisa during the investigation period by executing
most of the transactions detailed in pages 4-7 of this order.
17. Taking into consideration the facts and circumstances of the case, I, in exercise of the
powers conferred upon me under Sections 19 of the SEBI Act read with Section 11 and
11B and Regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices
relating to Securities Market) Regulations, 2003 hereby restrain Mr. Tushar S. Jhaveri
from accessing the securities market and prohibit him from buying, selling or otherwise
dealing in securities, directly or indirectly, for a period of One year.
18. This order shall be served on all recognized stock exchanges and depositories to ensure
that the Noticee is not allowed to undertake transactions as prohibited in Paragraph 17
above.
19. This order shall come into force with immediate effect.

October 21, 2015

MUMBAI

S.RAMAN
WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA

Page 9 of 9