WTM/RKA/EFD/36/2016

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER
UNDER SECTION 11B OF THE SECURITIES AND EXCHANGE BOARD OF
INDIA ACT, 1992
In respect of Kushal Diamonds Limited
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1. Kushal Diamonds Limited (hereinafter referred to as 'Kushal Diamonds' or the company) is a
company incorporated under the Companies Act, 1956 having its registered office at EMP
48/1203, Thakur Village, Kandivili (East), Mumbai 400 101. The shares of the company are
listed on Ahemedabad Stock Exchange (ASE), Bombay Stock Exchange Limited (BSE) and
Jaipur Stock Exchange (JSE).
2. SEBI vide its circular no. CIR/OIAE/1/2012 dated August 13, 2012 directed all companies
whose securities are listed on stock exchanges to obtain SCORES authentication by September
14, 2012. However, since certain companies including Kushal Diamonds did not obtain
SCORES authentication within the time period specified in the aforementioned circular, a
public notice was issued on January 13, 2013, advising inter alia the companies to obtain
SCORES authentication within seven days from the date of the advertisement, failing which
SEBI would be constrained to initiate appropriate enforcement actions. However, the
company still failed to obtain SCORES authentication. It was also observed that fifteen
investor complaints were pending against the company. SEBI vide its letter dated February 15,
2013 once again advised the company to obtain SCORES authentication and to redress the
investor complaints pending against it.
3. Since the company did not obtain SCORES authentication and failed to redress the investor
grievances, SEBI issued Show Cause Notices (SCNs) dated March 28, 2013 to the company
and its Directors (1) Mr Bakul Jhaveri, (2) Mr. Kalpesh Bhagwandas Sheth and (3)
Mr. Devdattbhai Shah Jayantilal (hereinafter collectively referred to as "the noticees"), calling
upon them to show cause as to why suitable directions including direction to restrain them
from accessing the securities market for a specified period should not be passed under section
11B of the SEBI Act. The SCN was delivered to Mr Bakul Jhaveri but it returned undelivered
from the last known addresses of the company, Mr. Kalpesh Bhagwandas Sheth and Mr.
Devdattbhai Shah Jayantilal. On January 31, 2014, the SCN was served on the company
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through affixture on its two last known alternate addresses. The SCNs were later served on the
alternate addresses of Mr. Kalpesh Bhagwandas Sheth and Mr. Devdattbhai Shah Jayantilal, as
well. The company, vide its letter dated November 03, 2014, sought 15 to 20 days time to
complete 'necessary formalities'.
4. Replying to the SCN, Mr. Devdattbhai Shah Jayantilal vide his letter received on March 08,
2016, inter alia submitted that he does not have any concern with the company and has never
attended the board meeting of the company. He claimed that other two directors, namely, Mr.
Bakul Jhaveri and Mr. Kalpesh Bhagwandas Sheth make all the decisions for the company and
they have used his documents to make him director.
5. An opportunity of personal hearing was granted to the company on January 28, 2016.
However, the company and its directors chose not to appear for the personal hearing on the
scheduled date. I note that sufficient opportunities have been granted to the noticees and they
are not keen to avail the same.
6. I note that Mr. Devdattbhai Shah Jayantilal has not refuted that he is a director of the
company. Once, it is established that he is a director of the company; onus is on the director to
prove that he is not responsible for the alleged acts and the omissions of the company. In the
present case, Mr. Devdattbhai Shah Jayantilal has not brought any evidence on record to
substantiate his contentions, I, therefore, reject his submissions. I further note that the
company and other directors of the company have not even filed any written reply/submission
to the SCNs. In view of these facts and circumstances, I deem it appropriate to decide the
matter on the basis of material available on record.
7. I note that the company has not obtained SCORES authentication, as required under SEBI
circular dated August 13, 2012, till date. I further note from the SCN that there were fifteen
investor complaints pending against the company for redressal.
8. I note that the investor complaints are pending unresolved since the year 2001. In addition to
the obligations under the provisions of Companies Act, the company is also under an
obligation to redress all investor complaints in terms of the advice/directions of SEBI, in view
of the provisions of section 11 of the SEBI Act. However, the company has not shown any
tenacity in resolving the investor grievances and in spite of repeated advice of SEBI, the said
investor grievances are pending till date.
9. Failure to redress investor grievances, by a listed company adversely affects the confidence of
investors in the securities market. In view of the foregoing, I am of the view that it is a fit case
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to issue appropriate directions under section 11B of the SEBI Act against the company and its
directors as contemplated in the show cause notices issued to them. I, therefore, in exercise of
the powers conferred upon me under section 19 of the SEBI Act read with sections 11 and
11B thereof, hereby restrain and prohibit Kushal Diamonds Limited and its directors, Mr.
Bakul Jhaveri, Mr. Kalpesh Bhagwandas Sheth and Mr. Devdattbhai Shah Jayantilal from
accessing the securities market and from buying, selling or dealing in securities, directly or
indirectly, in whatsoever manner, till the company obtains SCORES authentication in terms of
the SEBI circular dated August 13, 2012 and resolves all the investor grievances pending
against it. The aforesaid direction is without prejudice to any other action that may be taken
against the company and its directors in accordance with law.
10. 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.

Sd/Date: March 18th, 2016

Place: Mumbai

RAJEEV KUMAR AGARWAL

WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA

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