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WTM/RKA/EFD-DRA-III/49/2016

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA


ORDER
UNDER SECTION 11 AND SECTION 11B OF THE SECURITIES AND EXCHANGE
BOARD OF INDIA ACT, 1992- In respect of:
Sl. No.
1.

Entity
Mr. Purshottam Khandelwal

PAN
ADZPK9831B

2.

Ms. Sunita Gupta

AAHPG4700E

3.
4.

Cosmo Corporate Services Ltd. (Cosmo)


Master Finlease Ltd.(Master Finlease)

AAACC3529P
AAACM6050D

5.
6.

Avisha Credit Capital Ltd.( Avisha)


Vishvas Projects Ltd. (Vishvas)

AAACA5715D
AAACM2047A

In the matter of Gangotri Textiles Limited


1. Gangotri Textiles Limited (hereinafter referred to as the Company) is a company having its
shares listed on the Bombay Stock Exchange Limited (hereinafter referred to as BSE) and the
National Stock Exchange [hereinafter referred to as NSE). The Company made a further public
offer (FPO) of `55 crore which opened on May 18, 2006 and closed on May 23, 2006 with a
fixed price band in the range of ` 41 to ` 46. The shares issued and allotted in the FPO got
listed on the stock exchanges on June 12, 2006. The price of the scrip had risen from ` 50.30 on
April 7, 2006 to `70.40 on May 4, 2006 and thereafter fell to ` 45.5 on May 31, 2006.
2. Securities and Exchange Board of India (hereinafter referred as SEBI) undertook investigation
in the trading in the shares of the Company for the period April 07, 2006 to May 31, 2006
(hereinafter referred as investigation period). On the basis of investigation, it was alleged that,
Mr. Purshottam Khandelwal, Ms. Sunita Gupta, Cosmo, Master Finlease, Avisha, and Vishvas in
concert with Ishita Finstock Ltd (Ishita), Quantum Global Securities and Leasing Co. Ltd.
(Quantum), ISF Securities Ltd.(ISF), Mr. Praveen Poddar, Anupama Communications Pvt. Ltd,
Mefcom Securities Ltd.( Mefcom), Vishvas Securities Ltd.(VSL), and SIC Stocks and Services
Pvt. Ltd.(SIC) had indulged in large number of circular trades, synchronized trades and created
artificial volume in the scrip. These entities also allegedly indulged in price manipulation by
contributing significant positive and negative Last Traded Price (LTP) variation. These 14
Order in the matter of Gangotri Textiles Limited

Page 1 of 25

entities were collectively called as Vishvas Group in the observations of investigation.


3. Pursuant to investigation, a Show Cause Notice (SCN) dated November 5, 2013, bearing no.
IVD/ID6/BR/AKJ/GTL/OW/28289/2013 was issued to Mr. Purshottam Khandelwal, Ms.
Sunita Gupta, Cosmo, Master Finlease, Avisha and Vishvas (hereinafter collectively referred to
as Noticees). The SCN was issued on the basis of the following observations/findings of the
investigation :
(a) During the investigation period, there were 24,154 trades in the shares of the Company for
the traded quantity of 89,41,975 shares at BSE. Out of these, there were 430 trades for
15,60,914 shares (17.14% of the total traded quantity) which were synchronized trades. At
NSE, there were 21,451 trades for a traded quantity of 68,16,750 shares. Out of these, there
were 495 trades for 14,48,679 shares (21.25% of the total traded quantity) which were
synchronized trades.
(b) Mr. Purshottam Khandelwal, Cosmo, Ms. Sunita Gupta, Avisha, and Vishvas, together with
three other connected entities of Vishvas Group viz. Mr. Praveen Poddar, Mefcom and ISF,
indulged in 210 synchronized trades for 12,26,309 shares (78.56% of total synchronized
quantity and 13.71% of total market quantity) at BSE. Details of entity-wise alleged
synchronized trades at BSE are given in the following table:
Table 1
Client

Buy

Sell

Total

Count
of Buy
Orders

Count
of Buy
Trades

Total
Buy Qty

Count
of Sell
Orders

Count
of Sell
Trades

Total
Sell Qty

Total
Orders

Total
Trades

Praveen
Poddar

39

39

269841

21

21

113970

60

60

383811

Mefcom

49

49

195284

27

27

144458

76

76

339742

ISF

28

28

171623

28

28

136717

56

56

308340

Sunita
Gupta

30

30

176813

17

17

74205

47

47

251018

Cosmo

22

22

170236

20

20

120451

42

42

290687

Purshottam
Khandelwal

36

36

152555

97

97

636508

133

133

789063

Avisha

49999

49999

Vishvas

39958

39958

210

210

1226309

210

210

1226309

420

420

2452618

Total

Total
Trade
Qty

(c) Most of the aforesaid alleged synchronized trades were transacted by Vishvas Group
entities. On some of the days, the alleged synchronized quantity of shares traded by

Order in the matter of Gangotri Textiles Limited

Page 2 of 25

Vishvas Group constituted more than 15% of the total traded volume. For example, on
May 30, 2006, the total traded volume was 31,756 shares out of which 19,416 shares
(61.14% shares) were synchronized by the eight connected entities of Vishvas Group. It
was also observed that out of total 37 trading days during the investigation period, on 26
trading days, these entities indulged in synchronized trading. The details of 26 trading
days at BSE are given in the following table:Table 2

Date
(A)

SN

Total
mkt.
Volume
(B)

Total
Day
Synchronised
Volume
(C)

Synchronized
trading by eight
entities
(D)

Synch.
Trade
volume of eight
entities vs. total
synch.
trade
volume in %
(D/C*100)
(E)

Synch. trade volume


of eight entities vs.
total market volume
in %
(D/B)*100
(F)

30-05-2006

31756

19416

19416

100.00

61.14

31-05-2006

48722

23824

23804

99.92

48.86

18-05-2006

337055

125725

124887

99.33

37.05

12-05-2006

349076

121904

118404

97.13

33.92

21-04-2006

276438

60799

60000

98.69

21.70

28-04-2006

363073

78521

74981

95.49

20.65

11-05-2006

409252

89785

83755

93.28

20.47

29-04-2006

168693

32510

32510

100.00

19.27

09-05-2006

494413

119125

85935

72.14

17.38

10

16-05-2006

342392

76559

57955

75.70

16.93

11

02-05-2006

473324

78888

77614

98.39

16.40

12

10-05-2006

488420

107963

77924

72.18

15.95

13

08-05-2006

113772

22115

17000

76.87

14.94

14

04-05-2006

642628

87974

86302

98.10

13.43

15

29-05-2006

58042

8485

7485

88.21

12.90

16

25-05-2006

71468

10858

8820

81.23

12.34

17

24-05-2006

108555

14131

13200

93.41

12.16

18

23-05-2006

426111

161773

50215

31.04

11.78

19

19-05-2006

316863

66195

33911

51.23

10.70

20

15-05-2006

370350

46294

38454

83.06

10.38

21

25-04-2006

482177

64699

47571

73.53

9.87

22

26-05-2006

161280

26975

14123

52.36

8.76

23

17-05-2006

287561

34115

18724

54.88

6.51

24

27-04-2006

368587

30830

23660

76.74

6.42

25

24-04-2006

354385

24770

22710

91.68

6.41

26

22-05-2006

238886

7379

6949

94.17

2.91

Order in the matter of Gangotri Textiles Limited

Page 3 of 25

(d) On 25 days out of aforesaid 26 days, the synchronized trades of Vishvas Group were
more than 50% of total market synchronized trades. Also the contribution of volumes
through such synchronized trades by the above entities was more than 60% of total
traded volume on May 30, 2006 and it was more than 48% on May 31, 2006. On 12 days
out of total 26 days, the alleged synchronized trades of the group entities constituted
more than 15% to the total market volume.
(e) The entity-wise traded quantity of Vishvas Group through synchronized trading during
the investigation period at BSE is given below:
Table 3
Particula
rs
Buyer
Name
Praveen
Poddar
Mefcom
ISF
Sunita
Gupta
Cosmo
Purshott
am
Khandel
wal
Avisha
Vishvas
Total

Seller Name
Purshott
am
Khandel
wal

Prave
en
Podda
r

Sunita
Gupta

Mefcom

Cosmo

Avisha

Vishva
s

ISF

Total

189069

00

14774

29621

36377

00

00

00

269841

123830
99968

16999
19990

15455
5500

00
17146

6500
29019

00
00

00
00

32500
00

195284
171623

47858

14240

00

38951

24367

00

00

51397

176813

101825

15900

23811

21700

00

00

00

7000

170236

46841

14665

37040

14188

00

00

39820

152555

49999
23958

00
00
11397
0

00
00

00
00

00
10000

00
00

00
00

00
6000

49999
39958

74205

144458

120451

00

00

136717

1226309

636508

(f) Similarly, at NSE, during the investigation period, Cosmo and Master Finlease, together
with five other connected entities of Vishvas Group viz. Ishita VSL, Quantum, Mefcom
and ISF, indulged in 312 synchronized trades for 12,01,751 shares (82.95% of total
alleged synchronized quantity and 17.63% of total market quantity). The entity-wise
details of synchronized trades at NSE are given in the following table:
Table 4
Client
Name

Buy
Count
of Buy
Orders

Ishita

51

Co
unt
of
Buy
Tra
des
70

Sell

Total

Total Buy
Qty

Count
of Sell
Order
s

Coun
t of
Sell
Trade
s

Total Sell
Qty

Total
Orders

Total
Trades

296041

65

92

372986

116

162

Order in the matter of Gangotri Textiles Limited

Total
Trade
Qty

Page 4 of 25

669027

Client
Name

Buy
Count
of Buy
Orders

Mefcom
ISF

62
32

Co
unt
of
Buy
Tra
des
102
42

Quantum
Cosmo
VSL
Master
Total

33
36
4
3
221

51
40
4
3
312

Sell

Total

Total Buy
Qty

Count
of Sell
Order
s

Coun
t of
Sell
Trade
s

Total Sell
Qty

Total
Orders

Total
Trades

Total
Trade
Qty

318875
161362

58
23

68
23

310826
133759

120
55

170
65

629701
295121

168456
229898
21315
5804
1201751

31
31
8
2
218

40
68
19
2
312

176205
166330
34645
7000
1201751

64
67
12
5
439

91
108
23
5
624

344661
396228
55960
12804
2403502

(g) Most of the aforesaid synchronized trading were transacted by Vishvas Group. On some
of the days, the synchronized quantity of shares traded by Vishvas Group constituted
more than 15% of the total day traded volume. For example, on May 24, 2006, the total
traded volume was 1,35,845 shares out of which 56,862 shares (41.86% shares) were
synchronized by the seven connected entities of Vishvas Group. It was also observed
that out of total 37 trading days during the investigation period, on 24 trading days, these
entities indulged in synchronized trading at NSE as detailed in the following table :
Table 5

S
N
1
2
3
4
5
6
7
8
9
10
11

Date
(A)
24-May-06
31-May-06
23-May-06
18-May-06
12-May-06
10-May-06
2-May-06
28-Apr-06
19-May-06
17-May-06
30-May-06

Total
Day
Total mkt. Synchronised
Volume
Volume
(B)
(C)
135845
82466
55827
22000
361836
156445
286480
99989
325936
149093
508209
172281
190824
48813
242491
73740
305545
82810
315704
95451
65199
14500

Order in the matter of Gangotri Textiles Limited

Synchronized
trading
by
seven entities
(D)
56862
21500
133145
98859
107579
164890
48713
60240
72810
73386
14500

Synch.
Trade
volume of
seven
entities vs.
total synch.
trade
volume in %
(D/C*100)
(E)
68.95
97.73
85.11
98.87
72.16
95.71
99.80
81.69
87.92
76.88
100.00

Synch. trade
volume of
seven
entities vs.
total market
volume in %
(D/B)*100
(F)
41.86
38.51
36.80
34.51
33.01
32.45
25.53
24.84
23.83
23.25
22.24

Page 5 of 25

S
N
12
13
14
15
16
17
18
19
20
21
22
23
24

Date
(A)
11-May-06
29-Apr-06
22-May-06
24-Apr-06
4-May-06
15-May-06
25-May-06
26-May-06
21-Apr-06
29-May-06
9-May-06
25-Apr-06
16-May-06

Total
Day
Total mkt. Synchronised
Volume
Volume
(B)
(C)
294423
70414
138336
26199
104358
19310
174534
39239
455206
60161
186596
21941
105903
52028
98820
10950
149401
15490
56729
6150
373563
47046
480062
48796
291367
17675

Synchronized
trading
by
seven entities
(D)
64487
25845
19310
30475
59350
21368
12028
10950
15000
5500
33574
38905
12475

Synch.
Trade
volume of
seven
entities vs.
total synch.
trade
volume in %
(D/C*100)
(E)
91.58
98.65
100.00
77.67
98.65
97.39
23.12
100.00
96.84
89.43
71.36
79.73
70.58

Synch. trade
volume of
seven
entities vs.
total market
volume in %
(D/B)*100
(F)
21.90
18.68
18.50
17.46
13.04
11.45
11.36
11.08
10.04
9.70
8.99
8.10
4.28

(h) It was observed that on 23 days out of aforesaid 24 days, the alleged synchronized trades
of Vishvas Group was more than 50% of total market synchronized trades. Also the
contribution of volumes through alleged synchronized trades by the above entities was
more than 40% of total traded volume on 24/05/2006 and it was more than 38% on
31/05/2006. On 15 days out of total 24 days, the alleged synchronized trades of the
Vishvas Group constituted more than 15% to the total market volume. The entity-wise
traded quantity of Vishvas Group through alleged synchronized trading during the
investigation period at NSE is given below:
Table 6
Particular
s
Buyer
Name
Mefcom

Seller Name
Ishita
12273
8

Quant
um

VSL

Mefcom

Cosmo

Master
Finlease

ISF

Total

73820

5000

00

56927

53390

7000

318875

73439

00

136008

42150

44444

00

296041

Cosmo

00
11065
7

4975

00

81341

00

32925

00

229898

Quantum

68063

00

27653

41787

29953

1000

00

168456

ISF

67724

18996

1992

35350

37300

00

00

161362

Ishita

Order in the matter of Gangotri Textiles Limited

Page 6 of 25

Particular
s
Buyer
Name
VSL
Master
Finlease
Total

Seller Name
Ishita

Quant
um

VSL

Mefcom

Cosmo

Master
Finlease

ISF

Total

00

4975

00

16340

00

00

00

21315

3804
37298
6

00

00

00

00

2000

00

5804

176205

34645

310826

166330

133759

7000

1201751

(i) Analysis of trade log at both BSE and NSE reflected that there were substantial number
of trades in which parties and counterparties to the trade were entities which belong to
Vishvas Group. Thus, the Noticees were creating an artificial volume in the market by
trading among themselves i.e. by circular trading.
(j) At BSE, the Noticees together with three other connected entities of Vishvas Group viz.
Mr. Praveen Poddar, Mefcom, and ISF, allegedly indulged in 2,138 circular trades in 29
trading days out of 37 trading days during the investigation period and created artificial
volume of 26,90,184 shares (30.08% of total market volume) by buying and selling
among themselves. Further, out of 29 days wherein alleged circular trades were observed,
on 26 days, these alleged circular trades were entered through 210 alleged synchronized
trades for 12,26,309 shares, the details of which are given in the previous paragraphs.
The summary of circular trades among these nine entities at BSE during the investigation
period is given below:Table 7
Circular
Trade
Buyers
Vishvas
Avisha
Cosmo
Sunita
Gupta
Master
Finlease
Mefcom
Purshotta
m
Khandelw
al
ISF
Praveen
Poddar
Grand
Total

Cosmo

Sunita
Gupta

Master
Finlease

Sellers
Purshottam
Mefco
Khandelwa
m
l

Pravee
n
Poddar

ISF

Grand
Total

10000
00
5672

8000
00
43875

00
00
00

00
00
59535

54509
50000
259186

6000
00
7000

19597
00
49152

98106
50000
424420

38031

00

00

43901

82808

94132

29928

288800

00
9500

00
36059

00
00

10000
00

13399
180381

00
45579

4000
52274

27399
323793

72446
35602

150814
19965

8386
10000

108126
21041

65025
215666

124694
00

187160
38990

716651
341264

61559

29674

00

32044

279473

17001

00

419751

232810

288387

18386

274647

1200447

294406

381101

2690184

Order in the matter of Gangotri Textiles Limited

Page 7 of 25

(k) The day-wise circular trades among the aforesaid nine entities at BSE during the
investigation period is given below:
Table 8
Sr.
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

Date
(A)
31-05-2006
30-05-2006
11-05-2006
25-05-2006
29-05-2006
12-05-2006
18-05-2006
21-04-2006
16-05-2006
02-05-2006
26-05-2006
10-05-2006
28-04-2006
29-04-2006
15-05-2006
19-05-2006
04-05-2006
09-05-2006
05-05-2006
25-04-2006
27-04-2006
24-04-2006
24-05-2006
08-05-2006
17-05-2006
23-05-2006
26-04-2006
22-05-2006
03-05-2006

Circular Trades by
group
(B)
39260
24662
264716
41824
32885
196999
167150
135898
155579
193963
59835
174481
125220
51768
109551
90663
179516
135161
28946
115087
87898
77899
18260
19124
47493
63535
27118
22316
3377

Total Market Volume


(C)
48722
31756
409252
71468
58042
349076
337055
276438
342392
473324
161280
488420
363073
168693
370350
316863
642628
494413
118530
482177
368587
354385
108555
113772
287561
426111
265051
238886
209414

% of circular to
Total trades
(B/C*100)
80.58%
77.66%
64.68%
58.52%
56.66%
56.43%
49.59%
49.16%
45.44%
40.98%
37.10%
35.72%
34.49%
30.69%
29.58%
28.61%
27.93%
27.34%
24.42%
23.87%
23.85%
21.98%
16.82%
16.81%
16.52%
14.91%
10.23%
9.34%
1.61%

(l) The aforesaid circular trades of these nine entities constituted significant volume of total
traded volume in the scrip. For example, the alleged circular trades of these nine entities
constituted 80.58%, 77.66% and 64.68% of total traded volume on May 31, 2006, May
30, 2006 and May 11, 2006, respectively and on 10 days, the percentage of alleged
circular trade volume of these entities to the total market volume was more than 40%.
(m) At NSE, Cosmo and Master Finlease together with five other connected entities of
Vishvas Group viz. Ishita, VSL, Quantum, Mefcom and ISF indulged in 2,419 alleged
circular trades in 29 trading days out of 37 trading days during the investigation period
and created artificial volume of 23,56,185 shares (34.56% of total market volume) by
buying and selling among themselves. Further, out of 29 days wherein circular trades
Order in the matter of Gangotri Textiles Limited

Page 8 of 25

were observed, on 24 days, these alleged circular trades were entered through 312
synchronized trades for 12,01,751 shares, the details of which are given in the previous
paragraphs. The details of circular trades among these seven entities at NSE during the
investigation period is given in the following table:
Table 9
Circular
Trades
Buyers
ISF
Mefcom
VSL
Cosmo
Ishita
Master
Finlease
Quantum
Grand
Total

Sellers
625
68254
26258
36925
157329

Mefcom
110961
550
24142
123702
188865

VSL
6552
5000
497
00
2570

Cosmo
68158
102992
100
00
183095

Ishita
157108
231230
5022
143512
92185

Master
Finlease
00
7040
00
00
29825

Quantum
33458
100574
14980
27975
107776

Grand
Total
376862
515640
70999
332114
761645

2000
2000

00
76917

00
48823

00
59751

7841
101533

00
00

00
60

9841
289084

293391

525137

63442

414096

738431

36865

284823

2356185

ISF

(n) The day-wise circular trades among these seven entities at NSE during the investigation
period is given in the following table:
Table 10
Sr. No.

Date
(A)

Circular
group
(B)

31-May-06

49259

55827

% to Total
Market Volume
(B/C*100)
88.24

29-May-06

42472

56729

74.87

11-May-06

206314

294423

70.07

26-May-06

66609

98820

67.40

10-May-06

306955

508209

60.40

24-May-06

76547

135845

56.35

21-Apr-06

78993

149401

52.87

12-May-06

146837

325936

45.05

28-Apr-06

101720

242491

41.95

10

30-May-06

27070

65199

41.52

11

29-Apr-06

53560

138336

38.72

12

23-May-06

139929

361836

38.67

13

17-May-06

120652

315704

38.22

14

25-Apr-06

180850

480062

37.67

15

2-May-06

69401

190824

36.37

16

18-May-06

100523

286480

35.09

17

25-May-06

35953

105903

33.95

18

4-May-06

146256

455206

32.13

Order in the matter of Gangotri Textiles Limited

Trades

by

Total Market Volume


(C)

Page 9 of 25

Sr. No.

Date
(A)

Circular
group
(B)

Trades

by

19

15-May-06

52917

186596

% to Total
Market Volume
(B/C*100)
28.36

20

9-May-06

101367

373563

27.14

21

19-May-06

74995

305545

24.54

22

22-May-06

22174

104358

21.25

23

3-May-06

42159

223203

18.89

24

24-Apr-06

32830

174534

18.81

25

27-Apr-06

29939

197354

15.17

26

16-May-06

40058

291367

13.75

27

8-May-06

4848

49250

9.84

28

26-Apr-06

4997

77999

6.41

29

5-May-06

21712

0.00

Total Market Volume


(C)

(o) The aforesaid alleged circular trades of these seven entities constituted significant
volume of total traded volume in the scrip. For example, the alleged circular trades of
these seven entities constituted 88.24%, 74.87% and 70.07% of total traded volume on
May 31, 2006, May 29, 2006 and May 11, 2006, respectively and on 10 days, the
percentage of alleged circular trade volume of these entities to the total market volume
was more than 40%.
(p) At BSE, during the investigation period, Mr. Purshottam Khandelwal and Cosmo, in
addition to synchronized and circular trades also indulged in self trades (wherein the
buyer and seller was the same person) as described in the following table:
Table 11
Name of the entity

Number of trades

Traded Qty

Mr. Purshottam Khandelwal


Cosmo
Total

711
2
713

65025
5672
70697

(q) During the investigation period, the price of the scrip has decreased between April 7,
2006 to April 20, 2006 (Patch 1), increased in the period between April 21, 2006 to May
5, 2006 (Patch 2), and then again decreased between May 8, 2006 to May 31, 2006 (Patch
3) as described in the table below:
Table 12
Exchange

BSE

Opening
price
(April
07,
2006)
53.25

Closing price
(April 20, 2006)

Trading
days

% Change in
price of the
scrip

Patch I (April 7, 2006 to April 20, 2006)


44.75
8 Days

Order in the matter of Gangotri Textiles Limited

Average Daily
Traded
Volume

15.96%

Page 10 of 25

70713

NSE

56.00

44.40

8 Days

(Decrease)
20.70%
(Decrease)

68005

Patch II (April 21, 2006 to May 5, 2006)


BSE

46.00

66.55

11 Days

NSE

46.00

66.90

11 Days

BSE

64.50

NSE

63.55

Patch III (May 8, 2006 to May 31, 2006)


44.35
18 Days
45.40

18 Days

44.70%
(Increase)
45.40%
(Increase)

338391

31.20%
(Decrease)
28.60%
(Decrease)

258554

213738

217866

(r) It was also observed that all the entities belonging to Vishvas Group had traded only
during Patch 2 (i.e., the period of price rise) and Patch 3 (i.e., the period of price fall) and
had been instrumental to the respective price rise and fall by contributing significant
positive and negative LTP variation during the respective Patch.
(s) At BSE, total cumulative positive and negative LTP variation was `1130.40 and
`1139.25, respectively during the investigation period wherein noticees together with
three other connected entities of Vishavs Group viz. Praveen Poddar, Mefcom Securities
Ltd, and ISF Securities Ltd. contributed `718.05 and `468.65, respectively. The details
of alleged contribution of these nine entities belonging to Vishvas Group to cumulative
positive and negative LTP variation is given in the table below:
Table 13
Sr. No.

Client Name

1
Purshottam Khandelwal
2
Mefcom
3
Praveen Poddar
4
Sunita Gupta
5
ISF
6
Cosmo
7
Avisha
8
Vishvas
9
Master Finlease
Sum of LTP variation by Vishvas Group
Cumulative LTP variation during the
period
% of LTP variation by Vishvas Group

Sum of Positive LTP


Variations (`)
673.50
18.30
10.20
5.70
5.10
4.75
0.15
0.35
0.00
718.05
1130.40

Sum of Negative LTP


Variations (`)
-431.70
-24.25
-3.20
-4.35
-3.05
-1.70
0.00
-0.20
-0.20
-468.65
-1139.25

63.52%

41.14%

(t) At NSE, total cumulative positive and negative LTP variation was ` 995.25 and
`1007.25, respectively during the investigation period wherein Master Filease Ltd. and
Cosmo Corporate Services Ltd. together with five other connected entities of Vishvas
Group viz. Ishita, Mefcom, VSL, Quantum and ISF allegedly contributed `489.05 and
Order in the matter of Gangotri Textiles Limited

Page 11 of 25

`307.90, respectively. The details of alleged contribution of seven entities belonging to


Vishvas Group to cumulative positive and negative LTP variation is given below :
Table 14
Sr.
Client Name
No.
1
Ishita
2
Mefcom
3
VSL
4
Cosmo
5
Quantum
6
ISF
7
Master Finlease
Sum of LTP variation by Vishvas group
Cumulative LTP variation during the
period
% of LTP variation by Vishvas group

Sum of Positive LTP


Variations (`)
365.95
56.55
32.10
14.50
10.55
8.80
0.60
489.05
995.25

Sum of Negative LTP


Variations (`)
-229.20
-45.00
-18.50
-6.70
-3.70
-4.60
-0.20
-307.90
-1007.25

49.14%

30.57%

(u) An analysis of new high price (NHP) for the period under investigation revealed that at
BSE, in total 85 instances, price of the scrip increased by `17.70. During Patch 2, the
price rose by `13.85 in 69 instances. Vishvas Group entities contributed `5.45 (39.35%
of total increase) in 41 instances as given in the table below:Table 15
NHP Analysis
Details
Patch II (April 21, 2006 to May 05, 2006)
Total Price Rise (In 69 Instances)
`13.85
Contribution by Vishvas Group (In 41 Instances)
` 5.45 Purshottam Khandelwal : `5.25 in 39
Instances
Cosmo: `0.20 in 2 Instances
Contribution by other Scattered Entities (In 28 `.8.40
Instances)
% Contribution by Vishvas Group
39.35%

(v) Analysis of NHP for the period under investigation revealed that at NSE, in total 50
instances, price of the scrip increased by `15.05. During patch 2, the price rose by `13.90
in 43 instances. Vishvas Group entities contributed `4.80 (34.53% of total increase) in 14
instances as given in the table below:Table 16
NHP Analysis
Details
Patch II (April 21, 2006 to May 05, 2006)
Total Price Rise (In 43 Instances)
13.90
Contribution by Vishvas Group (In 14 Instances)
4.80
Ishita : 4.75 in 13 Instances
ISF : 0.05 in 1 Instance
Contribution by other Scattered Entities (In 29 9.10
Instances)
% Contribution by Vishvas Group
34.53%

Order in the matter of Gangotri Textiles Limited

Page 12 of 25

4. In view of the observations mentioned in the above paragraphs, it has been alleged in the SCN
that the Noticees, in concert with eight other connected entities of Vishvas Group ( viz; have
indulged in large number of synchronized trading, circular trading and price manipulation in the
shares of the Company which created an artificial volume and false or misleading appearance of
trading in the securities market. It is also alleged that those trades were only a device to inflate,
depress or fluctuate the price of the scrip. It is, therefore, alleged in the SCN that the Noticees
have committed following violations:
(a) that the Noticees have indulged in fraudulent and unfair trade practices and violated the
provisions of section 12A (a), (b), (c) of Securities and Exchange Board of India Act, 1992
and regulations 3(a), (b(c), (d), 4(1), and 4(2) (a), (e) of the Securities and Exchange Board of
India (Prohibition of Fraudulent and Unfair Trade practices relating to Securities Market),
Regulations 2003 ( hereinafter referred to as "the PFUTP Regulations")
(b) that Mr. Purshottam Khandelwal and Cosmo had indulged in self trades without an
intention of performing those trades or change of ownership of shares of the Company and
therefore have violated the provisions of regulation 4(2)(g) of the PFUTP Regulations.
5. The aforesaid provisions are reproduced hereunder:
SEBI Act, 1992

"Prohibition of manipulative and deceptive devices, insider trading and substantial


acquisition of securities or control.
12A. No person shall directly or indirectly

(a) use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be
listed on a recognized stock exchange, any manipulative or deceptive device or contrivance in
contravention of the provisions of this Act or the rules or the regulations made thereunder;
(b) employ any device, scheme or artifice to defraud in connection with issue or dealing in securities which
are listed or proposed to be listed on a recognised stock exchange;
(c) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon
any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on
a recognised stock exchange, in contravention of the provisions of this Act or the rules or the regulations
made there under;"

PFUTP Regulations

"Prohibition of certain dealings in securities.


3. No person shall directly or indirectly

(a) buy, sell or otherwise deal in securities in a fraudulent manner;

Order in the matter of Gangotri Textiles Limited

Page 13 of 25

(b) use or employ, in connection with issue, purchase or sale of any securities listed or proposed to be listed in
a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the
provisions of the Act or the rules or the regulations made there under;
(c) employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities which
are listed or proposed to be listed on a recognized stock exchange;
(d) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any
person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a
recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations
made there under."

"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 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;
.................................................................................................................................................
(e) any act or omission amounting to manipulation of the price of a security;
.
(g) entering into a transaction in securities without intention of performing it or without intention of change of
ownership of such security;"
6. By the SCN these 6 Noticees were called upon to show cause as to why directions under
sections 11(1), 11(4) and 11B of the SEBI Act should not be issued against them. All the
Noticees except Cosmo filed their respective reply to the SCN on different dates as mentioned
in the following table:
Table 17
Sl. No.
Entity
Date of Reply
1.
Mr. Purshottam Khandelwal
November 24, 2013
2.
Ms. Sunita Gupta
November 20, 2013
3.
Master Finlease
November 22, 2013
4.
Avisha
November 22, 2013
5.
Vishvas
November 26, 2013
7. Opportunities of personal hearings were granted to the Noticees on several dates which few of
them availed after seeking adjournments. Cosmo did not avail any of the opportunities despite
service of notices in this regard. Mr. Purshottam Khandelwal and Ms. Sunita Gupta availed the
opportunity. However, Master Finlease, Avisha and Vishvas did not avail any of the
opportunities of personal hearings despite hearings scheduled at SEBI-NRO as requested by
them but they filed written representations and sought further time for personal hearing on
some or the other grounds. Fresh opportunity given to all the Noticees on July 23, 2015 was
only availed by Ms. Sunita Gupta. Opportunities given on December 03,2015 and February 11,
2016 were not availed by any of the Noticees but vide letter dated February 9, 2016, Master
Order in the matter of Gangotri Textiles Limited

Page 14 of 25

Finlease requested for adjournment.


8. I note that Cosmo has neither filed any reply to the SCN nor did it avail the opportunities of
personal hearings despite service of notices upon it. Hence no further opportunities should be
granted to this Noticee. Ms. Sunita Gupta has filed a reply to the SCN, has availed the
opportunity of personal hearing on July 23, 2015 has also filed post hearing written submissions
vide her letter dated August 03, 2015. During the course of hearings in the matter, the other
three notices viz., Master Finlease, Avisha and Vishvas have filed their written
representations/submissions. Considering these facts and circumstances, I am of the view that
sufficient opportunities have been given to the Noticees and the mater can be proceeded with
on the basis of SCN, replies, oral/written submissions of the Noticees during the course of
hearing and material available on record and no further opportunity need to be granted. Replies
and submissions of the respective Noticees are summarised as under:Mr. Purshottam Khandelwal
9. He has submitted that he had no relation with any other entities of the Vishvas Group. He has
further submitted that one Mr. Nirmal Jain, entered into the trades his name and he has nothing
to do with the alleged manipulative trades.
Ms. Sunita Gupta
10. She has submitted that a penalty of `60 lakh has been imposed on her vide adjudication order
dated July 22, 2014 for the same cause of action. Therefore, initiating a proceeding under section
11B of the SEBI Act would be excessive as the entity has already been penalized for the same
cause of action and would amount to double jeopardy. She has further submitted that there was
nothing available on record to establish any connection with the Vishvas Group entities for
creating false and misleading appearance in the market while dealing in the scrip of the
Company. She had worked in good faith as a sub-broker.
Master Finlease
11. It has submitted that it had no relation with any other entities of the Vishvas Group except
Avisha. On the same issue as that in the SCN, SEBI has already imposed a penalty and as such
proceedings qua it be quashed. It had bought only 5804 shares and sold 7000 shares during the
investigation period, which is not sufficient to have resulted in the creation of any artificial
volume or any price manipulation.
Avisha
12. It has submitted that it had no relation with any other entities of the Vishvas Group except
Order in the matter of Gangotri Textiles Limited

Page 15 of 25

Master Finlease. On the same issue as that in the SCN, SEBI has already imposed a penalty and
as such proceedings qua it be quashed. It had bought only 50,000 shares during the investigation
period, which is not sufficient to have resulted in the creation of any artificial volume or any
price manipulation.
Vishvas
13. It has submitted that it had no relation with any entity of the Vishvas Group. On the same issue
as that in the SCN, SEBI has already imposed a penalty and as such proceedings qua it be
quashed. It had bought only 39,958 shares during the investigation period, which is not
sufficient to have resulted in the creation of any artificial volume or any price manipulation.
14. I have carefully considered the common SCN issued to the respective Noticees, their
replies/submissions and relevant material available on record. I note that the common SCN has
been issued to all the Noticees on the basis of same set of facts and circumstances. I, therefore,
deem it appropriate to deal with the SCN issued to all the Noticees herein by way of this
common order. It is further noted that the SCN has alleged that the Noticees, in concert with
eight other connected entities of Vishvas Group (viz; Ishita, Quantum, ISF, Mr. Praveen
Poddar, Anupama Communications Pvt. Ltd., Mefcom, VSL and SIC) indulged in the alleged
creation of artificial volume, false or misleading appearance of trading and price manipulation in
the scrip during the investigation period. However, these alleged 8 connected entities of Vishvas
Group are not Noticees in this SCN and as mentioned therein separate and independent
proceedings have been initiated against them. Hence, nothing in this order shall be construed as
any finding against them on merits.
15. Before dealing with the merits of the case, I deem it necessary to deal with technical objections
of the Noticees namely Ms. Sunita Gupta, Master Finlease, Avisha and Vishvas who have
contended that for the same set of alleged violations SEBI has imposed monetary penalty in
adjudication proceedings against them and the instant proceedings should be quashed on this
ground as it amounts to double jeopardy. In this regard, I note that the principle of double
jeopardy flows from the fundamental right enshrined in Article 20(2) of the Constitution of
India. I note that it is judicially settled position that in order to claim the protection of Article
20(2) it is necessary to show that - (a) there was a previous prosecution, (b) as a result of which
the accused was punished, and (c) the punishment was for the same offence. Unless all the three
conditions are fulfilled, Article 20 (2) of the Constitution of India is not attracted.
16. The words 'offence', 'prosecution' and 'punishment' in the context of Article 20(2) of the Constitution
of India contemplate proceedings of criminal nature before a court of law. The Hon'ble High
Order in the matter of Gangotri Textiles Limited

Page 16 of 25

Court of Bombay in the matter of SEBI Vs. Cabot International Capital Corporation (2004) to Comp L J
held that "the adjudication for imposition of penalty by Adjudication Officer, after due inquiry, is neither a
criminal nor a quasi criminal proceeding. The penalty leviable under this Chapter or under these sections, is
penalty in cases of default or failure of statutory obligation or in other words, breach of civil obligation. The
provisions and scheme of penalty under SEBI Act and the regulations, there is not element of criminal offence or
punishment as contemplated under criminal proceedings." The Hon'ble Supreme Court in Shriram Mutual
Fund & Anr. {Appeal (civil) 9523-9524 of 2003}, has also held that adjudication proceedings
under SEBI Act are civil proceedings. Further the present proceedings are also civil proceedings.
Therefore, in my view, principle of double jeopardy do not apply to the present civil proceedings
and the earlier adjudication proceedings that were settled by the order dated July 21, 2008, do
not bar the civil actions by way of directions under section 11 and 11B of the SEBI Act. In this
regard, the order of the Honble SAT dated December 02, 2010, in the matter of Appeal no. 70
of 2010 Yashraj Containeurs Ltd. vs SEBI is also worth mentioning:
...After arguing these appeals for some time, the learned counsel appearing for the appellants pray that they
may be allowed to withdraw the appeals. While granting this prayer, we cannot resist observing that in view of
the serious allegations made against the appellants which stand established during the course of the adjudication
proceedings, the Securities and Exchange Board of India (for short the Board) should not have been content
with initiating only adjudication proceedings against the appellants in which only a monetary penalty could be
levied. This is a fit case where the Board should have considered initiating proceedings under Sections 11 and
11B of the Securities and Exchange Board of India Act, 1992 for issuing appropriate directions against the
appellants to protect the integrity of the market and the interests of the investors.
17. I, therefore, am of the view that the directions contemplated under sections 11(1), 11(4)(b),
11A(1)(b) and 11B of the SEBI Act and imposition of monetary penalty under the SEBI Act are
civil actions and imposition of monetary penalty would not bar additional civil action by way of
directions as contemplated in the SCN.
18. Having addressed the aforesaid technical objections, I now proceed to deal with the merits of
the case. I note that all the Noticees have disputed their connections with Vishvas Group
entities except Master Finlease and Avisha who have admitted connections amongst themselves.
I note that such Noticees have made ipse dixit denials in this regard and have not been able to
substantiate their contentions on the basis of any material. In fact the SCN clearly brings out the
connections of the Noticees with Vishvas Group entities on the basis of following factors which
none of the Noticees have disputed-

Order in the matter of Gangotri Textiles Limited

Page 17 of 25

Table 18
Sr.
No

Entity Name
(Brokers Name)

Master Finlease

(Integrated Master Securities Pvt.


Ltd.)

Mr. Purshottam Khandelwal

Connection with other entities of Group

(SIC)

Cosmo
(Integrated Master Securities Ltd.)

Ms. Sunita Gupta

(Parasram Holdings)
5

Avisha

(Shriram Insight Share Brokers


Ltd.)

Vishvas (Formerly Known as


Mefcom Agro Industries Ltd.)
(Mefcom)

Same address as Avisha and Vishvas.


Shareholder in VSL. (Unlisted Company
shareholding as on September 30, 2006)
Off market transfers with VSL.

19.24%

Off Market Transfers from Anupama Communications Pvt.


Ltd.
Entered into synchronized trades with Mr. Praveen Poddar and
Ms. Sunita Gupta.
Entered into off market transfers with Master Finlease.
Entered into Synchronized trades with Quantum, Ishita, Mr.
Praveen Poddar and Ms. Sunita Gupta.
Entered into large no. of synchronized trades with Mr.
Purshottam Khandelwal, Cosmo, ISF, Mr. Praveen Poddar,
Mefcom.
Holder of 25% stake in VSL (Unlisted Co.) 3,37,380 shares as
on September 30, 2006.
Same address as Vishvas and Master Finlease.
Directors of Avisha (Ms. Shubha Jhindal, Mr. Vijay Jhindal
and Mr. Rakesh Agarwal) are also directors in Master Finlease.
Same address as Avisha and Master Finlease.

19. It is noted from the SCN that during investigation period, Mr. Purshottam Khandelwal had
bought 29,27,835 shares and sold 28,82,486 shares of the Company during investigation period.
Out of the total 420 synchronized trades in the scrip during the investigation period, 133 trades
were entered into by Mr. Purshottam Khandelwal. Out of the total shares bought by the him, his
buy orders for total 1,52,555 shares were synchronized with sell orders of Ms. Sunita Gupta,
Cosmo and the entities of Vishvas Group viz; Mr. Praveen Poddar, Mefcom and ISF. Further,
his sell orders for 6,36,508 shares were synchronized with buy orders of Ms. Sunita Gupta,
Cosmo, Avisha, Vishvas and the entities of Vishvas Group viz; Mr. Praveen Poddar, Mefcom,
and ISF. He had bought 7,16,651 shares of the Company through circular trades with Ms. Sunita
Gupta, Cosmo, Master Finlease and the entities of Vishvas Group viz; Mr. Praveen Poddar,
Mefcom and ISF. Further, he had sold 12,00,447 shares through circular trades with remaining 5
Noticees and the entities of Vishvas Group viz; Mr. Praveen Poddar, Mefcom and ISF. He had
also indulged in 711 self trades (for 65,025 shares) in the scrip during investigation period. His
trades had also contributed in LTP/NHP manipulation as described in the SCN.
20. Mr. Purshottam Khandelwal has not denied these transactions. However, he has claimed that
one Mr. Nirmal Jain had entered into the trades his name and he had nothing to do with the
Order in the matter of Gangotri Textiles Limited

Page 18 of 25

alleged manipulative trades. It is noted that Mr. Purshottam Khandelwal has not initiated any
legal action against Mr. Nirmal Jain so as to prove his innocence in the matter. He has failed to
establish any of his claims on the basis of any evidence and the documents shared with him deny
his claim. it is noted that such contention of Mr. Purshottam Khandelwal has been considered
during investigation in the matter and the SCN has clearly brought out that he himself had
opened his trading account and had received a cheque from the Company and he was thus aware
that shares of the Company were credited in his account. In absence of any legal action by him
against Mr. Nirmal Jain he had been charged in the SCN that his submissions were a ploy and an
afterthought to avoid regulatory actions. Despite such clear allegations based on the factors
which Mr. Purshottam Khandelwal is privy to, he has failed to substantiate his claim. I,
therefore, do not find any reason to differ with the charges and the allegations against him in the
SCN.
21. It has been alleged in the SCN that Ms. Sunita Gupta had indulged in synchronized trades and
circular trades. Out of the 3,42,246 shares of the Company bought by Ms. Sunita Gupta trades
for 1,76,813 shares were synchronized with trades of Mr. Purshottam Khandelwal, Cosmo and
the entities of Vishvas Group viz; Mr. Praveen Poddar, Mefcom and ISF. Further, out of
3,42,246 shares sold by her, trades for 74,205 shares were synchronized with trades of Mr.
Purshottam Khandelwal, Cosmo and the entities of Vishvas Group viz; Mr. Praveen Poddar,
Mefcom and ISF. Further, out of 3,42,246 shares of the Company bought by Ms. Sunita Gupta
during the investigation period 2,88,800 shares were involved in circular trading with Mr.
Purshottam Khandelwal, Cosmo and the entities of Vishvas Group viz; Mr. Praveen Poddar,
Mefcom and ISF and out of the 3,42,246 shares sold by her 288,387 shares were involved in
circular trading with Mr. Purshottam Khandelwal, Cosmo, Vishvas and the entities of Vishvas
Group viz; Mr. Praveen Poddar, Mefcom and ISF. Her trades had also contributed in
LTP/NHP manipulation as described in the SCN. Ms. Sunita Gupta has not given any plausible
explanation to these types of trades with connected entities rather she has admitted to have
indulged in those trades as sub- broker and has claimed her transactions to be bona fide. Thus, by
her own admissions, she has not only admitted her alleged trades but also to be acting as subbroker which requires registration with SEBI. I, therefore, reject her contentions.
22. It has been alleged in the SCN that Cosmos had indulged in synchronized trades and circular
trades in the scrip during the investigation period. Its buy orders for 1,70,236 shares were
synchronized with sell orders of Mr. Purshottam Khandelwal, Ms. Sunita Gupta and the entities
of Vishvas Group viz; Mr. Praveen Poddar, Mefcom and ISF. Its sell orders for 1,20,451 shares
were synchronised with buy orders of Mr. Purshottam Khandelwal, Ms. Sunita Gupta, Vishvas
and the entities of Vishvas Group viz; Mr. Praveen Poddar, Mefcom and ISF. Further, it had
Order in the matter of Gangotri Textiles Limited

Page 19 of 25

bought 4,24,420 shares of the Company through circular trading from Mr. Purshottam
Khandelwal, Ms. Sunita Gupta, and the entities of Vishvas Group viz; Mr. Praveen Poddar,
Mefcom and ISF. Further, Cosmo had sold 2,32,810 shares of the Company through circular
trades from Mr. Purshottam Khandelwal, Ms. Sunita Gupta, Vishvas and the entities of Vishvas
Group viz; Mr. Praveen Poddar, Mefcom and ISF. It had also indulged in self trades for 5,672
shares of the Company during the investigation period. Its trades had also contributed in
LTP/NHP manipulation as described in the SCN. Cosmo has not filed any reply and has also
failed to avail the opportunity of personal hearing. I, therefore, find that it has no explanations
to the allegations and charges as leveled in the SCN.
23. As alleged in the SCN, Master Finlease had bought 38,000 shares and 20,500 shares of the
Company at BSE and NSE, respectively, and sold 18,386 shares and 1,11,400 shares of the
Company at BSE and NSE, respectively. Master Finlease had indulged in synchronized trades
and circular trades. At BSE, out of the 38000 shares bought by it, 27399 shares were involved in
circular trading with other entities of the Vishvas Group; viz; Mr. Praveen Poddar, and Mefcom
and all of 1,83,868 shares sold by it were involved in circular trading with other entities of the
Vishvas Group. Further, at NSE, out of the 20,500 shares bought by Master Finlease, 9,841
shares were involved in circular trading with other entities of the Vishvas Group and out of
1,11,400 shares sold by it, 36,865 shares were involved in circular trading with other entities of
the Vishvas Group. Further, out of 439 synchronized trades at NSE, Master Finlease indulged in
5 synchronised trades. At NSE, its buy orders for 5804 shares were synchronized with the sell
orders of the entities of Vishvas Group viz; Ishita and ISF. Its sell orders for 7,000 shares were
synchronised with buy orders of the entity of Vishvas Group namely, Mefcom. Further, at BSE,
it had bought 27,399 shares of the Company through circular trading with Mr. Purshottam
Khandelwal and the entities of Vishvas Group viz; Mr. Praveen Poddar and Mefcom. Similarly,
at NSE, it had bought 9,841 shares of the Company through circular trading with the entities of
Vishvas Group viz; ISF and Ishita. Further, at BSE, Master Finlease had sold 18,386 shares of
the Company through circular trades with Mr. Purshottam Khandelwal and the entity of Vishvas
Group, viz; ISF. At NSE, Master Finlease had sold 36,865 shares of the Company through
circular trades with the entities of Vishvas Group, viz; Mefcom and Ishita. Its trades had also
contributed in LTP/NHP manipulation as described in the SCN. These trading data are based
on order log/ trade log annexed in the Annexures to the SCN. Master Finlease has not disputed
this data and has contended that it had bought only 5,804 shares and sold 7,000 shares during
the investigation period. In view of established data in order log/trade log, I find the
submissions of Master Finlease without any basis.
24. Further, as per the SCN, Avisha had bought 50,000 shares of the Company at BSE during
Order in the matter of Gangotri Textiles Limited

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investigation period. Total 49,999 shares were bought by Avisha through synchronized
transaction with Mr. Purshottam Khandelwal. Further, Vishvas had bought 100000 shares of the
Company at BSE during investigation period and had indulged in 5 synchronized trades with
other entities of the Vishvas Group for 39958 shares. Out of the total shares bought by it, 98106
shares were involved in circular trading with other entities of the Vishvas Group. Avisha and
Vishvas have not disputed their trades and have claimed that their respective trades are not
sufficient to result in the creation of any artificial volume or any price manipulation. In my view,
when seen in isolation, individual transaction may look small. However, when seen holistically the non-genuine synchronized and circular trades in the same pattern and in close proximity of
time with the other transacting parties as part of plan of entire group to manipulate the volume
and price of the scrip, such trades also contribute to manipulation. I, therefore, do not agree
with the contentions of Master Finlease, Avisha and Vishvas.
25. In view of the above discussions, I find that none of the Noticees have filed any plausible
reply/explanation on merits of the case. It is pertinent to mention that there is no scale to
measure fraudulent, deceptive and manipulative device, plan and artifice or its impact and the
findings in that regard always depend on inferences drawn from a mass of factual details.
Findings in this regard can also be gleaned from patterns of transactions/dealings of connected
parties, their conduct/behaviour, proximity of time in placing orders, frequency of trades, etc. In
the instant case, a clear pattern of synchronised and circular trading is evident in the trades
amongst the respective Noticee and counter parties entities of Vishvas Group with same or
different combination of the Noticees and these Vishvas Group entities. Placing of the sell
orders with same counterparties for same quantity of shares at the same price within nil or too
negligible time difference repeatedly over a period of time in bulk of such transactions with
almost the same set of counterparties, as brought out in the SCN and its Annexures are clear
indication that those trades were synchronised as a pre-planned device, artifice and contrivance.
In this regard, the following observations of the Honble SAT in Ketan Parekh Vs. SEBI, Appeal
no. 2/2004 decided on July 14, 2006, are worth mentioning :
.......... A synchronised transaction will, however, be illegal or violative of the Regulations if it is executed
with a view to manipulate the market or if it results in circular trading or is dubious in nature and is
executed with a view to avoid regulatory detection or does not involve change of beneficial ownership or is
executed to create false volumes resulting in upsetting the market equilibrium. Any transaction executed with
the intention to defeat the market mechanism whether negotiated or not would be illegal. Whether a
transaction has been executed with the intention to manipulate the market or defeat its mechanism will
depend upon the intention of the parties which could be inferred from the attending circumstances because
direct evidence in such cases may not be available. The nature of the transaction executed, the frequency with
which such transactions are undertaken, the value of the transactions, whether they involve circular trading
Order in the matter of Gangotri Textiles Limited

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and whether there is real change of beneficial ownership, the conditions then prevailing in the market are some
of the factors which go to show the intention of the parties. This list of factors, in the very nature of things,
cannot be exhaustive. Any one factor may or may not be decisive and it is from the cumulative effect of these
that an inference will have to be drawn.
26. In the screen based trading the manipulative or fraudulent intent can be inferred from various
factors such as conduct of the party, pattern of transactions, etc. Such intention may be
demonstrated from the attending circumstances as observed by the Hon'ble SAT in Ketan Parekh
case in the following words"The nature of transactions executed, the frequency with which such transactions are undertaken, the value of
the transactions, ........., the conditions then prevailing in the market are some of the factors which go to show
the intention of the parties. This list of factors, in the very nature of things, cannot be exhaustive. Any one
factor may or may not be decisive and it is from the cumulative effect of these that an inference will have to be
drawn."
27. In this regard, I have taken into account the following observations of the Hon'ble SAT in its
order dated December 13, 2010 in Appeal no. 190/2010 - Ajmera Associates Pvt. Ltd. Vs. SEBI :
"... It is not in dispute that the trading system that we have on the stock exchanges is a blind trading system
which maintains complete anonymity of the persons trading. The broker while executing an order (buy or sell)
cannot possibly know at the time of placing the order through the system as to who the counter party is or even
the counter party broker. In other words, the trading system does not permit the buyers and the sellers to have
any interaction between them except through the trading system. A buy order placed on the system matches
with a sell order and a trade comes to be executed and this matching is done by the system on a price time
priority basis. Despite the anonymity of the system, we have seen market players and the intermediaries like
the brokers executing manipulative trades by defeating the system and this is usually done by placing the buy
and sell orders simultaneously for the same amount and at the same price. Such matching orders usually
result in trades in comparatively less liquid scrips. This being the system, it sometimes becomes difficult to find
out whether the brokers who execute the trades of their clients and who are expected to carry out their
directions are also a party to the mischief. If the broker knew at the time of executing the trade what the client
was upto, then obviously he is a party to the mischief. Since the trading system maintains complete anonymity,
brokers always plead that they were ignorant about the counter party or his broker. In such a situation one
has to look to the trading pattern and if the trades match too often or if the matching of the trades is noticed
day after day and trade after trade, one can infer that the matching was done not by the system but by
manipulating the same....."
28. As brought in the SCN and its Annexures, substantial number of synchronised transactions and
circular transactions in the scrip were entered into by each of the Noticees with other Noticees
and Vishvas Group entities being counter parties to their trades. In the instant case, the basis of
connection amongst concerned Noticees and their counter parties -Vishvas Group entities have
Order in the matter of Gangotri Textiles Limited

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not been disputed by them. Even otherwise, considering the frequency and pattern of
transactions, I am of the opinion that the above trades of the Noticees, who are found to be
acting in league with counter parties, are of too much of a coincidence in anonymous screen
based trading system. Such transactions are possible only through coordinated and deliberate
synchronization of orders by the involved parties. I find that such repeated matching of time,
rate and quantity in anonymous screen based trading could be possible only with the
involvement of the Noticees under a pre-meditated plan, device and artifice to create nongenuine and artificial volume.
29. I further note that apart from synchronised and circular transactions as found above, Cosmo had
done 2 self trades for 5672 and Mr. Purshottam Khandelwal had indulged in several number
(711) of self trades for substantially high quantity (65025 shares); wherein the same entity was
buying party as well as selling party. Those self-trades clearly did not involve change in beneficial
ownership of traded shares and were, therefore, illegal. It is relevant to mention that with regard
to the nature and effect of self-trades the Honble SAT, in the matter of M/s. Jayantilal Khandwala
& Sons Pvt. Ltd. vs. SEBI (Appeal no. 24 of 2011 decided on June 8, 2011), has held that: one
cannot buy and sell shares from himself. Such transactions are obviously fictitious and meant only to create false
volumes on the trading screen of the exchange.
30. In the instant case, the nature of transactions, volume of the transactions and the frequency with
which these transactions were undertaken by the Noticees acting in concert with counter parties
connected entities of Vishvas Group cannot but lead to the conclusion that the aforesaid
transactions in the scrip of the Company were undertaken by the Noticees for creation of
artificial volume to give false or misleading appearance of trading in the scrip without intention
of change in beneficial ownership. I find that indulgence in non-genuine synchronized, circular
trades and illegal self-trades, repeatedly, with connected entities without intending to change
beneficial ownership of traded shares clearly establishes creation of artificial volume as alleged in
the SCN.
31. I further find that entering into such synchronized, circular and self-trades was an attempt to
tamper with the free, fair and transparent price discovery system of the stock exchange. Such
practices where the transactions are put in with a premeditated understanding, have potential to
distort the price discovery process at the stock exchange and disturbs the market equilibrium.
This apart, the undisputed overt and covert acts and substantial contribution of the Noticees in
LTP variation and establishing NHP in the scrip during respective Patch of price rise and fall at
BSE and NSE both clearly establish their involvement in price manipulation in the scrip as
described in the SCN.
Order in the matter of Gangotri Textiles Limited

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32. I, therefore, find that the Noticees have used and employed manipulative and deceptive device
or contrivance in their transactions in shares of the Company in contravention of provisions of
section 12A(a) (b) and (c) of the SEBI Act and regulations 3(a)(b) (c) (d) and regulation 4(1)(2)
(a) and (e) of the PFUTP Regulations as they had indulged in creation of artificial volume and
price manipulation as described in the SCN. Mr. Purshottam Khandelwal and Cosmo have also
contravened provisions of regulation 4(2)(g) of the PFUTP Regulations as they indulged in
illegal self- trades apart from non-genuine synchronised and circular trades as found in this case.
33. It is relevant to mention that in the matter of Sumeet Industries Limited, vide order dated May
21, 2014 Mr. Purshottam Khandelwal has been restrained by SEBI from accessing the securities
market and has been further prohibited from buying, selling or otherwise dealing in securities,
directly or indirectly, or being associated with the securities market in any manner, whatsoever,
for a period of three years. He has also been directed by the said order to disgorge the wrongful
gain made by him from his contraventions, as described in that order, with simple interest @
12% per annum from March 12, 2007 till the date of payment. I further note that in that matter,
in adjudication proceedings varying monetary penalties were imposed against other 5 entities
who are Noticees in the instant matter also. In case of Vital Communications Limited, vide
order dated July 31,2014 SEBI has restrained Cosmo and Master Finlease from accessing the
securities market and has further prohibited them from buying, selling or otherwise dealing in
securities, directly or indirectly, or being associated with the securities market in any manner,
whatsoever, for the period of three years. Vide ex-parte ad interim order dated June 29,2015 Avisha
Credit Capital Ltd. has been restrained from accessing the securities market and from buying,
selling or dealing in securities, either directly or indirectly, in any manner, till further directions.
These orders are still in operation.
34. It is, thus, noted that the Noticees have repetitively indulged in manipulations in the securities
market and have manipulated the volumes and prices of other scrips in addition to the instant
one. In my view, repeated fraudulent acts and delinquent behaviour of the erring Noticees does
not bode well for the integrity, orderly development and smooth functioning of the securities
market. It, therefore, becomes incumbent to deal with contraventions, digression and
demeanour of the erring Noticees sternly and take appropriate actions for effective deterrence.
While considering appropriate directions in this regard, I further note that there is no allegation
of any unlawful gain or avoidance of loss by the Noticees or loss caused to the investors and
nothing has been brought on record in this respect. However, it is noted that magnitude and
quantum of contribution of each of the Noticees are varying and the same can be a mitigating
factor for the purpose of appropriate direction.
Order in the matter of Gangotri Textiles Limited

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35. Considering the above facts and circumstances, I, in order to protect the interest of investors
and the integrity of the securities market, 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 and
11B thereof and regulation 11 of the Securities and Exchange Board of India (Prohibition of
Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 hereby
restrain the following entities from accessing the securities market and further prohibit them
from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated
with the securities market in any manner, whatsoever, for the period as mentioned in the
following table:
Table 19
Sl. No.
1.

Entity
Mr. Purshottam Khandelwal

PAN
ADZPK9831B

Period
5 years

2.
3.
4.

Ms. Sunita Gupta


Cosmo Corporate Services Ltd
Master Finlease Ltd.

AAHPG4700E 3 years
AAACC3529P 5 years
AAACM6050D 5 years

5.
6.

Avisha Credit Capital Ltd.


Vishvas Projects Ltd.

AAACA5715D
AAACM2047A

1 year
1 year

36. With regard to Mr. Purshottam Khandelwal, Cosmo Corporate Services Ltd., Master Finlease
Ltd. and Avisha Credit Capital Ltd. who are debarred/restrained/prohibited pursuant to the
respective orders dated May 21,2104 July 31,2014 and June 29,2015, the directions in the said
orders and the directions in the instant order shall run concurrently.
37. A copy of this order shall be served on all the recognized stock exchanges and the depositories
to ensure that the direction given herein are complied with.
38. This order shall come into force with immediate effect.

Sd/DATE: APRIL 13TH, 2016


PLACE: MUMBAI

Order in the matter of Gangotri Textiles Limited

RAJEEV KUMAR AGARWAL


WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA

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