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3,90,780 shares of Hubtown in Patch II. It was also observed that DMMSPL
had created long positions in the scrip of Hubtown during Patch II and
DMMSPL was holding the highest net long position of 63,000 shares
accounting for 6.35% of Open Interest as on March 26, 2009. During
investigation it was observed that WCPL, MCL and ABL had certain fund
transfers with DMMSPL.
5. In order to conduct a thorough investigation and in order to ascertain the
exact role played by various entities including DMMSPL, vide summons
dated November 03, 2011 the Noticee was advised to furnish
details/information as mentioned in its Annexure. Vide letter dated
November 17, 2011 the Noticee sought extension of time and so vide
summons dated November 22, 2011 the Noticee was advised to submit the
said details/information. The Noticee vide its letter dated November 30,
2011 submitted its reply to summons dated November 22, 2011. However,
since no information regarding certain fund transfers were provided by the
Noticee, vide summons dated December 23, 2011 the Noticee was advised
to provide the necessary information and clarifications. It was alleged that
despite receiving the summons dated December 23, 2011; the Noticee
failed to submit its reply. It was alleged that the Noticee failed to submit
complete details/information as required vide the aforesaid summonses,
thereby violating the provisions of Section 11C(2) and 11C(3) of the SEBI
Act, 1992.
APPOINTMENT OF ADJUDICATING OFFICER
6. Shri Piyoosh Gupta was appointed as the Adjudicating Officer vide order
dated March 30, 2012 and the said appointment was conveyed vide
proceedings of the Whole Time Member dated April 11, 2012 to inquire
and adjudge under Section 15A(a) of the SEBI Act, 1992 alleged violations
of provisions of Section 11C(2) & 11C(3) of SEBI Act, 1992 committed by
the Noticee. Pursuant to the transfer of Shri Piyoosh Gupta, the
Adjudication Order in respect of Dhananjaya Money Management Services Private Limited
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provided by us were absolutely correct. It is true that we are not connected with
Hubtown, its promoters/directors. Further, the statement in the reply that
except for the business transaction with Withal Commercial Pvt. Ltd., we are not
connected with other entities mentioned in the summons is also absolutely
correct. The findings with respect to receipt of funds from Pacific Corporate
Services Ltd. and Amit Business Ltd. and non disclosure of the same in our letter
dated November 30, 2011 was based on the details available in our books of
accounts. It is submitted that we received a sum of Rs. 13 crores into our Axis
bank account (through Pacific Corporate Services Ltd.) was actually a part
payment/advance against purchase of shares on behalf of Amkay Trading in an
unlisted company held by us, and therefore our books were reflecting the said
payment against Amkay Trading and Pacific Corporate Services Ltd. as alleged,
we have not received a sum of Rs. 13 crores. It is submitted that on March 06,
2009 we have accounted a sum of Rs. 13 crores in the account of Amkay Trading
and not from Pacific Corporate Services Ltd., however on instructions from
Amkay Trading the said fund was given to Pacific Corporate Services Ltd., since
post due diligence of the unlisted company Amkay Trading was not interested in
the acquisition of the shares of the said unlisted company since it had various
contingent liabilities and legal cases pending against it. We humbly request your
goodself to consider our submission dated December 27, 2011 which has been
inadvertently omitted at the end of the Investigating Officer, on perusal of the
same you will find that we have provided all the required information. With
regard to the receipt of funds of Rs. 1 crore from Amit Business Limited, it is
submitted that the said funds were actually received on behalf of M/s Mahaveer
Metal Corporation as the same was due from for long. At the time of submission
of reply we had checked our bank accounts vis a vis our own books of accounts
wherein this receipt of Rs. 1 crore (from Amit Business Limited) was marked
against M/s Mahaveer Metal Corporation. At the time of submission of reply we
could not cross verify the entities name (in the bank statement) from which the
funds were received.
o However it is pertinent to note that we had duly clarified both the above issues to
the Investigating Officer vide our letter dated December 27, 2011 submitted with
SEBI on December 28, 2011 in response to SEBI's summons dated December 23,
o From the above it is clear that in all three communications were issued by SEBI
to us which were duly replied by us at all times and we had duly sought
indulgence of SEBI at the time when we were not in a position to comply with the
deadline put forth by the Investigating Officer. It is once again clarified that all
the details pertaining to transactions with Pacific Corporate Services Ltd. and
Amit Business Limited were duly explained to the Investigating Officer with all
the pertinent details including purpose of the fund transfer, date of repayment
and collateral, if any and the reasons for discrepancy in the submissions made
vide our letter dated November 30, 2011, through our letter dated December 27,
2011 which was duly received by SEBI on December 28, 2011.
12. From the material available on record, I note that summons dated
November 03, 2011, was issued to the Noticee by the Investigating
Authority (IA) asking it to furnish details/information as mentioned in its
Annexure. The said summons dated November 03, 2011 was duly delivered
to the Noticee through Systematix and vide letter dated November 17,
2011, the Noticee sought extension of time to submit reply. Thereafter, vide
summons dated November 22, 2011 the Noticee was advised to submit the
details/information by November 30, 2011. From the material available on
record, I note that the details/information sought vide summons dated
November 03, 2011 and summons dated November 22, 2011 were
identical.
13. Vide letter dated November 30, 2011, the Noticee provided information
and, inter alia, stated that its source of funds for trading was through own
sources/ loans from NBFCs and margin in the derivatives segment was
given by way of permissible mode of cash/ shares. The Noticee also stated
that it was not connected with Hubtown, its directors/promoters, etc. With
reference to the relation/ connection with other identified entities/ groups
as listed in the summons, the Noticee stated that except for business
transaction with one entity, WCPL, it was not connected with any of the
other entities. From the details provided by the Noticee, it was observed
that the Noticee had received Four Crore Rupees from WCPL in March 2009
as advance for purchase of unlisted shares. It was observed from the bank
statement of the Noticee (obtained from the bank) that it had also received
Thirteen Crore Rupees from Pacific Corporate Services Ltd. (now known as
MCL) on March 06, 2009 and One Crore Rupees from ABL in March 20,
Adjudication Order in respect of Dhananjaya Money Management Services Private Limited
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MCL & ABL and clarify the discrepancy with its previous submissions, by
December 28, 2011.
16. In this regard, the Noticee has submitted that it had filed its reply to
summons dated December 23, 2011 by its letter dated December 27, 2011
(which was received by SEBI on December 28, 2011) vide which the
Noticee had made the following submissions:
We received Rs. 13 crores on March 2009 into our Axis Bank account, as
advised by Amkay Trading Pvt. Ltd., which was towards part pay payment /
advance against purchase of shares by Amkay Trading is an unlisted
company held by us. The said amount was paid as advance and subject to due
Diligence of the unlisted company and its financial by Amkay Trading / its
representatives.
We were advised by Amkay Trading Pvt. Ltd. that they were not interested in
the acquisition of shares on account of various contingent liabilities and legal
cases in the target company. As per their instructions, the said amount of Rs.
13 crores was remitted to pacific Corporate Services Ltd from Amkay Trading
Pvt. Ltd. as their share application money.
With respect to Rs. 1 crores received from Amit Business Limited, it was
received on behalf of old outstanding from M/s. Mahavir Metal Corporation
accordingly it is adjusted in their account and there was no direct dealing /
due of ours with M/s. Amit Business Limited.
As these transactions were not with respect to listed securities as well as
directly not accounted in the name of concerned parties as mentioned above
accordingly we have not provided these details in our earlier letter.
Trust this satisfies the issue raised by you.
17. From the submissions of the Noticee made vide letters dated May 15, 2013
and September 24, 2014 and also during the course of personal hearing, I
find that the Noticees letter dated December 27, 2011 bears the SEBI
acknowledgement stamp dated December 28, 2011. On enquiry, it is
observed that the said letter of the Noticee dated December 27, 2011 was
scanned and inwarded in SEBI vide reference number IW/123382/2011.
18. In view of the above I find that that the Noticee had corresponded to SEBI
in response to the summons dated December 23, 2011, vide its letter dated
December 27, 2011 providing its response within the stipulated time.
Adjudication Order in respect of Dhananjaya Money Management Services Private Limited
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Hence, I find that the charge against the Noticee for not submitting reply in
response to summons dated December 23, 2011, as alleged in the SCN, does
not stand established.
19. Since the reply of the Noticee dated December 27, 2011 was not considered
and taken on record before initiating the present Proceedings, I hold that
the allegation of violation of the provisions of Section 11C(2) and 11C(3) of
the SEBI Act, 1992 against the Noticee, as alleged in the SCN, is not
established.
ORDER
20. In view of my findings noted in the preceding paragraphs, I dispose of the
Adjudication Proceedings accordingly.
21. In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding
Inquiry and Imposing Penalties by Adjudicating Officer) Rules 1995, copies
of this Order are being sent to the Noticee and also to Securities and
Exchange Board of India.
Jayanta Jash
Adjudicating Officer