BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO.EAD-5/SVKM/DS/AO/29-31/2015]
UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF INDIA
ACT, 1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING
INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES,
1995.
---------------------------------------------------------------------------------------------------------------Sr. No.

Name of the Noticee

PAN No.

1.

Jayesh Shah

ACXPJ9086H

2.

Tushar Shah

PAN not available

3.

Parag Shah

PAN not available

In the matter of Platinum Corporation Limited

---------------------------------------------------------------------------------------------------------------BRIEF FACTS
1. Securities and Exchange Board of India (hereinafter referred to as SEBI) conducted
investigation into the alleged irregularities in the trading of the shares of Platinum
Corporation Limited (hereinafter referred to as PCL/Company). The Investigation,
inter-alia, revealed that PCL made certain corporate announcements subsequent to
which the price of the scrip shot up. The corporate announcements did not
materialise and a large number of entities off-loaded their holdings in PCL
subsequent to the corporate announcements made by the company.
2. The investigation also revealed that Shri Jayesh Shah, Shri Tushar Shah and Shri
Parag Shah (hereinafter referred to as Noticees collectively and by their names
individually),promoters of PCL transferred shares to connected persons and also

Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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pooled shares from various persons and dumped the shares in the market to take
advantage of price rise subsequent to corporate announcements.
3. SEBI, therefore, initiated Adjudication Proceedings against the Noticeesunder
section 15HA of the SEBI Act, 1992 (hereinafter referred to as SEBI Act, 1992) for
the alleged violation of the Regulations 3(a) (b) (c) , 4(1) , 4(2)(e) of SEBI
(Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market),
Regulations, 2003 (hereinafter referred to as PFUTP Regulations).
4. The matter was adjudicated by another Adjudicating Officer and vide Order dated
October 01, 2012 penalty was also imposed onNoticees under section 15HA of the
SEBI Act, 1992. Noticees challenged the said order before the Securities Appellate
Tribunal (hereinafter referred to as SAT) and SAT vide order dated August 27, 2014
restored the matter to the file of SEBI for passing fresh order on merits. The
operational portion of the SAT order is as follows:

Accordingly, impugned order dated October 1, 2012 is quashed and

set aside and the matters relating to three appellants are restored to
the file of SEBI for passing fresh order on merits and in accordance
with law after giving personal hearing to the appellants.
APPOINTMENT OF ADJUDICATING OFFICER
5. Pursuant to the remand of the matter by SAT, SEBI vide order dated September 29,
2014 appointed Shri A. Sunilkumar as the Adjudicating Officer under section 15 I of
SEBI Act read with Rule 3 of SEBI (Procedure for Holding Inquiry and Imposing
Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as Rules) to
inquire into and adjudge under section 15HA of SEBI Act, 1992 the aforesaid
allegations. Consequent to the transfer of Shri A. Sunil Kumar, the undersigned was
appointed as the Adjudicating Officer vide order dated June 22, 2015.

Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING

6. Show Cause Notice No. EAD-04/ADJ/PKB/EIF-83/OW/23967/2011 dated July 21,
2011(hereinafter referred to as SCN)which was issued to Noticees under Rule 4(1)
of the Rules to show cause as to why an inquiry should not be initiated and penalty
be not imposed under section 15HA of SEBI Act for the aforesaid allegations as
detailed in the said SCN, was forwarded to the Noticees along with Notice Ref. No.
EAD-05/ADJ/ASK/SPV/OW/3272/2015 dated January 29, 2015.
7. Shri Parag Shah, vide letter dated May 08, 2015 submitted reply. Shri JayeshShah
submitted his reply vide letter dated July 31, 2015 and Shri Tushar Shah submitted
reply vide letter dated May 08, 2015. The gist of common submissions of the
Noticees are as under:

that since 29th December 2004, Noticees were holding 40,00,000 shares each
of PCL which constituted about 11.1% (3.7% each) of the equity capital.

that in or about 2006, Noticees were in need of funds for their personal
requirements and for that purpose they were looking for finance and one Mr.
Bipin Shah agreed to provide finance against transfer of shares of PCLand as a
confidence building measure, Noticeesagreed to transfer to Bipin Shah shares
of PCL in anticipation of the money to be advanced by Shri Bipin Shah.

that Noticees were never promoters of PCL but through some error on the part
of the PCL, Noticees shareholding was shown as promoter holding and when
Noticees sought a clarification from the company of such misleading
representation, it expressed regret and apologized for the mistake vide letter
dated June 25, 2007

8. Noticees also availed of the opportunity of personal hearing and appeared before the
undersigned on August 10, 2015 through their counsel Shri S K Shelat Advocate.
Written submissions dated September 09, 2015 were also filed. Summary of
submissions made on behalf ofNoticees during the personal hearing are as under:

Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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that on similar facts an order was passed by the Adjudicating Officer on

January 30, 2012 wherein penalty of 10 Lakh per head was imposed on 17
entities. In Appeal Nos. 86 to 102 of 2012, vide order dated August 24, 2012,
SAT reduced the said penalty to 2 lakhs per head. Therefore, it was urged that
the same be considered in the present case of the Noticees whose cases are
based on similar facts.

referring to the reply dated May 08, 2015 of Shri Tushar Shah and Annexure 3
thereto wherein all the three Noticees were shown as promoters as well as nonpromoters of the company, the inconsistency in the stand taken by the
company in showing Noticees as both promoters and non- promoters is pointed
out by the counsel.

That Noticees were not shown as promoters in the IPO document filed by the
company in 1996 nor they have become promoters by way of any
amalgamation or merger.

that vide letter dated November 28, 2007 and reminder dated December 01,
2007, Tushar Shah (Noticee No. 2) sought clarification from the company
regarding Noticees being shown as the promoters of the company and the
company had acknowledged its mistake on February 25, 2007.

that an affidavit dated March 24, 2014 was filed by Prateek Shah, M D of the
company before Honble SAT in Appeal Nos. 94/2014, 95/2014 and 96/2014
wherein it is admitted that none of Noticees no. 31 to 33 of the SCN were
promoters of PCL at any point of time.

That Noticees had 40 lac shares each in the company and transferred the
same to third parties as security for securing loans that did not materialise and
there is an arbitration filed by Noticees, which is still pending.

Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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It was also denied that Shri Jayesh Shah was a Director of the company at any
point of time. The details like date of birth, fathers name and address of Shri
Jayesh Shah given in the SCN are different from the details of Shri Jayesh
Shah, Noticee herein.

CONSIDERATION OF ISSUES AND FINDINGS

9. I have carefully perused the replies to the SCN, oral submissions of Noticees and the
documents available on record. The issues that arise for consideration in the present
case are :
a) Whether Noticees have violated provisions of Section 12 A(a) (b) (c) of
SEBI Act read with provisions of Regulation 3 (a) (b) (c) , 4(1) , 4(2)(e) of
PFUTP violations?.
b) Does the violation, if any, on the part ofNoticees attract any penalty under
section 15HA of the SEBI Act?
c) If yes, what should be the quantum of penalty?
10. Before dealing with the charges levelled againstNoticees, I deal with the preliminary
issues raised by them with regard to inspection of documents and furnishing of
complete investigation report. I note thatNoticees had sought for the inspection of the
complaint filed by All Gujrat Investor Protection Trust with SEBI and also a copy of
the complete investigation report. I note that all the documents relied upon in support
of the charges were made available to the Noticeesalong with the SCN. They have
also been given opportunity of personal hearing to explain the circumstances
appearing against them. They were ably defended by Advocate Shri S K Shelat. In
this regard, I would like to rely the observation made by Hon'ble Securities Appellate
Tribunal (SAT) in the matter of MayroseCapfin Private Limited vs SEBI (decided on
30.03.2012) wherein SAT observed thus:".....................the principles of natural
Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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justice require that the inquiry officer should make available such document and
material to the delinquent on which reliance is being placed in the inquiry. It is not
necessary for the inquiry officer to make available all the material that might have
been collected during the course of investigation but has not been relied upon for
proving charge against the delinquent. No prejudice can, therefore, be said to have
been caused to the appellant on this count.....

In the light of the above, I am

convinced that principles of natural justice have been duly complied with in the
instant proceedings as all relied upon documents have been given toNoticees along
with the SCNs and they were given opportunities to explain the circumstances
appearing against them. Non furnishing of complaint of All Gujarat Investor
Protection Trust has not caused any pre-judice to Noticees as it is not relied upon
document for the purpose of these proceedings.
11. Moving on to the merits of the matter, it is alleged in the SCN thatNoticees were
promoters of the company who transferred shares to the persons connected to them
and dumped the said shares in the market to take advantage of the price raise
subsequent to corporate announcements made by the company that never
materialised.
12. I find that the company was originally incorporated in the year 1992 in the name and
style as Kanugo Lease and Investment Limited. It came out with an IPO in the year
1996 with an offer of 67 lac shares of ` 10 each at par aggregating to `6.70 crores.
The shares of the company are listed at the Bombay, Ahmedabad and Vadodara
Stock Exchanges. In the year 2003, the company reduced the face value of its
shares from `10/- to `1/- per share.
13. It is alleged that PCL had come out with certain corporate announcements which
influenced the price and volume of the scrip of PCL when Noticees along with other
connected entities dumped shares in the market. Noticees were shown as promoters
of the company when PCL made the corporate announcements. The shares were
off-loaded in the market subsequent to the corporate public announcements which
caused prices to shot up. It is important to look into the kind of the corporate
Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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announcements made by PCL and its reaction to the scrip in terms of price and
volume. It is also important to see the persons who dumped the shares and their
connection among themselves and with the company.
14. I find that the corporate announcements were made by PCL between July 2005 and
January 2008. These announcements were positive announcements such as tie ups
for development of software business, bagging of orders worth `60 million,
preferential allotment to promoters at high price, venturing into construction business
etc/-.The details of the corporate announcements made by the company during the
period are as under:

Date
July 20, 2005

Details of announcement / Event

The company entered into strategic tie-up with M/s
Cartesian Computer Ltd. for development of software for
defence.
Sept 06, 2005 The company bagged an order worth Rs.60 million from
M/s Alps BPO services ltd. Further the board of the
company approved to shift its registered office from
Ahmedabad to Bangalore.
Oct 06, 2005
The company plans to diversify in the field of
manufacturing icecream and other dairy products. The
company also planned to diversify into contract farming
and setting up of Agro Bio-tech park. Further, proposal to
shift its registered office was cancelled.
Dec 02, 2005
The company in its EGM authorized the board to create,
offer and issue 5.35 crore shares at ` 2/- through
preferential allotment to Mr. Pratik Shah and others. The
Board was also authorized to create, offer and issued
shares to the existing shareholders of ` 1/- each at Par in
the ratio of two shares for every one share held.
Feb 27, 2006
The Company dropped dealing with Alps BPO services,
due to non-fulfillment of procedure, formalities and
commitment from the buyers.
March
06, Tie-ups is no longer with Cartesian Computers henceforth
2006
March
2006

16, The company has signed a contract manufacture Icecream with M/s Dharnendrainds Ltd., further the company
also entered into an agreement with M/s Hirak Biotech Ltd
to market their Icecream.
Nov 29, 2006
The company planned to enter in the business of
Construction and Infrastructure business.
Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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Dec 08, 2006

Jan 19, 2007

Dec 05, 2007
Jan 07, 2008

Jan 15, 2008

The company announced that they tied up with M/s Rajvi

Construction for development of commercial and
residential premises
Decided to issue one crore shares of ` 1/- each on
preferential basis at a price of ` 3.10 per share.
The board accorded to borrow sum of money Rs.100 crore
for meeting their business requirement.
The company plans to consider raising money through
placement of shares/debentures/convertible instruments to
QIBs.
The Board in its meeting held on January 15, 2008
approved raising of funds through QIBs or through GDR
issue. The board also approved increase its authorized
capital from ` 12 crore to ` 32 crore and increase of FII
investment limit from 24% to 74%.

Taking advantage of the price rise after the above announcements were made,
Noticees had liquidated their entire shareholding during the quarter ending
December 2007.
15. The first of such announcement was made by the company in July, 2005 that the
company has entered into strategic tie up with M/s Cartesian Computer Limited
(Cartesian) for development of software for defence. It was also mentioned that
Cartesian was engaged in developing of high end software with many government
departments such as defense and others. The price and trading volume reacted
positively to this announcement which is evident from increase in average trading
volume and price of the scrip at BSE.
16. As per the Annual Returns filed by Cartesian with RoC for the year 2003-04,
Cartesian was a subsidiary of Alps BPO Services Limited and one Shri Ramanbhai V
Trivedi was Director of Cartesain since 2005. Ramanbhai Trivedi was shown as a
promoter of PCL during March 2001 to September 2003 , i.e for 11 quarters. Further,
the annual returns of Cartesian as downloaded from MCA website shows that the
total sale of Cartesian for the year ended March 31, 2005 was Nil, whereas, PCL in
its announcement made on July 20, 2005 mentioned that M/s Cartesain Computer
Limited is currently engaged in developing of high end software with many
government departments such as defense and others. Thus Cartesian and PCL are
Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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connected through the same promoter and the announcement of PCL regarding
Cartesian are also fraudulent. Further, on March 06, 2006, PCL made another
announcement regarding end of its dealings with Cartesian nearly 8 months after the
initial public announcement of its grand plans with Cartesian. The tie-up between
Cartesian and PCL was announced only for the purpose of creating interest in the
scrip to drive up the prices& volumes. It is a fraudulent act considering that the total
sales revenue of Cartesian for the financial year 2004-05 was NIL. During the month
after the so called tie up was announced, the price of the scrip moved from `1.36 to
`2.18, a rise of 60.29%.

17. Another positive announcement of the company which created artificial demand for
the stock was on 06 September, 2005 when it announced that the company bagged
an order worth `60 million from M/s Alps BPO Services Limited. Later, after 5
months on February 27, 2006, PCL announced that the dealings with Alps BPO was
called off.As seen earlier, Alps BPO &Ramanbhai Trivedi were connected
&Ramanbhai was the promoter of PCL. Cartesian was a subsidiary of Alps BPO
Services Limited and one Shri Ramanbhai V Trivedi was Director of Cartesain since
2005 andRamanbhai Trivedi was also a promoter of PCL.
18. Further, PCL, in its quarterly results for the period ended Sep-Dec, 2005 and Mar2006, declared that it operated in only one segment i.e, Government Securities. It
had never operated in software development and BPO segments except in the
corporate announcements made to that effect. Hence, dissemination of positive
news of tie- up with software companies as stated above was fraudulent and was
never intended to be materialised or seriously pursued. Within few months of making
such grand public announcements which had caused the price rise, it was further
announced that the projects earlier announced were called off.

19. Another positive announcement of PCL was on November 29, 2006 relating to its
claims of projects approved by the Government with the property developers and
some manufacturing industries. It also announced that it had a tie up with M/s Rajvi
Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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Construction for development of shopping malls and residential projects. It was

further informed that it approved investment limit of ` 80 million for the business and
decision to change its name and main objects of the company on December 20,
2006. It was further announced that the Board has decided on January 19, 2007 to
issue one crore equity shares through preferential allotment at a price of `3.10 per
share. The price of the scrip which was trading in the range of `0.61 in the month of
November, 2006 prior to corporate announcement had shot up to ` 3.14 on
November 28, 2006 (a price rise of 414%) due to these Public Announcements.
Further the company in its quarterly results for this period had not reported any
business income from construction/manufacture activities.
20. The entities who transacted in the scrip had a common telephone number
(9824019596) for all these accounts. The said telephone number belonged to one
Shri Ashok Hiralal Shah, who was a Director of PCL and his connection with the
entities and promoters of PCL is as under:
Name
of
the
entity
Robinson
Worldwide Trade
Ltd. (RWTL)

Connection

Remarks

KYC of the DP, India Infoline

Lt., BOID 10357128 shows
thatRamanbhai N. Trivedi was
director of RWTL.
KYC of Exclusive Broking
House Ltd. shows that the
address of RWTL was 403,
Sanjay Apartment, opp. CN
Vidyalaya,
Ambawadi,
Ahmedabad.
This address is same as
Induram Developers Pvt. Ltd.,
which is being managed by
Ashok Hiralal Shah.

RWTL received 5,00,000 shares from Jayesh

Shah, Promoter of PCL and Noticee No. 1
herein.
Ramanbhai Trivedi was director of RWTL
Ramanbhai Trivedi was shown in promoters
shareholding in the quarterly shareholding
submitted to BSE for the period during March
2001 till September 2003 by PCL. He was
also linked to corporate announcement of
PCL regarding Defence Software tie-ups
which never materialised but caused spurt in
volume & price of the scrip.
Establishes connection between Ashok
Hiralal Shah and RWTL.

BharatkumarRatilal
Shah

Bharat Shah received shares

from Jayesh Shah, Noticee No.
1
Bharat Ratilal Shahreceived
sharesoff
market
from
AnandRamanbhaiTrivedi, son
of RamanbhaiN. Trivedi.
KYC of Bharat kumar R Shah
maintained at DP SHCIL
BOID:30308189 of B, contain

This shows the connection between

Bharatkumar Shah, Ashok Hiralal Shah and
Ramanbhai Trivedi.

Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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Exdon
Trading
Company Ltd.

mobile no. 9824019596, which

is being used by Ashok H.Shah
Mr. Ashok Hiralal Shah was
Director of Exdon Trading.
He signed Tripartite agreement
entered between NSDL, PCL
and Pinnacle Share Registry
Ltd. on behalf of PCL as
Director of the company
Parag Shah transferred shares
to Exdon Company Limited

21. The main contention of Noticees is that they were not the promoters of PCL at any
point of time and it was a mistake on the part of PCL to show them as promoters of
PCL and PCL corrected the said mistake when it was brought to its notice. I find from
the shareholding pattern filed by PCL with BSE that the Noticees were shown as the
promoters of PCL from 2005 to 2007i.e, continuously for a period of 3years i.e, (11
quarters). Shareholding of the Noticees as promoters as submitted by PCL to BSE
and made public by BSE is as under:

Quarterended

HoldingsofPromoters
Parags
hah

March2005
June2005
Sept2005
Dec2005
March2006
June2006
Sept2006
Dec2006
March2007
June2007
Sept2007
Dec2007

40,00,000
40,00,000
40,00,000
40,00,000
40,00,000
40,00,000
40,00,000
40,00,000
40,00,000
40,00,000
40,00,000
-Nil-

JayeshShah

40,00,000
40,00,000
40,00,000
40,00,000
65,00,000
65,00,000
65,00,000
65,00,000
65,00,000
65,00,000
65,00,000
-Nil-

TusharS
Other
hah
promoters

40,00,000
40,00,000
40,00,000
40,00,000
20,00,000
20,00,000
20,00,000
20,00,000
20,00,000
20,00,000
20,00,000
-Nil-

20,64,000
20,64,000
20,64,000
20,64,000
15,64,000
-Nil-Nil-Nil-Nil-Nil-Nil-Nil-

Total
shares

1,40,64,000
1,40,64,000
1,40,64,000
1,40,64,000
1,40,64,000
1,25,00,000
1,25,00,000
1,25,00,000
1,25,00,000
1,25,00,000
1,25,00,000
-Nil-

% of equity
capital

13.14%
13.14%
13.14%
13.14%
13.14%
11.68%
11.68%
11.68%
11.68%
11.68%
11.68%
-Nil-

22. From the above table, I find that PCL has shown Noticees as its promoter
shareholders from 2005 to 2007i.e, continuously for 11 quarters. Noticees have
Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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never disputed that they were promoters of PCL until May 2006 wherein for the first
time Noticee No. 2 wrote to PCL. In support of this contention the Noticees have
produced an affidavit dated March 24, 2014 filed by Shri Prateek Shah, M D of the
company wherein it is acknowledged that it was a mistake on the part of PCL that
the Noticees were shown as promoters.The said affidavit was filed before Honble
SAT in Appeal Nos. 94/2014, 95/2014 and 96/2014 between Noticees and SEBI.
Noticees have also submitted letters purportedly written by them in May 2006 to the
company regarding this issue and PCLs reply to the same.
23. It is mandatory for every listed company that its shareholding be disclosed to the
public through the stock exchanges where its shares are listed. This is as per the
listing agreement and other relevant Regulations. While making such disclosure, it is
also mandatory that the shareholding should be shown bifurcated as promoters
holding and non-promoters holding. In the instant case also PCL, a listed
company, in compliance with the listing agreement has disclosed its shareholding
pattern to BSE wherein the shares were listed. The said periodic disclosures under
the listing agreement serve a very important purpose of informing general public and
the investors about the shareholding and names of the promoters and significant
shareholders. This is important for the public to make their investment decisions.
Regarding the importance of periodic disclosures SAT in the matter of GHCL Vs
SEBI (decided on 31.07.2014) observed that The requirement of Listing
Agreement emanates from Section 21 of SC(R) Act, 1956 which requires every such
company to enter into an agreement, traditionally termed as Listing Agreement
with the Stock Exchange on which the shares are sought to be listed. Next, the
purpose underlying the requirement of making regular and true disclosures by a
company as regards the shares which the promoters may come to hold from time to
time is to bring about greater transparency in the functioning of the companies. It is
through such disclosures that the investors take an informed decision in a given
situation to invest in the scrip of that company or even to exit. This is extremely
important for the growth of a healthy capital market...Hence, the disclosures made
by PCL in compliance with the statutory requirements is given due consideration.
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24. Noticees themselves admitted that they were holding 40,00,000 shares each of PCL
since 2004. As per the shareholding shown by PCL to BSE during 2004, the
shareholding of the Noticees also is 40 lac shares each which constituted 3.7% of
the total shareholding per Noticee and they together held more than 10% shares in
PCL which is significant holding.
25. It is also mandatory for listed companies to send their Annual Reports to its
shareholders. Being shareholders of PCL, the Noticees would have got the Annual
Report of PCL every year wherein the details of shareholding of promoters and nonpromoters are detailed. Noticees had not taken any objection to them being shown
as promoters at least until May 2006 when they reportedly wrote for the first time to
the company.
26. It is a matter of public record that PCL continuously for 11 quarters disclosed that the
Noticees are its promoters. PCL did not respond to SEBI during investigation period
but curiously at the same time responded to Noticees clarifying that they were
wrongly shown as promoters. The defence of the Noticees that they wrote to the
company and got their names removed from the list of the promoters does not
inspire confidence. The purported private correspondence between the parties do
not carry much weightage than the public disclosure made by the company to the
stock exchanges continuously for 3 years under the statutory requirements.
Therefore, from the facts and circumstances of the case, I find that the act of
Noticees and also of PCL in obliging the Noticees for getting the error rectified is an
afterthought and part of larger scheme of things. PCL came out with the non-serious
corporate announcements, Noticees who were shown as promoters of PCL for
continuously 11 quarters and held 40 lakhs shares each, had dumped all the shares
to the gullible investors taking advantage of the price rise.

27. There was a bald denial that Noticee No. 1 was a Director of the company during the
relevant period without any substantive explanation. During the hearing held on
August 10, 2015, on behalf of Noticee No. 1, it was undertaken to furnish supporting
documents to corroborate this claim, but no evidence to the contrary is produced.
Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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28. The following factors have weighed in establishing the charges against Noticees:
i.

Noticees were significant shareholders of PCL collectively holding more

than 10% of shares, each holding 40 lakhs shares.

ii.

Jayesh Shah Noticee No. 1 was on the Board of the company.

iii.

Noticees were shown as the promoters of the company continuously for

11 quarters in filings made to the stock exchanges as per the Listing
Agreement.

iv.

The company came out with a series of Public announcements which

never materialised during the period.

v.

Noticees off-loaded their holdings during this period.

At no point of time during this period of 11 quarters (3 years) when the company was
continuously making periodic disclosures to the stock exchanges showing Noticees
as promoters, did the Noticees issue any public notice that they are not promoters of
the company when they are presumed to be in receipt of the statutory Annual
Reports from the company every year. The statutory disclosures made by the
company to the stock exchanges continuously for 3 years and the exchange in turn
disseminating such information to the general public assumes importance.
29. I also note that during investigation the company was also asked to furnish the
details of the promoters to the investigating authority. It did not respond to the
summons of SEBI. At the same time, it responded to the letters of the Noticees and
declared them to be non-promoters. This further shows the complicity of the
company with the Noticees. Neither the company nor Noticees have issued a public
notice dissociating themselves as the promoters of the company. Hence, the public
continued to believe that Noticees were the promoters of the company based on the
disclosures made to the stock exchanges continuously for 11 quarters.
30. Now, therefore, Noticees are estopped from claiming that they are not the promoters
of the company based on some private correspondence stated to have been
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exchanged between the company and Noticees without there being any public notice
of such information. This is a clear case of acquiescence. It is a kind of "permission"
given by silence or passiveness. Noticees have allowed this to happen by staying
silent or by not objecting, continuously for 11 quarters (3 years) during which period,
the company and the stock exchange showed them as the promoters.
31. Explaining the reasons for off-loading the shares, Noticees have contended that it
was out of necessity of funds and they did not get consideration from the said
transactions and there is an arbitration filed by the Noticees against the said third
parties which is still pending. No documents are filed in support of the said
contentions. Even otherwise, the object of disposal is not so relevant.

32. During the personal hearing also, it was argued more on the quantum of penalty
while not disputing the transactions per se. Transactions were not disputed against
the backdrop of the corporate announcements.
33. In view of the above, I am of the considered view that the facts of the present case
clearly bring out an element of market manipulation by the fraudulent scheme of PCL
wherein Noticees were promoters of the company for 3 years and holding collectively
10% of the total share capital of the company and 40 lakhs shares each, had
dumped their shares in the background of the price rise subsequent to the nonserious corporate announcements made by the company. Therefore, I am of the
view that the allegation of violation of the provisions of Regulation 3(a) (b) (c), 4(1) &
4(2) (e) of PFUTP Regulations by the Noticees stands established.
34. The Honble Supreme Court of India in the matter of SEBI Vs. Shri Ram Mutual Fund
[2006] 68 SCL 216(SC) held that once the violation of statutory regulations is
established, imposition of penalty becomes sine qua non of violation and the
intention of parties committing such violation becomes totally irrelevant. Once the
contravention is established, then the penalty is to follow.

Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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35. Thus, the aforesaid violations by the Noticees make them liable for penalty under
Section 15HA of SEBI Act, 1992 which read as follows:
Penalty for fraudulent and unfair trade practices
15HA. If any person indulges in fraudulent and unfair trade practices relating to
securities, he shall be liable to a penalty of twenty-five crore rupees or three times
the amount of profits made out of such practices, whichever is higher.

36. The learned Counsel for the Noticees has contended that on similar facts an order
was passed by the Adjudicating Officer on January 30, 2012 wherein a penalty of 10
Lakh per head was imposed on 17 entities. In Appeal Nos. 86 to 102 of 2012, vide
order dated August 24, 2012, SAT reduced the said penalty to 2 lakhs per head.
Therefore, it was urged that the same be considered in the present case also. The
said order of Hon'ble SAT is perused. It is noted that while reducing the penalty,
Honble SAT observed the following:
The order passed by the adjudicating officer has not brought anything on
record to indicate why higher penalty of Rs.10 lac is imposed on the
appellant whereas penalty of Rs.2 lac only has been imposed in the case
of Manoj R. Shah and Manish Ashokbhai. In the absence of any
distinguishing feature brought out in the order, we are inclined to agree
with the arguments of the learned counsel for the appellant that there
should be uniformity in imposing penalty in respect of violations which
are identical in nature.
37. It may be noted that Noticees had acted in a fraudulent manner to the detriment of
investors and the market in general and had posed a great threat to the safety and
integrity of the market. Noticees have completely exited the scrip by dumping their
shares

taking

advantage

of

price

rise

based

on

non-serious

corporate

announcements by the company which never materialised. The unjust profits made

Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
Page 16 of 20

by the Noticees to the detriment of investing public are calculated hereafter. The
penalty is justified for the following reasons:
i.

Such activities erode the confidence of the investors and persons who
indulge in manipulative and fraudulent transactions, or abet the carrying
out of such transactions which are fraudulent and

deceptive, should be

suitably penalized for the said acts of omissions and commissions.

ii.

Noticees

were

holding

40

lakhs

shares

each

prior

to

corporate

announcements and liquidated their entire shareholding between October

2007 and December 2007 taking advantage of the surge in the price of the
scrip consequent to the corporate announcements made by the company
which were never implemented. However, exact dates on which they
liquidated their holdings is not available. Hence, average price during the
said quarter when the Noticees had completely exited from the scrip is taken
into account. The price of the scrip during this period moved as under at
BSE.

Month

Open (in `)

October, 2007
November,
2007
December,
2007

iii.

1.57
1.19

High (in
`)
1.69
1.60

Low (in
`)
1.15
0.95

Close (in
`)
1.19
1.33

Average (in
`)
1.38
1.26

1.30

2.97

1.30

2.97

2.14

Total

4.78

4.78/3

1.59 or 1.60

Profits made: The average price of the scrip before the corporate
announcements was approx. ` 1.00. And the average price after the
corporate announcement during the period Noticee offloaded their
shareholding as per the aforesaid table is`1.60. Therefore, Noticees made
unjust profit of `0.60 (`1.60 - `1.00)per share.

Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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iv.

It is necessary that suitable penalty is imposed on the Noticees to meet the

ends of justice. Honble Supreme Court of India in the matter of N.
Narayanan v. SEBI, vide judgment dated April 26, 2013 noted the following:
"'Market abuse' impairs economic growth and erodes investor's
confidence. Market abuse refers to the use of manipulative and deceptive
devices, giving out incorrect or misleading information, so as to
encourage investors to jump into conclusions, on wrong premises, which
is known to be wrong to the abusers.... SEBI, the market regulator, has to
deal sternly with companies and their Directors indulging in manipulative
and deceptive devices, insider trading etc. or else they will be failing in
their duty to promote orderly and healthy growth of the Securities market.
Economic offence, people of this country should know, is a serious crime
which, if not properly dealt with, as it should be, will affect not only
countrys economic growth, but also slow the inflow of foreign investment
by genuine investors and also casts a slur on Indias securities market.
Message should go that our country will not tolerate market abuse and
that we are governed by the Rule of Law. Fraud, deceit, artificiality,
SEBI should ensure, have no place in the securities market of this
country and market security is our motto.

ORDER
38. The price of the scrip which is otherwise illiquid and not frequently traded has shot
up by as much as 414% without there being any change in the economic
fundamentals of the company. The unusual price rise was due to making grand
forward looking public announcements like tie ups, bagging of orders, venturing into
new projects etc. which never materialized. Noticees who were holding 40 lakhs
shares each in the company and together held significant percentage of the paid up
capital which is 11.1%, have completely exited from the company between October
2007 and December 2007 and brought down their shareholding to NIL as on
December 31, 2007 as per the disclosures made on the BSE website. Taking
Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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advantage of the price rise during the relevant period, each of the Noticee had made
unjust profit of approx. ` 24,00,000 each as calculated in the table below. Having
regard to the nature and gravity of the charges established, I am of the considered
view that a penalty which is 3 times the unjust profits made is justified in the facts
and circumstances of the case under Section 15HA of the SEBI Act, 1992.
39. Now, therefore, after taking into consideration the nature and gravity of the charges
established, having regard to section 15J of the SEBI Act and in exercise of the
powers conferred upon me under Section 15-I of the SEBI Act read with Rule 5 of
the Rules, I hereby impose monetary penalties on the Noticees in terms of Section
15HA of the SEBI Act as shown in table below:

Sr.

Name of the

No. of

Approx. profit

Penalty imposed

No.

Noticee

shares

made (in `)

3 times of the profit

made (in `)

offloaded
1.

Jayesh Shah

40,00,000

24,00,000
(40,00,000 x 0.6)

2.

Tushar Shah

40,00,000

24,00,000
(40,00,000 x 0.6)

3.

Parag Shah

40,00,000

24,00,000
(40,00,000 x 0.6)

TOTAL

` 72,00,000
(Rupees Seventy Two
Lakhs Only)
` 72,00,000
(Rupees Seventy Two
Lakhs Only)
` 72,00,000
(Rupees Seventy Two
Lakhs Only)

` 2,16,00,000 (Rupees
Two Crores Sixteen
Lakhs Only)

40. Noticees shall pay the said amount of penalty by way of demand draft in favour of
SEBI - Penalties Remittable to Government of India, payable at Mumbai, within 45
days of receipt of this order. The said demand draft should be forwarded to The

Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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Division Chief, Enforcement Department-EFD-DRA-II, SEBI Bhavan, Plot No. C 4

A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400 051.
41. In terms of rule 6 of the Rules, copies of this order are sent to Noticees and also to
the Securities and Exchange Board of India.

Place: Mumbai
DATE: 30.11.2015

S V KRISHNAMOHAN
ADJUDICATING OFFICER

Adjudication Order in the matter of Platinum Corporation Limited Jayesh Shah, Tushar Shah and Parag Shah
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