Case: 1. SEBI, 2. Ishita Investments and its Propreitor, Mr. Ashish Dhirawani Vs 1. In Re: Hitech Drilling Services India Limited. Securities and Exchange Board of India
| Judges | K.M. Abraham, Member |
| Issue | Company Laws |
| Judgement Date | April 29, 2009 |
| Court | Securities and Exchange Board of India |
Order:
K.M. Abraham, Member
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Securities and Exchange Board of India (hereinafter referred to as SEBI) conducted an investigation into the affairs relating to the acquisition of Hitech Drilling Services India Limited (hereinafter referred to as the company) by Aban Lloyd Chiles Offshore Limited (hereinafter referred to as Aban) and the trading which took place in the shares of the company during March 2001. The shares of the company are listed on the Bombay Stock Exchange Limited (hereinafter referred to as BSE) and the Delhi Stock Exchange Limited (hereinafter referred to as DSE). The shares of the company are also permitted to be traded at National Stock Exchange of India Limited. The investigation conducted by SEBI observed that the shares of the company were being traded in the range of Rs. 32/- to Rs. 40/- between March 1, 2001 and March 13, 2001. However, from March 14, 2001, the share price of the company touched the upper circuit limit till March 16, 2001. The price of the shares went up from Rs. 35.75/- on March 14, 2001 to Rs. 53.05/- on March 16, 2001. It was observed that Ishita Investments, proprietor of which was Mr. Ashish Dhirawani, placed orders for nearly 2,70,000 shares of the company on March 14, March 15 and March 16, 2001 on behalf of Mr. Paresh Thakkar, Mr. Bharat Palan and M/s. Vinayak Investments. The investigation of SEBI observed that the said orders were placed through the stock broker viz. M/s S A Deshpande (Member, BSE). Further, it was observed that Ishita Investments was not a registered sub broker during the relevant period. In view of the aforesaid trading pattern, it was alleged that Ishita Investments and its proprietor Mr. Ashish Dhirawani prima facie violated Regulation 4(a) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 (hereinafter referred to as PFUTP Regulations). Accordingly, a notice dated February 3, 2006 was issued to Ishita Investments and Mr. Ashish Dhirawani asking them to show cause as to why action should not be taken against them.
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Mr. Ashish Dhirawani, vide letter dated February 12, 2006 inter alia stated that he had not done anything personally in placing the order and that the entire benefit had gone to Mr. Paresh Thakkar and the others. According to him, he had not committed any violation of either the repealed Regulation of 1995 i.e PFUTP Regulations or the new Regulation of 2003. Mr. Ashish Dhirawani contended that SEBI had not provided him with the documents which were relied upon by SEBI while issuing the show cause notice. He further stated, "I further most respectfully submit that I never dealt in past in such transactions nor I have intentions to do so, on the contrary it is Paresh Thakkar and others who had used me and taken advantage of my goodness and cooperation."
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Subsequently, Ishita Investments and Mr. Ashish Dhirawani availed an opportunity of hearing which was granted by my predecessor on May 29, 2007. Thereafter, written submissions was filed by Mr. Ashish Dhirawani, vide letter dated June 12, 2007 (the date mentioned in the letter was June 12, 2006). He inter alia stated that out of the 9 days in which Ishita Investments traded in the shares of the company, irregularities were pointed out only in respect of its trades executed, through the trading terminal of M/s. S. A. Deshpande, on behalf of the clients viz. Mr. Paresh Thakkar, Mr. Bharat Palan and M/s. Vinayak Investments on March 14, 15 & 16, 2001. He further stated that Ishita Investments acted as the sub broker to M/s. S. A. Deshpande while placing the impugned orders in the shares of the company on behalf of the...
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