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WTM/GM/ISD/11/FEB/2017. Case: In Re: Pine Animation Limited and Ors. Vs. Securities and Exchange Board of India

Judgment Cited in Precedent Map Related
Case NumberWTM/GM/ISD/11/FEB/2017
JudgesG. Mahalingam, Whole Time Member
IssueSecurities And Exchange Board Of India Act, 1992 - Section 12A(a)
Judgement DateThursday February 09, 2017
CourtSecurities and Exchange Board of India

Order:

G. Mahalingam, Whole Time Member

Background

  1. Securities and Exchange Board of India ("SEBI"), vide an ad interim ex-parte order dated May 8, 2015 (hereinafter referred to as "interim order") restrained 178 entities, including (1) Mayank Dhanuka, (2) Umang Dhanuka, (3) Madan Mohan Dhanuka, (4) Neha Dhanuka, (5) Bina Devi Dhanuka, (6) Nikunj Dhanuka and (7) Rajkumari Dhanuka (hereinafter referred to as "Dhanuka Group entities"), from accessing the securities market and further prohibiting them from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever, till further directions.

  2. The interim order was passed in view of the prima facie findings about a scheme/device or artifice involving a facade of preferential issue of equity shares of Pine Animation Limited (hereinafter referred to as "Pine") in order to provide fictitious Long Term Capital Gains ("LTCG") to preferential allottees and promoter related entities (i.e. entities to whom Pine's promoters directly/indirectly transferred their shares in physical form). It was observed that after the release of compulsory lock-in period, the preferential allottees and the promoter related entities were provided exit at an artificially inflated price by the entities related/connected amongst themselves and with Pine, by misusing stock exchange system, for making unlawful gains and to convert ill-gotten gains into genuine one to avail LTCG. With respect to Dhanuka Group entities, it has been alleged in the interim order that they are the promoter related entities. They had indirectly received shares from promoters of Pine and sold them at artificially inflated price in order to make unlawful gains to the tune of ` 7.53 Crore. It has been also alleged that subsequent to allotment of shares, Pine immediately transferred the allotment money to Bihariji Constructions Pvt. Ltd. in which Dhanuka entities are directors. In view of aforesaid, it has been alleged that the acts and omissions of the debarred entities are in contravention of the provisions of regulations 3(a), (b), (c), (d), 4(1), 4(2)(a), (b), (e) and (g) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 and section 12A(a), (b) and (c) of Securities and Exchange Board of India Act, 1992.

  3. The debarred entities were given an opportunity to file their reply and appear for hearing. The Dhanuka Group entities had also filed their...

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