PRESS RELEASE - SEBI

April 06, 1998
PR No. 71/1998

Prosecutions launched by SEBI
Investigation, Enforcement and Surveillance Dept.

During the first quarter of 1998 (January to March, 1998), SEBI has filed criminal complaints in courts launching prosecutions in 10 cases involving 67 persons/entities, under Section 24 of the SEBI Act, 1992, for violations of the SEBI Act and the Regulations framed thereunder, and also under Section 621 of the Companies Act, 1956, under the powers delegated to SEBI under the Companies Act, 1956. Details are given below.

  1. In the following cases prosecutions have been launched in terms of Section 24 of the SEBI Act, 1992, for violation of SEBI Act and its regulations framed to promote orderly and healthy growth of the securities market and to protect investors:

  1. Dr. Avinash Magan and 16 other entities namely ; M/s Yogi Leasing and Finance Ltd., M/s Mahadev Bio-Engineers, M/s Well Wisher Traxin Pvt. Ltd., M/s Ankurita Tradefin, Dharmendra Pandya of M/s D.Pandya Investments, Anil Shroff, of M/s Laxmi Investments, M/s Expert Technologies Pvt. Ltd., M/s Moods Dealers Pvt. Ltd., M/s Om Securities, Manoj Motta of M/s Swastik Enterprises, Tushar Shah of M/sHi Tech Securities, Mr. R.C.Arora, of M/s Aee Bee Stocks, Laxmandas Arora, of M/s Aee Bee Investments, M/s Par Securities, M/s Apco Pharma Ltd., and Mr. Saurabh Vora of Agarwal Enterprises. These entities had colluded with him in creating an artificial market and rigging the price of the shares of M/s NAPA Papers Ltd. from Rs.9.50 to Rs. 70.00 in 17 trading days, in violation of Regulation 4 of the SEBI (Prohibition of the Fraudulent and Unfair Trade Practices relating to the Securities Markets), Regulations, 1995.

  2. Mr. Mihir Ghelani, Mr. Yogendra Ruparel and Mr. Dipak Dalal for rigging the price of the scrip of M/s Kamakshi Housing Ltd., from Rs. 24/- to Rs. 310/- in 50 trading days, for the violation of Regulation 4 of the SEBI Prohibition of the Fraudulent and Unfair Trade Practices relating to the Securities Markets), Regulations, 1995

  3. M/s. Rushabh Securities Ltd. Ahmedabad, and its directors namely, Mr. Hasmukh Ray Bhatt, Mr. D.B.Gandhi and Mr. P.B.Mehta. They had made a public offer in terms of the laws to acquire the shares of M/s Rosemount Pharma Ltd., Ahmedabad. However, on receipt of the shares from the investors, they failed to make payment for the same to all the investors, within the time specified in Regulation 22(1) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1994 and Regulation 22(12) of the said regulations of 1997. 

  4. Prosecution has been launched for violation of the Companies Act, 1956, for misstatements in the prospectus leading to fraudulent inducement of investors to buy or deal in the shares of the company, in violation of Sections 63 and 68 of the Companies Act, 1956 against M/s Shree Dewan Steels (I) Ltd., Ludhiana, and six of its directors viz., Mr. Naresh Chatly, Mr. W.R.Chatly, Mr. Dipak Ralan, Mr. Umesh Munjal, Ms. Pushpa Devi and Ms. Samita Chatly. 

  1. Prosecution has been launched in the cases of the companies mentioned below and their directors for not redressing the grievances of their investors. In these cases inspite of large number of investors� complaints, the grievances were not redressed by these companies :

  2. M/s. Chandigarh Packaging Products Ltd., Chandigarh, and its directors namely ; Shri Ripjit Singh Brar, Mr. M.S.Jagannathan Ms. Harpreet Sandhu, Ms. Gurpreet Kaur Dhillon, Dr. Harmal Singh and Mr. Sukhdev Singh Dhillon for the non-payment of interest in terms of Section 73 of the Companies Act, 1956, for delay in refund of application money collected from investors.

  3. M/s. Radhika Spinning Mills Ltd., New Delhi, and its directors namely; Mr. Dinesh Kumar Agarwal and Lt. Gen. R.V. Kulkarni for the delay in despatch of shares lodged for transfer, in terms of Section 113 of the Companies Act, 1956.

  4. M/s. Xedd Telecom Ltd., Secunderabad, and its directors namely ; Mr. P.K. Jain, Mr. R.K. Narender, Mr. K.S.V. Raaman and Mr. S. Srinivasan for delay in refund of application money, delay in despatch of shares lodged for transfer in terms of Sections 73 and 113 of the Companies Act, 1956.

  5. M/s. Richimen Silks Ltd., Hyderabad, and its directors namely; Mr. G. Vittal, Mr. K. Thipperswamy, Smt. G.Vijaya Laxmi, Shri. R.R.Kumar and Shri. B.N.Jaisimha, for delay in refund of application money, delay in despatch of shares lodged for transfer in terms of Sections 73 and 113 of the Companies Act, 1956.

  6. M/s. Mahadev (Agro) Industries Ltd., New Delhi, and its directors viz., Mr. A.K.Sharma, Mr. O.P.Tushir, Mr. R.S.Hooda, Mr. V.Shankar, Mr. Dipesh P.Seth and Mr. H.C. Chugh for delay in refund of application money, delay in despatch of shares lodged for transfer in terms of Sections 73 and 113 of the Companies Act, 1956. The complaint was filed at the Metropolitan Magistrate�s Court at New Delhi.

  7. M/s. Mithila Steels Ltd., Dhar, (M.P.) and its directors namely Mr. K.R.Maithil, Mr. N.K.Maithil, Mr. S.S.Sokhi, Mr. C.S.Shetty, Mr. Swadesh Bharadwaja and Mr. P.C. Soni for delay in despatch of shares lodged for transfer in terms of Section 113 of the Companies Act, 1956.

In addition to the above, SEBI has moved applications before the High Court of Andhra Pradesh at Hyderabad for permission to launch prosecution against M/s OMC Computers Ltd., Secunderabad, and M/s K.P.Gelatines and Chemicals Ltd., Medak (A.P.) for the violation of Sections 73, 113 and 207 of the Companies Act, 1956, as these companies are under liquidation.