ORDER
G.N. Bajpai, Chairman
1. BACKGROUND
1.1 Biyani Securities Pvt. Ltd. and Shri Harish Biyani are former members of Calcutta Stock Exchange (“CSE”).
1.2 DSQ Industries Ltd. was formerly known as Lexus Exports Ltd. DSQ Industries now known as Jardine Overseas Ltd. is a group company of Shri Dinesh Dalmia- main promoter of DSQ Software. Its shares are listed on the Calcutta Stock Exchange. DSQ Industries has its registered office address at 11/1A, Chowringhee Terrace, Calcutta – 700 020 and corporate office address is at 407-408, G.R. Complex, Anna Salai Nandanam, Chennai – 600 035.
1.3 SEBI conducted investigation into the trading in the shares of DSQ Industries Ltd. and the following was observed:
The total paid-up share capital of DSQ Industries Ltd. was Rs. 20,04,29,160 consisting of 2,00,42,916 shares of Rs. 10/- each.
As per the distribution schedule furnished by the company to SEBI, its broad shareholding pattern as on 28/09/2001 was as under:
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Particulars No. of Shares % of total no. of shares
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Foreign Holdings - Non Resident Companies 6,68,516 3.33% Govt / Govt Sponsored FI's - Mutual Funds 2,76,000 1.37% Directors and Relatives 1,18,800 0.59% Promoter Companies 2,22,300 1.11% Other bodies corporate 1,06,36,700 53.07% Others 8120600 40.51% Total 2,00,42,916 100.00%
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It was also observed that as per the previous distribution schedule dated 28/09/2000, its shareholding pattern was as under:
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Particulars No. of Shares % of total no. of shares
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Foreign Holdings - Non Resident Companies 95,96,216 47.878% Govt / Govt Sponsored FI's - Nationalized Banks 53,09,300 26.490% Directors and Relatives 1,18,800 0.593% Promoter Companies 27,66,700 13.804% Other bodies corporate 16,29,400 8.130% General Public 6,22,500 3.105% Total 2,00,42,916 100.00%
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It was noticed that there were discrepancies in the distribution schedule filed by the company with the CSE and with SEBI. Examination of the distribution schedule dated 28/9/00 filed by the company with the CSE revealed the Non resident shareholding to be 92,63,916 shares (46.17%), Nationalized Banks shareholding to be 3939300 shares (19.65%), other body corporates to be 62,47,000 shares (31.17%) and shareholding of promoter companies was not stated.
1.4 In this backdrop, transactions of Biyani Securities Pvt. Ltd. and Shri Harish Biyani were examined. It was observed that these entities transacted heavily in the scrip of DSQ Industries Ltd. From the details of trade log and order log of the exchange from November 1, 2000 till March 31, 2001, it was observed that shares were not frequently traded. There were no major volumes observed till December 2000 and from December 6 to December 18 and December 20 & 21, significant volumes were observed. Further, analysis of price movement revealed that the price of the shares increased sharply from levels of Rs. 350- on January 1, 2001 to levels of Rs. 450/- on January 8, 2001. Significant trading was also observed on 4 days in the period i.e. January 1, 2, 4 and 8, 2001. Further, there was a spurt in the price in November 2000 also and the price started moving up from December 19, 2000 onwards. It was further observed that this price increase was on very low volumes of 100-500 shares. The trade analysis found are as under:
a) During November 2000 Titan Stock Broking Limited, Shri Harish Biyani, Amritlal Gopalji Thacker, Niraj Balasaria artificially increased the price of DSQ Industries through their trades. Titan Stock Broking and Amritlal Thackerji stated that transactions were done for various DSQ Industries Ltd. Promoter group entities like Cooltex, Hulda etc.
b) On December 20, 2000, the price of the scrip increased from Rs.298 to Rs.320 when Biyani Securities (P) Ltd traded in the scrip and in the next trade when SMIFS Securities traded, the price increased to Rs. 339 when a cross deal between Hulda Properties and SMIFS capital Markets was entered.
1.5 From the order log and trade log for the period 01-01-01 to 8/1/01, it was revealed that a large number of trades were carried on only between 2 brokers – namely Shri Harish Biyani and Amritlal Gopalji Thacker. Further, it was observed that Biyani Securities Pvt. Ltd. an associate of Shri Harish Biyani entered into cross deals also. On analysis, it was revealed that orders were placed at almost the same time by the buying and selling brokers. There was creation of artificial market and artificial volumes by synchronization of logging in of orders. Both the buying as well as selling orders were put by the buying and selling brokers for same quantity and for same price at the same time. The orders were also placed at prices higher than the last traded price. The price was thus artificially increased.
2. SHOW CAUSE NOTICE AND REPLY
2.1 In view of the above, a Show Cause Notice dated 19.02.04 was issued to Biyani Securities Pvt. Ltd. and Shri Harish Biyani asking them as to why directions under section 11 and 11B of the SEBI Act, 1992 read with regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 debarring them from dealing in securities for certain period or any other appropriate directions be not issued for the allegations stated therein.
2.2 Shri Harish Biyani replied to the said show cause vide his letter dated 26.02.04 as under:
1. That his Proprietary concern and Biyani Securities Pvt. Ltd., being a company within the meaning of Companies Act, 1956, are two different entities and therefore they cannot be branded as a ‘group entity’.
2. That he was continuously sick.
3. That his office situated at 4, N.S. Road, Calcutta – 700001 was sealed by the police authorities since September, 2002.
4. That all the documents related to the trades of the period covered under the notice were either lying at the aforesaid office or were seized by Calcutta Police.
5. That none of the transactions as stated in the show cause notice was entered by his firm with the intent of any price manipulation, synchronised dealings, circular trading, matched dealing, structured trading, artificial market making/creating etc.
6. That his firm had not done any transaction with any of its client which was known to him as “DSQ Group entities”.
7. That his firm had not colluded with any promoters as alleged.
8. That all the transactions were done within the rules and regulations.
9. That his firm consistently has been complying with and cooperating with all the enquiries and investigations carried from time to time by SEBI or other agencies in sequel to the market debacle in the year 2001.
10. That there had never been any malafide intent in any of the deals made by his firm.
11. That the trades in question had been carried at the instance of respective clients and he had not been privy to any information regarding what transpired behind the scenes in the stated matter.
3. PERSONAL HEARING AND SUBMISSIONS
3.1 A personal hearing before the Chairman was granted to Biyani Securities Pvt. Ltd. and Shri Harish Biyani on 11.08.04 vide SEBI’s letter dated 19.07.04. Shri Harish Biyani vide letter dated 06.08.04 expressed his inability to attend the personal hearing due to ill health.
3.2 One more opportunity of being heard was given on 24.09.04 vide letter dated 06.09.04. Shri Harish Biyani vide his letter dated 11.09.04 again expressed his inability to attend the personal hearing due to ill health. Although fair and reasonable opportunity was granted, the parties failed to avail the same and hence the matter is disposed off based on material on record.
4. CONSIDERATION OF ISSUES
4.1 I have carefully examined the charges and the reply thereto.
4.2 It is observed from the order log and trade log analysis of 01.01.01, 02.01.01, 04.01.01 and 08.01.01 that there was unusual movement in the prices and volumes traded in the scrip of DSQ Industries Ltd due to which the price had shot up from Rs. 342 to Rs. 451/- as can be seen from the following :
Log analysis of 01/01/01
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Date Time trd id order id Rate time Diff (sec) b/s mem Mem qty ord.
rate
(Rs.)
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01-01-01 10:58:54 876 61013758 342 10:58:52 **** Sell 35 467 100 342 01-01-01 10:58:54 876 210590148 342 10:58:48 0:00:04 Buy 467 35 100 342 01-01-01 10:59:11 877 61013761 344.8 10:59:10 **** Buy 35 467 100 344.8 01-01-01 10:59:11 877 210590153 344.8 10:59:02 0:00:08 Sell 467 35 100 344.8 01-01-01 11:01:51 878 61013795 347 11:01:51 **** Sell 35 467 100 347 01-01-01 11:01:51 878 210590212 347 11:01:46 0:00:05 Buy 467 35 100 347 01-01-01 11:02:13 879 61013798 349.5 11:02:11 **** Buy 35 467 100 349.5 01-01-01 11:02:13 879 210590216 349.5 11:02:03 0:00:08 Sell 467 35 100 349.5 01-01-01 11:02:28 880 61013799 350.6 11:02:27 **** Sell 35 467 100 350.6 01-01-01 11:02:28 880 210590222 350.6 11:02:18 0:00:09 Buy 467 35 100 350.6 01-01-01 11:02:45 881 61013802 352.8 11:02:44 **** Buy 35 467 100 352.8 01-01-01 11:02:45 881 210590226 352.8 11:02:35 0:00:09 Sell 467 35 100 352.8 01-01-01 11:03:07 882 61013806 353.9 11:03:06 **** Sell 35 467 100 353.9 01-01-01 11:03:07 882 210590229 353.9 11:02:58 0:00:08 Buy 467 35 100 353.9 01-01-01 11:03:22 883 61013808 356 11:03:22 **** Buy 35 467 100 356 01-01-01 11:03:22 883 210590232 356 11:03:13 0:00:09 Sell 467 35 100 356 01-01-01 11:03:38 884 61013811 357 11:03:36 **** Buy 35 467 100 357 01-01-01 11:03:38 884 210590235 357 11:03:29 0:00:07 Sell 467 35 100 357 01-01-01 11:03:55 885 61013813 359.8 11:03:54 **** Sell 35 467 100 359.8 01-01-01 11:03:55 885 210590240 359.8 11:03:44 0:00:10 Buy 467 35 100 359.8 01-01-01 12:09:53 886 61014459 360 12:09:51 **** Sell 35 805 100 360 01-01-01 12:09:53 886 150958941 360 12:09:52 0:00:01 Buy 805 35 100 360 01-01-01 12:10:09 887 61014461 360.8 12:10:08 **** Buy 35 805 100 360.8 01-01-01 12:10:09 887 150958945 360.8 12.10.03 0.00.05 Sell 805 35 100 360.8 01-01-01 12:10:42 888 61014464 361.2 12:10:41 **** Buy 35 805 100 361.2 01-01-01 12:10:42 888 150958959 361.2 12:10:34 0:00:07 Sell 805 35 100 361.2 01-01-01 12:10:59 889 61014466 361.9 12:10:58 **** Sell 35 805 100 361.9 01-01-01 12:10:59 889 150958966 361.9 12:10:52 0:00:06 Buy 805 35 100 361.9 01-01-01 12:11:29 890 61014469 361.6 12:11:17 **** Sell 35 805 100 361.6 01-01-01 12:11:29 890 150958978 361.6 12:11:29 0:00:12 Buy 805 35 100 361.6 01-01-01 12:11:51 891 61014474 362.4 12:11:50 **** Buy 35 805 100 362.4 01-01-01 12:11:51 891 150958980 362.4 12:11:43 0:00:07 Sell 805 35 100 362.4 01-01-01 12:12:12 892 61014479 362.1 12:12:12 **** Sell 35 805 100 362.1 01-01-01 12:12:12 892 150958987 362.1 12:12:10 0:00:02 Buy 805 35 100 362.1 01-01-01 12:12:30 893 61014483 363.3 12:12:29 **** Buy 35 805 100 363.3 01-01-01 12:12:30 893 150958990 363.3 12:12:25 0:00:04 Sell 805 35 100 363.3 01-01-01 12:32:11 894 61014587 363.1 12:32:10 **** Sell 35 467 100 363.1 01-01-01 12:32:11 894 210591294 363.1 12:32:04 0:00:06 Buy 467 35 100 363.1 01-01-01 12:32:29 895 61014588 363.8 12:32:28 **** Buy 35 467 100 363.8 01-01-01 12:32:29 895 210591295 363.8 12:32:21 0:00:07 Sell 467 35 100 363.8
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35 : HARISH CHANDRA BIYANI 467 : NIRAJ KUMAR BALASARIA 805 :AMRATLAL GOPALJI THACKER
Log analysis of 2/1/01
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Date time trd id order id Rate time diff b/s mem Mem qty ord.
rate
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02-02-01 14:52:28 896 210595213 366 14:52:26 **** sell 35 805 100 366 02-02-01 14:52:28 896 180721378 366 14:52:17 0:00:09 buy 805 35 100 366 02-02-01 14:52:49 897 210595221 368.7 14:52:48 **** buy 35 805 100 368.7 02-02-01 14:52:49 897 90957919 368.7 14:52:39 0:00:09 sell 805 35 100 368.7 02-02-01 14:53:17 898 210595226 370.8 14:53:15 **** buy 35 805 100 370.8 02-02-01 14:53:17 898 180721395 370.8 14:53:06 0:00:09 sell 805 35 100 370.8 02-02-01 14:53:39 899 210595231 373 14:53:38 **** buy 35 805 100 373 02-02-01 14:53:39 899 180721404 373 14:53:30 0:00:08 sell 805 35 100 373 02-02-01 14:54:08 900 210595234 375.6 14:54:07 **** sell 35 805 100 375.6 02-02-01 14:54:08 900 180721412 375.6 14:54:00 0:00:07 buy 805 35 100 375.6 02-02-01 14:54:35 901 210595243 377.8 14:54:34 **** sell 35 805 100 377.8 02-02-01 14:54:35 901 180721418 377.8 14:54:16 0:00:18 buy 805 35 100 377.8 02-02-01 14:55:02 902 210595253 379.6 14:55:02 **** sell 35 805 100 379.6 02-02-01 14:55:02 902 180721426 379.6 14:54:51 0:00:11 buy 805 35 100 379.6 02-02-01 14:55:36 903 210595258 381.1 14:55:33 **** sell 35 805 100 381.1 02-02-01 14:55:36 903 180721434 381.1 14:55:24 0:00:09 buy 805 35 100 381.1 02-02-01 14:55:54 904 210595262 382.9 14:55:53 **** buy 35 805 100 382.9 02-02-01 14:55:54 904 180721438 382.9 14:55:43 0:00:10 sell 805 35 100 382.9 02-02-01 14:56:07 905 210595265 384.6 14:56:06 **** buy 35 805 100 384.6 02-02-01 14:56:07 905 180721440 384.6 14:55:57 0:00:09 sell 805 35 100 384.6 02-02-01 14:56:20 906 210595267 386.7 14:56:18 **** buy 35 805 100 386.7 02-02-01 14:56:20 906 180721445 386.7 14:56:11 0:00:07 sell 805 35 100 386.7 02-02-01 14:56:29 907 210595271 388.5 14:56:28 **** buy 35 805 100 388.5 02-02-01 14:56:29 907 180721449 388.5 14:56:22 0:00:06 sell 805 35 100 388.5 02-02-01 14:56:44 908 210595275 389.8 14:56:42 **** buy 35 805 100 389.8 02-02-01 14:56:44 908 180721453 389.8 14:56:33 0:00:09 sell 805 35 100 389.8 02-02-01 14:57:27 909 210595289 387 14:57:26 **** sell 35 805 200 387 02-02-01 14:57:27 909 180721464 387 14:57:19 0:00:07 buy 805 35 200 387 02-02-01 14:57:50 910 210595295 390.2 14:57:50 **** sell 35 805 100 390.2 02-02-01 14:57:50 910 90957990 390.2 14:57:42 0:00:08 buy 805 35 100 390.2 02-02-01 14:58:20 911 210595304 389.1 14:58:18 **** sell 35 805 100 389.1 02-02-01 14:58:20 911 180721480 389.1 14:58:07 0:00:11 buy 805 35 100 389.1 02-02-01 14:58:34 912 210595309 390.1 14:58:32 **** sell 35 805 100 390.1 02-02-01 14:58:34 912 180721486 390.1 14:58:25 0:00:07 buy 805 35 100 390.1 02-02-01 14:58:51 913 210595315 390.8 14:58:49 **** buy 35 805 100 390.8 02-02-01 14:58:51 913 180721490 390.8 14:58:40 0:00:09 sell 805 35 100 390.8 02-02-01 14:59:18 914 31147583 390.6 14:59:17 **** buy 35 805 100 390.6 02-02-01 14:59:18 914 90958020 390.6 14:59:09 0:00:08 sell 805 35 100 390.6
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Date Trade Order Rate Order B/s Sell Mem Buy mem Client Qty Order
time no time rate
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2/1/1 14:52:28 210595213 366 14:52:26 Sell Harish Amritlal Self 100 366.00
Chandra Gopalji
Biyani Thacker
2/1/1 14:52:28 180721378 366 14:52:17 Buy Amritlal Harish Self 100 366.00
Gopalji Chandra
Thacker Biyani
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From the above , it is observed that on 02-02-01, A G Thacker placed a buy order no. 180721378 at 14.52.17 hrs for 100 shares @ Rs. 366 when the last traded price was Rs. 363.8. Thereafter, within a span of 9 seconds i.e. at 14.52.26 hrs, Shri Harish Biyani placed a sell order no. 210595213 for 100 shares at the same price i.e. Rs. 366. These orders were matched at 14.52.28 hrs for 100 shares
Log analysis of 4/1/01
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Date Time trd id order id rate Time diff b/s mem Mem qty ord. rate
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04-01-01 13:10:23 915 61026497 392.5 13:10:22 **** sell 35 805 100 395 04-01-01 13:10:23 915 180728792 395 13:10:20 0:00:02 buy 805 35 100 395 04-01-01 13:10:31 916 61026500 392.5 13:10:30 **** sell 35 805 100 392.5 04-01-01 13:10:31 916 180728790 392.5 13:10:12 0:00:18 buy 805 35 100 392.5 04-01-01 13:10:45 917 61026501 397.6 13:10:44 **** sell 35 805 100 397.6 04-01-01 13:10:45 917 180728795 397.6 13:10:35 0:00:09 buy 805 35 100 397.6 04-01-01 13:10:57 918 61026503 399.9 13:10:56 **** sell 35 805 100 399.9 04-01-01 13:10:57 918 180728796 399.9 13:10:49 0:00:07 buy 805 35 100 399.9 04-01-01 13:11:18 919 61026505 402.4 13:11:17 **** buy 35 805 100 402.4 04-01-01 13:11:18 919 180728798 402.4 13:11:08 0:00:09 sell 805 35 100 402.4 04-01-01 13:11:38 920 61026510 405.3 13:11:36 **** buy 35 805 200 405.3 04-01-01 13:11:38 920 180728802 405.3 13:11:23 0:00:13 sell 805 35 200 405.3 04-01-01 13:15:49 921 61026540 406.4 13:15:47 **** buy 35 805 100 406.4 04-01-01 13:15:49 921 180728835 406.4 13:15:30 0:00:17 sell 805 35 100 406.4 04-01-01 13:16:09 922 61026543 407.5 13:16:08 **** buy 35 805 100 407.5 04-01-01 13:16:09 922 180728839 407.5 13:15:59 0:00:09 sell 805 35 100 407.5 04-01-01 13:16:21 923 61026544 408.5 13:16:20 **** buy 35 805 100 408.5 04-01-01 13:16:21 923 180728840 408.5 13:16:11 0:00:09 sell 805 35 100 408.5 04-01-01 13:16:33 924 61026545 409.9 13:16:32 **** buy 35 805 100 409.9 04-01-01 13:16:33 924 180728841 409.9 13:16:23 0:00:09 sell 805 35 100 409.9 04-01-01 13:16:43 925 61026547 410.8 13:16:42 **** buy 35 805 100 410.8 04-01-01 13:16:43 925 180728843 410.8 13:16:35 0:00:07 sell 805 35 100 410.8 04-01-01 13:17:00 926 61026549 411.5 13:16:59 **** sell 35 805 100 411.5 04-01-01 13:17:00 926 180728845 411.5 13:16:51 0:00:08 buy 805 35 100 411.5 04-01-01 13:17:13 927 61026551 412.4 13:17:12 **** sell 35 805 100 412.4 04-01-01 13:17:13 927 180728848 412.4 13:17:02 0:00:10 buy 805 35 100 412.4 04-01-01 13:17:38 928 61026556 413.8 13:17:37 **** sell 35 805 100 413.8 04-01-01 13:17:38 928 180728854 413.8 13:17:27 0:00:10 buy 805 35 100 413.8 04-01-01 13:18:03 929 61026558 416.1 13:18:01 **** sell 35 805 100 416.1 04-01-01 13:18:03 929 180728857 416.1 13:17:51 0:00:10 buy 805 35 100 416.1 04-01-01 13:18:33 930 61026563 416.4 13:18:32 **** buy 35 805 500 416.4 04-01-01 13:18:33 930 180728866 416.4 13:18:22 0:00:10 sell 805 35 500 416.4 04-01-01 13:18:53 931 61026572 417.5 13:18:52 **** sell 35 805 300 417.5 04-01-01 13:18:53 931 180728870 417.5 13:18:43 0:00:09 buy 805 35 300 417.5 04-01-01 13:19:08 932 61026574 418.5 13:19:06 **** sell 35 805 100 418.5 04-01-01 13:19:08 932 180728874 418.5 13:18:56 0:00:10 buy 805 35 100 418.5 04-01-01 13:19:29 933 61026580 419.6 13:19:28 **** sell 35 805 100 419.6 04-01-01 13:19:29 933 180728880 419.6 13:19:20 0:00:08 buy 805 35 100 419.6 04-01-01 13:20:01 934 61026583 417.5 13:19:59 **** buy 35 805 200 417.5 04-01-01 13:20:01 934 180728885 417.5 13:19:53 0:00:06 sell 805 35 200 417.5 04-01-01 13:20:21 935 61026587 419.5 13:20:20 **** sell 35 805 100 419.5 04-01-01 13:20:21 935 180728892 419.5 13:20:11 0:00:09 buy 805 35 100 419.5 04-01-01 13:20:32 936 61026588 419.8 13:20:31 **** sell 35 805 100 419.8 04-01-01 13:20:32 936 180728900 419.8 13:20:23 0:00:08 buy 805 35 100 419.8
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Log analysis of 8/1/01
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Date Time trd order Rate time Diff b/s mem Mem qty Ord.
id id rate
——————————————————————————————–
08-01-01 12:43:48 937 61030594 424.4 12:43:47 **** sell 35 805 100 424.4 08-01-01 12:43:48 937 180732375 424.4 12:43:37 0:00:10 buy 805 35 100 424.4 08-01-01 12:44:03 938 61030596 427.8 12:44:02 **** buy 35 805 100 427.8 08-01-01 12:44:03 938 180732379 427.8 12:43:54 0:00:08 sell 805 35 100 427.8 08-01-01 12:44:25 939 61030598 430.4 12:44:24 **** sell 35 805 100 430.4 08-01-01 12:44:25 939 180732380 430.4 12:44:12 0:00:12 buy 805 35 100 430.4 08-01-01 12:44:43 940 61030599 432.8 12:44:42 **** buy 35 805 100 432.8 08-01-01 12:44:43 940 180732383 432.8 12:44:33 0:00:09 sell 805 35 100 432.8 08-01-01 12:44:59 941 61030601 435.6 12:44:58 **** sell 35 805 100 435.6 08-01-01 12:44:59 941 180732384 435.6 12:44:49 0:00:09 buy 805 35 100 435.6 08-01-01 12:45:12 942 61030602 438.2 12:45:11 **** buy 35 805 100 438.2 08-01-01 12:45:12 942 180732386 438.2 12:45:00 0:00:11 sell 805 35 100 438.2 08-01-01 12:45:24 943 61030603 439.9 12:45:22 **** buy 35 805 100 439.9 08-01-01 12:45:24 943 180732387 439.9 12:45:14 0:00:08 sell 805 35 100 439.9 08-01-01 12:45:45 944 61030608 443.5 12:45:44 **** buy 35 805 100 443.5 08-01-01 12:45:45 944 180732390 443.5 12:45:37 0:00:07 sell 805 35 100 443.5 08-01-01 12:46:04 945 31158351 445.4 12:46:02 **** sell 35 805 100 445.4 08-01-01 12:46:04 945 180732393 445.4 12:45:54 0:00:08 buy 805 35 100 445.4 08-01-01 12:46:15 946 61030614 447.7 12:46:15 **** sell 35 805 100 447.7 08-01-01 12:46:15 946 180732394 447.7 12:46:06 0:00:09 buy 805 35 100 447.7 08-01-01 12:46:43 947 61030620 448.2 12:46:41 **** sell 35 805 100 448.2 08-01-01 12:46:43 947 180732397 448.2 12:46:29 0:00:12 buy 805 35 100 448.2 08-01-01 12:47:05 948 61030627 449.5 12:47:04 **** buy 35 805 200 449.5 08-01-01 12:47:05 948 180732402 449.5 12:46:51 0:00:13 sell 805 35 200 449.5 08-01-01 12:47:37 949 61030634 450.2 12:47:37 **** buy 35 805 100 450.2 08-01-01 12:47:37 949 180732407 450.2 12:47:30 0:00:07 sell 805 35 100 450.2 08-01-01 12:48:19 950 61030638 446.7 12:48:17 **** buy 35 805 100 446.7 08-01-01 12:48:19 950 180732408 446.7 12:48:17 0:00:00 sell 805 35 100 446.7 08-01-01 12:48:36 951 61030643 447.6 12:48:35 **** buy 35 805 100 447.6 08-01-01 12:48:36 951 180732411 447.6 12:48:29 0:00:06 sell 805 35 100 447.6 08-01-01 12:48:54 952 61030646 450.6 12:48:53 **** sell 35 805 100 450.6 08-01-01 12:48:54 952 180732412 450.6 12:48:44 0:00:09 buy 805 35 100 450.6 08-01-01 12:49:14 953 61030649 450.9 12:49:12 **** sell 35 805 100 450.9 08-01-01 12:49:14 953 180732415 450.9 12:49:05 0:00:07 buy 805 35 100 450.9 08-01-01 12:53:45 954 61030688 450 12:53:23 **** buy 35 35 10000 450 08-01-01 12:53:45 954 61030691 450 12:53:44 0:00:21 sell 35 35 10000 450 08-01-01 12:53:55 955 61030690 450 12:53:43 **** buy 35 35 10000 450 08-01-01 12:53:55 955 61030695 450 12:53:54 0:00:11 sell 35 35 10000 450 08-01-01 12:54:02 956 61030692 450 12:53:50 **** buy 35 35 10000 450 08-01-01 12:54:02 956 61030699 450 12:54:02 0:00:12 sell 35 35 10000 450 08-01-01 12:54:13 957 61030697 450 12:53:56 **** buy 35 35 10000 450 08-01-01 12:54:13 957 61030703 450 12:54:12 0:00:16 sell 35 35 10000 450 08-01-01 12:54:22 958 61030701 450 12:54:02 **** buy 35 35 10000 450 08-01-01 12:54:22 958 61030706 450 12:54:20 0:00:18 sell 35 35 10000 450 08-01-01 12:54:29 959 61030702 450 12:54:09 **** buy 35 35 10000 450 08-01-01 12:54:29 959 61030708 450 12:54:28 0:00:19 sell 35 35 10000 450 08-01-01 12:54:36 960 61030704 450 12:54:16 **** buy 35 35 10000 450 08-01-01 12:54:36 960 61030710 450 12:54:35 0:00:19 sell 35 35 10000 450 08-01-01 12:54:42 961 31158397 450 12:54:21 **** buy 35 35 10000 450 08-01-01 12:54:42 961 61030713 450 12:54:41 0:00:20 sell 35 35 10000 450 08-01-01 12:54:49 962 61030707 450 12:54:27 **** buy 35 35 10000 450 08-01-01 12:54:49 962 61030716 450 12:54:48 0:00:21 sell 35 35 10000 450 08-01-01 12:55:00 963 61030709 450 12:54:34 **** buy 35 35 10000 450 08-01-01 12:55:00 963 61030718 450 12:54:59 0:00:25 sell 35 35 10000 450 08-01-01 12:55:06 964 61030712 450 12:54:39 **** buy 35 35 10000 450 08-01-01 12:55:06 964 61030720 450 12:55:06 0:00:27 sell 35 35 10000 450 08-01-01 12:55:13 965 61030715 450 12:54:45 **** buy 35 35 10000 450 08-01-01 12:55:13 965 61030722 450 12:55:12 0:00:27 sell 35 35 10000 450 08-01-01 12:55:19 966 61030717 450 12:54:54 **** buy 35 35 10000 450 08-01-01 12:55:19 966 61030725 450 12:55:18 0:00:24 sell 35 35 10000 450 08-01-01 12:55:24 967 61030719 450 12:55:05 **** buy 35 35 10000 450 08-01-01 12:55:24 967 61030727 450 12:55:23 0:00:18 sell 35 35 10000 450 08-01-01 12:55:32 968 61030721 450 12:55:11 **** buy 35 35 10000 450 08-01-01 12:55:32 968 61030728 450 12:55:31 0:00:20 sell 35 35 10000 450 08-01-01 12:55:38 969 61030724 450 12:55:16 **** buy 35 35 10000 450 08-01-01 12:55:38 969 61030730 450 12:55:37 0:00:21 sell 35 35 10000 450 08-01-01 12:55:46 970 61030726 450 12:55:21 **** buy 35 35 10000 450 08-01-01 12:55:46 970 61030733 450 12:55:44 0:00:23 sell 35 35 10000 450 08-01-01 12:55:52 971 61030729 450 12:55:35 **** buy 35 35 10000 450 08-01-01 12:55:52 971 61030735 450 12:55:51 0:00:16 sell 35 35 10000 450 08-01-01 12:55:58 972 61030732 450 12:55:43 **** buy 35 35 10000 450 08-01-01 12:55:58 972 61030736 450 12:55:58 0:00:15 sell 35 35 10000 450 08-01-01 12:56:04 973 61030734 450 12:55:49 **** buy 35 35 10000 450 08-01-01 12:56:04 973 61030737 450 12:56:03 0:00:14 sell 35 35 10000 450 08-01-01 12:56:46 974 61030742 450 12:56:38 **** buy 35 35 10000 450 08-01-01 12:56:46 974 61030744 450 12:56:45 0:00:07 sell 35 35 10000 450 08-01-01 12:56:50 975 61030743 450 12:56:44 **** buy 35 35 10000 450 08-01-01 12:56:50 975 61030747 450 12:56:50 0:00:06 sell 35 35 10000 450 08-01-01 13:09:47 976 31158550 450.9 13:09:46 **** sell 35 805 100 450.9 08-01-01 13:09:47 976 210606701 450.9 13:09:38 0:00:08 buy 805 35 100 450.9 08-01-01 13:10:14 977 61030888 451.2 13:10:14 **** sell 35 805 100 451.2 08-01-01 13:10:14 977 180732535 451 13:09:46 0:00:28 buy 805 35 100 451.2
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From the above, it is observed that there was creation of artificial market and artificial volumes as a result of synchronization in logging in / matching of buy and sell orders amongst few brokers. Orders were purchased within a gap of few seconds by Shri Harish Biyani for the same quantity and same rate to ensure that buyers get the desired sellers and vice versa. Thus, there was circular trading also. There was price manipulation as the orders were placed at successively higher prices than the last traded prices.
4.3 It is noted that after the share prices rose dramatically from Rs.342 to Rs.450 against low volumes of trades as seen from the above trades, there were several cross deals by Shir Harish Biyani wherein both the buyer and seller were his clients for very large volumes to the tune of 10000 shares per transaction as shown under :
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Date Time Ord id Rate Time Time diff b/s mem mem Clt cod qty ord. rate
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8/1/1 12:53:45 61030688 450 12:53:23 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:53:45 61030691 450 12:53:44 0:00:21 sell 35 35 greenfield 10000 450.00 8/1/1 12:53:55 61030690 450 12:53:43 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:53:55 61030695 450 12:53:54 0:00:11 sell 35 35 greenfield 10000 450.00 8/1/1 12:54:02 61030692 450 12:53:50 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:54:02 61030699 450 12:54:02 0:00:12 sell 35 35 greenfield 10000 450.00 8/1/1 12:54:13 61030697 450 12:53:56 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:54:13 61030703 450 12:54:12 0:00:16 sell 35 35 greenfield 10000 450.00 8/1/1 12:54:22 61030701 450 12:54:02 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:54:22 61030706 450 12:54:20 0:00:18 sell 35 35 greenfield 10000 450.00 8/1/1 12:54:29 61030702 450 12:54:09 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:54:29 61030708 450 12:54:28 0:00:19 sell 35 35 greenfield 10000 450.00 8/1/1 12:54:36 61030704 450 12:54:16 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:54:36 61030710 450 12:54:35 0:00:19 sell 35 35 greenfield 10000 450.00 8/1/1 12:54:42 31158397 450 12:54:21 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:54:42 61030713 450 12:54:41 0:00:20 sell 35 35 greenfield 10000 450.00 8/1/1 12:54:49 61030707 450 12:54:27 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:54:49 61030716 450 12:54:48 0:00:21 sell 35 35 greenfield 10000 450.00 8/1/1 12:55:00 61030709 450 12:54:34 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:55:00 61030718 450 12:54:59 0:00:25 sell 35 35 greenfield 10000 450.00 8/1/1 12:55:06 61030712 450 12:54:39 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:55:06 61030720 450 12:55:06 0:00:27 sell 35 35 greenfield 10000 450.00 8/1/1 12:55:13 61030715 450 12:54:45 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:55:13 61030722 450 12:55:12 0:00:27 sell 35 35 greenfield 10000 450.00 8/1/1 12:55:19 61030717 450 12:54:54 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:55:19 61030725 450 12:55:18 0:00:24 sell 35 35 greenfield 10000 450.00 8/1/1 12:55:24 61030719 450 12:55:05 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:55:24 61030727 450 12:55:23 0:00:18 sell 35 35 greenfield 10000 450.00 8/1/1 12:55:32 61030721 450 12:55:11 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:55:32 61030728 450 12:55:31 0:00:20 sell 35 35 greenfield 10000 450.00 8/1/1 12:55:38 61030724 450 12:55:16 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:55:38 61030730 450 12:55:37 0:00:21 sell 35 35 greenfield 10000 450.00 8/1/1 12:55:46 61030726 450 12:55:21 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:55:46 61030733 450 12:55:44 0:00:23 sell 35 35 greenfield 10000 450.00 8/1/1 12:55:52 61030729 450 12:55:35 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:55:52 61030735 450 12:55:51 0:00:16 sell 35 35 greenfield 10000 450.00 8/1/1 12:55:58 61030732 450 12:55:43 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:55:58 61030736 450 12:55:58 0:00:15 sell 35 35 greenfield 10000 450.00 8/1/1 12:56:04 61030734 450 12:55:49 **** buy 35 35 nainabarter 10000 450.00 8/1/1 12:56:04 61030737 450 12:56:03 0:00:14 sell 35 35 greenfield 10000 450.00 8/1/1 12:56:46 61030742 450 12:56:38 **** buy 35 35 Nainabarter 10000 450.00 8/1/1 12:56:46 61030744 450 12:56:45 0:00:07 sell 35 35 Greenfield 10000 450.00 8/1/1 12:56:50 61030743 450 12:56:44 **** buy 35 35 Nainabarter 10000 450.00 8/1/1 12:56:50 61030747 450 12:56:50 0:00:06 sell 35 35 Greenfield 10000 450.00 8/1/1 13:09:47 31158550 450.9 13:09:46 **** sell 35 805 SELF 100 450.90 8/1/1 13:09:47 210606701 450.9 13:09:38 0:00:08 buy 805 35 SELF 100 450.90 8/1/1 13:10:14 61030888 451.2 13:10:14 **** sell 35 805 SELF 100 451.20 8/1/1 13:10:14 180732535 451 13:09:46 0:00:28 buy 805 35 SELF 100 451.20
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Further, there was synchronization of logging in of orders. These transactions were also in the nature of synchronization of trades / matched orders/ structured trading which ensured matching of orders of seller with a specific buyer. These orders were placed simultaneously or within close proximity of each other. From the client code entered by the broker, it appears that the clients are Greenfield and Naina Barter. These transactions were to the tune of 2,20,000 shares and comprised 99% of the traded volumes on that day.
4.4 Similar transactions of high volumes were also observed on other dates i.e. 13/11/00, 15/11/00, 6/12/00, 12/12/00, 13/12/00, 14/12/00, 18/12/00, 20/12/00 and 21/12/00. Investigation into the order log and trade log on these dates brought out that transactions on these dates were also cross deals of Shri Harish Biyani. These transactions were also in the nature of synchronization of logging in of buy and sell orders with buy and sell order were put within close proximity of each other.
4.5 Therefore, I find that the price was artificially pushed from Rs. 340 levels to Rs. 452 levels within 4 trading days i.e. an increase of 33% on low volumes. Trading was concentrated among 3 brokers namely Shri Harish Biyani, Niraj Kumar Balasaria and Amritlal Gopalji Thacker. There was creation of artificial market and artificial volumes as a result of synchronization of logging in / matching of buy and sell orders. Orders were put within a gap of very few seconds by Biyani Securities Pvt. Ltd. and Shri Harish Biyani for the same quantity and same rate to ensure that buyers get the desired sellers and vice versa.
4.6 The transactions done by Biyani Securities Pvt. Ltd. and Shri Harish Biyani, in the ‘sell n cash’ scheme of SHCIL on 27/2/01 and 1/3/01 and cash on payout scheme on 2/3/01 in the shares of DSQ Industries is strong pointer to the promoter broker nexus between DSQ Group & Biyani Securities Pvt. Ltd. and Shri Harish Biyani. Promoters colluded with Biyani Securities Pvt. Ltd. and Shri Harish Biyani in obtaining finance on account of Biyani Securities Pvt. Ltd. and Shri Harish Biyani facing payment crisis on the CSE. Funds to the tune of approximately Rs. 34 crore and Rs. 8 crore were availed on 27/2/01 and 1/3/01 in the ‘sell n cash’ scheme.
These funds were made available on the same date as the transaction date. Thereafter, funds to the extent of around Rs. 24 crore was availed for cash on payout transactions done on 2/3/01. This amount was made available on 5/3/01 by discounting a post dated cheque given by SHC IL.
4.7 As stated above, the Promoters colluded with Biyani Securities Pvt. Ltd. and Shri Harish Biyani. Promoter associated entities – Hulda, Square D Textiles) credited shares of DSQ Industries to the demat account of Biyani Securities Pvt. Ltd. and Shri Harish Biyani then used these shares in addition to other shares lying with Biyani Securities Pvt. Ltd. and Shri Harish Biyani to avail of the schemes of SHC IL to obtain immediate sale consideration in the ‘sell-n-cash’ scheme of SHC IL as discussed above. Biyani Securities Pvt. Ltd. and Shri Harish Biyani also discounted post dated cheques given to them by SHC IL under the ‘cash on payout’ scheme. Biyani Securities Pvt. Ltd. was empanelled broker for selling the shares. Biyani Securities Pvt. Ltd. availed finance for self as well as for Shri Harish Biyani for selling these shares in the schemes.
4.8 The buying broker was Shri Harish Biyani who was buying shares for DSQ group entities. Shares were brought in synchronised deals with buying and selling orders logged in at almost the same time for same rate and quantity with prior understanding to match sell orders with specific buy orders. Brokers indulged in creation of artificial market, creation of artificial volumes as a result of synchronization / prior intention to matching orders. There was creation of artificial market and artificial volumes as a result of synchronization in logging in / matching of buy and sell orders. Orders are put within a gap of very few seconds by Biyani Securities Pvt. Ltd. and Shri Harish Biyani for the same quantity and same rate with a prior intention to match the orders to ensure that buyers get the desired sellers and vice versa. Shares effectively did not change beneficial ownership by remaining within the DSQ group. Thus, there was circular trading also.
4.9 For the purpose of large transactions only the days when there was volume of 1,00,000 shares or more was chosen in the entire period of November 1,2000 till March 31,2000. The Price Volume data is as under:
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Date Volume Opening price High Low Close
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06/12/2000 212500 275.00 275.00 275.00 275.00 12/12/2000 365000 274.00 274.00 274.00 274.00 13/12/2000 370000 275.00 275.00 275.00 275.00 14/12/2000 360000 280.00 280.00 280.00 280.00 18/12/2000 502500 275.00 280.00 275.00 280.00 20/12/2000 661600 310.00 320.30 296.00 320.10 21/12/2000 1088000 315.00 339.00 315.00 339.00 08/01/2001 222000 424.40 451.20 424.40 451.20 09/01/2001 262000 452.00 452.00 450.50 450.50 10/01/2001 235000 480.00 480.00 443.30 451.50 13/02/2001 325000 318.00 318.00 318.00 318.00
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The trade log analysis shows that for all the trades done on December 6, 2000 the buying and selling broker was Shri Harish Biyani and the buying and selling clients were Hulda Properties and Trades Limited and Greenfield Investments respectively which were DSQ group associates. Other large trades between December 6,2000 and December 20,2000 were executed by Shri Harish Biyani as cross deals. The details are as under:
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Date Buying Selling Price Quantity Buying Client Selling
Broker Broker Client
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12/12/00 HB HB 274 365000 Arun Ploymer Greenfield
13/12/00 HB HB 275 370000 Cooltex
Commodities Greenfield
14/12/00 HB HB 280 360000 Aspolite Barter Greenfield
18/12/00 HB HB 275 5002500 Aspolite Barter Greenfield
20/12/00 HB HB 310 616600 Cooltex
Commodities Greenfield
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All these clients were introduced by Mr. Ashok Sharma, a director of Hulda Properties who used to place orders and later mentioned the names of the clients in whose name the contract notes are to be prepared.
4.10 Further there were huge transactions executed by Biyani Securities Pvt. Ltd. and Shri Harish Biyani on February 27, 2001. Biyani Securities Pvt. Ltd. sold a total of 10.4 lakh shares of DSQ Industries in the ‘sell n cash’ scheme of SHCIL @ Rs 335 per share in Rolling Settlement and the total transaction value was Rs 569.5 lacs. Examination revealed that when the selling broker was Biyani Securities Pvt. Ltd., the buying broker for the shares on the other side was Shri Harish Biyani. The order log and trade log revealed that there was synchronization of buying and selling orders by these brokers as under:
Date Trade Tr Order Order Diff B/S Mem Client Code Qty Price
Time No NO time (sec)
27-02-01 12:16:13 1 61175322 12:16:13 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:16:13 1 31317843 12:15:37 0:00:36 sell 545 b110 10000 335.00
27-02-01 12:16:56 2 61175333 12:16:56 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:16:56 2 31317859 12:16:32 0:00:24 sell 545 b110 10000 335.00
27-02-01 12:17:18 3 61175338 12:17:18 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:17:18 3 31317864 12:17:07 0:00:11 sell 545 b110 10000 335.00
27-02-01 12:17:27 4 61175342 12:17:27 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:17:27 4 31317867 12:17:17 0:00:10 sell 545 b110 10000 335.00
27-02-01 12:17:33 5 61175347 12:17:33 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:17:33 5 31317870 12:17:26 0:00:07 sell 545 b110 10000 335.00
27-02-01 12:17:43 6 61175350 12:17:43 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:17:43 6 31317874 12:17:36 0:00:07 sell 545 b110 10000 335.00
27-02-01 12:18:03 7 61175356 12:18:02 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:18:03 7 31317880 12:17:55 0:00:07 sell 545 b110 10000 335.00
27-02-01 12:18:12 8 61175359 12:18:11 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:18:12 8 31317884 12:18:03 0:00:08 sell 545 b110 10000 335.00
27-02-01 12:18:42 9 61175371 12:18:42 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:18:42 9 31317895 12:18:34 0:00:08 sell 545 b110 10000 335.00
27-02-01 12:18:55 10 61175383 12:18:55 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:18:55 10 31317902 12:18:47 0:00:08 sell 545 b110 10000 335.00
27-02-01 12:19:05 11 61175389 12:19:05 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:19:05 11 31317909 12:19:00 0:00:05 sell 545 b110 10000 335.00
27-02-01 12:19:16 12 61175394 12:19:15 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:19:16 12 31317913 12:19:10 0:00:05 sell 545 b110 10000 335.00
27-02-01 12:19:29 13 61175402 12:19:28 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:19:29 13 31317920 12:19:22 0:00:06 sell 545 b110 10000 335.00
27-02-01 12:19:45 14 61175411 12:19:45 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:19:45 14 31317927 12:19:38 0:00:07 sell 545 b110 10000 335.00
27-02-01 12:19:56 15 61175419 12:19:56 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:19:56 15 31317932 12:19:50 0:00:06 sell 545 b110 10000 335.00
27-02-01 12:20:07 16 61175427 12:20:07 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:20:07 16 31317938 12:19:59 0:00:08 sell 545 b110 10000 335.00
27-02-01 12:20:19 17 61175431 12:20:19 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:20:19 17 31317945 12:20:07 0:00:12 sell 545 b110 10000 335.00
27-02-01 12:20:28 18 61175437 12:20:28 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:20:28 18 31317949 12:20:17 0:00:11 sell 545 b110 10000 335.00
27-02-01 12:20:34 19 61175443 12:20:34 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:20:34 19 31317955 12:20:28 0:00:06 sell 545 b110 10000 335.00
27-02-01 12:20:55 20 61175452 12:20:55 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:20:55 20 31317963 12:20:42 0:00:13 sell 545 b110 10000 335.00
27-02-01 12:21:07 21 61175459 12:21:07 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:21:07 21 31317972 12:21:02 0:00:05 sell 545 b110 10000 335.00
27-02-01 12:21:16 22 80900215 12:21:15 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:21:16 22 31317976 12:21:11 0:00:04 sell 545 b110 10000 335.00
27-02-01 12:22:17 23 61175482 12:22:17 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:22:17 23 31318004 12:22:09 0:00:08 sell 545 b110 10000 335.00
27-02-01 12:22:25 24 61175484 12:22:24 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:22:25 24 31318011 12:22:18 0:00:06 sell 545 b110 10000 335.00
27-02-01 12:22:41 25 61175488 12:22:40 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:22:41 25 31318018 12:22:34 0:00:06 sell 545 b110 10000 335.00
27-02-01 12:22:59 26 61175493 12:22:58 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:22:59 26 51149345 12:22:52 0:00:06 sell 545 b110 10000 335.00
27-02-01 12:23:13 27 61175500 12:23:13 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:23:13 27 31318028 12:23:05 0:00:08 sell 545 b110 10000 335.00
27-02-01 12:23:23 28 61175502 12:23:23 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:23:23 28 31318033 12:23:17 0:00:06 sell 545 b110 10000 335.00
27-02-01 12:23:36 29 61175507 12:23:36 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:23:36 29 31318037 12:23:28 0:00:08 sell 545 b110 10000 335.00
27-02-01 12:23:55 30 61175512 12:23:55 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:23:55 30 31318042 12:23:48 0:00:07 sell 545 b110 10000 335.00
27-02-01 12:24:07 31 61175517 12:24:07 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:24:07 31 31318048 12:24:01 0:00:06 sell 545 b110 10000 335.00
27-02-01 12:24:20 32 61175522 12:24:20 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:24:20 32 31318052 12:24:14 0:00:06 sell 545 b110 10000 335.00
27-02-01 12:24:39 33 61175528 12:24:39 **** buy 35 rathyatrasa 5000 335.00
27-02-01 12:24:39 33 31318055 12:24:29 0:00:10 sell 545 b110 5000 335.00
27-02-01 12:27:34 34 61175580 12:27:34 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:27:34 34 31318110 12:27:23 0:00:11 sell 545 h001 10000 335.00
27-02-01 12:27:47 35 61175584 12:27:47 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:27:47 35 31318118 12:27:41 0:00:06 sell 545 h001 10000 335.00
27-02-01 12:27:58 36 61175590 12:27:58 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:27:58 36 31318121 12:27:52 0:00:06 sell 545 h001 10000 335.00
27-02-01 12:28:07 37 61175594 12:28:07 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:28:07 37 31318128 12:28:02 0:00:05 sell 545 h001 10000 335.00
27-02-01 12:28:19 38 61175598 12:28:19 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:28:19 38 31318137 12:28:14 0:00:05 sell 545 h001 10000 335.00
27-02-01 12:28:36 39 61175612 12:28:36 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:28:36 39 31318148 12:28:31 0:00:05 sell 545 h001 10000 335.00
27-02-01 12:28:46 40 61175615 12:28:46 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:28:46 40 31318156 12:28:42 0:00:04 sell 545 h001 10000 335.00
27-02-01 12:28:59 41 61175621 12:28:59 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:28:59 41 31318163 12:28:54 0:00:05 sell 545 h001 10000 335.00
27-02-01 12:29:13 42 61175629 12:29:13 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:29:13 42 31318168 12:29:06 0:00:07 sell 545 h001 10000 335.00
27-02-01 12:29:30 43 61175636 12:29:30 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:29:30 43 31318180 12:29:25 0:00:05 sell 545 h001 10000 335.00
27-02-01 12:29:44 44 61175641 12:29:43 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:29:44 44 31318190 12:29:37 0:00:06 sell 545 h001 10000 335.00
27-02-01 12:30:17 45 61175650 12:30:16 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:30:17 45 31318203 12:30:11 0:00:05 sell 545 h001 10000 335.00
27-02-01 12:30:26 46 61175653 12:30:26 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:30:26 46 31318207 12:30:21 0:00:05 sell 545 h001 10000 335.00
27-02-01 12:33:30 47 61175696 12:33:30 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:33:30 47 31318231 12:32:44 0:00:46 sell 545 h001 10000 335.00
27-02-01 12:33:36 48 61175698 12:33:35 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:33:36 48 31318234 12:33:06 0:00:29 sell 545 h001 10000 335.00
27-02-01 12:33:53 49 61175706 12:33:52 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:33:53 49 31318245 12:33:44 0:00:08 sell 545 h001 10000 335.00
27-02-01 12:34:10 50 61175710 12:34:10 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:34:10 50 31318249 12:33:59 0:00:11 sell 545 h001 10000 335.00
27-02-01 12:40:18 51 61175799 12:40:18 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:40:18 51 31318308 12:40:07 0:00:11 sell 545 h058 10000 335.00
27-02-01 12:40:28 52 61175804 12:40:28 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:40:28 52 31318312 12:40:18 0:00:10 sell 545 h058 10000 335.00
27-02-01 12:40:36 53 61175808 12:40:35 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:40:36 53 31318314 12:40:30 0:00:05 sell 545 h058 10000 335.00
27-02-01 12:40:43 54 61175811 12:40:43 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:40:43 54 31318316 12:40:38 0:00:05 sell 545 h058 10000 335.00
27-02-01 12:40:53 55 61175816 12:40:53 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:40:53 55 31318319 12:40:47 0:00:06 sell 545 h058 10000 335.00
27-02-01 12:41:01 56 61175819 12:41:00 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:41:01 56 31318320 12:40:55 0:00:05 sell 545 h058 10000 335.00
27-02-01 12:41:13 57 61175826 12:41:13 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:41:13 57 31318321 12:41:03 0:00:10 sell 545 h058 10000 335.00
27-02-01 12:41:21 58 80900526 12:41:20 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:41:21 58 31318324 12:41:13 0:00:07 sell 545 h058 10000 335.00
27-02-01 12:41:26 59 61175832 12:41:26 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:41:26 59 31318326 12:41:22 0:00:04 sell 545 h058 10000 335.00
27-02-01 12:41:37 60 61175839 12:41:37 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:41:37 60 31318328 12:41:30 0:00:07 sell 545 h058 10000 335.00
27-02-01 12:41:50 61 61175846 12:41:50 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:41:50 61 31318330 12:41:45 0:00:05 sell 545 h058 10000 335.00
27-02-01 12:42:02 62 61175849 12:42:02 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:42:02 62 31318332 12:41:57 0:00:05 sell 545 h058 10000 335.00
27-02-01 12:42:18 63 61175855 12:42:18 **** buy 35 rathyatrasa 10000 335.00
27-02-01 12:42:18 63 31318338 12:42:13 0:00:05 sell 545 h058 10000 335.00
27-02-01 15:19:58 64 61178133 15:18:51 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:19:58 64 31320443 15:19:58 0:01:07 sell 545 hulda 10000 335.00
27-02-01 15:20:28 65 61178141 15:19:10 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:20:28 65 31320451 15:20:28 0:01:18 sell 545 hulda 10000 335.00
27-02-01 15:21:18 66 61178145 15:19:21 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:21:18 66 31320471 15:21:17 0:01:56 sell 545 hulda 10000 335.00
27-02-01 15:21:31 67 61178148 15:19:26 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:21:31 67 31320474 15:21:30 0:02:04 sell 545 hulda 10000 335.00
27-02-01 15:21:43 68 61178151 15:19:37 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:21:43 68 31320479 15:21:43 0:02:06 sell 545 hulda 10000 335.00
27-02-01 15:21:52 69 61178157 15:19:42 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:21:52 69 31320483 15:21:52 0:02:10 sell 545 hulda 10000 335.00
27-02-01 15:22:01 70 61178161 15:19:50 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:22:01 70 31320484 15:22:00 0:02:10 sell 545 hulda 10000 335.00
27-02-01 15:22:08 71 61178164 15:19:55 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:22:08 71 31320486 15:22:08 0:02:13 sell 545 hulda 10000 335.00
27-02-01 15:22:16 72 180902547 15:20:05 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:22:16 72 31320488 15:22:15 0:02:10 sell 545 hulda 10000 335.00
27-02-01 15:22:24 73 61178170 15:20:13 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:22:24 73 31320494 15:22:23 0:02:10 sell 545 hulda 10000 335.00
27-02-01 15:22:34 74 61178197 15:21:07 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:22:34 74 31320498 15:22:33 0:01:26 sell 545 hulda 10000 335.00
27-02-01 15:22:41 75 61178198 15:21:12 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:22:41 75 31320501 15:22:41 0:01:29 sell 545 hulda 10000 335.00
27-02-01 15:22:49 76 61178204 15:21:17 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:22:49 76 31320503 15:22:49 0:01:32 sell 545 hulda 10000 335.00
27-02-01 15:22:56 77 61178207 15:21:24 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:22:56 77 31320509 15:22:56 0:01:32 sell 545 hulda 10000 335.00
27-02-01 15:23:04 78 61178209 15:21:28 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:23:04 78 31320514 15:23:03 0:01:35 sell 545 hulda 10000 335.00
27-02-01 15:23:11 79 61178214 15:21:40 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:23:11 79 31320515 15:23:11 0:01:31 sell 545 hulda 10000 335.00
27-02-01 15:23:18 80 61178216 15:21:46 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:23:18 80 31320517 15:23:17 0:01:31 sell 545 hulda 10000 335.00
27-02-01 15:23:25 81 61178219 15:21:51 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:23:25 81 31320524 15:23:24 0:01:33 sell 545 hulda 10000 335.00
27-02-01 15:23:35 82 61178222 15:21:55 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:23:35 82 31320526 15:23:35 0:01:40 sell 545 hulda 10000 335.00
27-02-01 15:23:43 83 61178225 15:22:01 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:23:43 83 31320532 15:23:43 0:01:42 sell 545 hulda 10000 335.00
27-02-01 15:23:52 84 61178231 15:22:08 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:23:52 84 31320534 15:23:52 0:01:44 sell 545 hulda 10000 335.00
27-02-01 15:24:00 85 61178233 15:22:15 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:24:00 85 31320535 15:23:59 0:01:44 sell 545 hulda 10000 335.00
27-02-01 15:24:07 86 61178234 15:22:27 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:24:07 86 31320537 15:24:06 0:01:39 sell 545 hulda 10000 335.00
27-02-01 15:24:14 87 61178240 15:22:32 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:24:14 87 31320540 15:24:13 0:01:41 sell 545 hulda 10000 335.00
27-02-01 15:24:20 88 61178242 15:22:36 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:24:20 88 31320543 15:24:20 0:01:44 sell 545 hulda 10000 335.00
27-02-01 15:24:33 89 61178243 15:22:41 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:24:33 89 31320547 15:24:32 0:01:51 sell 545 hulda 10000 335.00
27-02-01 15:24:39 90 61178245 15:22:49 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:24:39 90 31320549 15:24:39 0:01:50 sell 545 hulda 10000 335.00
27-02-01 15:24:46 91 61178249 15:22:57 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:24:46 91 31320551 15:24:46 0:01:49 sell 545 hulda 10000 335.00
27-02-01 15:24:53 92 61178272 15:23:53 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:24:53 92 31320554 15:24:52 0:00:59 sell 545 hulda 10000 335.00
27-02-01 15:25:01 93 61178276 15:24:01 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:25:01 93 31320558 15:25:01 0:01:00 sell 545 hulda 10000 335.00
27-02-01 15:25:08 94 61178282 15:24:09 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:25:08 94 31320562 15:25:08 0:00:59 sell 545 hulda 10000 335.00
27-02-01 15:25:17 95 61178284 15:24:15 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:25:17 95 31320566 15:25:17 0:01:02 sell 545 hulda 10000 335.00
27-02-01 15:25:25 96 61178310 15:25:25 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:25:25 96 31320569 15:25:24 0:00:01 sell 545 hulda 10000 335.00
27-02-01 15:25:35 97 61178316 15:25:33 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:25:35 97 31320576 15:25:34 0:00:01 sell 545 hulda 10000 335.00
27-02-01 15:25:47 98 61178324 15:25:37 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:25:47 98 31320585 15:25:47 0:00:10 sell 545 hulda 10000 335.00
27-02-01 15:25:55 99 61178326 15:25:42 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:25:55 99 31320588 15:25:55 0:00:13 sell 545 hulda 10000 335.00
27-02-01 15:26:05 100 61178328 15:25:54 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:26:05 100 31320591 15:26:05 0:00:11 sell 545 hulda 10000 335.00
27-02-01 15:26:14 101 61178330 15:25:59 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:26:14 101 31320595 15:26:14 0:00:15 sell 545 hulda 10000 335.00
27-02-01 15:26:26 102 61178340 15:26:22 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:26:26 102 31320600 15:26:26 0:00:04 sell 545 hulda 10000 335.00
27-02-01 15:27:02 103 61178362 15:27:01 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:27:02 103 31320603 15:26:38 0:00:23 sell 545 hulda 10000 335.00
27-02-01 15:27:07 104 61178367 15:27:07 **** buy 35 rathyatrasa 10000 335.00
27-02-01 15:27:07 104 31320611 15:26:58 0:00:09 sell 545 hulda 10000 335.00
27-02-01 15:27:31 105 61178378 15:27:31 **** buy 35 rathyatrasa 5000 335.00
27-02-01 15:27:31 105 31320620 15:27:15 0:00:16 sell 545 Hulda 5000 335.00
Total 2080000
Note : 545 - Biyani Securities Private Ltd 35 - Harish Biyani
From the above , it is noted that the buy as well as the sell orders were placed in lots of 10,000 shares for the entire quantity (except for lot of 5000 shares on few occasions). It is noted that the buy and sell orders were placed in close proximity of time 5-15 seconds. In view of the fact that it was an ill-liquid segment and the buy and the sell orders were placed consecutively with a very short time difference which is often under few seconds, it can be said that these trades were sync hronized by the brokers with prior understanding to match. There was creation of artificial market and artificial volumes as a result of synchronization in logging in / matching of buy and sell orders.
4.11 As observed earlier, Biyani Securities Pvt. Ltd. sold as empanelled broker a total of 10.4 lakh shares of DSQ . Of these, 8.7 lakh shares were sold for Self and 1.7 lakh for Shri Harish Biyani. In connection with the sale of 8.7 lakh shares, examination of the demat statement Biyani Securities Pvt. Ltd. brought out that Biyani Securities Pvt. Ltd. and Shri Harish Biyani got shares in their demat account in the following manner:
———————————————————
Date Particulars Qty --------------------------------------------------------- 21/2/01 By CM Smifs, Physical / 2001146 155000 26/2/01 By Integrated / 10961302 300000 27/2/01 By CM Smifs, Physical / 2001146 325000 27/2/01 By CM Smifs, Rolling / 2001507 90000 --------------------------------------------------------- Total 870000 ---------------------------------------------------------
From the above , it is observed that 3,00,000 shares were credited in off market transfer on 26/2/01 and the remaining were market purchases. Investigations brought out that the off market transfer of 3,00,000 shares was from the demat account of Square D Textiles – a DSQ group entity.
4.12 Statement on behalf of Biyani Securities Pvt. Ltd. admitted that Square D textiles was never its client and the shares were received from ‘Hulda’ who used to give specific instruction for subsequent sale of the shares. It does not explain why shares came into beneficiary account instead of the pool account. Regarding credits into its account from SMIFS, Biyani Securities (P) Ltd stated that it purchased 1,55,000 shares in sett no. 146 from market through SMIFS Securities. As regards credit on27/2/01 of 415000 shares, Biyani Securities Pvt. Ltd. stated that it purchased 90,000 shares from the market and the balance 3,25,000 shares were transferred to it from ‘Hulda’. These 8,70,000 shares were then credited to the account of SHCIL. This shows the nexus between Biyani Securities Pvt. Ltd. and Shri Harish Biyani and the promoters. To facilitate financing Biyani Securities Pvt. Ltd. and Shri Harish Biyani by the ‘sell n cash’ scheme, 3,00,000 shares were given to them by the promoter group entities Square D Textiles and 3,25,000 shares by ‘Hulda’. Biyani Securities Pvt. Ltd. and Shri Harish Biyani also had 2,55,000 shares already available. As regards sale of these 8.7 lakh shares in the ‘sell n cash’ scheme, Biyani Securities Pvt. Ltd. and Shri Harish Biyani stated that they sold the entire lot of 8,70,000 shares on behalf of another DSQ group entity – ‘Hulda’. If shares were sold on behalf of Hulda as claimed,, shares should come from the beneficiary account of Hulda and not from Biyani Securities Pvt. Ltd. and Shri Harish Biyani ‘s account.
4.13 As regards sale of 1.7 lakh shares by Shri Harish Biyani, it was found during the course of investigations that Biyani Securities Pvt. Ltd. and Shri Harish Biyani got shares in their demat account in the following manner:
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Date Particulars Qty
———————————————————
21/2/01 By CM Smifs, Physical / 2001146 170000
———————————————————
Once again, it is seen that shares were credited as market purchases. Shri Harish Biyani stated that Biyani Securities Pvt. Ltd. and Shri Harish Biyani had purchased these shares from the market through SMIFS. The contentions by Biyani Securities Pvt. Ltd. and Shri Harish Biyani that they sold 1.7 lakh shares on behalf of DSQ group entity – Hulda is not tenable since if shares were to be sold on behalf of Hulda, shares would have been sold from the beneficiary account of Hulda and not from broker’s account.
On the other side, as buying broker, Shri Harish Biyani stated that Biyani Securities Pvt. Ltd. and Shri Harish Biyani had purchased 1,70,000 shares as part of total 10,40,000 shares purchased by them for various clients as below:
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Buying client Qty (number of shares) -------------------------------------------------------- Ballona Dealcom 32500 Behala finance and Investment 21000 Century Lefin Ltd 1700 Kettlewell tracom P Ltd. 250000 Dynamic enterprises 29600 Ganesh Barter Ltd 26600 Rathyatra Sales 428600 Gitabali Tracom 250000 Total 10,40,000 --------------------------------------------------------
4.14 It may be noted that many of the buying clients as above have same address as that of ‘ Hulda’ and also Mr Bhalotia as common director in Hulda and the buying clients. Hulda as brought out earlier is promoter associated entity. Thus , for the entire transactions of 10,40,000 shares, both the buying as well as the selling clients have linkages with each other and DSQ group.
These transactions were in the nature of synchronization with buying orders and selling orders matched for quantity and price. Orders were put within time gap of few seconds. Both buying and selling brokers were Biyani Securities Pvt. Ltd. and Shri Harish Biyani who indulged in creation of artificial market, creation of artificial volumes as a result of synchronization / prior intention to matching orders. In view of the fact that both brokers belong to Biyani group and the synchronization has happened over so many transactions, the stand taken by either broker is not tenable. Further, the transactions accounted for the entire trading volume i.e. 100% on that date.
4.15 On March 1, 2001, Shri Harish Biyani once again availed of the ‘Sell and Cash’ Scheme through Biyani Securities Pvt. Ltd. which sold 2,40,000 shares of DSQ Industries @ Rs 335 per share for Shri Harish Biyani. It is observed that when selling broker was Biyani Securities Pvt. Ltd., the buying broker for the shares on the other side was Shri Harish Biyani. The order log and trade log revealed that there was synchronization of buying and selling orders as under: From the above, it can be seen that all orders both buy as well as sell were placed in multiples of 10,000 and apart from these orders there were no other buy as well as sale orders prevalent at that time and time lag between buy and sale order in most of the occasions was very less and it can be concluded that these were synchronized transactions with prior understanding to match.
——————————————————————————
Date Time Broker Code Buy/Sale Quantity Price mm/dd/yy
——————————————————————————
03-01-01 3:21:53 PM D0035 B 10000 335.00 03-01-01 3:22:09 PM D0545 S 10000 335.00 03-01-01 3:22:11 PM D0035 B 10000 335.00 03-01-01 3:22:16 PM D0035 B 10000 335.00 03-01-01 3:22:17 PM D0545 S 10000 335.00 03-01-01 3:22:26 PM D0035 B 10000 335.00 03-01-01 3:22:26 PM D0545 S 10000 335.00 03-01-01 3:22:32 PM D0035 B 10000 335.00 03-01-01 3:22:34 PM D0545 S 10000 335.00 03-01-01 3:22:37 PM D0035 B 10000 335.00 03-01-01 3:22:41 PM D0545 S 10000 335.00 03-01-01 3:22:42 PM D0035 B 10000 335.00 03-01-01 3:22:51 PM D0035 B 10000 335.00 03-01-01 3:22:56 PM D0545 S 10000 335.00 03-01-01 3:23:00 PM D0035 B 10000 335.00 03-01-01 3:23:03 PM D0545 S 10000 335.00 03-01-01 3:23:34 PM D0545 S 10000 335.00 03-01-01 3:23:55 PM D0545 S 10000 335.00 03-01-01 3:42:28 PM D0035 B 10000 335.00 03-01-01 3:42:34 PM D0035 B 10000 335.00 03-01-01 3:42:38 PM D0035 B 10000 335.00 03-01-01 3:42:43 PM D0035 B 10000 335.00 03-01-01 3:42:49 PM D0035 B 10000 335.00 03-01-01 3:42:54 PM D0035 B 10000 335.00 03-01-01 3:43:02 PM D0035 B 10000 335.00 03-01-01 3:43:04 PM D0545 S 10000 335.00 03-01-01 3:43:07 PM D0035 B 10000 335.00 03-01-01 3:43:12 PM D0035 B 10000 335.00 03-01-01 3:43:13 PM D0545 S 10000 335.00 03-01-01 3:43:22 PM D0035 B 10000 335.00 03-01-01 3:43:22 PM D0545 S 10000 335.00 03-01-01 3:43:29 PM D0545 S 10000 335.00 03-01-01 3:43:37 PM D0545 S 10000 335.00 03-01-01 3:43:41 PM D0035 B 10000 335.00 03-01-01 3:43:45 PM D0545 S 10000 335.00 03-01-01 3:43:46 PM D0035 B 10000 335.00 03-01-01 3:43:52 PM D0545 S 10000 335.00 03-01-01 3:43:54 PM D0035 B 10000 335.00 03-01-01 3:44:00 PM D0545 S 10000 335.00 03-01-01 3:44:02 PM D0035 B 10000 335.00 03-01-01 3:44:06 PM D0035 B 10000 335.00 03-01-01 3:44:07 PM D0545 S 10000 335.00 03-01-01 3:44:16 PM D0545 S 10000 335.00 03-01-01 3:44:23 PM D0545 S 10000 335.00 03-01-01 3:44:30 PM D0545 S 10000 335.00 03-01-01 3:44:37 PM D0545 S 10000 335.00 03-01-01 3:44:43 PM D0545 S 10000 335.00 03-01-01 3:44:50 PM D0545 S 10000 335.00
—————————————————————————-
4.16 Examination of the demat statement of Shri Harish Biyani brought out that on 1/3/01, 2,40,000 shares were debited from beneficiary account of Shri Harish Biyani in favour of SHC IL for the sale of 2,40,000 shares. It is pertinent to note that Shri Harish Biyani got shares in its demat account in the following manner:
———————————————————
Date Particulars Qty
———————————————————
21/2/01 By Integrated / 10961302 170000
——————————————————–
These shares were credited as off market purchases and were credited from the demat account of Hulda. Shri Harish Biyani stated that Biyani Securities Pvt. Ltd. and Shri Harish Biyani sold 2,40,000 shares on behalf of Hulda. If shares were to be sold on behalf of Hulda, shares would have been sold from the beneficiary account of Hulda and not from Biyani Securities Pvt. Ltd. and Shri Harish Biyani’s account. In effect, Shri Harish Biyani used shares of DSQ Industries for availing finance in the ‘sell and cash’ scheme of SHC IL by selling shares as empanelled broker of SHC IL – i.e. Biyani Securities Pvt. Ltd.
4.17 Further, when Biyani Securities Pvt. Ltd. was selling shares, Shri Harish Biyani was the counter party broker. Shri Harish Biyani stated that Biyani Securities Pvt. Ltd. and Shri Harish Biyani had bought these 2,40,000 shares on behalf of client – Veersali Commodities Ltd. I further note that address of Veersali is same as that of Hulda and also one of the directors and contact person of this entity is Mr. Manoj Kumar Bhalotia who is also a director of M/s. Hulda Properties and Trades Limited – the seller. Therefore Veersali Commodities Limited also appears to be an entity of DSQ group. These further points to nexus between promoters and Biyani Securities Pvt. Ltd. and Shri Harish Biyani whe n it is noticed that shares bought by broker for promoter associated entity – Veersali were sold on the other side for another promoter associated entities – Hulda. Thus, there was circular trading also as well as creation of artificial market. Biyani Securities Pvt. Ltd. and Shri Harish Biyani indulged in creation of artificial market, creation of artificial volumes as a result of synchronization of orders. CSE had subsequently expunged the transaction of 2,40,000 shares amounting to Rs. 8.04 crore on the grounds that the transactions were non genuine transactions. It is pertinent to note this deal of 2,40,000 shares comprised around 60% of the total traded volume on the said date.
4.18 On March 2, 2001, Shri Harish Biyani once again availed the Cash on Pay out scheme (COP) of SHCIL through Biyani Securities Pvt. Ltd. which sold 7,20,000 shares of DSQ Industries for Shri Harish Biyani. The important feature of this scheme are as under:
a) As per the scheme an investor can sell his shares through one of the empanelled brokers of SHCIL and the payment is released to the investor on the next day of the pay out. For this purpose a post-dated cheque (dated to next day of pay out) is issued to the investor by SHCIL on the evening of trade day.
b) The features of this scheme are same as SAC and the only difference being that the payment is released one day after pay out. As per SCHIL, this was only a variant of the SAC scheme wherein a post dated payment cheque was issued instead of a current date cheque.
c) The objective of COP scheme was to help the small investors who are not entertained by the brokers to transact (sell their shares) in the capital market in the risk free environment. Under this scheme the payment is released one day after the pay out of the relevant stock exchange.
4.19 Shri Harish Biyani has a DP beneficiary account with SHCIL. On 1.3.2001, he requested SHCIL to sell 2.4 lakh shares of DSQ Industries Ltd under ‘sell-n-cash’ scheme. The shares were sold on the same day by SHCIL in rolling settlement No.2001518 of CSE through Biyani Securities Pvt. Ltd., an associate firm of Shri Harish Biyani on whose behalf the trade was executed. SHCIL made payment against this transaction to Shri Biyani on the same day after deducting brokerage and service charges from the sale proceeds of Rs.8.04 crore. SHCIL also executed another transaction for sale of 7.2 lakh shares of DSQ Industries under ‘sell-n-cash’ scheme on behalf of Shri Biyani through Biyani Securities Pvt Ltd in settlement no.2001159 for Rs.24.48 crore on 2.3.2001. Unlike the earlier transaction, SHCIL released the payment through a post dated cheque to Shri Biyani who discounted the cheque with Indus Ind Bank, Calcutta and received the sale proceeds.
4.20 In the transactions of sale of DSQ Industries shares dated 1.3.01 financed by SHCIL on behalf of its clients Shri Harish Biyani under ‘sell-n-cash’ scheme through Biyani Securities Pvt Ltd and CSE, the counter party broker was Shri Harish Biyani himself. In the transaction dated 2.3.2001, assured / facilitated by SHCIL for Shri Harish Biyani the counter party brokers were Shri Harish Biyani, Arihant Exim & Doe Jones, CSE, on scrutiny of pay-in/pay-out of settlement no.148 and the rolling settlements falling due during the same time, classified the trades financed / assured by SHCIL through Biyani Securities Pvt Ltd as trades in the nature of accommodation and expunged these trades.
4.21 Shri Harish Biyani stated that since he was in need of funds he sold DSQ shares to SHCIL and received a post dated cheque from them and got the cheque discounted. He further said that SHCIL in turn sold those shares in the market on the same day through Biyani Securities Pvt Ltd but CSE did not make payment since the deals were expunged.
4.22 As stated, earlier, on 2/3/01, Biyani Securities Pvt. Ltd. sold 7,20,000 shares in the ‘cash on payout’ scheme of SHCIL . The table showing the various trading parties for the transaction is as follows:
———————————————————————————
Sale Quantity Selling Selling Price Amount (Rs.) Buying Quantity
Broker Client Broker
———————————————————————————
720000 BSPL HB 340 244800000 HB 220000
Doe Jones 250000
Arihant Exim 250000
7,20,000 244800000 720000
———————————————————————————
It is observed that there was synchronization of buying and selling orders by matching of order quantity, times and price. The details are as under:
Date Trade Trd Order no Order Diff-sec B/S Code Client Qty Rate
time No time
02-03-01 15:13:06 145 151168469 15:11:21 *** sell 545 self 10000 340.00
02-03-01 15:13:06 145 180916834 15:13:05 0:01:44 buy 978 self 10000 340.00
02-03-01 15:13:14 146 151168473 15:11:34 *** sell 545 self 10000 340.00
02-03-01 15:13:14 146 180916836 15:13:14 0:01:40 buy 978 self 10000 340.00
02-03-01 15:13:22 147 151168475 15:11:45 *** sell 545 self 10000 340.00
02-03-01 15:13:22 147 180916839 15:13:22 0:01:37 buy 978 self 10000 340.00
02-03-01 15:13:33 148 151168480 15:11:54 *** sell 545 self 10000 340.00
02-03-01 15:13:33 148 180916846 15:13:33 0:01:39 buy 978 self 10000 340.00
02-03-01 15:13:40 149 151168488 15:12:02 *** sell 545 self 10000 340.00
02-03-01 15:13:40 149 180916849 15:13:40 0:01:38 buy 978 self 10000 340.00
02-03-01 15:13:47 150 151168491 15:12:10 *** sell 545 self 10000 340.00
02-03-01 15:13:47 150 180916851 15:13:46 0:01:36 buy 978 self 10000 340.00
02-03-01 15:14:04 151 151168495 15:12:19 *** sell 545 self 10000 340.00
02-03-01 15:14:04 151 180916856 15:14:04 0:01:45 buy 978 self 10000 340.00
02-03-01 15:14:09 152 151168499 15:12:28 *** sell 545 self 10000 340.00
02-03-01 15:14:09 152 180916859 15:14:09 0:01:41 buy 978 self 10000 340.00
02-03-01 15:14:16 153 151168501 15:12:37 *** sell 545 self 10000 340.00
02-03-01 15:14:16 153 180916861 15:14:16 0:01:39 buy 978 self 10000 340.00
02-03-01 15:14:22 154 151168503 15:12:45 *** sell 545 self 10000 340.00
02-03-01 15:14:22 154 180916865 15:14:22 0:01:37 buy 978 self 10000 340.00
02-03-01 15:14:35 155 151168510 15:13:17 *** sell 545 self 10000 340.00
02-03-01 15:14:35 155 180916869 15:14:35 0:01:18 buy 978 self 10000 340.00
02-03-01 15:14:42 156 151168514 15:13:25 *** sell 545 self 10000 340.00
02-03-01 15:14:42 156 180916872 15:14:42 0:01:17 buy 978 self 10000 340.00
02-03-01 15:14:48 157 151168518 15:13:33 *** sell 545 self 10000 340.00
02-03-01 15:14:48 157 180916873 15:14:47 0:01:14 buy 978 self 10000 340.00
02-03-01 15:14:51 158 151168521 15:13:40 *** sell 545 self 10000 340.00
02-03-01 15:14:51 158 180916874 15:14:51 0:01:11 buy 987 self 10000 340.00
02-03-01 15:14:56 159 151168523 15:13:47 *** sell 545 self 10000 340.00
02-03-01 15:14:56 160 151168525 15:13:54 *** sell 545 self 10000 340.00
02-03-01 15:14:56 159 180916879 15:14:56 *** buy 978 self 10000 340.00
02-03-01 15:14:56 160 180916880 15:14:56 *** buy 987 self 10000 340.00
02-03-01 15:15:00 161 151168528 15:14:01 *** sell 545 self 10000 340.00
02-03-01 15:15:00 162 151168532 15:14:08 *** sell 545 self 10000 340.00
02-03-01 15:15:00 162 180916885 15:15:00 0:00:52 buy 978 self 10000 340.00
02-03-01 15:15:00 161 180916883 15:14:59 *** buy 987 self 10000 340.00
02-03-01 15:15:04 163 151168533 15:14:15 *** sell 545 self 10000 340.00
02-03-01 15:15:04 163 180916886 15:15:03 0:00:48 buy 987 self 10000 340.00
02-03-01 15:15:07 164 151168535 15:14:22 *** sell 545 self 10000 340.00
02-03-01 15:15:07 164 180916887 15:15:07 0:00:45 buy 987 self 10000 340.00
02-03-01 15:15:09 165 151168537 15:14:29 *** sell 545 self 10000 340.00
02-03-01 15:15:09 165 180916889 15:15:09 0:00:40 buy 978 self 10000 340.00
02-03-01 15:15:14 166 151168543 15:14:39 *** sell 545 self 10000 340.00
02-03-01 15:15:14 166 180916890 15:15:14 0:00:35 buy 978 self 10000 340.00
02-03-01 15:15:15 167 151168548 15:14:46 *** sell 545 self 10000 340.00
02-03-01 15:15:15 167 180916891 15:15:14 0:00:28 buy 987 self 10000 340.00
02-03-01 15:15:18 168 151168554 15:14:55 *** sell 545 self 10000 340.00
02-03-01 15:15:18 168 180916892 15:15:17 0:00:22 buy 987 self 10000 340.00
02-03-01 15:15:20 169 151168557 15:15:03 *** sell 545 self 10000 340.00
02-03-01 15:15:20 169 180916893 15:15:19 0:00:16 buy 978 self 10000 340.00
02-03-01 15:15:21 170 151168561 15:15:09 *** sell 545 self 10000 340.00
02-03-01 15:15:21 170 180916894 15:15:21 0:00:12 buy 987 self 10000 340.00
02-03-01 15:15:25 171 151168565 15:15:16 *** sell 545 self 10000 340.00
02-03-01 15:15:25 171 180916896 15:15:25 0:00:09 buy 978 self 10000 340.00
02-03-01 15:15:26 172 151168567 15:15:23 *** sell 545 self 10000 340.00
02-03-01 15:15:26 172 180916897 15:15:25 0:00:02 buy 987 self 10000 340.00
02-03-01 15:15:41 173 151168572 15:15:31 *** sell 545 self 10000 340.00
02-03-01 15:15:41 173 180916903 15:15:41 0:00:10 buy 987 self 10000 340.00
02-03-01 15:15:45 174 151168576 15:15:37 *** sell 545 self 10000 340.00
02-03-01 15:15:45 174 180916905 15:15:45 0:00:08 buy 978 self 10000 340.00
02-03-01 15:16:08 175 151168587 15:15:46 *** sell 545 self 10000 340.00
02-03-01 15:16:08 175 180916914 15:16:08 0:00:22 buy 978 self 10000 340.00
02-03-01 15:16:13 176 151168595 15:15:53 *** sell 545 self 10000 340.00
02-03-01 15:16:13 176 180916915 15:16:13 0:00:20 buy 978 self 10000 340.00
02-03-01 15:16:20 177 151168598 15:16:00 *** sell 545 self 10000 340.00
02-03-01 15:16:20 177 180916916 15:16:20 0:00:20 buy 987 self 10000 340.00
02-03-01 15:16:23 178 151168603 15:16:09 *** sell 545 self 10000 340.00
02-03-01 15:16:23 179 151168608 15:16:16 *** sell 545 self 10000 340.00
02-03-01 15:16:23 178 180916917 15:16:23 *** buy 978 self 10000 340.00
02-03-01 15:16:23 179 180916918 15:16:23 *** buy 987 self 10000 340.00
02-03-01 15:16:26 180 151168614 15:16:23 *** sell 545 self 10000 340.00
02-03-01 15:16:26 180 180916921 15:16:26 0:00:03 buy 987 self 10000 340.00
02-03-01 15:16:31 181 151168616 15:16:30 *** sell 545 self 10000 340.00
02-03-01 15:16:31 181 180916922 15:16:29 0:00:01 buy 978 self 10000 340.00
02-03-01 15:16:49 182 151168619 15:16:38 *** sell 545 self 10000 340.00
02-03-01 15:16:49 182 180916924 15:16:48 0:00:10 buy 987 self 10000 340.00
02-03-01 15:16:50 183 151168623 15:16:44 *** sell 545 self 10000 340.00
02-03-01 15:16:50 183 180916926 15:16:50 0:00:06 buy 978 self 10000 340.00
02-03-01 15:16:53 184 151168632 15:16:51 *** sell 545 self 10000 340.00
02-03-01 15:16:53 184 180916927 15:16:52 0:00:01 buy 987 self 10000 340.00
02-03-01 15:17:02 185 151168635 15:16:58 *** sell 545 self 10000 340.00
02-03-01 15:17:02 185 180916930 15:17:02 0:00:04 buy 987 self 10000 340.00
02-03-01 15:17:10 186 151168640 15:17:05 *** sell 545 self 10000 340.00
02-03-01 15:17:10 186 180916933 15:17:10 0:00:05 buy 987 self 10000 340.00
02-03-01 15:17:18 187 151168649 15:17:13 *** sell 545 self 10000 340.00
02-03-01 15:17:18 187 180916937 15:17:18 0:00:05 buy 987 self 10000 340.00
02-03-01 15:17:22 188 151168654 15:17:19 *** sell 545 self 10000 340.00
02-03-01 15:17:22 188 180916939 15:17:22 0:00:03 buy 987 self 10000 340.00
02-03-01 15:17:30 189 151168659 15:17:25 *** sell 545 self 10000 340.00
02-03-01 15:17:30 189 180916946 15:17:29 0:00:04 buy 987 self 10000 340.00
02-03-01 15:17:36 190 151168664 15:17:32 *** sell 545 self 10000 340.00
02-03-01 15:17:36 190 180916948 15:17:36 0:00:04 buy 987 self 10000 340.00
02-03-01 15:17:43 191 151168666 15:17:39 *** sell 545 self 10000 340.00
02-03-01 15:17:43 191 180916954 15:17:43 0:00:04 buy 987 self 10000 340.00
02-03-01 15:17:48 192 151168669 15:17:45 *** sell 545 self 10000 340.00
02-03-01 15:17:48 192 180916956 15:17:48 0:00:03 buy 987 self 10000 340.00
02-03-01 15:17:56 193 151168671 15:17:52 *** sell 545 self 10000 340.00
02-03-01 15:17:56 193 180916960 15:17:56 0:00:04 buy 987 self 10000 340.00
02-03-01 15:18:01 194 151168674 15:17:59 *** sell 545 self 10000 340.00
02-03-01 15:18:01 194 180916961 15:18:01 0:00:02 buy 987 self 10000 340.00
02-03-01 15:18:21 195 61197636 15:18:20 *** buy 35 self 10000 340.00
02-03-01 15:18:21 195 151168684 15:18:10 0:00:10 sell 545 self 10000 340.00
02-03-01 15:18:27 196 61197640 15:18:27 *** buy 35 self 10000 340.00
02-03-01 15:18:27 196 151168688 15:18:18 0:00:09 sell 545 self 10000 340.00
02-03-01 15:18:40 197 61197648 15:18:40 *** buy 35 self 10000 340.00
02-03-01 15:18:40 197 151168692 15:18:26 0:00:14 sell 545 self 10000 340.00
02-03-01 15:19:38 198 120952423 15:19:38 *** buy 35 self 10000 340.00
02-03-01 15:19:38 198 151168696 15:18:34 0:01:04 sell 545 self 10000 340.00
02-03-01 15:19:43 199 61197683 15:19:42 *** buy 35 self 10000 340.00
02-03-01 15:19:43 199 151168724 15:19:40 0:00:02 sell 545 self 10000 340.00
02-03-01 15:19:47 200 61197687 15:19:47 *** buy 35 self 10000 340.00
02-03-01 15:19:47 200 151168727 15:19:47 0:00:00 sell 545 self 10000 340.00
02-03-01 15:19:55 201 61197695 15:19:55 *** buy 35 self 10000 340.00
02-03-01 15:19:55 201 151168733 15:19:53 0:00:02 sell 545 self 10000 340.00
02-03-01 15:20:08 202 61197706 15:20:08 *** buy 35 self 10000 340.00
02-03-01 15:20:08 202 151168739 15:20:02 0:00:06 sell 545 self 10000 340.00
02-03-01 15:20:13 203 61197710 15:20:13 *** buy 35 self 10000 340.00
02-03-01 15:20:13 203 151168741 15:20:09 0:00:04 sell 545 self 10000 340.00
02-03-01 15:20:18 204 61197714 15:20:18 *** buy 35 self 10000 340.00
02-03-01 15:20:18 204 151168746 15:20:17 0:00:01 sell 545 self 10000 340.00
02-03-01 15:20:35 205 61197725 15:20:35 *** buy 35 self 10000 340.00
02-03-01 15:20:35 205 151168751 15:20:29 0:00:06 sell 545 self 10000 340.00
02-03-01 15:20:41 206 61197728 15:20:41 *** buy 35 self 10000 340.00
02-03-01 15:20:41 206 151168757 15:20:38 0:00:03 sell 545 self 10000 340.00
02-03-01 15:20:47 207 61197730 15:20:47 *** buy 35 self 10000 340.00
02-03-01 15:20:47 207 151168764 15:20:45 0:00:02 sell 545 self 10000 340.00
02-03-01 15:20:59 208 61197740 15:20:58 *** buy 35 self 10000 340.00
02-03-01 15:20:59 208 151168770 15:20:52 0:00:06 sell 545 self 10000 340.00
02-03-01 15:21:08 209 61197745 15:21:08 *** buy 35 self 10000 340.00
02-03-01 15:21:08 209 151168776 15:21:00 0:00:08 sell 545 self 10000 340.00
02-03-01 15:21:27 210 61197756 15:21:27 *** buy 35 self 10000 340.00
02-03-01 15:21:27 210 151168784 15:21:21 0:00:06 sell 545 self 10000 340.00
02-03-01 15:21:33 211 61197759 15:21:33 *** buy 35 self 10000 340.00
02-03-01 15:21:33 211 151168785 15:21:29 0:00:04 sell 545 self 10000 340.00
02-03-01 15:21:50 212 61197766 15:21:50 *** buy 35 self 10000 340.00
02-03-01 15:21:50 212 151168788 15:21:36 0:00:14 sell 545 self 10000 340.00
02-03-01 15:21:56 213 61197767 15:21:55 *** buy 35 self 10000 340.00
02-03-01 15:21:56 213 151168792 15:21:42 0:00:13 sell 545 self 10000 340.00
02-03-01 15:22:01 214 61197768 15:22:01 *** buy 35 self 10000 340.00
02-03-01 15:22:01 214 151168794 15:21:52 0:00:09 sell 545 self 10000 340.00
02-03-01 15:22:09 215 61197771 15:22:09 *** buy 35 self 10000 340.00
02-03-01 15:22:09 215 151168796 15:21:59 0:00:10 sell 545 self 10000 340.00
02-03-01 15:22:21 216 61197777 15:22:20 *** buy 35 self 10000 340.00
02-03-01 15:22:21 216 151168800 15:22:13 0:00:07 sell 545 self 10000 340.00
It was also seen that when Biyani Securities Pvt. Ltd. sold 7,20,000 shares, on the buying side, it was Shri Harish Biyani who purchased 2,20,000 shares. The balance 5,00,000 shares were purchased by 2 brokers belonging to the D K Singhania group. It was later brought out that the CSE had expunged the entire transactions of 7,20,000 shares on the ground that they were non genuine transactions.
4.23 Shri Harish Biyani stated that it bought these shares for client – Kettlewell Tracom. It is pertinent to note that address of Kettelwell is same as that of ‘Hulda’ and also one of the directors and contact person of this entity is Mr. Manoj Kumar Bhalotia who is also a director of M/s. Hulda Properties and Trades Limited. Therefore, Kettelwell Commodities Limited also is an entity of DSQ group. The transactions done by Biyani group of brokers in the ‘sell n cash’ scheme of SCHIL on 27/2/01 and 1/3/01 and ‘cash on payout’ scheme on 2/3/01 in the shares of DSQ Industries is strong pointer to the promoter broker nexus between DSQ Group and Biyani group of brokers. Promoters colluded with Biyani group in obtaining finance on account of Biyani brokers facing payment crises on the CSE. As discussed in detail later, funds to the tune of approximately Rs. 34 crore and Rs. 8 crore were availed on 27/2/01 and 1/3/01 in the ‘sell n cash’ scheme of SHCIL . Thus, funds were made available on the same date as the transaction date. Thereafter, funds to the extent of around Rs. 24 crore was availed for cash on payout transactions done on 2/3/01. This amount was made available on 5/3/01 by discounting a post dated cheque given by SHC IL.
4.24 In view of the foregoing, it can be concluded that Biyani Securities Pvt. Ltd. and Shri Harish Biyani had acted in concert with the promoters and its associate entities – Hulda, Square D Textiles which credited shares of DSQ Industries to the demat account of Biyani Securities Pvt. Ltd. and Shri Harish Biyani. Shares of promoter entities were also credited through SMIFS Securities Ltd. Biyani Securities Pvt. Ltd. and Shri Harish Biyani then used these shares in addition to other shares lying with it to avail of the schemes of SHCIL to obtain immediate sale consideration in the sell n cash scheme of SHC IL as discussed above. Biyani Securities Pvt. Ltd. was empanelled broker of SHCIL for selling the shares in the said schemes. Biyani Securities Pvt. Ltd. availed finance for self as well as for Shri Harish Biyani for selling these shares in the schemes. The buying broker was Shri Harish Biyani who was buying shares for DSQ group entities. Shares were brought in synchronised deals with buying and selling orders logged in at almost the same time for same rate and quantity with prior understanding to match sell orders with specific buy orders. Biyani Securities Pvt. Ltd. and Shri Harish Biyani indulged in creation of artificial market, creation of artificial volumes as a result of synchronization / prior intention to matching orders. There was creation of artificial market and artificial volumes as a result of synchronization in logging in / matching of buy and sell orders. Orders are placed within a gap of few seconds by Biyani Securities Pvt. Ltd. and Shri Harish Biyani for the same quantity and same rate to ensure that buyers get the desired sellers and vice versa. Shares effectively did not change beneficial ownership by remaining within the DSQ group. Thus, there was circular trading also. The transactions also created artificial market.
4.25 I also note that when Biyani Securities Pvt. Ltd. sold 7,20,000 shares, on the buying side, Harish Biyani purchased 2,20,000 shares. The balance 5,00,000 shares were purchased by the Arihant Exim Scrip Pvt. Ltd. and Doe Jones Investments & Consultants Pvt. Ltd. who were brokers at the relevant time and belonged to the D K Singhania group (2,50,000 shares each).
4.26 In appeal no 54 of 2002 – Nirmal Bang Securities Pvt. Ltd v. SEBI, the Hon’ble Securities Appellate Tribunal has held as under with regard to synchronized deals
“BEB has been charged for synchronized deals with First Global. I have examined the data provided by the parties on this issue. I find many transactions between BEB and FGSB. There are many instances of such transactions. I find the scrip, quantity and price for these orders had been synchronized by the counter party brokers. Such transactions undoubtedly create an artificial market to mislead the genuine investors. Synchronized trading is violative of all prudential and transparent norms of trading in securities. Synchronized trading on a large scale can create false volumes. The argument that the parties had no means of knowing whether any entity controlled by the client is simultaneously entering any contra order elsewhere for the reason that in the online trading system, confidentiality of counter parties is ensured, is untenable. It was submitted by the Appellants that it was not possible for the broker to know who the counter party broker is and that trades were not synchronized but it was only a coincidence in some cases. Theoretically this is OK. But when parties decide to synchronize the transaction the story is different. There are many transactions giving an impression that these were all synchronized, otherwise there was no possibility of such perfect matching of quantity price etc. As the Respondent rightly stated it is too much of a coincidence over too long a period in too many transactions when both parties to the transaction had entered buy and sell orders for the same quantity of shares almost simultaneously.”
Such transactions wherein the buy and sell orders were entered almost simultaneously and the time lag is just under few seconds as aforesaid and the transactions are matched in terms of order quantity, price and time are highly irregular and defeat the purpose of normal order matching system in the price discovery process in the exchanges and would also be in violation of Regulation of 4 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) 1995 which reads as under:-
Prohibition against market manipulation. 4 No persons shall
(a) effect, take part in, or enter into, either directly or indirectly, transactions in securities, with the intention of artificially raising or depressing the prices of securities and thereby inducing the sale or purchase of securities by any person;
(b) indulge in any act, which is calculated to create a false or misleading appearance of trading on the securities markets;
(c) indulge in any act, which results in reflection of prices of securities based on transactions that are not genuine trade transactions;
(d) enter into a purchase or sale of any securities, not intended to effect transfer of beneficial ownership but intended to operate only as a device to inflate, depress, or cause fluctuation in the market price of securities;
4.27 As already noted above, when Biyani Securities Pvt. Ltd. sold 7.2 lac shares of DSQ Industries, Shri Harish Biyani purchased 2.2 lac shares and the rest were purchased by Arihant Exim Scrip Pvt. Ltd. and Doe Jones Investments & Consultants Pvt. Ltd. It is therefore, concluded that the brokers viz. Shri Harish Biyani and Biyani Securities Pvt Ltd acted in concert with the promoters of DSQ Group for creation of artificial market and rise in prices by entering into irregular transactions by way of synchronized trades and cross deals in which the order, quantity, time and prices are matched, financing of trades through the schemes of SHCIL, etc. as discussed above
Acting in concert is something about which actual evidence is normally difficult to come. The Supreme Court had dealt with the issue in the case of CIT v. East Coast Commercial Co. Ltd. AIR (1967) SC 768 (Kedia Family case) in the context of Section 23A of the Indian Income Tax Act, 1922 wherein the question was whether Kedia family had acted in concert to control the affairs of the concerned company. In the facts of that case, there was no evidence of any overt act showing that they were acting in concert and thereby constituted and acted as a block.
In para 14 of the judgement, the SC observed as follows:
“….. It is sufficient, if having regard to their relation, etc., their conduct and their common interest, that it may be inferred that they must be acting together, evidence of actual concerted acting is normally difficult to obtain, and is not insisted upon.” (p.772)
Hence, it is clear from the above that Biyani Securities Pvt. Ltd. and Shri Harish Biyani had together indulged in creation of artificial market, artificial price rise, giving misleading appearance of trades and hence have violated Regulation 4 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 as aforesaid.
4.28 The method and manner of execution of these transactions whereby the order price, quantity and time are matched was highly irregular and against the normal price discovery mechanism in Stock Exchanges. It was contended that Biyani Securities Pvt Ltd and Harish Biyani are separate and distinct entities. While the former is a company registered under the Companies Act, 1956, the latter is an individual broking firm. As such, it was contended that both of them cannot be clubbed together for the aforesaid show cause notice for irregular transactions.
4.29 The JPC Report dated 19.12.2002 on stock market scam at para 6.21 observed that a number of large brokers have more than one card in CSE which are either in the name of their family members or companies where they are major shareholders. Shri Harish Biyani and Biyani Securities Pvt Ltd are amongst such brokers.
4.30 The net outstanding position of Shri Harish Biyani and Biyani Securities Pvt Ltd to the CSE where they were declared defaulters by the Exchange are as under :
(Rs. In crores)
—————————————————————————
Sr. Name of the Defaulter Net Oustanding Total Net No. outstanding
—————————————————————————
Settl Sett Settl.
No.148 No.149 No.150
1. Shri Harish Biyani 20.08 2.49 3.14 25.71
2. Biyani Securities Pvt Ltd 0.79 3.06 3.16 7.01
————————————————————————–
Both Shri Harish Biyani and Biyani Securities Pvt Ltd were declared defaulters on 26.3.2001 by the CSE. One of the reasons for the payment problem at CSE was building up of large outstanding positions by few brokers in few scrips mainly in HFCL and DSQ and volatility in the prices during the relevant period.
In this context, the Hon’ble Supreme Court decision in Delhi Development Authority v. Skipper Construction Co. Pvt Ltd. (1996) 4 Comp LJ 233 (SC) … AIR 1996 SC 2005 that (para 27 at page 247 of COMP LJ ) may be referred to.
“The concept of corporate entity was evolved to encourage and promote trade and commerce but not to commit illegalities or to defraud people. Where , therefore, the corporate character is employed for the purpose of committing illegality or defrauding others , the court would ignore the corporate character and wi ll look at the reality behind the corporate veil so as to enable it to pass appropriate orders to do justice between the parties concerned. The fact that an individual and members of his family have created several corporate bodies would not prevent the court from treating all of them as one entity belonging to and controlled by that individual and family. If it is found that these corporate bodies are merely cloaks behind which lurks the individual and /or members of his family and that the device of incorporation was really a ploy adopted for committing illegalities and /or to defraud people” (underlining supplied).
Acting in concert is something about which actual evidence is normally difficult to come. The Hon’ble Supreme Court in the case of CIT v. East Coast Commercial Co.Ltd. AIR (1967) SC 768 (Kedia Family case) in the context of Section 23A of the Indian Income Tax Act, 1922 wherein the question was whether Kedia family had acted in concert to control the affairs of the concerned company. In the facts of that case, there was no evidence of any overt act showing that they were acting in concert and thereby constituted and acted as a block. In para 14 of the judgment, the SC observed as follows:
“….. if the members of the Kedia family form a block and had more than 75 per cent of the voting power, it was not necessary to prove that they actually exercised controlling interest. It is the holding in aggregate of a majority of the shares issued by a person or persons acting in concert in relation to the affairs of the company which establishes the existence of a block. It is sufficient, if having regard to their relation, etc., their conduct and their common interest, that it may be inferred that they must be acting together, evidence of actual concerted acting is normally difficult to obtain, and is not insisted upon.” (p.772)(italics added).
4.31 The evidence of connected circumstances and preponderance of probabilities, common course of natural events and combination of facts creating network and artificial volumes gives rise to a reasonable inference that Biyani Securities Pvt. Ltd. and Shri Harish Biyani did not act in good faith and without negligence when they had executed these transactions.
The standard of proof required in a proceeding of this nature is at variance with the standard of proof required in criminal cases. It is sufficient if the preponderance of probabilities suggests towards the indulgence of the delinquent in the misconduct. The strict rules of Evidence Act and proof beyond reasonable doubt are not applicable to a proceeding of this nature. The Supreme Court’s decision in Gulabchand v. Kudilal AIR 1966 SC 1734 and the decision of the Special Court for trial of offences relating to transactions in securities in the matter of National Housing Bank v. ANZ Grindlays Bank, 1998 (2 ) LJ 153 is relied upon in this regard.
5. ORDER
Now, therefore, having regard to the nature and gravity of the charges established against Biyani Securities Pvt. Ltd. and Shri Harish Biyani, I hereby, in exercise of powers under Section 11(4), 11B of SEBI Act, 1992, and Regulation 11 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003, prohibit Biyani Securities Pvt. Ltd. and its directors and Shri Harish Biyani from buying, selling or dealing in the securities market for a period of 5 years.
This order shall come into force with immediate effect.