21 securities and exchange board of india ...17. mr. kinkar bhattacharya amdpb1266e 18. mr. sukanta...

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WTM/SR/IVD-ID-7/ 21 /03/2017

SECURITIES AND EXCHANGE BOARD OF INDIA

CORAM: SHRI. S RAMAN, WHOLE TIME MEMBER

ORDER

Under Sections 11(1), 11(4)(d) and 11B of the Securities and Exchange Board of India Act, 1992

In respect of –

S. No.

Name PAN

1. Beejay Investment & Financial Consultants Private Limited AABCB0832B

2. Mr. Sudhir Jain AEUPJ6167K

3. Ms. Rashmi Jain ABBPL1283E

4. Eversight Tradecomm Private Limited AAACE7667E

5. Mr. Adish Jain AGZPJ0317Q

6. Mr. Peeyush Jain AFNPJ8263L

7. Stupendors Traders Private Limited AADCS7524F

8. Mr. Vicky Kothari AKQPK4594D

9. Ms.Prativa Kothari AWCPK5030E

10. Neelanchal Mercantile Private Limited AAACN8842N

11. Mr. Surendra Agarwala ADHPA1860E

12. Mr. Bhupendra Kumar Dhanuka ACOPD8512C

13. Divyadrishti Merchants Private Limited AABCD8147K

14. Divyadrishti Traders Private Limited AABCD8146J

15. Mr. Debasis Mishra AHBPM8657M

16. Mr. Rajesh Kumar Agarwal ADDPA1188K

17. Mr. Kinkar Bhattacharya AMDPB1266E

18. Mr. Sukanta Chatterjee AIRPC7338Q

1. Securities and Exchange Board of India (“SEBI”), passed an ad-interim exparte Order dated June 16, 2016

against 18 entities, viz. Beejay Investment and Financial Consultants Pvt. Ltd. (Beejay) and its Directors,

viz. Mr. Sudhir Jain (Sudhir Jain), Ms. Rashmi Jain (Rashmi Jain), Eversight Tradecomm Private Limited

(Eversight) and its Directors, viz., Mr. Adish Jain (Adish Jain), Mr. Peeyush Jain (Peeyush Jain),

Stupendors Traders Private Limited (Stupendors) and its Directors, viz., Mr. Vicky Kothari (Vicky

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Kothari), Ms. Prativa Kothari (Prativa Kothari), Neelanchal Mercantile Private Limited (Neelanchal)

and its Directors, viz., Mr. Surendra Agarwala (Surendra Agarwala), Mr. Bhupendra Kumar Dhanuka

(Bhupendra Dhanuka), Divyadrsihti Merchants Private Limited (DDM) and Divyadrishti Traders

Private Limited (DDT) and the Directors of DDM and DDT, viz., Mr. Debasis Mishra (Debasis Mishra),

Mr. Rajesh Kumar Agarwal (Rajesh Agarwal), Mr. Kinkar Bhattacharya (Kinkar Bhattacharya) and Mr.

Sukanta Chatterjee (Sukanta Chatterjee). All the said four directors are common for both DDM and

DDT. The aforesaid entities are hereinafter referred to individually by their respective names and

collectively as the Noticees. Vide the aforesaid Order, it was inter alia directed as under:

“to impound the alleged unlawful gains of a sum of `27,44,34,765/- (alleged gain of `18,99,43,661/- + interest of

`8,44,91,104/- from 01/10/2012 to 15/06/2016) jointly or severally from the aforesaid eighteen Noticees,

the aforesaid Noticees are further directed:-

not to dispose of, transfer, alienate or charge any of their assets (movable or immovable) till such time the amounts

mentioned above are credited to an escrow account {“Escrow Account in Compliance with SEBI Order dated June

16, 2016 – A/c (in the name of the respective persons/entities)”} created specifically for the purpose in a Nationalized

Bank. The escrow account/s shall create a lien in favour of SEBI and the monies kept therein shall not be released

without permission from SEBI.

to provide, within 7 days of this Order, a full inventory of all their assets and properties and details of all their bank

accounts, demat accounts and holdings of shares/securities, if held in physical form and details of companies in which

they hold substantial or controlling interest.”

2.1 The aforesaid ad interim exparte order was passed under the following factual background:

i. SEBI received a Suspicious Transaction Report (“STR”) dated December 21, 2012 from Financial Intelligence

Unit (“FIU”) generated by ICICI Bank Limited (“ICICI Bank”) with respect to the high value

transactions noticed in the Bank accounts of three of the Noticees, viz. Beejay (A/c No. 627705044687,

ICICI Bank), Sudhir Jain (A/c No. 627705054140, ICICI Bank) and Eversight (A/c No. 627705054145,

ICICI Bank) during the period September 10, 2011 to September 09, 2012. The aforesaid entities were

already under restraint from accessing the market during the period September 10, 2011 to September 09,

2012 as per direction issued by SEBI vide interim order dated June 04, 2009 for their alleged manipulation

in the scrips of Cals Refineries Limited (Cals), Confidence Petroleum India Limited (Confidence), Bang

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Overseas Limited (Bang), Shree Precoated Steels Limited (SPSL) (now known as Ajmera Realty & Infra

Limited) and Temptation Foods Limited (Temptation).

ii. As the aforesaid entities were under restraint imposed by SEBI vide interim order dated June 04, 2009 for

the manipulation in the said four scrips, during the aforesaid period of September 10, 2011 to September

09, 2012 (when the abovementioned suspicious transactions were noticed by FIU), SEBI ordered an

investigation into the dealings of Beejay, Sudhir Jain and Eversight for the period September 01, 2011 to

September 30, 2012 (“Investigation Period”) to ascertain whether there were any violations of the

provisions of SEBI Act, 1992 (“SEBI Act”), Rules and Regulations made thereunder and SEBI directions.

iii. The investigation revealed that the debarred entities, Beejay, and Eversight transferred funds,

directly/indirectly, to the connected entities, viz. Stupendors, Neelanchal, DDM and DDT during the

investigation period. Neelanchal, DDM and DDT in turn transferred funds to various brokers for trading.

In the process, the aforesaid Noticees allegedly made unlawful gains. The relevant findings made in the

investigation report are summarized as under:

a. The debarred Noticees, Beejay and Eversight had transferred a total amount of `17.78 crores to

Neelanchal during the investigation period. Beejay had also (directly/indirectly) transferred funds

through Stupendors to Neelanchal, who in turn transferred the same to different brokers for trading.

For instance, on December 08, 2011, an amount of `2 crores were transferred by Beejay through

Stupendors, to Neelanchal who in turn transferred the same to the broker (Religare Securities Ltd.).

Numerous such transactions involving huge amounts have been noted in their accounts during the

investigation period.

b. Similarly, DDM and DDT received an amount of ̀ 42.28 crores from Beejay and Eversight, out of which

an amount of `21.49 crores has been transferred to the brokers, for trading during the investigation

period.

c. The total funds flow from the debarred Noticees viz. Beejay and Eversight, directly to the connected

entities, i.e Noticees, viz. Neelanchal, (A/c No. 627705500278, ICICI Bank), DDM, (A/c No.

000605010065, ICICI Bank & 00082340012275, HDFC Bank) and DDT (000605010082, ICICI Bank)

during the investigation period was as under:

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(in `crores)

Serial no.

Name of Entity Amount Received from debarred entities

Amount Transferred to brokers

Proportion of the funds received from debarred entities that are transferred to brokers for trading

1. Neelanchal Mercantile Pvt Ltd

Beejay 0.30

38.59 46% Eversight 17.48

Total 17.78

2. Divyadrishti Merchants Pvt Ltd

Beejay 28.94

17.20 100%

Eversight 0.85

Total

29.79

3. Divyadrishti Traders Pvt Ltd

Beejay 12.49 4.29 100%

Total 12.49

d. The aforesaid table indicates that the debarred Noticees, Beejay and Eversight had transferred a total

amount of `17.78 crores to Neelanchal during the investigation period. Neelanchal, in turn transferred

`38.59 crores to the brokers for trading. The proportion of funds received by Neelanchal from the

debarred Noticees, viz. Beejay and Eversight, for trading is therefore considered as 46%. Accordingly,

46% of the profits made by Neelanchal by trading during the investigation period is attributed to Beejay

and Eversight.

e. Similarly, DDM and DDT received a total amount of `42.28 crores (` 29.79 crores + ` 12.49 crores)

from Beejay and Eversight, out of which an amount of `21.49 crores ( ` 17.20crores + ` 4.29 crores )

was transferred to the brokers for trading during the investigation period. The entire funds transferred

by DDM and DDT to the brokers during the investigation period was found to have been received

(directly/indirectly) from the debarred Noticees, viz., Beejay and Eversight (as the amounts transferred

to DDM and DDT were higher than that transferred by DDM and DDT to the brokers). Accordingly,

the entire profits (100%) made by DDM and DDT by trading during the investigation period is attributed

to Beejay and Eversight.

f. Investigation therefore observed that the Noticees, viz. Neelanchal, DDM, DDT and Stupendors had

facilitated the trades of the debarred Noticees, viz. Beejay and Eversight by transferring funds received

from them to the aforesaid stock brokers, in contravention of extant SEBI’s directions. It was hence

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concluded that the Noticees made alleged unlawful gains to the tune of `27.36 crores (alleged gain of

`18.99 crores + interest of ` 8.36 crores) in aggregate through trading in the securities market during

the debarment period.

g. The Noticees, viz. Sudhir Jain and Rashmi Jain were the Directors of Beejay, Adish Jain and Peeyush

Jain were the Directors of Eversight, Vicky Kothari and Prativa Kothari were the Directors of

Stupendors, Surendra Agarwala and Bhupendra Dhanuka were the Directors of Neelanchal, Debasis

Mishra, Rajesh Agarwal, Kinkar Bhattacharya and Sukanta Chatterjee were the Directors of both DDM

and DDT. The said Directors were in charge and responsible for the conduct of the business and day to

day affairs of the respective companies during the period of investigation and hence liable for the

activities of the Companies during the said period.

h. Investigation also observed that the stock broker, viz. Korp Securities (through whom DDM and DDT

traded) was connected to the Noticees, viz. DDM, DDT and Neelanchal. The director of Korp

Securities, viz. Mr. Sushil Kumar Agarwal and one of the directors of DDM and DDT, viz. Rajesh

Agarwal are brothers. Further, DDM holds 17,500 shares of Milestone Shares & Stock Broking Pvt Ltd,

who in turn holds 1,250,000 shares of Neelanchal.

2.2 In view of the aforesaid findings of the investigation and also considering the possibility that the aforesaid

debarred entities and the connected entities might divert the unlawful gains (subject to the adjudication of the

allegation on the merits in the final order), which may result in defeating the effective implementation of the

possible direction of disgorgement (of the illgotten gains made by the Noticees by trading during the

debarment period), if any, to be passed after adjudging the matter on merits, SEBI vide the said ad-interim

exparte Order dated June 16, 2016 (mentioned at Paragraph No. 1) inter alia directed the Noticees, viz.

Beejay, Eversight, Stupendors, Neelanchal Mercantile, DDM and DDT and their Directors, who were

responsible for the conduct of the said companies viz. Sudhir Jain and Rashmi Jain (Beejay), Mr. Adish

Jain and Mr. Peeyush Jain (Eversight), Mr. Vicky Kothari and Miss Prativa Kothari (Stupendors) Mr.

Surendra Agarwala and Mr. Bhupendra Dhanuka (Neelanchal) and Mr. Debasis Mishra, Mr. Rajesh

Agarwal, Mr. Kinkar Bhattacharya and Mr. Sukanta Chatterjee (DDM and DDT) to impound the alleged

unlawful gains of a sum of ` 27,44,34,765/- (alleged gain of ` 18,99,43,661/- + interest of `8,44,91,104/-

from 01/10/2012 to 15/06/2016).

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2.2.1 The said Order also observed “As the present investigation was focused on the fund flows observed from the Bank

Account statements of Mr. Sudhir Jain, Beejay Investment & Financial Consultants Private Limited and Eversight

Tradecomm Private Limited, under reference from FIU, and the corresponding bank accounts of the entities facilitating trades

of the debarred entities, the Securities and Exchange Board of India shall conduct fresh investigation into the matter covering

the other bank accounts also, that were used for trading, by the entities, which would have been used to aid the debarred entities

to trade in the market. The same shall be completed as expeditiously as possible. If any violations are brought out in the

investigation, the Securities and Exchange Board of India shall proceed in accordance with law”.

2.2.2 The aforesaid Noticees were provided with an opportunity to file their replies to SEBI within 21 days from

the date of the receipt of the Order. They were also advised to indicate in their replies whether they wish

to avail an opportunity of personal hearing in the matter.

3.1 Pursuant to this, the following Noticees filed their replies to the allegations in the said interim order:

i. Beejay vide letter dated September 22, 2016;

ii. DDT vide letter dated October 06, 2016;

iii. DDM vide letter dated September 21, 2016;

iv. Rajesh Agarwal vide letter dated October 27, 2016;

v. Kinkar Bhattacharya vide letter dated October 22, 2016;

vi. Sukanta Chatterjee vide letter dated October 24, 2016.

3.2 The remaining Noticees, viz. Sudhir Jain, Rashmi Jain, Eversight, Adish Jain, Peeyush Jain, Stupendors,

Vicky Kothari, Prativa Kothari, Neelanchal, Surendra Agarwala, Bhupendra Dhanuka and Debasis Mishra

did not file any reply despite the interim order being served upon them. Two of the Noticees, viz.

Neelanchal and Surendra Agarwala (one of the Directors of Neelanchal) filed a Writ Petition before the

Hon’ble High Court of Calcutta inter alia challenging the said ad-interim exparte dated June 16, 2016. The

Hon’ble High Court of Calcutta, vide Order dated January 06, 2017 inter alia directed that Neelanchal

should file its reply to the SCN within 10 days from the date of the Order and on receipt of such reply

SEBI would dispose of the same in accordance with law within four weeks thereafter. The Hon’ble court

also ordered that Neelanchal shall make an application for opening of a new bank account as well as demat

account and carry on business. Subsequent to this, Neelanchal filed its reply vide letter dated February 01,

2017 (received by SEBI via e-mail dated February 02, 2017), i.e. after a delay of 15 days (February 02, 2017

rather than January 16, 2017). Vide the said letter, they also sought copies of investigation report, STR and

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Form 32 (filed by Neelanchal) obtained from MCA website (wherein the email id of the director of

Eversight, Mr. Peeyush Jain ([email protected]) was mentioned as the e-mail id of the

director of Neelanchal). The relevant documents sought by the Noticee have been forwarded to them vide

letter dated February 16, 2017.

3.3 In the meanwhile, seven of the Noticees, viz. Beejay, Neelanchal, DDM, DDT, Rajesh Agarwal, Kinkar

Bhattacharya and Sukanta Chatterjee (who sought personal hearing) were given an opportunity of personal

hearing before me on February 07, 2017. During the hearing held on February 07, 2017, only four of the

Noticees, viz. Beejay, Neelanchal, DDT and DDM appeared and made their respective submissions. The

remaining three Noticees did not avail the opportunity of personal hearing. During the hearing, the

aforesaid four Noticees sought time to file their additional written submissions in the matter. Accordingly,

they were granted time till February 15, 2017. The Noticees were also directed to furnish the following

information/documents by February 15, 2017:

Beejay to provide the details along with full particulars including the rationale, documentary proof, etc. in respect of each

of the transactions during the period September 01, 2011 to September 30, 2012 appearing in the Accounts of

Stupendors, Neelanchal, DDM and DDT in the books of accounts of Beejay (Annexure A, B, C and Annexure-2 of

the reply dated September 22, 2016 filed by Beejay).

Neelanchal to provide the details/explanation along with full particulars including the rationale, documentary proof, etc.

in respect of each of the transactions during the period September 01, 2011 to September 30, 2012 appearing in the

Accounts of Beejay and Eversight in the books of accounts of Neelanchal (Annexure 3 and 4 of the reply dated February

01, 2017 filed by Neelanchal).

Neelanchal to provide details/explanation along with full particulars including the rationale, documentary proof, etc. in

respect of each of their transactions/fund transfers with Stupendors during the period September 01, 2011 to September

30, 2012,

Neelanchal to respond to SEBI letter dated 19/10/2016 followed by two reminders dated 01/11/2016 and

11/11/2016 [issued pursuant to the present investigation],

DDM and DDT to provide the details along with full particulars including the rationale, documentary proof, etc. in

respect of the transactions/fund transfers carried out by them with entity Beejay and the stock broker, Korp Securities

during the period September 01, 2011 to September 30, 2012.

mailto:[email protected]

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3.4 Subsequent to this, Beejay, DDT and DDM vide separate letters dated February 18, 2017 filed their

respective written submissions. The Noticee, Neelanchal filed their reply vide letter dated February 27,

2017.

The replies and submissions of the Noticees are summarized as under:

i. Beejay vide letters dated September 22, 2016 and February 18, 2017 inter alia submitted as under:

a. We have not traded directly/indirectly in the securities market as alleged in breach of prohibitory directions issued by SEBI

vide its Order dated 04.06.2009 r/w 19.01.2010. We have strictly complied with/adhered to the directions issued by

SEBI and there is no contravention of the same. Findings in the said Order are based on the presumption that we had

traded indirectly by transferring funds, directly/indirectly, to the alleged connected entities during the investigation period

while the prohibitory directions issued by SEBI were in force. The said presumption is totally misplaced, is based on mere

surmises and conjectures and is also completely contrary to factual position on record.

b. The allegations in the said Order are primarily based on movement of funds between various entities including Beejay during

the investigation period i.e. September 01, 2011 to September 30, 2012.

c. In so far as Stupendors is concerned, at all points of time Beejay had to pay the amounts to Stupendors, raised by Beejay

at earlier point of time from Stupendors. As on 01.09.2011, Beejay had to return an amount of Rs 21,68,75,000/- to

Stupendors and as on 27.09.2012 the amount stood at Rs 59,25,90,000/-. During the entire investigation period, Beejay

had either been further borrowing or been repaying the amounts. The balances kept fluctuating. But at all points of time,

during the investigation period, Beejay had to repay the amounts to Stupendors.

Therefore, whatever funds were transferred by Stupendors to other entities (who are alleged to have traded in the

securities market) were funds belonging to Stupendors alone. Further, Beejay had no role or involvement in transfer of funds

by Stupendors to others and Beejay is not aware of the utilization of funds held by Stupendors. Furthermore, Beejay

categorically submit that the fund transfers by Stupendors were not on our behest or on our behalf or on our instruction.

d. In so far as DDT is concerned, at all points of time (except for short time period) we had to pay the amounts to DDT,

raised by us at earlier point of time from DDT. As on 01.09.2011, we had to return an amount of `1,61,10,000/- to

DDT and as on 03.07.2012 (post which there are no fund transfers till 30.09.2012) the amount stood at `1,00,000/-

During the period 01.09.2011 to 12.10.2011, Beejay had to repay the amounts to DDT. As on 12.10.2011,

Beejay had to repay an amount of Rs 86,60,000/-.

During the period 13.10.11 to 03.02.2012, Beejay had to receive amounts from DDT. As on 03.02.2012,

Beejay had to receive an amount of Rs 3,48,40,000/-. Significantly, during this period there are no transactions

which have been alleged to have been funded by Beejay.

During the period 04.02.2012 to 03.07.2012, Beejay had to repay the amounts to DDT. As on 03.07.2012,

Beejay had to repay an amount of Rs 100,000/-.

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e. From the aforesaid, it is clear that the balances kept fluctuating. But at all points of time (except for short time period),

during the investigation period, Beejay had to repay the amounts to DDT. Therefore, whatever funds were transferred by

DDT to its brokers were funds belonging to DDT alone. Further, Beejay had no role or involvement in transfer of funds

by DDT to its brokers and we are not aware of the utilization of funds held by DDT. Furthermore, Beejay categorically

submit that the fund transfers by DDT were not on Beejay’s behest or on Beejay’s behalf or on Beejay’s instruction.

f. In so far as DDM is concerned, at all points of time (except for short time period) Beejay had to pay the amounts to DDM,

raised by Beejay at earlier point of time from DDM. As on 01.09.2011, Beejay had to return an amount of Rs.

14,32,21,300/- to DDM. Thereafter, till 19.03.2012 the same status continued and as on 19.03.2012 Beejay had to

pay an amount of Rs 41,25,000/- to DDM.

g. During the period 20.03.2012 to 30.07.2012, Beejay had to receive amounts from DDM. As on 20.03.2012, Beejay

had to receive an amount of Rs 58,75,000/- and as on 30.07.2012 Beejay had to receive an amount of Rs 4,26,00,000/-

Significantly, during this period there are no transactions which have been alleged to have been funded by Beejay.

h. From the aforesaid, it is clear that the balances kept fluctuating. But at all points of time (except for short time period),

during the investigation period, Beejay had to repay the amounts to DDM. Therefore, whatever funds were transferred by

DDM to its brokers were funds belonging to DDM alone. Further, Beejay had no role or involvement in transfer of funds

by DDM to its brokers and Beejay is not aware of the utilization of funds held by DDM. Furthermore, Beejay categorically

submits that the fund transfers by DDM were not on Beejay’s behest or on Beejay’s behalf or on Beejay’s instruction.

i. Nothing has been brought on record to substantiate that Beejay was in any manner, involved in fund transfers by DDM

to brokers or that the fund transfers were at Beejay’s behest or on Beejay’s behalf or on Beejay’s instruction. Therefore, the

issue of DDM transferring funds to brokers on Beejay’s behalf for the purpose of trading etc. as alleged cannot and does

not arise.

j. In so far as Neelanchal is concerned, there are insignificant fund transactions. The amount (i.e. Rs 5lacs) lent on

23.11.2011, 09.12.2011, 23.12.2011, 30.12.2011 was reversed on the same day. The amount (i.e. Rs 5lacs) borrowed

on 07.03.2012 was repaid back on 09.03.2012 and the amount (i.e. Rs 5lacs) borrowed on 23.05.2012 was repaid

back on 12.06.2012. Admittedly, at any given point of time the amount borrowed or lent was not more than Rs 500,000/-

which is exceedingly insignificant. Therefore, based on the said fund transfer, Beejay cannot be alleged to have traded through

Neelanchal.

k. With regard to the observations pertaining to the alleged connection with various related/connected entities, Beejay denied

that they were connected to any related or connected entities save and except to the extent as stated herein below:

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Insofar as Shri Adish Jain, and Shri Peeyush Jain are concerned, it is submitted that they are distant relatives of our

director Mr.Sudhir Jain. Further, Shri Vicky Kothari, is related to Beejay’s Director. All of them are financially

independent and trade independently. Further, Beejay has no role to play in their day to day business activity.

Insofar as DDT, DDM and Stupendors are concerned, Beejay stated that Beejay has no relation/connection or nexus

with them save and except borrowing, lending and dealing in unlisted securities in the ordinary course of Beejay’s

business. The shares of Siddhi Commotrade Pvt Ltd and Corus Marketing Pvt Ltd were acquired by Beejay in the

ordinary course of their business. Further, nothing has been brought on record to substantiate the allegation that they

had traded indirectly in the securities market by transferring funds, directly/indirectly, to the said entities.

Based on the trading done by the said entities, it has been surmised that Beejay had traded indirectly in the securities

market by transferring funds, directly/indirectly which is legally untenable and unsustainable. Even the profit gained

by the said entities has not been transferred to them.

It is categorically submitted that the entire relationship/grouping is erroneous and completely contrary to the factual

position on record and is based merely on surmises and conjectures. Since the grouping is erroneous, the whole edifice of

the Order fails.

l. It is submitted that the calculation of profit is totally absurd, illogical, notional and inacceptable. It was denied that Beejay

has made any profits as alleged.

m. Beejay had no role whatsoever in the trading done by the said entities. Even nothing has been brought on record even remotely

suggesting that Beejay had any role in trading by the said entities. Further, Beejay was not aware of the profit/loss incurred

by the said entities during the investigation period or at any point prior to or post the investigation period.”

ii. Neelanchal vide letters dated February 02, 2017 and February 27, 2017 inter alia submitted as

under:

a. “We, Neelanchal Mercantile Pvt. Ltd., have been registered as a non-deposit raising NBFC with the Reserve Bank of India

since 1st January, 2008. We commenced our business of shares & securities trading from 5th November, 2009 and have set

a strong track record in all our activities. Our business is to make investment in securities, besides granting of loans &

advances,

b. We have been trading in the securities market, in the ordinary course, based on our commercial wisdom and analysis, through

various brokers viz JM Financial Services Private Limited, IFCI Financial Services Limited, India Infoline Limited,

Religare Securities Limited, Aditya Birla Money Limited, Saffron Global Markets Private Limited. Further for the purpose

of our trading we have availed margin funding facilities from various NBFC’S (viz JM Financial Products Limited, Narayan

Sriram Investments Private Limited, India Infoline Finance Limited, Religare Finvest Limited). Such margin funding were

our principal source of investments in listed shares & securities and our trading were carried out based on margin funding

limits provided to us by NBFC’s of reputed Broking Houses,

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c. The Impugned Order has been passed in gross violation of principles of natural justice and in complete violation of provisions

of section 11(4) and 11B of SEBI Act. The facts and circumstances of the case do not justify passing of any ex parte order.

Here we may point out that, on May 07, 2015, we had received letter from SEBI seeking various details from us regarding

certain fund transactions between us, “Beejay”, “Eversight” and “Sudhir Jain” during the period September 01, 2011 to

September 30, 2012. The details were provided by us to SEBI vide our letter dated July 31, 2015. We submit that

subsequent to our letter dated July 31, 2015 there has been no communication from SEBI. Thereafter, suddenly after almost

more than 10 months from the last communication, the Impugned Order was passed, without issuing any Show Cause Notice

or granting any opportunity of hearing and without taking our reply into consideration.

d. The directions contained in the Impugned Order are also in total breach of section 11(4) of the SEBI Act. SEBI has cleverly

circumvented the provisions of section 11(4)(e).

e. The direction to disgorge, even before the matter has been finally adjudicated on merits, is totally arbitrary, unreasonable and

legally untenable. In the absence of any express power to charge interest on the alleged disgorged amount, the direction to pay

interest is totally illegal. The direction to pay interest @ of 12% at this juncture from the back date, when the liability has

not been crystallized, is totally unjustified and unwarranted.

f. It is submitted that all our trades during the Investigation Period were executed on a recognized stock exchanges, executed

through SEBI Registered Stock Brokers (who had completed our KYC norms), settlement were made by exchanges and there

has been no illegality in our trades. Even 'The Order' has not brought anything on record or alleged that our trades were in

violation of SEBI Act or Regulations,

g. It is alleged that we are related to DDM, based on the fact that DDM held 17,500 Equity Shares of Milestone Shares &

Stock Broking Pvt. Ltd. which in turn hold 12,50,000 shares of our company. It is submitted that Milestone Share &

Stock Broking Pvt. Ltd. is our holding company (holding just 55.60% of our voting capital) and DDM had became its

minority shareholder on 31/03/2010, holding just 5.43 % of the share capital. There was no restraining order by SEBI

or any other regulator against DDM when share were allotted by Milestone to DDM. Thus, nothing adverse is to be inferred

against us based on the fact that DDM happens to be a minority shareholder of our holding company. It is further submitted

that DDM did not had any management control of our company or of our holding company,

h. It is submitted that SEBI has drawn adverse inference against us by inferring that we were a 'Dummy' entity. It is vehemently

denied that we are a Dummy entity. The observation made by SEBI at para 4(m) of 'The Order' are based on flawed

rational and without appreciating the facts on records. In this regards we would like to submit that we are a Non-Banking

Finance Company registered with RBI and that we enjoy considerable goodwill and reputation in the market and broking

fraternity. We wish to place the following on record. We had contributed significantly to the nation exchequers by way of taxes

and levies. SEBI's observations that "it can be deduced that Neelanchal was a 'dummy' entity" are thus in bad taste, based

on erroneous observation;

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Nature of Expenses Financial Year 2010-11 Financial Year 2011-12 Financial Year 2012-13

Service Tax Paid 14,92,304 35,61,726 1,21,07,486

Securities Transaction Taxes 52,77,968 1,44,09,816 34,79,667

TOT, Stamp Duty and other Statutory Levies

52,79,964 3,63,38,000 2,95,08,465

Finance Charges 1,39,25,144 5,78,00,974 5,77,54,245

Inventories of Quoted shares as at year end 31,37,07,600 78,01,18,938 20,98,02,334

i. It has been alleged at para 4(f) of 'The Order' that we are connected to Eversight and that we share a common E-Mail Id

with Eversight namely, [email protected]. In our written submission dated 01.02.2017 we had denied that

the said E-Mail Id belongs to us and we had sought details from SEBI, based on which SEBI has drawn such observation.

During the course of the personal hearing it was pointed out to our Authorised representative, that the E-Mail Id of our

company was mentioned as [email protected] in Form 32 filed with MCA on 10.03.2011 In this regards

it is submitted that our E-Mail Id is [email protected] and not [email protected]. Form 32

is respect of resignations of our Directors was filed by our auditor. The clerical staff from his firm has filled in wrong E-

Mail I'd in the form, which went unnoticed by us. We are sorry for the same and reiterate that our E-Mail Id has always

been [email protected] and [email protected]. We enclose herewith necessary evidence by way of

communication from our bankers and our DP Client Masters to show that our E-Mail Id during the relevant point of

time was [email protected] and [email protected]. The same may kindly be taken on records.

Transaction with Beejay:

j. We have entered into financial transactions with Beejay in the ordinary course of our business of NBFC. We had taken

and given very short term loans and advances mostly in the nature of intraday transactions or for a day or two. We are

enclosing herewith ledger a/c with Beejay for the period 01.09.2011 to 30.09.2012 as Annexure - 3, wherein there are

6 payments & 6 receipts of Rs.5,00,000/- each. We have taken very short term loan on 3 occasions which were repaid to

Beejay during the day end. On two occasion Beejay has taken loan from us, which were repaid by Beejay after 2 days on

one occasion and after about 20 days on other occasion.

Transaction with Eversight:

k. The transactions with Eversight were in the ordinary course of our business of NBFC. We had taken and given short

loans and advances. We are enclosing herewith Ledger a/c of Eversight for the period 01.09.2011 to 30.09.2012 as

Annexure – 4. During the financial year 2011-12, we had taken intraday loan from Eversight for a sum of

Rs.5,00,000/- on 2 occasion. The same were repaid by day end. We had given short term loan of Rs.5,00,000 each on

two occasions, which were repaid by Eversight.

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l. During the financial year 2012-13, we had taken short term advances from them in the ordinary course, which were repaid

to them on demand. The maximum amount outstanding at any point of time during the year was Rs.12,28,00,000/- on

27/07/2012 which was repaid to them subsequently. As at year end i.e March 31, 2013 there was no outstanding

payable or receivable with them.

m. From 05.06.2012 to 30.09.2012, we had regular transactions of receipts and repayment of Loan/Advance with

Eversight in the ordinary course and none of which were for the alleged trades of Eversight. As at 30/09/2012 a sum of

Rs.12.03 crores was payable to Eversight which has been repaid to them in January, 2013 and as at year end 31.03.2013

a sum of Rs. NIL was payable to them.

Transaction with Sudhir Jain:

n. During the Investigation Period we had received Advances from Sudhir on 3 instances of Rs. 5 lakhs each and the same

were repaid on the same day. The day end balance in all such case was Rs. NIL. Thus, it cannot be alleged that Sudhir

Jain has traded through us. The daily day end Closing Balance of Sudhir Jain during the Investigation Period was Rs.

Nil.

o. It is submitted that we have repaid all the sum of money received from the debarred entities during the Investigation Period

and nothing is due & payable to them. No part of the amount received in lying due with us.

p. Further to the above, it is denied that we had received a sum of Rs. 0.30 crores from Beejay and Rs. 17.48 crores from

Eversight during the Investigation Period for the purpose of enabling their trades. It is further submitted that the details of

Rs. 38.59 crores allegedly transferred to brokers has not been provided in 'The Order'. There are no evidence in 'The

Order' that the amount received from Beejay and Eversight have been transferred to the brokers.

q. Thus, the allegations leveled against us are based on mere surmises and conjunctures, assumptions and presumptions.

r. All the trades during the Investigation period were executed on the floor of the exchanges, and were on our own account.

Contracts notes were generated in our name, pay in & pay out obligation were made by us, we were the beneficial owner of

all the shares & securities during the period and all the transactions and the resultants profit & loss were duly disclosed

in our books, which were duly audited.

s. It is submitted that our Directors & Shareholders are different from Directors & Shareholders of other companies listed

in the Ex parte Order and that none of the barred entities viz. Beejay, Sudhir, Eversight or Stupendors are our

shareholders. Further, it is stated in the Ex parte Order that DDM held 17,500 Equity Shares of Milestone Shares &

Stock Broking Pvt. Ltd. which in turn hold 12,50,000 shares of our company. It is submitted that Milestone Share &

Stock Broking Pvt. Ltd. is our holding company (holding just 55.60% of our voting capital) and DDM had became it’s

minority shareholder on 31/03/2010, holding just 5.43% of the share capital of Milestone. There was no restraining

order by SEBI or any other regulator against DDM when share were allotted by Milestone to DDM. Thus nothing

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adverse is to be inferred against us based on the fact that DDM happens to be a minority shareholder of our holding

company.

t. It is submitted that all our trading during the “Investigation period” were on our own account and that no part of the same

relates to the debarred entities, Beejay and Eversight.

u. We state that it is matter of record that during the period under investigation, we had bought and sold several shares/scrips

on NSE and BSE through IFCI Financial Services Limited, Religare Securities Limited, Aditya Birla Money Limited

and India Infoline Limited and in fact prior to investigation period and even thereafter, our pattern of trades has always

been the same. …..In fact even prior to and post the investigation period, we had several transactions with the said debarred

entities and since the said fund transactions have nothing to do with our trading in the securities market, we fail to

understand on what basis SEBI even assumes that our trades on NSE and BSE were on behalf of said debarred entities,

v. We state that SEBI’s prima facie observation that “Korp” was connected to us is wrong & flawed. We have never been a

client of “Korp” or had any financial transaction with “Korp”……..

w. In respect of our trades on NSE: SEBI has worked out notional profit of Rs.20,50,14,938/- in respect of our trades in

Pipavav Def. & Offshore Engg. and a notional loss of Rs.2,27,43,858/- in respect of our trades in Pipavav Shipyard

Ltd. We understand that, both the companies are one and the same. Further to that such profit & loss are also not set off

in working out the alleged gain.

x. In respect of our trade in the script of SRS Ltd on NSE & BSE, we have been allotted 32,98,718 shares @ Rs. 58/-

each, during the Investigation period. Such acquisition has not been considered by SEBI in tabulating profit & loss.

Further corporate action like acquisition through bonus issue e.g in the case of Nitin Fire Protection Industries Ltd. has

not been considered,

y. ……….SEBI has observed that our Directors are responsible for our conduct and therefore liable; however SEBI fails to

understand that the trades entered into by us were in the normal course of business and same is well established and clear

from the material relied by us hereinabove. Therefore, question of holding us or our directors guilty of any violation is

improper”

iii. DDM vide letters dated September 21, 2016 and February 18, 2017inter alia stated:

(a) “The movement of funds between us & Beejay on 26/08/2011 predates the Investigation period. Further, it has been

stated in the Impugned Order that the movement of funds from Beejay to us on 02/09/2011 was towards our trade

through Korp on 02/09/2011. In this regards we submit as under:

i. On 02/09/2011 we had received a sum of Rs.30 lacs from Beejay towards our dues as on 01/09/2011 i.e start

of the investigation period.

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ii. The movement of funds between us & Korp of Rs. 30 lacs were into Korp's ICICI Bank a/c 000605016720,

which is a General Business account of Korp. The said account of Korp is not a NSE/BSE Client account. Thus,

the transfer of funds to Korp was not for the purpose of our trading.

iii. It has been stated by SEBI that the funds received by us from Beejay were for our trades on BSE through Korp on

02/09/2011. It is denied that we have traded on 02/09/2011 on BSE through Korp. From the above it is

apparent that the inference drawn by SEBI are factually incorrect, erroneous and flawed.

(b) Based on the above it is apparent that SEBI has drawn erroneous inferences based on movement of funds between us &

Beejay, which were in the ordinary course.

(c) It is submitted that SEBI has merely stated that we have received a sum of Rs. 29.79 crores (28.94 crores from Beejay

and 0.85 crores from Eversight) during the Investigation period and that we have transferred a sum of Rs. 17.20 crores to

our brokers. The details of the same have not been provided in the Exparte Ad Interim Order. Further, SEBI has not

brought on records any evidences to show that the payments to our Brokers were out of funds received from Beejay or

Eversight. The very fact that there is difference in the amount paid by these entities i.e Rs. 29.79 crores to us and that that

paid by us to our Brokers i.e Rs17.20 crores is an indicator that the funds received by us from these entities were not for

the purpose of enabling their trades in securities market.

(d) No part of the amount paid by us to Korp for the pupose of our trading in the securities market has been sourced from

Beejay or Eversight.

(e) Based on erroneous observation, assumption & presumptions SEBI has worked out alleged "Gains" in respect of our

trades in an arbitrary, whimsical & callous manner. It is SEBI's own showing that most of the trades entered into by us

on NSE and BSE have resulted into huge losses. We submit that our said trades on NSE and BSE have resulted in a

net loss of Rs. 5,78,61,817/-. However, we fail to understand that on what basis SEBI has recorded that we had made

a gain of Rs. 98,36,879/- by entering into said trades. Even according to SEBI the impugned transactions were on the

platform of the Exchanges and therefore instead of considering the actual rates SEBI has considered weighted average price,

assumed opening prices and closing prices. In any event SEBI's computation by completely ignoring the actual losses, is

absurd and illogical.

(f) SEBI has erred in observing that "the entire profit made by the said entities (us) by trading during the investigation period

is attributed to Beejay & Eversight". The observation has been made by SEBI based on the observation that the amount

transferred to us by Beejay & Eversight is higher than that transferred by us to brokers. The same is absurdity and illogical

and shows the callous and casual manner in which investigation has been carried out and observation made. Assuming

(without admitting) the allegation to be true, SEBI has not brought out anything on records to explain as to why Beejay

&Eversight has collectively paid us Rs. 29.79 crores when we have paid only Rs. 17.20 crores to our brokers and why

100% of our trading is attributable to be on behalf of Beejay and Eversight.”

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iv. DDT vide letters dated October 06, 2016 and February 18, 2017inter alia submitted:

(a) “The Movement of funds between us & Beejay on 18/08/2011 predates the Investigation period. Further, it has been

stated in the Impugned Order that the movement of funds from Beejay to us on 11/10/2011 was towards our trade

through Korp on 12/10/2011. In this regards we submit as under:

On 11/10/2011 we had received a sum of Rs.40 lacs from Beejay. A part of the same i.e Rs. 11.10 lacs were towards

our dues as on 01/09/2011 i.e start of the investigation period and balance Rs. 28.90 lacs were towards our advance

given to Beejay on 08/09/2011.

The movement of funds between us & Korp of Rs.15 lacs were into Korp's ICICI Bank a/c 000605016720, which

is a General Business account of Korp. The said account of Korp is not a NSE/BSE Client account. Thus, the transfer

of funds to Korp was not for the purpose of our trading.

The difference in amount received by us from Beejay & that paid by us to Korp indicate that we had received funds from

Beejay for purpose other than trading on their behalf.

(b) It has been stated and inferred that the funds received from Beejay were for our trades through Korp on 12/10/2011. It

is submitted that on 12/10/2011, we had sold 185 shares of Neha International Ltd. on BSE @ Rs.113.90 for a

total sum of Rs. 21,402/-. From the above it is apparent that the inference drawn by SEBI is erroneous and flawed. If

such trades were to be on behalf of Beejay as alleged, Beejay would not have made a payment of Rs. 40 lacs to us, on the

contrary we would have paid Beejay Rs.21,402/-

(c) We did not had any transaction with Eversight during the Investigation period.

(d) It is submitted that SEBI has merely stated that we have received a sum of Rs. 12.49 crores from Beejay during the

Investigation period and that we have transferred a sum of Rs.4.29 crores to our brokers. The details of the same have not

been provided in the Exparte Ad Interim Order. Further, SEBI has not brought on records any evidences to show that

the payments to our Brokers were out of funds received from Beejay. The very fact that there is difference in the amout paid

by Beejay to us and that that paid by us to our Brokers is an indicator that the funds received by us from Beejay was not

for the purpose of enabling the trades of Beejay in securities market.

(e) Based on erroneous observation, assumption & presumptions SEBI has worked out alleged "Gains" in respect of our

trades in an arbitrary, whimsical & callous manner. It is SEBTs own showing that most of the trades entered into by us

on NSE and BSE have resulted into huge losses. We submit that our said trades on NSE and BSE have resulted in a

net loss of Rs.6,35,20,439/-. However, we fail to understand that on what basis SEBI has recorded that we had made

a gain of Rs. 1,01,79,817/- by entering into said trades. Even according to SEBI the impugned transactions were on the

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platform of the Exchanges and therefore instead of considering the actual rates SEBI has considered weighted average price,

assumed opening prices and closing prices. In any event SEBI's computation by completely ignoring the actual losses, is

absurd and illogical.

(f) SEBI has erred in observing that "the entire profit made by the said entities (us) by trading during the

investigation period is attributed to Beejay & Eversight". The observation has been made by SEBI based on the

observation that the amount transferred to us by Beejay is higher than that transferred by us to brokers. The same is

absurdity and illogical and shows the callous and casual manner in which investigation has been carried out and observation

made. Assuming (without admitting) the allegation to be true, SEBI has not brought out anything on records to explain

as to why Beejay has paid us Rs.12.49 crores when we have paid only Rs.4.29 crores to our brokers and why 100% of

our trading is attributable to be on behalf of Beejay.”

Common submissions by DDM and DDT:

(a) “The transactions in shares & securities alleged in the Exparte Ad-Interim Order were entered by us in the normal course

of our business, out of our own funds and wisdom. The same were executed by us through our brokers, and the risk rewards

in respect of these trades were ours. Contracts notes were generated in our name, pay in & pay out obligation were made

by us, we were the beneficial owner of all the shares & securities during the period and all the transactions and the resultants

profit & loss were duly disclosed in our books and the resultant profit & loss were duly assessed to taxes.

(b) We had entered into several financial & commercial transactions with several entities including Beejay Investment and

Financial Consultant Pvt Ltd. (Beejay) and Eversight Tradecom Pvt Ltd. (Eversight) during the period under

investigation.

(c) It is matter of record that Beejay & Eversight are NBFC's and the relationship that we had with these entities are strictly

commercial in nature and it is erroneous to even infer that these entities have traded through us in the securities markets.

It is also on record that our relationship with these entities predates the Orders passed by SEBI against them. Merely

because we had some bonafide transactions with them which has no connection with our trades in the securities market, it

cannot be inferred that we traded on behalf of these entities. In any event SEBI has not even attempted to establish or even

show any correlation between funds transfers between us and these entities and our trades in the normal course of business.

(d) The erroneous inference has been drawn by SEBI based on movement of funds between us & Korp in Korp's ICICI Bank

a/c 000605016720. The said account of Korp is a General Business purpose account and not NSE / BSE Client

account. The movement of funds between us & Korp in this account was not for the purpose of our trading.

(e) If SEBI is right in presuming that these were not our trades and these were trades of the debarred entities it is clear from

the said assumption that the profits or losses if any resulting out of said trades also would then belong to these debarred

entities and would not belong to us. In that case it is unfair and unwarranted on part of SEBI to hold us jointly responsible

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for depositing the impounded amounts/alleged unlawful gains and attaching our accounts for the same. There is nothing on

record to even suggest that we were controlled by these debarred entities.

(f) Even as per SEBI's Order, we sold more shares than the one we bought, during the Investigation period. The only logical

understanding would be that we had an opening stock of shares which resulted into sale. On this ground itself it is clear

that the allegations made by SEBI are incorrect. It is also recorded that 100% of our trading was on behalf of the debarred

entities. If it is SEBI's own case that we sold more shares than the one we bought, how is it even possible to assume that

100% of our trading was on behalf of debarred entities?

(g) It is also important to note that even as per SEBI the Suspicious Transaction Report (STR) received by SEBI was on

December 21, 2012 and only in April 2015, SEBI called upon us to provide certain details. The said details were

provided by us and last of such communication between us and SEBI was on July 3, 2015. Thereafter for almost a year

there was no communication from SEBI and therefore we fail to understand the reason for passing an Exparte Ad- Interim

Order against us. SEBI ought to have issued a Show Cause notice and provided a full opportunity for us to defend and

only thereafter they ought to have taken a final decision. However, SEBI chose to pass a drastic order whereby SEBI's

attempt is only to kill the company.

(h) No urgency has been shown by SEBI while passing such harsh directions i.e. freezing of accounts and impounding of

amounts. ………….. We state that such directions are not remedial or preventive and rather the same are penal. Further

it is highly unfair and unreasonable on part of SEBI to make the Exparte Order effective immediately without providing

any opportunity to us to explain why same are incorrect and cannot be implemented.

(i) SEBI in Exparte Ad-Interim Order recorded that the alleged unlawful profits were by Beejay and Eversight therefore

there was no question of issuing an Exparte order directing these entities alongwith us to jointly and severally deposit the

said alleged unlawful gains,

(j) Nothing has been alleged against us or brought on records to demonstrate that we have violated the provision of the Act or

Regulations vide our trading in the ordinary course during the Investigation Period.”

v. Rajesh Agarwal vide letter dated November 01, 2016 inter alia submitted:

(a) “The order dated June 16, 2016 is of grave consequence to me. The directions issued by you against me have resulted in

deprivation of my right to carry on legitimate business activities and have tarnished my reputation, besides causing severe

financial crisis to me,

(b) I was a Director of DDT and DDM from April 01, 2011 to June 29, 2012 and that at present I do not have access to

any records and documents of these companies. My reply are thus based on the vivid memories I had during my association

with these companies. I was not a Director of these entities for a substantial part of the Investigation Period,

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(c) I do not have any relation / link / connection / association/ nexus with the alleged Sudhir Jain, Beejay Investments &

Financial Consultants Pvt. Ltd. or Eversight Tradecomm Pvt. Ltd.

(d) I am not a shareholder of DDT or DDM and that during my Directorship I had carried on the affairs of these companies

in the best possible manner so as to enhance the shareholders value. I have acted with the other Directors and management

of these companies in keeping with my duties as a Director of these companies, All the trades and dealing that these

companies have carried out during my tenure as a Director were in the ordinary course and devoid of any manipulative

intent. I deny that any part of the trades of DDM and DDT during my tenure as Director was on behalf of any other

entity. It is further submitted that Beejay and Eversight has transferred sum of monies to these entities in the normal course

and not for carrying out any trades in the securities market as alleged.

(e) I am a brother of Mr. Sushi! Kumar Agarwal, who was a Director of Korp in the past. Myself and my elder brother, Mr.

Sushil Kr. Agarwal, are independent and have independent livelihood. We both reside at different places and do not have

any business connection. Both of us have independent living. DDM & DDT has been trading through Korp in the past

also. During the Investigation period, till the time I was a Director of these companies, DDM & DDT have traded

through other brokers also and not exclusively with Korp. Therefore, the connection pointed out is irrelevant and ill conceived,

(f) I carried out my duties as a Director of these companies in a bonafide manner, and in the ordinary course. That the alleged

flow of funds from Beejay & Eversight were in the ordinary course and were there in the past also. DDM & DDT were

trading in the securities markets in the past also. All the act and deeds of these companies during my tenure as a Director

were in the ordinary course and nothing has been brought on records that these companies have committed any offence with

my consent or connivance, or any offence is attributable to any neglect on my part,

(g) The only power in SEBI's hands to attach the bank account of any person involved in violation of any of the provisions of

this Act, or the rules or the regulations made there under, is subject to the check and balance of making an application for

approval of such attachment to a First Class Judicial Magistrate. In the present case, SEBI has not obtained any such

approval necessary for attaching our bank account to any degree. Further, the proviso makes it clear that SEBI has no

power to attach bank accounts which are not actually involved in the alleged violation. Therefore, no such direction to bank

to not to debit the bank account could have been issued.

(h) Since no transactions have been done by me in the securities market and no proceeds of any securities involved in the alleged

transactions pertaining to trading done by other entities are lying in my bank account, no direction to my Banks to not

debit my account could have been issued. Further, since no proceeds of securities are lying in my demat account no direction

to depositories to not debit my account could have been issued….. it is clear that the whole exercise of power by SEBI is

totally illegal and completely contrary to express and mandatory provisions of Section 11 (4) of SEBI Act,

(i) Pursuant to the "said order" my livelihood and my survival is at stake. I am unable to finance my medical requirement

and my family financial needs. Doctors have advised me admission to hospital again in the month of December, 2016 for

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which I need to raise finance, I therefore request your goodself to view my case sympathetically and the order freezing my

bank account be revoked immediately”

vi. Kinkar Bhattacharya vide letter dated October 22, 2016 inter alia submitted:

(a) I am a Director of Divya Drishti Traders Pvt. Ltd. and Divya Drishti Merchants Pvt. Ltd., since March 30, 2012, I

was not a Director of these entities for a substantial part of the Investigation Period. I do not have any alleged link /

connection / nexus with any of the alleged entities in the 'said order", except DDTPL and DDMPL, wherein I am a

Director and hence no negative inferences should have been drawn against me,

(b) I am not a shareholder of DDT or DDM and that I have carried on the affairs of the companies in the best possible

manner so as to enhance the shareholders value. I have acted with the other Directors and management of these companies

in keeping with my duties as a Director of these companies. All the trades and dealing that these companies have carried

out during my tenure as a Director were in the ordinary course and devoid of any manipulative intent. I deny that any part

of the trades of DDM and DDT during my tenure a Director was on behalf of any other entity. I submit that Beejay and

Eversight has transferred sum of monies to these entities in the normal course and not for carrying out any trades in the

securities market as alleged,

(c) The allegation are without any basis and legally not tenable. It is submitted that I carried out my duties as a Director of

these companies in a bonfide manner, and in the ordinary course. That the alleged flow of funds from Beejay & Eversight

were in the ordinary course and were there in the past also. These companies were trading in the securities markets in the

past also. All the act and deeds of these companies during my tenure as a Director were in the ordinary course and nothing

has been brought on records that these companies have committed any offence with my consent or connivance or any offence

is attributable to any neglect on my part,

(d) The directions issued by you against me have resulted in deprivation of my right to carry on legitimate business activities

and have tarnished my reputation.

(e) I adopt the reply given by Divya Drishti Traders Pvt. Ltd. (DDTPL) and DDM Pvt. Ltd (DDMPL), wherein I am

a Director.

vii. Sukanta Chattejee vide letter dated October 24, 2016 replied as under:

(a) I was a Director of DDTPL and DDMPL from 30th March, 2012. Thus, I was not a Director of these entities for a

substantial part of the Investigation Period. I do not have any alleged link/connection / nexus with any of the alleged

entities in the 'said order", except DDTPL and DDMPL, wherein I am a Director and hence no negative inferences

should have been drawn against me,

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(b) I am not a shareholder of DDTPL or DDMPL and that I have carried on the affairs of the companies in the best possible

manner so as to enhance the shareholders value. I have acted with the other Directors and management of these companies

in keeping with my duties as a Director of these companies. All the trades and dealing that these companies have carried

out during my tenure as a Director were in the ordinary course and devoid of any manipulative intent. I deny that any part

of the trades of DDMPL and DDTPL during my tenure a Director was on behalf of any other entity. I submit that

Beejay and Eversight has transferred sum of monies to these entities in the normal course and not for carrying out any

trades in the securities market as alleged,

(c) I carried out my duties as a Director of these companies in a bonafide manner, and in the ordinary course. That the alleged

flow of funds from Beejay & Eversight were in the ordinary course and were there in the past also. DDM & DDT were

trading in the securities markets in the past also. All the act and deeds of these companies during my tenure as a Director

were in the ordinary course and nothing has been brought on records that these companies have committed any offence with

my consent or connivance, or any offence is attributable to any neglect on my part,

(d) The only power in SEBI's hands to attach the bank account of any person involved in violation of any of the provisions of

this Act, or the rules or the regulations made there under, is subject to the check and balance of making an application for

approval of such attachment to a First Class Judicial Magistrate. In the present case, SEBI has not obtained any such

approval necessary for attaching our bank account to any degree. Further, the proviso makes it clear that SEBI has no

power to attach bank accounts which are not actually involved in the alleged violation. Therefore, no such direction to bank

to not to debit the bank account could have been issued.

(e) Since no transactions have been done by me in the securities market and no proceeds of any securities involved in the alleged

transactions pertaining to trading done by other entities are lying in my bank account, no direction to my Banks to not

debit my account could have been issued. Further, since no proceeds of securities are lying in my demat account no direction

to depositories to not debit my account could have been issued….. it is clear that the whole exercise of power by SEBI is

totally illegal and completely contrary to express and mandatory provisions of Section 11 (4) of SEBI Act,

(f) Pursuant to the "said order" bank account of my mother, bearing a/c no. 33110062479 with Standard Chartered Bank,

19, N.S.Road Branch, Kolkata - 700 001 has been frozen for debits. It is submitted that my mother, a widow, aged 80

years is a pensioner and the account has myself as the second holder for ease of operation, as my mother is too old to visit

the branch and operate the account herself. It is further submitted that, I have never used the said account for my personal

transaction and that no part of the alleged transaction during the Investigation Period have been transacted from the said

account. The account solely belongs to my mother and she is dependent on her pension for survival. It is humbly prayed that

necessary instructions / order be made to Standard Chartered Bank for allowing normal operation of the account as any

delay would deprive my old, widow mother of her survival. She is dependent on the pension received in the account for her

survival,

(g) There is no justification for subjecting me to the directions made in the order. It is submitted that, as your goodself could

see, that I have not committed any wrong and no charge has been established against me even prima facie, to warrant any

action. Since your order has adverse impact not only on my reputation and recognition, it will be unfair to subject me to

such an order pending investigation.”

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4.1 I have carefully examined the investigation report, interim order, replies filed by the Noticees and the

additional written and oral submissions made before me by the Noticees along with the documents

submitted therewith. Before dealing with submissions of the Noticees on merits, it is necessary to deal

with the preliminary objections raised by them.

4.2 The Noticees viz. Beejay, Neelanchal, DDM and DDT, have contended that the interim order was passed

without issuing show cause notice or granting opportunity of hearing and this is in gross violation of

principles of natural justice. The Noticees have also contended that the direction to disgorge, even before

the matter has been finally adjudicated on merits, is totally arbitrary, unreasonable and legally untenable

and that there is no express power to charge interest on the alleged disgorged amount. In this regard, I

note that the power of SEBI to pass interim orders flows from Sections 11 and 11B of the SEBI Act

which empower SEBI to pass appropriate directions in the interests of investors or securities market,

pending investigation or inquiry or on completion of such investigation or inquiry. Exigencies of the

situation also warrant urgent action by SEBI so that profit or illgotten gains are not fritted away till the

matter is finally disposed of. The law with regard to doing away with the requirement of pre-decisional

hearing in certain situations is well settled. The following findings of the Hon'ble Supreme Court of India

in the matter of Liberty Oil Mills & Others Vs Union Of India & Other (1984) 3 SCC 465 1984 Indlaw

SC 326 are noteworthy:-

"It may not even be necessary in some situations to issue such notices but it would be sufficient but obligatory to consider

any representation that may be made by the aggrieved person and that would satisfy the requirements of procedural fairness

and natural justice. There can be no tape-measure of the extent of natural justice. It may and indeed it must vary from

statute to statute, situation to situation and case to case. Again, it is necessary to say that pre-decisional natural justice

is not usually contemplated when the decisions taken are of an interim nature pending investigation or enquiry. Ad-

interim orders may always be made ex-parte and such orders may themselves provide for an opportunity to the aggrieved

party to be heard at a later stage. Even if the interim orders do not make provision for such an opportunity, an aggrieved

party has, nevertheless, always the right to make appropriate representation seeking a review of the order and asking the

authority to rescind or modify the order. The principles of natural justice would be satisfied if the aggrieved party is given

an opportunity at the request. "

4.2.1 In the instant matter, the ad-interim exparte order was passed under the provisions of Sections 11(1), 11(4)

and 11B of the SEBI Act. The second proviso to Section 11(4), in fact, state the following: "Provided

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further that the Board shall, either before or after passing such orders, give an opportunity of hearing to such intermediaries

or persons concerned". Further, various Courts, while considering the aforesaid sections of the SEBI Act

have also held that principles of natural justice will not be violated if an interim order is passed and a

post- decisional hearing is provided to the affected entity. Reference may also be drawn to the following

judgments of the Hon'ble High Courts in this regard:

a. The Hon'ble Bombay High Court in Anand Rathi & Others Vs. SEBI (2002 (2) BomCR 403 2001

Indlaw MUM 26 observed as under:

"31. It is thus clearly seen that pre decisional natural justice is not always necessary when ad- interim orders are made

pending investigation or enquiry, unless so provided by the statute and rules of natural justice would be satisfied if the

affected party is given post decisional hearing. It is not that natural justice is not attracted when the orders of suspension

or like orders of interim nature are made. The distinction is that it is not always necessary to grant prior opportunity of

hearing when ad-interim orders are made and principles of natural justice will be satisfied if post decisional hearing is given

if demanded.

32. Thus, it is a settled position that while ex parte interim orders may always be made without a pre decisional opportunity

or without the order itself providing for a post decisional opportunity, the principles of natural justice which are never

excluded will be satisfied if a post decisional opportunity is given, if demanded."

b. The Hon'ble High Court of Judicature for Rajasthan at Jaipur in the matter M/s. Avon Realcon Pvt.

Ltd. & Ors Vs. Union of India & Ors (D.B. Civil WP No. 5135/2010 Raj HC) has held that:

"...Perusal of the provisions of Sections 11(4) & 11(B) shows that the Board is given powers to take few measures either

pending investigation or enquiry or on its completion. The Second Proviso to Section 11, however, makes it clear that

either before or after passing of the orders, intermediaries or persons concerned would be given opportunity of hearing. In

the light of aforesaid, it cannot be said that there is absolute elimination of the principles of natural justice. Even if, the

facts of this case are looked into, after passing the impugned order, petitioners were called upon to submit their objections

within a period of 21 days. This is to provide opportunity of hearing to the petitioners before final decision is taken.

Hence, in this case itself absolute elimination of principles of natural justice does not exist. The fact, however, remains as

to whether post-decisional hearing can be a substitute for pre-decisional hearing. It is a settled law that unless a statutory

provision either specifically or by necessary implication excludes the application of principles of natural justice, the


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requirement of giving reasonable opportunity exists before an order is made. The case herein is that by statutory provision,

principles of natural justice are adhered to after orders are passed. This is to achieve the object of SEBI Act. Interim

orders are passed by the Court, Tribunal and Quasi- Judicial Authority in given facts and circumstances of the case

showing urgency or emergent situation. This cannot be said to be elimination of the principles of natural justice or if ex-

parte orders are passed, then to say that objections thereupon would amount to post-decisional hearing. Second Proviso to

Section 11 of the SEBI Act provides adequate safeguards for adhering to the principles of natural justice, which otherwise

is a case herein also..."

4.2.2 The interim order in the instant case has been passed by taking into account the facts and material

brought out by the investigation conducted by SEBI. The facts and circumstances necessitating issuance

of ad-interim ex parte directions have been elaborately explained in the said interim order (Paragraph No

6). The direction for impounding the illegal gains along with applicable interest in this case was issued

to prevent the diversion of illegal gains by the Noticees. The said Order was passed after taking into

account the fact that non-interference by SEBI at that stage would have defeated the effective

implementation of the directions of disgorgement, if any that might have to be passed after adjudication

on merits. If no such directions were issued, it would result in irreparable injury to the interests of the

securities market and the investors. It is also pertinent to note that the interim order also provided the

Noticees a post decisional opportunity, to reply to the allegations and a personal hearing.

In view of the above, I find that the aforesaid interim order passed by SEBI was not in

disregard of the principles of natural justice since, in accordance with the settled law, the Noticees were

granted an opportunity to file their replies and also avail the opportunity of personal hearing, which was

afforded.

4.2.3 The amount directed to be impounded (i.e an amount of `18,99,43,661/- ) in the instant matter as per

the interim Order, is the alleged illegal gain made by the Noticees by trading during the debarred period,

i.e. September 10, 2011 to September 09, 2012, thereby flouting extant directions issued by SEBI. The

interest @ 12% per annum (i.e an amount of `8,44,91,104/- ) from September 10, 2012 till the passing

of interim order was computed on the said illegal gain. The direction to impound the illegal gains along

with applicable interest on the same was in the interest of investors so that the value of funds credited

to the said account is not eroded and the amount is impounded till the matter is finally disposed of.

I, therefore, do not find merit in the contentions of the Noticees.



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4.3 Another preliminary contention raised by the Noticees was that the directions contained in the interim

order are in total breach of Section 11(4) of the SEBI Act and SEBI has circumvented the provisions of

Section 11(4) (e) of the SEBI Act, which provides for the procedures to be followed while attaching the

bank accounts of the entities involved.

In this regard, it is observed that the power under Section 11 and 11B of the SEBI Act, 1992

can be invoked at any stage, i.e., either during pendency or on completion of inquiry or investigation. As

per Section 11(4) (d) of the SEBI Act, SEBI has the power to impound and retain the proceeds or

securities in respect of any transaction which is under investigation. In the instant matter, SEBI, in

exercise of the powers conferred on it under Section 11(4) (d) of the SEBI Act, has directed the Noticees

(vide the said interim order) to impound the illegal gain along with the interest (i.e an amount of

`27,44,34,765/-). Further, the said Order allowed the Noticees to make debits in excess of the amount

to be impounded from the bank accounts (frozen pursuant to the said interim Order). Also, credits if any,

into the accounts are also allowed. In view of the above, the contention raised by the Noticee that SEBI

has circumvented the provisions of Section 11(4) (e) of the SEBI Act is not tenable.

5 Having dealt with the preliminary contentions of the Noticees, I now proceed to deal with submissions of

the Noticees on merit.

5.1 The interim Order has clearly explained the connection amongst the Noticees and the fund transactions

observed in the various bank accounts of the Noticees. It has clearly been stated in the said Order that the

fund transactions between the Noticees were not significant prior to the investigation period. However,

during the investigation period, i.e. the period during which the Noticees, viz. Beejay and Eversight were

undergoing debarment, the fund transactions between the Noticees became significant. It was found that

the debarred entities, viz. Beejay and Eversight had transferred a total amount of `17.78 crores to

Neelanchal and Neelanchal in turn transferred an amount of `38.59 crores to the brokers, viz. Religare

Securities, IFCI Financial., Aditya Birla Money, and India Infoline during the investigation period. It was

observed that Neelanchal traded in the market through the said brokers. Similarly, the Noticees, DDM

and DDT received amounts of `29.79 crores and `12.49 crores respectively from the debarred entities,

viz. Beejay and Eversight. Out of the said amounts (i.e ` 29.79 crores and ` 12.49 crores), DDM and DDT

transferred ` 17.20 crores and ` 4.29 crores respectively to brokers for the purpose of trading.


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The main contention of the Noticees, viz. Beejay, Neelanchal, DDM and DDT is

that the alleged financial transactions were in the ordinary course of their business. They have also stated

that they had taken and given Short Term Advances and Loans mostly in the nature of intraday transactions.

It is however noted that even though the Noticees, Neelanchal and Beejay state that they are registered as

non-deposit raising NBFCs with Reserve Bank of India (RBI), they did not provide any documents in

respect of the loan transactions involving huge amounts in their accounts. Being registered NBFC, it is

strange that they had entered into loan transactions involving huge amounts with the debarred entities in

its normal course of business without execution of appropriate documents. Similarly, the Noticees, DDM

and DDT have stated that their relationship with the debarred entities, i.e. the Noticees, viz. Beejay and

Eversight are strictly commercial in nature. However, no documents have been furnished by them to

substantiate high value transactions in their accounts during the investigation period. Hence, terming such

high value transactions as mere short term loans and advances sans documentary proof, could only be seen

as an afterthought. The contentions in this regard are therefore devoid of merit.

It is also pertinent to note that during the hearing held on February 07, 2017, the Noticees, viz.

Beejay, Neelanchal, DDM and DDT were directed to provide details along with documentary proof and

full particulars including the rationale, etc. in respect of each of the high value transactions found in their

bank account statements/books of accounts during the investigation period. Apart from merely stating

that those transactions were executed during the ordinary course of business and were in the form of Short

Term Loans and Advances, the Noticees failed to provide any satisfactory reply/explanation in respect of the

said transactions. It is also observed from the transaction statements provided by the Noticees, viz. Beejay,

Neelanchal, DDM and DDT that there were multiple high value transactions in their accounts on the same

day. This apart from strengthening the inference that the Noticees were acting in concert, also clearly

establish the connection and tacit understanding between them. In view of the aforesaid, I am inclined to

reject the contentions put forth by the Noticees that the transactions with the debarred entities were only

Short Term Loans and Advances sans documentation.

5.2 In respect of the connection alleged to have existed between Neelanchal and Eversight, i.e. the e-mail ID

([email protected]) of the director of Eversight, viz. Mr. Peeyush Jain, was mentioned in

the Form 32 filed by Neelanchal, Neelanchal in their reply dated February 27, 2017 have submitted that

the clerical staff from their office have filled in wrong e-mail ID in the form, which went unnoticed by

them. It is however noted that the said Form 32 was filed by the Auditor of Neelanchal. In view of this,

mailto:[email protected]

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and also considering the connection between the entities as evident from the high value transactions (stated

earlier in previous paragraph), I am of the view that the submission is devoid of merits.

5.3 The Noticees, viz. Rajesh Agarwal, Kinkar Bhattacharya and Sukanta Chatterjee (Directors of DDM and

DDT) vide letters dated October 27, 2016, October 22, 2016 and October 24, 2016 respectively submitted

that they were not directors of the companies for a substantial part of the investigation period and that all

the trades and dealing that the companies have carried out during their tenure as directors were in the

ordinary course and hence devoid of any manipulative intent. The directors of Beejay, Eversight,

Stupendors, one of the directors of Neelanchal, and one of the Directors of DDM and DDT did not file

reply. Further, Neelanchal in its reply vide letter dated February 02, 2017, on behalf of its director, Surendra

Agarwala submitted that the trades entered were in the normal course of business and the question of

holding them or their directors guilty of any violation is improper.

It is a settled position of law that the directors, during their tenure, are responsible and

liable for the conduct of the day to day affairs and business of the company and therefore cannot exclude

themselves from the liabilities arising out of the activities of the Company. The material available on record

such as MCA filings, etc. prima facie indicate that the aforesaid Noticees were the directors of the Companies

during the period of investigation. I therefore cannot accept the aforesaid contentions put forth by the

Noticees.

5.4 Neelanchal in their reply have further contended that the profit calculation arrived at in the interim order

is erroneous as SEBI failed to consider the fact that the entity was trading on both NSE and BSE

simultaneously and accordingly SEBI did not consider the net position in various scrips that the entities

have traded in. In this regard, I note that:

The said calculation arrived at in the interim Order was on the basis of net profit made by the Noticee

in each stock exchange, i,e, NSE and BSE.

The fact that they were simultaneously trading in both the exchanges was brought to the knowledge of

SEBI by the Noticee vide their letter dated February 02, 2017.

5.4.1 Accordingly, the scrip-wise net position limit of the Noticee vis-a’ vis both the stock exchanges and the

profit earned by Neelanchal on such basis is worked out. The revised profit calculation (on the basis of

the details given by the Noticee) is as under:

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Name of Scrip Exchange Buy Qty

Wt Avg Buy Price

(in ` ) Sell Qty

Wt Avg Sell Price

(in ` )

Opening Price

(in ` )

Closing Price

(in ` ) Profit (in ` )

BSE - 0 25,720 373.76

NSE 390,000 366.42 364,280 371.10

Total 390,000 366.42 390,000 371.27

BSE 75,000 122.50 132,239 133.23 134.00

NSE 25,000 135.50 12,761 95.99 135.75

Total 100,000 125.75 145,000 129.95 NA

BSE 95,000 296.21 1,000 327.50 292.05

NSE 156,000 322.68 295,000 302.62 292.30

Total 251,000 312.66 296,000 302.70

BSE 269,000 74.07 269,000 76.95

NSE - 0.00 - 0.00

Total 269,000 74.07 269,000 76.95

BSE 73,680 253.99 54,016 245.20

NSE 45,336 253.98 65,000 247.70

Total 119,016 253.99 119,016 246.57

BSE 200,000 80.66 - 0.00

NSE 465,000 73.19 665,000 62.10

Total 665,000 75.44 665,000 62.10

BSE 153,820 205.78 123,689 209.36 151.75

NSE 456,166 193.56 350,372 181.12 152.10

Total 609,986 196.64 474,061 188.49

BSE 282,000 102.03 302,000 104.60 312.90

NSE - 0.00 - 0.00

Total 282,000 102.03 302,000 104.60

BSE 1,326,457 353.91 850,926 338.72 82.52

NSE 2,594,212 354.49 2,645,944 365.19 82.20

Total 3,920,669 354.30 3,496,870 358.75

BSE - 0.00 - 0.00

NSE 25,000 14.10 175,000 13.41 12.40

Total 25,000 14.10 175,000 13.41

BSE 150,000 56.83 1,405,874 57.53

NSE 5,110,961 55.16 3,855,087 58.00

Total 5,260,961 55.21 5,260,961 57.87

BSE 275,858 221.55 337,066 222.87 208.00

NSE 533,981 225.14 476,023 225.07 207.85

Total 809,839 223.92 813,089 224.16

BSE 250,000 61.35 25,000 24.50 55.75

NSE 81,631 95.36 206,631 24.70 56.10

Total 331,631 69.72 231,631 24.68

BSE 12,741,470 53.75 11,684,869 60.29 49.55

NSE 17,218,634 58.70 21,030,796 58.45 50.50

Total 29,960,104 56.59 32,715,665 59.11

BSE 27,556,157 80.17 26,265,517 80.73 78.30

NSE 65,164,322 76.13 49,634,520 79.07 78.45

Total 92,720,479 77.33 75,900,037 79.65

BSE 320,000 26.94 170,000 25.47

NSE 200,000 26.97 350,000 22.78

Total 520,000 26.95 520,000 23.66

BSE 250,000 33.15 250,000 30.80

NSE - 0.00 - 0.00

Total 250,000 33.15 250,000 30.80

BSE - 0.00 907,200 34.18 55.00

NSE 936,000 33.66 3,327,518 35.19 68.00

Total 936,000 33.66 4,234,718 34.98 NA

BSE 4,453,905 18.77 1,823,129 15.52 25.70

NSE 4,489,922 19.64 7,510,136 17.36 26.45

Total 8,943,827 19.21 9,333,265 17.00

BSE - 0 100,000 93.48

NSE 200,000 117.30 100,000 93.37

Total 200,000 117.30 200,000 93.42

BSE 297,000 215.59 282,800 211.11 211.05

NSE - 0.00 - 0.00

Total 297,000 215.59 282,800 211.11

BSE 99,487 255.04 42,209 264.62 250.00

NSE 99,621 254.28 231,899 246.81 252.80

Total 199,108 254.66 274,108 249.56 NA

GROSS TOTAL PROFIT

UNISYS SOFTWARES AND

HOLDINGS INDUSTRIES

VARUN INDUSTRIES LIMITED

S. KUMAR NATIONWIDE

SPLASH MEDIA & INFRA LIMITED

SRS LIMITED

SUJANA TOWERS LTD

TULIP TELECOM LTD

IVRCL LTD

MANDHANA INDUS LTD

NITIN FIRE PROTECTION

INDUSTRIES LIMITED

PARSVNATH DEVELOPERS LTD

PIPAVAV DEFENSE & OFF SHORE

ENGG

DISH TV INDIA

EVERONN EDUCATION

FINEOTEX CHEMICAL LTD

GLODYNE TECHNOSERVE LTD

GTLINFRA

ABG Shipyard

AMTEK AUTO

ARSS INFRASTRUCTURE PROJECTS

BLUE CIRCLE SERVICES

DEWAN HOUSING FINANCE

CORP LTD

1,891,404

158,868

(2,032,280)

774,017

(882,680)

(8,869,718)

(9,968,944)

(3,440,424)

(99,761,524)

134,250

14,007,699

246,042

(11,832,100)

99,120,808

191,825,171

NA

(1,712,818)

(587,500)

(107,695,320)

(23,410,081)

(4,775,467)

308,158,258

(1,330,518)

(1,259,076)

NA

NA

NA

NA

NA

NA

NANA

NA

NA

NA

NA

NA

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5.4.2 In respect of the computation of the profits alleged to have been earned by the Noticees (mentioned in

the interim Order), following have to be borne in mind:

i. The interim order dated June 16, 2016 was passed on the basis of the findings of the investigation, which

focused on the fund flow observed from the bank accounts of the debarred entities (based on the

reference received from FIU) and also the corresponding bank accounts of the entities which facilitated

the trades of the debarred entities. The profits made by the Noticees were calculated on the basis the

transactions observed in the said bank accounts. SEBI, in the same interim order (dated June 16, 2016)

therefore directed a fresh investigation into the matter covering the other bank accounts of the Noticees

(that were used for trading), which were used to aid the debarred Noticees to trade in the market.

Currently the matter is being investigated.

ii. It is worthwhile to mention that a significant number of high value transactions (involving amounts as

high as `60 crores) have been noticed in the bank accounts of the Noticees during the investigation

period. Neelanchal was not forthcoming in providing the details inter alia regarding their transactions

with Beejay, Sudhir Jain and Eversight and also transactions with various other entities as sought by

SEBI vide letters October 19, 2016 and reminders dated November 01, 2016 and November 11, 2016.

They have also failed to file their reply to the charges alleged in the interim order. It was only after the

issuance of directions by the Hon’ble Calcutta High Court (on January 06, 2017) that Neelanchal chose

to file their reply (vide letter dated February 02, 2017), to the charges alleged in the interim order (dated

June 16, 2016). Though the Hon’ble High Court directed Neelanchal to file its reply within 10 days from

the date of the Order, they filed the said reply after a delay of more than two weeks (i.e. on February 02,

2017).

iii. Further, in respect of the details sought by SEBI (vide letters dated October 19, 2016 and reminders

dated November 01, 2016 and November 11, 2016), for the purpose of present investigation, Neelanchal

replied only after being directed to do so during the hearing held before me on February 07, 2017. During

the course of hearing (held on February 07, 2017), Neelanchal was inter alia directed to reply to (i) the

aforesaid letters issued in connection with the ongoing investigation and also (ii) to provide the details

along with full particulars including the rationale, documentary proof, etc. in respect of each of the

transactions during the investigation period. They were advised to provide the details latest by February

15, 2017.

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It is however, noted that Neelanchal filed the said reply only on February 27, 2017 without

relevant documentary evidence in support of their contentions. In respect of the Noticees, viz. DDM

and DDT, it is noted that the replies filed by them are vague and without any documentary evidence in

support. Further, I note that the Noticees, Beejay, Eversight and Stupendors failed to reply to the letters

dated March 09, 2017 sent by the investigation department, seeking relevant details and documents

necessary for the ongoing investigation. However no reply has been received till date and accordingly

reminders were issued to them on March 24, 2017. In the absence of the above details, it is not possible,

at this juncture, to compute the exact funds transferred by the debarred entities to Neelanchal, DDM

and DDT to the brokers for trading.

iv. The interim Order has arrived at a notional profit made by each of the Noticees on the basis of the fund

trail observed in the bank account statements of the Noticees, under reference from FIU. The calculation

of the actual profits made by the Noticees can only be done after the present investigation pertaining to

the other bank accounts of the Noticees, which were used for trading during the investigation period is

completed.

5.5. As regards the submission put forth by Neelanchal that they be permitted to open a new bank and demat

accounts and that be allowed to carry on their business, I note that SEBI vide interim Order dated June

16,2016, inter alia directed to impound the alleged unlawful gain of a sum of `27,44,34,765/- from all the

eighteen Noticees and further not to dispose of, transfer, alienate or charge any of their assets (movable

or immovable) till such time the said amount is credited to an escrow account. Further, as per the said

Order, debits are allowed from the bank accounts (frozen as per the directions) for amounts available in

excess of the amount to be impounded (i.e. excess of `27,44,34,765/- ). In view of this, I find that there is

no embargo on the Noticees to carry on with their business or to open a new bank account or demat

account, provided the Noticees credit the amount of illegal gain which has been directed to be impounded

as per the directions (issued by the interim Order) in an escrow account.

Here, it is not out of place to mention that the present investigation (initiated on the basis

of the directions issued in the interim order), covering the bank accounts (that were used for trading by

the entities) which would have been used to aid the debarred Noticees to trade in the market, is presently

underway. Also, the entities including the Noticees herein are yet to submit the documents sought during

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the present investigation pertaining to the fund flow involving high value transactions found in their bank

accounts (used for trading during the period of investigation) with various entities, etc..

I do not therefore find it necessary to modify the directions contained in the interim

order.

6. Further, the present investigation initiated pursuant to the directions issued in the aforesaid interim order

covers other bank accounts of the Noticees, viz. Neelanchal, DDM and DDT, which were used by the

debarred Noticees, viz. Beejay and Eversight for trading during the investigation period (i.e. during the

debarment period). The preliminary analysis of these bank accounts prima facie indicated that there were

several high value transactions involving amounts as high as `60 crores with various entities including the

debarred entities during the investigation period. The frequency at which the transactions took place and

also the number of entities involved in these high value transactions raise legitimate suspicion as to the

genuineness of these transactions. It is relevant to note that till date, the Noticees have not submitted any

documents to substantiate the aforesaid high value transactions took place in their bank accounts during

the investigation period. The failure on the part of the Noticees to submit any documents in respect of

these high value transactions can only be seen, at this stage, as an effort on the part of the Noticees to

thwart the process of ongoing investigation. It is indeed in the interests of the Noticees to cooperate with

the present investigation launched by SEBI so that early disposal of the matter can be ensured.

7. All things considered, I find that at this stage the Noticees have not been able to show sufficient reasons

to draw any inference other than those drawn in the interim order against them. The Noticees have failed

to make out a prima facie case and to establish a case in their favour and have not been able to submit facts

and details which warrant revocation of the interim order. I, therefore, am of the considered view that no

intervention is called for, at this stage, in either vacating the interim directions or modifying them.

8.1 I, therefore, in exercise of the powers conferred upon me under Sections 11(1), 11(4) and 11B of the SEBI

Act read with Section 19 thereof, hereby confirm the directions issued vide ad-interim ex-parte order dated

June 16, 2016, in respect of the Noticees, viz. Beejay Investment and Financial Consultants Pvt. Ltd. and

its Directors, viz., Mr. Sudhir Jain, Ms. Rashmi Jain, Eversight Tradecomm Private Limited and its

Directors, viz., Mr. Adish Jain and Mr. Peeyush Jain, Stupendors Traders Private Limited and its Directors,

viz., Mr. Vicky Kothari and Ms. Prativa Kothari, Neelanchal Mercantile Private Limited and its Directors,

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viz., Mr. Surendra Agarwala and Mr. Bhupendra Kumar Dhanuka, Divyadrishti Merchants Private Limited

and Divyadrishti Traders Private Limited and their Directors, viz., Mr. Debasis Mishra, Mr. Rajesh Kumar

Agarwal, Mr. Kinkar Bhattacharya and Mr. Sukanta Chatterjee. The directions issued vide the interim order

dated June 16, 2016 shall continue to be in force till further directions subject to outcome of the

investigation mentioned above.

8.2 As regards the quantum of illegal gains to be disgorged, the figure already arrived at (in the interim Order)

shall be once again be looked into considering the contentions raised by Neelanchal (in the reply dated

February 01, 2017). SEBI shall also endeavor to complete the investigation within six months from the

date of this Order.

9. The order shall come into force with immediate effect. A copy of the order shall be served on the stock

exchanges and depositories for ensuring compliance with the above directions.

Order accordingly.

Place: Mumbai Date: March 27, 2017

S. RAMAN WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA

21 securities and exchange board of india ...17. mr. kinkar bhattacharya amdpb1266e 18. mr. sukanta...

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