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BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA


[ADJUDICATION ORDER NO. EAD-5/SVKM/AO/02/2016-17]
UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF
INDIA ACT, 1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR
HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING
OFFICER) RULES, 1995AGAINST
SHRI SANJEEV BANSAL
S-337, Greater Kailash Part - 1,
New Delhi 110 048

Inthe Matter of SRG INFOTECH LIMITED


__________________________________________________________________
BACKGROUND IN BRIEF

1.

Securities and Exchange Board of India (SEBI) conducted investigation


into the irregular trading in the scrip of SRG Infotech Ltd (hereinafter
referred to as "SRG/Company"). SRG had come out with a Rights Issue
in 1995 and also stated that software development and exports, computer
education, multimedia and Registrar and Share Transfer Agents as their
business activities. SRG had not carried out any of the afore-mentioned
activities except that of Registrar and Share Transfer Agent. The price of
the scrip was rigged up in the no-delivery period wherein it rose from ` 9
to ` 20, an increase of 122%. Arihant Equity Fund Ltd(now known as
Universal Media Network Ltd.) and New Age Shares and Stock Brokers
Pvt. Ltd are the promoters of SRG and also dealt in the scrip in large
quantities. These two entities entered orders for large quantities and

Adjudication Order against Shri Sanjeev Bansalin the matter of SRG Infotech Ltd.Page 1 of 15

subsequently deleted them either after updating the price or after part
execution of the order.

2.

The Investigating Authority (IA) issued Summons dated June 16, 2004 to
ShriSanjeev Bansal(herein after referred to asNoticee)who was Director
in both Arihant Equity Fund Ltd and New Age Shares and Stock Brokers
Pvt. Ltdfor production of documents and personal appearance to ascertain
his role in the irregularities in the scrip of SRG.

3.

Pursuant to the aforesaid summonsShri Ashok Agarwal, brother &


Authorized Representative (AR) of the Noticee appeared before the IAon
July 09, 2004 and allegedly made incorrect statementsthat Sanjeev Bansal,
(the Noticee herein)has never dealt in the Scrip of SRG.Therefore, SEBI
initiated adjudication proceedings against the Noticee,under Section 15HB
of SEBI Act, 1992 (hereinafter referred to as SEBI Act) for violationof
the provisions of Sections 11C(3), (5) and (6) of SEBI Act.

APPOINTMENT OF ADJUDICATING OFFICER

4.

Shri Satya Ranjan Prasad was appointed as the Adjudicating Officer (AO)
vide communication of proceedings dated 16.11.04 and consequent upon
the transfer of Shri Satya Ranjan Prasad, Shri A Sunil Kumar was
appointed as the AO vide communication of proceedings dated 09.04.2014
and 15.01.2015. Consequent to the transfer of Shri. A. Sunil Kumar,the
undersigned,

was

appointed

as

the

Adjudicating

Officer

vide

communication of proceedings dated June03, 2015 to inquire into and


adjudge under Section 15HB of the SEBI Act, the alleged violation of the
Adjudication Order against Shri Sanjeev Bansalin the matter of SRG Infotech Ltd.Page 2 of 15

provisions of Section 11C(3), (5) and (6) of SEBI Act, 1992, by the
Noticee.

SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING

5.

Show Cause Notice dated December 07, 2015 (hereinafter referred to as


SCN) was issued to the Noticee in terms of Rule 4 of SEBI (Procedure
for Holding Inquiry and Imposing Penalties by Adjudicating Officer)
Rules, 1995 (hereinafter referred to as the Adjudication Rules) read
with section 15I of SEBI Act, 1992 to show cause as to why an inquiry
should not be initiated and penalty be not imposed under section 15HB of
SEBI Act, 1992 for the aforesaid alleged contravention of the provisions
of Sections 11C(3), (5) and (6) of SEBI Act. Copies of the documents
relied upon in the SCN were also provided to the Noticee along with the
SCN.It was alleged in the SCN that the Noticee had made incorrect
statement before the IA that the Noticee has never dealt in the Scrip of
SRG.

6.

Noticee submitted his reply to SCN vide letter dated 11.01.2016and the
relevant portionsare reproduced hereunder:

Prima facie, I dont remember much regarding this matter because:


(a) There has been a considerable lapse of time.
(b) All the matters were being handled by Mr. Ashok Agarwal, my
elder brother and owner of SRG Infotech and New Age Shares etc.

Adjudication Order against Shri Sanjeev Bansalin the matter of SRG Infotech Ltd.Page 3 of 15

That all the decisions were taken by Mr. Ashok Agarwal who forced
me to sign on the dotted lines. Sometimes he would ask his employee to
forge signatures.

That Arihant Equity belonged to Mr. Santosh Jain and Mr. Pramod
Jain. I was a director of the co. for a very short period of time.

That even as per the statement of Mr. Ashok Agarwal dated


09/07/2004 which has been annexed as annexure VI to the SCN, he
never said that Sanjeev Bansal never dealt in the scrip of SRG
Infotech on behalf of Arihant Equity Fund. Even otherwise I cannot
be penalized for the statements made by any other individual.

That during the year 1999 I used to sign as per my signature in bank
documents (Annexure V), prima facie to the best of my knowledge and
memory I dont remember having signed the documents annexed as
annexure VII, VIII, and IX as they have been different sign than my
usual.

As per the order dated 23/09/2008(http:/ / www.sebi.gov.in/cms/sebi_data/attachdocs/1291270971752.pdf)


Page 24 Point No. (vii) of CONSIDERATION OF ISSUES is
reproduced below:
I find that Shri Sanjeev Bansal had admitted that he was director of
both NASSB & UMNL during the period of investigation and that
NASSB & UMNL were clients of IMS. Shri Sanjeev Bansal had also
admitted that NASSB had dealt in shares of companies listed on BSE
& NSE. Shri Sanjeev Bansal had stated that he was appointed as
director of UMNL because it required a person based in Delhi to
represent and co-ordinate its matters and that UMNL was a client of

Adjudication Order against Shri Sanjeev Bansalin the matter of SRG Infotech Ltd.Page 4 of 15

IMS for which orders were placed by him on behalf of the management
of UMNL.

From the above mentioned order of Shri T C NAIR (Whole Time


Member) SEBI, it is clear I have not made incorrect statement as
alleged in the Show Cause Notice dated 07/12/2015

7.

Noticee, was alsogiven an opportunity of personal hearing on January 20,


2016. Vide letter dated 11.01.2016, he acknowledged receipt of the said
letter and submitted his reply to SCN as mentioned in para 6 above,
however, he failed to appear for the hearing on January 20, 2016. A final
opportunity of personal hearing was given to the Noticee on February 10,
2016. Again he failed to appear but vide letter dated 09/02/2016
hesubmitted to consider his reply dated 11/01/2016 and withdraw the
Show Cause Notice (SCN).

8.

Thus, the Noticee was provided with fair and reasonable opportunity to
beheard which he failed to avail and hence, I proceed with the matter on
the basisof the material available on record.

CONSIDERATION OF ISSUES AND FINDINGS

9.

I have carefully perused the written submissions of the Noticee and the
documents available on record. The issues that arise for consideration in
the present case are :

Adjudication Order against Shri Sanjeev Bansalin the matter of SRG Infotech Ltd.Page 5 of 15

a)

Whether the Noticee had made incorrect statement before the IA and
whether he violated the provisions of section 11C(3), 11C(5)and
11C(6) of SEBI Act, 1992?

b)

Whether the Noticee is liable for monetary penalty under section


15HB of SEBI Act, 1992?

c)

What quantum of monetary penalty should be imposed on the Noticee


taking into consideration the factors mentioned in Section 15J of the
SEBI Act?

Issue I Violations of the provisions of section 11C(3), 11C(5)and 11C(6) of


SEBI Act, 1992?

10.

Before moving forward, it is pertinent to refer to the relevant provisions of


Section 11C (3), (5) and (6) of SEBI Act, 1992 which reads as under:

Section 11C(3), 11C(5) and Section 11C(6) of the SEBI Act, 1992

Section 11C(3): The Investigating Authority may require any intermediary


or any person associated with securities market in any manner to furnish
such information to, or produce such books, or registers, or other
documents, or record before him or any person authorised by it in this
behalf as it may consider necessary if the furnishing of such information
or the production of such books, or registers, or other documents, or
record is relevant or necessary for the purposes of its investigation.
Section 11C(5): Any person, directed to make an investigation under subsection (1), may examine on oath, any manager, managing director,
officer and other employee of any intermediary or any person associated
with securities market in any manner, in relation to the affairs of his
business and may administer an oath accordingly and for that purpose
may require any of those persons to appear before it personally.
Section 11C(6): If any person fails without reasonable cause or refuses

Adjudication Order against Shri Sanjeev Bansalin the matter of SRG Infotech Ltd.Page 6 of 15

(a) to produce to the Investigating Authority or any person authorised by


it in this behalf any book, register, other document and record which is his
duty under sub-section (2) or sub-section (3) to produce; or
(b) to furnish any information which is his duty under sub-section (3) to
furnish; or
(c) to appear before the Investigating Authority personally when required
to do so under sub-section (5) or to answer any question which is put to
him by the Investigating Authority in pursuance of that sub-section; or
(d) to sign the notes of any examination referred to in sub-section (7), he
shall be punishable with imprisonment for a term which may extend to one
year, or with fine, which may extend to one crore rupees, or with both, and
also with a further fine which may extend to five lakh rupees for every day
after the first during which the failure or refusal continues.

11.

Against the backdrop of unusual price rise in the scrip of SRG from ` 9 to
` 20 and entering of large quantities of orders and subsequent deletion of
the same either after updating the price or after part execution of the order
by Arihant Equity Fund Ltd(now known as Universal Media Network Ltd)
and New Age Shares and Stock Brokers Pvt. Ltd who are the promoters of
SRG, Summons dated June 16, 2004 was issued to the Noticee who was
Director in both Arihant Equity Fund Ltd and New Age Shares and Stock
Brokers Pvt. Ltd for production of documents and personal appearance to
ascertain his role in the alleged irregularities.

12.

Mr. Ashok Agarwal, Brother & Authorized Representative of the Noticee


appeared before the IA on July 09, 2004 and, inter alia, made statement
that the Noticee has never dealt for Arihant Equity Fund Ltd in the Scrip
of SRG. It is now alleged that this statementwas incorrect. The relevant
extracts of the said statement is extracted below: -

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Q. 10.Please explain as towhy M/s integrated have specifically taken the


name of Shri Sanjeev Bansal as having placed orders for Arihant
and New Age?
Ans.

. Sanjeev Bansal has never dealt for Arihant


Equity Fund.

13.

In response to the SCN, Noticee submittedthat as per the statement of


Mr. Ashok Agarwal dated 09/07/2004 which has been annexed as
annexure VI to the SCN, he never said that Sanjeev Bansal never dealt in
the scrip of SRG Infotech on behalf of Arihant Equity Fund.In this
regard, from the extract of the statement reproduced above it is clearly
stated by Shri Ashok Agarwal (Brother and Authorized Representative of
Sanjeev Bansal) before the IAthat Mr. Sanjeev Bansal has never dealt for
Arihant Equity Fund.

14.

I find from the material available on record that the Depository account
opening form dated 28.05.1999, executed with Integrated Master
Securities (IMS) for the purpose of opening of trading account in the
name of Arihant Equity Fund Ltdbears the name of Shri Sanjeev Bansal as
the sole authorized signatory for operating the DP account and he also
signed the application form, signature card and DP agreement as the
Director of Arihant Equity Fund Ltd.I also find from the records available
that the Bank A/c No. 325052 was opened in the name of Arihant Equity
Fund Ltd on 20.01.1999 with the Bank of America with Sanjeev Bansal
and Pramod Jain as authorized signatories. It is also not in dispute that the
said Bank account was used for the trading activity in the scrip of SRG by
Arihant Equity Fund Ltd. I find from the letterdated 10.05.1999 signed by

Adjudication Order against Shri Sanjeev Bansalin the matter of SRG Infotech Ltd.Page 8 of 15

Shri Sanjeev Bansal on behalf of Arihant Equity Fund Ltd authorizing


IMS to transfer credit balance in SettlementNo. 9917 of NSE towards
Debit balance in Settlement No. 7 ofBSE. Further, it is important to note
that Bill No. Group A/07/0007/ dated 17.05.1999 in Settlement period
from 03.05.1999 to 07.05.1999 was acknowledged by Shri Sanjeev Bansal
in token of various transactions done with IMS in the scrip of SRG. Hence,
the contention of the Noticee is not correct.

15.

The Noticee is bound by the statements made on his behalf by his


Authorized Representative who also happens to be his brother in this case.

16.

Noticee has also submitted that all the decisions were taken by Mr. Ashok
Agarwal who acted with iron hands as per his whims and fancies. He
forced me to sign on the dotted lines and things like that. Sometimes he
would ask his employee to forge signatures. in addition to this he also
submitted that during the year 1999 I used to sign as per my signature in
bank documents (Annexure V), prima facie to the best of my knowledge
and memory I dont remember having signed the documents annexed as
annexure VII, VIII, and IX as they have been different sign than my
usual.The SCN in the present matter is limited to the chargesof false and
incorrect statement before the IA. Therefore, I do not find any relevance in
the said submissions.It is relevant to note that, in the SEBI order no.
WTM/TCN/ 46 /ID3/Sept /2008 dated 23.09.2008it was observed that
documents annexed to SCNs include application form, signature card,
DP agreement and a copy of delivery instruction and none of them are
signed by any other director apart from Mr. Sanjeev Bansal and the
same was not disputed by the Noticee.

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17.

It is contended that in view of the findings by WTM SEBI vide order


dated 23.09.2008 that the Noticee has traded in the Scrip of SRG, it cannot
be said that the Noticee has made a false statement before the IA that he
has never dealt for Arihant Equity Fund Ltd in the Scrip of SRG. In this
contention it is relevant to note that the wrong statement was made to the
IA on 09.07.2004 whereas the order was passed on 23.09.2008 after the
completion of Investigation and upon arrival of conclusion based on
evidence on the role of the Noticee in the trading in the scrip of SRG.

18.

Noticee has also submitted that the matter is related to the events in the
year 1998-2000, therefore there has been a significant lapse of time of
approx. 16-18 years. Delay in initiating the proceedings itself cannot be a
ground for discharging the Noticee.Under the SEBI Act, 1992 there is
nolimitation on initiation of adjudication proceedings.

19.

Now as regards the violation of section 11C (3), 11C (5) and 11C (6) of
SEBI Act, 1992, I note that section 11C (3) of SEBI Act, authorize the IA
to summon any person associated with securities market in any manner to
furnish such informations, documents, records etc. if the same are
considered relevant for the investigation. This section also authorizes the
IA to call upon the persons before him to provide the necessary or relevant
information for the purposes of its investigation. SAT has observed in the
matter of DKG Buildcon Pvt. Ltd. V/s SEBI, Appeal No. 106/2006, order
dated 07.01.2009 thatSection 11C of the Act was introduced with effect
from 29.10.2002 and sub-section (3) thereof provides that the
investigating authority may require any person associated with the

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securities market to furnish such information, or produce such books, or


registers, or other documents, or record before him. The power to
require a person to furnish any information or record or documents
includes the power to require such person to make a statement and give
clarifications with regard to the information and documents produced by
him. In the absence of such a power the purpose of the legislature in
introducing section 11C would be frustrated and the Board will not be
able to investigate properly the market irregularities and offences. In
order to advance the object of Parliament the language used in subsection (3) of section 11C has to be given a wider meaning. We are,
therefore, of the considered opinion that section 11C (3) gives the power
to the investigating authority to call upon any person to make a statement
while furnishing any information, document or record. Similarly, Section
11C (5) of the SEBI Act empowers the IA to require the personal
appearance of such personto furnish any information or record or
documents and the said power also includes the power to require such
person to make a statement and give clarifications with regard to the
information and documents produced by him. When SEBI has statutory
power to call for information, there is corresponding duty on the other
person to give correct information.

20.

In Siddhartha Agarwal V/s SEBI, Appeal no. 96 of 2007 dated 26.11.2008


SAT has observed as under at para 5 of the Order: Section 15A(a) of the Act provides that if any person who is required
under the Act to furnish any documents, returns or reports fails to furnish
the same, he shall be liable to a penalty of one lac rupees for each day
during which such failure continues or one crore rupees whichever is less.

Adjudication Order against Shri Sanjeev Bansalin the matter of SRG Infotech Ltd.Page 11 of 15

Making a false statement would amount to failure to furnish the


information sought and would attract section 15A(a) of the Act.

21.

In view of the aforesaid discussions and findings, I find that the Noticee
made incorrect statement before the IA. It is settled position of law that
making a false statement or if the information furnished is incorrect or
misleading would amount tofailure to furnish the information sought and
thereby violative of section 11C(3) and (5) of SEBI Act, 1992. Reference
may also be made to SAT order dated 21.07.2011 in Appeal no. 54 of
2011 in Kemefs Specialties Pvt. Ltd V/s SEBI. The following is extracted
from the said order: We are inclined to agree with the learned counsel for the respondent that
if the information furnished is incorrect or misleading, the aforesaid
provisions would come into play and it could be said that the delinquent
had failed to furnish the required information.

Issue II Whether Noticee is liable for monetary penalty under section 15HB
of SEBI Act, 1992?

22.

It, would also be appropriate here to refer the provision of Section 15HB
of SEBI Act, as it existed at the relevant point of time, which reads as
under: -

Penalty for contravention where no separate penalty has been provided.


Section 15HB Whoever fails to comply with any provision of this Act,
the rules or the regulations made or directions issued by the Board
Adjudication Order against Shri Sanjeev Bansalin the matter of SRG Infotech Ltd.Page 12 of 15

thereunder for which no separate penalty has been provided, shall be


liable to a penalty which may extend to one crore rupees."
23.

I note that Section 15HB is a residuary provision for imposing the


monetary penalty for violation which is not covered by any section from
15A to 15HA under chapter VI A of the SEBI Act. I am of the view that
for making a false statement before the IA, no separate penalty has been
provided under SEBI Act and accordingly penalty can be imposed under
section 15HB of SEBI Act, 1992.In this regard reliance is also placed on
the order dated February 13, 2006 of Honble SAT in Appeal no. 20 of
2006 in the matter of SPS Share Brokers Pvt. Ltd. vs. SEBI wherein it was
held that non-cooperation with the Investigation would result in violation
of Section 11C (3) & (5) of SEBI Act, and imposition of penalty under
Section 15HB is justified.

24.

As regards the imposition of monetary penalty, reliance is placed upon the


order of the Honble Supreme Court of India in the matter of
Chairman,SEBI vs. Shriram Mutual Fund {[2006] 5 SCC 361} wherein it
was held that "In our view, the penalty is attracted as soon as
contravention of the statutory obligations as contemplated by the Act is
established and, therefore, the intention of the parties committing such
violation becomes immaterial. . Hence, we are of the view that once
the contravention is established, then the penalty has to follow and only
the quantum of penalty is discretionary."

25.

For the reasons stated earlier I hold that the Noticee is liable for monetary
penalty under section 15HB of SEBI Act.

Adjudication Order against Shri Sanjeev Bansalin the matter of SRG Infotech Ltd.Page 13 of 15

Issue III What quantum of monetary penalty should be imposed on


theNoticee taking into consideration the factors mentioned inSection 15J of the
SEBI Act?
26.

While determining the quantum of penalty under section 15HB of SEBI


Act, 1992, the factors stipulated in section 15J of SEBI Act, which reads
as under are considered:Section 15J - Factors to be taken into account by the adjudicating
officer
While adjudging quantum of penalty under section 15-I, the adjudicating
officer shall have due regard to the following factors, namely:(a) the amount of disproportionate gain or unfair advantage, wherever
quantifiable, made as a result of the default;
(b) the amount of loss caused to an investor or group of investors as a
result of the default;
(c) the repetitive nature of the default.

27.

I note that the material made available on record has not quantified the
amount of disproportionate gain or unfair advantage made by the Noticee
and the loss suffered by the investors as a result of the Noticee's default.
Also there is no material made available on record to assess the amount of
loss caused to investors or the amount of disproportionate gain or unfair
advantage made by the Noticee as a result of default. However, I am of the
view that making incorrect statement before the IA hampers the
investigation. The matter relates to investigation into the unusual price rise
of the Scrip from ` 9 to ` 20, an increase of 122%and the role of various
persons including the Noticee.Further, any delay or hurdle in investigation

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due to non-cooperation by any entity is detrimental to the interest of


investors in securities market and the same deserves to be viewed
seriously.

ORDER

28.

After taking into consideration all the facts and circumstances of the
case,I, in exercise of the powers conferred upon me under Section 15I (2)
of the SEBI Act read with Rule 5 of the Adjudication Rules, hereby
impose a penalty of `1,00,000/- (RupeesOne Lakh Only) on the Noticee
i.e. Sanjeev Bansal.

29.

The penalty shall be paid by way of demand draft drawn in favour of


SEBI Penalties Remittable to Government of India payable at Mumbai
within 45 days of receipt of this Order. The said demand draft shall be
forwarded to the The Division Chief (Enforcement Department - DRAII), Securities and Exchange Board of India, SEBI Bhavan, Plot No. C 4
A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400 051.

30.

In terms of rule 6 of the Rules, copies of this order are sent to the Noticee
and also to the Securities and Exchange Board of India.

Date: April 29, 2016


Place: Mumbai

S. V. Krishnamohan
Chief General Manager & Adjudicating Officer

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