an order of remand passed under Order 41 Rule 23A is amenable to appeal under Order 43 Rule 1 (u) of the Code. The High Court relied upon a decision of this Court in the case Narayanan Vs. Kumaran & Ors. (2004) 4 SCC 26 in holding that Civil Miscellaneous Appeal from the order of remand was not maintainable. The High Court was clearly in error. What has been held by this Court in Narayanan is that an appeal under Order 43 Rule 1 Clause (u) should be heard only on the ground enumerated in Section 100 of the Code. In other words, the constraints of Section 100 continue to be attached to an appeal under Order 43 Rule 1(u). The appeal under Order 43 Rule 1(u) can only be heard on the grounds a second appeal is heard under Section 100. There is a difference between maintainability of an appeal and the scope of hearing of an appeal. The High Court failed to keep in view this distinction and wrongly applied the case of Narayanan in holding that miscellaneous appeal preferred by the appellant was not maintainable. The appeals are accordingly allowed. The impugned order of the High Court is set aside.Page 7 7 The C.M.A. No. 1227 of 2002 titled as Jagannathan and Others Vs. Raju Sigamani is restored to the file of the Madras High Court, Madurai Bench for hearing and disposal in accordance with law. No order as to costs.

Page 1
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
   CIVIL   APPEAL   Nos.   3347-3348  OF   2012
   ARISING   OUT  OF
   Special   Leave  to   Appeal   (Civil)   No(s).19439-19440/2010
JEGANNATHAN                            APPELLANT
                 VERSUS
RAJU SIGAMANI & ANR.                   RESPONDENTS
JUDGMENT
   R.M.   LODHA,  J.
Delay condoned.
Leave granted.
The appellant herein is plaintiff No. 2. He, along
with two others, namely, Gnanasoundari and George filed
a Suit against the present respondent   No.1 for
declaration, permanent injunction and mandatory
injunction.
The respondent No. 1 contested the Suit on diverse
grounds.
After recording evidence and on hearing the
parties, the trial Court on September 16, 1999 decreed
plaintiffs' Suit for the grant of permanent injunction.
Aggrieved by the judgment and decree dated
September 16, 1999, the respondent No.1 preferred first
appeal which came up for hearing before the SubordinatePage 2
2
Judge, Tiruchirapalli. On hearing the parties, the
first appellate Court, allowed the appeal, set aside
the judgment of the trial Court and remanded the Suit
back to the trial Court with a direction to give an
opportunity to both the parties to let in evidence –
oral and documentary— and then decide the Suit afresh
on merits.
The order of remand dated April 8, 2002 was
challenged by the present appellant and present
respondent No. 2 by filing a Miscellaneous Appeal
before the High Court under Order 43 Rule 1(u) of the
Code of Civil Procedure, 1908 (for short 'the Code').
The High Court, by its order dated 26th September,
2008, held that the Civil Miscellaneous Appeal was not
maintainable and dismissed the appeal on that ground.
The appellant and the respondent No. 2 then filed
a petition before the High Court seeking review of the
order dated September 26, 2008. However, the Review
Petition was also dismissed on November 12, 2009. It is
from these two orders that the present appeal has
arisen.
Order 41 of the Code provides for appeals from
original decrees. The Code empowers the appellate Court
to order remand in three situations. These three
situations are covered by Order 41 Rule 23, Order 41Page 3
3
Rule 23A and Order 41 Rule 25 which read as under:
23. Remand of case by Appellate Court —
Where the Court from whose decree an appeal
is preferred has disposed of the suit upon a
preliminary point and the decree is reversed
in appeal, the Appellate Court may, if it
thinks fit, by order remand the case, and
may further direct what issue or issues
shall be tried in the case so remanded, and
shall send a copy of its judgment and order
to the Court from whose decree the appeal is
preferred, which directions to re-admit the
suit under its original number in the
register of civil suits, and proceed to
determine the suit; and the evidence (if
any) recorded during the original trial
shall, subject to all just exceptions, be
evidence during the trial after remand.
23A. Remand in other cases —
Where the Court from whose decree an appeal
is preferred has disposed of the case
otherwise than on a preliminary point, and
the decree is reversed in appeal and a
retrial is considered necessary, the
Appellate Court shall have the same powers
as it has under rule 23.
25. Where Appellate Court may frame issues
and refer them for trial to court whose
decree appealed from —
Where the court from whose decree the appeal
is preferred has omitted to frame or try any
issue, or to determine any question of fact,
which appears to the Appellate Court
essential to the right decision of the suit
upon the merits, the Appellate Court may, if
necessary, frame issues, and refer the same
for trial to the court from whose decree the
appeal is preferred and in such case shall
direct such court to take the additional
evidence required; and such court shall
proceed to try such issues, and shall return
the evidence to the Appellate Court together
with its findings thereon and the reasons
there for within such time as may be fixed byPage 4
4
the Appellate Court or extended by it from
time to time.
Order 41 Rule 23 is invocable by the appellate
Court where the appeal has arisen from the decree
passed on a preliminary point. In other words, where
the entire suit has been disposed of by the trial Court
on a preliminary point and such decree is reversed in
appeal and the appellate Court thinks proper to remand
the case for fresh disposal. While doing so, the
appellate Court may issue further direction for trial
of certain issues.
Order 41 Rule 23A has been inserted in the Code
by Act No. 104 of 1976 w.e.f. February 1, 1977.
According to Order 41 Rule 23A of the Code, the
appellate Court may remand the suit to the trial Court
even though such suit has been disposed of on merits.
It provides that where the trial Court has disposed of
the Suit on merits and the decree is reversed in appeal
and the appellate Court considers that retrial is
necessary, the appellate Court may remand the suit to
the trial Court.
Insofar as Order 41 Rule 25 of the Code is
concerned, the appellate Court continues to be in
seisin of the matter; it calls upon the trial Court to
record the finding on some issue or issues and send
that finding to the appellate Court. The power underPage 5
5
Order 41 Rule 25 is invoked by the appellate Court
where it holds that the trial Court that passed the
decree omitted to frame or try any issue or determine
any question of fact essential to decide the matter
finally. The appellate Court while remitting some issue
or issues, may direct the trial Court to take
additional evidence on such issue/s.
Insofar as the present case is concerned, the
trial Court had disposed of the suit on merits and not
on a preliminary issue. The first appellate Court set
aside the judgment and decree of the trial Court and
directed the trial Court to decide the suit afresh
after giving parties an opportunity to lead evidence —
oral as well as documentary. The nature of the order
passed by the appellate Court leaves no manner of doubt
that such order has been passed by the appellate Court
in exercise of its power under Order 41 Rule 23A of the
Code.
Order 43 of the Code provides for appeals from
orders. Clause (u) of Rule 1 Order 43 was amended
consequent upon insertion of Rule 23A in Order 41
w.e.f. February 1, 1977. It reads as under:
An appeal shall lie from the following
orders under the provisions of Section 104,
namely:—
x x x x xPage 6
6
(u) an order under rule 23 or rule 23A of
Order XLI remanding a case, where an appeal
would lie from the decree of the Appellate
Court;
x x x x x
It is clear from the above provision that an order
of remand passed under Order 41 Rule 23A is amenable to
appeal under Order 43 Rule 1 (u) of the Code.
The High Court relied upon a decision of this
Court in the case Narayanan Vs. Kumaran & Ors. (2004) 4
SCC 26 in holding that Civil Miscellaneous Appeal from
the order of remand was not maintainable. The High
Court was clearly in error. What has been held by this
Court in Narayanan is that an appeal under Order 43
Rule 1 Clause (u) should be heard only on the ground
enumerated in Section 100 of the Code. In other words,
the constraints of Section 100 continue to be attached
to an appeal under Order 43 Rule 1(u). The appeal under
Order 43 Rule 1(u) can only be heard on the grounds a
second appeal is heard under Section 100. There is a
difference between maintainability of an appeal and the
scope of hearing of an appeal. The High Court failed to
keep in view this distinction and wrongly applied the
case of Narayanan in holding that miscellaneous appeal
preferred by the appellant was not maintainable.
The appeals are accordingly allowed.
The impugned order of the High Court is set aside.Page 7
7
The C.M.A. No. 1227 of 2002 titled as Jagannathan
and Others Vs. Raju Sigamani is restored to the file of
the Madras High Court, Madurai Bench for hearing and
disposal in accordance with law.
No order as to costs.
.............................J.
     (R.M. LODHA)
.............................J.
         (H.L. GOKHALE)        
NEW DELHI,
02-04-2012

WHAT IS CUSTODY WHETHER IT IS JUDICIAL CUSTODY OR POLICE CUSTODY ? IN GRANTING BAIL, THE COURT CAN SEE ONLY CUSTODY AND OFFENCE . WHEN THE BAIL NOT OBTAINED FROM MISREPRESENTATION, THE QUESTION OF CANCELLING THE BAIL DOES NOT ARISE. EVEN IN THE ABSENCE OF JUDICIAL CUSTODY, THE HIGH COURT CAN GRANT BAIL IN CERTAIN CASES WHEN THE ACCUSED IS UNDER POLICE CUSTODY ALSO. THE D.S.P. WHO KEPT THE ACCUSED FOR MORE THAN 24 HOURS SHOULD BE SUSPENDED FROM THE SERVICE

THE HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU              

CRIMINAL PETITION No.10864 of 2011  

02-01-2012

Alaparthi Chinna

Kota Lakshmi Satyanarayana and another  

Counsel for the Petitioner : Sri N.Ravi Prasad

Counsel for the Respondent No.1:  Sri Ch.Ravindra Babu
Counsel for the Respondent No.2:  Public Prosecutor.

ORDER :
        The petitioner/defacto-complainant filed this petition under Section
439(2) Cr.P.C for cancelling bail granted to the 1st respondent/accused in
Crl.P.No.7709 of 2011 on 06.09.2011 by this Court in Crime No.73/2011 of I Town
Police station, Tenali, Guntur District on the ground that by the time order of
bail was passed by this Court, the accused was not arrested and remanded to
judicial custody and that by misrepresentation of facts, the 1st
respondent/accused obtained bail in this crime from this Court.
        2) The 1st respondent/accused is accused of offences punishable under
Sections 420, 323, 506, 509 I.P.C and Section 3(1)(x) of the Scheduled Castes
and Scheduled Tribes (Prevention of Atrocities) Act, 1989.  It is alleged that
the accused obtained Rs.30,000/- from the defacto-complainant for securing job
as Aaya to her on daily wages and that he failed to secure the job and that when
the defacto-complainant demanded for return of the said amount, the accused
abused her in the name of her Madiga caste in filthy language and threatened her
with dire consequences.  The case was booked by the police on 30.06.2011 on
report given by the defacto-complainant.  This Court noted in the order dated
06.09.2011 that the accused was arrested on 31.07.2011 and had been in custody
since then.  It is pointed out by the petitioner's counsel that though the
accused was taken into custody by the police during the course of investigation,
he was neither arrested nor produced before the Magistrate nor the Magistrate
remanded the accused to judicial custody.  It is also pointed out by the
petitioner's counsel that when the accused approached the Sessions Court for
bail under Sections 437 and 439 Cr.P.C, the IV Additional Sessions Judge, Guntur
by order dated 23.08.2011 dismissed bail petition of the accused on the ground
that he was not remanded to judicial custody by the Magistrate and that there
was no material to show arrest or remand of the accused to judicial custody and
that the accused was not produced before the Magistrate.
        3) This Court in this petition called for report of the Deputy
Superintendent of Police, Tenali Sub-Division who is the investigating officer
in this crime.  The Deputy Superintendent of Police, Tenali Sub-Division filed
report by way of affidavit dated 12.12.2011 in this Court.  Relevant portion of
the said report reads:
        "4. It is respectfully further submitted that after collecting prima-facie
evidence, on 31.7.2011 at 1 p.m. in Tenali I Town Police Station, the accused
Kota Laxmi Satyanarayana was arrested duly following all legal requirements.
The arrested person has been referred to the District Hospital, Tenali for
obtaining fitness certificate to enable the Investigating Officer to produce him
along with Remand Report before the Hon'ble Court of I Additional Judicial
Magistrate of First Class, Tenali, since some of the offences are non-bailable
nature.  The Deputy Civil Surgeon, District Hospital, Tenali examined the said
accused, Kota Laxmi Satyanarayana and opined that he was suffering with
Hyperglycemia due to not taking insulin and leading to Hyperglycemic coma, that
he was unfit for transportation and the case was being referred immediately to
High Health Centre for better treatment.  Thus as per the medical advise, the
accused was shifted to K.I.M.S Hospital, Tenali, where he was admitted as
inpatient in I.C.U ward.  It is pertinent to mention here that any accused
person who has been arrested will be taken to medical examination and then will
be produced before Judicial First Class Magistrate for judicial custody.  All
the procedures of law has been complied in this case.  Hence the procedure is
complied with."
        The record further shows that Sub-Divisional Police Officer/Deputy
Superintendent of Police, Tenali filed memo before the I Additional Judicial
Magistrate of the First Class, Tenali in this crime on 01.08.2011 mentioning the
above facts and stating that he was producing remand report with all the
connected records and medical certificate of the accused for further proceedings
in this case.  On that memo, the Magistrate passed the following order.
        "The police are directed to produce the accused before the Medical
Officer, District Hospital, Tenali for his examination and police are further
directed to produce the accused along with remand report and other certificates.
Meanwhile, the office is directed to return Remand Report to police for
representation of the same along with the accused."
        4) On 02.08.2011 the Sub-Divisional Police Officer represented the said
memo "after compliance".  In the office note of the Magistrate Court after
resubmission, it is noted that the memo was represented along with a certificate
issued by the Deputy Civil Surgeon, District Hospital, Tenali stating that the
accused was unfit for transit and hence, not produced before the Court on
02.08.2011.  The said resubmission endorsement on the memo was not signed by the  
Sub-Divisional Police Officer, but some other person singed for Sub-Divisional
Police Officer.  It is stated by the Deputy Superintendent of Police in his
report submitted to this Court that the accused was kept under Police guard in
K.I.M.S hospital, Tenali where he was undergoing treatment from 01.08.2011 to
09.09.2011.  In pursuance of bail order granted by this Court on 06.09.2011 the
Magistrate issued official memo to the Station House Officer, Tenali I Town
Police Station directing release of the accused who was in police custody
undergoing treatment, after obtaining bond papers from the accused and his
sureties.
        5) According to certificate dated 02.08.2011 of Deputy Civil Surgeon,
District Hospital, Tenali, the accused was suffering from Hyperglycaemia as he
did not take insulin leading to Hyperglycaemic coma.  Dr.Kowshik Kolluru of
Spark Diabetic and Multi Speciality Hospital gave certificate dated 01.08.2011
that the accused met him at 09.30 P.M on 31.01.2011 for management of
Hyperglycaemic coma and Transient Ischaemic Attack and that he was a known  
history of diabetic and past history of C.V.A and that he was admitted under his
care as inpatient in K.I.M.S hospital I.C.U for further management and that he
might require bed rest.  As per memo dated 01.08.2011 filed by Sub-Divisional
Police Officer before the Magistrate, the accused was arrested on 31.07.2011 at
13.00 hours at I Town Police Station, Tenali and that the accused was sent to
District Area Hospital, Tenali for medical fitness to produce him before the
Court for judicial remand.  When the accused was arrested by the Sub-Divisional
Police Officer at 13.00 hours on 31.07.2011 at I Town Police Station, Tenali,
the accused could not have met Dr.Kowshik Kolluru of Spark Diabetic and Multi
Speciality Hospital, Tenali at 09.30 P.M. (21.30 hours) on 31.07.2011.  The
certificate dated 01.08.2011 said to have been issued by Dr.Kowshik Kolluru of
Spark Diabetic and Multi Speciality Hospital is ex facie false and it is a
managed certificate.  There is no certificate issued by Deputy Civil Surgeon,
District Hospital, Tenali to the effect that the accused was produced before him
on 31.07.2011 after his arrest or on 01.08.2011 for medical examination by the
police.  Certificate dated 02.08.2011 given by Dr.Athota Ravindra Kumar, Deputy
Civil Surgeon, District Hospital, Tenali reads that the accused was referred to
Higher Centre for better management and that at that time, the accused was unfit
for transport.  The Deputy Civil Surgeon was certifying condition of the accused
on 02.08.2011.  It is not as if the accused had to be transported from Tenali to
any distant place.  The accused had to be produced before the Magistrate who is
located at Tenali itself.  The certificate issued by Dr.Kowshik Kolluru of Spark
Diabetic and Multi Speciality Hospital shows that the said hospital is located
in front of Judges' Quarters at Tenali.  In the light of the above factual
aspects of the case, I proceed to examine whether action/inaction of the Sub-
Divisional Police Officer, Tenali in not producing before the Magistrate after
his arrest is in accordance with Indian Constitution and in accordance with law.
        6) Article 22 of the Indian Constitution provides for production against
arrest and detention in custody of a person.  Sub-Article (2) thereof prescribes
production of any person arrested and detained in custody before the nearest
Magistrate within a period of 24 hours of such arrest in the following terms.
        "Art.22. (1)- - -- - - - - -
        (2) Every person who is arrested and detained in custody shall be produced
before the nearest Magistrate within a period of twenty-four hours of such
arrest excluding the time necessary for the journey from the place of arrest to
the Court of the Magistrate and no such person shall be detained in custody
beyond the said period without the authority of a Magistrate.
        (3) Nothing in clauses (1) and (2) shall apply -
(a) to any person who for the time being is an enemy alien; or
(b) to any person who is arrested or detained under any law providing for
preventive detention.
        Exceptions are provided for such production within a period of twenty-four
hours of arrest in Sub-Article (3) only in case relating to enemy alien and
preventive detention."
        7) Section 54 Cr.P.C provides for examination of arrested person by
medical officer.  Section 54 Cr.P.C as it stands after Amending Act 5 of 2009
with effect from 31.12.2009, reads as follows:
        "54. Examination of arrested person by medical officer:-
(1) When any person is arrested, he shall be examined by a medical officer in
the service of Central or State Governments and in case the medical officer is
not available by a registered medical practitioner soon after the arrest is
made:
        Provided that where the arrested person is a female, the examination of
the body shall be made only by or under the supervision of a female medical
officer, and in case the female medical officer is not available, by a female
registered medical practitioner.
        (2) The medical officer or a registered medical practitioner so examining
the arrested person shall prepare the record of such examination, mentioning
therein any injuries or marks of violence upon the person arrested, and the
approximate time when such injuries or marks may have been inflicted.
        (3) Where an examination is made under sub-section (1), a copy of the
report of such examination shall be furnished by the medical officer or
registered medical practitioner, as the case may be, to the arrested person or
the person nominated by such arrested person."
        Section 55A Cr.p.C prescribes that it shall be duty of the person having
the custody of the accused to take reasonable care of the health and safety of
the accused.  The duty under Section 55A is subject to the duty under Section 56
Cr.P.C.  Section 56 Cr.P.C enjoins duty on the police officer making arrest to
take the person so arrested or send that person before a Magistrate having
jurisdiction in the case or before the officer in-charge of a police station.
In the case on hand, it was a superior police officer viz., Sub-Divisional
Police Officer, Tenali, who effected arrest of the accused.  Therefore, it is
his duty to take or send the person arrested before the Magistrate having
jurisdiction in the case.  Section 57 Cr.P.C commands that no police officer
shall detain in custody a person arrested for a longer period exceeding twenty-
four hours, which period is exclusive of the time necessary for the journey from
the place of arrest to the Magistrate.  The only relaxation for production of
the arrested accused within twenty-four hours contained in Section 57 Cr.P.C is
in case the Magistrate under Section 167 Cr.P.C by special order authorised the
police officer to detain such person for a period of more than twenty-four
hours.  Section 167(1) Cr.P.C reiterates duty of the police officer in the
following language:
        "167. Procedure when investigation cannot be completed in twenty-four
hours:- (1) Whenever any person is arrested and detained in custody, and it
appears that the investigation cannot be completed within the period of twenty-
four hours fixed by Section 57, and there are grounds for believing that the
accusation or information is well-founded, the officer in charge of the police
station or the police officer making the investigation, if he is not below the
rank of sub-inspector, shall forthwith transmit to the nearest Judicial
Magistrate a copy of the entries in the diary hereinafter prescribed relating to
the case, and shall at the same time forward the accused to such Magistrate."
        On such production of the arrested person by the police officer who
effected arrest, before the Magistrate, it is open to the Magistrate under Sub-
section (2) of Section 167 Cr.P.C to authorise detention of the accused person
to such custody as such Magistrate thinks fit for a prescribed term.  Such
authorised custody by the Magistrate may be custody of the accused in prison by
way of judicial remand or custody of the person to the police by way of police
custody.
        8) Without such authorisation from the Magistrate under Section 167(2)
Cr.P.C the police officer who arrested the accused person has no discretion to
keep the accused person in his custody either in police station or in his house
or in a hospital or in any other place, in the light of the above provisions of
the Constitution of India and the Code of Criminal Procedure, 1973.  The
action/inaction of the Sub-Divisional Police Officer, Tenali in not producing
the accused person in this crime before the Magistrate and in allowing the
accused person to remain in hospital, is in clear violation of the above
constitutional and legal provisions.  Any custody of the accused beyond twenty-
four hours without production of the accused before the Magistrate, becomes
illegal as well as un-constitutional.  When the accused was arrested on
31.07.2011 at 13.00 hours at I Town Police Station, Tenali, the accused should
have been produced before the Magistrate at Tenali immediately thereafter or
within reasonable time.  Without there being prima facie case against the
accused from the evidence collected by the Sub-Divisional Police Officer, he
would not have arrested the accused on 31.07.2011 at 13.00 hours.  Instead of
producing the accused before the Magistrate either on the same day or within
twenty-four hours thereof by 13.00 hours on 01.08.2011 after getting the accused
examined by medical officer of the Government Hospital, Tenali either on
31.07.2011 or on 01.08.2011 before 13.00 hours, the Sub-Divisional Police
Officer prima facie in collusion with the accused person obtained a certificate
from Dr.Kowshik Kolluru of Spark Diabetic & Multi Speciality Hospital on
01.08.2011 as if the said doctor examined the accused at 09.30 A.M. on
31.07.2011.  On the next day, Dr.Athota Ravindra Kumar, Deputy Civil Surgeon,
District Hospital, Tenali, gave medical fitness certificate dated 02.08.2011 as
if he examined the accused on that day and referred him to higher centre for
better management.  Detention of the accused with the Sub-Divisional Police
Officer beyond 13.00 hours on 01.08.2011 makes it illegal as well as
unconstitutional.  In case an arrested accused person acquired any health
problem after his arrest, then it is for the police officer to produce the
accused before the Magistrate within twenty-four hours after obtaining medical
certification of the accused from a Government doctor and thereafter it is for
the Magistrate who after authorising the custody of the accused to the specified
authority under Section 167(2) Cr.P.C to take a decision and to give a direction
either to prison authorities in case the accused is authorised to be detained in
prison or to the police authorities in case the accused is authorised to be
detained in police custody, for getting necessary medical aid and to provide
necessary medical facilities to the accused so detained.  It is not for the
police officer to admit the arrested accused in a hospital and to violate legal
and constitutional mandate of production of the arrested accused before the
Magistrate within twenty-four hours of his detention under arrest.  Such action
on the part of police officers is likely to lead unscrupulous tendencies like in
the present case, where the accused was allowed to remain in hospital from
31.07.2011 to 09.09.2011 after his arrest without production before a
Magistrate, till the accused was ordered to be released on bail by this Court.
Such activity on the part of the police officers will give wrong signals to the
society and to the public at large that rich and influential persons can manage
unscrupulous police officers, so that they need not go either to a Court or to a
prison even after arrest while in custody.  The Sub-Divisional Police Officer,
Tenali prima facie committed a constitutional violation in not producing the
accused before the Magistrate within twenty-four hours of his arrest.  His
action/inaction in this regard is highly deplorable.  This is a fit case for
keeping the said police officer under suspension and to conduct departmental
disciplinary enquiry against him as well as to book a criminal case against him
as well as others who facilitated him in this regard, by C.I.D and to make
investigation about their illegal and unconstitutional activity mentioned above.
        9) In so far as granting of bail to the accused in this crime by this
Court under Section 439 Cr.P.C is concerned, it has to be seen whether it was
granted in accordance with law and whether there was any misrepresentation on
the part of the accused before this Court for obtaining bail.  In Criminal
Petition No.7709 of 2011 filed by the accused for bail under Section 439 Cr.P.C
it was stated that the police called him to the police station on 31.07.2011 at
about 7.00 A.M. and that the police have detained and arrested him and informed
his kith and kin about the arrest and that due to continuous interrogation and
torture, at about 6.30 P.M the accused fell unconscious in the police station
with illness and that he was taken to Area District Hospital and to private
hospital.  It was never stated in Criminal Petition No.7709 of 2011 that the
accused was in judicial custody.  In that petition, the accused also enclosed
copies of remand report, medical certificates of both the doctors as well as
order dated 23.08.2011 passed by the IV Additional Sessions Judge, Guntur
refusing bail to the accused on the ground that he was not remanded to judicial
custody.  Therefore, it cannot be said that the accused obtained bail from this
Court in Criminal Petition No.7709 of 2011 by making any misrepresentation
before this Court.
        10) It is contended by the counsel for the defacto-complainant who is
seeking cancellation of bail to the accused that without there being judicial
custody, this Court has no jurisdiction to entertain a bail petition under
Section 439 Cr.P.C.  It is contended that judicial custody of the accused is a
condition precedent for entertaining a bail application by this Court under
Section 439 Cr.P.C.  Under Section 439 Cr.P.C, this Court as well as the Court
of Session are empowered to exercise special powers for releasing on bail 'any
person accused of an offence and in custody'.  Custody referred in Section 439
Cr.P.C need not necessarily be judicial custody given under Section 167(2)
Cr.P.C.  It can be either judicial custody or police custody under Section
167(2) Cr.P.C or detention in custody of an arrested person under Section 57
Cr.P.C.  If custody in Section 439 Cr.P.C is to be read as judicial custody,
then it amounts to adding something which the Parliament did not intend to add
and which the Parliament did not intend to restrict power of the High Court and
the Court of Session.  Therefore, in the circumstances, the order dated
06.09.2011 in Criminal Petition No.7709 of 2011 is not liable to be set aside or
cancelled.
        11) In the result, this Criminal Petition is dismissed, with further
directions to the following effect:
(a) The Director General and Inspector General of Police, Andhra Pradesh,
Hyderabad is directed to place Y.T.R.Prasad, Deputy Superintendent of
Police/Sub-Divisional Police Officer, Tenali Sub-Division, Tenali, Guntur
District under suspension and to initiate departmental disciplinary enquiry
against him for violating the constitutional as well as legal provisions as
indicated above and take consequential appropriate departmental disciplinary
action against him.
(b) The Additional Director General of Police, C.I.D, Andhra Pradesh, Hyderabad
is directed to register case against Y.T.R.Prasad, Deputy Superintendent of
Police/Sub-Divisional Police Officer, Tenali Sub-Division, Tenali, Guntur
District along with others, if any, who facilitated him in this regard, under
appropriate penal sections of law in the light of the observations made in this
order and to investigate into the offence according to law.

_______________________________    
SAMUDRALA GOVINDARAJULU, J        
January 02, 2012

BEFORE THE ADJUDICATING OFFICER SECURITIES AND EXCHANGE BOARD OF INDIA- I find that the acts of manipulative trading by Hi–Fi and Sangita helped in creating artificial demand and thereby leading to a false appearance of trading in the scrip of the Company as also as causing fluctuations in the price of the scrip of the company as these kind of activities seriously affect the normal price discovery mechanism of in the securities market. In light of the facts of the case and material available on record I am convinced that Hi–Fi and Sangita have violated the provisions of Regulation 4(1), 4(2) (a) (b) & (g) of PFUTP Regulations. - ORDER - 39. Considering the facts and circumstances of the case, in terms of the provisions of Section 15HA of SEBI Act, 1992 and Rule 5(1) of the Adjudication Rules, I hereby impose a penalty of ` 1,00,000/- (Rupees One Lakh only) on Hi-Fi Tradecom Private Limited and ` 1,00,000/- (Rupees One Lakh only) on Sangita Securities Private Limited. 40. 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 Division Chief, Investigation Department, Securities and Exchange Board of India, Plot No. C4-A, ‘G’ Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400051. Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd. In the matter of GHCL Ltd.

Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd.  
In the matter of GHCL Ltd.
 
Page 1 of 14                                                                                                                                                              April 02, 2012
BEFORE THE ADJUDICATING OFFICER
SECURITIES AND EXCHANGE BOARD OF INDIA
[ADJUDICATION ORDER NO. JS/AO–01/2012]
__________________________________________________________________________________
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, 1995
                                                     
                      In respect of:
1) Hi-Fi Tradecom Private Limited
                                                                                                  (PAN – Not Available)
   2) Sangita Securities Private Limited
                                                                                                  (PAN – Not Available)                
                                                                  In the Matter of: GHCL Ltd.
__________________________________________________________________________________
BACKGROUND
1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) conducted
investigation in the scrip of GHCL Limited (hereinafter referred to as “the
Company/GHCL”) for the period from February 01, 2006 to March 30, 2006
(hereinafter referred to as the “investigation period”) for trading on the National
Stock Exchange of India Ltd. (hereinafter referred to as “NSE”) and The Bombay
Stock Exchange Ltd. (hereinafter referred to as “BSE”).
2. Price-volume data of the scrip GHCL recorded at NSE and BSE was as below:
  (Face value ` 10 per share)
Exchange Open (`) High (`) Low (`) Close (`) Volume
NSE
129.00
(Feb 1, 2006)
167.05
(Mar 23, 2006)
126.15
(Feb 2, 2006)
164.35
(Mar 30, 2006)
2,89,02,331
BSE
128.25
(Feb 1, 2006)
166.55
(Mar 23, 2006)
125.50
(Feb 1, 2006)
163.55
(Mar 30, 2006)
1,27,01,978 Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd.
In the matter of GHCL Ltd.
 
Page 2 of 14                                                                                                                                                              April 02, 2012
3. Major spurt in price was observed from March 08, 2006 where the scrip opened at `
132.95 and increased to ` 167.05 (25.65%) on March 23, 2006 and closed at ` 164.35 on
March 30, 2006. Prior to the investigation period, the scrip traded within the range of `
119 to ` 135 with an average volume of 3,72,085 shares. It traded within the range of `
156 to  `  193 during April 01 – 30, 2006 (immediately after the investigation period)
with an average volume of 1,51,948 shares.
4. It was observed that during the investigation period, a group of clients connected to
each other, i.e., the  Jalco Group consisting of the following companies: Hi-Fi
Tradecom Pvt. Ltd. (hereinafter referred to as the ‘Hi-Fi’), Jalco Financial Services Pvt.
Ltd. (hereinafter referred to as the ‘Jalco’), Wilful Finance & Investment Company Pvt.
Ltd. (hereinafter referred to as the ‘Wilful’), Shailaja Finance Ltd. (hereinafter referred
to as the ‘Shailaja’), Signet Suppliers Pvt. Ltd. (hereinafter referred to as the ‘Signet’),
Dhoop Sales Private Ltd. (hereinafter referred to as the ‘Dhoop’), Sangita Securities
Pvt. Ltd. (hereinafter referred to as the ‘Sangita’) and Pathik Merchandise Pvt. Ltd.
(hereinafter referred to as the ‘Pathik’) traded substantially in the shares of the
Company.
5. It was observed that Shri Sanjay Jalan  was the promoter of Jalco and Wilful and
introducer of Sangita. Further, Sangita and Hi-Fi had a common address. Jalco also
shared its address with Signet, Dhoop and Pathik. Fund movement was observed
between Jalco and Shailaja. Shri Manohar Ram (Director of Pathik) also had
Directorship in Wilful. Thus, these entities were connected and their trading has been
cumulatively treated as the ‘Jalco Group’. These entities altogether traded 2,08,25,138
shares on gross basis (25.03% for total traded quantity at both the exchanges). It was
observed that these entities traded through multiple brokers, on the NSE and the BSE
and that the Jalco Group which traded substantially in the scrip also executed
synchronized trades within the group. The summary of trades of the Jalco Group was
as below:
NSE BSE
Client Name  Buy
Qty (%) Sell Qty  (%) Buy Qty (%) Sell Qty  (%)
Jalco 6088015 21.06 4484993 15.52 269239 2.12 4384889 34.52
Wilful 2028212 7.01 1174962 4.07 21116 0.17 625000 4.92
Signet 210000 0.73 210000 0.73 0 0.00 0 0.00Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd.
In the matter of GHCL Ltd.
 
Page 3 of 14                                                                                                                                                              April 02, 2012
Dhoop 25000 0.09 44637 0.15 0 0.00 0 0.00
Pathik 0 0.00 253811 0.88 0 0.00 15000 0.12
Shailaja 179508 0.62 0 0.00 86511 0.68 0 0.00
Hi-Fi 124245 0.43 285000 0.99 0 0.00 15000 0.12
Sangita 285000 0.99 0 0.00 15000 0.12 0 0.00
Total 8939980 30.93 6453403 22.33 391866 3.09 5039889 39.68
6. It was observed that Sangita bought 3,00,000 (2,85,000 at NSE and 15,000 at BSE)
shares of the Company during February 23 – March 3, 2006, in which 2,96,357 shares
(2,82,256 at NSE and 14,101 at BSE) were bought from Hi-Fi. It was also observed that
all these 20 trades were synchronised wherein time gap between placing buy orders
and sell orders were 0-7 seconds and quantity and rate were also identical. It was
further observed from the account opening forms of Sangita (India Infoline) and Hi-Fi
(Indiabulls) that Mrs. Sangita Jhunjhunwala and Mrs.  Suruchi Jhunjhunwala, the
directors of Sangita, were the family members of Smt. K D Jhunjhunwala who had
directorship in Hi-Fi.
7. It was observed that two promoter entities of the Company, Carissa Investment Pvt.
Ltd. (hereinafter referred to as the ‘Carissa’) and ILAC Investment Pvt. Ltd.
(hereinafter referred to as the ‘ILAC’) transferred shares as well as funds to the Jalco
Group during the investigation period when Jalco group was trading substantially
which created volume. It was also observed that Jalco shared common address with
Carissa and ILAC. It was further observed that Shri V K Mehta was director of Dhoop
and also of Carissa.
8. It was alleged that the Jalco Group received shares from the promoter entities and
they traded in the market substantially in the shares of the Company which created
artificial volume and subsequently transferred shares to the promoter entities. It was,
inter-alia, alleged that Hi–Fi and Sangita as  a part of the Jalco Group executed
synchronised trades and traded among the group during the investigation period
without any intention to effect transfer of beneficial ownership. It was further alleged
that Hi–Fi and Sangita alongwith other entities of the Jalco Group, employed as well
as aided and abetted in employing manipulative trade practices which led to creation
of artificial volumes and impacted the price of the scrip of the Company during the
investigation period.  Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd.
In the matter of GHCL Ltd.
 
Page 4 of 14                                                                                                                                                              April 02, 2012
APPOINTMENT OF ADJUDICATING OFFICER
9. The undersigned was appointed as the Adjudicating Officer vide Order dated June 18,
2009 and the said appointment was conveyed vide proceedings of the Whole Time
Member dated June 29, 2009 to inquire into and adjudicate under Section 15 HA of the
SEBI Act, 1992, the alleged violation of provisions of Regulation 4(1), 4(2) (a), (b) and
(g) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities
Market) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations”).
SHOW CAUSE NOTICE, HEARING & REPLY
10. A Show Cause Notice (hereinafter referred to as “SCN”) in terms of the provisions of
Rule 4(1) of SEBI (Procedure for Holding Inquiry and Imposing Penalties by
Adjudicating Officer) Rules, 1995  (hereinafter referred to as “Adjudication Rules”)
was issued to Hi–Fi and Sangita on November 30, 2009, calling upon to show cause
why an inquiry should not be held against them under Rule 4 of the Adjudication
Rules for the alleged violations.
11. The aforesaid SCN was sent to Hi-Fi which returned undelivered and therefore the
same was resent alongwith Hearing Notice dated June 16, 2010 vide which an
opportunity of personal hearing was given to Hi-Fi which was scheduled for June 28,
2010, which was duly delivered to Hi-Fi. Since Hi-Fi failed to avail the opportunity of
personal hearing, vide Hearing Notice  dated August 03, 2010 another opportunity
was granted to Hi-Fi on August 27, 2010. However, Hi-Fi failed to avail the
opportunity of personal hearing scheduled on August 27, 2010. Thereafter, another
opportunity of personal hearing was given to Hi-Fi on September 02, 2010 vide
Hearing Notice dated August 27, 2010 which Hi-Fi once again failed to avail. One
more opportunity of personal hearing was given to Hi-Fi on September 22, 2010 vide
Hearing Notice dated September 02, 2010 which Hi-Fi failed to avail.
12. Since no reply was received from Hi-Fi, another opportunity of personal hearing was
granted on October 29, 2010 vide Hearing Notice dated October 14, 2010. Shri R K
Dhaniwal, Authorised Representative (hereinafter referred to as “AR”) of Hi-Fi
attended the hearing on the scheduled date and requested for a copy of the SCN Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd.
In the matter of GHCL Ltd.
 
Page 5 of 14                                                                                                                                                              April 02, 2012
which was provided to the AR. Subsequently, Hi-Fi submitted its reply vide letter
dated November 12, 2010 and inter-alia made the following submissions
(a) It was denied that Hi-Fi was related / connected / associated with the Jalco Group in
any manner and it made a strong objection to being referred to as the ‘Jalco Group’.
(b) All transactions were open market purchase  and sale and it was denied that just
because one of the directors of Hi-Fi was  a relative of the directors of Sangita, the
transactions were synchronized, as both the entities were separate legal entity.
(c) It was submitted that Hi-Fi had given a detailed reply to letter no.
IVD/ID6/BM/MR/GHCL/135956/2008 dated 25.08.2008 and hence it was denied that
Hi-Fi had not offered comments on its trading.
(d) Hi-Fi had dealt in many other securities during the period of investigation including
the shares of GHCL and all trades were open market transactions and Hi-Fi had not
adopted any type of malpractices or unfair trading in any of the securities.
(e) It was denied that Hi-Fi had violated any of the provisions of the PFUTP regulations
or the provisions of the SEBI Act, as alleged.
13. The aforesaid SCN was sent to Sangita. However, as no reply was received, Hearing
Notice dated June 16, 2010 vide which an opportunity of personal hearing was given
to Sangita which was scheduled for June  28, 2010. Since Sangita failed to avail the
opportunity of personal hearing, vide Hearing Notice dated August 03, 2010 another
opportunity was granted to Sangita on August 27, 2010. However, Sangita failed to
avail the opportunity of personal hearing scheduled on August 27, 2010. Thereafter,
another opportunity of personal hearing was given to Sangita on September 02, 2010
vide Hearing Notice dated August 27, 2010 which Sangita once again failed to avail.
One more opportunity of personal hearing was given to Sangita on September 22,
2010 vide Hearing Notice dated September 02, 2010 which Sangita failed to avail.
14. Since no reply was received from Sangita, another opportunity of personal hearing
was granted on October 29, 2010 vide Hearing Notice dated October 14, 2010. Shri R K
Dhaniwal, AR of Sangita attended the hearing on the scheduled date and requested
for a copy of the SCN which was provided to the AR. Subsequently, Sangita
submitted its reply vide letter dated November 12, 2010 and  inter-alia made the
following submissions Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd.
In the matter of GHCL Ltd.
 
Page 6 of 14                                                                                                                                                              April 02, 2012
(a) It was denied that Sangita was related / connected / associated with the Jalco Group
and its promoters in any manner and it made a strong objection to being referred to as
the ‘Jalco Group’.
(b) All transactions were open market purchase and it was denied that just because of the
directors of Sangita were relative of a director of Hi-Fi, the transactions were
synchronized, as both the entities were separate legal entity carrying the business at
their own.
(c) It was submitted that Sangita had given a detailed reply to letter no.
IVD/ID6/BM/MR/GHCL/135956/2008 dated 25.08.2008 and hence it was denied that
Sangita had not offered comments on its trading.
(d) Sangita had dealt in many other securities during the period of investigation including
the shares of GHCL and all trades were open market transactions and Sangita had not
adopted any type of malpractices or unfair trading in any of the securities.
(e) It was denied that Sangita had violated any of the provisions of the PFUTP regulations
or the provisions of the SEBI Act, as alleged.
15. Vide letters dated November 12, 2010, Hi–Fi and Sangita had also requested for
another opportunity of personal hearing which was acceded to and accordingly vide
Hearing Notices dated July 27, 2011 opportunity of personal hearing was granted to
Hi–Fi and Sangita which was scheduled on August 17, 2011. However, Hi–Fi and
Sangita failed to avail the opportunity of personal hearing on the scheduled date, i.e.,
August 17, 2011. In this regard, I note that sufficient time and opportunities were
given to Hi–Fi and Sangita to appear for personal hearing and make submissions in
this matter in compliance with the principles of natural justice. I further note that till
date, Hi–Fi and Sangita have not made any further submissions before me. Therefore,
I note that the principles of natural justice have been duly complied with. Hence, I am
proceeding with the inquiry taking into account the material available on record.
ISSUES FOR CONSIDERATION
16. After perusal of the material available on record, I have the following issues for
consideration, viz.,
A. Whether Hi–Fi and Sangita have violated the provisions of Regulation 4(1), 4(2)
(a), (b) and (g) of PFUTP Regulations?
B. Whether Hi–Fi and Sangita are liable for monetary penalty under Section 15HA of
the SEBI Act, 1992? Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd.
In the matter of GHCL Ltd.
 
Page 7 of 14                                                                                                                                                              April 02, 2012
C. What quantum of monetary penalty should be imposed on Hi–Fi and Sangita
taking into consideration the factors mentioned in Section 15J of the SEBI Act,
1992?
FINDINGS
17. On perusal of the material available on record and giving regard to the facts and
circumstances of the case, I record my findings hereunder.
ISSUE 1: Whether Hi–Fi and Sangita have violated the provisions of Regulation 4(1), 4(2)
(a), (b) and (g) of PFUTP Regulations?
18. The relevant provisions of PFUTP Regulations read as under:  
Regulation 4: Prohibition of manipulative, fraudulent and unfair trade practices
(1) Without prejudice to the provisions of  regulation 3, no person shall indulge in a
fraudulent or an unfair trade practice in securities.
(2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it
involves fraud and may include all or any of the following, namely:—
(a) indulging in an act which creates false  or misleading appearance of trading in the
securities market;
(b) dealing in a security not intended to effect transfer of beneficial ownership but intended
to operate only as a device to inflate, depress or cause fluctuations in the price of such
security for wrongful gain or avoidance of loss;
(g) entering into a transaction in securities without intention of performing it or without
intention of change of ownership of such security;
19. From the material available on record, it  is observed that during the investigation
period, the entities belonging to Jalco Group traded with substantial concentration in
the scrip of the Company and altogether traded 2,08,25,138 shares on gross basis
(25.03% for total traded quantity at both the  exchanges). It is also observed that the
Jalco Group had executed synchronized trades within the group for 9,50,844 at NSE
(3.29% of the market volume) and 1,76,024 shares at BSE (1.39% of the market
volume).
20. It is observed that Jalco traded through multiple brokers and altogether bought
63,07,254 shares and sold 88,69,882 shares which constituted 15.16% and 21.32% of the
total traded volume at both the exchanges  during investigation period. It is also
observed that Wilful traded through multiple brokers and altogether bought 20,99,328
shares and sold 17,99,962 shares which constituted 5.05% and 4.33% of total market
volume respectively.  Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd.
In the matter of GHCL Ltd.
 
Page 8 of 14                                                                                                                                                              April 02, 2012
21. From  Annexure  IV  of  the  SCN  it  is  observed that Carissa and ILAC, who were
promoter entities of the Company and shared common address with Jalco, had
altogether transferred 21,55,000 shares of the  Company to Jalco, Wilful, Signet and
India Infoline during January 3-10, 2006  in off-market, and 3,50,000 shares to India
Infoline Investment Services Pvt. Ltd. (NBFC of India Infoline) on February 25, 2006.
22. Further, they received 9,65,000 shares from India Infoline on March 13, 2006 and same
were transferred to India Infoline Investment Services Pvt. Ltd. on March 14, 2006.
Again they received 6,45,000 shares on March 29, 2006 from Jalco and Wilful and same
were transferred to India Infoline Investment Services Pvt. Ltd. on March 30, 2006.
Carissa and ILAC received 26,71,000 shares on March 31, 2006 from Jalco, Wilful and
India Infoline Investment Services Pvt. Ltd. Thereafter, Carissa and ILAC transferred
shares to these entities in the first week of April 2006. Because Carissa and ILAC
transferred shares in the beginning of the quarter and received back the shares at the
end of quarter, no major change could be observed on the shareholding pattern of the
promoters.  
23. Further during the course of statement recording before the Investigating Authority
(hereinafter referred to as “IA”), it was submitted by Shri V K Mehta, Director Carissa
and AR of ILAC that they had business relationship with Jalco, Wilful and Signet and
broker client relationship with India Infoline. It was further stated that the shares
which were transferred to India Infoline Investment Services Pvt. Ltd. were towards
margin for trading in the shares. It is observed that after receiving the shares from
Carissa, India Infoline Investment Services  Pvt. Ltd. transferred the shares to Jalco
which were then transferred by Jalco to the pool account of its broker for meeting the
delivery obligations. From bank statement of Carissa (Citibank – 800002222) it is
observed that funds (within the range of ` 24,00,000 to ` 6,00,00,000) were transferred
to Jalco/Wilful on many occassions. Further, from the bank statements of Jalco/Wilful
it is observed that after receiving money from Carissa, Jalco/Wilful made payment to
the brokers.
24. It is observed that the Jalco Group comprising 8 entities together bought 93,31,846
shares (89,39,980 at NSE and 3,91,866 at BSE) which constituted 22.43% of total
volume recorded at both the exchanges, i.e., 4,16,04,309 shares and altogether sold
1,14,93,292 shares (64,53,403 at NSE and 50,39,889 at BSE) which constituted 27.63% of Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd.
In the matter of GHCL Ltd.
 
Page 9 of 14                                                                                                                                                              April 02, 2012
total volume recorded at both the exchanges. It is also observed that the day wise
contribution of the Jalco Group ranged from 11.79% to 52.36% on NSE and 0.49% to
42.29% on BSE. Among themselves they traded for 14,63,261 shares (12,87,237 at NSE
and 1,76,024 at BSE) including self trades which accounted for 3.52% of total traded
volume at both the exchanges. It is further observed that out of 267 trades (10 at BSE
and 257 at NSE), 59 trades (9 at BSE and 50 at NSE) for 11,26,868 shares (176024 at BSE
and 950844 at NSE) were executed through structured orders wherein time difference
between placing buy orders and sell orders were less than 1 min and rate and quantity
were also identical and were thus synchronized. Summary of their trading is given
below:
Exchange Buy Qty No. of
Buy
Order
Sell Qty No. of
Sell order
Traded
among Group
% of Mkt.
Volume
NSE 8939980 1500 6453403 430 1287237 4.45
BSE 391866 54 5039889 113 176024 1.39
Total 9331846 1554 11493292 543 1463261 5.84
25. It is observed that out of the above, following were synchronized which were
executed by them on 8 days and their trades constituted 1.39% of the market volume
on BSE and 3.29% of the market volume on NSE.    
   
26. It is observed that the IA had sought information from the entities of Jalco Group with
regard to the relationship with GHCL and its promoters/directors, shareholding and
mode of acquisition of shares, trading details, bank statements, demat statements,
comments on their trading, etc. It is also observed that during the course of statement
recording before the IA, Shri Mulridhar Vyas (an authorized representative of Jalco
and Wilful) on behalf of Jalco and Wilful stated in his statement recorded on January
19-20, 2009 that they had no relationship  with GHCL or its promoter/directors.
However, as already observed, there was transfer of funds and securities between the
entities of Jalco Group and the promoter entities of GHCL (Carissa/ILAC).  
NSE BSE
Buy
Client
Name
Sell
Client
Name
No.
of
Buy
ord
er
no.
of
sell
ord
er
no.
of
trad
es
Traded
Qty
Qty
traded
through
Structure
d order
% to
traded
Qty
No
of
Buy
ord
ers
no.
of
sell
ord
ers
no.
of
trade
s
Traded
Qty
Qty
traded
through
synchron
ized
order
% to
traded
Qty
Jalco Wilful 25 25 26 525959 444747 84.56 6 6 6 149900 149900 100
Signet Signet 9 9 17 197669 197669 100 0 0 0 0 0 0
Sangita Hi-Fi 17 17 17 282256 282256 100 3 3 3 14101 14101 100
Shailaja Pathik 2 2 2 26172 26172 100 1 1 1 12023 12023 100
Grand Total 53 53 62 1032056 950884 92.13 10 10 10 176024 176024 100 Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd.
In the matter of GHCL Ltd.
 
Page 10 of 14                                                                                                                                                              April 02, 2012
27. It is observed that on March 13, 2006 Jalco sold 28,09,569 shares where the
counterparty was GMO Emerging Market Fund and its connected entities trading
through the broker Quantum Securities Ltd. (hereinafter referred to as “Quantum”)
and the trades were synchronized. It is observed that Jalco stated before the IA that
Emerging Market Funds (FII) wanted to buy shares of the Company and they received
request through Quantum and offered to sell and was not aware of the counterparty.
It is observed that FII bought shares and were holding the shares during next quarter.
28. It is observed that Dhoop bought 25000 shares and sold 44637 shares and major
counterparty were Wilful and Jalco who were the group entities. It is also observed
that Pathik sold 2,53,811 shares at NSE and majority of shares were bought by Jalco,
Wilful and Shailaja and out of the above shares sold by Pathik few trades were
synchronized with Shailaja. It is further observed that there was movement of funds
between Shailaja & Jalco. Shailaja had received ` 2,42,00,000 from Jalco on April 18,
2006. From the copy of ledger account submitted by Shailaja to the IA, it is observed
that funds were given to Jalco during April 1, 2005 to April 19, 2005 and was taken
back on April 18, 2006 (after one year) without paying any interest.
29. As already observed, the promoter of Jalco and Wilful, i.e., Shri Sanjay Jalan was the
introducer of Sangita and Sangita & Hi-Fi shared a common address. Further, from
the account opening forms of Sangita (India Infoline) and Hi-Fi (Indiabulls), it is
observed that Mrs. Sangita Jhunjhunwala and Mrs. Suruchi Jhunjhunwala, the
directors of Sangita, were the family members of Smt. K D Jhunjhunwala who had
directorship in Hi-Fi. It is observed that  as a part of the Jalco Group, Hi-Fi bought
1,24,245 shares of the Company (at NSE) and sold 3,00,000 shares of the Company
(2,85,000 at NSE and 15,000 at BSE). Further, Sangita bought 3,00,000 shares (2,85,000
at NSE and 15,000 at BSE) during February 23-March 3, 2006, in which 2,96,357 shares
(2,82,256 at NSE and 14,101 at BSE) were bought from Hi-Fi and these 20 trades were
synchronized wherein time gap between placing buy orders and sell orders were 0-7
seconds and quantity and rate were also identical.
30. In view of the aforesaid, it is apparent that entities of Jalco  Group received shares
from the promoter entities, traded in the market substantially, executed synchronized
trades and also traded among the group which created artificial volume and at the Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd.
In the matter of GHCL Ltd.
 
Page 11 of 14                                                                                                                                                              April 02, 2012
end of the quarter the Jalco Group transferred shares to the promoter entities. I am of
the considered opinion that the entire chain of events of transferring securities and
funds by the promoter entities of GHCL to the related entities of Jalco Group, dealing
in the shares by Jalco Group in substantial quantity through synchronized trades and
trading among groups to create huge volume in the market and shares received back
by the promoters, tends to indicate a manipulation scheme which created misleading
appearance of trading.
31. Now I deal with the submissions of Sangita and Hi-Fi made vide their letters dated
November 12, 2010. I note that Sangita and Hi-Fi have neither denied nor disputed the
trades but have made analogous statements and,  inter-alia, have submitted that all
transactions were open market and they denied that just because the directors of
Sangita were relative of a director of Hi-Fi, the transactions were synchronized, as
both the entities were separate legal entity carrying the business at their own. Sangita
and Hi-Fi also submitted that they had dealt in many other securities during the
investigation period including the shares of GHCL. I don’t find the aforesaid
submissions of Sangita and Hi-Fi satisfactory and also don’t find that the same can
absolve them from the violation of law. I also find that though, in isolation, the trades
of Sangita or Hi-Fi may seem innocuous, however, considering the background
elaborated earlier, wherein securities and funds were transferred by the promoter
entities of GHCL to the related entities of Jalco Group, dealing in the shares by Jalco
Group in substantial quantity through synchronized trades and trading among
groups to create huge volume in the  market and shares received back by the
promoters and the connivance of the Jalco Group in this regard, the transactions of
Sangita and Hi-Fi clearly reinforce their role as members of Jalco Group.
32. I find it too much a coincidence that Sangita bought 3,00,000 (2,85,000 at NSE and
15,000 at BSE) shares and Hi-Fi sold 3,00,000 (2,85,000 at NSE and 15,000 at BSE)
shares during the same time period. Further, the fact Sangita bought 3,00,000 shares
(2,85,000 at NSE and 15,000 at BSE) during February 23-March 3, 2006, in which
2,96,357 shares (2,82,256 at NSE and 14,101 at BSE) were bought from Hi-Fi highlights
the fact that the trades were carried out as part of Jalco Group to create artificial
volume. Moreover, these transactions were carried out through a number of trades on
different dates and the 20 trades were synchronized wherein time gap between
placing buy orders and sell orders were 0-7 seconds and quantity and rate were Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd.
In the matter of GHCL Ltd.
 
Page 12 of 14                                                                                                                                                              April 02, 2012
identical. Sangita and Hi-Fi have not been  able to explain their transactions in the
given background.  
33. In view of the aforesaid, I find that the  acts of manipulative trading by Hi–Fi and
Sangita helped in creating artificial demand and thereby leading to a false appearance
of trading in the scrip of the Company as also as causing fluctuations in the price of
the scrip of the company as these kind of activities seriously affect the normal price
discovery mechanism of in the securities market. In light of the facts of the case and
material available on record I am convinced that Hi–Fi and Sangita have violated the
provisions of Regulation 4(1), 4(2) (a) (b) & (g) of PFUTP Regulations.
ISSUE 2: Whether Hi–Fi and Sangita are liable for monetary penalty under Section 15HA
of the SEBI Act, 1992?
34. The provisions of Section 15 HA of the SEBI Act, 1992 reads,
Penalty for fraudulent and unfair trade practices:
Section 15HA:  
If any person indulges in fraudulent and unfair trade practices relating to securities,
he shall be liable to a penalty of twenty-five crore rupees or three times the amount of
profits made out of such practices, whichever is higher.
35. After carefully considering the facts and  circumstances of the case and violation
committed by Hi–Fi and Sangita, I am of the opinion that Hi–Fi and Sangita are liable
for monetary penalty under Section 15HA of the SEBI Act, 1992.
ISSUE 3: What quantum of monetary penalty should be imposed on Hi–Fi and Sangita
taking into consideration the factors mentioned in Section 15J of the SEBI Act, 1992?
36. While imposing monetary penalty it is important to consider the factors stipulated in
Section 15J of the Act, which reads as under:
“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.”
37. I note that on the basis of data available on record, it is difficult, in cases of such
nature, to quantify exactly the disproportionate gains or unfair advantage enjoyed by Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd.
In the matter of GHCL Ltd.
 
Page 13 of 14                                                                                                                                                              April 02, 2012
an entity and the consequent losses suffered by the investors. Further the amount of
loss to an investor or group of investors  also cannot be quantified on the basis of
available facts and data. Even though the monetary loss to the investors cannot be
computed, any manipulation in the volume caused by vested interest always erodes
investor confidence in the market so that investors find themselves at the receiving
end of market manipulators. Artificial volume leads to artificial liquidity and it is well
known that greater the liquidity, the higher is the investors’ attraction towards
investing in that scrip. Besides, this kind of activity seriously affects the normal price
discovery mechanism of the securities market. People who indulge in manipulative,
fraudulent and deceptive transactions, or abet the carrying out of such transactions
which are fraudulent and deceptive, should be suitably penalized for the said acts of
omissions and commissions.
 
38. In the forgoing paragraphs it is now established that Hi–Fi and Sangita have violated
the provisions of Regulation 4(1), 4(2) (a) (b) & (g) of PFUTP Regulations. Considering
the facts and circumstances of the case and the violations committed by Hi–Fi and
Sangita, I find that imposing a penalty of ` 1,00,000/- (Rupees One Lakh only) on HiFi Tradecom Private Limited and  ` 1,00,000/- (Rupees One Lakh only) on Sangita
Securities Private Limited would be commensurate with the violations committed by
them.
ORDER
39. Considering the facts and circumstances of  the case, in terms of the provisions of
Section 15HA of SEBI Act, 1992 and Rule 5(1) of the Adjudication Rules, I hereby
impose a penalty of ` 1,00,000/- (Rupees One Lakh only) on Hi-Fi Tradecom Private
Limited and  ` 1,00,000/- (Rupees One Lakh only) on Sangita Securities Private
Limited.
40. 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 Division Chief,
Investigation Department, Securities and Exchange Board of India, Plot No. C4-A, ‘G’
Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400051.  Adjudication Order in respect of Hi-Fi Tradecom Pvt. Ltd. and Sangita Securities Pvt. Ltd.
In the matter of GHCL Ltd.
 
Page 14 of 14                                                                                                                                                              April 02, 2012
41. In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding Inquiry and
Imposing Penalties by Adjudicating Officer) Rules 1995, copies of this Order are being
sent to Hi-Fi Tradecom Private Limited and Sangita Securities Private Limited and
also to Securities and Exchange Board of India.
Date: April 02, 2012                                                                              Jeevan Sonparote
Place: Mumbai                                                                        Adjudicating Officer

BEFORE THE ADJUDICATING OFFICER SECURITIES AND EXCHANGE BOARD OF INDIA Vikas Narnavar aided and abetted the company and its promoter in manipulating the market and defrauding innocent investors. 10. Thus, Vikas Narnavar was alleged to have violated regulations 4(1), 4(2) (a) of SEBI (PFUTP) Regulations 2003. Adjudication Order in respect of Vikas Gourihar Narnavar in the matter of E.Star Infotech Ltd.

Adjudication Order in respect of Vikas Gourihar Narnavar in the matter of E.Star Infotech Ltd. 
March 30, 2012 Order No. MC/AO- 06/2012 Page 1 of 8
BEFORE THE ADJUDICATING OFFICER
SECURITIES AND EXCHANGE BOARD OF INDIA
[ADJUDICATION ORDER NO. MC/AO- 06/2012]
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, 1995
In Respect of
Vikas Gourihar Narnavar (PAN:  ACRPN6457D)
 In The Matter of
E.Star Infotech Ltd.
BRIEF BACKGROUND
1. The shares of E.Star Infotech Ltd. (hereinafter referred to as the company/ EIL) were
listed on BSE, Ahmedabad Stock Exchange (ASE) and Hyderabad Stock Exchange
(HSE). The shares were traded only on BSE during of November 16, 2004 to January
18, 2005 (investigation period) SEBI conducted  an investigation in respect of buying,
selling and dealing in the shares of EIL during the aforesaid investigation period.  
2. The price of the scrip increased from Rs.0.68 (opening price on 16/11/2004) to Rs.2.50
(high on 10/1/2005) and closed at Rs1.76 on 18/1/2005. The average number of shares
traded during the entire period were 15,58,843 shares. The scrip was traded in B2 group
during the period 16/11/2004 and was shifted to T group w.e.f. 6/12/2004.
3. The company made a profit of Rs.485.70 lacs, Rs.270.05 lacs and Rs.356.55 lacs during
the financial year ending on 31st March, 2003, 31st March, 2004 and 31st March, 2005
respectively on paid up equity capital of  Rs. 994.50 lacs. The company also reported
profit of Rs.190.64 lacs and Rs.73.12 lacs as on 31st March, 2006 and 31st March, 2007
respectively. The company had not declared any dividend for the last 3 years prior to the
investigation period.
4. During the investigation period, various positive news relating to Strategic Business
Agreement with M/s Raffles – Singapore, procurement of order, introduction of
Nanotechnology etc have appeared in Business Standard and were informed to the
Exchange. The company had made the announcements which were at the proposal Adjudication Order in respect of Vikas Gourihar Narnavar in the matter of E.Star Infotech Ltd.
March 30, 2012 Order No. MC/AO- 06/2012 Page 2 of 8
stage and there was no material development. These positive announcements, which
were not implemented, resulted in the scrip trading at / near circuit limit around the days
of announcement, thus leading to price rise.
5. Shri Mahesh Thanvi, Managing Director  of the company, was holding 1,50,27,000
shares amounting to 30.05% of the total paid up capital of the company as on
September 30, 2004. He engaged in off-market transactions with certain connected
clients during the period under examination  and, directly and indirectly, transferred
1,50,00,000 shares to the connected clients. No disclosures in this regard have been
made to the Exchange by the company.
6. Shri Mahesh Thanvi transferred 1,00,00,000 shares (20% of the paid up capital of the
company) by off market trades on November 29, 2004 and December 01, 2004 to
Bharat Rikhabchand Shah, Manishaben Himanshubhai Shah, Himanshubhai C. Shah,
Harsha Piyush Shah and Hiren Chinubhai Vora, hereinafter referred to as the Shah
Group.
7. Shri Mahesh Thanvi transferred 50,00,000 shares (10% of the paid up capital of the
company) by off market trades on January 5, 2005 and January 13, 2005 to some of the
connected entities namely Amul Pravinbhai Sheth, Vithalbhai Vallabhbhai Gajera,
Dahyabhai Ghanshyambhai Patel, Vinodbhai Devsibhai Patel, Jayesh Kumar
Prakashbhai Shah, Navinkumar Pravinbhai  Patel, Pravinbhai Premjibhai Patel,
Dalsukhbahi Devsibhai Patel, Girdharbhai Jayrambhai Vagadiya, Kanubhai Pragjibhai
Patel, Ramniklal M. Patel (hereinafter referred to as Patel group clients). These entities
further transferred shares in off-market to their connected entities namely
Rameshchandra Jain (440000 shares) and Vikas Gourihar Narnavar (2018817 shares).
Further one connected client of aforesaid entities namely Vipul R. Jain received 224100
shares in off market trades from Harsha P. Shah (a clients of Shah Group). These
clients are hereinafter named as Patel group. These clients were found connected
through common address, common introducer and securities flow among themselves.
8. By executing the above off market trades, the above entities aided and abetted the
company and its promoter in manipulating the market and defrauding the investors.
9. The aforesaid findings lead to the allegation that Vikas Narnavar aided and abetted the
company and its promoter in manipulating the market and defrauding innocent investors.
10. Thus, Vikas Narnavar was alleged to have violated regulations 4(1), 4(2) (a) of SEBI
(PFUTP) Regulations 2003.  Adjudication Order in respect of Vikas Gourihar Narnavar in the matter of E.Star Infotech Ltd.
March 30, 2012 Order No. MC/AO- 06/2012 Page 3 of 8
11. Vikas Narnavar was sent summons to provide details of off market trades, details of
disclosures made, bank account statements, demat account statements etc. The
summons could not be delivered to your address hence they were delivered through his
broker. The brokers have given the acknowledgement receipt of the same.
12. Despite being issued summons Vikas Narnavar chose not to furnish the information
asked from him. By not furnishing the information as required by the summons he was
alleged to have violated Section 11C(3) read with 11C(2) of the SEBI act
APPOINTMENT OF ADJUDICATING OFFICER
13. I was appointed as Adjudicating Officer, vide order dated May 07, 2009, under section
15 I of Securities and Exchange Board of India Act,1992 (hereinafter referred to as
“SEBI Act,1992”) to enquire into and adjudge the  alleged violations of the provisions of
SEBI Act and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to
Securities Market) Regulations, 2003 [hereinafter referred to as SEBI (PFUTP)
Regulations], by Vikas Narnavar (hereinafter referred to as noticee) as observed during
the investigations conducted into the trading in the scrip of M/s. E. Star Infotech Ltd. for
the period from November 16, 2004 to January 18, 2005.
SHOW CAUSE NOTICE, REPLY AND HEARING
14. A show cause notice dated November 30, 2009 was issued to Vikas Narnavar in the
matter wherein he was asked to show cause as to why an inquiry should not be held
against him in terms of Rule 4 of the SEBI (Procedure for Holding Enquiry and Imposing
Penalties by Adjudicating Officer) Rules, 1995 read with Section 15 I of the SEBI Act,
1992.  The same was dully delivered on December 02, 2009 (proof of delivery/
acknowledgement is present on record). The noticee submitted a written reply dated
December 14, 2009. In his reply noticee mentioned inter alia that that he was trapped by
Ramnik Lal Patel, he has no knowledge of stock market. He does not know where all
Ramnik Lal Patel has opened trading account in his name. The noticee also submitted
that presently he earns Rs.7000 per month and during 2004-05 he used to get only Rs
5000 per month and it was very difficult for him to sustain his family.
15. A notice of inquiry was sent on February 08, 2012 and opportunity for personal hearing
in the matter was also provided.
16. The noticee appeared for hearing before me on February 21, 2012. The noticee
submitted during the hearing that Ramnik Lal Patel had got him to sign on some forms
for which he was paid around Rs.10000 to 15000. He submitted that he neither visited Adjudication Order in respect of Vikas Gourihar Narnavar in the matter of E.Star Infotech Ltd.
March 30, 2012 Order No. MC/AO- 06/2012 Page 4 of 8
any broker nor got any statements from any broker. The noticee submitted that he
presently earns Rs.7000 per month and given his level of income he is hardly able to
sustain his family rest aside investing it in the market.
17. During personal hearing Vikas Narnavar also presented an Affidavit dated 06 Jan 2010
which was verified with the original.
18. In the Affidavit which is signed by Ramnik Lal Patel, it is submitted that Ramnik Lal Patel
had approached Vikas Narnavar for opening trading account, demat account and bank
account for the purpose of trading in shares of various companies. Ramnik Lal Patel had
offered Vikas Narnavar some share in profit made through share transactions in his
account by him. Ramnik Lal Patel had told Vikas Narnavar that he will make profit
without doing anything. Ramnik Lal Patel took signatures of Vikas Narnavar on Account
opening forms of some brokers including Pilot Credit Capital Ltd. Ramnik Lal Patel also
took signature of Vikas Narnavar on blank cheque leafs and blank delivery instruction
slip for demat account. Ramnik Lal Patel also used to place buy and sale orders for
dealing in shares on behalf of Vikas Narnavar. Ramnik Lal Patel used to collect contract
notes and bills from the office of the brokers for transaction done by him in the name of
Vikas Narnavar. For the above favors Ramnik Lal Patel paid some amount to Vikas
Narnavar. All the trades in various scrips were done by Ramnik Patel in the name of
Vikas Narnavar.
CONSIDERATION OF ISSUES
19. On perusal of the Show Cause Notice, and other material available on record, I have the
following issues for consideration, viz,
(1) Whether the noticee has violated Regulations 4(1) and 4(2) (a) of SEBI PFUTP
Regulations.
(2) Whether the noticee has violated Section 11C(3) read with 11C(2) of the SEBI Act.
(3) Whether the noticee is liable for monetary penalty under sections 15 HA and
15A(a) of the SEBI Act.
(4) What quantum of monetary penalty should be imposed on the noticee, taking into
consideration the factors mentioned in section 15J of SEBI Act.  Adjudication Order in respect of Vikas Gourihar Narnavar in the matter of E.Star Infotech Ltd.
March 30, 2012 Order No. MC/AO- 06/2012 Page 5 of 8
FINDINGS
20. On Perusal of the materials available on record and giving regard to the facts and
circumstances of the case, I record my findings hereunder
Issue 1: Whether the noticee has violated 4(1) and 4(2) (a) of PFUTP Regulations,
PFUTP Regulations
4. Prohibition of manipulative, fraudulent and unfair trade practices”
(1)    Without prejudice to the provisions of regulation 3, no person shall indulge in a
fraudulent or an unfair trade practice in securities.
(2)  Dealing in securities shall be deemed to be a fraudulent or an unfair trade
practice if it involves fraud and may include all or any of the following, namely:-
(a)  Indulging in an act which creates false or misleading appearance of trading in the
securities market;
21. The investigation report brought out that Shri Mahesh Thanvi transferred 50,00,000
shares (10% of the paid up capital of the company) by off market trades on January 5,
2005 and January 13, 2005 to some of the connected entities namely Amul Pravinbhai
Sheth, Vithalbhai Vallabhbhai Gajera, Dahyabhai Ghanshyambhai Patel, Vinodbhai
Devsibhai Patel, Jayesh Kumar Prakashbhai Shah, Navinkumar Pravinbhai Patel,
Pravinbhai Premjibhai Patel, Dalsukhbahi Devsibhai Patel, Girdharbhai Jayrambhai
Vagadiya, Kanubhai Pragjibhai Patel, Ramniklal M. Patel (Patel group). These entities
further transferred shares in off-market to their connected entities namely
Rameshchandra Jain (440000 shares) and Vikas Gourihar Narnavar (2018817 shares).
22. Vikas Narnavar through the broker Pilot Credit Capital Limited sold 25,51,500 shares
and purchased 1,00,000 shares from the market i.e. he made a net sale of 24,51,500
shares.
23. Thus it is clear that Vikas Narnavar received 20,18,817 shares in off market trades
through the Patel Group entities who in turn received the shares from Mahesh Thanvi.
He sold these shares in the market at higher prices. Thus he facilitated the sale of
shares transferred by the promoter of  the company, Shri Mahesh Thanvi to the Patel
Group entities.
24. Based on the submissions made by Vikas Narnavar, it seems that he has allowed some
persons to use his trading account as well as bank accounts to indulge in trades which Adjudication Order in respect of Vikas Gourihar Narnavar in the matter of E.Star Infotech Ltd.
March 30, 2012 Order No. MC/AO- 06/2012 Page 6 of 8
enabled Shri Mahesh Thanvi to offload his shareholding in the market, thus creating a
false impression of trading in the market.
25. I theeforre find that the noticee has aided and abetted the company and its promoter in
manipulating the market and defrauding innocent investors and hence violated
Regulations 4 (1) and (2) (a) of SEBI (PFUTP) Regulations 2003.
26. In view of the foregoing, I hold that the allegation of violation of provisions of Regulations
4(1) and (2) (a) of SEBI PFUTP Regulations stand established.
Issue 2: Whether the noticee has violated Section 11C(3) read with 11C(2) of the SEBI
Act.
11C.
(2) Without prejudice to the provisions of sections 235 to 241 of the Companies Act, 1956(1
of 1956), it shall be the duty of every manager, managing director, officer and other
employee of the company and every intermediary referred to in section 12 or every person
associated with the securities market to preserve and to produce to the Investigating
Authority or any person authorised by it in this behalf, all the books, registers, other
documents and record of, or relating to,he company or, as the case may be, of or relating to,
the intermediary or such person, which are in their custody or power.
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 it 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.
27. Vikas Narnavar was sent summons vide letter dated June 12, 2008 and November  17,
2008 to provide details of off market trades, details of the counter party, consideration
amount, bank account statements, demat account statements. He replied to the
summons vide letter dated Sep 09, 2008 stating, inter alia, that his name had been used
by Ramnik Lal Patel for trading in various scrips and that he was willing to cooperate in
any inquiry or investigation.
28. Although the information sought was not provided by Vikas Narnavar, I find that his
submission deserved to be treated with merit. As a name lender, he may not be in a
position to supply all details of bank accounts, demat accounts or trading accounts.
Moreover, this information was available  from the exchanges, brokers as well as
depository participants. As the noticee responded to the summons and submitted
information about the person he was working for, I find that he complied with the Adjudication Order in respect of Vikas Gourihar Narnavar in the matter of E.Star Infotech Ltd.
March 30, 2012 Order No. MC/AO- 06/2012 Page 7 of 8
summons and hence the charge of violation of Section 11C(3) read with 11C(2) of the
SEBI Act is not established.
Issue 3: Whether the noticee is liable for monetary penalty under sections. 15HA and
15A(a) of SEBI Act, 1992
29. As the allegations of violation of Regulations 4 (1) and (2) (a) of SEBI (PFUTP)
Regulations 2003 against Vikas Narnavar stand established, the noticee is liable for
monetary penalty under Section 15HA, of the SEBI Act, 1992, which reads as follows:
“Penalty for fraudulent and unfair trade practices.
15HA. If any person indulges in fraudulent and unfair trade practices relating to
securities, he shall be liable to a penalty of twenty-five crore rupees or three times the
amount of profits made out of such practices, whichever is higher.”
Issue 4: What quantum of monetary penalty should be imposed on the noticee, taking
into consideration the factors mentioned in section 15J of SEBI Act?
30. While deciding the quantum of penalty, the factors laid down under Section 15J of SEBI
Act have to be given due regard, which are as follows –
(i)   the amount of disproportionate gain or unfair advantage, wherever quantifiable,
made as a result of default,
(ii)  the amount of loss caused to an investor or group of investors as a result of the
default and
(iii)  the repetitive nature of default.
31. From the material available on record, it is difficult to quantify exactly the
disproportionate gains or unfair advantage enjoyed by Vikas Narnavar and the
consequent losses suffered by the investors.
32. While the amount of loss caused to investors cannot be quantified, considering the facts
and circumstances of the case and the material available on record and the violation
committed by the noticee, I find that penalty of Rs.50,000/-(Rs. Fifty Thousand only)
under Section 15 HA of the SEBI Act will be commensurate with the violations
committed by Mr. Vikas Narnavar. Adjudication Order in respect of Vikas Gourihar Narnavar in the matter of E.Star Infotech Ltd.
March 30, 2012 Order No. MC/AO- 06/2012 Page 8 of 8
ORDER
33. After taking into consideration all the facts and circumstances of the case, I hereby
impose a penalty of Rs.50,000/-(Rs. Fifty Thousand only) under Section 15 HA on Mr.
Vikas Narnavar for violation of Regulations 4 (1) and 4(2) (a) of PFUTP Regulations of
the SEBI Act 1992.
34. Vikas Narnavar as mentioned above shall pay the said amount of penalty by way of
demand draft 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 should be
forwarded to Mr. Biswajit Choudhury, Deputy General Manager, SEBI, SEBI Bhavan,
C4-A, ‘G’ Block, Bandra Kurla Complex, Bandra (East). Mumbai- 400 051.
35. 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: March 30, 2012 Maninder Cheema
Place: Mumbai Adjudicating Officer