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DEPUTY GENERAL MANAGER INVESTIGATIONS DEPARTMENT IVD/ID6/BM/DM/ 68887/2006 June 8, 2006

Sh. Umesh Gowda (Director) Sun Infoways Ltd. 21/1 Cuffe Parade Sobhani Road Mumbai - 4000005 Subject: Show Cause Notice under Section 11B of SEBI Act read with Regulation 11 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 read with the corresponding provisions of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 in the case of M/s Sun Infoways Ltd. 1. The company Sun Infoways Limited (hereinafter referred to as " SIL") was promoted by Mr. Shrikant Vasant Joglekar and Mr. Sujit Shrikant Joglekar on 29th June 1994 as Best Mulyankan Consultants Pvt. Ltd. with the main object to render consultancy services for valuation of assets such as land, building, machinery, agricultural land etc. Subsequently the company was converted into public company and the name of the company was changed to Best Mulyankan Consultants Ltd. on 21st June 1995. On March 07, 1996, the company came out with a public offer of equity shares and got listed on BSE on 16th May 1996 The name Sun Infoways Ltd. was adopted by the company after it changed its name with effect from 11th May, 2000 from Best Mulyankan Consultants Limited. 2. As stated by Mr. Shrikant Vasant Joglekar on February 19, 2003 under oath to SEBI, after the public issue he was not able to service the issue proceeds and therefore wanted to exit from the company. Hemant Damodar Mehta, a consultant, introduced Mr.Manish Kumar Marwah to Mr.Joglekar, who was instrumental in making a deal in which Mr. Joglekar and his family members sold their stake in SIL for a total consideration of Rs.98,34,659/- (Rs.4.95/- per share) following which Rajan Tawate, Tanvir Zaki, Pravin Sonalkar, Hafeza Vohra and Kuldeep Handoo was appointed as the new directors on 01/02/2000. Prior to this on 08/01/2000 Shri.Sujith Joglekar and Smt.S.S. Joglekar resigned as directors of SIL. Mr.S.P.Muthe and S.P. Adarkar also resigned from the board of directors

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of SIL on 02/02/2002 and Anil Pujari was appointed as Managing Director of the company with effect from 19/02/2002. The chronology of events in this regard and a copy of statement of Shrikant Vasant Joglekar are placed at ANNEX-1. Mr.Shrikant V Joglekar submitted his resignation from the board of directors of the company on 23/06/2000. 3. Investigation concluded that promoter group including their associates were holding as high as 98% of the capital of the company. All these block of shares were purchased by Anil Pujari, Hozefa Vohra, Rajan Tawate, Tanvir Zaki, Pravin Sonalkar and Kuldeep Kumar Handoo (hereinafter called New acquirers) in January 2000 for a total consideration of Rs.98,34,659/- from the promoters of SIL. The new acquirers did not comply with the requirements of Regulations 8(1), 8(2), 10, 11(1) & 11(2) of SEBI (Substantial Acquisition of Shares & Takeover) Regulations 1997, for the acquisition of 98% of shareholdings from Shri. Joglekar' family and relatives (erstwhile promoters of SIL). s 4. The scrip of SIL witnessed significant price rise accompanied with rise in volumes during the period April 1, 2000 to November 1, 2000. An investigation was ordered by Securities and Exchange Board of India (hereinafter referred to as " SEBI" into the buying, selling and dealing in ) the scrip of SIL, for the period Feb. 2000 to Nov. 2000 under the provisions of the SEBI Act, 1992 read with SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 1995 and other relevant SEBI Regulations. 5. The investigations revealed that the directors of SIL (enclosed as ANNEX2) and the promoters of Zap Infotech namely Mr.Arif Mithani and Mr. Abbas Mithani, valued Zap Infotech at exorbitant and unrealistic levels and ultimately merged Zap Infotech with SIL. In order to get this plan implemented, they involved Sakhsham Financial Services Pvt. Ltd. and S S Kothari & Co Chartered Accountants for enabling over-valuation of Zap Infotech. S S Kothari & Co. had valued Zap Infotech to the extent of Rs.359.00 crores as on 31.03.2000 and Rs.790.00 crores as on 31.03.2001. S S Kothari & Co. was aware that Zap Infotech was not doing any real business and all its records were bogus. In this background they knowingly valued Zap Infotech for Rs.790.00 crores. Sun Infoways and Zap Infotech agreed to merge and in consideration of which Sun Infoways Ltd. issued Rs.55,88,200/- shares of Rs.10.00/- each at a premium of Rs.840/- per share to the promoters of Zap Infotech. It was reported to BSE that the Board of Directors of the company is considering acquisition of Zap Infotech on the meeting of Board of Directors dated 16/8/2000. It was further appeared in the BSE bulletin on 17/08/2000 that the MOU was approved.

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In the course of investigations it was also observed that during the period 09.02.2000 to 10.11.2000, the price of the scrip increased from Rs.10/- to the extent of Rs.724/- on 11.09.2000. Details of price volume data of SIL during this period and the corporate developments as reported to BSE are placed at ANNEX-3. 6. After acquiring the shares, the new acquirers/directors i.e. Anil Pujari, Hozefa Vohra, Kuldeep Handoo etc. entered into large volume of trading in the scrip of SIL. These transactions were put through in the names of clients viz., Great Eastern Mercantile Pvt. Ltd., Sh.Suman Pandit, Sh. Rajendra Rai, Sh. Ajay Bohra, Sh. Sandep Bohra, S. Sunil Saxena, Smt. Sadhna Nabera and Sh. Iqbal Rupani, Ashok Kumar Choudhary, Rajesh Kumar Choudhary , Kuldip Kumar Handoo, Dilip Nabera, Act React Holdings Private Limited, Adinath Propcon Private Limited, Adhunik Finance Pvt. Ltd., Apoorv Fincap Ltd., Concept Institute Pvt. Ltd., Laxmi Securities, Neha Fincap Limited, Sai Investments, Telefinlease Ltd. etc., who executed them through the brokers IKM Investors Services Ltd., NC Jain, JCL Securities Pvt. Ltd., Jhunjhunwala Stock Brokers Pvt. Ltd., SMK Shares and Stock Broking Pvt. Ltd., Stock Brokers, TCP Stock Brokers Pvt. Ltd., TJ Stock Broking Services Pvt. Ltd. and Manubhai Mangaldas Securities Pvt. Ltd. The broker wise list of entities and the cross linkages between these entities are given as Annex-4. A large number of trades were executed by the above referred group at successively higher prices. In this process, the promoters group increased the price of shares from Rs.10/- to Rs.700/- during period February 2000- September 2000. It was seen that Shri. Dilip Nabera was the auditor of the company and had audited the financial statements for the year ended March 31, 2000. He stated to SEBI under oath on 28/09/2002 that he joined as the auditor of the company on 24th July 2000. However he agreed that he know Mr.Kuldeep Handoo, director of the company from 1997 and since then they are friends. He also stated that he introduced Act react holdings Pvt. Ltd to JV Portfolio Private Ltd., unregistered sub broker to TCP Stock Brokers, as Mr. Handoo approached him for introducing the entity. He also accepted that he personally know Mr.Manish kumar Marwah. Mr.Nabera is seen to have dealt in the scrip heavily through himself, his wife Sadhana Nabera, and associated entities including Great Eastern Merchantile Pvt. Ltd., Adhunik Finance Pvt. Ltd, Rajendra Ranka etc. Investigation revealed that some of these clients traded through multiple brokers. The client details of each of the eight members and the modus operandi of these structured deals involving participating brokers/ promoters/ clients as brought out in the report is illustrated below:

7.

8.

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9.

N.C. JAIN : The following are the clients/sub brokers of N. C.Jain who have dealt in the scrip. 1. 2. 3. 4. 5. J. V. Stock Broking Pvt. Limited Smart Growth Securities Growing Securities P. P. Investments Keshav & Company

Himanshu Kalra, the proprietor of Growing Securities, deposed before SEBI on 09.01.2002 (copy of his statement is placed at ANNEX-5) and gave the list of all the clients who traded through his trading terminal. The list includes the name Sh. Rajesh Kumar and Sh. R.K. Chaudhary (both are the same persons). Sh. Rajesh Kumar while being deposed before SEBI on 28.01.2002 (copy of his statement is placed at ANNEX-6), inter-alia, stated that he was tipped by his brother Shri Ashok Kumar Chaudhary to invest in the scrip of SIL. Examination of the trades done by Shri Rajesh Kumar/Rajesh Kumar Chaudhary through this member has brought out that the counter party is Rajendra Rai in a majority of the trades. Such trades are placed at ANNEX7. Similarly in the other leg of transactions there are instances where Rajesh Kumar/Rajesh Kumar Chaudhary is buying through NC Jain and the counter party broker is IKM, who is selling for its client Rajendra Rai. Such trades are as placed at ANNEX-8. Sh.Rajendra Rai is alleged to be a friend of Kuldip Handoo, Director in SIL, who in turn is a friend of Ashok Kumar Chaudhary-the brother of Rajesh Kumar Chaudhary. These trades constitute 1.5% (approx) of the total trades during the period under investigation (Feb 2000- Nov. 2000) that has been initiated by these two connected parties. Similarly there are trades where Rajesh Kumar Chaudhary and his brother Ashok Kumar Chaudhary were the counter parties in the same trade involving buying and/or selling of the scrip of SIL executed through this member. The transactions where buyer is Ashok Kumar Chaudhary and the seller is Rajesh Kumar Chaudhary and vice versa is placed at ANNEX-9 and ANNEX-10 respectively. Ashok Kumar Chaudhary while giving the statement before SEBI on 07.01.2002 has admitted to have heard some news about the scrip of SIL from Sh Sudesh Kumar Marwah, who was residing in the same area (as submitted by Mr.Chaudhary -copy of the statement given by Sh. Ashok Kumar Chaudhary is paced at ANNEX-11). It is seen that Sudesh kumar Marwah is father of Manish Marwah, who was associated with the directors of the company as stated by Mr.Joglekar. This suggests the flow of

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information from the directors of the company to Manish Kumar Marwah to Chaudharies. This shows that both Sh. Ashok Kumar Chaudhary and Sh. Rajesh Kumar had information pertaining to the scrip and they took advantage of the information they received from Manish Marwah through Sudesh Kumar Marwah. It is seen that Ashok Kumar Chaudhary and Rajesh Kumar Chaudhary aided and abetted the manipulation by involving in selling among themselves and with Rajendra Rai, a front entity of Kuldeep Handoo (director of SIL) that created artificial volume in the market. 10. TCP STOCK BROKERS LTD.: Investigation into the dealings of the clients of TCP Stock Brokers Ltd. revealed that JV PORTFOLIO PRIVATE LTD. (JVPL) was an unregistered sub broker of the member. The director of JVPL, Shri Sajiv Dhavan was examined in his office at his C-64, Shivalik, New Delhi. Following two clients, apart from some small investors, have traded heavily in the scrip though this sub broker. 1. Act React Holdings Private Ltd. 2. Kuldip Handoo The director of JVPL stated that Sh. Kuldip Handoo was his regular client and has been trading through him for past four years. All the orders pertaining to Act React Holdings Private Limited and that of Shri Kuldip Handoo had been referred by Shri Kuldeep Handoo on telephone. It was also noticed during the investigation that the introduction of Shri Handoo was witnessed by the staffs of JVPL, i.e. by Suresh Parida, Satish Sharma and Deepak. The way Sh. Kuldip Handoo and Act React Holdings have been entertained by this member gives enough scope to infer that JVPL was hand in glove with Kuldip Handoo. It is also seen that Act React Holding Pvt Ltd was introduced to this sub broker by Dilip Nabera. On examining the client registration application of the clients of JVPL it was observed that M/s Laxmi Securities and M/s Sai Investment were found to be the associate/group company of Shri Kuldip Handoo as they have the common address as mentioned below: 19 A, Arjun Nagar, Opposite B extension, Safdarjung Enclave, New Delhi. 11. IKM INVESTOR SERVICES LIMITED (IKM): Shri Pramod Jain, director of IKM Investor Services deposed before SEBI on 05.11.2001 and denied that there were any deals in their own account. However, all the trades took place through their sub brokers. Most of the trades executed through this member have taken place through his sub broker M/s CompuAction Securities Pvt.Ltd. and M/s JMC Investments. CompuAction Securities

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Private Limited was called for recording of statement and Shri Kapil Awal, Manager, CompuAction Securities Private Ltd. deposed before SEBI on 10.01.2002 (copy of statement by Sh.Kapil Awal is placed at ANNEX-12). He stated that the following five clients traded through CompuAction Securities Pvt.Ltd: ? ? ? ? ? Ashok Kumar Chaudhary S. K. Marwah Rajinder Rai Ramesh Kumar Chandra Mohini Anand

The first four clients were found to be related to one another. Ashok Kumar Chaudhary has introduced both S. K. Marwah and Ramesh Kumar and is also a friend of Kuldip Handoo. Kapil Awal in his statement has stated that in case of Shri Rajinder Rai the orders were given on phone by himself, sometimes by Mr.Manish Kumar and by Ashok Kumar Chaudhary. He further stated that even deliveries in case of Rajinder Rai were received by Ashok Kumar Chaudhary. To the contrary Rajinder Rai in his statement which was recorded on 7.8.2002 has denied making any investments in any scrip (copy of statement by Rajinder Rai is placed at ANNEX-13). His statement shows that he was working as a peon in one of the Chartered Accountant firms namely Dhanajay & Co for the last three years. He further stated that he used to work at 19A, Arjun Nagar, Safdarganj Enclave, New Delhi, where Ashok Kumar used to meet Kuldeep Handoo. It is seen from the records that Rajinder Rai was introduced to the sub broker by Dilip Nabera. He agreed that he had signed the a few cheques and client agreement form as per the instruction of Dhananjay Kumar. The trading details of Shri Ashok Kumar Chaudhary through CompuAction Securities Private Limited is placed at ANNEX- 14. These trading details shows that Shri Ashok Kumar Chaudhary had started trading in the scrip from settlement no. 47/1999-00 (07.02.00 ­ 11.02.00) at a price of Rs. 11.34. In the first five settlements he has built up positions at a very low price and then gradually started offloading in a small amount while still buying some of the shares. The total buy position of Shri Ashok Kumar Chaudhary is 60600 and the total sell quantity was 53400 during the period under investigation. Almost in all settlements there were trades by Shri Ashok Kumar Chaudhary and these trades have influenced the price. It was also admitted by Shri Ashok Kumar Chaudhary in his statement (refer annex-10) while deposing before SEBI on 07.01.2002 that the rationale for his investment in this scrip was news from Shri Sudesh Kumar Marwah at a time when the price was hovering around Rs.11/. Trading details of Ashok

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Kumar Choudhary shows that except 1000 shares all other shares have been offloaded by him in the market. He made substantial gain in this scrip by virtue of his connection with Manish Marwah (S/o Sh. S.K. Marwah) and Kuldip Handoo and, therefore, he has acted in concert with these people. It is also pertinent to note that Shri Ashok Kumar Chaudhary has encouraged his brother Shri Rajesh Kumar (who also traded in the name R. K. Chaudhary) to invest in this scrip. This apart, Shri Ashok Kumar Chaudhary has denied having known Kuldip Handoo or Suman Pandit. Howeever it was stated by Suman Pandit, one of the Directors in Telefinlease Private Ltd. (other directors being Manish Marwah and Anil Raina) that Shri Ashok Kumar Chaudhary used to come to 19-A, Arjun Nagar, Safdarjung Enclave, New Delhi to meet Kuldip Handoo. It may be noted that Telefinlease Private Ltd. has also dealt in the scrip of SIL during the investigation period. Shri Ashok Kumar Chaudhary has also done trading through R. S. Investments of Delhi, an unregistered sub broker of M/s Jhunjhunwala Stock Brokers. Shri Sanjay Gupta of R. S. Investments was called for deposition before SEBI and his statement was recorded on 11.01.2002 (copy of statement by Sanjay Gupta is placed at ANNEX-15). The two clients, who have traded in the scrip through R.S. Investments were: ? ? Ashok Kumar Chaudhary Telefinlease Pvt. Ltd.

Investigation has revealed that Mr. Manish Marwah and Mr. Suman Pandit were the directors of M/s Telefinlease Pvt. Ltd., who were was introduced by Shri Ashok Kumar Chaudhary. To make out them as separate persons, Shri Ashok Kumar Chaudhary has introduced Shri Manish Marwah to R. S. Investments and his father Shri S. K. Marwah at CompuAction Securities Private Ltd. In case of deliveries of shares taken/given both Shri Chaudhary and Marwah have acted for each other. Sometimes both Shri Chaudhary and Shri Marwah used to come together to RS Investments to place orders for Telefinlease. Trade details of Shri Ashok Chaudhary executed through R. S. Investments are placed at ANNEX-16 which shows that Shri Chaudhary sold out many of the shares held by him and in the transaction he made an approximate gain of Rs. 1767797/- if the figures as shown above is read in consonance with the figure given in the table for his trade with CompuAction Securities Private Limited. It may be noted that in most cases the counter party clients are related entities to above mentioned persons. 12. SMK SHARE AND STOCK BROKING PVT. LTD.: Trading details of the dealings of its sub broker, Shreepati Holdings & Finance Private Limited

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were examined in detail. The sub broker Shreepati Holdings & Finance Pvt. Ltd. have acted for 1. Act React Holdings Pvt. Ltd. 2. Great Eastern Mercantile Pvt.Ltd. (GEM) (introduced by Dilip Nabera & having same address and telephone number as Mr.Nabera) -while Adhunik Finance Ltd. is a direct client to the member. Though the trade done by the member directly for its clients was not significant, , the trades done by their sub broker Shreepati Holdings Private Limited were found to be large. Moreover, the Auditor of the SIL, Shri Dilip Nabera and Associates has also traded in the scrip at his HUF account and there is substantial trade in the scrip by Adhunik Finance Ltd, which is based in the same premises/same flat where Shri Dilip Nabera's and Associates are operating. The location is Gr 1/B, May Building, 299 Princess Street, Mumbai- 400 002 According to Shri Dilip Nabera the directors of Adhunik Finance Ltd. are Mrs. Sadhna Nabera, wife of Dilip Nabera and one Ms. Shivkanta Kothari. The total trade done by Adhunik Finance Ltd through JCL Securities Pvt. Ltd., one of the members who was examined, during investigation period in the scrip of SIL for the period Feb 2000- Nov 2000 is placed at ANNEX-17. From the trading pattern it is evident that this entity had done trade in almost all the settlements starting from settlement No.17 (17.07.00 ­ 21.07.00). It is also important to note that no other directors of Adhunik Finance except Sadhna Nabera have traded in the scrip. It is seen that Adhunik Finance was acting as sub broker to another member Shilpa Stock Brokers and were trading in the scrip. The company GEM has been used as one of the selling entities for Sun Infoways Ltd. The details of trade done by GEM through Shreepati Holdings Pvt. Ltd. are placed at ANNEX-18. GEM has been introduced at Shreepati Holdings Pvt. Ltd. by Shri Dilip Nabera. GEM has also done trade through Shreepati Holding Pvt. Ltd. through JCL Securities Private Ltd. The details are ANNEX-19. This client has only the sale transactions. The total sale transaction of GEM is 12000 quantities. From the analysis of Bank Statements of Sun Infoways Ltd. it is seen that there were fund transfers with GEM. Further it is seen that the shares sold by GEM was shares issued to the promoters (preferential).

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Durgesh Kabra, partner in M/s Durgesh Kabra & Co., deposed before SEBI on 14.06.2002 (copy of the statement by Durgesh Kabra is enclosed as ANNEX-20) was instrumental in getting Great Eastern Mercantile Private Limited (GEM) incorporated and the documents were witnessed by his brother Shri Ganesh Kabra. He stated that GEM was sold out because its promoters were unable to carry on the activities for which it was promoted earlier. He named two probables; one Shri Dilip Nabera and the other one Shri Dinesh Lodha who might have taken over GEM from its promoters. The name of Dinesh Lodha did not figure anywhere in the investigation, it was strongly suspected that Shri Dilip Nabera would have himself bought this company and managed to put Rupanis as its directors, while acting on behalf of the promoters/Directors of Sun Infoways Limited. The introduction of GEM was through Dilip Nabera and even the Telephone Number (2010488/523) mentioned at the client member agreement form of Shreepati Holdings & Finance Pvt. Ltd, belongs to Adhunik Finance Ltd., where the wife of Shri Dilip Nabera is a director. Moreover, the Nabera & Associates, CA also has office in the same room. It is, therefore, apparent that Dilip Nabera himself did all the transactions of GEM with an intention to manipulate the price of SIL. The client member agreement form submitted by both SMK Stock Brokers and JCL Securities show directors of GEM as· Shri Iqbal Rupani · Haider Ali Rupani (However this is not reflected in the records of Registrar of Companies). Dilip Nabera had given a platform to the promoters/directors namely Shri Iqbal Rupani and Haider Ali Rupani of GEM to offload shares in the market and to increase liquidity in the market ultimately leading to artificial price rise. Following links establishes the fact that Dilip Nabera as an insider in SIL and has played active role in the price manipulation of the scrip: ? ? ? ? GEM was introduced by Dilip Nabera The contact telephone number given on the client introduction form of GEM belongs to Adhunik Finance Ltd. a company where Mrs. Sadhna Nabera, wife of Dilip Nabera, is one of the Directors. All the orders were in fact given by Shri Dilip Nabera in case of GEM as stated by Ms Kanan Sheth of Shreepati Holdings Private Ltd. The shares sold in the market were of pre public issue and Shri Nabera knew it. He facilitated the sale of such shares for the sake of promoters/ director and later also got the post of statutory auditor in the company.

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? ? 13.

Shri Nabera introduced Act React Holding Private Limited with Shreepati Holdings; the director of Act React Holdings Shri Kuldip Handoo was also the director in Sun Infoways Limited. Iqbal Rupani accepted that he was paid for being the director of GEM.

JHUNJHUNWALA STOCK BROKERS PVT. LTD.: This member has done trade for M/S R. S. Investments as its client/sub broker. Though M/s R. S. Investments was not a registered intermediary as confirmed by Sanjay Gupta, partner, in his statement recorded on 11.01.2002 (refer annex-15), however, it has acted as a sub broker. The client details of R. S. Investments are as follows: 1. M/s TeleFinlease Private Limited 2. Ashok Chaudhary 3. Devki Nandan The directors of Telefinlease are: 1. Shri Suman Pandit, 2. Anil Raina and 3. Shri Manish Marwah Telefinlease has acted as a front entity for SIL. Moreover, the very fact that Telefinlease was introduced by Ashok Kumar Chaudhary, who admitted to have traded in the scrip based on information he received from Mr. Sudesh Kumar Marwah. Manish Kumar Marwah S/o Sh. Sudesh Kumar Marwah himself has traded in the scrips, reinforces the belief that they were having information pertaining to the manipulations going on in the scrip and perhaps about the strategic alliance that Sun Infoways went in for with Zap InfoTech Ltd. The details of trade done by Ashok Kumar Chaudhary through R.S. Investments is placed in ANNEX-21. It is clear that Ashok Kumar Chaudhary has used this sub broker to offload his stake in this scrip. Moreover, the trade log analysis suggests that there was a concerted attempt by all these persons acting in concert to continue buying and selling in the scrip to maintain liquidity. As can be seen from the table placed at ANNEX-22 that in all the transactions done by Shri Chaudhary with R. S. Investments (an unregistered sub broker of Jhunjhunwala Stock Brokers Pvt Ltd.) the counterparty broker was IKM Investor(Clearing no 766) and the sub broker being Compuaction Securities, who is buying for Rajendra Rai, a front of Kuldip Handoo. Similarly there are instances where the buyer is R. S. Investment for Telefinlease (a company belonging to S. K. Marwah, Suman Pandit, Anil

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Raina) and the seller is IKM for its clients Ashok Kuamr Chaudhary and Rajender Rai through sub broker CompuAction Securities. Such instances are placed at ANNEX- 23. Shri Sanjay Gupta, partner in R.S. Investments was called for deposition and has stated in his statement recorded on 11.01.2002 that both Ashok Kumar Chaudhary and Manish Marwah are friends and they used to place orders for each other as well as receive and give deliveries on each other's behalf. Further, it was also stated by Shri Sanjay Gupta in his statement that almost all the trades of Shri Ashok Kumar Chaudhary was in the scrip of SIL and in case of Telefinlease Pvt. Ltd. also all the trades were in SIL. This shows that both Ashok Kumar Chaudhary and Shri Manish Marwah were acting in concert to artificially raise the price of the scrip of SIL. 14. TJ STOCK BROKING SERVICES PVT. LTD.: Shri Kamal Kumar Jain, Director, TJ Stock Broking Services Private Ltd. stated in his statement recorded on 08.11.2001 that there was not any trade in the scrip at their own account, whatever trade took place was through two sub brokers, viz. ? ? Portfolio Equity Services Bhansali Securities

Smt. Savita Bhansali, Proprietor, Portfolio Equity Services while being examined on 06.08.2002 stated that major transactions took place in case of the following clients. ? ? ? ? ? ? ? ? ? Act React Holdings Private Ltd. Apoorv Fincap Ltd. (Directors-Sunil Saxena, JL Raina, Anil Raina) Adinath Propcon Private Ltd. Neha Fincap Ltd. Concepts Institute Private Ltd. (director ­ Sandeep Bohra) Ajay Bohra Sandeep Bohra Chitra Bohra Meena Bohra

Smt Savita Bhansali stated that the orders pertaining to Act React Holdings Private Limited was given mostly by Kuldip Handoo and on some occasions orders were given by Sunil Saxena, who is a director in Apoorv Fincap Ltd. which has also traded in the scrip. The trade details of Adinath Propcon Private Limited, through Portfolio Equity Services, is placed at ANNEX-24. The directors of this company are:

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? ?

J. L. Raina Anil Raina

As is clear from the annex-24 that Adinath Propcon has used Porfolio Equity Services for building position in the scrip. Shri J. L. Raina in his statement given to us has denied being director of any company in the name of Adinath Propcon Private Limited. He, however, maintained that since Kuldip was residing with him at 106, Community Centre there was a strong possibility that he had put his name as one of the directors. Kuldip Handoo and Shri Raina worked together at Magnum Business Services, East of Kailash till 1994. Raina has also stated that both Suman Pandit and Kuldip Handoo are related and at one point of time both of them had been residing in the 106, Community Centre, Baljit Nagar, West Patel Nagar, New Delhi. The detail of trade done by Neha Fincap Pvt. Ltd (Director Suman Pandit) through Portfolio Equity Services is placed at ANNEX-25. Suman Pandit is also a director in Telefinlease Pvt. Ltd., involved in this price manipulation. As is evident from annex-26 the gross buy from this entity is much more than gross sale. Like all the other cases as discussed before this entity also took position in the very beginning of period under investigation, i.e. when there was hardly any information about this company in the market. Savita Bhansali in her statement has stated in case of Neha Fincap Pvt. Ltd. orders were placed by Shri Sunil Saxena. She has further stated that Sunil Saxena is a professional colleague of Kuldip Handoo, Suman Pandit and Anil Raina-all directors in Act React Holdings Pvt. Ltd., thus the involvement of Neha Fincap Private Limited is established with Act React Holdings Pvt. Ltd., Apoorv Fincap and Adinath Propcon Private Limited. The trade details of Apoorv Fincap Ltd. through Portfolio Equity Services are placed at ANNEX-26. From the table it is apparent that this client has net buy position in the scrip and it has also started buying almost during the same period when the other client/associates of Handoo-Nabera started trading in the scrip. The orders in this case were given by Shri Sunil Saxena and sometimes by his mother Vimla Saxena. The office address of both Apoorv Fincap and Adinath Propcon Private Limited was once same atC-63-A, Sarojini Marg, C- Scheme, Jaipur - 302 001. -which shows Apoorv Fincap Ltd. and Aadinath Propcon Private Limited are associated with each other. Ajay Bohra, one of the clients of Portfolio Equity Services, has the highest volume of trade among this sub broker' clients. It is worth mentioning here s

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that Ajay Bohra has done trade for not only himself but he has encouraged his family members to do trade in the scrip as is evident from the details given in the foregoing section. His wife mother and brother were also trading in the scrip. Like all the other entities, Shri Ajay Bohra started trading in the scrip from settlement no. 2 (03.04.00 ­ 07.04.00), i.e. when there was hardly any news in the market about the scrip. The statement of Shri Ajay Bohra has been recorded on 05.08.2002 where he submitted to have come to know about SIL through one his professional colleagues. This is further corroborated by his associations with Shri Sunil Saxena, who has placed orders for Handoo's entities. Moreover, the fact that his brother Shri Sandip Bohra, his wife Chitra Bohra and his mother Smt. Meena Bohra have all traded in the scrip further supports his involvement in the scrip. Moreover, one common strategy followed by all the persons acting in concert with Kuldip Handoo/Dilip Nabera was to buy the scrip in the beginning of the manipulation and to offload it at a substantially higher price. It is further seen that Sandeep Bohra was director in Apoorv fincap Ltd and Concept Institute Pvt Ltd. 15. JCL SECURITIES PVT. LTD. (JCL): During the period covered for investigation in the scrip of SIL, one of the direct clients of this member is M/s Adhunik Finance Private Limited, who has also dealt through Sub Broker Shreepati Holding & Finance Pvt. Ltd. The major clients of Sreepathi Holdng are1. Act React Holding Pvt. Ltd. (Introduced by Nabera- Director is Handoo) 2. Dilip Nabera HUF 3. Great Eastern Mercantile Pvt. Ltd. (introduced by Nabera). 4. Rajendra Ranka (introduced by Mr.Nabera- is relative) 5. Adhunik Finance Pvt. Ltd. (Director is W/o Mr.Dilip Nabera) There are instances where trades have taken place between JCL and IKM where in over 80% of the instances the clients are Nabera Group and Kuldip Handoo Group. Since Rajendra Rai was merely acting as a front of Kuldip Handoo, and was introduced by Dilip Nabera with Shreepati Holding & Finance Pvt. Ltd.. The table at ANNEX-27 illustrates such instances: The director of Shreepati Holdings and Finance Private Limited, Kanan Sheth furnished the position of their clients in the scrip, which is placed at ANNEX-28. As can be seen from the above table, Act React Holding has used this sub broker to offload the shares it bought from other sub brokers in the market, probably from the ones bought from Portfolio Equity Services. As Act React Holdings Private Limited was introduced to this sub broker by Dilip Nabera who himself has traded in the scrip. Moreover, Dilip Nabera

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was also auditor in the company and the company Act React Holdings belongs to Kuldip Handoo who was a Director in Sun Infoways Ltd. further reinforces the fact that Act React Holdings Private Limited was used by Shri Nabera to manipulate the price in the scrip. Adhunik Finance Private Limited (Director Sadhna Nabera) has also traded in the scrip through this sub broker with a gross purchase of 49,800 and gross sale of 33,000 shares. There are instances where Sadhna Nabera has purchased and that too at a time when the mega merger of Sun Infoways Limited with Zap Infotech was about to come in the media. The trades are placed at ANNEX-29. 16. SHILPA STOCK BROKER PRIVATE LTD.: There are instances where Concept Institute Private Limited is selling through Shilpa Stock Brokers and one of the counter parties is JCL. Such instances are placed at ANNEX-30. It is pertinent to note that both Concept Institute Pvt. Ltd. and Apoorv Fincap are related to each other since Shri Sandip Bohra was a common director in both the entities. Since most of the trades of Shilpa Stock Broker Private Ltd. have been matched with IKM' trade for Ashok Kumar Chaudhary, it s appears that orders for Shilpa Stock Broker Private Ltd. have been put by Dilip Nabera as Adhunik Finance Private Limited, belonging to Sadhna Nabera who is also a sub broker of Shilpa Stock Brokers. In view of the above it is seen that the noticees 1-31 had manipulated the volume and price of the scrip by continuously involving in trades among themselves pushing the price of the scrip from Rs.10/- to over Rs.724/during the period 09.02.2000 to 10.11.2000. They were aided by the management of the company that continuously made positive corporate announcement during this period. The company SIL, and its promoters/directors which includes Sh.Anil Pujari, Sh. Hozefa Vohra, Kuldeep Handoo, Sh.Tanvir Zaki, Sh.Pravin Sonalkar, Sh.Prakash Pangarkar, Sh. Sanjay P.Muthe, Sh. Arif Mithani, Sh. Umesh Gowda and their associates Sh.Suman Pandit, Sh. Rajendra Rai, Sh. Ajay Bohra, Sh. Sandep Bohra, S. Sunil Saxena, Sh.Dilip Nabera, Smt. Sadhna Nabera and Sh. Iqbal Rupani who entered into large volume of trading in the shares of SIL and WHEREAS these transactions were put through in the names of clients viz., Great Eastern Mercantile Pvt. Ltd., Ashok Kumar Choudhary, Rajesh Kumar Choudhary , Kuldip Kumar Handoo, Dilip Nabera, Sadhana Nabera, Act React Holdings Private Limited, Adinath Propcon Private Limited, Adhunik Finance Pvt. Ltd., Apoorv Fincap Ltd., Concept Institute Pvt. Ltd., Laxmi Securities, Neha

17.

18.

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Fincap Limited, Saksham Financial Services, Sai Investments, Telefinlease Pvt. Ltd. etc that are interconnected to each other, and thus the noticees 1-31-have violated the regulations 3, 4(a, b, c, d, e) and 6(d) of SEBI Prohibition of Fraudulent and Unfair Trade Practices Regulations 1995 by indulging in price manipulation and creating of artificial volumes and interest in the market. Further the new acquirers viz. Anil Pujari, Hozefa Vohra, Rajan Tawate, Tanvir Zaki, Pravin Sonalkar and Kuldeep Kumar Handoo had acquire 98% of share capital of the company from Shri. Joglekar' family and relatives s (erstwhile promoters of SIL). in January 2000 for a total consideration of Rs.98,34,659/-. While doing so the new acquirers did not comply with the requirements of Regulations 8(1), 8(2), 10, 11(1) & 11(2) of SEBI (Substantial Acquisition of Shares & Takeover) Regulations 1997. 19. In view of this, you, noticees 1-31, are hereby called upon to show cause as to why actions under Section 11B of the SEBI Act, 1992 read with Regulation 11 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities market) Regulations, 1995 including debarring you from accessing capital market should not be taken against you. Further, noticees Anil Pujari, Hozefa Vohra, Rajan Tawate, Tanvir Zaki, Pravin Sonalkar and Kuldeep Kumar Handoo are hereby called upon to show cause as to why directions under Section 11B of the SEBI Act, 1992 read with Regulations 8(1), 8(2), 10, 11(1) & 11(2) of SEBI (Substantial Acquisition of Shares & Takeover) Regulations 1997, including debarring you from accessing capital market should not be taken against you. 20. This shall be without prejudice to the right of SEBI to initiated prosecution under Section 24 of SEBI Act, 1992 or any other action as it may deem fit in terms of the provision of the said act or the rules and regulations framed there under.

Your explanation should reach us within a period of 15 days from the date of receipt of this show cause, failing which suitable action will be taken against you, without any further reference to you. You may also indicate in your reply whether you are desirous of attending for personal hearing before the Chairman, SEBI before taking any action as above. Yours faithfully

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BARNALI MUKHERJEE

Encl: as above

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