Final Order in the matter of Delta Leasing and Finance Ltd.

WTM/AB/IVD/ID14/23301/2022-23 SECURITIES AND EXCHANGE BOARD OF INDIA FINAL ORDER UNDER SECTIONS 11(4), 11(4A), 11B(1), 11B(2) AND 15I OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ WITH RULE 5 OF THE SEBI (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES) RULES, 1995 AND SECTIONS 12A(2) AND 23I OF SECURITIES CONTRACTS (REGULATION) ACT, 1956 READ WITH RULE 5 OF THE SECURITIES CONTRACTS (REGULATION) (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES) RULES, 2005.

In respect of: Noticee Noticee Name PAN no. 1 M/s. Natraj Capital & Credit Pvt Ltd AAACN2928D Mr. Parmanand Yadav 2. AIMPY3580D Proprietor of Roxtech Securities Mr. Praveen Goyal 3. AQMPG2650C Proprietor of Shivam Trading Company Mr. Santosh Kumar 4 AEKPK6751Q Proprietor of Balaji Enterprises Ms. Sapna 5 DRUPS8079D Proprietor of Stallion Trading Co. Mr. Sunil Singh 6 BDGPS0774K Proprietor of Alfa Finsec (Aforesaid entities are hereinafter individually referred to by their respective name or noticee number and collectively as “the Noticees”.) In the matter of trading activities of certain entities in the scrip of Delta Leasing and Finance Ltd.

1. Present proceedings emanate from a show cause notice dated September 3, 2021 (hereinafter referred to as “SCN”) issued by Securities and Exchange Board of India (hereinafter referred to as “SEBI”), to the Noticees. It is noted that an investigation was conducted by SEBI into the trading activities of certain entities in the scrip of Final Order in the matter of Delta Leasing and Finance Ltd.

Delta Leasing and Finance Ltd. (hereinafter referred to as “the Company”). Investigation has found that promoters of the Company had indulged in manipulation of the volume of the shares traded in the market by dealing in the scrip of the Company in such a manner where the promoter/promoter connected entities had transferred a substantial portion of their holdings through off market to the suspected entities group who had in turn sold the shares so received, in the market. The counter party buyers for these sale transactions were also amongst the suspected entity group who had transferred back the shares so bought, to the promoter/promoter connected entities through off market transfer either directly or in directly through other suspected entities. The extent to which the shares received through off market and sold in the market by the suspected entities and which were bought in the market by the counter party suspected entities and transferred back to the promoters group by them through off market transfers either directly or through other suspected entities constitute the artificial volume created in the market. As the entire shares transferred by the promoters group to the suspected entities had come back to them through market sale transaction by the suspected entities and subsequent off market transfer, there was no actual change in the ownership of the security in these transactions. Based on the investigation conducted in the aforesaid matter, enforcement actions were initiated by SEBI against 176 entities for volume manipulation, 78 entities for price and volume manipulation, 30 entities for price manipulation in violation of Section12A(c) of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act, 1992”) and SEBI (Prevention of Fraudulent and Unfair Trade Practices relating to securities market) Regulations 2003 (hereinafter referred to as “PFUTP Regulations, 2003”), 15 promoter entities for disclosure violations under SEBI (Prohibition of Insider Trading) Regulations 1992 and 5 Promoter entities for disclosure violations under SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011.

2. While the shares were sold from promoter/ promoter connected entities to suspected entities and later on, the promoter/ promoter connected entities bought back shares from suspected entities, these two legs of the transaction cycle were conducted through off-market in 802 transactions (spot delivery). SEBI conducted

Final Order in the matter of Delta Leasing and Finance Ltd.

another investigation into 802 off-market transactions (spot transactions) carried out during the period from January 01, 2013 to December 31, 2014 (hereinafter referred to as “Investigation Period”) into the scrip of the Company, to examine as to whether these off market transactions were carried out in accordance with provisions of Section 2(i)(a) of Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as “SCRA, 1956”) or was there any violations of Section 13, Section 16 and Section 18 of SCRA, 1956 read with SEBI Notification G.S.R 219 (E) dated March 2, 2000 and SEBI Notification No. LAD-NRO/GN/2013-14/26/6667 dated October 03, 2013, or any other violation of provisions of SEBI Act, 1992 and PFUTP Regulations, 2003. The present order deals with these off-market transactions.

3. SCN alleged the violation of the following provisions:

Noticee no. Provisions alleged to have been Called upon to show cause violated 1 to 6 By committing the acts of acting as Why appropriate directions under unregistered intermediaries (stock Sections 11B(1) and 11(4) of the broker/sub-broker) in having clientele SEBI Act, 1992, including debarment, dealing for trading and dealing in should not be issued against them securities and by creating a and/ or why appropriate penalty falsified/fabricated document to give an under Sections 11(4A) and 11B(2) impression of authenticity about its read with Sections 15HA and 15HB of transactions, the Noticees are alleged to SEBI Act, 1992 should not be have violated the provisions of Section imposed upon them. 17(1) of SCRA, 1956 and 12(1) of SEBI Act,1992 read with Regulation 3 of SEBI (Stock Brokers) Regulations, 1992 (hereinafter referred to as “Broker Regulations, 1992”) and Section 12A(c) of SEBI Act, 1992 read with Regulation 3(a), 3(d), 4(1) of PFUTP Regulations, 2003 1 to 6 By delaying the transfer of shares to the Why appropriate penalty should not transferees subsequent to receipt of be imposed under Section 12A(2) payment from the transferees much read with Section 23H of SCRA, beyond the time frame stipulated in 1956.

Final Order in the matter of Delta Leasing and Finance Ltd.

Section 2(i)(a) of SCRA, 1956, the Noticees are alleged to have violated Sections 13, 16 and 18 of SCRA, 1956 read with SEBI Notification G.S.R 219 (E) dated March 2, 2000 and SEBI Notification No. LAD-NRO/GN/2013- 14/26/6667 dated October 03, 2013. 1 to 6 By not responding in any manner to the Why appropriate penalty should not summons issued, the Noticees are be imposed under Sections 11(4A) alleged to have violated the provisions of and 11B(2) read with Section 15A(a) Section 11C(2) and 11C(3) of SEBI Act, of SEBI Act, 1992 1992. 1, 2, 5 and 6 By stating an untrue and incorrect Why appropriate penalty should not reason of gift transaction by Noticee no. be imposed against them under 1 and further as “Loan/Return of Loan Sections 11(4A) and 11B(2) read with shares” by the Noticee no. 1, Noticee no. Section 15HA of SEBI Act, 1992. 2, Noticee no. 5 and Noticee no. 6, in the DIS while carrying out the off market transfer transactions without any creation of pledge of shares duly confirmed by the Depositories NSDL & CDSL, thereby falsifying the documents in an attempt to evade compliance of the transactions with the time frame stipulated in Section 2(i)(a) of SCRA, 1956, amounting to an act of deceit and unfair trade practice while dealing in securities thereby are alleged to have violated the provisions of Regulation 4(1) of PFUTP Regulations, 2003.

4. An opportunity of personal hearing was granted to all the Noticees on March 29, 2022. On the scheduled date of hearing, authorized representative on behalf of Noticee no. 6 appeared and made submissions. None appeared for Noticee no. 1 to 5, nor was any request for adjournment received from them. The service of SCN and Hearing Notice was done upon the Noticees in the following manner.

Noticee Particulars

Final Order in the matter of Delta Leasing and Finance Ltd.

Noticee no. 1 The SCN was sent by Speed Post on the three available addresses on record of Noticee no. 1. These Speed Post returned undelivered with the remark “Insufficient Address/ No such person in address”. Another attempt for the delivery of SCN was made on October 4, 2021, at all the three addresses of Noticee no. 1. However, the SCN returned undelivered with the same remarks. Thereafter, SCN was affixed at two addresses of Noticee no. 1. I note that scanned copy of the SCN was also sent on the email id’s of Noticee no. 1 available on record and successful email delivery notifications were also received. The Hearing Notice dated February 16, 2022, sent by Speed Post was delivered to one of the addresses of Noticee no. 1. An affixture of Hearing Notice was also done on two of the addresses of Noticee no. 1. I note that scanned copy of the Hearing Notice was also sent on the email id’s of Noticee no. 1 available on record and successful email delivery notifications were also received. The SCN and Hearing Notice were also served upon Noticee no. 1 through paper publication in the Delhi Edition of Dainik Jagran on March 4, 2022 and Delhi Edition of Hindustan Times on March 4, 2022. I note that the unserved SCN and Hearing Notice were also published on the SEBI Website.

Noticee no. 2 The SCN was sent by Speed Post on the available address on record of Noticee no. 2. The Speed Post returned undelivered with the remark “Addressee left without instructions”. Another attempt for the delivery of SCN was made on October 4, 2021. However, the SCN returned undelivered with the same remarks. Thereafter, SCN was affixed at last known address of Noticee no. 2. I note that scanned copy of the SCN was also sent on the email id’s of Noticee no. 2 available on record, but delivery to those email id’s was also unsuccessful. The Hearing Notice dated February 16, 2022, sent by Speed Post was retuned undelivered with the remark “Insufficient Address”. I note that scanned copy of the Hearing Notice was also sent on the email id’s of Noticee no. 2 available on record but delivery to those email id’s was also unsuccessful. The SCN and Hearing Notice were also served upon Noticee no. 2 through paper publication in the Delhi Edition of Dainik Jagran on March 4, 2022 and Delhi Edition of Hindustan Times on March 4, 2022. I note that the unserved SCN and Hearing Notice were also published on the SEBI Website.

Noticee no. 3 The SCN was sent by Speed Post on the available address on record of Noticee no. 3. The Speed Post returned undelivered with the remark “Addressee left without instructions”. Another attempt for the delivery of SCN was made on October 4, 2021. However, the SCN returned undelivered with the same remark. Thereafter, SCN was affixed at last known address of Noticee no. 3. I note that scanned copy of the SCN was also sent on the email id’s of Noticee no. 3 available on record and successful email delivery notifications were also received. The Hearing Notice dated February 16, 2022, sent by Speed Post was retuned undelivered with the remark “Addressee cannot be located”. I note that scanned copy of the Hearing Notice was also sent on the email id’s of Noticee no. 3 available on record and successful email delivery notifications were also received.

Final Order in the matter of Delta Leasing and Finance Ltd.

The SCN and Hearing Notice were also served upon Noticee no. 3 through paper publication in the Delhi Edition of Dainik Jagran on March 4, 2022 and Delhi Edition of Hindustan Times on March 4, 2022. I note that the unserved SCN and Hearing Notice were also published on the SEBI Website. Noticee no. 4 The SCN was sent by Speed Post on the available address on record of Noticee no. 4. The Speed Post was successfully delivered. Since, no reply was received, another delivery of SCN was made on October 4, 2021, which was also successfully delivered. Since no reply was received, SCN was also affixed at the last known address of Noticee no. 4. I note that scanned copy of the SCN was also sent on the email id’s of Noticee no. 4 available on record and successful email delivery notifications were also received. The Hearing Notice dated February 16, 2022, sent by Speed Post was retuned undelivered with the remark “Addressee left without instructions”. I note that affixture of Hearing Notice was also done on the last known address of Noticee no. 4. I note that scanned copy of the Hearing Notice was also sent on the email id’s of Noticee no. 4 available on record and successful email delivery notifications were also received.

Though the service of SCN was successful, but since no reply was received, hence, out of abundant caution, the SCN and Hearing Notice were also served upon Noticee no. 4 through paper publication in the Delhi Edition of Dainik Jagran on March 4, 2022 and Delhi Edition of Hindustan Times on March 4, 2022. I note that the SCN and Hearing Notice were also published on the SEBI Website. Noticee no. 5 The SCN was sent by Speed Post on the available address on record of Noticee no. 5. The Speed Post returned undelivered with the remark “Refused”. Another attempt for the delivery of SCN was made on October 4, 2021. However, the SCN returned undelivered with the same remark. Thereafter, SCN was affixed at last known address of Noticee no. 5. I note that scanned copy of the SCN was also sent on the email id’s of Noticee no. 5 available on record and successful email delivery notifications were also received. The Hearing Notice dated February 16, 2022, sent by Speed Post was retuned undelivered with the remark “Insufficient Address”. I note that affixture of Hearing Notice was also done on the last known address of Noticee no. 5. I note that scanned copy of the Hearing Notice was also sent on the email id’s of Noticee no. 5 available on record and successful email delivery notifications were also received.

The SCN and Hearing Notice were also served upon Noticee no. 5 through paper publication in the Delhi Edition of Dainik Jagran on March 4, 2022 and Delhi Edition of Hindustan Times on March 4, 2022. I note that the unserved SCN and Hearing Notice were also published on the SEBI Website. Noticee no. 6. SCN and Hearing Notice dated February 16, 2022, were successfully delivered by Speed Post to Noticee no. 6. He has also filed a reply dated September 27, 2021.

5. I note that an email dated November 3, 2022 was also sent to all the Noticees providing them a final opportunity to make written submissions/ reply if any, to the SCN. However, no reply to the said email was received from any of the Noticees.

Final Order in the matter of Delta Leasing and Finance Ltd.

6. I note that the primary investigation in the trading activities of certain entities in the scrip of the Company, was concluded by SEBI on September 5, 2019, and enforcement action was initiated against a total of 190 entities for manipulation of the price and /or volume and /or both in the scrip for violations of PFUTP Regulations, 2003 and Section12A(c) of SEBI Act, 1992 and against the Promoter entities for disclosure violations under SEBI (PIT) Regulationsm, 1992 and SEBI (SAST) Regulations, 2011. However, during the course of the primary investigation, it was observed that several off-market transactions have taken place, which form part in the modus operandi adopted by the entities in the price-volume manipulation in the scrip. Thus, a separate investigation was carried out by SEBI involving these 802 off-market transactions, which got concluded on October 23, 2020. Subsequently, the matter was placed before another WTM, SEBI for approval of SCN but since the term of the then WTM was about to expire, hence, the matter came to be reassigned to the undersigned on July 23, 2021. The undersigned approved the issuance of the SCN on August 9, 2021 and the SCN dated September 3, 2021 came to be issued.

7. During the investigation, it was observed that 802 off market transactions were carried out between 231 entities which comprised of 58 Source Clients (Transferors) and 173 Target Clients (Transferees) where 2,17,99,401 quantity of shares were involved in the transactions. While examining the off market transactions of the Source clients and the replies of the Source/Target Clients together with documentary evidences furnished, SEBI investigation found that almost all the Source Clients had carried out off market transfers with several entities on varying dates and consideration amount. However, in such transactions, the Noticees, who are the Source Clients, were observed to have carried out off market transfers as an act of trading or dealing in securities market for their clients i.e. the entities have carried out clientele transactions with 34 entities inasmuch as offering shares as a sale transaction and issuing certain documents like Bills demanding payment of money, Cash Receipts acknowledging the receipt of cash for the transaction, ledgers indicating the extent of transactions done for the clients in the scrip etc. SEBI investigation also revealed that Noticee no. 1 had even charged brokerage from the client and issued a document purported to be a contract

Final Order in the matter of Delta Leasing and Finance Ltd.

note in a prescribed Format of Form A being used by SEBI Registered Stock Brokers except that it did not have the SEBI registration number. All the documents such as Cash Receipts, Bill, Ledgers etc. were issued in the name of Firms predominantly Proprietary Concerns with PAN numbers same as that of the Source entities.

8. Taking into account the number of clients dealt with by each of these Noticees and also the number of transactions which they have done, the SCN alleges that the transferor clients have been carrying out a clientele dealing while dealing in the scrip of the Company. None of these transferor entities/Noticees are registered with SEBI as a market intermediary in any capacity and authorized to do a direct clientele dealing in securities market. On analysis of the KYC forms of such entities, SEBI found that all the Noticees are registered with their respective stock brokers as a client and not as any sub broker. Therefore, the SCN alleges that the Noticees have acted as unregistered intermediaries.

9. The SCN provides the following details of Noticee no. 1 to 6 who have allegedly acted as unregistered stock broker/sub-broker and the number of clients for whom such transactions had been done and also the extent of transactions carried out by them: S. Firm Name Proprietor PAN Number of Number Qty of Total value of No clients of shares shares. dealt with transacti transferred transferred(Rs.) ons 1. STALLION TRADING CO. SAPNA DRUPS8079D 11 14 415710 30906556 2. ROXTECH SECURITIES PARMANAN AIMPY3580D 11 18 181730 18912226.7 SERVICES D YADAV 3. ALFA FINSEC SUNIL BDGPS0774K 2 3 30500 6688000 SINGH 4. SHIVAM TRADING CO. PRAVEEN AQMPG2650C 3 4 139900 11207100 GOYAL 5. BALAJI ENTERPRISES SANTOSH AEKPK6751Q 2 2 15100 13657650 KUMAR 6. NATRAJ CAPITAL AAACN2928D 5 6 59750 7440875 CREDIT PVT LTD

10. The SCN alleges that all the aforementioned six Noticees have acted as unregistered stock broker / sub-broker in as much as carrying out clientele dealings and such dealings have been done either in their own name or in their firm name.

Final Order in the matter of Delta Leasing and Finance Ltd.

11. In addition to above, the SCN also alleges that all the aforesaid Noticees have carried out off market transactions with their clients wherein the settlement of the transactions was not in accordance within the time frame stipulated in Section 2(i)(a) of SCRA, 1956. Further, SCN alleges that in many of the transactions, the Noticees in order to evade the compliance of time period for settlement of off market transactions as stipulated in Section 2(i)(a) of SCRA, 1956 had also indulged in stating false reasons in the DIS for their transactions as loan of shares, return of loan, bad delivery, rectification of bad delivery and gift as the case may be, thereby committed an act of deceit and unfair trade practice in violation of Regulation 4(1) of PFUTP Regulations, 2003.

12. I note that in the SCN, the violations alleged against the Noticees emanate from the off-market transactions in the shares of the Company entered into by the Noticees which were not on spot delivery basis. In this regard, I note that in terms of Section 2(i) of SCRA, 1956, spot delivery contract has been defined as under:

“(i) “spot delivery contract” means a contract which provides for,- (a) actual delivery of securities and the payment of a price therefor either on the same day as the date of the contract or on the next day, the actual period taken for the despatch of the securities or the remittance of money therefor through the post being excluded from the computation of the period aforesaid if the parties to the contract do not reside in the same town or locality; (b) transfer of the securities by the depository from the account of a beneficial owner to the account of another beneficial owner when such securities are dealt with by a depository;”

13. As per aforesaid definition, a ‘spot delivery contract’, means a contract which provides for actual delivery of securities and payment of consideration thereof either on the same day as date of the contract or on the next day. When a contract in securities qualifies as “spot delivery contract” as above, then by virtue of provision of Section 18(1) of SCRA, 1956, nothing contained in Sections, 13, 14, 15 and 17 applies to such contracts. Section 13 declares contracts in notified areas illegal in certain circumstances, Section 14 declares contracts in notified area to be void in certain circumstances, Section 15 provides that member of stock exchange may not act as principle in certain circumstances and Section 17 provides for licensing

Final Order in the matter of Delta Leasing and Finance Ltd.

of dealers in securities in certain areas. In addition, Section 16 provides for power of Central Government to prohibit contracts in securities in certain cases, save with the permission of the Central Govt. In terms of notifications dated July 30, 1992 and March 01, 2000, issued by the Central Government in exercise of its powers conferred under Section 29A of SCRA, 1956, the powers under Section 16 are also exercisable by SEBI and RBI also. SEBI vide notification dated March 01, 2000, issued by it in exercise of the powers conferred by Section 16(1) inter alia provided that no person in the territory to which the SCRA, 1956 extends, shall, save with the permission of the board, enter into any contract for sale or purchase of securities other than such spot delivery contract or contract for cash or hand delivery or special delivery or contract in derivative as is permissible under SCRA, 1956 or SEBI Act, 1992 and the rules and regulations made under such Acts and rules, regulations and bye laws of a recognized stock exchange. The said notification dated March 01, 2000 has been rescinded and replaced by another notification dated October 03, 2013, however, the position with respect to “spot delivery contracts” remained same under the said notification also. Section 16(2) of SCRA, 1956 provides that all contracts in contravention of the provisions of sub-section (1) entered into after the date of notification issued thereunder shall be illegal. The combined effect of Section 18(1) of SCRA, 1956 and of notifications issued by SEBI under Section 16(1) of SCRA, 1956, in respect of spot delivery contract, can be summarised as that any contract in securities which is not spot delivery contract, falls foul of Section 13, 14, 15, 16 and 17, that is to say it is either prohibited or illegal or void, if the other requirements laid down in these Sections are satisfied.

14. The details of the findings of investigation and the consequent alleged violations of each of the aforesaid six Noticees and my findings thereon are dealt with as under:

14.1. Natraj Capital & Credit Pvt. Ltd. (Noticee no. 1):

14.1.1. I note that Noticee no. 1 has neither filed any reply to the SCN nor has appeared for hearing, despite due service of the SCN and hearing notice. 14.1.2. SEBI investigation has revealed that Noticee no. 1 had issued contract note/bill which showed the details of the quantity of shares, rupee value of Final Order in the matter of Delta Leasing and Finance Ltd.

the shares, the name of the transferee client, date of execution of the transaction etc. and the contract note/bill was issued in the name of ‘M/s Natraj Capital and Credit Pvt. Ltd.’ as a member of erstwhile Delhi Stock Exchange (‘DSE’) [sample of which is provided in para 14.1.21 below]. In order to confirm the authenticity of the bill, SEBI investigation enquired from DSE whether ‘M/s Natraj Capital and Credit Pvt. Ltd.’ was registered as a member of DSE. In response, DSE stated that M/s. Natraj Capital and Credit Pvt. Ltd. was not registered with DSE as a trading member in any manner. Thus, I find that Noticee no. 1 has misled the investors by issuing the contract note/bill with a stamp mentioning itself as a member of DSE, misrepresenting the bill, by giving an authentication as a registered member of DSE, to the investors. 14.1.3. The SCN mentions the following details of client wise transactions done and nature of records issued by Noticee 1: Table 2 S.No Name of the Target Client Date of Amount Qty of shares Name of Date of issue of Transfer of recorded transferred document issued Contract Note shares (Rs.) to clients /sale bill / Ledger 1 KRISHANU MUKHARJI 16.06.2014 48209.65 3000 Contract Note 02.04.2013 ATUPM4571F 1201130000331614 2 KRISHANU MUKHARJI 16.06.2014 3000 Contract Note 02.04.2013 06446825 ATUPM4571F 3 AJEET SINGH CHAUHAN 22.03.2014 150000 18750 Sale Bill and 15.03.2010 10903373 Ledger 4 DINESH KUMAR 11715795 22.03.2014 88000 11000 Sale Bill and 15.03.2010 Ledger 5 VANDNA CHAUHAN 22.03.2014 88000 11000 Sale Bill and 15.03.2010 10373950 Ledger 6 NAVNEET PAREEK 13.06.2014 130000 13000 Contract Note 10.10.2012 00010738 14.1.4.

On analysis of the transactions of Noticee no. 1, it could be seen that Noticee no. 1 as on date of receipt of money from its clients either did not have any stock of the scrip in its account or sufficient quantity to transfer the shares. Further, it had acquired the shares from other sources either through off market or on market and provided the shares to the clients which clearly indicate that Noticee no. 1 has been engaging in trading /dealing in securities for its clients. It was also observed that in one instance, Noticee no. 1 while dealing with its client Krishanu Mukharji (PAN ATUPM4571F), had effected delivery of shares to the client through Noticee no. 6. It is pertinent to mention that even Noticee no. 6, for effecting transfer of shares to the client - Krishanu Mukharji of Noticee 1, did not have any stock of the scrip in his account or Final Order in the matter of Delta Leasing and Finance Ltd.

sufficient quantity to transfer the shares as on date of receipt of payment from the target clients. The instances in the below table are given for illustration and the exhaustive list was provided as Annexure 1 to the SCN: Table 3 Name, PAN, Name, PAN, Quantity Date of Date of Balance Balance shares as on Demat Id of Demat Id of target transferred payment by transfer of shares as 1 day before date of source client client (3) target client shares by on date of transfer of (1) (2) source credit of shares/Balance (4) client amount shares as on date of (5) (6) transfer of shares (7) NATARAJ KRISHANU 3000 02.04.2013 16.06.2014 0 6000 CAPITAL & MUKHARJI CREDIT PVT ATUPM4571F LTD (through 1201130000331614 SUNIL SINGH KRISHANU 3000 02.04.2013 16.06.2014 0 3000 BDGPS0774K MUKHARJI 10113199 06446825 IN301766) ATUPM4571F NATRAJ AJEET SINGH 18750 15.03.2010 22.03.2014 0 68007 CAPITAL & CHAUHAN CREDIT PVT 10903373 LTD 00001943 DINESH KUMAR 11000 15.03.2010 22.03.2014 0 49257 11715795 VANDNA 11000 15.03.2010 22.03.2014 0 9007 CHAUHAN 10373950 NAVNEET 13000 10.12.2012 13.06.2014 0 13000 PAREEK 00010738

14.1.5. The details of a few transactions of acquisition of shares in between the time period of date of credit of amount to the transferor and date of transfer of shares to the transferee is given below and the exhaustive list of all the transactions was placed at Annexure 2 to the SCN: Table 4 Name, PAN, Date of Qty of shares ON Mkt/ Particulars of the Source client in case of OFF Demat Id, DP Id of source acquisition acquired OFF Mkt Market acquisitions client (2) (3) (4) (1) Name of the client Client ID NATARAJ CAPITAL & 28.09.2013 30,000 OFF Mkt VIVEK FINANCIAL FOCUS 10178100 CREDIT PVT LTD (through 01.10.2013 8000 ON Mkt N.A N.A SUNIL SINGH BDGPS0774K 19.10.2013 8300 OFF Mkt VIVEK FINANCIAL FOCUS 10178100 10113199 IN301766) 21.10.2013 26500 OFF Mkt FARSIGHT SECURITIES 10110348 LTD 13.11.2013 25 ON Mkt N.A N.A NATRAJ CAPITAL & CREDIT INDEP- N.A PVT LTD AAACN2928D 13-05-2013 8500.000 CR 00001943 56300 INDEP- N.A 20-05-2013 11456.000 CR INDEP- M/s Tushar India Pvt Ltd. IN301766 28-06-2013 16810.000 CR 10110532 INDEP- N.A 01-07-2013 47061.000 CR M/s Kesri Industrial Lab Pvt 1205630000002018 30-07-2013 118300.000 OFF Mkt Ltd. 13-06-2014 13000.000 OFF Mkt Navneet Pareek 1206500000010738

14.1.6. The following are the date wise transactions of the Noticee no. 1 from its date of receipt of money from the clients and till the date of transfer of securities to the clients in column 2 of Table 5: Table 5 Name, PAN, Name, PAN, Quantity Consideration Consideration Market Market Date of Date of Number Demat Id of target transferred amount as (Rs.) received rate value payment by transfer of of days client (3) per DIS (Rs.) (Rs.) (Rs.) target client of delay

Final Order in the matter of Delta Leasing and Finance Ltd.

Demat Id of (2) (4) by source (6) shares by (10) source client (7) (8) source client client (5) (9) (1) NATARAJ KRISHANU 3000 Not mentioned 48209.65 203 609000 02.04.2013 16.06.2014 439 CAPITAL & MUKHARJI CREDIT PVT ATUPM4571F LTD (through 1201130000331614 SUNIL KRISHANU 3000 Not mentioned 203 609000 02.04.2013 16.06.2014 439 SINGH MUKHARJI 06446825 BDGPS0774K ATUPM4571F 10113199 IN301766) NATRAJ AJEET SINGH 18750 Not mentioned 150000 90.50 1696875 15.03.2010 22.03.2014 1467 CAPITAL & CHAUHAN 10903373 CREDIT PVT DINESH KUMAR 11000 Not mentioned 88000 90.50 995500 15.03.2010 22.03.2014 1467 LTD 11715795 00001943 VANDNA CHAUHAN 11000 Not mentioned 88000 90.50 995500 15.03.2010 22.03.2014 1467 10373950 NAVNEET PAREEK 13000 Not mentioned 130000 195 2535000 10.12.2012 13.06.2014 549 00010738 From Table 5, SCN observed that not only the consideration amount received by the Noticee no. 1 is generally far less but it is received much before the actual date of transfer. It could only be seen from the DIS (Delivery Instruction Slip) that the Noticee no. 1 had not made entries in DIS regarding the consideration amount and/or the date of receipt of consideration in order to conceal the actual date/ amount received by the Noticee no. 1. Further, the date of transfer of shares by Source client mentioned in the DIS is much after the actual date of payment received.

14.1.7. In view of the above, I find that all of the above acts by the Noticee no. 1 were to make the DIS appear as if it was for a normal genuine spot delivery transaction carried on the execution date (date of transfer of shares), whereas the actual payment had been received by the Noticee no. 1 in 2010, 2012 & 2013, and the transfer of shares was done in March-June 2014, after more than a year of delay. The open price in the market on June 16, 2013 was Rs. 203/- per share but the Noticee no. 1 had sold the shares at a mere Rs. 16.07/- per share through cash payment which raises serious doubts on the genuineness of the transaction. 14.1.8. From Table 5, I find that the Noticee no. 1 has delayed the transfer of shares to the transferees, after the receipt of the amount from the transferee, in all cases, by more than the time given in Section 2(i) of SCRA, 1956. Thus, I find that, the transactions were not “spot delivery contract” in terms of Section 2(i) of SCRA, 1956. 14.1.9. On examination of the DI slips of Noticee no. 1, it was observed that the reasons for transfers stated was “Loan of Shares or return of loan of shares”

Final Order in the matter of Delta Leasing and Finance Ltd.

and “gift”. The SCN alleges that if the transactions were to be considered as loan transactions, then such transactions should have happened only in the manner provided in Section 12 of the Depositories Act, 1996 (hereinafter to be referred to as “Depositories Act, 1996”) and Regulation 58 of SEBI (Depositories and participants) Regulations,1996 (hereinafter to be referred to as “DP Regulations, 1996”) (since repealed). 14.1.10. Upon further verification about the nature of the above transactions as to whether the same were either in the nature of creation of pledge or revocation or invocation of pledge, with the Depositories NSDL and CDSL, SEBI’s investigation found that none of the transactions are in the nature of pledge. I note that since the off market transfers involving the said loan transactions involve transfer of ownership of the shares, thereby these transactions cannot be considered as Pledge transactions. As mentioned above, I also note that the provisions of Section 2(i) of SCRA, 1956 requires that in a spot delivery contract the securities be delivered on the same day of receipt of consideration or on the next day. Further, in case of dematerialized shares, a spot delivery contract means transfer of securities by the depository from one BO account to another BO account. A plain reading of Section 2(i)(b) of SCRA, 1956 gives an impression that in case of dematerialized shares, there is no requirement of payment of consideration. In this regard, Hon’ble SAT in the matter of Mrs. Bhanuben Jaisukhlal Shah vs. Securities and Exchange Board of India, [Appeal no.271 of 2011 decided on March 5, 2010], held as under:

“…………………According to clause (b), when securities are transferred from one beneficial account to another, it would be treated as “actual delivery” of securities within the meaning of clause (a). It is, thus, clear that clause (b) is not an independent clause but only an explanation to the words “actual delivery” as used in clause (a). We cannot, therefore, accept the argument of the appellant that clause (b) is an independent clause and that the spot delivery contract is complete with the mere transfer of securities from the account of one beneficial owner to that of another without reference to the payment of consideration. This could never be. If that were so, the contract itself would become void being without consideration. Clause (b) cannot be picked up and interpreted in a manner which defeats the very purpose for which it was enacted. While interpreting the provisions of Section 2(i) of the Act, we

Final Order in the matter of Delta Leasing and Finance Ltd.

have to keep in mind the consequences which are likely to flow from the intended interpretation. We cannot but hold that clause (b) in Section 2(i) was not meant to stand on its own and it has to be read in conjunction with clause (a).”

14.1.11. Thus, in case of dematerialized shares as well, the delivery of shares and payment of consideration has to be completed either on the same day or the next day. Since, in these transaction payment was received by Noticee no. 1 much prior to making of delivery of shares, therefore, I note that these transactions were not spot delivery contracts in terms of Section 2(i) of SCRA, 1956. I note that by virtue of the provisions of SEBI Notification G.S.R 219 (E) dated March 1, 2000 and SEBI Notification No. LAD-NRO/GN/2013- 14/26/6667 dated October 03, 2013, issued by SEBI in exercise of powers under Section 16 of SCRA, 1956, prior permission of SEBI is required to be obtained before entering into any contract for sale and purchase of securities, which does not fall in the category of any of the exceptions stipulated in the said notifications including the exception of spot delivery contract. As noted earlier, since the transactions entered into by the Noticees were not spot delivery contract, thus, the Noticees were required to obtain permission from SEBI before entering into such contracts. I find that no permission of SEBI was sought by Noticee no. 1 before entering into any of these transactions, which are squarely hit by the embargo put in place by the aforesaid notifications. Therefore, by virtue of the provision of Section 16(2) of SCRA, 1956, I find that all the transactions entered into by Noticee no. 1 were illegal. 14.1.12. I note that for effecting transfer of shares, electronically, it is the source client who had to issue the DIS duly filled in and signed to its DP (Depository Participant). Therefore, the source client is responsible for the contents filled in by him in the DIS. When the source client state the reasons for transfer in the DIS as “Loan or return of loan shares” transaction which is not true and when the other records exist contrary to the reasons stated in the DIS by the source client, I find that the contents of the DIS were falsified. I note that it can only be construed that such an act has been resorted to by the source client i.e. Noticee no. 1 to portray its off market transfer of shares as spot delivery contracts within the meaning of Section 2(i) of SCRA, 1956.

Final Order in the matter of Delta Leasing and Finance Ltd.

14.1.13. For few of the transactions, Noticee no. 1 had stated the reasons for such transactions as “gift”. The following is the summary of total number of such so called “gift” transactions, number of target clients dealt with by the Noticee no. 1, quantity of shares involved and value of such transactions: Table 8(Summary transactions) Number of target Number of off Total Qty of Total Consideration as Total market value as clients dealt market shares per DIS(Rs.) on date of transfer of with(Transferees) transactions transferred shares in rupee terms of shares transferred (Rs.) 6 7 2,24,000 Not Mentioned 1,05,12,150

14.1.14. The following are the details of the Target clients with whom the Noticee no. 1 has dealt, with reason mentioned in the DIS as “gift” transaction: Table 9 Name, PAN, Name, PAN, Quantity Consideratio Market rate Market value Date of Demat Id of Demat Id of transferred n (Rs.) as per (Rs.) (Rs.) transfer of source client target client DIS shares by source client NATRAJ FUSSY 1000 Not Mentioned 146.15 146150 21.05.2013 CAPITAL & FINANCIAL CREDIT PVT SERVICES LTD PVT LTD 00001943 10108866 AJEET 18000 Not Mentioned 89.5 1611000 04.06.2013 AGARWAL 11698956 TUSHAR 100000 Not Mentioned 35.05 3505000 13.08.2013 INDIA PVT LTD 00001924 DELPHINA 30000 Not Mentioned 87.5 2625000 10.12.2013 DISTRIBUTO RS PRIVATE LIMITED 11027148 PLACIDO 20000 Not Mentioned 87.5 1750000 10.12.2013 MARKETING PRIVATE LIMITED 11027156

The transactions mentioned in Table 9 above are provided for illustration purpose and the exhaustive list of clients and their replies were placed at Annexure 4 to the SCN. Entities Delphina Distributors Pvt. Ltd, Placido Marketing Pvt. Ltd and Susane Traders Pvt. Ltd were merged with M/s. Utilas Infrastructure Pvt. Ltd on February 22, 2018. 14.1.15. I note that in all the aforesaid transactions in Table 9 and the exhaustive list in Annexure 4 of the SCN, the consideration amount is not mentioned, the mode and manner of the amount received has also not been stated. I note that none of the source clients or the Target clients had substantiated their claim of consideration received / paid with any documentary evidences in response to the summons issued during SEBI investigation, seeking the aforementioned details.

Final Order in the matter of Delta Leasing and Finance Ltd.

14.1.16. In order to ascertain the genuineness of these transactions as a gift transaction, SEBI investigation had sought information from both the Donor and the Donee such as copy of the gift deed, relationship between the Donor and the Donee, formal acceptance of the gift by the Donee etc. Neither the Donor nor the Donee had replied to the summons. Therefore, it could only be inferred from this that the source client had stated the transaction as “gift” in order to portray these off market transactions as “spot delivery contract” within the meaning of Section 2(i) of SCRA, 1956 so as to avoid rigors of Sections 13, 14, 15, 16 and 17 of SCRA, 1956. 14.1.17. In the instant case, Noticee no. 1 by stating its off market transfer of shares as “Gift” transactions in the DIS when the fact is that none of such transactions are “Gift” transactions, the said Noticee no. 1 has committed an act of deceit and unfair trade practice by giving false reason of “Gift” in DIS for transfer of shares in order to portray these off market transfer of shares as spot delivery contract as defined under Section 2(i) SCRA, 1956. 14.1.18.

For the summons issued to the Noticee no. 1 during SEBI investigation, seeking information on the transactions inter-alia including the reasons for delay in delivery of shares to the clients, the Noticee no. 1 neither replied nor responded to the summons in any manner. I note that there is no record of successful delivery of the said summons to Noticee no. 1. Thus, the allegations in the SCN for violations of Section 11C (2) and 11C (3) of SEBI Act, 1992, cannot be sustained. 14.1.19. The clients of the Noticee no. 1 in response to the summons had furnished the copy of records issued by the Noticee no. 1 and while some of them had stated that they were not aware of the delay and others have stated that they have been following up with the Noticee no. 1 to receive the shares. 14.1.20. The following are the details of the responses /replies furnished by the recipient clients of the Noticee 1: Table 10 Sl.no Name of the Date of Date of reply List of documents of Reply stated by transferee for delay in. recipient client summons the Noticee 1 receipt of shares furnished by the transferee 1. KR ISHANU 18.11.2019 27.11.2019 Contract note & I would like to state that I had purchased the MUKHARJI statement of account shares in April 2013 from Natraj Capital & 06446825 Credit Pvt. Ltd. I continuously pursued broker ATUPM4571F Natraj Capital & Credit Pvt. Ltd. through its authorized representative over telephone for transfer of shares to my Demat account and after continuously following up with them, they finally transferred the shares in June

Final Order in the matter of Delta Leasing and Finance Ltd.

2014. I did not have any prior knowledge about the likelihood date/period of the transfer of shares to my Demat account 2. AJ EET SINGH 18.11.2019 27.12.2019 Sale bill & Transaction No reply CHAUHAN statement 10903373 3. DIN ESH KUMAR 18.11.2019 30.12.2019 Sale bill & Transaction No reply 11715795 statement 4. VA NDNA CHAUHAN 19.11.2019 27.12.2019 Sale bill & Transaction No reply 10373950 statement 5. NA VNEET PAREEK 19.11.2019 15.12.2019 Contract note cum bill When I came to know that the shares 00010738 purchased by me were not updated by the broker and were not reflecting in my Demat Account after lapse of time, I started pursuing the broker Natraj Capital and Credit Private Limited. As per my memory, the person whom I was contacting was Mr. Vinod Garg and with the follow-up, I got the Shares transferred to my Demat Account. I had no prior knowledge about the likely date/ period of the transfer of shares to my Demat Account It is observed from the reply of the recipient clients and the documents furnished by them (sample of which is shown below in para 14.1.21) that Noticee no. 1 has acted as sub-broker/stock broker.

14.1.21. The following is a sample of the nature of records issued by the Noticee no. 1 to its clients while dealing in the scrip of the company. as clientele transactions: Contract Note Regd. Office: CONTRACT NOTE (Regulation 3.5) Plot No.-28, Gali No.3, Subject to Jurisdiction of the Courts in New Delhi Sainik Farm, Mohan Garden, CONTRACT NOTE ISSUED BY MEMBERS ACTING FOR CONSTITUENTS AS BROKERS & AGENTS Uttam Nagar, New Delhi - 110059 NATRAJ CAPITAL & CREDIT PVT. LTD. KRISHANU MUKHARJI Contract Note-Form A No.: 7 D-62, Swasi Madho Sigh Road DATE 02/04/2013 Bani Park SETTLEMENT NO. DR-003/2013-2014 JAIPUR – 302016 SETTLEMENT PERIOD 02/04/2013 TO 02/04/2013 PAN: ATUPM4571F Sir/Madam, I/We have this day done by your order and on your account the following transactions: Securities BOUGHT FOR YOU for Delivery/Clearing Order Trade Trade Quantity Kind of Purchase Brok Rate plus Amount Rs. Quan Kind Sale Brokera Rate Amount Rs. No. No. Time Security rate erag brokerage tity of Rate ge minus e Net Rate secur brokerage ity Net Rate 6000 Delta 8.00 0.03 8.03 48,180.00 Add Service Tax @ 12.36 % 29.65 48,209.65 For NATRAJ CAPITAL & CREDIT PVT. LTD. AUTHORIZED SIGNATORY Member of Delhi Stock Exchange Association Ltd. New Delhi The above representation of contract notes cum bill issued by Noticee no. 1 is for illustration and the copies of all the cash bills, contract notes of Noticee no. 1 were provided as Annexure-5 (Colly) to the SCN.

14.1.22. On scrutiny of the documents furnished by the clients during investigation, as can be seen from para 14.1.21, I find that the Noticee no. 1 has issued certain documents viz.: a ledger account for the clients indicating a running

Final Order in the matter of Delta Leasing and Finance Ltd.

account being maintained for the clients, and also a sale bill raised on the client for purchase of 6000 quantity of shares of the Company at a price of Rs. 8 per share. The share bill also contains a settlement no. DR-003/2013- 2014 for the transaction done. However, the name of the Exchange in which such transaction had been done have not been mentioned. I note that the scrip was listed on BSE only, on April 18, 2013 i.e. subsequent to the date of transaction mentioned in the Sale Bill. Further, the settlement number in BSE starts with a sequence of DR-040/20-21 which means 40th settlement in the financial year 2020-2021. The settlement number indicated in the sale bill do not match the format of settlement number being followed in BSE. Further, the trading in Delhi Stock Exchange Ltd. in which the scrip was listed had ceased w.e.f. October 30, 2003. The rate quoted in the sale bill for the scrip also has no basis as the scrip had not been traded in BSE and DSE as on the date of transaction. As such, I find that the settlement number stated in the Sale Bill is incorrect, false and misleading.

I also find that Noticee no. 1 had used a Firm Name “Natraj Capital & Credit Pvt. Ltd.”, used a client code for the client which is mandatory for a stock broker to deal with clients, a fictitious settlement number etc. Thus, I note that it is only an attempt made by Noticee no. 1 to provide an illusionary impression of genuineness about itself and also as if the transaction is done through authentic sources such as Stock Exchanges, so as to win over the trust and confidence of the clients to deal with it. As such, the Noticee 1 was not authorized to do a clientele transaction. Further, I note that Noticee no. 1 has falsified/fabricated the documents so as to give an impression of authenticity about itself and its transactions. From the manner in which the transactions have been executed by the Noticee no. 1 and on scrutiny of the documents such as contract note, sale bill etc. issued by the Noticee no. 1 to its clients as explained above, I find that Noticee no. 1 namely, M/s Natraj Capital and Credit Pvt. Ltd. has acted as a Stock Broker/Sub-broker in as much as carrying out clientele dealing in securities without obtaining prior registration from SEBI or without being the member of a recognized stock exchange and thus, violated Regulation 3 of Broker Regulations, 1992 and Section 12(1) of SEBI Act,1992.

Final Order in the matter of Delta Leasing and Finance Ltd.

14.1.23. All the aforesaid acts committed by Noticee no. 1, such as acting as unregistered stock broker/ sub-broker, issuing false contract notes to clients, falsifying DIS by not mentioning the consideration amount in the DIS in order to make it appear as a genuine spot delivery contract, falsifying DIS by mentioning the false reason of transfer in DIS, entering into illegal contracts for sale/purchase of securities in violation of Section 16(1) of SCRA, 1956, tantamount to unfair trade practice relating to securities market. Thus, I find that Noticee no. 1 has also violated the provisions of Regulation 4(1) of PFUTP Regulations, 2003.

14.2. Parmanand Yadav, Proprietor of Roxtech Securities Services (Noticee no. 2):

14.2.1. I note that Noticee no. 2 has neither filed any reply to the SCN nor has appeared for hearing, despite due service of the SCN and hearing notice. SEBI’s investigation has revealed that Noticee no. 2 had carried out clientele transactions both in his name as “Parmanand Yadav” and also in his firm name “Roxtech Securities Services” as seen from the documents such as cash receipt, client ledger, share bill etc. maintained by the Noticee no. 2 (sample of which is provided in para 14.2.16 below) Table 11 Name PAN Address ROXTECH SECURITIES AIMPY3580D C-76/189, BILSON SQUARE UDHAN MARG, GOLE SERVICES MARKET NEW DELHI INDIA 110003 PARMANAND YADAV AIMPY3580D C-76/189, BILSON SQUARE UDHAN MARG, GOLE MARKET NEW DELHI INDIA 110003 14.2.2. The following are the details of client wise transactions done and nature of records issued by Noticee no. 2 which are provided for illustration purpose and the exhaustive list was placed at Annexure 6 to the SCN. Table 12 S.No Name of the Client Date of transfer of Amount Qty of shares Name of document Bill/Receipt shares recorded (Rs.) transferred issued to clients date 1 ASHOK KUMAR MITTAL 30.05.2013 2523 2523 Sale Bill, Ledger 04.04.2012 HUF 00028581 2 ASHOK KUMAR MITTAL 04.06.2013 11000 11000 Sale Bill, Ledger 04.04.2012 HUF 00028581 3 ASHOK KUMAR MITTAL 04.06.2013 15000 15000 Sale Bill, Ledger 04.04.2012 HUF 00028581 4 ASHOK KUMAR MITTAL 04.06.2013 7601 7601 Sale Bill, Ledger 04.04.2012 HUF 00028581 5 ASHOK KUMAR MITTAL 05.06.2013 23876 23876 Sale Bill, Ledger 04.04.2012 HUF 00028581

Final Order in the matter of Delta Leasing and Finance Ltd.

14.2.3. As per the SCN, total number of clients for which such transactions have been executed, quantity of shares involved, money value of the shares involved for dealing in the scrip are given below: Table 13 Number of clients Number of Total Quantity of Total value in rupee terms involved transactions shares involved of shares transferred (Rs.) 11 18 1,81,730 1,15,23,900

14.2.4. On analysis of the transactions of Noticee no. 2, SEBI’s investigation has revealed that Noticee no. 2 as on date of receipt of money from its clients either did not have any stock of the scrip in his account or sufficient quantity to transfer the shares. Further, it was found that Noticee no. 2 had acquired the shares from other sources either through off market or on market and provided the shares to the clients which clearly indicate that the Noticee no. 2 has been engaging in trading /dealing in securities for its clients. It was also observed that Noticee no. 2 while dealing with its clients, for few clients he had effected delivery of shares to them through Noticee no. 6 and another entity by name Prem Chand (PAN AXNPC3713G). It is pertinent to mention that the Source clients Mr. Prem Chand and Noticee 6 who has transacted through Roxtech Securities also did not have any stock of the scrip in their accounts or sufficient quantity to transfer the shares as on date of receipt of payment from the target clients. Table 14 Name, Name, PAN, Quantit Date of Date of Balance Balance shares as PAN, Demat Id of target client y payment transfer of shares on 1 day before Demat Id of (2) transfe by target shares by as on date of transfer of source rred client source client date of shares/Balance client (3) (5) credit of shares as on date (1) (4) amount of transfer of (6) shares (7) PARMANA ASHOK KUMAR MITTAL HUF 00028581 2523 02.04.2012 30.05.2013 0 50,250 ND YADAV ASHOK KUMAR MITTAL HUF 00028581 11000 02.04.2012 04.06.2013 0 47,727 00026166 ASHOK KUMAR MITTAL HUF 00028581 15000 02.04.2012 04.06.2013 0 36,727 ASHOK KUMAR MITTAL HUF 00028581 7601 02.04.2012 04.06.2013 0 21,727 ASHOK KUMAR MITTAL HUF 00028581 23876 02.04.2012 05.06.2013 0 64,126 ASHOK KUMAR MITTAL 00028596 4580 02.04.2012 06.06.2013 0 40,250 ASHOK KUMAR MITTAL HUF 00028581 200 02.04.2012 06.06.2013 0 35,670 VIVEK KUMAR AGARWAL 00002671 16000 14.06.2013 12.06.2013 13170 35,470 ASHOK KUMAR MITTAL HUF 00028581 6300 02.04.2012 13.06.2013 0 19,470 PARMANA AMANJEET MADAN 00018175 5500 23.04.2013 23.05.2014 0 21,576 ND YADAV (Rs.

38,500) 00026166 ANIL NAGPAL 00018308 6000 26.04.2013( 26.05.2014 0 16,076 (through Rs. 42000) PREM BALPREET SINGH MADAN 00018181 6000 23.04.2013 03.06.2014 0 10,076 CHAND (Rs. 42000) AXNPC371 SAMYAK JAIN 00018268 13500 Rs. 94500 13.06.2014 0 33,526 3G paid in cash 00028471 ASHNA GROVER 00031725 2150 02.04.2012 20.06.2014 0 5,226 32000) (Rs. 4300) PARMANA NEERAJ CHAWLA & SONS HUF 24000 April 2012 05.08.2014 0 74.328 ND YADAV 10679475 (Rs. 48000) 00026166 NEELAM JAIN 00052722 21000 N.A 21.08.2014 0 55.958 (through NEERAJ CHAWLA & SONS HUF 10000 April 2012 26.08.2014 0 11.658 SAPNA 10679475 (Rs. 20000)

Final Order in the matter of Delta Leasing and Finance Ltd.

DRUPS807 PRIYA JAIN 10138157 6500 25.04.2013 27.08.2014 0 8.658 9D (Rs. 13000 00030356 paid in cash) 32000) Total 1,81,73

14.2.5. The details of a few transactions of acquisition of shares by the Noticee no. 2 in between the time period of date of credit of amount to the transferor and date of transfer of shares to the transferee is given below and the exhaustive list of all the transactions was provided as Annexure 7 to the SCN. Table 15 Name, PAN, Date of Qty of shares ON Mkt/ OFF Particulars of the Source in case of OFF Demat Id, DP ID of acquisition acquired Mkt Market acquisitions source client (2) (3) (4) (1) Name of the client Client ID PARMANAND YADAV 23.04.2013 250 INTEP-CR N.A N.A AIMPY3580D 00026166 15.05.2013 50,000 INTEP-CR N.A N.A 32000 05.06.2013 50,000 OFF Mkt SHASHI YADAV 1203200000026092 PARMANAND YADAV 07.06.2013 25,000 ON Mkt N.A N.A 00026166 (through PREM 14.06.2013 23,790 ON Mkt N.A N.A CHAND AXNPC3713G 21.06.2013 30,000 ON Mkt N.A N.A 00028471 32000) PARMANAND YADAV 31.07.2014 1,17,328 OFF Mkt SACHIN KUMAR 1203200000028484 00026166 (through PREM CHAND 1203200000028471 SAPNA DRUPS8079D KARAN 1203200000028919 00030356 32000) SANDEEP KUMAR 1203200000028923 13.08.2014 65,930 OFF Mkt SANDEEP KUMAR 1203200000028923 PREM CHAND 1203200000028471 18.08.2014 14,000 OFF Mkt SANDEEP KUMAR 1203200000028923

14.2.6. The following are the date wise transactions of the Noticee no. 2 from its date of receipt of money from the client and till the date of transfer of securities to the clients in col. 2 of Table 16. The details of transactions provided below are for illustration purpose and the exhaustive list was placed as Annexure 8 to the SCN. Table 16 Name, PAN, Name, PAN, Quantit Considerati Consider Market Market Date of Date of Numb Demat Id of Demat Id of target y on amount ation rate value payment by transfer of er of source client client transfe as per DIS (Rs.) (Rs.) (Rs.) target client shares by days of (1) (2) rred (Rs.) received source delay (3) (4) by (6) (7) (8) client (10) source (9) client (5) PARMANAND ASHOK KUMAR 2523 2,11,932 66,500 99.9 252047.7 02.04.2012 30.05.2013 422 YADAV MITTAL HUF (Rs. 66,500) 00026166 00028581 ASHOK KUMAR 11000 21,89,200 1012000 02.04.2012 04.06.2013 427 MITTAL HUF 00028581 92 PARMANAND AMANJEET 5500 8,74,500 38,500 168 924000 23.04.2013 23.05.2014 394 YADAV MADAN 00018175 (Rs. 38,500) 00026166 ANIL NAGPAL 6000 9,96,000 42,000 182.95 1097700 26.04.2013(R 26.05.2014 394 (through PREM 00018308 s. 42000) CHAND AXNPC3713G 00028471 32000) PARMANAND NEERAJ CHAWLA 24000 23,34,400 48,000 95 2280000 April 2012 (Rs. 05.08.2014 855 YADAV & SONS HUF 48000) 00026166 10679475 (through SAPNA DRUPS8079D 00030356 32000)

Final Order in the matter of Delta Leasing and Finance Ltd.

It can be seen from Table 16 that the consideration amount mentioned as per DIS is more or less close to the market rate prevailing then at the time of transfer of shares. It could also be seen that not only the consideration amount received by the Noticee no. 2 is far less but it is received much before the actual date of transfer. It could be seen from the DIS that the Noticee no. 2 has made entries in DIS regarding the consideration amount to match with the prevailing market rate, thereby, concealing the actual amount received. Further, the execution date (date of transfer of shares) mentioned in the DIS is much after the actual date of payment received. 14.2.7. All of the above acts are an attempt to make the DIS appear as if it is a normal genuine spot delivery transaction carried on the execution date (date of transfer of shares) whereas the actual payment has been received by the Noticee no. 2 in 2012 & April, 2013, the transfer of shares was done in May- June-August 2014, after more than a year of delay. The open price in the market on 23.05.2013 was Rs. 133.55 but the Noticee no. 2 has sold the shares at a mere Rs. 7 per share through cash payment which raises serious doubts on the genuineness of the transaction. 14.2.8. Further, it can be seen from Table 16 that the Noticee no. 2 has delayed the transfer of shares to the transferee after the receipt of the amount from the transferee, in all cases, by more than the time given in Section 2(i) of SCRA, 1956. Thus, the transactions were not “spot delivery contract” in terms of Section 2(i) of SCRA, 1956. 14.2.9. On examination of the DI slips of Noticee 2, it was observed that the reasons for transfers stated was “Loan of Shares or return of loan of shares”. The following is the summary of total number of such so called loan transactions, number of target clients dealt with by the Noticee 2, quantity of shares involved and value of such transactions: Table 17(Summary transactions) Number of target Number of off Total Qty of Total Consideration as clients dealt market shares per DIS(Rs.) with(Transferees) transactions transferred 14 22 2,82,161 2,50,85,916

14.2.10. SEBI’s investigation has revealed the following details of the Target clients who had categorically denied the transactions to be loan transactions and Final Order in the matter of Delta Leasing and Finance Ltd.

had confirmed the same to be only sale or purchase transaction as the case may be: Table 18 Source Target Client Date of Summons Reply Summons Reply date Nature of reply client Particulars transfer of date of date of date of target of target of target clients particulars shares source source client client client client PARMANA ASHOK KUMAR 30.05.2013 22.10.2019 N.A 14.11.2019 29.11.2019 Denied as loan ND MITTAL HUF transaction YADAV 00028581 00026166 ASHOK KUMAR 06.06.2013 22.10.2019 N.A 14.11.2019 29.11.2019 Denied as loan MITTAL transaction 00028596 VIVEK KUMAR 12.06.2013 22.10.2019 N.A 18.11.2019 26.11.2019 Denied as loan AGARWAL transaction 00002671

The transactions mentioned in Table 18 above are provided for illustration purpose and the exhaustive list of clients and their replies was placed at Annexure 9 to the SCN. 14.2.11. The SCN states that if all the aforesaid transactions were to be considered as loan transactions, then such transactions should have happened only in the manner provided in Sec.12 of the Depositories Act, 1996 and Regulation 58 of DP Regulations, 1996 (since repealed). 14.2.12. Upon further verification about the nature of the above transactions as to whether the same were either in the nature of creation of pledge or revocation or invocation of pledge, with the Depositories NSDL and CDSL, SEBI’s investigation found that none of the transactions are in the nature of pledge. I note that since the off market transfers involving the said loan transactions involve transfer of ownership of the shares, thereby these transactions cannot be considered as Pledge transactions. As mentioned above, I also note that the provisions of Section 2(i) of SCRA, 1956 requires that in a spot delivery contract the securities be delivered on the same day of receipt of consideration or on the next day. Since, in these transaction payment was received by Noticee no. 2 much prior to making of delivery of shares, therefore, I note that these transactions were not spot delivery contracts in terms of Section 2(i) of SCRA, 1956. I note that by virtue of the provisions of SEBI Notification G.S.R 219 (E) dated March 1, 2000 and SEBI Notification No. LAD-NRO/GN/2013-14/26/6667 dated October 03, 2013, issued by SEBI in exercise of powers under Section 16 of SCRA, 1956, prior permission of SEBI is required to be obtained before entering into any

Final Order in the matter of Delta Leasing and Finance Ltd.

contract for sale and purchase of securities, which does not fall in the category of any of the exceptions stipulated in the said notifications including the exception of spot delivery contract. I find that no permission of SEBI was sought by Noticee no. 2 before entering into any of these transactions, which are squarely hit by the embargo put in place by the aforesaid notifications. Therefore, by virtue of the provision of Section 16(2) of SCRA, 1956, I find that all the transactions entered into by Noticee no. 2 were illegal. 14.2.13. I note that for effecting transfer of shares, electronically, it is the source client who had to issue the DIS duly filled in and signed to its DP (Depository Participant). Therefore, the source client is accountable and responsible for the contents filled in by him in the DIS. When the source client state the reasons for transfer in the DIS as “Loan or return of loan shares” transaction which is not true and when the other records exist contrary to the reasons stated in the DIS by the source client, the act of the source client in giving false reason of “loan or return of loan shares” for transfer of shares amounts to unfair trade practice while dealing in securities.

I note that it can only be construed that such an act has been resorted to by the source client i.e. Noticee no. 2 to portray its off market transfer of shares as spot delivery contracts within the meaning of Section 2(i) of SCRA, 1956. In the instant case, the Noticee no. by stating its off market transfer of shares as Loan transactions in the DIS when the fact is that none of such transactions are loan transactions, the said Noticee no. 1 has committed an act of deceit and resorted to unfair trade practice by giving false reason of “Loan / return of loan shares” in DIS for transfer of shares to portray its off market transfer of shares as spot delivery contracts within the meaning of in Section 2(i) of SCRA, 1956. 14.2.14. For the summons issued to Noticee no. 2 (during SEBI’s investigation), seeking information on the transactions inter-alia including the reasons for delay in delivery of shares to the clients, I note that, the Noticee no. 2 neither replied nor responded to the summons in any manner. I note that there is no record of successful delivery of the said summons to Noticee no. 2. Thus, the allegations in the SCN for violations of Section 11C(2) and 11C(3) of SEBI Act, 1992, cannot be sustained.

Final Order in the matter of Delta Leasing and Finance Ltd.

14.2.15. The clients of the Noticee no. 2 in response to the summons had furnished the copy of records issued by the Noticee no. 2 and while some of them had stated that they were not aware of the delay and others have stated that they have been following up with the Noticee no. 2 to receive the shares. The following are the details of the responses /replies furnished by the recipient clients of the Noticee no. 2: Table 19 Sl.no. Name of the Date of Date of List of documents of the Reply stated by transferee for delay in recipient client summons reply Noticee 2 furnished by receipt of shares the transferee 1. AS HOK KUMAR 14.11.2019 29.11.2019 Copy of sub ledger, sale I had no prior knowledge about the likelihood MITTAL HUF bill 00028581 date/ period of delivery of shares. I had requested (M/s Roxtech Securities Services) time and again for delivery of shares. 2. AS HOK KUMAR 14.11.2019 29.11.2019 Copy of sub ledger, sale I had no prior knowledge about the likelihood MITTAL 00028596 bill date/ period of delivery of shares. I had requested (M/s Roxtech Securities Services) time and again for delivery of shares. 3. VI VEK KUMAR 18.11.2019 26.11.2019 Copy of sub ledger, sale No reply AGARWAL bill 00002671 4. AM ANJEET MADAN 14.11.2019 23.11.2019 Copy of sub ledger, sale No reply 00018175 bill 5. AN IL NAGPAL 14.11.2019 21.11.2019 Copy of sub ledger, sale It is stated that we have no prior knowledge 00018308 bill about the likelihood date/period of the transfer of shares in my account. There was no formal communication with the buyer in respect of delay in transfer of shares in my account. Delivery of shares was made by seller prior to sale of shares on exchange. 6. BA LPREET SINGH 14.11.2019 23.11.2019 Copy of sub ledger, sale No reply MADAN 00018181 bill 7. SA MYAK JAIN 18.11.2019 26.11.2019 Copy of sub ledger, sale No reply 00018268 bill 8. AS HNA GROVER 14.11.2019 13.12.2019 Copy of sub ledger, sale No reply 00031725 bill 9. NE ERAJ CHAWLA & 18.11.2019 27.11.2019 Copy of sub ledger, sale No reply SONS HUF bill 10679475 10. NE ELAM JAIN 18.11.2019 25.11.2019 Copy of sub ledger, sale I had no prior knowledge about the likelihood 00052722 bill date/ period of delivery of shares. I had requested (M/s Roxtech Securities Services) time and again for delivery of shares. 11. PR IYA JAIN 18.11.2019 25.11.2019 Copy of sub ledger, sale No reply 10138157 bill

From the reply of the recipient clients and the documents furnished by them (sample of which is provided in para 14.2.16 below), it is revealed that Noticee no. 2 has acted as an unregistered sub-broker/ stock broker.

Final Order in the matter of Delta Leasing and Finance Ltd.

14.2.16. The following is a sample of the details of the nature of records issued by the Noticee no. 2 to its clients while dealing in the scrip of the Company as clientele transactions: Contract Note SALE BILL ROXTECH SECURITIES SERVICES Bill No.: B1-R-SC/1314003/56 Bill Date: 04/04/2012 C-76/189, BILSON SQUARE UDHAN MARG, GOLE MARKET To DELHI- 110003 ASHOK KUMAR MITTAL HUF (YYYY/CAK55) PAN No. AIMPY3580D B-31 EAST JYOTI NAGAR LON ROAD NEW DELHI – 110093 PAN No.: AAJHA7095N Benef. Code : Dp Id: Dear Sirs, We are herewith delivering you the Shares/Debs. Stated below for which please make the payments Sauda Dt. Security Details Book Distinctive Cert Qty. Rate Bkg. Serv. Trxn. Amount Cl. Numbers Tax Chrg 02/04/2012 DELTA LEASING DM 66500 1.00 0.00 0.00 0.00 66500.00 Scrip Total: 66500 66500.00

*** Due To Us *** 66500.00 E & O.E. For ROXTECH SECURITIES SERVICES We are not responsible for keeping blank shares after taking delivery according to Association Rules Authorized Signatory

The above representation of sale bill issued by Noticee no. 2 is for illustration and the copies of all the cash bills, ledgers, share bills and other documents issued to the clients by Noticee no. 2 were provided as Annexure-10 (Colly) to the SCN. 14.2.17. On scrutiny of the documents furnished by the clients as given in Annexure- 10 (Colly), I find that the Noticee no. 2 has issued certain documents viz.: a ledger account for the clients indicating a running account being maintained for the clients, and also a sale bill raised on the client for purchase of 5500 quantity of shares of the Company at Rs. 7. The sale bill also contains a settlement no. B1R 1314018 for the transaction done. However, the name of the Exchange in which such transaction had been done have not been mentioned. The scrip was listed in BSE only on 18.04.2013 that is subsequent to the date of transaction mentioned in the Sale Bill. Further, the settlement No. in BSE starts with a sequence of DR-040/20-21 which means 40th settlement in the financial year 2020-2021. The settlement number indicated in the sale bill do not match the format of settlement no. being followed in BSE. Further, the trading in Delhi Stock Exchange Ltd in which the scrip was listed had ceased w.e.f. 30.10.2003. The rate quoted in the sale bill for the scrip also has no basis, as the scrip had not been traded in Final Order in the matter of Delta Leasing and Finance Ltd.

BSE and DSE as on the date of transaction. I note that the settlement number stated in the Sale Bill is incorrect, false and misleading. It could be seen that Noticee no. 2 had used a Firm Name “Roxtech Securities Services”, used a client code for the client which is mandatory for a stock broker to deal with clients, a fictitious settlement number etc. Thus, I find that it is only an attempt made by the Noticee no. 2 to provide an illusionary impression of genuineness about itself and also of the transaction done through authentic sources such as Stock Exchanges so as to win over the trust and confidence of the clients to deal with it. I note that, Noticee no. 2 was not authorized or licensed to do a clientele transaction. Further, I also note that Noticee no. 2 had also falsified/fabricated the documents so as to given an impression of authenticity about itself and its transactions. Therefore, from the manner in which the transactions have been executed by the Noticee no. 2 and on scrutiny of the documents such as contract note, sale bill etc. issued by the Noticee no. 2 to its clients as explained above, I find that Noticee no. 2, Proprietor of ‘Roxtech Securities Services’ has acted as a Stock Broker/ Sub-broker inasmuch as carrying out clientele dealing in securities without obtaining prior registration from SEBI or without being the member of a recognized stock exchange and thus, violated the provision of Regulation 3 of Broker Regulations, 1992 and Section 12(1) of SEBI Act,1992. 14.2.18. All the aforesaid acts committed by Noticee no. 2, such as acting as unregistered stock broker/ sub-broker, falsifying DIS by mentioning the false consideration amount in the DIS in order to make it appear as a genuine spot delivery contract, falsifying DIS by mentioning the false reason of transfer in DIS, entering into illegal contracts for sale/purchase of securities in violation of Section 16(1) of SCRA, 1956, tantamount to unfair trade practice relating to securities market. Thus, I find that Noticee no. 2 has also violated the provisions of Regulation 4(1) of PFUTP Regulations, 2003.

14.3. Praveen Goyal (Noticee no. 3) – Proprietor of Shivam Trading Co.

14.3.1. I note that Noticee no. 3 has neither filed any reply to the SCN nor has appeared for hearing, despite due service of the SCN and hearing notice.

Final Order in the matter of Delta Leasing and Finance Ltd.

SEBI’s investigation has revealed that Noticee no. 3 had carried out clientele transactions both in his name as “Praveen Goyal” and also in his firm name “Shivam Trading Company” as seen from the documents such as cash receipt, client ledger, share bill etc. maintained by the Noticee no. 3 (sample of which is provided in para 14.3.12 below). Table 20 Name Address SHIVAM TRADING Co. E-24 KAMLA NAGAR DELHI INDIA 110007 PRAVEEN GOYAL E-24 KAMLA NAGAR DELHI INDIA 110007

14.3.2. SCN mentions the following are the details of client wise transactions done and nature of records issued by the Noticee no. 3: Table 21 S.No Name of the Client Date of Transfer Amount Qty of Name of Receipt/bill of shares recorded (Rs.) shares document issued date transferred to clients 1 MANISH GUPTA (HUF) 04.08.2014 176000 22000 Sale Bill, Ledger 02.04.2013 00020930 2 NEERAJ RATHOR (HUF) 06.08.2014 769600 17700 Sale Bill, Ledger 07.04.2013 00020755 3 NEERAJ RATHOR (HUF) 04.09.2014 78500 Sale Bill, Ledger 07.04.2013 00020755 4 PREM CHAND GUPTA 06.08.2014 179200 22400 Sale Bill, Ledger 05.04.2013 (HUF) 00020761 5 MAYA GUPTA 00020244 04.08.2014 204800 25600 Sale Bill, Ledger 06.04.2013 14.3.3. SCN also mentions, total number of clients for which such transactions have been executed, quantity of shares involved, money value of the shares involved are given below: Table 22 Number of clients Number of Total Quantity of Total value in rupee terms involved transactions shares involved of shares transferred 4 5 1,65,500 13,56,000 14.3.4. On analysis of the transactions of Noticee no. 3, I find from Table 23 that the Noticee no. 3 as on date of receipt of money from its clients either did not have any stock of the scrip in its account or sufficient quantity to transfer the shares. Further, it had acquired the shares from other sources either through off market or on market and provided the shares to the clients which clearly indicate that the Noticee no. 3 has been engaging in trading /dealing in securities for its clients. Table 23 Name, PAN, Name, PAN, Quantit Date of payment by Date of Balance Balance shares as Demat Id of Demat Id of target y target client transfer of shares on 1 day before source client transfe shares by as on date of transfer of client (2) rred (4) source client date of shares/Balance (1) (3) (5) credit of shares as on date amount of transfer of (6) shares (7) PRAVEEN MANISH GUPTA (HUF) 22000 02.04.2013 (Rs. 176000 04.08.2014 0 93,306 GOYAL 00020930 paid in cash) 11029158 NEERAJ RATHOR 17700 06.08.2014 0 17,806 (HUF) 00020755

Final Order in the matter of Delta Leasing and Finance Ltd.

NEERAJ RATHOR 78500 07.04.2013 (Rs. 769600 04.09.2014 0 78,785 (HUF) 00020755 paid in cash for 96200 shares) PREM CHAND GUPTA 22400 05.04.2013 (Rs. 179200 06.08.2014 0 35,706 (HUF) 00020761 paid in cash) MAYA GUPTA 25600 06.04.2013(Rs. 204800 04.08.2014 0 1,18,906 00020244 paid in cash) Total 1,65,50 0

14.3.5. The details of a few transactions of acquisition of shares in between the time period of date of credit of amount to the transferor and date of transfer of shares to the transferee is given below and the exhaustive list of all the transactions was placed at Annexure 11 to the SCN. Table 24 Name, PAN, Date of Qty of shares ON Mkt/ OFF Demat Id, DP ID of source client acquisition acquired Mkt (1) (2) (3) (4) PRAVEEN GOYAL AQMPG2650C 20.11.2013 10,249 INTEP-CR 11029158 IN300206 03.12.2013 2400 ON Mkt 04.12.2013 8410 INTEP-CR 24.02.2014 100 ON Mkt 28.02.2014 5 ON Mkt

14.3.6. The SCN mentions the following are the date wise transactions of the Noticee no. 3 from its date of receipt of money from the client and till the date of transfer of securities to the client in respect of the clients in col.2 of Table 25: Table 25 Name, Name, PAN, Quantit Considerati Considerati Market Market Date of payment by Date of Numb PAN, Demat Id of target y on amount on (Rs.) rate value target client transfer of er of Demat Id client transfe as per DIS received by (Rs.) (Rs.) shares by days of of source (2) rred (Rs.) source (6) (8) source delay client (3) (4) client (7) client (10) (1) (5) (9) PRAVEE MANISH GUPTA 22000 Not 176000 94.5 2,079,000 02.04.2013 (Rs. 04.08.2014 488 N GOYAL (HUF) 00020930 Mentioned 176000 paid in cash) 11029158 NEERAJ RATHOR 17700 Not 796000 95 1,615,000 07.04.2013 (Rs. 06.08.2014 485 (HUF) 00020755 Mentioned 769600 paid in cash NEERAJ RATHOR 78500 Not 68.6 5,385,100 for 96200 shares) 04.09.2014 514 (HUF) 00020755 Mentioned PREM CHAND GUPTA 22400 Not 179200 95 2,128,000 05.04.2013 (Rs. 06.08.2014 487 (HUF) 00020761 Mentioned 179200 paid in cash) MAYA GUPTA 25600 Not 2,04,800 94.5 2,419,200 06.04.2013(Rs. 04.08.2014 484 00020244 Mentioned 204800 paid in cash) Total 1,65,50 13,56,000 1,36,26,3 0 00

From Table 25, I find that the consideration amount received by the Noticee no. 3 is much before the actual date of transfer. From the DIS, I also find that the Noticee no. 3 has not made entries in DIS regarding the consideration amount in order to conceal the actual amount received by the Noticee no. 3. Further, the execution date mentioned is much after the actual date of payment received. 14.3.7. I find that all of the above acts are an attempt to make the DIS appear as if it is a normal genuine spot delivery transaction carried on the execution date

Final Order in the matter of Delta Leasing and Finance Ltd.

(date of transfer of shares), whereas the actual payment has been received by the Noticee no. 3 in April, 2013, the transfer of shares was done in August 2014, after more than a year of delay. The open price in the market on 06.08.2013 was Rs. 34.15 but the Noticee no. 3 has sold the shares at a mere Rs. 8 per share through cash payment which raises serious doubts on the genuineness of the transaction. 14.3.8. Further, from Table 25, I find that the Noticee no. 3 has delayed the transfer of shares to the transferee after the receipt of the amount from the transferee, thereby, Noticee no. 3 has not settled the transaction as per the time frame stipulated in section 2(i) of SCRA, 1956. I note that the provisions of Sec. 2(i) of SCRA, 1956 requires that in a spot delivery contract the securities be delivered on the same day of receipt of consideration or on the next day. Since, these transactions are not in conformation to the time frame of settlement stipulated in Sec. 2(i)(a) of SCRA, 1956, they are not spot delivery contracts. I note that by virtue of the provisions of SEBI Notification G.S.R 219 (E) dated March 1, 2000 and SEBI Notification No. LAD-NRO/GN/2013- 14/26/6667 dated October 03, 2013, prior permission of SEBI is required to be obtained before entering into any contract for sale and purchase of securities, which does not fall in the category of any of the exceptions stipulated in the said notifications including one of the exception as spot delivery contract. I find that no permission of SEBI was sought by Noticee no. 3 before entering into any of these transactions, which are squarely hit by the embargo put in place by the aforesaid notifications. Therefore, by virtue of the provision of Section 16(2) of SCRA, 1956, I find that all the transactions entered into by Noticee no. 3 were illegal. 14.3.9. I note that for the summons issued to the Noticee no. 3, during SEBI’s investigation, seeking information on the transactions inter-alia including the reasons for delay in delivery of shares to the clients, Noticee no. 3 neither replied nor responded to the summons in any manner. I note that there is no record of successful delivery of the said summons to Noticee no. 3. Thus, the allegations in the SCN for violations of Section 11C(2) and 11C(3) of SEBI Act, 1992, cannot be sustained.

Final Order in the matter of Delta Leasing and Finance Ltd.

14.3.10. The clients of Noticee no. 3 in response to the summons had furnished the copy of records issued by the Noticee no. 3 and while some of them had stated that they were not aware of the delay and others have stated that they have been following up with the Noticee no. 3 to receive the shares. The following are the details of the responses /replies furnished by the recipient clients of the Noticee no. 3: Table 26 Sl.no. Name of the Date of Date of reply List of documents Reply stated by the transferee for delay in receipt of recipient client summons of the Noticee 3 shares furnished by the transferee 1. MA NISH 13.11.2019 14.12.2019 Copy of sale bill As per our agreed terms, M/s Shivam Trading Co. were GUPTA (HUF) and ledger required to transfer the DAFL shares immediately on 00020930 payment of purchase price (i.e. on April 02, 2013). However, they failed to transfer the same despite regular follow-ups from our end. We had no prior knowledge about the same. After we informed that legal action would be initiated on non-transfer of shares legitimately bought by us, the shares were transferred to us in August, 2014. 2. NE ERAJ 13.11.2019 14.12.2019 Copy of sale bill As per our agreed terms, M/s Shivam Trading Co. were RATHOR (HUF) and ledger required to transfer the DAFL shares immediately on 00020755 payment of purchase price (i.e. on April 07, 2013).

However, they failed to transfer the same despite regular follow-ups from our end. We had no prior knowledge about the same. After we informed that legal action would be initiated on non-transfer of shares legitimately bought by us, the shares were transferred to us in August, 2014. 3. PR EM CHAND 14.11.2019 14.12.2019 Copy of sale bill As per our agreed terms, M/s Shivam Trading Co. were GUPTA (HUF) and ledger required to transfer the DAFL shares immediately on 00020761 payment of purchase price (i.e. on April 05, 2013). However, they failed to transfer the same despite regular follow-ups from our end. We had no prior knowledge about the same. After we informed that legal action would be initiated on non-transfer of shares legitimately bought by us, the shares were transferred to us in August, 2014. 4. MA YA GUPTA 13.11.2019 14.12.2019 Copy of sale bill As per our agreed terms, M/s Shivam Trading Co. were 00020244 and ledger required to transfer the DAFL shares immediately on payment of purchase price (i.e. on April 06, 2013). However, they failed to transfer the same despite regular follow-ups from our end.

We had no prior knowledge about the same. After we informed that legal action would be initiated on non-transfer of shares legitimately bought by us, the shares were transferred to us in August, 2014.

14.3.11. It is from the reply of the recipient clients and the documents furnished by them (sample of which is shown in para 14.3.12 below), I find that Noticee no. 3 has acted as an unregistered sub-broker/ stock broker. 14.3.12. The following is a sample of the details of the nature of records issued by the Noticee no. 3 to its clients while dealing in the scrip of the company as clientele transactions: Contract Note Shivam Trading Co. Address: E-24 Kamla Nagar New Delhi-110007 Phone No. 011-64704632 To, No. 21 Manish Gupta HUF Address: A-304/E-8, Krishna Apra Residency Dated 2/4/2013 Sector 61, Noida - 201307 DEBIT NOTE Particulars Amount We have debit your account, for sale of 22000 shares of Delta Leasing & Finance Ltd. 176000.00

Total 176000.00 (Rupee One Lac Seventy Six Thousand Only)

Final Order in the matter of Delta Leasing and Finance Ltd.

Proprietor For, Shivam Trading Co The above representation of sale bill issued by Noticee no. 3 is for illustration and the copies of all the cash bills, ledgers, share bills and other documents issued to the clients by Noticee no. 3 were provided as Annexure-12 (Colly) to the SCN. 14.3.13. On scrutiny of the documents furnished by the clients as given in Annexure- 12 (Colly) to the SCN, I find that the Noticee no. 3 has issued certain documents viz.: a ledger account for the clients indicating a running account being maintained for the clients, and also a sale bill raised on the client for purchase of 78,500 quantity of shares of the company at Rs. 8 per share. The scrip was listed in BSE only on 18.04.2013 that is subsequent to the date of transaction mentioned in the Sale Bill. Further, the trading in Delhi Stock Exchange Ltd in which the scrip was listed had ceased w.e.f. 30.10.2003. The rate quoted in the sale bill for the scrip also has no basis as the scrip had not been traded in BSE and DSE as on the date of transaction. I find that Noticee no. 3 had used a Firm Name “Shivam Trading Co.”, used a client code for the client which is mandatory for a stock broker to deal with clients, a cash bill etc. Thus, I find that it is only an attempt made by Noticee no. 3 to provide an illusionary impression of genuineness about the itself and also of the transaction done through authentic sources such as Stock Exchanges so as to win over the trust and confidence of the clients to deal with it. As such, the Noticee no. 3 was not authorized or licensed to do a clientele transaction. Further, it had also falsified/ fabricated the documents so as to given an impression of authenticity about itself and its transactions. From the manner in which the transactions have been executed by the Noticee no. 3 and on scrutiny of the documents such as contract note, sale bill etc. issued by the Noticee no. 3 to its clients as explained above, I find that Noticee no. 3 namely Mr. Praveen Goyal – Proprietor of Shivam Trading Co. has acted as a Stock Broker/Sub-broker inasmuch as carrying out clientele dealing in securities without obtaining prior registration from SEBI or without being the member of a recognized stock exchange and thus,

Final Order in the matter of Delta Leasing and Finance Ltd.

violated the provision of Regulation 3 of Broker Regulations, 1992 and Section 12(1) of SEBI Act,1992. 14.3.14. All the aforesaid acts committed by Noticee no. 3, such as acting as unregistered stock broker/ sub-broker, falsifying DIS by not mentioning the consideration amount in the DIS in order to make it appear as a genuine spot delivery contract, falsifying DIS by mentioning the false reason of transfer in DIS, entering into illegal contracts for sale/purchase of securities in violation of Section 16(1) of SCRA, 1956, tantamount to unfair trade practice relating to securities market. Thus, I find that Noticee no. 3 has also violated the provisions of Regulation 4(1) of PFUTP Regulations, 2003.

14.4. Santosh Kumar (Noticee no. 4) – Proprietor of Balaji Enterprises

14.4.1. I note that Noticee no. 4 has neither filed any reply to the SCN nor has appeared for hearing, despite due service of the SCN and hearing notice. Investigation has revealed that Noticee no. 4 has carried out clientele transactions both in his name as “Santosh Kumar” and also in his firm name “Balaji Enterprises” as seen from the documents such as cash receipt, client ledger, share bill etc. maintained by the Noticee no. 4 (sample of which is shown in para 14.4.12) Table 27 Name PAN Address BALAJI ENTERPRISES AEKPK6751Q B-4/51 C, ASHOK VIHAR, PHASE-II, DELHI INDIA 110052 SANTOSH KUMAR AEKPK6751Q B-4/51 C, ASHOK VIHAR, PHASE-II, DELHI INDIA 110052 14.4.2. The SCN mentions the following details of client wise transactions done and nature of records issued by Noticee no. 4: Table 28 S.No Name of the Client Date of Transfer Amount Qty of Name of Receipt/bill of shares recorded shares document date (Rs.) transferred issued to clients 1 RAJ SAURABH SINGH 13.12.2013 82000 1000 Sale Bill, Ledger 02.04.2013 11022666 2 INDO CREDITOP PVT LTD 22.03.2014 22140000 150000 Sale Bill, Ledger 07.04.2013 00017304 14.4.3. As per the information mentioned in the SCN, total number of clients for which such transactions have been executed, quantity of shares involved, money value of the shares involved are given below: Table 29

Final Order in the matter of Delta Leasing and Finance Ltd.

Number of Number of Total Quantity of shares Total value in rupee terms of clients involved transactions involved shares transferred (Rs.) 2 2 1,51,000 2,22,22,000 14.4.4. On analysis of the transactions of Noticee no. 4, I find that, in the transaction involving 1,50,000 shares executed on 22.03.2014, the Noticee no. 4 as on date of receipt of money from its clients did not have sufficient quantity to transfer the shares. Further, he had acquired the shares from other sources either through off market or on market and provided the shares to the clients which clearly indicate that the Noticee no. 4 has been engaging in trading /dealing in securities for its clients. The following are the details of the shares obtained through other sources by Noticee no. 4 for effecting transfer to its clients:

Table 30 Name, PAN, Name, PAN, Quantity Date of Date of Balance Balance shares as Demat Id of Demat Id of transferred payment by transfer of shares as on on 1 day before source client target client to (3) target client shares by date of credit date of transfer of from whom whom source client of amount shares/Balance acquired transferred (4) (5) (6) shares as on date (1) subsequently of transfer of (2) shares (7) SANTOSH INDO 150000 21.03.2013 22.03.2014 6,38,870 Not Available KUMAR CREDITOP PVT 00429092 LTD 00017304 (through MEERA MISHRA 10592317) 14.4.5. The details of a few transactions of acquisition of shares in between the time period of date of credit of amount to the transferor and date of transfer of shares to the transferee is given below and the exhaustive list of all the transactions was provided as Annexure 13 to the SCN. Table 31 Name, PAN, Date of Qty of shares ON Mkt/ OFF Demat Id, DP ID of source client acquisition acquired Mkt (1) (2) (3) (4) SANTOSH KUMAR 00429092 01.04.2013 1,00,000 OFFMKT (through MEERA MISHRA 15.05.2013 2,00,000 OFFMKT 10592317) 06.06.2013 50,000 OFFMKT 22.07.2013 1,45,000 OFFMKT 29.07.2013 4,00,000 OFFMKT 14.4.6. The following are the date wise transactions of the Noticee no. 4 from its date of receipt of money from the client and till the date of transfer of securities to the client in respect of the clients mentioned in col. 2 of Table 32: Table 32 Name, PAN, Name, PAN, Quantity Considerati Mark Market Date of Date of number Demat Id of Demat Id of target transferr on (Rs.) et value payment by transfer of of days source client client ed received by rate (Rs.) target client shares by of delay (1) (2) (3) source (Rs.) source (9) client (6) (7) client

Final Order in the matter of Delta Leasing and Finance Ltd.

(4) (5) (8) SANTOSH RAJ SAURABH 1000 82000 82.65 82,650 10.12.2013 13.12.2013 2 days KUMAR SINGH 11022666 (paid through 00429092 bank) SANTOSH INDO CREDITOP 150000 22140000 90.5 13575000 21.03.2013 22.03.2014 365 KUMAR PVT LTD 00429092 00017304 (through MEERA MISHRA 10592317) Total 1,51,000 2,22,22,000 1,36,57,6 50

14.4.7. Further, from Table 32, I find that the Noticee no. 4 has delayed the transfer of shares to the transferee after the receipt of the amount from the transferee, in one case, by more than the time given in Section 2(i) of SCRA, 1956. Thus, I note that, the transactions were not “spot delivery contract” in terms of Section 2(i) of SCRA, 1956. 14.4.8. I note that by virtue of the provisions of SEBI Notification G.S.R 219 (E) dated March 1, 2000 and SEBI Notification No. LAD-NRO/GN/2013-14/26/6667 dated October 03, 2013, prior permission of SEBI is required to be obtained before entering into any contract for sale and purchase of securities, which does not fall in the category of any of the exceptions stipulated in the said notifications including one of the exception as spot delivery contract. I find that no permission of SEBI was sought by Noticee no. 4 before entering into any of these transactions, which are squarely hit by the embargo put in place by the aforesaid notifications. Therefore, by virtue of the provision of Section 16(2) of SCRA, 1956, I find that all the transactions entered into by Noticee no. 4 were illegal. 14.4.9. For the summons issued to Noticee no. 4, during SEBI’s investigation, seeking information on the transactions inter-alia including the reasons for delay in delivery of shares to the clients, the Noticee no. 4 neither replied nor responded to the summons in any manner. I note that there is no record of successful delivery of the said summons to Noticee no. 4. Thus, the allegations in the SCN for violations of Section 11C (2) and 11C(3) of SEBI Act, 1992, cannot be sustained. 14.4.10. The clients of the Noticee no. 4 in response to the summons had furnished the copy of records issued by the Noticee no. 4 and while some of them had stated that they were not aware of the delay and others have stated that they have been following up with the Noticee no. 4 to receive the shares. The Final Order in the matter of Delta Leasing and Finance Ltd.

following are the details of the responses /replies furnished by the recipient clients of the Noticee no. 4 to SEBI: Table 33 Sl.no. Name of the Date of Date of reply List of documents of the Noticee 4 recipient client summons furnished by the transferee

1. R AJ SAURABH 19.11.2019 09.12.2019 Entity stated in writing with copy of bank SINGH 11022666 statement. 2. IN DO CREDITOP 19.11.2019 11.12.2019 Sale Bill & Entity stated in writing with PVT LTD 00017304 copy of bank statement.

14.4.11. It is from the reply of the recipient clients and the documents furnished by them (sample of which is provided in para 14.4.12 below), I find that the Noticee no. 4 has acted as an unregistered sub-broker/ stock broker. 14.4.12. The following is a sample of the details of the nature of records issued by Noticee no. 4 to its clients while dealing in the scrip of the Company as clientele transactions. Contract Note SALE BILL BALAJI ENTERPRISES Bill No.: B1-R-SC/1314037/2 Bill Date: 23/05/2013 B4/51D ASHOK VIHAR PHASE II DELHI 110052 To INDO CREDITOP PVT LTD (YYYY/CIC65) PAN NO-AAACI1876R 47, COMMUNITY CENTER, NEW FRIENDS COLONY, NEW DELHI - 110065 Dear Sirs, We are herewith delivering you the Shares/Debs. Stated below for which please make the payments Sauda Dt. Security Details Book Distinctive Cert Qty. Rate Bkg. Serv. Trxn. Amount Cl. Numbers Tax Chrg 21/05/2013 DELTA LEASING DM 1,50,000 147.60 0.00 0.00 0.00 22140000.00 Scrip Total: 1,50,000 22140000.00

*** Due To Us *** 22140000.00 E & O.E. For BALAJI ENTERPRISES We are not responsible for keeping blank shares after taking delivery according to Association Rules Authorized Signatory Copies of all the cash bills, ledgers, share bills and other documents issued to the clients by Noticee no. 4 were placed as Annexure-14 (Colly) to the SCN. 14.4.13. On perusal of the documents furnished by the clients as can be seen from para 14.4.12 above, I find that the Noticee no. 4 has issued certain documents viz: a ledger account for the clients indicating a running account being maintained for the clients, and also a sale bill raised on the client for purchase of 1,50,000 quantity of shares of the company at Rs. 147.60. The share bill also contains a Bill no. B1-R-SC/1314037/2 for the transaction done. However, the name of the Exchange in which such transaction had been done have not been mentioned. It could be seen that Noticee no. 4 had

Final Order in the matter of Delta Leasing and Finance Ltd.

used a Firm Name “Balaji Enterprises”, used a client code for the client which is mandatory for a stock broker to deal with clients, etc. Thus, I note that it is only an attempt made by Noticee no. 4 to provide an illusionary impression of genuineness about itself and also of the transaction done through authentic sources such as Stock Exchanges so as to win over the trust and confidence of the clients to deal with it. As such, the Noticee no. 4 was not authorized or licensed to do a clientele transaction. Further, it had also falsified/ fabricated the documents so as to given an impression of authenticity about itself and its transactions. From the manner in which the transactions have been executed by the Noticee no. 4 and on perusal of the documents such as contract note, sale bill etc. issued by the Noticee no. 4 to its clients as explained above, I find that Noticee no. 4 namely Santosh Kumar – Proprietor of Balaji Enterprises has acted as a Stock Broker/Sub-broker inasmuch as carrying out clientele dealing in securities without obtaining prior registration from SEBI or without being the member of a recognized stock exchange and thus, violated the provision of Regulation 3 of Broker Regulations, 1992 and Section 12(1) of SEBI Act,1992. 14.4.14. All the aforesaid acts committed by Noticee no. 4, such as acting as unregistered stock broker/ sub-broker, entering into illegal contracts for sale/purchase of securities in violation of Section 16(1) of SCRA, 1956, tantamount to unfair trade practice relating to securities market. Thus, I find that Noticee no. 4 has also violated the provisions of Regulation 4(1) of PFUTP Regulations, 2003.

14.5. Ms. Sapna – Proprietor of Stallion Trading Co. (Noticee no. 5)

14.5.1. The SCN states that Noticee no. 5 has carried out clientele transactions both in her name as “Sapna” and also in her firm name “Stallion Trading Company” as seen from the documents such as cash receipt, client ledger, share bill etc. maintained by the Noticee no. 5 (sample of which is provided in para 14.5.17 below). Table 34 Name PAN Address STALLION TRADING DRUPS8079D 23, DOUBLE STOREY, WELCOME, COMPANY SEELAM PUR-III, DELHI INDIA 110053

Final Order in the matter of Delta Leasing and Finance Ltd.

SAPNA DRUPS8079D 23, DOUBLE STOREY, WELCOME, SEELAM PUR-III, DELHI INDIA 110053 14.5.2. The following are the details of client wise transactions done and nature of records issued by Noticee no. 5: Table 35 Sno Name of the Client Date of Amount Qty of Name of Cash Transfer of recorded(Rs.) shares document Receipt/Sale shares transferred issued to clients bill date 1 RAJAN VERMA 18548284 15.04.2013 199500 57000 Sale Bill, Ledger 17.04.2013 2 BALA GARG 00018521 15.04.2013 32000 16000 Sale Bill, Ledger 17.04.2013 3 SHILPA GARG 00018711 15.04.2013 32000 16000 Sale Bill, Ledger 17.04.2013 4 NITISH AHUJA 00024846 02.04.2012 68000 33000 Sale Bill, Ledger 02.04.2012 5 MEETU AGGARWAL 05.04.2013 68000 34000 Sale Bill, Ledger 15.05.2013 00031007 6 SAROJ BANSAL 10049574 15.04.2013 122500 35000 Sale Bill, Ledger 17.04.2013 7 SHARADA PRASAD 10.05.2013 448200 35000 Sale Bill, Ledger 14.03.2013 00052821 8 SUDHIR PRASAD 00052834 10.05.2013 218230 35000 Sale Bill, Ledger 14.09.2013 9 VIJAY KUMAR AGGARWAL 05.04.2013 41000 20000 Sale Bill, Ledger 15.05.2013 00031011 10 VIJAY KUMAR AGGARWAL 05.04.2013 500 Sale Bill, Ledger 15.05.2013 00031011 11 ADHIR SACHDEVA 10.05.2013 N.A 29000 Sale Bill, Ledger 14.05.2013 00005889 12 RAJINDER BANSAL 15.04.2013 N.A 35210 Sale Bill, Ledger 17.04.2013 18873305 13 SHARADA PRASAD 10.05.2013 448200 35000 Sale Bill, Ledger 14.03.2013 00052821 14 SUDHIR PRASAD 00052834 10.05.2013 218230 35000 Sale Bill, Ledger 14.09.2013 14.5.3.

The SCN states that, total number of clients for which such transactions have been executed, quantity of shares involved, money value of the shares involved for dealing in the scrip are given below: Table 36 Number of Number of Total Quantity of shares Total value in rupee Target clients transactions involved terms of shares involved transferred (Rs.) 11 14 4,15,710 2,73,43,220 14.5.4. On analysis of the transactions of the Noticee no. 5, from the below table, I find that Noticee no. 5 as on date of receipt of money from its clients either did not have any stock of the scrip in its account or sufficient quantity to transfer the shares and it had acquired the shares from other sources either through off market or on market and provided the shares to the clients which clearly indicate that Noticee no. 5 has been engaging in trading /dealing in securities for its clients. Table 37 Name, Name, PAN, Quantity Date of payment by target Date of Balanc Balance shares PAN, Demat Id of target transferred client transfer of e as on 1 day Demat Id client (3) shares by shares before date of of source (2) (4) source client as on transfer of client (5) date of shares/Balance (1) credit shares as on of date of transfer amoun of shares t (7) (6) SAPNA RAJAN VERMA 57000 15.04.2013 (Rs.

199500 13.08.2014 0 81,958 00030356 18548284 paid in cash) BALA GARG 16000 15.04.2013 (Rs. 32000) 22.08.2014 0 18,958 00018521

Final Order in the matter of Delta Leasing and Finance Ltd.

SHILPA GARG 16000 15.04.2013 (Rs. 32000) 22.08.2014 0 34,958 00018711 NITISH AHUJA 33000 02.04.2012 (Rs. 66000 paid 26.08.2014 0 41,658 00024846 in cash) MEETU 34000 05.04.2013 (Rs. 68000 paid 27.08.2014 0 98,658 AGGARWAL in cash) 00031007 SAROJ BANSAL 35000 15.04.2013 (Rs. 122500 28.08.2014 0 37,658 10049574 paid in cash) SHARADA PRASAD 35000 10.05.2013 (Rs. 448200 02.09.2014 0 70,000 00052821 paid in cash for 298800 shares) SUDHIR PRASAD 35000 10.05.2013 (Rs. 218230 02.09.2014 0 35,000 00052834 paid in cash for 145500 shares) VIJAY KUMAR 20000 05.04.2013 (Rs. 41000 paid 03.09.2014 0 81,500 AGGARWAL in cash) 00031011 VIJAY KUMAR 500 03.09.2014 0 5000 AGGARWAL 00031011 ADHIR SACHDEVA 29000 10.05.2013 04.09.2014 0 1,28,090 00005889 RAJINDER BANSAL 35210 15.04.2013 04.09.2014 0 1,14,300 18873305 SHARADA PRASAD 35000 10.05.2013 (Rs. 448200 04.09.2014 0 1,63,090 00052821 paid in cash for 298800 shares) SUDHIR PRASAD 35000 10.05.2013 (Rs. 218230 04.09.2014 0 1,98,090 00052834 paid in cash for 145500 shares) Total 415710

14.5.5. The details of a few transactions of acquisition of shares in between the time period of date of credit of amount to the transferor and date of transfer of shares to the transferee is given below in Table 38 and the exhaustive list of the transactions was placed at Annexure 15 to the SCN. Table 38 Name, PAN, Date of Qty of Source of Particulars of the Source in case of OFF Market Demat Id,DP ID of acquisition shares acquisition – acquisitions source client (2) acquired OFF Mkt / ON (1) (3) Mkt (4) Name of the client Client ID SAPNA 31.07.2014 1,17,328 OFF Mkt SACHIN KUMAR 1203200000028484 DRUPS8079D PREM CHAND 1203200000028471 00030356 KARAN 1203200000028919 DP ID: 32000 SANDEEP KUMAR 1203200000028923 13.08.2014 65,930 OFF Mkt SANDEEP KUMAR 1203200000028923 PREM CHAND 1203200000028471 18.08.2014 14,000 OFF Mkt SANDEEP KUMAR 1203200000028923 25.08.2014 66,000 OFF Mkt SACHIN KUMAR 1203200000028484 SANDEEP KUMAR 1203200000028923 26.08.2014 40,000 OFF Mkt SACHIN KUMAR 1203200000028484 SANDEEP KUMAR 1203200000028923 14.5.6. The following are the date wise transactions of Noticee no. 5 from its date of receipt of money from the client and till the date of transfer of securities to the client in respect of the clients in col.2 of Table 39: Table 39 Name, Name, PAN, Quantity Consider Consider Mark Market Date of payment by Date of Numb PAN, Demat Id of target transferr ation ation et value target client transfer of er of Demat client ed amount (Rs.) rate (Rs.) shares by days of Id of (2) (3) as per received (Rs.) (8) source client delay source DIS (Rs.) by (7) (9) (10) client (4) source (6) (1) client (5) SAPNA RAJAN VERMA 57000 5167050 1,99,500 88.85 5064450 15.04.2013 (Rs. 13.08.2014 484 000303 18548284 199500 paid in cash) 56 BALA GARG 00018521 16000 1312000 32,000 1261600 15.04.2013 (Rs. 22.08.2014 493 78.85 32000)

Final Order in the matter of Delta Leasing and Finance Ltd.

SHILPA GARG 16000 1312000 32,000 1261600 15.04.2013 (Rs. 22.08.2014 493 00018711 78.85 32000) NITISH AHUJA 33000 2602050 66,000 2501400 02.04.2012 (Rs. 26.08.2014 875 00024846 75.8 66000 paid in cash) MEETU AGGARWAL 34000 262800 68,000 2577200 05.04.2013 (Rs. 27.08.2014 508 00031007 75.8 68000 paid in cash) SAROJ BANSAL 35000 2705500 1,22,500 2600500 15.04.2013 (Rs. 28.08.2014 499 10049574 122500 paid in cash) 74.3 SHARADA PRASAD 35000 2645000 4,48,200 2499000 10.05.2013 (Rs. 02.09.2014 479 00052821 448200 paid in cash 71.4 for 298800 shares) SUDHIR PRASAD 35000 2645000 2,18,230 2499000 10.05.2013 (Rs. 02.09.2014 479 00052834 218230 paid in cash 71.4 for 145500 shares) VIJAY KUMAR 20000 1428000 41,000 1400000 05.04.2013 (Rs. 03.09.2014 515 AGGARWAL 00031011 70 41000 paid in cash) VIJAY KUMAR 500 35700 35000 03.09.2014 515 AGGARWAL 00031011 70 ADHIR SACHDEVA 29000 2088000 N.A 1989400 10.05.2013 04.09.2014 481 00005889 68.6 RAJINDER BANSAL 35210 2535120 N.A 2415406 15.04.2013 04.09.2014 481 18873305 68.6 SHARADA PRASAD 35000 2520000 4,48,200 2401000 10.05.2013 (Rs. 04.09.2014 481 00052821 448200 paid in cash 68.6 for 298800 shares) SUDHIR PRASAD 35000 2520000 2,18,230 68.6 2401000 10.05.2013 (Rs. 04.09.2014 481 00052834 218230 paid in cash for 145500 shares) Total 415710 2,73,43,2 20

From Table 39, I find that the consideration amount mentioned as per DIS is more or less close to the market rate prevailing then at the time of transfer of shares. I also find that not only the consideration amount received by the Noticee no. 5 is far less but it is received much before the actual date of transfer. It could only be seen from the DIS that the Noticee no. 5 has made entries in DIS regarding the consideration amount to match with the prevailing market rate thereby concealing the actual amount received. Further, the execution date (date of transfer of shares) mentioned in the DIS is much after the actual date of payment received. 14.5.7. I note that all of the above acts are an attempt by Noticee no. 5 to make the DIS appear as if it is a normal genuine spot delivery transaction carried on the execution date (date of transfer of shares) whereas the actual payment has been received by Noticee no. 5 in 2012 & April-May 2013, the transfer of shares was done in August-September 2014, after more than a year of delay. The open price in the market on 10.05.2013 was Rs.173.75 but Noticee no. 5 has sold the shares at a mere Rs.1.50 per share through cash payment which raises serious doubts on the genuineness of the transaction. 14.5.8. Further, from Table 39, I find that Noticee no. 5 has delayed the transfer of shares to the transferee after the receipt of the amount from the transferee.

Final Order in the matter of Delta Leasing and Finance Ltd.

I note that, Noticee no. 5 has not settled the transaction as per section 2(i) of SCRA, 1956. 14.5.9. On examination of the DI slips of Noticee no. 5, I find that the reasons for transfers stated was “Loan of Shares or return of loan of shares”. The following is the summary of total number of such so called loan transactions, number of target clients dealt with by the Noticee no. 5, quantity of shares involved and value of such transactions: Table 40(Summary transactions) Number of target Number of off Total Qty. of Total Consideration as clients dealt market shares per DIS (Rs.) with(Transferees) transactions transferred 23 28 7,13,710 5,53,47,825

14.5.10. The following are the details of the Target clients who had categorically denied the transactions to be loan transactions and had confirmed the same to be only sale or purchase transaction as the case may be: Table 41 Source Target Client Date of Summons Reply Summons Reply date Nature of reply client Particulars transfer of date of date of date of target of target of target clients particulars shares source source client client client client SAPNA BALA GARG 22.08.2014 22.10.2019 N.A 14.11.2019 24.11.2019 Denied as loan 00030356 00018521 transaction SHILPA GARG 22.08.2014 22.10.2019 N.A 18.11.2019 25.11.2019 Denied as loan 00018711 transaction MEGHNA 25.08.2014 22.10.2019 N.A 30.10.2019 05.11.2019 Denied as loan SRIVASTAVA transaction 21358418 NITISH AHUJA 26.08.2014 22.10.2019 N.A 18.11.2019 22.11.2019 Denied as loan 00024846 transaction DIVYA JAIN 27.08.2014 22.10.2019 N.A 14.11.2019 22.11.2019 Denied as loan 10138173 transaction The transactions mentioned in Table 41 above are provided for illustration purpose and the exhaustive list of clients and their replies was provided as Annexure 16 to the SCN. 14.5.11. The SCN alleges that If all the aforesaid transactions are to be considered as loan transactions, then such transactions should have happened only in the manner provided in Section 12 of the Depositories Act, 1996 and Regulation 58 of DP Regulations, 1996. 14.5.12. Upon further verification about the nature of the above transactions as to whether the same were either in the nature of creation of pledge or revocation or invocation of pledge, with the Depositories NSDL and CDSL, SEBI’s investigation found that none of the transactions are in the nature of pledge. I note that since the off market transfers involving the said loan transactions involve transfer of ownership of the shares, thereby these transactions cannot be considered as Pledge transactions. As mentioned

Final Order in the matter of Delta Leasing and Finance Ltd.

above, I also note that the provisions of Section 2(i) of SCRA, 1956 requires that in a spot delivery contract the securities be delivered on the same day of receipt of consideration or on the next day. Since, in these transaction payment was received by Noticee no. 5 much prior to making of delivery of shares, therefore, I note that these transactions were not spot delivery contracts in terms of Section 2(i) of SCRA, 1956. I note that by virtue of the provisions of SEBI Notification G.S.R 219 (E) dated March 1, 2000 and SEBI Notification No. LAD-NRO/GN/2013-14/26/6667 dated October 03, 2013, issued by SEBI in exercise of powers under Section 16 of SCRA, 1956, prior permission of SEBI is required to be obtained before entering into any contract for sale and purchase of securities, which does not fall in the category of any of the exceptions stipulated in the said notifications including the exception of spot delivery contract. I find that no permission of SEBI was sought by Noticee no. 5 before entering into any of these transactions, which are squarely hit by the embargo put in place by the aforesaid notifications.

Therefore, by virtue of the provision of Section 16(2) of SCRA, 1956, I find that all the transactions entered into by Noticee no. 5 were illegal. 14.5.13. For effecting transfer of shares electronically it is the Source Client who had to issue the DIS duly filled in and signed to the Source DP (Depository Participant). Therefore, the Source client is accountable and responsible for the contents filled in by him in the DIS. When the Source client state the reasons for transfer in the DIS as “Loan or return of loan shares” transaction which is not true and when the other records exist contrary to the reasons stated in the DIS by the Source Client, the act of the Source client in giving false reason of “loan or return of loan shares” for transfer of shares would amount to an act of deceit. It can only be construed that such an act has been resorted to by the source client, Noticee no. 5 in order to evade or avoid regulatory compliance on off market transfer of shares as stipulated in Section 2(i) of SCRA, 1956. In the instant case, the Noticee no. 5 by stating its off market transfer of shares as Loan transactions in the DIS when the fact is that none of such transactions are loan transactions, I find that Noticee no. 5 has resorted to giving false reason of “Loan / return of loan shares” in Final Order in the matter of Delta Leasing and Finance Ltd.

DIS for transfer of shares in order to evade or avoid regulatory compliance stipulated in Section 2(i) SCRA for off market transfer of shares. 14.5.14. The SCN states that, for the summons issued to Noticee no. 5, during investigation, seeking information on the transactions inter-alia including the reasons for delay in delivery of shares to the clients, the Noticee no. 5 neither replied nor responded to the summons in any manner. I note that there is no record of successful delivery of the said summons to Noticee no. 5. Thus, the allegations in the SCN for violations of Section 11C (2) and 11C(3) of SEBI Act, 1992, cannot be sustained. 14.5.15. The clients of the Noticee no. 5 in response to the summons had furnished the copy of records issued by the Noticee no. 5 and while some of them had stated that they were not aware of the delay and others have stated that they have been following up with the Noticee no. 5 to receive the shares. The following are the details of the responses /replies furnished by the recipient clients of the Noticee no. 5 during investigation: Table 42 Sl.no. Name of the recipient Date of Date of List of documents Reply stated by the transferee for delay client summons reply of the Noticee 5 in receipt of shares furnished by the transferee 1. RA JAN VERMA 18.11.2019 17.12.2019 Copy of sub ledger, No prior knowledge regarding delay & 18548284 sale bill Regularly taken up the matter with transferor.

2. BA LA GARG 00018521 14.11.2019 24.11.2019 Copy of sub ledger, No reply sale bill 3. SH ILPA GARG 18.11.2019 25.11.2019 Copy of sub ledger, No prior knowledge regarding delay & not 00018711 sale bill taken up the matter with anyone. 4. NI TISH AHUJA 18.11.2019 22.11.2019 Copy of sub ledger, the shares were held by the share broker 00024846 sale bill in his Demat account on behalf of me and when I wanted to sell the shares, I got them transferred to my Demat account for sale. 5. ME ETU AGGARWAL 18.11.2019 22.11.2019 Copy of sub ledger, No reply 00031007 sale bill 6. SA ROJ BANSAL 18.11.2019 26.11.2019 Copy of sub ledger, No reply 10049574 sale bill 7. SH ARADA PRASAD 18.11.2019 26.11.2019 Copy of sub ledger, The delivery of the shares was delayed 00052821 sale bill by the broker without any intimation to me. I had no prior knowledge regarding the delay, nor had I agreed to any delay in transfer of the equity shares. I had spoken and followed up with Mr. Anil Gupta several times thereafter regarding the undue delay and he always assured the delivery of equity shares of M/s Delta Leasing and Finance Ltd shall be done immediately.

8. SU DHIR PRASAD 18.11.2019 26.11.2019 Copy of sub ledger, The delivery of the shares was delayed 00052834 sale bill by the broker without any intimation to me. I had no prior knowledge regarding the delay, nor had I agreed to any delay in transfer of the equity shares. I had spoken and followed up with Mr. Anil Gupta several times thereafter regarding the undue delay and he always assured the delivery of equity shares of M/s Delta Leasing and Finance Ltd shall be done immediately. 9. VI JAY KUMAR 18.11.2019 26.11.2019 Copy of sub ledger, No reply AGGARWAL 00031011 sale bill

Final Order in the matter of Delta Leasing and Finance Ltd.

10. AD HIR SACHDEVA 14.11.2019 18.02.2020 Copy of sub ledger, No prior knowledge regarding delay & 00005889 sale bill Regularly taken up the matter with transferor. 11. RA JINDER BANSAL 18.11.2019 26.11.2019 Copy of sub ledger, No reply 18873305 sale bill

14.5.16. It is from the reply of the recipient clients and the documents furnished by them (sample of which is given in para 14.5.17 below), I find that the Noticee no. 5 has acted as an unregistered Stock Broker/Sub-broker. 14.5.17. The following is a sample of the details of contents of the “SALE BILL” issued by the Noticee no. 5 to its clients while dealing in the scrip of the Company as clientele transactions. Contract Note SALE BILL

STALLION TRADING CO. To CRV23 RAJAN VERMA 23, Double Storey, Welcome, Seelampur-III, Delhi - 110053 491, Sec -14 GURGAON- 122001 HARYANA Bill No : 003 Dated: 17/04/2013 Dear Sirs, We are herewith delivering the shares state below :- Transaction Date Description of Security Qty Rate Amount 15/04/2013 DELTA LEASING & FIN. 57000 3.50 199500.00

Settlement No.: BIR1314013 Total 199500.00 Demat Delivery transfer from: Client ID: DP ID: Slip No. :

E & O.E. Received above shares Signature of customer For STALLION TRADING CO. Authorized Signatory PAN: DRUPS8079D Copies of all the cash bills, ledgers, share bills and other documents issued to the clients by Noticee no. 5 were provided as Annexure-17 (Colly) to the SCN. 14.5.18. On perusal of the documents furnished by the clients as can be seen from para 14.5.17 above, I find that the Noticee no. 5 has issued certain documents viz.: a ledger account for the clients indicating a running account being maintained for the clients, and also a sale bill raised on the client for purchase of 57000 quantity of shares of the company at Rs. 3.50 per share. The sale bill also contains a settlement no. B1R 1314013 for the transaction done. However, the name of the Exchange in which such transaction had been done have not been mentioned. The scrip was listed in BSE only on 18.04.2013 that is subsequent to the date of transaction mentioned in the Sale Bill. Further, the settlement No. in BSE starts with a sequence of DR-

Final Order in the matter of Delta Leasing and Finance Ltd.

040/20-21 which means 40th settlement in the financial year 2020-2021. The settlement number indicated in the sale bill do not match the format of settlement no. being followed in BSE. Further, the trading in Delhi Stock Exchange Ltd in which the scrip was listed had ceased w.e.f. 30.10.2003. The rate quoted in the sale bill for the scrip also has no basis as the scrip had not been traded in BSE and DSE as on the date of transaction. As such, I find that the settlement number stated in the Sale Bill is incorrect, false and misleading. I also find that Noticee no. 5 had used a Firm Name “Stallion Trading Co”, used a client code for the client which is mandatory for a stock broker to deal with clients, a fictitious settlement number etc. Thus I find that it is only an attempt made by Noticee no. 5 to provide an illusionary impression of genuineness about itself and also of the transaction done through authentic sources such as Stock Exchanges so as to win over the trust and confidence of the clients to deal with it. I note that, the Noticee no. 5 was not authorized or licensed to do a clientele transaction. Further I also note that, Noticee no. 5 had also fabricated the documents so as to give an impression of authenticity about itself and its transactions. From the manner in which the transactions have been executed by the Noticee no. 5 and on scrutiny of the documents such as contract note, sale bill etc. issued by the Noticee no. 5 to its clients as explained above, I find that Noticee no. 5 namely Ms. Sapna – Proprietor of Stallion Trading Co. has acted as a Stock Broker/Sub-broker inasmuch as carrying out clientele dealing in securities without obtaining prior registration from SEBI or without being the member of a recognized stock exchange and thus, violated the provision of Regulation 3 of Broker Regulations, 1992 and Section 12(1) of SEBI Act,1992. 14.5.19. All the aforesaid acts committed by Noticee no. 5, such as acting as unregistered stock broker/ sub-broker, falsifying DIS by concealing the consideration amount in the DIS in order to make it appear as a genuine spot delivery contract, falsifying DIS by mentioning the false reason of transfer in DIS, entering into illegal contracts for sale/purchase of securities in violation of Section 16(1) of SCRA, 1956, tantamount to unfair trade practice relating

Final Order in the matter of Delta Leasing and Finance Ltd.

to securities market. Thus, I find that Noticee no. 5 has also violated the provisions of Regulation 4(1) of PFUTP Regulations, 2003.

14.6. Mr. Sunil Singh – Proprietor of Alfa Finsec (Noticee no. 6)

14.6.1. SCN alleges that Noticee no. 6 had carried out clientele transactions both in his name as “Sunil Singh” and also in his firm name “Alfa Finsec” as seen from the documents such as cash receipt, client ledger, share bill etc. maintained by the Noticee no. 6 (sample of which is given in para 14.6.18 below). Table 43 Name PAN ALFA FINSEC BDGPS0774K SUNIL SINGH BDGPS0774K

14.6.2. The following are the details of client wise transactions done and nature of records issued by Noticee no. 6: Table 44 S.No Name of the Target Client Date of Amount Qty of Name of Cash Transfer of recorded shares document issued Receipt/Sale shares (Rs.) transferred to clients Bill date 1 MOHIT BEHAL 10184950 24.06.2014 14000 8000 Sale Bill, Ledger 09.04.2013 2 MOHIT BEHAL 10184950 26.06.2014 6000 Sale Bill, Ledger 09.04.2013 3 TILAK RAJ BEHAL 07.07.2014 132000 16500 Sale Bill, Ledger 09.04.2013 AAGPB4536N IN30086110186548

14.6.3. SCN states that, total number of clients for which such transactions have been executed, quantity of shares involved, money value of the shares involved are given below: Table 45 Number of Number of Total Quantity of shares Total value in rupee clients involved transactions involved terms of shares transferred (Rs.) 2 3 30,500 2,44,000

14.6.4. On analysis of the transactions of Noticee no. 6, I find from the below table that the Noticee no. 6 as on date of receipt of money from its clients either did not have any stock of the scrip in its account or sufficient quantity to transfer the shares and it had acquired the shares from other sources either through off market or on market and provided the shares to the clients which clearly indicate that the Noticee no. 6 has been engaging in trading /dealing in securities for its clients.

Table 46

Final Order in the matter of Delta Leasing and Finance Ltd.

Name, Name, PAN, Quantity Date of payment by Date of Balance Balance shares as PAN, Demat Id of target transferr target client transfer of shares on 1 day before Demat Id of client ed shares by as on date of transfer of source (2) (3) (4) source client date of shares/Balance client (5) credit of shares as on date (1) amount of transfer of (6) shares (7) SUNIL MOHIT BEHAL 8000 09.04.2013(Rs. 24.06.2014 0 8000 SINGH 10184950 14000(8000+6000) paid in 10113199 MOHIT BEHAL 6000 cash) 26.06.2014 0 19,730 10184950 TILAK RAJ BEHAL 16500 05.04.2013 (Rs. 132000) 07.07.2014 0 23,730 AAGPB4536N IN3008611018654 8 Total 30,500

14.6.5. The details of a few transactions of acquisition of shares in between the time period of date of credit of amount to the transferor and date of transfer of shares to the transferee is given below and the exhaustive list of all the transactions was provided as Annexure 18 to the SCN. Table 47 Name, PAN, Date of Qty of ON Mkt/ Particulars of the Source in case of OFF Demat Id, DP ID of source acquisition shares OFF Mkt Market acquisitions client (2) acquired (4) (1) (3) Name of the client Client ID SUNIL SINGH BDGPS0774K 28.09.2013 30,000 OFF Mkt VIVEK FINANCIAL 10178100 10113199 IN301766 FOCUS 01.10.2013 8,000 ON Mkt N.A N.A 19.10.2013 8,300 OFF Mkt VIVEK FINANCIAL 10178100 FOCUS 21.10.2013 26,500 OFF Mkt FARSIGHT SECURITIES 10110348 LTD 13.11.2013 25 ON Mkt N.A N.A 09.12.2013 2000 ON Mkt N.A N.A 14.6.6. The following are the date wise transactions of the Noticee no. 6 from its date of receipt of money from the client and till the date of transfer of securities to the client in respect of the clients in col. 2 of Table 48: Table 48 Name, PAN, Name, PAN, Quantit Considera Consideratio Market Market Date of Date of Number Demat Id of Demat Id of target y tion n (Rs.) rate value (Rs.) payment transfer of of days source client client transfer amount as received by (Rs.) by target shares by of delay (10) (1) (2) red per DIS source client (6) (7) client source (3) (Rs.) (5) client (4) (8) (9) SUNIL SINGH MOHIT BEHAL 8000 Not 112000 245 1960000 09.04.2013 24.06.2014 440 10113199 10184950 mentioned IN301766 MOHIT BEHAL 6000 Not 260 1560000 26.06.2014 442 10184950 mentioned TILAK RAJ BEHAL 16500 Not 132000 192 3168000 05.04.2013 07.07.2014 457 AAGPB4536N mentioned (Rs. IN30086110186548 132000) Total 30,500 2,44,000 66,88,000

14.6.7. From Table 48, I find that not only the consideration amount received by the Noticee no. 6 is generally far less but it is received much before the actual date of transfer. I also find from the DIS that the Noticee no. 6 has not made entries in DIS regarding the consideration amount in order to conceal the Final Order in the matter of Delta Leasing and Finance Ltd.

actual amount received by the Noticee no. 6. Further, the execution date (date of transfer of shares) mentioned in the DIS is much after the actual date of payment received so as to make the DIS appear as if it is a normal genuine spot delivery transaction carried on the execution date (date of transfer of shares), whereas the actual payment has been received by the Noticee no. 6 in April, 2013, the transfer of shares was done in June-July 2014, after more than a year of delay. The open price in the market on 24.06.2013 was Rs. 41.55 but the Noticee no. 6 has sold the shares at a mere Rs. 1 per share through cash payment which raises serious doubts on the genuineness of the transaction. 14.6.8. Further, it can be seen from Table 48 that the Noticee no. 6 has delayed the transfer of shares to the transferee after the receipt of the amount from the transferee, thereby, the Noticee no. 6 has not settled the transaction as per the time frame stipulated in Section 2(i)(a) of SCRA, 1956. 14.6.9. On examination of the DI slips of Noticee no. 6, I find that the reasons for transfers stated was “Loan of Shares or return of loan of shares”. The following is the summary of total number of such so called loan transactions, number of target clients dealt with by the Noticee no. 6, quantity of shares involved and value of such transactions: Table 49(Summary transactions) Number of target Number of off Total Qty of Total Consideration as Total market value as clients dealt market shares per DIS(Rs.) on date of transfer of with(Transferees) transactions transferred shares in rupee terms of shares transferred (Rs.) 4 18 3,00,970 Not mentioned 70,10,070

14.6.10. The following are the details of the Target clients who had categorically denied the transactions to be loan transactions and had confirmed the same to be only sale or purchase transaction as the case may be: Table 50 Source client Target Client Date of Summons Reply Summons Reply date of Nature of reply particulars Particulars transfer of date of date of date of target target client of target clients shares source client source client client SUNIL SINGH TILAK RAJ 07.07.2014 23.10.2019 N.A 19.11.2019 26.11.2019 Denied as loan 10113199 BEHAL transaction IN301766 AAGPB4536N IN300861101 86548 MOHIT 24.06.2014 23.10.2019 N.A 18.11.2019 26.11.2019 Denied as loan BEHAL transaction 10184950 MOHIT 26.06.2014 23.10.2019 N.A 18.11.2019 26.11.2019 Denied as loan BEHAL transaction 10184950

Final Order in the matter of Delta Leasing and Finance Ltd.

The transactions mentioned in table 50 above are provided for illustration purpose and the exhaustive list of clients and their replies was placed at Annexure 19 to the SCN. 14.6.11. The SCN alleges that if all the aforesaid transactions are to be considered as loan transactions, then such transactions should have happened only in the manner provided in Section 12 of the Depositories Act, 1996 and Regulation 58 of DP Regulations, 1996. 14.6.12. Upon further verification about the nature of the above transactions as to whether the same were either in the nature of creation of pledge or revocation or invocation of pledge, with the Depositories NSDL and CDSL, SEBI’s investigation found that none of the transactions are in the nature of pledge. I note that since the off market transfers involving the said loan transactions involve transfer of ownership of the shares, thereby these transactions cannot be considered as Pledge transactions. As mentioned above, I also note that the provisions of Section 2(i) of SCRA, 1956 requires that in a spot delivery contract the securities be delivered on the same day of receipt of consideration or on the next day.

Since, in these transaction payment was received by Noticee no. 6 much prior to making of delivery of shares, therefore, I note that these transactions were not spot delivery contracts in terms of Section 2(i) of SCRA, 1956. I note that by virtue of the provisions of SEBI Notification G.S.R 219 (E) dated March 1, 2000 and SEBI Notification No. LAD-NRO/GN/2013-14/26/6667 dated October 03, 2013, issued by SEBI in exercise of powers under Section 16 of SCRA, 1956, prior permission of SEBI is required to be obtained before entering into any contract for sale and purchase of securities, which does not fall in the category of any of the exceptions stipulated in the said notifications including the exception of spot delivery contract. I find that no permission of SEBI was sought by Noticee no. 6 before entering into any of these transactions, which are squarely hit by the embargo put in place by the aforesaid notifications. Therefore, by virtue of the provision of Section 16(2) of SCRA, 1956, I find that all the transactions entered into by Noticee no. 6 were illegal. 14.6.13. Here I would like to touch upon a related contention being raised by Noticee no. 6. It is argued by the Noticee that provisions of Section 2(i)(a) of SCRA,

Final Order in the matter of Delta Leasing and Finance Ltd.

1956, are not applicable to him, since he is not a market intermediary, I note that as to how Noticee no. 6 was acting as an unregistered stock broker/ sub-broker, is dealt in the subsequent paragraphs of this order, notwithstanding this finding, I note that provisions of Section 2(i)(a), Section 18A and Section 16 of SCRA, 1956, are applicable to all persons alike, whether as market intermediary or otherwise. Attention is drawn to the objects clause of the SCRA, 1956 which states that “An Act to prevent undesirable transactions in securities by regulating the business of dealing therein, by providing for certain other matters connected therewith.” In pursuance of this objective, Section 2(i)(a) of SCRA, 1956 provides that a spot delivery contract is one which is settled on the same day or on the next day. Section 18A declares all such contracts in derivatives illegal if not consummated on a recognized stock exchange. In order to prevent undesirable speculation in securities, Section 16 of SCRA, 1956, empowers the Central Government (power delegated to SEBI) to stipulate rules in respect of previous approval to be obtained for certain contracts in securities.

Accordingly, SEBI issued the following two notifications, SEBI Notification G.S.R 219 (E) dated March 2, 2000 and SEBI Notification No. LAD-NRO/GN/2013-14/26/6667 dated October 03, 2013. Thus, I note that, all the aforesaid provisions of law, are designed to prevent undesirable contracts in securities, in line with the objects of the SCRA, 1956. It is also pertinent to note that none of the aforesaid provisions of law, stipulate that they shall be applicable to SEBI registered intermediaries only. Rather if the objects of SCRA, 1956, were to be read into these provisions, one would agree that these provisions would squarely be applicable to all persons regardless of their status as SEBI registered intermediary or not. In view of the foregoing discussion, I do not find any merit in the contention being raised by Noticee no. 6. 14.6.14. For effecting transfer of shares electronically it is the Source Client who had to issue the DIS duly filled in and signed to the Source DP (Depository Participant). Therefore, the Source client is accountable and responsible for the contents filled in by him in the DIS.

When the Source client state the reasons for transfer in the DIS as “Loan or return of loan shares” transaction which is not true and when the other records exist contrary to the reasons

Final Order in the matter of Delta Leasing and Finance Ltd.

stated in the DIS by the Source Client, the act of the Source client in giving false reason of “loan or return of loan shares” for transfer of shares would amount to an act of deceit and unfair trade practice while dealing in securities. It can only be construed that such an act has been resorted to by the source client, Noticee no. 6 in order to evade or avoid regulatory compliance on off market transfer of shares as stipulated in Section 2(i)(a) of SCRA, 1956 In the instant case, the Noticee no. 6 by stating its off market transfer of shares as Loan transactions in the DIS when the fact is that none of such transactions are loan transactions, I find that the said Noticee no. 6 has committed an act of deceit by giving false reason of “Loan / return of loan shares” in DIS for transfer of shares in order to evade or avoid regulatory compliance stipulated in Section 2(i)(a) SCRA, 1956 for off market transfer of shares. 14.6.15. For the summons dated 23.10.2019 issued to Noticee no. 6 (during SEBI investigation), seeking information on the transactions inter-alia including the reasons for delay in delivery of shares to the clients, Noticee no. 6 neither replied nor responded to the summons in any manner.

I note that there is no record of successful delivery of the said summons to Noticee no. 6. Thus, the allegations in the SCN for violations of Section 11C (2) and 11C (3) of SEBI Act, 1992, cannot be sustained. 14.6.16. From the replies of the Target clients of Noticee 6, it could be ascertained that the transactions have been settled in a delayed manner not in accordance with the time frame stipulated in Section 2(i) of SCRA, 1956. The clients of the Noticee no. 6 in response to the summons issued by SEBI during investigation, had furnished the copy of records issued by the Noticee no. 6 and they stated that they were not aware of the delay and as they became aware they followed up with the Company to receive the shares. The following are the details of the responses /replies furnished by the recipient clients of the Noticee no. 6 in response to the summons issued: Table 51 Sl.no. Name of the recipient Date of Date of List of documents Reply stated by the transferee for client summons reply of the Noticee 6 delay in receipt of shares furnished by the transferee 1. MO HIT BEHAL 18.11.2019 26.11.2019 Copy of sale bill and I had given these shares for transfer but 10184950 cash receipt could not pursue the same.

Later on while checking the Demat account, I came to know that these shares were not transferred. I pursued the matter and Final Order in the matter of Delta Leasing and Finance Ltd.

advised the company to transfer these shares immediately. I had no prior knowledge about the delay and came to know about it only at the later stage 2. TI LAK RAJ BEHAL 19.11.2019 26.11.2019 Copy of sale bill and I had given these shares for transfer but AAGPB4536N cash receipt could not pursue the same. Later on while IN30086110186548 checking the Demat account, I came to know that these shares were not transferred. I pursued the matter and advised the company to transfer these shares immediately. I had no prior knowledge about the delay and came to know about it only at the later stage 14.6.17. It is from the reply of the recipient clients and the documents furnished by them (sample of which is given in para 14.6.18 below), I find that the Noticee no. 6 has acted as an unregistered Stock Broker/Sub-broker. 14.6.18. The following are the details of the nature of records issued by the Noticee no. 6 to its clients while dealing in the scrip of the Company as clientele transactions: Contract Note Alfa Finsec Regd. Off: 55, Dhaka Chamber, 2068/39 Naiwala, karol Bagh, New Delhi - 110005 SALE BILL Bill No.: N1-N-SC/2013067/1 Bill Date: 09/04/2013 To MOHIT BEHAL (1111/CMH9) 102, HARGOVIND KARKARDUMA, DELHI - 110092 Dear Sirs, We are herewith delivering you the Shares/Debs. Stated below for which please make the payments Sauda Dt. Security Details Book Distinctive Cert Qty. Rate Bkg. Serv. Trxn. Amount Cl. Numbers Tax Chrg 05/04/2013 DELTA LEASING DM 14000 8.00 0.00 0.00 0.00 112000.00

*** Due To Us *** 112000.00 E & O.E. For We are not responsible for keeping blank shares after taking delivery according to Association Rules Authorized Signatory 14.6.19. Copies of all the cash bills, ledgers, share bills and other documents issued to the clients by Noticee no. 6 were provided as Annexure-20 (Colly) to the SCN. 14.6.20. On scrutiny of the documents furnished by the clients as given in Annexure- 20 (Colly), I find that the Noticee no. 6 has issued certain documents viz.: a ledger account for the clients indicating a running account being maintained for the clients, and also a sale bill raised on the client for purchase of 16,500 qty of shares of the Company at Rs. 8. I note that Noticee no. 6 has not denied having issued such a Sale Bill. The sale bill also contains a Bill no. N1-N-SC/2013067/2 for the transaction done. However, the name of the Exchange in which such transaction had been done has not been mentioned.

Final Order in the matter of Delta Leasing and Finance Ltd.

The scrip was listed in BSE only on 18.04.2013 that is subsequent to the date of transaction mentioned in the Sale Bill. Further, the trading in Delhi Stock Exchange Ltd in which the scrip was listed had ceased w.e.f. 30.10.2013. The rate quoted in the sale bill for the scrip also has no basis as the scrip had not been traded in BSE and DSE as on the date of transaction. I note that Noticee no. 6 has contested that the sale bill was iisued subsequent to a private sale between two parties and that by itself does not make him a broker/sub-broker. I do not agree with this contention, for the following reason. I find that Noticee no. 6 had used a Firm Name “Alfa Finsec”, while dealing with the private party. One may wonder why would an individual use a Business Firm name, while entering into a private contract. I also note that Noticee no. 6 has used a client code ‘1111/CMH9’ for the client, which is mandatory for a stock broker to deal with clients. I also note that Noticee no. 6 has also mentioned the following term in his Sale Bill, which clearly indicates that buying and selling of securities on behalf of others was part of his regular course of business, “We are not responsible for keeping blank shares after taking delivery according to Association Rules”.

In view of the above, I note that Noticee no. 6 used to provide these Sale Bills to his clients in order to give an illusionary impression of genuineness about itself and also of the transaction done through authentic sources such as Stock Exchanges so as to win over the trust and confidence of the clients to deal with it. I note that, the Noticee no. 6 was not authorized or licensed to do a clientele transaction. Further, it had also falsified/fabricated the documents so as to given an impression of authenticity about itself and its transactions. From the manner in which the transactions have been executed by the Noticee no. 6 and on scrutiny of the documents such as contract note, sale bill etc. issued by Noticee no. 6 to its clients as explained above, I find that Noticee no. 6 namely Mr. Sunil Singh – Proprietor of Alfa Finsec, has acted as a Stock Broker/Sub-broker inasmuch as carrying out clientele dealing in securities without obtaining prior registration from SEBI or without being the member of a recognized stock exchange and thus, violated the provision of Regulation 3 of Broker Regulations, 1992 and Section 12(1) of SEBI Act,1992.

Final Order in the matter of Delta Leasing and Finance Ltd.

14.6.21. All the aforesaid acts committed by Noticee no. 6, such as acting as unregistered stock broker/ sub-broker, falsifying DIS by not mentioning the consideration amount in the DIS in order to make it appear as a genuine spot delivery contract, falsifying DIS by mentioning the false reason of transfer in DIS, entering into illegal contracts for sale/purchase of securities in violation of Section 16(1) of SCRA, 1956, tantamount to unfair trade practice relating to securities market. Thus, I find that Noticee no. 6 has also violated the provisions of Regulation 4(1) of PFUTP Regulations, 2003.

15. I note that in the present case, all the Noticees have been found to have acted as a stock broker / sub-broker without obtaining registration from SEBI or without being registered as a member of a recognized stock exchange. I also note that the Noticees have been found to be issuing false contract notes to clients / falsifying DIS by not mentioning the consideration amount (or mentioning false amount) in the DIS/falsifying DIS by mentioning the false reason of transfer in DIS / entering into illegal contracts for sale/purchase of securities in violation of Section 16(1) of SCRA, 1956, all these acts of the Noticees tantamount to unfair trade practice relating to securities market. Thus, I find that the Noticees have also violated the provisions of Regulation 4(1) of PFUTP Regulations, 2003. Therefore, I find that the Noticees are liable for imposition of appropriate penalty under Section 15HA of the SEBI Act, 1992. I also note that the Noticees have also been charged with violation of Section 11C(2) and 11C(3) of the SEBI Act, 1992, for not responding to the summons issued by SEBI during investigation. However, as observed in previous paras, no violation of Section 11C(2) and 11C(3) is made out in the instant case, and thus no penalty under Section 15A(a) of the SEBI Act, 1992 is attracted. I also note from the pre-paras that all the Noticees have entered into contracts in securities in violation of Section 16(1) of SCRA, 1956 and thus, by virtue of Section 16(2) had entered in illegal contracts, for which Noticees are liable for imposition of monetary penalty under Section 23H of SCRA, 1956. Similarly, for the violations of Regulation 3 of Broker Regulations, 1992 and Section 12(1) of SEBI Act, 1992, I find that the Noticees are liable for imposition of penalty under Section 15HB of SEBI Act, 1992. I note that the Noticees have been charged with the violation of Section 13 and 18 of SCRA, 1956. Section 13 of SCRA, 1956 provides as under:

Final Order in the matter of Delta Leasing and Finance Ltd.

“13. If the Central Government is satisfied, having regard to the nature or the volume of transactions in securities in any State or States or area that it is necessary so to do, it may, by notification in the Official Gazette, declare this section to apply to such State or States or area, and thereupon every contract in such State or States or area which is entered into after the date of the notification otherwise than between members of a recognised stock exchange or recognised stock exchanges in such State or States or area or through or with such member shall be illegal:

Provided that......................................................”

16. Hon’ble SAT while interpreting Section 13 of SCRA, 1956 in Bhanuben case (supra) held as under:

“2………………………………………………. A reading of the aforesaid provisions would make it clear that the Central Government has the power under section 13 of the Act to make the provisions of this section applicable in any State or States or area and upon its doing so, every contract in such State, States or area is required to be entered into from the date of the notification only between the members of a recognized stock exchange or recognized stock exchanges or through or with such member(s). Section 13 also provides that contracts entered into in any other manner shall be illegal. ……………………………………………………. Section 18(1) of Act, however, carves out an exception. It provides that nothing contained in Section 13 shall apply to spot delivery contracts. A combined reading of Sections 13 and 18(1) would lead us to conclude that as a general rule, every contract in securities should be executed through members of recognised stock exchange (s) or through or with such member(s) and the only exception thereto is spot delivery contract(s). In other words, every contract in securities must be executed through the stock exchange mechanism unless it is a spot delivery contract. It would follow that a contract in securities which is not executed through or with member(s) of a recognised stock exchange(s) and is not a spot delivery contract would be illegal. ………………………………………………” In addition to the scope and ambit of Section 13, as expounded by Hon’ble SAT, Section 13 has also to be read with SEBI circular dated September 14, 1999 on Negotiated deals, which is applicable to all registered stock brokers and stipulates

Final Order in the matter of Delta Leasing and Finance Ltd.

that stock brokers shall not be allowed to cross trade (square off) the clients transactions at its own end and all transactions have to be necessarily routed through the stock exchange. I note that these provisions have inter alia been put in place to prevent undue speculation in securities and ensure a market driven price for the securities to the investors. I note that in the instant case, the Noticees themselves have been found to have acted as unregistered stock brokers/ sub-brokers. Thus, the impugned transactions, were not consummated through the member of a stock exchange, and therefore, in terms of Section 13 of SCRA, 1956, read with Section 18, I find that all these off-market transfers were illegal. I find that the Noticees have violated the mandate of Section 13 of SCRA,1956, and thus, they are liable for imposition of penalty under Section 23H of SCRA, 1956.

17. For imposition of penalty under the provisions of the SEBI Act, 1992, Section 15J of the SEBI Act,1992 provides as follows:

“Factors to be taken into account while adjudging quantum of penalty. 15J. While adjudging quantum of penalty under 15-I or section 11 or section 11B, the Board or 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. Explanation. —For the removal of doubts, it is clarified that the power to adjudge the quantum of penalty under sections 15A to 15E, clauses (b) and (c) of section 15F, 15G, 15H and 15HA shall be and shall always be deemed to have been exercised under the provisions of this section.” Similar, requirements are laid down under Section 23J of SCRA, 1956 for imposition of monetary penalty under the provisions of SCRA, 1956.

18. Regarding the factors under Section 15J of SEBI Act, 1992 and SCRA, 1956, I note that there is no assessment in the SCN regarding the amount of disproportionate gain or unfair advantage gained by the Noticees, as a result of the alleged violation. Further, the SCN also does not specify the amount of loss caused to investor or group of investors, if any. I note that there is no material on record to indicate that Noticee no. 2, 3 and 6, have been found to have committed similar violations any

Final Order in the matter of Delta Leasing and Finance Ltd.

time in the past. I also note that, in the past, Noticee no. 4 and 5 have been found guilty for violation of Regulation 3(a), (b), (c), (d), 4(1), 4(2)(a) and (e) of PFUTP Regulations, 2003, in the matter of Eco Friendly Food Processing Park Ltd. and accordingly they were visited with penalty of Rs. 5 lakhs and debarment from securities market for a period of four years. I also note that, in the past, Noticee no. 1 has been found guilty for violation of Section 11C (2) and 11C(3) of SEBI Act, 1992 and Regulations 3 (a), (b), (c), (d) and 4 (1), 4(2)(a), (e) of PFUTP Regulations, 2003, in the matter of Focus Industrial Resources Ltd. and accordingly it was visited with aggregate penalty of Rs. 20 lakhs.

Directions and monetary penalties: 19. In view of the aforesaid findings and having regard to the facts and circumstances of the case, I, in exercise of the powers conferred upon me under Section 11(1), 11(4), 11(4A),11B(1) and 11B(2) of SEBI Act, 1992 read with Section 19 and Rule 5 of the SEBI (Procedure for holding Inquiry and Imposing Penalties) Rules, 1995 and Section 12A(2) of SCRA, 1956 read with Rule 5 of the Securities Contracts (Regulation) (Procedure for holding Inquiry and Imposing Penalties) Rules, 2005, direct as under:

(i) The Noticee no. 1, 2, 3, 4, 5 and 6, are restrained from accessing the securities market in any manner whatsoever, and further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, in any manner, whatsoever, for a period of three months, from the date of coming into force of this order;

(ii) The Noticee no. 1, 2, 3, 4, 5 and 6, are hereby imposed with, the penalties, as specified hereunder:

Noticee No. Name of Noticees Provisions under Penalty Amount which penalty (In Rupees) imposed Noticee no. 1 M/s. Natraj Capital & Section 15HA of the Rs. 7,50,000/- Credit Pvt Ltd SEBI Act, 1992. (Rupees Seven Lakhs and Fifty Thousand Only)

Final Order in the matter of Delta Leasing and Finance Ltd.

Section 15HB of the Rs. 1,00,000/- SEBI Act, 1992 (Rupees One Lakh Only) Section 23H of Rs. 2,00,000/- SCRA, 1956 (Rupees Two Lakh Only) Noticee no. 2 Mr. Parmanand Yadav Section 15HA of the Rs. 5,00,000/- Proprietor of Roxtech SEBI Act, 1992. (Rupees Five Securities Lakhs Only) Section 15HB of the Rs. 1,00,000/- SEBI Act, 1992 (Rupees One Lakh Only) Section 23H of Rs. 2,00,000/- SCRA, 1956 (Rupees Two Lakh Only) Noticee no. 3 Mr. Praveen Goyal Section 15HA of the Rs. 5,00,000/- Proprietor of Shivam SEBI Act, 1992. (Rupees Five Trading Company Lakhs Only) Section 15HB of the Rs. 1,00,000/- SEBI Act, 1992 (Rupees One Lakh Only) Section 23H of Rs. 2,00,000/- SCRA, 1956 (Rupees Two Lakh Only) Noticee no. 4 Mr. Santosh Kumar Section 15HA of the Rs. 7,50,000/- Proprietor of Balaji SEBI Act, 1992. (Rupees Seven Enterprises Lakhs and Fifty Thousand Only) Section 15HB of the Rs. 1,00,000/- SEBI Act, 1992 (Rupees One Lakh Section 23H of Rs. 2,00,000/- SCRA, 1956 (Rupees Two Lakh Only) Noticee no. 5 Ms. Sapna Section 15HA of Rs. 7,50,000/- Proprietor of Stallion SEBI Act, 1992 (Rupees Seven Trading Co. Lakhs and Fifty Thousand Only) Section 15HB of the Rs. 1,00,000/- SEBI Act, 1992 (Rupees One Lakh Section 23H of Rs. 2,00,000/- SCRA, 1956 (Rupees Two Lakh Only) Noticee no. 6 Sunil Singh Section 15HA of the Rs. 5,00,000/- Proprietor of Alfa Finsec SEBI Act, 1992. (Rupees Five M/s. Natraj Capital & Lakhs Only) Credit Pvt Ltd Section 15HB of the Rs. 1,00,000/- SEBI Act, 1992 (Rupees One Lakh Only) Section 23H of Rs. 2,00,000/- SCRA, 1956 (Rupees Two Lakh Only)

(iii) The said Noticees shall remit / pay the said amount of penalties within 45 days from the date of coming into force of this order. The said Noticees shall remit / pay the said amount of penalties through either by way of Demand

Final Order in the matter of Delta Leasing and Finance Ltd.

Draft in favour of “SEBI - Penalties Remittable to Government of India”, payable at Mumbai, or through online payment facility available on the website of SEBI, i.e. www.sebi.gov.in on the following path, by clicking on the payment link: ENFORCEMENT -> Orders -> Orders of Chairman/ Members -> PAY NOW. In case of any difficulties in online payment of penalties, the said Noticees may contact the support at portalhelp@sebi.gov.in. The demand draft or the details/ confirmation of e-payment should be sent to "The Division Chief, IVD/ ID-14, Securities and Exchange Board of India, SEBI Bhavan II, Plot no. C-7, "G" Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051” and also to e-mail id:-tad@sebi.gov.in in the format as given in table below:

Case Name Name of Payee Date of Payment Amount Paid Transaction No. Payment is made for: (like penalties/ disgorgement/ recovery/ settlement amount/ legal charges along with order details)

20. The obligation of the Noticees, restrained/ prohibited by this Order, in respect of settlement of securities, if any, purchased or sold in the cash segment of the recognized stock exchange(s), as existing on the date of coming into force of this Order, are allowed to be discharged irrespective of the restraint/prohibition imposed by this Order. Further, all open positions, if any, of the Noticees, restrained/prohibited in the present Order, in the F & O segment of the recognised stock exchange(s), are permitted to be squared off, irrespective of the restraint/prohibition imposed by this Order.

21. This Order comes into force with immediate effect.

Final Order in the matter of Delta Leasing and Finance Ltd.

22. This Order shall be served on all the Noticees, Recognized Stock Exchanges, Depositories and Registrar and Share Transfer Agents of mutual funds to ensure necessary compliance.

Sd- ANANTA BARUA Date: January 31, 2023 WHOLE TIME MEMBER Place: Mumbai SECURITIES AND EXCHANGE BOARD OF INDIA

Final Order in the matter of Delta Leasing and Finance Ltd.