Final Order in the matter of Moryo Industries Ltd.[SAT Appeal No.:605/2019 & Misc.App.No.664/2019]

SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: ANANTA BARUA FINAL ORDER Under Sections 11, 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 in the matter of Moryo Industries Ltd. In respect of:

Sr. Name of the Entity/Noticees PAN no. No. 1. Badri Lal Birla ABDPB7183R 2. Chandrakanta Laddha ABIPL0665K 3. Moryo Industries Limited AACCM5166G 4. Manoharlal Saraf AAIPS7577C 5. Geeta Manoharlal Saraf ANMPS6842B

The aforesaid entities are hereinafter referred to by their respective names/serial numbers or collectively as “the Noticees”.

1. SEBI had conducted a preliminary enquiry into the dealings in the scrip of Moryo Industries Limited (“Moryo”/ “the Company”) on BSE during the period from May 22, 2013 to January 30, 2015 as there was huge rise in the traded volume and price of the scrip. As certain activities of Moryo and its Promoter/Directors, Preferential Allottees, Moryo Group entities were prima facie in violation of SEBI Act, 1992 (“SEBI Act”) and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market), 2003 (“PFUTP Regulations”) SEBI passed an Ad-interim ex-parte order dated December 04, 2014 (“interim order”) inter alia against Noticee no. 3,4 and 5 restraining them from accessing the securities market and further prohibited them from buying, selling or dealing in securities, either directly or indirectly, in any manner whatsoever, till further directions.

2. The directions issued in the interim order, against Noticee no. 3, 4 and 5 were confirmed vide confirmatory Order dated August 22, 2016.

3. Pursuant to the interim order, SEBI has conducted a detailed investigation of the entire scheme employed in the instant matter, connection amongst the debarred entities, funds used for the price manipulation of the scrip of Moryo .etc., so as to ascertain the violation of securities laws. Upon completion of investigation by SEBI, it was observed that inter alia Noticee no. 3, 4 and 5 had violated provisions of PFUTP Regulations. Accordingly, a Show-Cause Notice dated December 05, 2017 (‘SCN’) was issued against the Noticees, alleging that Noticee no. 1 and 2 have violated Regulation 3(a),3(b),3(c),3(d) and Regulation 4(1),4(2)(a), 4(2)(e) of PFUTP Regulations and Noticee no. 3,4 and 5 have violated Regulation 3(a),3(b),3(c),3(d) and Regulation 4(1), 4(2)(f), 4(2)(k), 4(2)(r) of PFUTP Regulations. All the Noticees were called upon to show cause as to why suitable directions under section 11B, 11(4) and 11(1) of the SEBI Act cannot be passed against them for violation of the aforementioned provisions of PFUTP Regulations.

4. The SCN alongwith the documents relied upon as Annexures was sent to the Noticees by speed post. However, the SCN’s were returned undelivered. Subsequently, the delivery of SCN was completed on all the Noticees by way of affixture. SEBI issued letter dated November 20, 2018 to all the Noticees by Speed Post, conveying them the date of personal hearing. On the scheduled date of personal hearing .i.e. December 21, 2018, only Noticee no. 2 appeared through her son. Noticee no. 1 did not turn up for the personal hearing scheduled on December 21, 2019. Noticee no. 3 to 5 had requested for an adjournment of hearing vide their letter received by SEBI on December 19, 2018. In the interest of justice, hearing for Noticee no. 3 to 5 was adjourned to January 7, 2019. However, none of the Noticee nos. 3 to 5, appeared for the personal hearing on January 7, 2019, but the said Noticees have filed their replies dated January 5, 2019, received by SEBI on January 7, 2019. I note that Noticee no. 1 and 2 have not filed any replies.

Consideration of issues and findings: 5. The SCN has alleged that during the period from Jan 15, 2013 - Nov 08, 2013, two entities viz., Mr. Badri Lal Birla (Noticee no. 1) and Ms. Chandrakanta Laddha (Noticee no. 2) were observed to have manipulated the scrip price of Moryo and created a misleading appearance of trading in the scrip.

LTP contributor as buyer:

6. The SCN further alleges that Noticee no. 1 bought 32 shares through 22 trades and contributed Rs 86.40 of positive LTP (30.46% of market positive LTP) in 18 trades for 23 shares.

7. It was further observed that from the said 18 positive LTP contributing trades of Noticee no. 1, he had placed small quantity buy orders. The details of these trades along with their LTP contribution is given below:

Sl. Description No. of LTP % of total No. trades Contribution market (Rs) positive LTP 1 Trades where buy order qty is 15 77.05 1 share 27.16% 2 Trades where buy order qty is 2 7.15 2 shares 2.52% 3 Trades where buy order qty is 1 2.2 6 shares 0.78%

4 All buy trades which 18 86.40 contributed to positive LTP 30.46%

8. As can be seen from the above, out of 18 buy trades of Noticee no. 1 for 15 trades, buy order quantity was 1 share, which contributed to positive LTP of Rs 77.05. Further, for all 18 trades, buy order quantity was in the range of 1-6 shares, which contributed positive LTP of Rs 86.40, i.e., 30.46% of total market positive LTP.

9. On further analysis, investigation observed that out of the above 18 positive LTP contributing trades, there were 12 trades wherein the buy order was placed for small quantity (less than or equal to 6 shares) while the disclosed quantity of sell order was large (more than or equal to 100 shares). Such 12 trades were executed on 12 different days and resulted in positive LTP contribution of Rs 56.65 (19.97% of total market positive LTP) during Patch 1. Details of these 12 positive LTP contributing trades of Noticee no. 1, is given below:

Sell Buy Trad Sr Buy Sell Buy Sell Order Order Batch Buyer Seller Trade Trade LTP e No Order Order Order Order Discl Origin Date Name Name Time Price Diff Qua. Time Time Price Price ose al ntity Volu Quant me ity 31.01. Badri Lal Rakesh 09:54:43. 09:54:43 09:44:49 113.6 113.6 113.6 1 2.20 6 100 6 2013 Birla Kumar Modi 5050340 .476740 .745151 0 0 0 0 0 16.04. Badri Lal Vinod 14:15:33. 13:58:34 13:57:34 2 76.00 3.60 76.00 76.00 1 300 1 2013 Birla Banwarilal 5017690 .468399 .491223 Sharma 0 0 06.05. Badri Lal Rakesh 15:15:26. 15:09:40 15:03:58 104.0 104.0 104.0 3 4.40 1 500 1 2013 Birla Kumar Modi 3704090 .791931 .973828 0 0 0 0 0 07.05. Badri Lal Sunil Kr 15:15:21. 15:01:15 15:01:52 109.2 109.2 109.2 4 5.20 1 1000 1 2013 Birla Bagaria Huf 8107230 .838944 .144282 0 0 0 0 0 15.05. Badri Lal Insight 14:15:23. 14:02:44 13:43:02 132.0 132.0 132.0 5 5.00 1 500 1 2013 Birla Multitrading 8931650 .462858 .646609 0 0 0 Private 0 0 20.05. Badri Lal LPirmemite dR atan 11:15:29. 10:35:23 11:09:29 138.5 138.6 138.5 6 6.50 1 100 1 2013 Birla Bhaiya 3936290 .401312 .439263 0 0 0 0 0 22.05. Badri Lal Sunil Kr 15:15:24. 14:49:44 14:50:46 137.0 138.0 137.0 7 5.00 1 400 1 2013 Birla Bagaria Huf 6336290 .469930 .269227 0 0 0 0 0 06.06. Badri Lal Vivekanand 15:15:21. 15:13:43 15:06:28 108.0 111.0 108.0 8 7.45 1 170 1 2013 Birla Bagadia Huf 6561930 .808939 .362628 0 5 0 0 0 11.06. Badri Lal Narendra G 15:15:23. 15:09:11 14:55:04 107.2 107.2 107.2 9 4.60 1 250 1 2013 Birla Navalakha 5523810 .948413 .538992 5 5 5 0 0

Sell Buy Trad Sr Buy Sell Buy Sell Order Order Batch Buyer Seller Trade Trade LTP e No Order Order Order Order Discl Origin Date Name Name Time Price Diff Qua. Time Time Price Price ose al ntity Volu Quant me ity 12.06. Badri Lal Narendra G 15:15:29. 15:08:25 14:30:04 111.4 111.4 111.4 10 4.15 1 250 1 2013 Birla Navalakha 9985050 .744017 .860765 0 0 0 0 0 Coline 15:00:19 14:37:34 11 15.07. Badri Lal Computer 15:15:30. .392162 .335563 112.0 4.80 112.0 112.0 1 100 1 2013 Birla Private 3478120 0 0 0 0 0 Limited Vinubhai 14:56:55 14:32:21 18.07. Badri Lal 15:15:29. 100.0 106.0 100.0 12 Khushalbhai .371375 .488138 3.75 1 122 1 2013 Birla 1054690 0 0 0 Patel 0 0 10. From the above table, I note that, in respect of trades at sl. no. 4, 6 and 7 (i.e., where buy order was placed before the sell order), the buy orders were placed for 1 share at prices significantly (approximately ₹5) above LTP, which were subsequently matched by sell orders. In the remaining trades (i.e., where buy order was placed after the sell order), while the disclosed volume of the sell orders were large, buy orders were placed for small quantities, for which quantity the above trades were executed. These trades for small quantity were executed on 12 days and contributed to significant positive LTP of Rs 56.65 (19.97% of total market positive LTP).

11. I note from the table at para 9, that Noticee no. 1, had repeatedly entered into trades - Sr. no. 1 to 12, on several days (12 days) and contributed to significant positive LTP of Rs 56.65 (19.97% of total market positive LTP). It is observed that Noticee no. 1 was not acting as genuine buyer and had no bona fide intention to buy because in-spite of large disclosed quantity of sell orders, he was placing small quantity buy orders (1 share in 11 trades and 6 shares in 1 trade) by either matching or placing higher than sell order rate which were already above LTP at the time of buy order entry, or by placing buy orders at prices above LTP which were subsequently matched by sell orders, thereby contributing to significant positive LTP of Rs 56.65 (19.97% of total market positive LTP). It is evident from the above trading pattern that the intention of Noticee no. 1 was to mark the price higher and not merely to enter into the buy transactions carried out by him. LTP contributor as Seller:

12. Investigation observed that Noticee no. 1, contributed Rs. 68.65 of positive LTP (24.20% of market positive LTP) through 14 trades for 23 shares. It was further observed that Noticee no. 1, indulged in trades with very small share sell quantity (between 1 to 5 shares), details of which are given below: No. of Trad Sell Buy share Sl. Buy Sell Buy Sell Batch Buyer Seller Trade Trade LTP e Order Order s held No Order Order Order Order Date Name Name Time Price Diff Quan Volum Volum before. Time Time Price Price tity e e these trades Chandra 10.04. Badri 15:15:28. 15:09:25. 15:11:51. 1 kanta 66.00 5.00 66.00 66.00 1 1 5 700 2013 Lal Birla 0197830 3511850 8788370 Laddha Chandra 11.04. Badri 15:15:20. 14:30:39. 14:32:19. 2 kanta 69.00 3.00 69.00 69.00 1 1 10 699 2013 Lal Birla 9609680 5564540 9057080 Laddha Shyam 17.04. Badri 11:15:36. 10:30:05. 10:32:27. 3 Kanheyal 79.80 3.80 79.80 79.80 1 1 500 700 2013 Lal Birla 5707650 0960430 2075950 al Vyas 17.04. Badri Lal Badri 15:15:32. 14:51:16. 14:34:09. 4 79.80 7.30 79.80 79.80 1 1 1 699 2013 Birla Lal Birla 7875170 1298750 0199340 18.04. Badri Lal Badri 15:15:21.

14:35:52. 15:04:14. 5 83.75 3.95 83.75 83.75 1 1 1 699 2013 Birla Lal Birla 5569810 0683860 6230220 Chandra 13.05. Badri 15:15:29. 14:31:43. 14:32:47. 6 kanta 121.20 5.20 121.20 121.20 3 3 5 703 2013 Lal Birla 0931230 9379730 9692090 Laddha Chandra 17.05. Badri 15:15:31. 14:30:34. 14:31:15. 7 kanta 132.00 5.50 132.00 132.00 2 2 10 702 2013 Lal Birla 5513270 6734180 3454240 Laddha Chandra 21.05. Badri 15:15:30. 15:06:01. 15:04:14. 8 kanta 132.00 6.00 132.00 132.00 1 1 2 701 2013 Lal Birla 7855600 1523290 3967600 Laddha Amritlal 24.06. Badri 10:15:27. 09:59:55. 10:04:28. 9 Kanji 100.35 4.75 100.35 100.35 1 1 1 704 2013 Lal Birla 0151350 6360840 8100230 Haria Chandra 27.06. Badri 15:15:26. 14:33:10. 15:13:35. 10 kanta 108.00 2.65 109.35 107.95 1 1 2 703 2013 Lal Birla 5524120 3273100 9956750 Laddha Chandra 01.07. Badri 15:15:30. 14:53:06. 14:59:55. 11 kanta 106.80 4.15 106.80 106.75 2 2 5 704 2013 Lal Birla 3549310 6327380 9148270 Laddha Chandra 02.07. Badri 15:15:35. 14:39:36. 14:48:16. 12 kanta 109.90 3.10 109.90 109.85 1 1 3 702 2013 Lal Birla 1818470 1466430 2415370 Laddha Chandra 04.07.

Badri 10:15:46. 10:03:36. 10:04:35. 13 kanta 114.80 4.90 114.85 114.80 5 5 5 701 2013 Lal Birla 2864050 6494630 0806030 Laddha Chandra 19.07. Badri 15:15:36. 14:48:21. 15:04:47. 14 kanta 104.45 9.35 105.00 104.45 2 2 2 705 2013 Lal Birla 1418160 9549690 1531770 Laddha

13. From the above table, I note that, in spite of having sufficient quantity of shares of Moryo with him (approximately 700 shares before each trade), Noticee no. 1 was placing small quantity sell orders (1 to 5 shares) at higher than LTP. Such trades were executed on 13 days and contributed to significant positive LTP. It is also observed that in a span of 6 days when shares of Moryo were traded at BSE during April 10, 2013 to April 18, 2013, Noticee no. 1 had indulged into such positive LTP contributing trades (as shown in the above table) on 4 days. Also, in a span of 7 days when shares of Moryo were traded at BSE during June 24, 2013 to July 04, 2013, Noticee no. 1 had indulged into such positive LTP contributing trades (as shown in the above table) on 5 days. I note that Noticee no. 1 has not appeared for personal hearing on the scheduled date. I note that Noticee no. 1 has not filed any reply to the SCN. I also note that Noticee no. 1 did not avail the opportunity of personal hearing that was granted to him.

14. It is evident from the trading pattern of Noticee no. 1, both as buyer and seller, that he has purposely indulged in trades with very small quantity at prices higher than LTP, and that his intention was to mark the price higher and not merely to enter into the buy/ sell transactions carried out by him. Hence, I find that Noticee no. 1 had manipulated the scrip price and created a misleading appearance of trading in the scrip of Moryo.

15. Hence, Noticee no. 1 has violated Regulation 3(a),(b),(c),(d) and Regulation 4(1), 4(2)(a) and (e) of SEBI (PFUTP) Regulations, 2003, and hence, he is liable for appropriate directions u/s 11B and 11(4) r/w 11(1) of SEBI Act.

16. Investigation has observed that Noticee no. 2 has bought 1235 shares of Moryo, through 28 trades and has contributed Rs 77.85 of positive LTP (27.45% of market positive LTP) in 14 trades for 36 shares. On further analysis, investigation observed that out of the above 14 positive LTP contributing trades, there were 10 trades wherein the buy order was placed for small quantity (less than or equal to 10 shares) before the sell order. Such 10 trades were executed on 10 different days and resulted in positive LTP contribution of Rs 46.55 (16.41% of total market positive LTP) during Jan 15, 2013 - Nov 08, 2013. Details of these 10 positive LTP contributing trades of Noticee no. 2 is given below:

Sell Buy Trad Order Order Sl. Buy Sell Buy Sell Batch Buyer Seller Trade Trade LTP e Disclo Origin No Order Order Order Order Date Name Name Time Price Diff Quan se al. Time Time Price Price tity Volum Quant e ity 10.04. Chandrakant Badri Lal 15:15:28. 15:09:25. 15:11:51. 1 66.00 5.00 66.00 66.00 1 1 5 2013 a Laddha Birla 0197830 3511850 8788370 11.04. Chandrakant Badri Lal 15:15:20. 14:30:39. 14:32:19. 2 69.00 3.00 69.00 69.00 1 1 10 2013 a Laddha Birla 9609680 5564540 9057080 13.05. Chandrakant Badri Lal 15:15:29. 14:31:43. 14:32:47. 3 121.20 5.20 121.20 121.20 3 3 5 2013 a Laddha Birla 0931230 9379730 9692090 17.05. Chandrakant Badri Lal 15:15:31. 14:30:34. 14:31:15. 4 132.00 5.50 132.00 132.00 2 2 10 2013 a Laddha Birla 5513270 6734180 3454240 27.06. Chandrakant Badri Lal 15:15:26. 14:33:10. 15:13:35. 5 108.00 2.65 109.35 107.95 1 1 2 2013 a Laddha Birla 5524120 3273100 9956750 01.07. Chandrakant Badri Lal 15:15:30. 14:53:06. 14:59:55. 6 106.80 4.15 106.80 106.75 2 2 5 2013 a Laddha Birla 3549310 6327380 9148270 02.07. Chandrakant Badri Lal 15:15:35. 14:39:36. 14:48:16. 7 109.90 3.10 109.90 109.85 1 1 3 2013 a Laddha Birla 1818470 1466430 2415370 04.07. Chandrakant Badri Lal 10:15:46. 10:03:36. 10:04:35. 8 114.80 4.90 114.85 114.80 5 5 5 2013 a Laddha Birla 2864050 6494630 0806030 Narendra 08.07. Chandrakant 15:15:32. 14:43:07. 15:13:06. 9 G 118.70 3.70 120.65 118.65 5 5 10 2013 a Laddha 6766650 8061160 9253630 Navalakh a 19.07. Chandrakant Badri Lal 15:15:36. 14:48:21. 15:04:47. 10 104.45 9.35 105.00 104.45 2 2 2 2013 a Laddha Birla 1418160 9549690 1531770

17. As can be seen, in the above trades, I find that, buy order was placed before the sell order. The buy orders were placed for small quantity (less than or equal to 10 shares) at prices significantly above LTP, which were subsequently matched by sell orders. These trades for small quantity were executed on 10 days and contributed to significant positive LTP of Rs 46.55 (16.41% of total market positive LTP). It is also observed that in a span of 7 days when shares of Moryo were traded at BSE during June 27, 2013 to July 08, 2013, Noticee no. 2 had indulged in such positive LTP contributing trades (as shown in the above table) on 5 days.

18. I note that Noticee no. 2 has not filed any reply to the SCN. At the personal hearing Noticee no. 2 submitted that she traded in the script of Moryo without any malafide intention of manipulating the script price. However, considering that Noticee no. 2 had repeatedly entered into such trades (10 nos.) on several days (10 days) and contributed to significant positive LTP of Rs 46.55 (16.41% of total market positive LTP), I find that Noticee no. 2 was not acting as genuine buyer and had no bona fide intention to buy because she was placing small quantity buy orders at prices significantly above LTP which were subsequently matched by sell orders, thereby contributing to significant positive LTP. It is evident from the above trading pattern that the intention of Noticee no. 2 was to mark the price higher and not merely to enter into the buy transactions carried out by him. Hence, I find that Noticee no. 2, manipulated the scrip price and created a misleading appearance of trading in the scrip by such trades as explained above and she has violated Regulation 3(a),(b),(c),(d) and Regulation 4(1), 4(2)(a) and (e) of SEBI (PFUTP) Regulations and is liable for appropriate directions u/s 11B and 11(4) r/w 11(1) of SEBI Act.

19. Investigation has also observed that Noticee no. 3 had made preferential allotment of its 63,50,000 shares at the price of Rs 25/- per share to 42 persons (including joint allottees) on November 09, 2012. However, the SCN alleges that Moryo utilized preferential issue proceeds for investments in shares and for providing loans & advances which were not disclosed as objects of the issue. SCN further alleges that, the objects of the issue as presented to shareholders/public in notice of Extra Ordinary General Meeting of the members of the Company held on Oct 01, 2012 was not true, was misleading and contained information in a distorted manner which may influence the decision of the investors.

20. From the copy of notice of Extra Ordinary General Meeting of the members of the Company held on Oct 01, 2012 wherein special resolution was passed under section 81(1A) of the Companies Act, 1956, I note that Moryo had disclosed to its shareholders and public that the purpose of aforesaid fund raising through preferential allotment was to fulfil the additional fund requirements for: i. capital expenditure including acquisition of companies/business ii. funding long term working capital requirements iii. marketing iv. setting up of offices abroad and v. for other approved corporate purposes.

21. I note that, vide its letter dated Jan 12, 2016 to SEBI, Moryo has submitted that the allotment proceeds were utilised for purchase of share and securities and for giving loans and advances/ repayment of loan. I also note that, in response to the interim order, Moryo vide its letter dated May 29, 2015 has also admitted that it had invested in shares, out of proceeds of preferential allotment. However vide the said letter dated May 29, 2015, Moryo has denied that it has given any loan/ advance to certain entities (more specifically named therein) out of the preferential allotment proceeds, as was alleged in the interim order. Therefore, the SCN had alleged that Moryo had made contradictory and incorrect submissions vide its letter dated May 29, 2015 and Jan 12, 2016, with regard to use of allotment proceeds.

22. In its reply dated January 5, 2019, Noticee no. 3 has contended that:- a. After receipt of preferential allotment proceeds, due to market conditions, the funds could not be deployed as per the object of the issue as disclosed in the notice of EGM, and instead considering the object incidental or ancillary to attainment of main objects of our Company (as per MoA) which formed part of its business, only a part of the preferential issue proceeds was used for investments in shares and to temporarily lent to entities by way of loan majorly on which income was generated and which have been repaid. b. That as per clause III (B) (2) and (12) of the MoA of the Company, it was permitted to make investment in shares and as per Clause III (B) (11), the Company was empowered to advance money to companies, firms or person, whether the terms and conditions of the loan includes interest or not.

c. Therefore, the Company submits that it had invested the money for the purpose of purchasing shares and giving loans and advances which were part of the disclosed purpose.

23. I am not inclined to accept the arguments raised by Noticee no. 3 in the above para, for the following reason:

i. The objects of the preferential allotment as stated in the notice of the EGM dated October 21, 2012, cannot be equated with the objects of the company as stated in its MoA. The MoA of a company reflects the broad contours and objective of establishing the company, whereas the objects of a particular issue reflects the narrow/limited purpose for which finance is raised in a particular capital raising exercise by the company. ii. Even if for the sake of argument, if I were to consider the ancillary/incidental objects as contained in the MoA of the Company, I do not find Clause III (B) (11) of MoA to authorize the giving of Loans and Advances by the Company, rather it permits the Company to give guarantees or act as security. I also note that in its reply dated January 5, 2019, the Company has stated that Moryo had modified the objects clause of the MoA by way of special resolution in its general meeting on March 12, 2014, to suitably include financing, investment and share trading. However, such a post-facto amendment cannot remedy the illegality of its earlier exercise. iii. In its reply dated January 5, 2019, Moryo has submitted that its shareholders vide special resolution dated September 29, 2017 passed in AGM, have already accorded their ratification and approval to all acts, deed and things done by the Company in entering into and giving effect to the utilisation of proceeds in the said preferential issue which is in variance to the objects as stated out in the Notice of the EGM held on October 1, 2012. I note that past illegal acts/deeds of the Company cannot be legitimised by subsequent ratification by passing resolution of the shareholders of the Company.

24. Hence, I find that Moryo has made investments in shares and given loans & advances, which were not disclosed as objects of the preferential issue in the notice of EGM. Thus, the objects of the issue as presented to shareholders/public in notice of Extra Ordinary General Meeting of the members of the Company held on Oct 01, 2012 was not true and might have mislead the investors, thereby violating Regulations 3 (a), (b), (c), (d), 4(1), 4(2)(f), (k) and (r) of SEBI (PFUTP) Regulations, 2003.

25. A company is a separate legal entity, it cannot act by itself, but only through its directors who are expected to exercise their powers on behalf of the company with due diligence and within the framework of law. The aforesaid fraudulent act by Moryo could not have been done without the knowledge of the directors of Moryo. Accordingly, SCN was issued against Noticee no. 4 and 5 to show cause as to why suitable directions u/s 11(1), 11(4) and 11B of SEBI Act should not be issued against them.

26. I note that Noticee no. 4 was the Managing Director at the relevant point of time in Moryo. I also note that in the Annual Report for the FY 2012- 13, Noticee no. 5, has been designated as Independent Non-Executive Director and in the Annual Report for FY 2013-14, she has been designated as Non‐Executive Director. I also note that Noticee no. 5 is the wife of Noticee no. 4. Therefore, despite her designation as independent director for the FY 2012-13, I am inclined to consider her as non-independent director in terms of clause 49.I.(A)(iii)(b) of the erstwhile Listing Agreement, which provided that ‘the expression ‘independent director’ shall mean a nonexecutive director of the company who is not related to promoters or persons occupying management positions at the board level or at one level below the board’

27. Noticee no. 4 and 5 in their replies dated January 5, 2019 have referred to and relied upon the reply filed by Moryo dated January 5, 2019. In their replies Noticee no. 4 and 5 have submitted that merely because they were the directors of Moryo, no adverse inference can be drawn against them. However I note that Moryo being a separate legal entity cannot act on its own. Noticee No. 4 was the managing director of Moryo and Noticee no. 5 (wife of Noticee no. 4) was the non-executive director. I note that Noticee no. 4 and 5 were the signatories to the financial statements declared by the Company in its Annual Report for 2012-13 and 2013-14. I also note that Noticee no. 5 was the Chairman of the Audit Committee of the Company for the FY 2012-13 and 2013-14 and that she had attended all the meetings of the Audit Committee held during FY 2012-13 and 2013-14. Neither have Noticee no. 4 and 5 produced any proof in support of their non-involvement in the affairs of Moryo at the relevant point in time, nor have they pleaded that they were not involved in the affairs of the Company. Therefore, I find Noticee no. 4 and 5 responsible for the acts and affairs of Moryo, with respect to the activities which are the subject matter of SCN. DIRECTIONS: 28. In view of the above, and in the peculiar facts and circumstances of the matter, I, in exercise of the powers conferred upon me under section 19 read with sections 11(1), 11(4) and 11B of the SEBI Act, hereby direct as under:

a. Noticee nos. 1 and 2 are hereby restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities (including units of mutual funds), directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of five years from the date of this order. During the period of restraint, the existing holding (including units of mutual funds) of the said Noticees shall remain frozen. b. I note that vide the interim order dated December 04, 2014, the Noticee nos. 3 to 5 were directed not to access the securities market and further prohibited from buying, selling or otherwise dealing in securities directly or indirectly, or being associated with the securities market in any manner, whatsoever. In this connection, I note that Noticee no. 3 to 5 have already undergone prohibition for a period of more than 4 years and three months, which I find to be sufficient for the violations committed by them.

29. The above directions shall come into force with immediate effect.

30. Copy of this Order shall be forwarded to the recognised stock exchanges, depositories and RTA’s of all Mutual Funds for information and necessary action.

Sd/- Date: March 19, 2019 ANANTA BARUA Place: Mumbai WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA