Interim order in the matter of First Financial services Ltd[SAT Appeal No.:231/2016

WTM/RKA/ ISD/ 162 /2014 SECURITIES AND EXCHANGE BOARD OF INDIA EX-PARTE AD- INTERIM ORDER UNDER SECTIONS 11(1), 11(4) AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 IN THE MATTER OF FIRST FINANCIAL SERVICES LTD. 1. Securities and Exchange Board of India ("SEBI") conducted a preliminary inquiry in the dealings in the scrip pursuant to detection of a huge rise in the traded volumes and price of the shares of First Financial Services Ltd. {hereinafter referred to as "First Financial"} on the Bombay Stock Exchange Ltd. ('BSE") during the period from May 15, 2012 to March 31, 2014 (hereinafter referred to as "Examination Period"). 2. It was noticed that during the period from May 15, 2012 to February 08, 2013 ("Patch 1"), the price of the scrip of First Financial rose from ₹ 5/- to ₹ 263/, i.e. an increase of 5160% (53 times) in 115 trading days. From February 11, 2013 to December 12, 2013 ("Patch 2"), the price of the scrip increased from ₹ 268 to ₹ 296 till July 23, 2013 i.e. an increase of 10% in 113 trading days and thereafter decreased to ₹178 as on December 12, 2013 (i.e. a decrease of 40% in 96 trading days). Subsequently, on December 13, 2013, the equity shares of First Financial were split in the ratio of 1:10 and thereafter, the price of the scrip fell from ₹ 17.7 (effective price as a result of Stock split) to as low as ₹7 with huge increase in trading volume during December 13, 2013 to March 31, 2014 ("Patch 3"). An illustration of the price/volume movement in the scrip of First Financial during the Examination Period and afterwards is given below: Chart - I : Price-volume movement in the scrip of First Financial Total Volume Close Price 35 5000000 4500000 30 4000000 25 3500000 3000000 20 2500000 15 2000000 10 1500000 1000000 5 500000 0 0

Order in the matter of First Financial Services Ltd

3. First Financial had a share capital of ₹ 37,47,600 comprising 3,74,760 equity shares of ₹10/- each as on September 30, 2011. On December 08, 2011, First Financial made a preferential allotment of 54,50,000 equity shares at the price of ₹ 20/- per share (hereinafter referred to as the "1st preferential allotment"). Thereafter on April 28, 2012, it made another preferential allotment of 24,50,000 equity shares at the price of ₹ 20/- per share (hereinafter referred to as the "2nd preferential allotment"). Thus, in total, First Financial allotted 77,00,000 equity shares to 83 persons/entities. The equity shares allotted on preferential basis to aforesaid allottees were locked-in for a period of one year i.e. up to December 07, 2012 and April 27, 2013 respectively in the instant case in terms of Securities and Exchange Board of India (Issue of Capital And Disclosure Requirements) Regulations, 2009. Thus, these shares held by the said 83 allottees pursuant to preferential allotment were not tradable till December 07, 2012 and April 28, 2013 respectively. Subsequently, on December 13, 2013, the equity shares of First Financial were split in the ratio of 1:10.

Consequent to these actions, paid up share capital of First Financial increased to ₹80,74,76,000 comprising 8,07,47,600 shares (i.e. an increase of 7,70,00,000 shares) as on December 31, 2013. 4. From the Annual Reports of First Financial for FY 2011-12 and FY 2012-2013, it was observed that it is in the business of financing and investment activities and it had earned a profit of ₹ 32,22,148/- during 2011-12 and ₹ 47,93,621 during FY 2012-13 respectively. From the Annual Report of First Financial for the FY 2012-2013 it is observed that for the FY ended 2012 the earning per shares ("EPS") of First Financial was ₹ 0.41/- and for the FY ended March 31, 2013, EPS was ₹ 0.61/-. During the Examination Period there was no material corporate announcement made by First Financial which could support such price rise in its scrip. Thus, the sharp rise in the price of the scrip of First Financial during the Examination Period was not supported by its fundamentals or any other genuine factor. It is interesting to note that the shares of First Financial were suspended from June, 2000 to July, 2011. Between July, 2011 and May 15, 2012, the scrip of First Financial was traded only on July 8, 2011 and November 16, 2011. The closing price on these days was ₹ 7.12/- and ₹ 5.10/- respectively.

Strangely, in spite of such fundamentals and tarnished track record of long period of suspension of trading and below par market price, First Financial was able to garner funds aggregating to ₹ 15,40,00,000/- from aforesaid 83 entities at a premium of ₹ 10/- per share within a short span of five months of revocation of suspension. Investment in a company having such poor and meagre fundamentals cannot prima facie be termed as a rational investment behaviour. Such investments, as in this case, normally could be made if the allottees had a nexus with First Financial and its directors/promoters and the issue of these shares was under a prior arrangement between them. 5. As a part of the inquiry, SEBI advised BSE to conduct surprise inspection at the registered office of First Financial to determine inter alia, the following: a. Whether the company exists at the registered office/corporate office; b. Whether any operations of the company are conducted at the said address. 6. Accordingly, BSE, on October 31, 2014, conducted a surprise inspection at the registered office of First Financial (i.e.

Old no. 24, 2nd Floor, New no. 45, Venkata Maistry Street, Mannady, Chennai, Tamil Nadu – 600 001) when it was revealed that the said premise was occupied by another firm in the name of M/s Carewell Enterprises and no officials/employees of First Financial were available at the time of the said inspection. On further inquiry, it was learnt that First Financial had recently shifted its base to Mumbai. On November 07, 2014 BSE also conducted an inspection of the corporate office of First Financial (i.e. 1513 & 1514, Maker Chamber V, 221, Nariman Point, Mumbai – 400 021) but no employee/official of First Financial was available there nor any operations of First Financial were being carried out from the said address. It was aloe noticed that on November 2 and November 4, 2014 First Financial had made two disclosures about shift of corporate office within Mumbai. However, from visits to all the aforementioned sites it was revealed that First Financial does not exist at the registered and corporate office addresses available as per BSE’s record, where it is listed. 7. It was observed that within a short period after the 2nd preferential allotment, a significant increase in the price of the scrip took place which continued during the period of lock in on the shares allotted to the preferential allotees.

Considering the fact that prior to the preferential allotments, trading occurred in the scrip of First Financial on two occasions only, the increase in the traded volume in the period after preferential allotment was found to be substantial. In light of the above, in order to observe the price volume behaviour of the scrip, the trading in the scrip was analysed in two Patches with a focus on the following:-  The trading frequency;  The volume generated;  Contribution to price rise;  Buying behaviour as observed from Last Traded Price ("LTP") data 8. On analysis of trading activity in the Scrip, it was observed that, during the Examination Period, two sets /groups of entities were mainly involved. While one group of entities was primarily involved in pushing the price up during Patch-1 (when the shares allotted in preferential allotments were under lock-in) by contributing to positive LTP through first trades with negligible order quantity, the other group of entities was acting as buyers in Patch-2 in order to provide exit to preferential allottees and in the process creating artificial volume.

The role of these two groups is discussed in subsequent paragraphs. 9. During Patch 1 (May 15, 2012 to February 08, 2013), on May 15, 2012, the scrip price opened at ₹ 5.35 and closed at ₹ 263.45 on February 08, 2013. During this period, the scrip was traded with an average volume of 23 shares per day and total volume of 2653 shares in 115 trading days with an average of 1 trade per day. It was observed that price of the scrip was influenced by certain entities primarily through first trades during this period. It was noticed that these entities by putting 1 or 2 trades per day with negligible/ very less quantity of buy order contributed significantly to the price rise. From LTP analysis, it was observed that price of the scrip increased from ₹ 5.35 to ₹263.45 mainly through first trades in 115 instances. 10. It was observed that in Patch 1, out of a total of 115 instances of trades establishing new high price in the scrip, top four entities namely, Prem Lata Nahar, Shyam Kanheyalal Vyas, Bharat Bagri Bagri and Sumitra Devi Agrawal established new high price on 69 instances. The contribution of these four entities in establishing new high price was ₹ 185/- out of total price rise of ₹ 258/-, which constitutes 72% of the total new high price.

The details of contribution to price rise by these four entities during Patch 1 are as under: Table I : Contribution to price rise in Patch 1 by top four entities. Pos Pos LTP Contribut Tot Pos Contribution ion (in Contribution of the Client Count Client PAN Client Name %) in Securities as a buyer of LTP Prem Lata AFAPN8764M Nahar 29.01 258.35 74.94 34 Shyam ACTPV2787Q Kanheyalal Vyas 19.04 258.35 49.2 16 Bharat Bagri AADHB8488A Bagri 12.74 258.35 32.91 12 Sumitra Devi ABLPA9728M Agrawal 10.88 258.35 28.1 7 Total 71.67 258.35 185.15 69

11. Inquiry also revealed that these aforementioned entities had also traded and were instrumental in contributing to the price rise of other stocks. Further, Prem Lata Nahar,

Shyam Kanheyalal Vyas and Sumitra Devi Agrawal are also related /connected to Shilpa Stock Broker Pvt. Ltd. and Bharat Bagri Bagri to BCB Brokerage through whom they have traded. The details of connection are as follows. Table II-Basis of connection amongst the entities who established new high prices in Patch I Name Particulars Prem Lata Nahar Prem Lata Nahar is the Mother of Rakesh Nahar who is the owner/director of Shilpa Stock Broker Pvt. Ltd. Shyam Kanheyalal Vyas Client of Shilpa Stock Broker Pvt. Ltd. Also huge debit balance in the client ledger shows that it has been funded by the broker. Sumitra Agrawal Sumitra Agrawal is the client of Shilpa Stock Broker Pvt. Ltd and director of Rajat Stock Broking Bharat Bagri Bagri Promoter/ director of BCB Brokerage Pvt Ltd and share common address with BCB brokerage. 12. The selection of scrips for trading, the trading pattern and connectivity with brokers cast doubt on the intent of these entities while trading in the securities market. The sheer number of scrips with track records of such dubious price and volume rise in which the said entities and their connected brokers are involved also cast doubt on their conduct in the securities market.

This suspicion gains strength from the fact that when these entities were buying during Patch-1, shares were being supplied by B.P JhunJhunwala who was connected to First Financial and was the top net seller during the said period. It was also observed that B.P JhunJhunwala and his family was the ultimate buyer of the shares sold by the promoters of First Financial prior to the increase in the price of the scrip. It was noted that P Natarajan, N Nithya and N Jayanthi sold 80093, 3360 and 570 shares, respectively which were ultimately bought by B.P JhunJhunwala and his family namely Ruhi Jhujhunwala and Mala Jhunjhunwala. This prima facie indicates that First Financial, its connected entity and brokers acting in connivance under a pre-planned arrangement had artificially increased the price during the lock-in period. 13. During Patch 2 (February 11, 2013 to December 12, 2013), the price of the scrip of First Financial opened at ₹ 263.45 on February 11, 2013 and closed at ₹ 178.45 on December 12, 2013. The scrip touched a high of ₹ 300 on June 06, 2013. During this period, the scrip was traded with an average volume of 41,252 shares per day and total volume of 86,21,776 shares in 209 trading days.

As compared to Patch 1, in Patch 2 the average volume increased by 179256% (1793 times) and average price increased by 193 %.

14. On analysis of trading activity during Patch 2, certain entities related/connected to First Financial were found to be the net buyers to the preferential allottees and thereby created artificial demand for the supply of shares from preferential allottees. Their inter-relationship/connection were noted from the Know Your Client (KYC) details, their bank statements, off-market transactions amongst them and the information available on the Ministry of Corporate Affairs ("MCA") website. Considering the large number of these related/connected entities, it was deemed necessary to shortlist those who were closely connected to First Financial and/or were instrumental in the price rise and/or contributed in volume of First Financial during Patch 2 of the Examination Period. These entities were shortlisted on the basis of following parameters: a) Top entities based on gross buy/trade quantity; b) Any other entity who has traded in the scrip and directly or indirectly connected to the company/ its directors/ entities mentioned in point above 15. The particulars of the above mentioned shortlisted group (hereinafter referred to as the "First Financial group") and the basis of relationship / connection amongst them are under: Table -III: Particulars of the shortlisted entities and the basis of connection amongst them Sr. Name PAN Basis of Connection No 1 GLOBAL INFRATECH & AABCA4255H  Ashok Bothra was the common director FINANCE LTD. in Global Infratech & Finance Ltd, Dynamic Portfolio Management & 2 DYNAMIC PORTFOLIO AAACD9125E Services Ltd, Blue circle Services Ltd and MANAGEMENT & First financial Services Ltd. SERVICES LTD  S Krishna Rao was also the director in First Financial Services Ltd and Global 3 PADMA IMPEX PRIVATE AAACL4269P Infratech & Finance Ltd. LTD.  Fund transfer between Global Infratech & Finance Ltd. and First Financial 4 RANISATI DEALER PVT AADCR7368C Services Ltd. LTD  The shareholder of Padma Impex Pvt Ltd 5 RITESH COMMERCIAL AABCR1974J is Bina hemanshu Mehta with whom First HOLDINGS LTD. Financial has huge fund transfer.  Ranisati dealer is the shareholder in 6 RITESH PROJECTS AADCR6224M Padma Impex Pvt Ltd among others. PRIVATE LTD Ranisati Dealer has also appeared in the bank statement of Comfort Fincap Ltd.  Ritesh commercial and Ritesh Projects are promoters of Dynamic Portfolio

Management & Services Ltd 7 BURLINGTON FINANCE AABCB2575P  Fund transfer between Blue Circle LTD. Services Ltd, Pine animation Ltd and Amrit sales Promotion Pvt Ltd 8 BLUE CIRCLE SERVICES AAACB2131L  Panna Lal Maloo is the common director LTD. of Manimudra Vincom Private Ltd., Amrit Sales Promotion Pvt Ltd. and 9 MANIMUDRA VINCOM AADCM4316K Symphony Merchant Pvt Ltd. Also Fund PRIVATE LTD. transfer between Symphony Merchant Pvt and Amrit Sales Promotion Pvt Ltd. 10 AMRIT SALES AACCA3220D  Director of Burlington Finance Ltd is PROMOTION PVT LTD. Rabi Paul who is also director in Amrit Sales Promotion Pvt Ltd. 11 SYMPHONY MERCHANT AADCS5411K  Bazigar Trading Pvt Ltd has common ph PVT LTD no with Amrit Sales promotion and common address with Manimudra 12 BAZIGAR TRADING AABCB3052B Vincom Pvt Ltd PRIVATE LTD.  Fund transfer between Forever Flourishing Finance and Pine animation 13 PINE ANIMATION LTD. AAECM0267A  Common e-mail id maloo.kol@gmail.com 14 FOREVER FLOURISHING AAACF4311Q FINANCE & INVESTMENT PVT LTD 15 ASTABHUJA AADCN9427C  The directors of these companies are CONSTRUCTION common namely Narendra Joshi and PRIVATE LTD. Ratan Pandit.

16 NAVDURGA AACCK2399D  Ratan Pandit and Anita Jhunjhunwala are INVESTMENT directors in Ruby Traders exporters Ltd CONSULTANTS PRIVATE  Anita Jhunjhunwala is director as well LTD. shareholder of Subham Communication in which S Krishna Rao is also a 17 NITYADHARA PLAZA AACCN9567A shareholder PRIVATE LTD.  As S Krishna Rao was director of First Financial Services during the Examination Period, thus the counterparties are connected to the company.  S Krishna Rao and Jhunjhunwala group /family are closely connected as they are directors as well as shareholders of various private companies namely Onesource idea Pvt ltd, Onesource tech media Pvt ltd, Subham communication, Radhasoami securities, Nandlal Vyapaar Pvt Ltd, Chiraag suppliers Pvt Ltd, LRG Properties, BPJ Holding etc who have fund transaction with the company during the Examination Period.  As per the KYC submitted by the trading member ‘Comfort Securities Pvt Ltd’ for its client ‘Navdurga Investment Consultants Private Ltd.’ has common director with that of the company ‘Blue Circle Services Ltd’ viz, ‘Dhruvnarayan Jha’.  e-mail id given in the annual report of Astabhuja Construction Private Ltd. is dhruvonarayan.jha@rediffmail.com 18 JAIHANUMAN MULTI AABCJ6667L  Directors of Jaihanuman Multi Agencies AGENCIES PRIVATE Private Ltd., Gokul Securities pvt ltd and LTD. Rutron International Ltd are same namely Ashok Hargovindas Soni, Hitesh Jaswantrai Pandya, Chhaya Ashok Soni  Gokul securities Pvt Ltd is also the preferential Allottee of First Financial Services Ltd 19 MASTER SECURITIES/ AAHFM8098F  Directors of Master Infrastructure And MASTER Real Estate Developers Ltd And Master INFRASTRUCTURE AND Trust are Same Namely Harjeet Singh REAL ESTATE Arora, Rajinder Kumar Singhania, Pavan DEVELOPERS LTD Kumar Chhabra,Puneet Singhania,Jashanjyot Singh  Master trsut and their directors are also the preferential allottee in First financial Ltd 20 DHANLAKSHMI AAECD4759L  Rakesh Srivastava (director of BROKERS PRIVATE LTD. Dhanlakshmi) & Punita Srivastava (Director of HS Tradecom) share 21 HS TRADECOM PRIVATE AACCH8988B common address i.e 354, Jessore Road, LTD. Dum dum, Nagar Bazar, Kolkata, 700074, West Bengal.

22 JAYINE TRADECOM PVT AACCJ8342D  Jayine Tradecom and Hs Tradecom have LTD common e-mail id shefali.khandelwal89@gmail.com 23 SWARNA PUSHPA AAJCS0597G  As observed from MCA website, all these VANIJYA PRIVATE LTD. private companies have common director 24 HARI OM SUPPLIERS AABCH2251E namely Bishwanath Agarwal & Uttam PRIVATE LTD. Banerjee. Further there have o ff-market 25 GOLDSTAR TRACOM AADCG8045K transfer of shares among themselves. PRIVATE LTD.  As observed from KYC details they have 26 KALAKAR COMMERCIAL AADCK9346B common phone no and e-mail id i.e PRIVATE LTD. 9830041787 & bishwanath1951 @ 27 SWARNAPRIYA VANIJYA AAJCS0595E

PRIVATE LTD. gmail.com 28 SURBHIKA VYAPAAR AAJCS0680C  Most of these companies are Shareholders PRIVATE LTD. of Surbhika vyapaar pvt Ltd. Among 29 NANDAN KANAN IRON AABCN8968J others Ritesh Enclave Pvt Ltd and Ritesh AND STEEL PRIVATE Properties Pvt Ltd are shareholder of LTD. Surbhika Vyapaar who are also promoter 30 ANCHAL VYAPAAR AAFCA2480C of Dynamic Portfolio Management & PRIVATE LTD. Services Ltd 31 BNA COMMERCE AABCB0727D PRIVATE LTD. 32 SANCHAY TRADECOMM AAPCS2005M PRIVATE LTD. 33 SANCHAY TREXIM AAPCS1999E PRIVATE LTD. 34 STARDOX VINIMOY AAECS0352C  As observed from MCA website, all these PRIVATE LTD. private companies have common director namely Biswanath Basak and Swarup 35 R C SUPPLIERS PRIVATE AABCR2904A Kumar Dey LTD. 36 RAINA VYAPAAR AABCR3482R PRIVATE LTD 37 USHITA TRADING AND AAACU3269L AGENCIES LTD. 38 WALTARE INVESTMENT AAACW2314A  Off-market transfer of shares among the PVT LTD clients  Life line marketing pvt ltd share common 39 BIMAL KUMAR DROLIA AABCG9640C address with Waltare Investment pvt ltd  GRD Securities have acted as broker to all 40 PARMANAND DROLIA AABCC0603M these clients while dealing in the shares of First financial. GRD Securities is a group 41 ROSHAN KUMAR AAACF4335Q company of Drolia family. DROLIA  Parmanand Drolia is the shareholder of GRD Securities and GRD Securities had 42 GRD ENCLAVE PVT LTD AABCG9641D acted as brokers to all these clients.  GRD Enclave is a group company of 43 LIFE LINE MARKETING AAACL5973G GRD Securities in which the directors are PVT LTD. same that is Pramod Drolia, Bimal drolia. 43 LINTON AAACL5784F Common director as Dilip das and share CONSULTANTANTS common phone no and common address PRIVATE LTD. 44 BSR FINANCE & AABCB0636K CONSULTANTS PRIVATE LTD.

45 PREFER ABASAN AAECP2470J Fund transaction with Comfort Intech who is PRIVATE LTD. connected or related to First Financial as described in the order 46 KRIPA SECURITIES AACCK2399D  Off-market transfer with Globe Capital Market and Globe capital Market appears in the bank statement of Comfort Intech.  Kripa commodities is appearing under the head unsecured loan of Goldstar Tracom Private Ltd. 47 PRIDE DISTILLERY AACCM6582E  Jagdish purohit is the shareholder of mc PRIVATE LTD pride distillery as well as of JMD sound who is a subsidiary of JMD telefilms industries. JMD sound is also a shareholder of Onesource techmedia Ltd in which S Krishna Rao, director of First Financial is also shareholder. 48 SANTOSH KUMAR SHAH ALGPS0859J  Santosh Kumar Shah is connected to Madsan Agencies through off-market 49 MADSAN AGENCIES (P) AACCM0579K LTD.  Madsan agencies is connected to East India Securities and others through off- 50 MOTOREX FINANCE AACCM1042R market PVT. LTD.  Vinayshah0004@yahoo.co.in is the 51 MIDNIGHT AGENCIES AABCM6864G common e-mail id for santosh kumar PVT LTD shah, madsan agencies and shree sudarshan castings. Further they share 52 EAST INDIA SECURITIES AABCE2412N common address LTD. 53 VALUE AND WORTH AAFFV5756K 54 SHREE SUDHARSHAN AADCS9429B CASTINGS PVT LT 55 MINIMUM SHARES AND AAGCM0970Q  All these clients had bought huge number SECURITIES PRIVATE of shares of First financial through LTD. Narayan Securities. The Director of Narayan securities namely Amit Saraf was the Preferential allottee of First Financial during the Examination Period.  Further another preferential allottee namely Pawan kumar Bajaj is also 56 RAJANI INVESTMENT AABCR2457G connected to Amit Saraf as they are PRIVATE LTD. common director in Avyaan Capital private Ltd. 57 R K INVESTMENT AABCR2488R  These entities also share a common PRIVATE LTD. address.  Rajani Investment Pvt. Ltd. And R. K.

Investment Pvt. Ltd. Are also the shareholders of Minimum Shares and Securities Pvt. Ltd. 58 TOPLIGHT AABCT1134Q  ISG trader is shareholder of Toplight COMMERCIALS /TARA commercial among others and also CHAND AGARWAL appearing in the bank statement of Comfort Intech. 59 VEENA MOHANLAL AAWPC3158M  All these clients have traded through CHANDIRAMANI comfort securities who is a connected 60 NIRMAL KUMAR AAUPM6284E entity to First Financial MALHOTRA  All these entities have received money 61 KIRIT VASUDEO DAVE AHKPD0543J from similar entities namely Keshav Madhav Enterprises and Madanji Enterprises who have also provided funds to Astabhuja Construction, Nityadhara plaza etc.

16. It is observed that during Patch 2, the preferential allottees were net sellers and entities forming part of the First Financial group were net buyers, a snapshot of which is given below:- Table IV - Exit provided by First Financial Group to Preferential allottees

Gross Gross sell as Gross Gross Buy as % of % of Market Buy Market Gross sell Preferential 6995530 64.65 - - Allottees First Financial - - 6065202 56 Group 17. As it can be observed from Table IV, most of the trades took place between the allottees and the entities of First Financial Group. During the same period, the allottees were found to be selling and in the process making a huge profit/gain. It is observed that 80 allottees made a collective profit of a ₹ 172.21 Crore on a collective investment of ₹ 14.50 Crore, a whopping return of approximately 1087 % on their investment in a period of 20-24 months (including the lock in period of the shares allotted in the preferential allotment). This profit was obtained in a stock where the fundamentals/financials of the company do not justify the price. It is evident from the above analysis of Patch 2 that the entities of First Financial Group provided a hugely profitable exit to the allottees. The profit/gain earned by the allottees during Patch 2 is given below:-

Table: V- Profit made by the preferential allotees Shares Shares Cost Sr. Allotte sold price of Gross Sell Name No d shares Value Profit sold (in ₹) MASTER COMMODITY 1 SERVICES LTD. 75000 240000 1500000 58790800 57290800 2 GIRIRAJ PRASAD MANIHAR 25000 25000 500000 7318400 6818400 3 KRISHAN KUMAR DAGA 50000 50000 1000000 14531750 13531750 4 N K AGARWAL &SONS 100000 100000 2000000 29379910 27379910 5 RAMESH KUMAR DAGA 50000 50000 1000000 14512000 13512000 6 NARESH GARG 250000 120100 5000000 34696990 29696990 7 SANGEETA GARG 200000 178000 4000000 50261750 46261750 8 TUSHAR DHIRAJLAL MEHTA 50000 50000 1000000 13973771 12973771 9 MASTER TRUST LTD. 75000 85000 1500000 17624650 16124650 HASHMUKHBHAI B PATEL 10 HUF 375000 35000 7500000 10071508 2571508 11 H N PARWAL 50000 50000 1000000 14688550 13688550 12 SANJAY DAGA 50000 50000 1000000 14528000 13528000 13 KETAN DHIRAJLAL KAPASI 75000 75000 1500000 22073918 20573918 DRAKE PROPERTIES 14 PRIVATE LTD. 50000 50000 1000000 14534250 13534250 15 ANIL AGRAWAL HUF 250000 249900 5000000 72540759 67540759 16 BITTHAL DAS PARWAL 50000 50000 1000000 14705000 13705000 NAVRATANMAL JEETMAL 17 GANNA 50000 50000 1000000 14022850 13022850 18 VIMAL KUMAR MANTRI 25000 25000 500000 7364800 6864800 DHIRAJLAL MAGANLAL 19 MEHTA 50000 50000 1000000 14326875 13326875 20 BHARAT RAMJIBHAI MANEK 75000 75000 1500000 21984438 20484438 CHETAN RAMJIBHAI 21 MANEK 75000 75000 1500000 21984612 20484612 GOKUL SECURITIES 22 PRIVATE LTD. 300000 300000 6000000 81397817 75397817 23 MUKESH ATAL MUKESH 50000 50000 1000000 14702000 13702000

ATAL (HUF) 24 AASHISH V AGGARWAL 50000 40000 1000000 11807946 10807946 25 BAL KISHAN & SONS HUF 50000 50000 1000000 14693300 13693300 AMIT HASMUKHBHAI 26 PATEL 375000 625000 7500000 55706489 48206489 RAJENDRAKUMAR 27 AGARWAL HUF 75000 75000 1500000 21902905 20402905 28 RAJNI ATAL 50000 50000 1000000 14728900 13728900 29 RAJESH ATAL 50000 50000 1000000 14718580 13718580 SYNCOM FORMULATIONS 30 (INDIA) LTD. 100000 100000 2000000 24963016 22963016 JINESHNAVRATANMALGAN 31 NA 50000 50000 1000000 13993425 12993425 VIKASNAVRATANMALGAN 32 NA 50000 50000 1000000 13943850 12943850 DEVSHIBHAI PARSHOTTAMBHAI 33 DUNGRANI 200000 200000 4000000 58291100 54291100 34 AMIT SARAF 50000 50000 1000000 14755240 13755240 35 PAWAN KUMAR BAJAJ 50000 50000 1000000 14718000 13718000 36 GIRISHBHAI PATEL HUF 50000 50000 1000000 12578951 11578951 37 RITESH AGARWAL HUF 75000 75000 1500000 21931343 20431343 38 HARJEET SINGH ARORA 50000 50000 1000000 14184180 13184180 39 SARLA DHIRAJLAL MEHTA 50000 50000 1000000 14307762 13307762 40 SAMIR HARSHADRAI DOSHI 50000 50000 1000000 14728680 13728680 41 KAMAL KHEMKA 250000 66030 5000000 19106304 14106304 42 KULBIR SINGH 50000 50000 1000000 14753670 13753670 BHARATBHAI NATHABHAI 43 BUHA 50000 50000 1000000 14703371 13703371 44 SUNDER SOMANI 75000 75000 1500000 20512201 19012201 45 KARUNA ATAL 50000 50000 1000000 14718700 13718700 DHEERAJ KRISHNA 46 AGARWAL 50000 52500 1000000 15495975 14495975 RAJINDER KUMAR 47 SINGHANIA 50000 50000 1000000 14683020 13683020 48 PARVEEN PARVEEN 50000 50000 1000000 14736600 13736600

SINGHANIA SURESH KUMAR 49 KHANDELIA 112500 112500 2250000 31245539 28995539 50 MANJU KHANDELIA 100000 100000 2000000 27897219 25897219 51 PREM JAIN 125000 125000 2500000 36623649 34123649 52 HARNEESH KAUR ARORA 50000 50000 1000000 14524450 13524450 53 GAURAV JAIN 125000 125000 2500000 36310325 33810325 54 SUNITA CHAUDHARY 150000 150000 3000000 40657450 37657450 55 SANJIV CHAUDHRY 150000 150000 3000000 40755752 37755752 GOPALBHAI PARSHOTAMBHAI 56 DUNGARANI 200000 200000 4000000 58319451 54319451 NANDITA BHAVESH 57 MADIYAR 50000 50000 1000000 14744850 13744850 58 SANTOSH MANIHAR 25000 25000 500000 7355600 6855600 59 VINAL ARVIND KAPASI 75000 75000 1500000 22067915 20567915 60 SURESH KUMAR KALANI 100000 100000 2000000 29456462 27456462 ASHOKBHAI NATHABHAI 61 BUHA 50000 50000 1000000 14590648 13590648 62 BRIJ BHUSHAN SINGAL 225000 225000 4500000 65749627 61249627 NARAYAN PRASAD 63 MUNDHRA 100000 100000 2000000 28845604 26845604 64 SHILPA AGARWAL 75000 75000 1500000 21843585 20343585 65 PRIYANKA GANNA 50000 50000 1000000 13949708 12949708 66 SHILPA GANNA 50000 50000 1000000 13965480 12965480 67 RUPAL TUSHAR MEHTA 50000 50000 1000000 13844535 12844535 MANJUDEVI N MUNDRA 68 MUNDRA 100000 100000 2000000 28869249 26869249 CHAMPAKBHAI MANUBHAI 69 SOPARIWALA 50000 50000 1000000 14245180 13245180 70 BHARATI BHARAT MANEK 75000 75000 1500000 22022488 20522488 71 ANSHUL JAIN JAIN 50000 50000 1000000 14597500 13597500 72 NEERAJ SINGAL 225000 225000 4500000 64835211 60335211 73 UMA SONGAL 75000 75000 1500000 22178900 20678900 RAJKUMAR TEJBAHADUR 74 SINGH 50000 52000 1000000 15349975 14349975

75 PUNEET SINGHANIA 50000 50000 1000000 14546735 13546735 AAMIR NAWAB MEHJABEEN 76 MALIK 87500 87500 1750000 25605054 23855054 77 JASHANJYOT SINGH 50000 50000 1000000 14687586 13687586 78 HIMANSHU C SOPARIWALA 50000 50000 1000000 14426965 13426965 79 HARSHITA MAHESHWARI 25000 27000 500000 7927996 7427996 80 ANJALI DAGA 50000 50000 1000000 14378300 13378300 186709788 172209788 TOTAL 7250000 6995530 145000000 9 9

18. The transactions wherein the entities of First Financial group bought most of the shares sold by the allottees cannot be just a coincidence particularly when sellers have nexus with First Financial and its promoters/directors and buyers are the entities connected with First Financial and its promoters /directors. From the analysis presented for Patch 1, it was established that the shares of First Financial were not in demand by the general investors of the market and saw very low volume on most of the trading days and hence could not have commanded the price as observed in Patch 2. In any market, a sudden supply if not matched by similar demand leads to price fall. Considering the same, any rational investor would not have dumped a large number of shares without facing the risk of a significant price fall until and unless he was sure of the demand side absorbing the supply. In this peculiar case, the entities of First Financial Group created the demand against the supply from the preferential allottees. In the whole process, the principle of price discovery was kept aside and the market lost its purpose. It is evident from the above analysis that the Financial group entities provided a hugely profitable exit to the allottees. This could be only possible if the allottees, First Financial entities and First Financial and its promoter/ directors were hand in glove with each other. The said finding is also corroborated by the fact that in few instances/ cases, it is observed that the buyers are related /connected entities of preferential allottees. 19. During Patch-3 (December 13, 2013 to March 31, 2014) i.e pursuant to the stock split, price of the scrip opened at ₹ 17.7 on December 13, 2013 and fell to as low as ₹ 7 as on March 31, 2014. During this period, it was noticed that the scrip was traded with an average volume of 8,02,667 shares per day and total volume of 6,01,90,286 shares in 75 trading days. On analysis of trading activity during Patch-3, it was noticed that the top buyers among others include Minimum Shares And Securities Private Ltd., Rajani Investment Private Ltd., R K Investment Private Ltd, Pride Distillery Pvt Ltd, Veena

Mohanlal Chandramani, Kirit Vasudeo Dave and Nirmal Kumar Malhotra who had bought in total 2,43,93,430 shares comprising of 41% of gross buy to the market gross buy volume during the said period. These clients have traded through Narayan securities and Comfort securities that are related / connected to the Preferential allottees and company First Financial respectively in the manner as described in the table above (basis of connection).

20. Thereafter, the trading volume in the scrip decreased in the quarter ending June 2014 and again started increasing from August 2014 onwards. It was also noticed that the price of the scrip increased from ₹ 9 to a high of ₹ 24 during August, 2014 to October 2014 and the total trading volume also increased to 50,28,803 which is 1.6 times higher than the trading volume of 31,00158 shares during April to June 2014. From the trade data it is prima facie observed that connected /related clients namely Kripa securities Pvt. ltd, Padma Impex Private Ltd, Atash transport Pvt. Ltd, Pride Distillery are found to be top net sellers among others during this period August, 2014 to October 2014. It is pertinent to mention that Kripa securities Pvt. ltd, Padma Impex Private Ltd and Pride Distillery were buyers during Patch II, whereas, directors of Atash transport Pvt. Ltd were preferential allotees of the shares of First Financial and there were fund transactions between Atash transport Pvt. Ltd and First Financial during the Examination Period.

USE OF FUNDS RECEIVED THROUGH PREFERENTIAL ALLOTMENT AND CONNECTION BETWEEN PREFERENTIAL ALLOTEES AND FIRST FINANCIAL 21. From the copies of the special resolutions dated August 25, 2011 and March 12, 2012, passed under section 81(1A) of the Companies Act, 1956 as available on BSE website it is noted that First Financial had disclosed to its shareholders and public that the purpose of aforesaid fund raising through preferential allotment was to meet following requirements -  To expand the segment of Corporate Advisory Service like exploring refinancing alternatives of the clients and advising better sources of funds available.  To enter in to the spectrum of Loan / Debt Syndication, which is the need of the hour for all corporate and to provide a comprehensive suite of advisory services packaged with resource raising.  To enter in to segment of arranging Equity Placement / Strategic partners for corporate clients.

 To expand the geographies of the company by penetrating to the major clients such as Mumbai and Delhi by opening the branches therein. 22. From an examination of the P&L account for the period 2011-12 and 2012-13 it is observed that there is no receipt of advisory fee. Which implies that the company did not enter into any fee based activities which it had stated in the resolution for approval of preferential allotment by shareholders. Further, from an examination of the balance sheet of First Financial for the FY 2011-12 and 2012-13 it is observed that the company has no fixed assets and no capital work in progress. As far as expansion of geography by opening branches in Mumbai and Delhi is concerned, it is already discussed above that company is unavailable both at its corporate office as well as Registered office. Further the annual report indicates that company during the Examination Period is basically into trading or investment activities of its related/connected companies which is again not supported by the above resolution of arranging equity placement, Loan /Debt syndication etc. This prima facie indicate that the purpose mentioned by the company to raise funds through preferential allotment is just an eye-wash to the investor in general and was never done with an real intent. 23. During preliminary inquiry it was observed from the bank statement of First Financial that money received through two preferential allotments of equity shares was immediately transferred to the following entities as shown below:- Table : VI: Transfer of money after the preferential allotment 1st Preferential Allotment Entities Values (approx.) First Financial (other bank A/c) 1,20,00,000 Bina Hemanshu Mehta 2,42,00,000 Parikh Group (Chetan S Parikh HUF, Pankaj S Parikh, Vinod S Parikh, Kajal P Parikh, Dhara V Parikh, Dipal C Parikh, Megha P Parikh) 4,36,80,000 Marsh Steel Trading 1,00,00,000 Vision Steel Ltd 50,00,000 Noble Express Services Pvt. Ltd 5,00,000 Comfort Group comprising Comfort Fincap Ltd, Comfort Intech Ltd, Comfort Securities. 1,30,00,000 2nd Preferential Allotment Comfort Group (Comfort Fincap Ltd, Comfort Intech 2,48,36,757

Ltd, Comfort Securities) Tirupati Developers Pvt. Ltd 5,00,000 Advent Developers Pvt. Ltd 40,00,000 Kuber Kamana Marbles 1,05,00,000 Chiraag Suppliers Pvt. Ltd 50,00,000

24. From the fund statement analysis, it is observed that funds received as proceeds of preferential allotment were immediately transferred to various entities on the same day or next day and was never retained in the company for expansion of its business or execute its future plans as envisaged in the special resolution passed under section 81(1A) of the Companies Act, 1956. The whole system of fund transfer looks as if the transferor and transferee are pre-determined and funds are being routed through various channels before reaching the end users who are basically the buyers in Patch-2 that provided exit to the preferential allottees. It is also pertinent to mention that several preferential allottees such a those belonging to the Singal family, namely Brij Bhushan Singal, Neeraj Singal, Ritu Singal and Uma Singal (who were allotted 7,50,000 shares by First Financial at a cost price of ₹ 1.5 crore) indirectly received the funds back from First Financial in the name of investment by First Financial or otherwise. One such instance (mentioned in the above Table) is where ₹ 1.5 crore have been transferred to Marsh Steel Trading Ltd and Vision Steel Ltd for the purpose of investment as indicated in Annual Report of FY 2011-12 whose promoters are Singal family.

Thus the above events prima facie indicates that money received through preferential allotment were again routed to the same source i.e. Singal family. Inquiry also revealed that members of Singal family have been preferential allottees in such type of companies which have a history similar to that of First Financial. From the above facts, it prima facie emerges that a number of entities who were the preferential allotees in the present case, were regularly investing in companies for namesake and the money invested by them in these companies was being returned to them indirectly. 25. It was noticed that the entities who had received funds from First Financial after the preferential allotment had later transferred funds to First Financial. Again these funds were further transferred from First Financial to various entities and majorly to Comfort Group. It was further observed from the bank statement that an approximate amount of ₹ 11 crore has been transferred to Comfort Group whereas only ₹ 4.10 crore received during the Examination Period. Other events occurred during the Examination Period that substantiate the relationship between First Financial and Comfort group is as follows:

Table : VII: Relationship between First Financial and Comfort group Name Transaction details Anil Agrawal HUF  Director of Comfort Group as well as the preferential allotee of First Financial Jugal Chandrakant  Director of Comfort group and had received ₹ 15 lac from Thacker First Financial during Examination Period. Lakshya Global  Directors of Lakshya Global Logistics are Preferential allotee Logistics of First Financial  Transfer of Fund between Lakshya Global Logistics and First Financial and transfer of fund between Lakshya Global Logistics with Comfort Intech BLC Trading  Company had fund transfer with First Financial as well as with Agencies Comfort Intech Suresh Khandelia  Promoter of Comfort Fincap Ltd as well as preferential and Manju allottee of First Financial Khandelia A. K Nevatia  A. K Nevatia is the director of Comfort Group and also the director of Splash Media Infra Ltd in which First Financial has invested during the Examination Period. Ranisati Dealer Pvt  Both the entities are counterparties as buyers to preferential Ltd and Prefer allottees and have also appeared in the bank statement of Abasan pvt Ltd Comfort Fincap Ltd / Comfort Intech Ltd. 26. This prima facie indicates that Comfort group and its directors share a close relationship with First Financial which cannot be termed as mere commercial/business relationship.

Further on analysis, it is observed that comfort securities had been broker to majority of the top buyers during Patch-2 which again cannot be a mere coincidence. Thus the above findings prima facie indicate that Comfort group has played a key role in the whole process of preferential allotment that has resulted into huge profitable exit to the preferential allottees of such a stock that has hardly any intrinsic value. 27. It was also observed that the entities, to whom funds were transferred by First Financial, included two private companies namely, Chiraag Suppliers Pvt. Ltd and Nandlal Vyapaar Pvt. Ltd who were related/connected to First Financial and to whom ₹ 1 crore of was transferred during the Examination Period. It was observed from MCA database that among others, S Krishna Rao and Stanley Gilbert Mekhasingh, who were also directors of First Financial, held shares in these two companies at that point of time. 28. From the analysis of bank statements and financial statements, it is observed that funds received as proceeds of preferential allotment were immediately transferred to various entities on the same day or next day and was never retained in the company for expansion of its business or execute its future plans as envisaged in the special resolution passed under section 81(1A) of the Companies Act, 1956. The company representative/ company also could not satisfactorily explain the nature of conduct of its business and the final purpose for which the funds were actually utilised.

The fund movement, therefore, indicates routing of money through various channels before it reaches the end users to provide exit to the preferential allottees. 29. On analysis of bank statement of few top buyers, it is observed that these entities bank accounts had huge inflow of funds from different entities and the outflow is primarily to the trading member towards purchase of shares. It was also observed that entities from whom funds have been received are similar in cases of top buyers whose accounts are analysed. This shows that all the top buyers are related to each other. 30. A similar fund flow pattern was observed across all the First Financial group of entities who were found to be trading in Patch 2. It was observed that all of the First Financial group entities providing an exit to the allottees, received funds from various sources and the money received was transferred to their trading member towards purchase of shares of First Financial. Most of the First Financial Group entities are private Ltd. companies, engaged in various kind of businesses. However, the analysis of bank account statement reveals that they are only indulged in routing of funds.

On most of the instances, the funds received by them were immediately transferred to a trading member or to another entity. It was observed that there was a significant layering by way of funds transfers hiding the true identity of ultimate owner. 31. From the above examination and factors as discussed hereinabove, I note that the allottees, First Financial and First Financial group entities are connected to each other. In this regard, I note that Hon'ble SAT has, in many cases such as Classic Credit Ltd. vs. SEBI (SAT Appeal no. 68/2003, Order dated December 8, 2006), Classic Credit Ltd. vs. SEBI (SAT Appeal no. 76/ 2003, Order dated January 9, 2007) and Veronica Financial Services Ltd. vs. SEBI (SAT Order dated August 24, 2012), held that connection/relations can be established on the basis of factors including the common addresses, common directors/ shareholders, etc. 32. It is pertinent to mention that the key to the scheme of operations employed by the First Financial Group lies in the preferential allotment of shares made by First Financial. Due to a lock-in of one year on shares any gains made on the sale of such shares makes them eligible for long term capital gains.

From the observations of preliminary inquiry it is inter alia noted that :- a) the fund brought in by way of preferential allotment was utilised for purposes other than those disclosed and extended by way of purported loans to companies through informal arrangements; b) even when substantial number of shares i.e. 77 lakh shares were locked-in and non transferable / tradable, price of the scrip increased substantially to the extent of 5160% with small chunk of volume / purchases by certain entities; c) After the expiry of the lock-in period (i.e. in Patch 2), the average volume increased astronomically to the extent of 179256% (1793 times) and average price increased by 197%. Such increase in volume was mainly on account of matched trading amongst First Financial group entities and allottees d) 80 out of the 83 preferential allottees sold total 6995530 shares allotted to them by First Financial at the price increased on account of the aforesaid manipulative trading in Patch 1; e) The funds required for purchase of shares by the First Financial group entities had been provided to them through layering of fund transfers.

33. From the above facts and circumstances it can reasonably be inferred that the preferential allottees acting in concert with First Financial group have misused the stock exchange system to generate fictitious long term capital gains ("LTCG") so as to convert their unaccounted income into accounted one with no payment of taxes as LTCG is tax exempt. I prima facie find that the above modus operandi helped the concerned entities to pay a lower rate of tax on account of LTCG and helped them to show the source of this income to be from legitimate source i.e. stock market. 34. Considering the above, I am of the view that the preferential allotment was used as a tool for implementation of the dubious plan, device and artifice of First Financial group and allottees. One could argue that in the order to make LTCG, the preferential allottees in question could have bought in secondary market and waited for a year before selling the shares. In the instant case, probably the preferential allotment route was preferred over secondary market route because the share capital of First Financial prior to preferential allotment was very small i.e. 3,74,760 equity shares (face value ₹ 10) to accommodate the required fictitious LTCG of ₹ 172 crore approximately.

As such the capital expansion through preferential allotment and sock split provided much bigger source to the persons involved in terms of volume and price manipulation to facilitate the whole operation. 35. Since prior to the trading in its scrip during the Examination Period, First Financial did not have any business or financial standing in the securities market, in my view, the only way it could have increased its share value is by way of market manipulation. In this case, it is noted that the traded volume and price of the scrip increased substantially only after First Financial group and allottees started trading in the scrip. The average volume increased by 179256% (1793 times) during the Examination Period i.e. from 23 shares per day to 41,252 shares per day & the price increased by 5160% (53 times) during the Examination Period, i.e. ₹ 5 to ₹ 263. First Financial group entities were trading in the scrip above the LTP and their trades resulted into artificial increase in price. Thus these group of entities manipulated the price of the scrip during the Examination Period. I further note that, First Financial group entities and allottees traded amongst themselves as substantiated by their matching contribution to net buy and net sell in Patch 2. There was no change in the beneficial ownership of the substantial number of traded shares as the buyers and sellers both were part of the common group and were acting in league/concert to provide LTCG benefits to the allottees.

I prima facie find that First Financial group and allottees used securities market system to artificially increase volume and price of the scrip for making illegal gains to and to convert ill-gotten gains into genuine one. 36. I am of the considered view that the schemes, plan, device and artifice employed in this case, apart from being a possible case of money laundering or tax evasion which could be seen by the concerned law enforcement agencies separately, is prima facie also a fraud in the securities market in as much as it involves manipulative transactions in securities and misuse of the securities market. The manipulation in the traded volume and price of the scrip by a group of connected entities has the potential to induce gullible and genuine investors to trade in the scrip and harm them. As such the acts and omissions of First Financial group and allottees are ‘fraudulent’ as defined under regulation 2(1)(c) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (‘PFUTP Regulations’) and are in contravention of the provisions of Regulations 3(a), (b), (c) and (d) and 4(1), 4(2)(a), (b), (e) and (g) thereof and section 12A(a), (b) and (c) of the Securities and Exchange Board of India Act, 1992. The said provisions are reproduced hereunder:- SEBI ACT Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control.

"12A. No person shall directly or indirectly— (a) use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be listed on a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of this Act or the rules or the regulations made thereunder;

(b) employ any device, scheme or artifice to defraud in connection with issue or dealing in securities which are listed or proposed to be listed on a recognised stock exchange; (c) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognised stock exchange, in contravention of the provisions of this Act or the rules or the regulations made thereunder;" PFUTP Regulations "3. Prohibition of certain dealings in securities No person shall directly or indirectly— (a) buy, sell or otherwise deal in securities in a fraudulent manner; (b) use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of the Act or the rules or the regulations made there under; (c) employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange; (d) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made there under.

4. Prohibition of manipulative, fraudulent and unfair trade practices (1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities. (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely:— (a) indulging in an act which creates false or misleading appearance of trading in the securities market; (b) dealing in a security not intended to effect transfer of beneficial ownership but intended to operate only as a device to inflate, depress or cause fluctuations in the price of such security for wrongful gain or avoidance of loss; …. (e) any act or omission amounting to manipulation of the price of a security; …. (g) entering into a transaction in securities without intention of performing it or without intention of change of ownership of such security;" 37. I note that the directors of First Financial during the relevant time (i.e. S Krishna Rao, Stanley Gilbert Felix Melkhasingh and Sambasivaiyer Swaminathan), being in control of the day to day affairs of First Financial, had the knowledge of its acts and omissions.

They were also under an obligation to ensure that the acts and transactions of First Financial were not in violation of any of the applicable provisions of SEBI Regulations or other applicable laws. I, therefore, prima facie find that S Krishna Rao, Stanley Gilbert Felix Melkhasingh, Nirmal Singh Mertia and Sambasivaiyer Swaminathan were responsible for First Financial 's acts and omissions in this case. 38. I am of the opinion that a detailed investigation of the entire scheme employed in this case is necessary to find out the role of any other entity therein, connection amongst the concerned entities and the ultimate owners of funds used for manipulating the price of the scrip. Therefore, while SEBI would investigate into the probable violations of the securities laws, the matter may also be referred to other law enforcement agencies such as Income Tax Department, Enforcement Directorate and Financial Intelligence Unit for necessary action at their end as may be deemed appropriate by them. 39. SEBI strives to safeguard the interests of a genuine investor in the Indian securities market.

The acts of artificially increasing the price of scrip misleads investors and the fundamental tenets of market integrity get violated with impunity due for such acts. Under the facts and circumstances of this case, I prima facie find that the acts and omissions of First Financial group and allottees as described above is inimical to the interests of participants in the securities market. Therefore, allowing the entities that are prima facie found to be involved in such fraudulent, unfair and manipulative transactions to continue to operate in the market would shake the confidence of the investors in the securities market. 40. In this case it is noted that as on December 01, 2014 the allottees are still holding 65,98,810 shares of First Financial that were allotted to them in the aforesaid preferential allotments. Further, the entities that were buyers in Patch-2 and Patch-3 have gradually started selling shares after the price rise from August 2014 onwards i.e. from ₹9 to ₹23 almost 155% increase. The price of the scrip is currently around ₹23 per share and the holders including preferential allottees and buyers (exit providers), who are holding around 7,70,00,000 shares (post split), may potentially gain around ₹177 crore.

Unless prevented they may use the stock exchange mechanism in the same manner as discussed hereinabove for the purposes of their dubious plans as prima facie found in this case. In my view, the stock exchange system cannot be permitted to be used for any unlawful/forbidden activities. Considering these facts and the indulgence of a listed company in such a fraudulent scheme, plan, device and artifice as prima facie found in this case, I am convinced that this is a fit case where, pending investigation, effective and expeditious preventive and remedial action is required to be taken by way of ad interim ex -parte in order to protect the interests of investors and preserve the safety and integrity of the market. 41. In view of the foregoing, in order to protect the interest of the investors and the integrity of the securities market, I, in exercise of the powers conferred upon me in terms of section 19 read with section 11(1), section 11 (4) and section 11B of SEBI Act, 1992, pending inquiry/investigation and passing of final order in the matter, hereby restrain the following persons/entities from accessing the securities market and buying, selling or dealing in securities, either directly or indirectly, in any manner, till further directions:-

S. NO. NAME OF THE ENTITY PAN COMPANY 1 FIRST FINANCIAL SERVICES LTD AAACF1145J PROMOTERS AND DIRECTORS OF FIRST FINANCIAL 2 PONUSWAMMY NATARAJAN AAAPN9499G 3 N NITHYA AKWPN5092R 4 N JAYANTHI AACPJ1012F 5 S KRISHNA RAO AGWPR3410R 6 STANLEY GILBERT FELIX MELKHASINGH AAMPF5456D 7 SAMBASIVAIYER SWAMINATHAN AABPS1434P 8 NIRMAL SINGH MERTIA AKHPM8437G PREFERENTIAL ALLOTTEES 9 MASTER COMMODITY SERVICES LTD AAACE3600M 10 GIRIRAJ PRASAD MANIHAR AAAHG6195E 11 KRISHAN KUMAR DAGA AAAHK5685D 12 N K AGARWAL &SONS AAAHN5067J 13 RAMESH KUMAR DAGA AAAHR7973K 14 NARESH GARG AAAPG1524B 15 SANGEETA GARG AAAPG5628E 16 TUSHAR DHIRAJLAL MEHTA AAAPM8897P 17 MASTER TRUST LTD. AABCM5833B 18 HASHMUKHBHAI B PATEL HUF AABHH5224A 19 H N PARWAL AABHH6685K 20 SANJAY DAGA AABHS1744Q 21 KETAN DHIRAJLAL KAPASI AABPK6452F 22 DRAKE PROPERTIES PRIVATE LTD. AACCD4639H 23 ANIL AGRAWAL HUF AACHA9591E 24 BITTHAL DAS PARWAL AACHB8343P 25 NAVRATANMAL JEETMAL GANNA AACHN5142C

26 VIMAL KUMAR MANTRI AACHV0973P 27 DHIRAJLAL MAGANLAL MEHTA AACPM3147N 28 BHARAT RAMJIBHAI MANEK AACPM3397G 29 CHETAN RAMJIBHAI MANEK AACPM3398K 30 GOKUL SECURITIES PRIVATE LTD. AADCG7372B 31 MUKESH ATAL MUKESH ATAL (HUF) AADHM9088H 32 AASHISH V AGGARWAL AADPA5357P 33 BAL KISHAN & SONS HUF AAEFB0727D 34 AMIT HASMUKHBHAI PATEL AAEHA4171N 35 RAJENDRAKUMAR AGARWAL HUF AAEHR7685G 36 RAJNI ATAL AAEPA0263F 37 RAJESH ATAL AAEPA0264C 38 SYNCOM FORMULATIONS (INDIA) LTD. AAFCS6794R 39 JINESHNAVRATANMALGANNA AAFHJ7950P 40 VIKASNAVRATANMALGANNA AAHHV1011R 41 DEVSHIBHAI PARSHOTTAMBHAI DUNGRANI AAIPD7191D 42 AMIT SARAF AAJHA6325F 43 PAWAN KUMAR BAJAJ AAKHP1145F 44 GIRISHBHAI PATEL HUF AALHP0436L 45 RITESH AGARWAL HUF AAMHR6805C 46 HARJEET SINGH ARORA AAMPA0474C 47 SARLA DHIRAJLAL MEHTA AANPM7722Q 48 SAMIR HARSHADRAI DOSHI AAQPD2202F 49 KAMAL KHEMKA AAQPK0916R 50 KULBIR SINGH AATPS8757M 51 BHARATBHAI NATHABHAI BUHA AAWPB3665Q 52 SUNDER SOMANI AAWPS1022L 53 KARUNA ATAL ABHPA0900D 54 DHEERAJ KRISHNA AGARWAL ABHPA9593N 55 RAJINDER KUMAR SINGHANIA ABRPS7928R 56 PARVEEN SINGHANIA ABRPS7929Q 57 SURESH KUMAR KHANDELIA ABSPK3417A 58 MANJU KHANDELIA ABSPK3421A 59 PREM JAIN ABZPJ4150C 60 HARNEESH KAUR ARORA ACJPA6923B 61 GAURAV JAIN ACKPJ4330N 62 SUNITA CHAUDHARY ACLPC7278D 63 SANJIV CHAUDHRY ACLPC7284P 64 GOPALBHAI PARSHOTAMBHAI DUNGARANI ACOPD6501F 65 NANDITA BHAVESH MADIYAR ACOPM4635R

66 SANTOSH MANIHAR ACSPM8149E 67 VINAL ARVIND KAPASI ADQPK1014P 68 SURESH KUMAR KALANI ADRPK7629M 69 ASHOKBHAI NATHABHAI BUHA AECPB5885J 70 BRIJ BHUSHAN SINGAL AEFPS6298M 71 NARAYAN PRASAD MUNDHRA AENPM3873N 72 SHILPA AGARWAL AERPJ3347N 73 PRIYANKA GANNA AFQPJ7537N 74 SHILPA GANNA AFRPJ6563K 75 RUPAL TUSHAR MEHTA AGWPM9589L 76 MANJUDEVI N MUNDRA MUNDRA AHDPM7706M 77 CHAMPAKBHAI MANUBHAI SOPARIWALA AHPPS8032G 78 BHARATI BHARAT MANEK AHTPM1266G 79 ANSHUL JAIN ALGPJ9222L 80 NEERAJ SINGAL ANRPS7986B 81 UMA SINGAL ANRPS7987A 82 RAJKUMAR TEJBAHADUR SINGH ANTPS3913J 83 PUNEET SINGHANIA AROPS8175R 84 AAMIR NAWAB MEHJABEEN MALIK ATAPM4926A 85 JASHANJYOT SINGH AUPPS9752A 86 HIMANSHU C SOPARIWALA AVZPS5235M 87 HARSHITA MAHESHWARI AZWPM4747P 88 ANJALI DAGA BFRPD1515E FIRST FINANCIAL GROUP 89 ASTABHUJA CONSTRUCTION PRIVATE LTD. AAKCA4137B 90 DHANLAKSHMI BROKERS PRIVATE LTD. AAECD4759L 91 MASTER SECURITIES AAHFM8098F 92 PADMA IMPEX PRIVATE LTD. AAACL4269P 93 JAYINE TRADECOM PRIVATE LTD. AACCJ8342D 94 JAIHANUMAN MULTI AGENCIES PRIVATE LTD. AABCJ6667L 95 HS TRADECOM PRIVATE LTD. AACCH8988B 96 NITYADHARA PLAZA PRIVATE LTD. AADCN9427C 97 KRIPA SECURITIES PVT. LTD AACCK2399D 98 PREFER ABASAN PRIVATE LTD. AAECP2470J 99 STARDOX VINIMOY PRIVATE LTD. AAECS0352C 100 RAINA VYAPAAR PRIVATE LTD AABCR3482R 101 KALAKAR COMMERCIAL PRIVATE LTD. AADCK9346B 102 SWARNA PUSHPA VANIJYA PRIVATE LTD. AAJCS0597G 103 SURBHIKA VYAPAAR PRIVATE LTD. AAJCS0680C 104 HARI OM SUPPLIERS PVT. LTD. AABCH2251E 105 RANISATI DEALER PRIVATE LTD. AADCR7368C

106 PINE ANIMATION LTD. AAECM0267A 107 GOLDSTAR TRACOM PRIVATE LTD. AADCG8045K 108 SWARNAPRIYA VANIJYA PRIVATE LTD. AAJCS0595E 109 BAZIGAR TRADING PRIVATE LTD. AABCB3052B 110 ROSHAN DROLIA AAACF4335Q 111 GLOBAL INFRATECH & FINANCE LTD. AABCA4255H 112 LIFE LINE MARKETING PVT LTD. AAACL5973G 113 SHREE SUDHARSHAN CASTINGS PVT LTD AADCS9429B 114 BSR FINANCE & CONSULTANTS PRIVATE LTD. AABCB0636K 115 WALTARE INVESTMENT PVT LTD AAACW2314A 116 BIMAL KUMAR DROLIA AABCG9640C 117 PARMANAND DROLIA AABCC0603M 118 PRIDE DISTILLERY PRIVATE LTD AACCM6582E 119 R C SUPPLIERS PRIVATE LTD. AABCR2904A 120 USHITA TRADING AND AGENCIES LTD. AAACU3269L 121 GRD ENCLAVE PRIVATE LTD AABCG9641D 122 LINTON CONSULTANTS PRIVATE LTD AAACL5784F 123 SANTOSH KUMAR SHAH ALGPS0859J 124 MADSAN AGENCIES (P) LTD. AACCM0579K 125 MOTOREX FINANCE PVT. LTD. AACCM1042R 126 MIDNIGHT AGENCIES PVT LTD/VIJAY KUMAR SHAH AABCM6864G 127 EAST INDIA SECURITIES LTD. AABCE2412N 128 VALUE AND WORTH AAFFV5756K 129 MINIMUM SHARES AND SECURITIES PVT LTD AAGCM0970Q 130 R AJANI INVESTMENT PRIVATE LTD. AABCR2457G 131 R K INVESTMENT PRIVATE LTD. AABCR2488R AAACD9125E 132 D Y NAMIC PORTFOLIO MANAGEMENT & SERVICES LTD 133 RITESH COMMERCIAL HOLDINGS LIMITED AABCR1974J 134 RITESH PROJECTS PRIVATE LTD AADCR6224M 135 BURLINGTON FINANCE LIMITED AABCB2575P 136 BLUE CIRCLE SERVICES LIMITED AAACB2131L 137 MANIMUDRA VINCOM PRIVATE LIMITED AADCM4316K 138 AMRIT SALES PROMOTION PVT LIMITED AACCA3220D 139 SYMPHONY MERCHANT PVT LTD AADCS5411K 140 FOREVER FLOURISHING FINANCE & INVESTMENT PVT AAACF4311Q LTD 141 NAVDURGA INVESTMENT CONSULTANTS PVT LTD AACCN9567A 142 TOPLIGHT COMMERCIALS /TARA CHAND AGARWAL AABCT1134Q 143 NIRMAL KUMAR MALHOTRA AAUPM6284E 144 KIRIT VASUDEO DAVE AHKPD0543J 145 VEENA MOHANLAL CHANDIRAMANI AAWPC3158M OTHER

146 COMFORT FINCAP LTD AABCP4792J 147 COMFORT SECURITIES LTD AABCC9625R 148 COMFORT INTECH LTD AAACC5567H 149 PREM LATA NAHAR AFAPN8764M 150 SHYAM KANHEYALAL VYAS ACTPV2787Q 151 BHARAT BAGRI BAGRI AADHB8488A 152 SUMITRA DEVI AGRAWAL ABLPA9728M 42. This order shall come into force with immediate effect. The Stock exchanges and the depositories are directed to ensure that all the above directions are strictly enforced. 43. This order is without prejudice to the right of SEBI to take any other action that may be initiated against the aforementioned entities in accordance with law. The persons/entities against whom this Order is passed may file their objections, if any, within twenty one days from the date of this order and, if they so desire, avail themselves of an opportunity of personal hearing before the Securities and Exchange Board of India, on a date and time to be fixed on a specific request, received from the said persons/entities.

Sd/- DATE:DECEMBER 19, 2014 RAJEEV KUMAR AGARWAL PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA