Miscellaneous Order in the matter of Modex International Securities Limited

Miscellaneous Order in the matter of Modex International Securities Limited

WTM/AB/MIRSD/NRO/04/2020-21

SECURITIES AND EXCHANGE BOARD OF INDIA MISCELLANEOUS ORDER

On the representations from Shri Suresh Kumar Gupta (PAN: AAKPG4217F), Shri Ankit Gupta (PAN: AJZPG6768K), Shri Anuj Gupta (PAN: AGIPG2383C) and Shri Rakesh Kumar Gupta (PAN: AAJPK4671N) – In respect of ex parte ad interim order dated April 30, 2020 passed in the matter of Modex International Securities Limited.

1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) passed a Miscellaneous Order dated May 22, 2020 (hereinafter referred to as “Misc Order”) on the representations made by Shri Suresh Kumar Gupta (PAN: AAKPG4217F), Shri Ankit Gupta (PAN: AJZPG6768K) and Shri Anuj Gupta (PAN: AGIPG2383C) in respect of the ex parte ad interim order dated April 30, 2020 (hereinafter referred to as “Interim Order”) passed in the matter of Modex International Securities Limited (hereinafter referred to as “MISL”).

2. Shri Suresh Kumar Gupta, Shri Ankit Gupta and Shri Anuj Gupta (hereinafter collectively referred to as “Representors”), who are the family members of Ms. Sharda Gupta (Noticee no. 8 in the Interim order), had made separate representations, dated May 11, 2020 and May 13, 2020, inter alia, requesting SEBI to issue an order directing their bank accounts, mutual fund AMCs and all other financial institutions in preview of the interim order to de-freeze all their accounts in which Representors are primary holders and Ms. Sharda Gupta is a joint holder and not a primary holder, on an urgent basis.

3. After considering the representations made, interim order passed and the comments of NSE, it was held in the Misc Order that:

Quote

5. I have considered the representations made, interim order passed and the comments of NSE, as mentioned above. It is noted that in the interim order there is no adverse findings against the Representors. Their bank accounts and other investments have been frozen as Ms. Sharda Gupta, one of the Noticee to the interim order, is joint holder in such bank accounts and investments. It is noted that Representors are the clients of MISL and are not connected with MISL as directors. Representors have also submitted that they have got their independent source of income and the funds lying in the banks accounts sought to be de-freezed, are out of their personal income and are included in their income in ITRs. A perusal of the ITRs, furnished by the Representors alongwith their respective representations, reveals that all the bank accounts except the HDFC Bank account on Shri Ankit Gupta, have been disclosed in their respective ITRs for the last three assessment years.

6. I note that examination of statement of bank accounts of the Representors, which have been sought to de-freezed, shows transfers of funds between the Representors and MISL, however, prima facie, same has to be seen in the light of the fact that Representors are the clients of MISL especially when there is no allegation of any wrongdoing by the Representors, in the interim order. There is also a deposit of Rs. 1 Crore by Ms. Sharda Gupta, Noticee no. 8 to the interim order, in the bank account of Shri Suresh Kumar Gupta. However, forensic report or the comments received from NSE, does not impute any wrongdoing to such transfer per se. The interim order has been passed against Ms. Sharda Gupta on the basis of the fact that she was the director of MISL.

7. It is also observed that Representors have sought de-freezing of their investments in mutual funds, details whereof have been claimed to be provided in their Respective ITRs. However, on perusal of ITRs, it is noted that there is mention of investments made by the Representors in the mutual funds, however, other details like folio numbers, name of the mutual fund and which are jointly held with Ms. Sharda Gupta, are not available.

8. In view of the aforesaid, I hereby direct that the bank accounts of the Representors shall be de-freezed, the details whereof are as under:

Name of the Name of Account Number First PAN of Fist Second Holder Representor Bank Holder Holder Suresh Axis Bank 040010100001023 Suresh AAKPG4217F Sharda Gupta Kumar Gupta Kumar Gupta

Ankit Gupta Axis Bank 040010100020044 Ankit AJZPG6768K Sharda Gupta Gupta

Anuj Gupta Axis Bank 040010100020036 Anuj Gupta AGIPG2383C Sharda Gupta

9. Representations dated May 11, 2020 and May 13, 2020, made by the Representors, stand disposed of with the aforesaid direction. Unquote

4. As noted in the Misc Order, it was observed that the Representors had sought de-freezing of their investments in mutual funds, details whereof have been claimed to be provided in their Respective ITRs. However, on perusal of the ITRs of the Representors, it was noted that there was mention of investments made by the Representors in the mutual funds, however, other details like folio numbers, name of the mutual fund and which are jointly held with Ms. Sharda Gupta, were not available.

5. Thereafter, vide joint letter dated May 27, 2020, the Representors have now enclosed the missing details of their investments including mutual funds, PMS linked demat account, savings linked fixed deposits and Bonds and have requested SEBI to de-freeze the same in line with the Misc Order, since as per Clause 7 of the Misc Order, the other investments of Representors could not be de-frozen for want of complete details of the said investments, including mutual funds.

6. Following are the details of their investment accounts which are jointly held by each of them with Ms. Sharda Gupta and which stand frozen due to the interim order against Ms. Sharda Gupta, as submitted by the Representors:

a. Details of Suresh Kumar Gupta: Details First Holder Name Suresh Kumar Gupta First Holder PAN AAKPG4217F

Mutual Fund Details: AMC Folio No. First Holder Second Second Bank Account Registered Holder Holder PAN Registered Bank Account Against Folio Holders Name

HDFC 13521106/45 Suresh Sharda AAKPG7214J Axis Bank - Suresh Kumar Mutual Kumar Gupta Gupta 040010100001023 Gupta Fund HDFC 13564356/81 Suresh Sharda AAKPG7214J Axis Bank - Suresh Kumar Mutual Kumar Gupta Gupta 040010100001023 Gupta Fund Kotak 3871123/53 Suresh Sharda AAKPG7214J Axis Bank - Suresh Kumar Mutual Kumar Gupta Gupta 040010100001023 Gupta Fund Kotak 3871125/47 Suresh Sharda AAKPG7214J Axis Bank - Suresh Kumar Mutual Kumar Gupta Gupta 040010100001023 Gupta Fund ICICI 9833233 Suresh Sharda AAKPG7214J Axis Bank - Suresh Kumar Prudential Kumar Gupta Gupta 040010100001023 Gupta Mutual Fund ICICI 7213236 Suresh Sharda AAKPG7214J Axis Bank - Suresh Kumar Prudential Kumar Gupta Gupta 040010100001023 Gupta Mutual Fund ICICI 8096036 Suresh Sharda AAKPG7214J Axis Bank - Suresh Kumar Prudential Kumar Gupta Gupta 040010100001023 Gupta Mutual Fund Mirae 7994716963 Suresh Sharda AAKPG7214J Axis Bank - Suresh Kumar Mutual Kumar Gupta Gupta 040010100001023 Gupta Fund

Nippon 499196390746 Suresh Sharda AAKPG7214J Axis Bank - Suresh Kumar India Kumar Gupta Gupta 040010100001023 Gupta Mutual Fund Nippon 401125956374 Suresh Sharda AAKPG7214J Axis Bank - Suresh Kumar India Kumar Gupta Gupta 040010100001023 Gupta Mutual Fund

Fixed Deposit Details: Bank Account no. First Second Second Bank Account Registered Holder Holder Holder PAN number linked Bank with Investment Account Holders Name Axis Bank FD 916040046299450 Suresh Sharda AAKPG7214J Axis Bank - Suresh Kumar Gupta 040010100001023 Kumar Gupta Gupta Axis Bank FD 919040010198547 Suresh Sharda AAKPG7214J Axis Bank - Suresh Kumar Gupta 040010100001023 Kumar Gupta Gupta Axis Bank FD 916040052010455 Suresh Sharda AAKPG7214J Axis Bank - Suresh Kumar Gupta 040010100001023 Kumar Gupta Gupta Axis Bank FD 920040022884229 Suresh Sharda AAKPG7214J Axis Bank - Suresh Kumar Gupta 040010100001023 Kumar Gupta Gupta

Bonds Details: Bank Account no. First Second Second Bank Account Registered Holder Holder Holder PAN number linked Bank with Investment Account Holders Name NHAI Bonds – 1829722 Suresh Sharda AAKPG7214J Axis Bank - Suresh 54EC Capital Kumar Gupta 040010100001023 Kumar Bonds Gupta Gupta HDFC Bank (GOI TBH51060210768 Suresh Sharda AAKPG7214J Axis Bank - Suresh 8% Taxable Kumar Gupta 040010100001023 Kumar Bond) – 2003 Gupta Gupta b. Details of Anuj Gupta Details First Holder Name Anuj Gupta First Holder PAN AGIPG2383C

Mutual Fund Details: AMC Folio no. First Second Second Bank Account Registered Holder Holder Holder PAN Registered Bank against Folio Account Holders Name HDFC Mutual 2435417/80 Anuj Sharda AAKPG7214J Axis Bank - Anuj Gupta Fund Gupta Gupta 040010100020036 HDFC Mutual 4056099/62 Anuj Sharda AAKPG7214J Axis Bank - Anuj Gupta Fund Gupta Gupta 040010100020036

Fixed Deposit Details:

Bank FD Account no. First Second Second Bank Account Registered Holder Holder Holder PAN number linked Bank with FD Account Holders Name Axis Bank 919040010199825 Anuj Sharda AAKPG7214J Axis Bank - Anuj Gupta Gupta Gupta 040010100020036 Axis Bank 919040068825185 Anuj Sharda AAKPG7214J Axis Bank - Anuj Gupta Gupta Gupta 040010100020036 c. Details of Ankit Gupta Details First Holder Name Ankit Gupta First Holder PAN AJZPG6768K

Mutual Fund Details: AMC Folio no. First Second Second Bank Account Registered Holder Holder Holder PAN Registered Bank against Folio Account Holders Name HDFC Mutual 4056170/43 Ankit Sharda AAKPG7214J Axis Bank - Ankit

Fund Gupta Gupta 040010100020044 Gupta HDFC Mutual 5066498244/02 Ankit Sharda AAKPG7214J Axis Bank - Ankit Fund Gupta Gupta 040010100020044 Gupta HDFC Mutual 7191912/71 Ankit Sharda AAKPG7214J Axis Bank - Ankit Fund Gupta Gupta 040010100020044 Gupta Kotak Mutual 4735382/86 Ankit Sharda AAKPG7214J Axis Bank - Ankit Fund Gupta Gupta 040010100020044 Gupta ICICI 9855173/81 Ankit Sharda AAKPG7214J Axis Bank - Ankit Prudential Gupta Gupta 040010100020044 Gupta Mutual Fund Mirae Asset 7999509331 Ankit Sharda AAKPG7214J Axis Bank - Ankit Mutual Fund Gupta Gupta 040010100020044 Gupta

Fixed Deposit & Bonds Details: Bank Account no. First Second Second Bank Account Registered Holder Holder Holder PAN number linked Bank with Investment Account Holders Name Axis Bank 918040095888491 Ankit Sharda AAKPG7214J Axis Bank - Ankit Gupta Gupta 040010100020044 Gupta Axis Bank 919040010211064 Ankit Sharda AAKPG7214J Axis Bank - Ankit Gupta Gupta 040010100020044 Gupta Axis Bank 919040067739171 Ankit Sharda AAKPG7214J Axis Bank - Ankit Gupta Gupta 040010100020044 Gupta HDFC Bank TBH51060210769 Ankit Sharda AAKPG7214J Axis Bank - Ankit (GOI 8% Gupta Gupta 040010100020044 Gupta Taxable Bond) - 2003

Bank Account Details: Bank FD Account no. First Second Second Details Holder Holder Holder PAN HDFC Bank 50100296941735 Ankit Sharda AAKPG7214J The Bank Statement since Gupta Gupta inception from HDFC Bank has been attached.

7. The Representors have declared that the above investments have been made solely by them through their personal income and that all gains/income/TDS/tax liabilities have been accrued to their respective PAN numbers. The Representors have also submitted their annual tax statements for financial year 2019-20 (Form 26AS) and Interest Certificate for financial year 2019-20 issued by Axis Bank.

8. Further, I note that in the representation dated May 27, 2020, there is reference to one Shri Rakesh Kumar Gupta, who is stated to be the 4th family member. In the letter, it was stated that earlier Shri Rakesh Gupta had also made representation along with the Representors, however, Misc Order did not cover his representation. In this regard, Shri Rakesh Kumar Gupta was informed that no such representation was received from him by SEBI. He was advised to send his representation. Subsequently, vide email dated June 16, 2020, SEBI received a separate representation from Shri Rakesh Kumar Gupta, who is stated to be the brother in law of Ms. Sharda Gupta requesting SEBI to defreeze his bank accounts and other investments which were frozen as Ms. Sharda Gupta is the second holder in all these accounts. Brief of the representation made by Shri Rakesh Kumar Gupta is as follows:

a. Shri Rakesh Kumar Gupta, aged 64, is the brother in law of Ms. Sharda Gupta. b. His bank account has been frozen without providing him any notice or any opportunity of hearing. c. He did not have any relationship with MISL in the past and has not worked in any capacity with MISL. d. The following bank account frozen pursuant to the order against Ms. Sharda Gupta belongs to him:

Sr. FD Account no. First First Holder Second Mode of No. Holder PAN No. Holder Operation 1 Axis Bank Rakesh AAJPK4671N Sharda Gupta Either or 040010100000850 Kumar survivor Gupta

2 ICICI Bank Rakesh AAJPK4671N Sharda Gupta Either or 114501000878 Kumar survivor Gupta 3 HDFC Bank Rakesh AAJPK4671N Sharda Gupta Either or 04851930011327 Kumar survivor Gupta e. That all the deposits in the above bank account are out of his personal income and these incomes are included in his annual income tax return. None of the deposits belong to Ms. Sharda Gupta. He is the first holder and Ms. Sharda Gupta is the second holder. The mode of operation of this account is either or survivor. Ms. Sharda Gupta is included as a second holder for ease of operations only. f. Similarly in case of his Mutual Fund investments, Ms. Sharda has been included as second holder for ease of operations only. The investments where he is the first holder are from his accounts only. Further any gain and tax liabilities from such investments are accrued to him alone and are accounted for in his personal ITR. g. That he has his own independent source of income and reports his bank accounts and mutual fund gain/loss in his annual income tax return independent of Ms. Sharda Gupta. h. That the freezing of his bank accounts have caused genuine hardship to him. He has been facing difficulties in meeting his day to day expenses including payment of utilities, credit card bills etc. This had adversely affected his work obligations at such difficult times, when his sources of income are strained due to the pandemic. i. That since he had no relationship with MISL, lifting the attachment of his bank accounts will not cause any prejudice to the interests of SEBI. j. In view of the aforesaid, he has requested SEBI to issue an order directing that his bank, mutual fund AMC and all other financial institutions in preview of the SEBI order, to de-freeze all his accounts in which he is a primary holder and Ms Sharda Gupta is a joint holder and not a primary holder, on an urgent basis.

9. Following are the details of the bank accounts and investment accounts submitted by Shri Rakesh Kumar Gupta, which are jointly held by him with Ms. Sharda Gupta and which stand frozen due to interim order against Ms. Sharda Gupta:

a. Details of Rakesh Kumar Gupta: Details First Holder Name Rakesh Kumar Gupta First Holder PAN AAJPK4671N

Mutual Fund Details: AMC Folio no. First Second Second Bank Account Registered Holder Holder Holder PAN Registered Bank against Folio Account Holders Name Aditya Birla 1012695283 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Sun Life Kumar Gupta 040010100000850 Kumar Gupta Gupta Aditya Birla 1015640476 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Sun Life Kumar Gupta 040010100000850 Kumar Gupta Gupta Axis AIF 9049898026 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Kumar Gupta 040010100000850 Kumar Gupta Gupta Axis Mutual 9011747006 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Fund Kumar Gupta 040010100000850 Kumar Gupta Gupta HDFC Mutual 4056088/95 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Fund Kumar Gupta 040010100000850 Kumar Gupta Gupta HDFC Mutual 6885085/22 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Fund Kumar Gupta 040010100000850 Kumar Gupta Gupta HDFC Mutual 7149196/82 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Fund Kumar Gupta 040010100000850 Kumar Gupta Gupta ICICI Mutual 7087400/06 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Fund Kumar Gupta 040010100000850 Kumar

Gupta Gupta ICICI Mutual 11188614/38 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Fund Kumar Gupta 040010100000850 Kumar Gupta Gupta Mirae Mutual 7999509502 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Fund Kumar Gupta 040010100000850 Kumar Gupta Gupta Nippon India 499193440692 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Mutual Fund Kumar Gupta 040010100000850 Kumar Gupta Gupta Nippon India 4084078471 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Mutual Fund Kumar Gupta 040010100000850 Kumar Gupta Gupta Nippon India 401119858525 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Mutual Fund Kumar Gupta 040010100000850 Kumar Gupta Gupta Nippon India 4167409214 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Mutual Fund Kumar Gupta 040010100000850 Kumar Gupta Gupta PGIM India 9012849745 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Kumar Gupta 040010100000850 Kumar Gupta Gupta Tata Mutual 4681972/72 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Fund Kumar Gupta 040010100000850 Kumar Gupta Gupta UTI Mutual 599305857465 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Fund Kumar Gupta 040010100000850 Kumar Gupta Gupta

Fixed Deposit & Bonds: Bank Account no. First Second Second Bank Account Registered Holder Holder Holder PAN number linked Bank with Investment Account Holders Name Axis Bank 919040010907406 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Kumar Gupta 040010100000850 Kumar Gupta Gupta Axis Bank 919040070683328 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Kumar Gupta 040010100000850 Kumar

Gupta Gupta HDFC Bank TBHS1060210767 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh (GOI 8% Kumar Gupta 040010100000850 Kumar Taxable Gupta Gupta Bond) - 2003

Bank Account Details – Currently Frozen: Bank FD Account no. First Holder Second Holder Second Holder PAN Axis Bank 040010100000850 Rakesh Kumar Gupta Sharda Gupta AAKPG7214J ICICI Bank 114501000878 Rakesh Kumar Gupta Sharda Gupta AAKPG7214J HDFC Bank 04851930011327 Rakesh Kumar Gupta Sharda Gupta AAKPG7214J

PMS Demat Account: First Type of Account Client ID DP ID Second Second Bank Holder Holder Holder PAN Account registered against Demat Rakesh Demat Account 60744849 IN301549 Sharda AAKPG7214J Axis Bank - Kumar Gupta 04001010000 Gupta 0850

Alternative Investment Fund: AMC Folio no. First Second Second Bank Account Registered Holder Holder Holder PAN Registered Bank against Folio Account Holders Name Axis New 9049898026 Rakesh Sharda AAKPG7214J Axis Bank - Rakesh Opportunities Kumar Gupta 040010100000850 Kumar AIF -1/Axis Gupta Gupta Asset Managment

10. In the present matter, interim order was passed on the basis of the report of the National Stock Exchange of India Ltd. (NSE). Accordingly, comments of NSE with regard to the representation details submitted by Shri Rakesh Kumar Gupta were sought in the matter. NSE vide email dated June 29, 2020 has informed as under:

a. Association of the Shri Rakesh Kumar Gupta with MISL: As per the client details available in the UCI Database as uploaded by the MISL, it has been observed that Shri Rakesh Kumar Gupta is a registered client of the member as under:

Code Name PAN R120 Rakesh Kumar Gupta AAJPK4671N

Further, Shri Rakesh Kumar Gupta is not associated as director with MISL as per the Exchange records.

b. Ledger and ROS Balances: As on January 24, 2020, financial ledger balance/securities holding of client Shri Rakesh Kumar Gupta is NIL.

c. Directorship in MISL: Since DIN for Shri Rakesh Kumar Gupta is not available, the details for companies / LLP in which he may be director / partner is not available with NSE.

d. Payment / Receipts as Clients of broker: On verification of ledger account of Shri Rakesh Kumar Gupta and bank statements / bank book of the member, it has been observed that payments and receipts made to / from Shri Rakesh Kumar Gupta during the period April 01, 2017 to Jan 24, 2020 were in capacity of the client and as on January 24, 2020, the financial ledger balance of client Shri Rakesh Kumar Gupta is NIL.

11. I have considered the representations made by Shri Rakesh Kumar Gupta, interim order passed and the comments of NSE, as mentioned above. It is noted that in the interim order there is no adverse findings against Shri Rakesh Kumar Gupta. His bank accounts and other investments have been frozen as Ms. Sharda Gupta, one of the Noticee to the interim order, is joint holder in such bank accounts and investments. It is noted that Shri Rakesh Kumar Gupta is the client of MISL and is not connected with MISL as a director. Shri Rakesh Kumar Gupta has also submitted that he has got his independent source of income and the funds lying in the three banks accounts sought to be de-freezed, are out of his personal income and are included in his income in the ITR. A perusal of the ITR, furnished by Shri Rakesh Kumar Gupta along with his representations, reveals that only one bank account i.e. Axis Bank account no. 040010100000850 has been disclosed in his ITR for the last three assessment years.

12. I have also considered the representation made by the Representors and Shri Rakesh Kumar Gupta with regard to their investments lying in the demat accounts/mutual fund folios/fixed deposit/Bonds/units of Alternative Investment Funds/demat account for PMS which are jointly held by them with Ms. Sharda Gupta. The Representors and Shri Rakesh Kumar Gupta want to access the investments which are held by each of them with Ms. Sharda Gupta, jointly. I note that the Representors and Shri Rakesh Kumar Gupta are connected with MISL as clients only and they are not the directors of MISL. There are no directions issued against these entities in the ex parte interim order dated April 30, 2020 passed against MISL. Further, I find that no adverse findings have been recorded against the Representors and Shri Rakesh Kumar Gupta, in the aforesaid order dated April 30, 2020. The Representors and Shri Rakesh Kumar Gupta have declared that the above investments have been made solely by them through their personal income and that all gains/income/TDS/tax liabilities have been accrued to their respective PAN numbers.

13. With regard to the representations to access the securities lying in the demat accounts/mutual fund folios/fixed deposit & Bonds/Alternative Investment Funds which are jointly held by the Representors and Shri Rakesh Kumar Gupta with Ms. Sharda Gupta, I note that the ownership of securities lying in a joint demat account lies jointly with both the holders of the said account. Unlike bank accounts, demat accounts are not operated on ‘either or survivor’ basis. For carrying out a transaction in respect of securities lying in joint demat accounts, Delivery Instruction Slip (DIS) is to be signed for by both the holders. In this regard, the bye laws of CDSL states as under:

“5.3.13. A participant shall, before opening any account or while acting upon the instruction of any Beneficial Owner: …. 5.3.13.3. in case of joint owners of securities, obtain authority in writing from all such joint owners.”

Further, the bye laws of NSDL states as under:

“6.4.4. The Participant shall act on the instructions of the Client provided in the manner laid down under the Business Rules.”

As per the Business Rules of NSDL:

“12.2. MARKET TRADES 12.2.1. The Participant shall effect a debit or credit to the accounts of its Clients only on receipt of proper authorization from the Clients in the forms laid out in Form 12 and Form 14. Alternatively, a Client may give standing instructions to its Participant to credit its account. In case the Client does not have sufficient balance in its account, the debit to the account shall be effected to the extent of balance available. 12.2.2. The aforementioned forms submitted by the Clients and Clearing Members shall be checked by the Participant to ensure the completeness of the form and validity of the signature of the Client and the Clearing Member before the requests on these forms are executed.”

As per the instructions given on Form 12 (Delivery instruction by client) and Form 14 (Receipt Instruction), it states that “In case of joint holdings, all joint holders must sign”

14. The respective mutual fund units in these folios are held by the Representors and Shri Rakesh Kumar Gupta jointly with Ms. Sharda Gupta. Thus, I find that securities/units of mutual funds lying in the joint demat accounts /mutual fund folios/AIF might have been purchased with the funds of the Representors and Shri Rakesh Kumar Gupta, respectively, however, once such securities/units of mutual fund/AIF are held in joint name, they are owned by the joint holders. Further, the PMS demat account as submitted by Shri Rajesh Kumar Gupta, is held jointly by Shri Rakesh Kumar Gupta and Ms. Sharda Gupta, therefore, all the securities lying in this account belongs to the joint holders of this demat account.

15. As per the interim order dated April 30, 2020 against the Noticees including Ms. Sharda Gupta, it was inter alia directed that the assets of the Noticees shall be utilized only for the purpose of payment of money and/or delivery of securities, as the case may be, to the clients/investors under the supervision of the concerned exchanges/depositories. Further, that the depositories are directed to ensure that no debits are made in the demat accounts, held jointly or severally, of the Noticees except for the purpose of payment of money and/or delivery of securities, as the case may be. Hence, I note that if the Representors and Rakesh Kumar Gupta’s prayer to remove the freeze on the joint demat accounts/ folios is granted, it will make the Interim order dated April 30, 2020 qua Ms. Sharda Gupta infructuous.

16. Further, with regard to the HDFC Bank Account no. 50100296941735 of Shri Ankit Gupta, a representation has again been made for de-freezing the HDFC bank account and the bank account statement since inception has been submitted by Shri Ankit Gupta. In the Misc Order, the said bank account was not directed to be de-freezed in view of the fact that same was not disclosed in the ITR of Shri Ankit Gupta. Now the Mr. Ankit Gupta has submitted his said bank account statement since inception i.e. June 19, 2019 till May 05, 2020, probably to demonstrate that the funds lying in the said account belong to him. From the bank statements, I note that the HDFC Bank Account has been opened on June 19, 2019 and the joint holders are Ms. Sharda Gupta and also one Ms. Smriti Gupta. As per the Annual Tax Statement (Form 26AS) for the assessment year 2020-21 submitted by Shri Ankit Gupta vide the joint letter dated May 27, 2020, I note that TDS payment has been made through an HDFC Bank account, however, no number of such account is given to identify whether the HDFC Bank account mentioned in the Annual Tax Statement is the same which has been sought to be de-freezed. In such a scenario, request for de-freezing of said HDFC Bank account can-not be entertained.

17. In view of the above, considering the submissions and evidences brought on record, I, hereby allow, - a. the transfer of half of each type of securities held in Demat Account number IN301549 60744849 held with Nippon India Portfolio Management (wherein Shri Rakesh Kumar Gupta is the primary holder and Ms. Sharda Gupta is the second holder) to a new demat account to be opened by the Shri Rakesh Kumar Gupta in his own name.

b. the de-freezing of the bank account of Rakesh Kumar Gupta, the details whereof is as under: Bank Account no. First First Holder Second Second Holder PAN Holder Holder PAN Axis 040010100000850 Rakesh AAJPK4671N Sharda AAKPG7214J Bank Kumar Gupta Gupta c. the release of half of units of mutual fund and alternative investment funds, in favour of Shri Rakesh Kumar Gupta that are lying in the folios, the details of which are given in para 9 above, wherein, Shri Rakesh Kumar Gupta and Ms. Sharda Gupta are joint holders.

d. the de-freezing of the fixed deposits and bonds, the details of which are given in para 9 above, wherein Shri Rakesh Kumar Gupta is the first holder and Ms. Sharda Gupta is the second holder.

e. the release of half of mutual fund units in favour of the respective Representors that are lying in the folios which are held jointly by each Representor with Ms. Sharada Gupta, the details of which are given in para 6 above, wherein, the respective Representors and Ms. Sharda Gupta are joint holders.

f. the de-freezing of the fixed deposits and bonds, the details of which are given in para 6 above, wherein the Representors are the first holders and Ms. Sharda Gupta is the second holder.

18. Accordingly, joint representations dated May 27, 2020 made by the Representors and Shri Rakesh Kumar Gupta and individual representation dated June 16, 2020 made by Shri Rakesh Kumar Gupta, stand disposed of with the aforesaid directions.

19. This order comes into force with immediate effect.

20. A copy of this order shall be forwarded to all the Representors, Stock Exchanges, the relevant banks and the Depositories to ensure that the direction given above is strictly complied with.

Sd/ ANANTA BARUA Date: July 23, 2020 WHOLE TIME MEMBER Place: Mumbai SECURITIES AND EXCHANGE BOARD OF INDIA