Order against Mr. Arun Kumar Bhuwalka in the matter of M/s Grob Tea Ltd

1. On receipt of a complaint alleging non compliance of certain requirements under the provisions of Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers) Regulations 1997 in the matter of Grob Tea Limited (hereinafter referred as company) during December 1997 and September 2000, Securities and Exchange Board of India (hereinafter referred to as SEBI) initiated an investigation into the dealing in the shares of the company which was listed at Calcutta Stock Exchange Limited (hereinafter referred to as CSE) for the period November 11, 1997 to December 30, 2000. The said investigation was conducted inter alia in respect of the buying, selling and dealing in the shares of the said company and the alleged contravention of the provisions of the Securities and Exchange Board of India Act, 1992 and the Rules/Regulations framed thereunder. The investigation conducted by SEBI inter alia revealed that the stock brokers viz. M/s Prabhat Kumar Jhunjhunwala and M/s Arun Kumar Bhuwalka (hereinafter referred to as the Broker) had entered into off the floor transactions and the same were not reported to CSE. It was inter alia alleged that the Broker had contravened Rule 4 (b) of the then existing Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Rules, 1992 and Clauses A (1), A (4) and A (5) of Code Conduct stipulated in Schedule II of Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992 (hereinafter referred to as the Broker Regulations). Thereafter, SEBI, vide order dated September 29, 2003 inter alia read with the subsequent order dated November 23, 2007 appointed an Enquiry Officer under the provisions of Securities and Exchange

Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (since repealed) to enquire into the alleged violations committed by the Broker. In the meanwhile, the said Regulations was repealed with effect from the notification of Securities and Exchange Board of India (Intermediaries) Regulations, 2008, (hereinafter referred to as the Intermediaries Regulations) and the Designated Authority (hereinafter referred to as the Enquiry Officer), vide Report dated May 19, 2009 recommended to censure the Broker for not reporting the off the floor transactions to CSE and thereby violating Clause A(5) of the Code of Conduct specified under Schedule II of the Broker Regulations.

2. Pursuant to the submission of the Enquiry Report, SEBI issued a notice dated June 16, 2009 to the Broker advising it to show cause as to why the penalty as recommended by the Enquiry Officer or as considered appropriate by SEBI should not be imposed against it. A copy of the Enquiry Report was also forwarded to the Broker with the said show cause notice. The Broker was also advised to inform SEBI, whether he desired to avail an opportunity of hearing. As the Broker had not sent any reply, SEBI sent reminders dated August 20, 2009 and October 14, 2009. Thereafter, the Broker, vide letter dated nil (received by SEBI on October 26, 2009) stated that all its transactions (market or off market) has been timely informed to its clients as well as to CSE. The Broker also stated that he is agreeable to any punishment as SEBI may decide. Though, the Broker was advised to indicate whether it required a personal hearing, no response was made by it, in that regard. In view of the reply of the Broker, I do not consider it necessary to provide an opportunity of hearing to it and the present proceeding is being considered on the basis of the available material on record including the aforesaid reply of the Broker. The allegations against the Broker is that it had not reported the off the floor transactions executed by it, to CSE. As the details of such off the floor transactions were given in detail in the Enquiry Report and that the Broker had not disputed the execution such transactions, the same are not reiterated in this Order. The Enquiry Officer observed that the off the floor transactions were not reported by the Broker as required under SEBI Circular March 14, 1995 and thus, it had violated Clause A (5) of code of conduct for Stock Brokers Specified in Schedule II of the Broker Regulations. The Broker had not controverted the findings of the Enquiry Officer. Though, the Broker in its reply stated that it had timely informed all its transactions (market or off market) to its clients as well as to CSE, it could not produce any evidence in this regard. As mentioned above, the Broker agreed to accept the punishment. Considering the totality of the facts and circumstances of the case, the present enquiry proceeding initiated against the Broker is disposed of, as ordered hereinunder.

3. In view of the foregoing, I, in exercise of the powers conferred upon me under Section 19 of the Securities and Exchange Board of India Act, 1992 read with Regulation 28 (2) of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008, hereby censure the stock broker viz. M/s Arun Kumar Bhuwalka [Registration No. INB 0300772218], Member, Calcutta Stock Exchange Limited.

DR. K. M. ABRAHAM WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA PLACE: MUMBAI DATE: FEBRUARY 15, 2010