Order in respect of Blue Chip Corporation Pvt. Ltd., Mr. Nitin Rajaram Narke, Mr. Pravin B. Darawade, Ms. Bhavana Chadha, M/s Milestone Investment, M/s Nitin Narke Investment, M/s Blue Cheap Investment and M/s Blue Chip Investment

WTM/SR / SEBI/EFD-DRA2/56/09/2017 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA S. RAMAN, WHOLE TIME MEMBER ORDER Under Section 11(1), 11 (4) and 11B of the Securities and Exchange Board of India Act, 1992 in respect of Blue Chip Corporation Pvt. Ltd. (PAN: AAECB5060A), Mr. Nitin Rajaram Narke (PAN: AECPN7019L), Mr. Pravin B. Darawade (PAN: ATUPD8449F), Ms. Bhavana Chadha (PAN: AFNPC9292G), M/s Milestone Investment (PAN: AASFM5213B), M/s Nitin Narke Investment (PAN: ATUPD8449F), M/s Blue Cheap Investment (PAN: AECPN7019L) and M/s Blue Chip Investment(PAN: AECPN7019L). 1. Securities and Exchange Board of India (‘SEBI”) received complaints from Hadapsar Parisar Investors Association, Pune (“HPIA”) Private Limited inter alia alleging the following: i. “Mr. Nitin Rajaram Narke had solicited and raised money from public through M/s Milestone Investment, M/s Nitin Narke Investment, M/s Blue Chip Investment and had promised them a return of 100% in 10 months and 200% in 20 months. ii. In this manner, Mr. Nitin Rajaram Narke, through 15 agents, collected an amount of Rs.1,200 crores from public. iii.

Mr. Nitin Rajaram Narke had represented to the investors that he is a SEBI registered stock broker of NSE and a trading member of Multi Commodity Exchange of India (MCX). He also showed the certificate of registrations in respect of these exchanges and told that trading in shares through BCCPL and Blue Chip Commodities Broking Pvt. Ltd. (BCCBPL) is legal. iv. In the advertisement, dated November 27, 2011, published in the newspaper “Dainik Bhaskar” Mr. Nitin Rajaram Narke promised that money will be immediately returned to an investor on demand who would invest through him. v. When investors sought refund of their money, BCCPL shifted their office unlawfully and did not refund the money to the investors. The board of directors of BCCPL are absconding since last two years. The refund cheques issued by BCCPL have also bounced. During this time, the office of BCCPL also used to be closed most of the time. vi. BCCPL again issued advertisements in newspaper that its office would open from February 2014, but the office was never opened. vii. Mr. Nitin Rajaram Narke has, thus, cheated the investors for Rs.1,200 crores.

Mr. Nitin Rajaram Narke was arrested by Pune police for one month. However, after his release on a personal bond of `1 lakh, Mr. Nitin Rajaram Narke has been threatening the investors who had lodged complaint against him.”

2. Blue Chip Corporation Private Limited ("BCCPL") is registered with SEBI as a stock broker in cash and equity derivative segments of National Stock Exchange of India Limited (“NSE”) (Registration No. INB/INF231446536) with effect from August 24, 2011. Mr. Nitin Rajaram Narke and Mr. Pravin B. Darawade are directors of BCCPL.

3. Upon preliminary inquiry by SEBI with Exchanges and Banks and Police Department, Pune, it was observed that the Directors of BCCPL viz., Mr. Nitin Rajaram Narke and Mr. Pravin B. Darawade by misusing their certificate of registration granted to act as a stock broker collected funds/deposits from investors. Further, Mr. Nitin Rajaram Narke along with Ms. Bhavana Chadha floated various firms viz. M/s Blue Chip Investment, M/s Blue Cheap Investment, M/s Milestone Investment, M/s Nitin Narke Investment solicited and induced their clients and investors to deal in securities. They had also collected funds and deposits from their clients and investors through misrepresentation and allurement of high returns.

4. As the aforesaid activities of the Mr. Nitin Rajaram Narke, Mr. Pravin B. Darawade and Ms. Bhavana Chadha and their aforementioned firms were prima facie in violation of provisions of SEBI Act, 1992 ("SEBI Act"), Securities Contracts (Regulation) Rules, 1957 ("SCRR"), the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 ("Brokers Regulations"), the SEBI (Portfolio Managers) Regulations, 1993 (“PMS Regulations”) and the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (“PFUTP Regulations”), SEBI passed an ad interim ex-parte order dated November 09, 2015 with the following directions: a) The Financial assets of Blue Chip Corporation Pvt. Ltd ( PAN :AAECB5060A), Nitin Rajaram Narke ( PAN :AECPN7019L), Mr. Pravin B. Darawade (PAN: ATUPD8449F), Ms. Bhavana Chadha (PAN:AFNPC9292G), M/s. Milestone Investment (PAN: AASFM5213B), M/s. Nitin Narke Investment (PAN: ATUPD8449F), M/s. Blue Cheap Investment (PAN:AECPN7019L) and M/s. Blue Chip Investment (PAN :AECPN7019L) are hereby impounded till further directions. They are further directed not to dispose off or alienate any of their assets, whether movable or immovable, or any interest or investment or charge in any of such assets except for the purpose provided herein. b) The banks and depositories are directed that no debits shall be made in their bank accounts/demat accounts, held jointly or severally, except after confirmation from the concerned stock exchange in this regard.

c) The concerned stock exchanges, depositories and the banks are directed to ensure that all the above directions are strictly enforced. d) The aforesaid entities are directed to provide the complete details of amounts collected from investors and amount due to each of them. e) The aforesaid entities are directed to provide a full inventory of all their assets whether movable or immovable, or any interest or investment or charge in any of such assets, including details of their all their bank and demat accounts immediately but not later than 7 working days from the date of receipt of these directions. f) The aforesaid entities are restrained from accessing the securities market and are further prohibited from buying, selling or otherwise dealing in securities, either directly or indirectly, or being associated with the securities market in any manner whatsoever, with immediate effect, till further directions. g) The aforesaid entities shall cease and desist from undertaking any activity in the securities market, directly or indirectly, in any manner whatsoever till further directions. h) Blue Chip Corporation Pvt. Ltd., Mr. Nitin Rajaram Narke, Mr. Pravin B. Darawade, Ms. Bhavana Chadha M/s Milestone Investment, M/s Nitin Narke Investment, M/s Blue Cheap Investment and M/s Blue Chip Investment are prohibited from mobilizing funds in any manner or pooling funds from public and from offering any unregistered service, in whatever form. i) Mr. Nitin Rajaram Narke, Mr. Pravin B. Darawade, Ms. Bhavana Chadha, Blue Chip Corporation Pvt. Ltd., M/s Milestone Investment, M/s Nitin Narke Investment, M/s Blue Cheap Investment and M/s Blue Chip Investment are directed to immediately withdraw and remove all advertisements, representations, literatures, brochures, materials, publications, documents, websites, etc. and any unregistered activity in the securities market. j) Blue Chip Corporation Pvt. Ltd., Mr. Nitin Rajaram Narke, Mr. Pravin B. Darawade, Ms. Bhavana Chadha, M/s Milestone Investment, M/s Nitin Narke Investment, M/s Blue Cheap Investment and M/s Bluechip Investment are prohibited from transferring the funds/deposits from their bank account, which were mobilised from the clients or other investors or from disposing of or alienating any asset that has been created from the funds/deposits received from their clients or other investors for purposes other than refund as directed hereinabove.”

5. The said ex-parte order cum show cause notice provided that the Noticees may file their objections, if any, within twenty one (21) days from the date of receipt of the said interim order. The order further provided that they may avail an opportunity of personal hearing before SEBI on a date and time to be fixed on a specific request in writing.

6. Vide separate letters dated November 10, 2015, the ex-parte order cum show cause notice (“SCN”) was sent to the Noticees viz., Mr. Nitin Rajaram Narke, Mr. Pavin B. Darawade, Ms. Bhavana Chadha, M/s. Milestone Investment. However, the same were returned undelivered by the postal authorities with remarks 'left address’. SEBI also issued a Press Release dated November 10, 2015 with respect to the interim order dated November 09, 2015. As per the information furnished by the Pune District Police (Rural), Mr. Nitin Narke was arrested and put in judicial custody at Yerawada Jail, Pune. In view of the same, a copy of the order cum SCN was sent to Mr. Nitin Rajaram Narke through Superintendent of Jail, Yerawada, Pune.

7. In response to the SCN, Shri Nitin Rajaram Narke vide letter dated November 19, 2015 inter alia submitted the following: a) “BCCPL and BCCBPL are not connected with Milestone Investments, Nitin Narke Investment and other sister concern proprietorship accounts. b) These companies were closed down temporarily due to his arrest in July 2014, because of which he was unable to file his audit reports networth certificate, unable to send SEBI a letter informing that his office was temporarily closed and also unable to submit all the relevant documents. c) I have not given any advertisement in the newspaper ‘Dainik Bhaskar’ as quoted in the Order dated November 09, 2015. d) I have never quoted to any person or investor that he will pay monthly interest of 8 to 10 percent. It is a false allegation made against him. e) I had never violated any rules or regulations of SEBI or MCX or NCDEX. Also he has never taken Rs.1200 Crores from any client/person. f) It is apparent from the Demat Account status of BCCPL that only very few people had done trading on their own knowledge. g) I am facing trials in various courts in Pune based on the false allegation made by HPIA against him. As per the FIR filed in various police stations an amount of Rs.15,30,32,400/- claim was registered. h) I have never employed 17 agents as stated in the order dated November 09, 2015, to collect money from people. i) I was arrested in the year 2012 and released on bail, he had met with the Compliance Officer of National Stock Exchange (NSE) and resumed his business as a Stock Broker. My terminal was closed in December 2013, owing to some personal problems.

j) I was in Yerwada Central Prison from July 2014 till November 2015. Upon my release from jail, I request for a personal hearing where I would submit all the relevant documents to clarify that I am innocent.”

8. Thereafter, several opportunities of personal hearings were granted to the Noticees details of which are tabulated as under: Sl.No Date of Hearing Mode of communication Reason for adjournment 1 September 08, 2016 Letter dated August 16, 2016 Noticees failed to appear. 2 October 24, 2016 Published in the newspapers (Times Authorized Representative of India, Pune Edition and Sakal sought adjournment Times, All Marathi Editions 3 December 08, 2016 E-mail dated October 26, 2016 Adjournment sought by Ms. Bhavana Chadda 4 March 29, 2017 Letter dated March 02, 2017 and Adjournment sought by Ms. published in the newspapers (Times Bhavana Chadda. Nitin of India and Maharashtra Times) Narke appeared in person and also on behalf of all his firms and sought adjournment. 5 April 27,2017 E-mail dated March 31, 2017 Shri Nitin Narke appeared in person along with the authorized representative and sought adjournment and inspection of documents. Inspection of documents was conducted on June 06, 2017 and documents were provided. 6 July 06, 2017 e-mail dated June 15, 2017 Authorized representative sought adjournment for a week 7 July 14, 2017 e-mail dated July 07, 2017 Shri Nitin Narke appeared in person along with the authorized representative and sought adjournment 8 August 04, 2017 e-mail dated July 18, 2017 Shri Nitin Narke appeared in person along with the authorized representative and sought adjournment 9 August 16, 2017 e-mail dated August 08, 2017 Shri Nitin Narke appeared in person and sought adjournment vide his letter dated August 16, 2017.

9. Thereafter, a final opportunity of personal hearing was granted to all the Noticees on August 22, 2017 and same was communicated vide e-mail dated August 18, 2017. Mr. Nitin Rajaram

Narke along with his Authorized Representatives viz., Mr. Hrishikesh Subhedar and Mr. Amol S. Dange, Advocates appeared before me on August 22, 2017 on behalf of all the Noticees and made submissions. Further, M. Nitin Narke had also made the following additional submissions in the matter vide e-mail dated August 31, 2017: a) It has been alleged by Hadapsar Parisar Investors Association (Pune) (HPIA) that Nitin Rajaram Narke has raised money from public through M/s Milestone Investment, M/s Nitin Narke Investments and M/s Blue Chip Investments and had promised to give a return of 100% in 10 months and 200% investment in 20 months. There is no substantial evidence procured in the said Order nor there is any document which will show the genuineness of HPIA. This shows that as per the complaint forwarded by HPIA is itself without any evidence. b) The BCCPL is nowhere connected with M/s Milestone Investments, M/s Nitin Narke Investments, and M/s Blue Chip Investments. c) It does not reveal that any funds have been transferred from M/s Milestone Investments, M/s Nitin Narte Investments, and M/s Blue Chip Investments to BCCPL. d) Even BCCPL, and Nitin Rajaram Narke has never Published an article in Dainik Bhaskar on 27/11/2011.

The BCCPL is the only company involved in the trading of stocks registered with SEBI. Thus the allegation made by HPAI does not survive in the eyes of law as there is no evidence/document to show that HPIA has invested certain fund with BCCPL and others. It has been further revealed that Board of Directors were absconding when the HPIA had approached them for the refund of money. There was no question for BCCPL or its BOD to abscond. e) As per para no. 6(d) it reveals that 3 investor’s complaints have been filed against BCCPL & Investors grievous resolution panel of NSE has ruled in the favor of the Complaint. f) No evidence was produced with the complaint which will show the investors have invested. It is further submitted that there are no documents to show the amount was handed over by investors to BCCPL. g) That going through the documents produced along with the order it does not reveal that any inquiry/investigation has been carried out. There is no question to terminate the license under the SEBI Act 1992. As per Section 11(C), it has been defined regarding investigation. It reveals that the statements of witnesses are required to be recorded. h) As per the definition of Section 4 of SEBI Act, it has been stated that the Board shall consist of the Chairman, 2 Members from amongst the officials of Ministry of Central Government, one Member from the official of Reserve Bank and 5 other members to be appointed by the central Government.

Going through the order, it reveals that the order has been passed by Mr.Rajiv Kumar Agarwal, WTM only.”

Consideration of Issues and findings: 10. In the instant case, the issue for consideration is whether the Noticees’ collection of money and managing the funds of investors with a promise of high returns are in violation of Section12(1) of the SEBI Act read with Regulation 3 of the PMS Regulations, Rule 8(3)(f) of the SCRR and Clauses A(1), (2) and D(4) of the Code of Conduct for Sub-brokers read with Regulation 15 of the Stock Brokers and Sub-brokers Regulations, Section 12A (a) (b) and (c) of the SEBI Act and Regulation 3 (b), (c) and (d) and Regulation 4(1) and 4(2) (k) of the PFUTP Regulations.

11. Before dealing with the charges levelled against the Noticees, the relevant legal provisions, the contravention of which have been alleged in the instant case are reproduced hereunder:- SEBI Act, 1992 Section 12(1) – "No stock-broker, sub-broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and such other intermediary who may be associated with securities market shall buy, sell or deal in securities except under, and in accordance with, the conditions of a certificate of registration obtained from the Board in accordance with the regulations made under this Act." Section 12A of the 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 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 this Act or the rules or the regulations made there under; (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;" Regulation 3 – SEBI (Portfolio Managers) Regulations, 1993 "No person shall act as portfolio manager unless he holds a certificate granted by the Board under these regulations: …" The Securities Contracts (Regulation) Rules, 1957 "8 (3) No person who is a member at the time of application for recognition or subsequently admitted as a member shall continue as such if— (f) he engages either as principal or employee in any business other than that of securities or commodity derivatives except as a broker or agent not involving any personal financial liability…"

PFUTP Regulations, 2003 Definition of ‘fraud” – Regulation 2(1)(c). (c)“fraud” includes any act, expression, omission or concealment committed whether in a deceitful manner or not by a person or by any other person with his connivance or by his agent while dealing in securities in order to induce another person or his agent to deal in securities, whether or not there is any wrongful gain or avoidance of any loss, and shall also include— (1) a knowing misrepresentation of the truth or concealment of material fact in order that another person may act to his detriment; (2) a suggestion as to a fact which is not true by one who does not believe it to be true; (3) an active concealment of a fact by a person having knowledge or belief of the fact; (4) a promise made without any intention of performing it; (5) a representation made in a reckless and careless manner whether it be true or false; (6) any such act or omission as any other law specifically declares to be fraudulent; (7) deceptive behaviour by a person depriving another of informed consent or full participation; (8) a false statement made without reasonable ground for believing it to be true; (9) the act of an issuer of securities giving out misinformation that affects the market price of the security, resulting in investors being effectively misled even though they did not rely on the statement itself or anything derived from it other than the market price.

And “fraudulent” shall be construed accordingly; Regulation 3 and 4 of the PFUTP Regulations - 3. Prohibition of certain dealings in securities " No person shall directly or indirectly— (a)… (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:— (k) an advertisement that is misleading or that contains information in a distorted manner and which may influence the decision of the investors;…" SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 “Conditions of registration. 9. Any registration granted by the Board under regulation 6 shall be subject to the following conditions, namely,- (f) he shall at all times abide by the Code of Conduct as specified in Schedule II; and .....” General Obligations and Responsibilities To maintain proper books of account, records etc. 17.(2) Every stock broker shall intimate to the Board the place where the books of account, records and documents are maintained. Schedule-II Code of Conduct for Stock Brokers: “A General (1) Integrity: A stock-broker, shall maintain high standards of integrity, promptitude and fairness in the conduct of all his business…. (5) Compliance with Statutory requirements: A Stock broker shall abide by all the provisions of the Act and the rules, regulations issued by the Government, the Board and the Stock Exchanges from time to time as may be applicable to him.”

12. I shall now proceed to deal with the charges alleged against Noticees. On an examination of the material available on record such as complaints of investors along with the documents furnished therein, information furnished by the Stock Exchanges, Depositories, various Banks and Pune Police, information downloaded from MCA 21 portal, etc., I note the following: 12.1 BCCPL (Blue Chip Corporation Private Limited) was a member of NSE and BCCBPL (Blue Chip Commodities Broking Pvt. Limited) was a member of MCX and National Commodity and Derivatives Exchange Limited (“NCDEX”). 12.2 Mr.Nitin Rajaram Narke and Mr. Pravin B. Darawade are Promoter Directors of BCCPL and BCCBPL. 12.3 As per the investor complaints, Mr. Nitin Rajaram Narke had solicited and collected money from public by assuring high returns to them. Investors made the payments to M/s Milestone Investment, M/s Nitin Narke Investment, M/s Blue Cheap Investment, M/s Blue Chip Investment, which were not registered with SEBI as an intermediary. It is also noted that Mr. Nitin Narke did not open any trading/demat accounts for the investors.

12.4 As per the information provided by banks, it is noted that Ms. Bhavana Chadha and Mr. Nitin Rajaram Narke are partners in the firm M/s Milestone Investment. M/s Blue Chip Investment is constituted as a sole proprietorship by Mr. Nitin Rajaram Narke. 12.5 Mr. Nitin Rajaram Narke and other entities M/s Milestone Investment, M/s Nitin Narke Investment, M/s Bluechip Investment had issued post-dated cheques to the investors which subsequently got dishonoured. 12.6 From the post-dated cheques issued by Mr. Nitin Rajaram Narke and others, the following bank accounts were noted: Sr. No. Account in the name of Name of Bank Bank account No. 1 Blue Chip Investment Axis Bank Ltd, Pune 910020033025119 2 Blue Cheap Investment ICICI Bank, Pune 147505500007 3 Milestone Investment ICICI Bank, Pune 147505500021 4 Nitin Narke Investment ICICI Bank, Pune 147505500100 5 Nitin Rajaram Narke ICICI Bank, Pune 147505500096 6 Nitin Rajaram Narke ICICI Bank, Pune 147501500483 7 Blue Cheap Investment HDFC Bank Ltd., Pune 08378620000057 8 Milestone Investment HDFC Bank Ltd., Pune 08372560000909 9 Narke Nitin Rajaram HDFC Bank Ltd., Pune 15781930000665 10 Narke Nitin Rajaram HDFC Bank Ltd., Pune 09622020000379 11 Blue Cheap Investment IDBI Bank, Pune 0651102000005098 12 Blue Cheap Investment Cosmos Co-operative Bank Ltd., Pune 09310010426 13 Blue Cheap Investment Saraswat Bank, Pune 370100100000024 14 Blue Cheap Investment The Royal Bank of Scotland N.V., Pune 1659086 15 Blue Cheap Investment Indusind Bank, Pune 0002518201050 16 Nitin Rajaram Narke Saraswat Bank 370218100000001

12.7 From the information received from the abovementioned banks (Sr. No. 1 to 10 above). the following instances of transactions are noted:

Table 1: Bank account in the name of M/s Blue Chip Investment Account Details (sample transactions above `5 Name: Blue Chip Investment lacs only) No. 910020033025119 Name of Bank: Axis Bank, Pune Period : 01/04/2011 to 30/06/2012 Tran Cheque Particulars Debit (`) Credit (`) Date No. 06/04/2011 By Cash 5,00,000 07/04/2011 By Cash 7,00,000

08/04/2011 By Cash 5,00,000 09/04/2011 By Cash 9,50,000 11/04/2011 By Cash 5,00,000 13/04/2011 By Cash 5,00,000 15/04/2011 By Cash 9,50,000 18/04/2011 By Cash 9,50,000 19/04/2011 By Cash 9,50,000 20/04/2011 By Cash 8,00,000 23/04/2011 By Cash 9,50,000 25/04/2011 By Cash 9,00,000 26/04/2011 By Cash 9,00,000 27/04/2011 By Cash 9,50,000 28/04/2011 By Cash 9,50,000 29/04/2011 By Cash 9,50,000 30/04/2011 By Cash 9,50,000 02/05/2011 By Cash 5,00,000 04/05/2011 By Cash 9,50,000 05/05/2011 By Cash 9,50,000 06/05/2011 By Cash 9,00,000 07/05/2011 By Cash 9,50,000 09/05/2011 By Cash 9,50,000 10/05/2011 By Cash 5,00,000 11/05/2011 By Cash 8,00,000 12/05/2011 By Cash 6,00,000 13/05/2011 By Cash 5,00,000 16/05/2011 By Cash 5,00,000 20/05/2011 By Cash 7,00,000 21/05/2011 By Cash 7,00,000 23/05/2011 By Cash 9,50,000 24/05/2011 By Cash 9,50,000 25/05/2011 By Cash 9,50,000 27/05/2011 By Cash 5,00,000 28/05/2011 By Cash 7,00,000 30/05/2011 By Cash 9,50,000 01/06/2011 By Cash 8,00,000 03/06/2011 By Cash 9,50,000 06/06/2011 By Cash 5,00,000 07/06/2011 By Cash 9,00,000 09/06/2011 By Cash 5,00,000 10/06/2011 By Cash 8,00,000 13/06/2011 By Cash 9,50,000 14/06/2011 By Cash 9,00,000 15/06/2011 By Cash 9,50,000 18/06/2011 By Cash 9,50,000

24/06/2011 By Cash 9,50,000 27/06/2011 By Cash 5,00,000 28/06/2011 By Cash 5,00,000 29/06/2011 By Cash 5,00,000 30/06/2011 By Cash 5,00,000 01/07/2011 By Cash 5,00,000 05/07/2011 By Cash 9,50,000 06/07/2011 By Cash 5,00,000 07/07/2011 By Cash 5,00,000 11/07/2011 By Cash 6,00,000 12/07/2011 By Cash 8,00,000 13/07/2011 By Cash 5,00,000 14/07/2011 By Cash 7,00,000 15/07/2011 By Cash 5,00,000 16/07/2011 By Cash 9,50,000 18/07/2011 By Cash 9,50,000 19/07/2011 By Cash 9,50,000 20/07/2011 By Cash 9,50,000 21/07/2011 By Cash 6,00,000 23/07/2011 By Cash 6,00,000 25/07/2011 By Cash 9,00,000 26/07/2011 By Cash 8,00,000 28/07/2011 By Cash 5,00,000 29/07/2011 By Cash 5,00,000 02/08/2011 By Cash 7,00,000 03/08/2011 By Cash 9,50,000 12/08/2011 By Cash 5,00,000 16/08/2011 By Cash 5,00,000 17/08/2011 By Cash 9,50,000 29/08/2011 By Cash 5,00,000 30/08/2011 By Cash 8,00,000 02/09/2011 By Cash 6,00,000 06/09/2011 By Cash 9,50,000 07/09/2011 By Cash 8,00,000 08/09/2011 By Cash 9,00,000 09/09/2011 By Cash 9,50,000 10/09/2011 By Cash 9,00,000 12/09/2011 By Cash 5,00,000 17/09/2011 By Cash 5,00,000 20/09/2011 By Cash 5,00,000 22/09/2011 By Cash 7,00,000 24/09/2011 By Cash 5,00,000 26/09/2011 By Cash 16,00,000 07/10/2011 By Cash 9,00,000

08/10/2011 By Cash 9,00,000 14/10/2011 By Cash 9,00,000 15/10/2011 By Cash 9,00,000 18/10/2011 By Cash 5,00,000 19/10/2011 By Cash 5,00,000 29/10/2011 579916 To self 20,00,000 02/11/2011 579920 Blue Chip Investment 20,00,000 05/11/2011 By Cash 8,00,000 11/11/2011 By Cash 9,00,000 12/11/2011 By Cash 6,00,000 14/11/2011 581527 To self 20,00,000 15/11/2011 581531 To self 20,00,000 16/11/2011 579955 Nitin Narke Investment 50,00,000 23/11/2011 581536 To self 20,00,000 24/11/2011 579963 To self 30,00,000 28/11/2011 579346 To Cash/Self 5,50,000 30/11/2011 581548 To self 9,50,000 25/11/2011 579344 To self 9,00,000 10/12/2011 581557 To self 9,00,000 14/12/2011 579359 To self 5,00,000 19/12/2011 579364 To self 11,00,000 21/12/2011 581599 To self 25,00,000 27/12/2011 581600 To self 5,00,000 28/12/2011 579387 To Cash/Self 3,00,000 29/12/2011 578192 To Self 3,00,000 30/01/2012 80916 To Cash/Self 2,80,000 01/02/2012 35667 To Cash/Self 2,60,000 08/02/2012 35670 To Cash/Self 8,00,000 08/02/2012 35669 To Cash/Self 5,00,000

Table 2: Bank account in the name of M/s Blue Cheap Investment Account Details (sample Name: Blue Cheap Investment transactions above `10 lacs only) No. 147505500007 Name of Bank: ICICI Bank, Fatima Nagar, Pune Period : 01/04/2011 to 23/04/2012 Date Particulars Cheque Withdrawals (`) Deposits (`) No. 03/05/2011 Blue Cheap Investment 10,00,000 09/06/2011 Trfr to: BCCPL 8116 20,00,000 20/06/2011 Trfr from: Nitin R Narke 10,00,000

20/06/2011 -do- 15,00,000 23/06/2011 Trfr to: Blue Chip Commodities 4905 40,00,000 Broking Pvt Ltd 30/06/2011 Trfr to: Yourself DD 4979 17,40,000 01/07/2011 Trfr to: Yourself DD 4973 11,60,000 04/07/2011 Trfr to: Yourself DD 4991 32,00,000 06/07/2011 Trfr from: Blue Chip 13,00,000 Commodities Broking Pvt Ltd 08/07/2011 Trfr to: BCCPL 907443 90,00,000 11/07/2011 Trfr to: Nitin Narke 7932 20,00,000 15/07/2011 Trfr to: Blue Chip Commodities 7984 15,00,000 Broking Pvt Ltd 21/07/2015 -do- 6373 10,00,000 21/07/2015 Trfr to: BCCPL 6374 40,00,000 27/07/2011 Trfr from: Blue Chip 55,00,000 Corporation 01/08/2011 Trfr to: BCCPL 8944 55,00,000 04/08/2011 Blue Chip Corp 9000 10,00,000 10/08/2011 Trfr from: Blue Chip 50,00,000 Corporation 10/08/2011 Blue Cheap Investment 30,00,000 10/08/2011 Blue Cheap Investment 48,00,000 11/08/2011 Trfr to: BCCPL 9025 15,00,000 12/08/2011 Blue Chip Investment 9024 30,00,000 18/08/2011 Trfr to: Nitin Narke 10411 20,00,000 18/08/2011 Blue Cheap Corporation 10412 50,00,000 20/08/2011 Cash paid self 7521 75,00,000 20/08/2011 Trfr from: Blue Chip 1,00,00,000 Corporation 20/08/2011 Trfr from: Blue Chip 50,00,000 Corporation 22/08/2011 Trfr from: Blue Chip 40,00,000 Corporation 22/08/2011 Blue Cheap Investment 40,00,000 25/08/2011 Trfr from: Blue Chip 10,00,000 Corporation 02/09/2011 Trfr to: BCCPL 8171 10,00,000 03/09/2011 Trfr from: Nitin R Narke 20,00,000 03/09/2011 Trfr to: BCCPL 11451 20,00,000 05/09/2011 Nitin R Narke 11577 10,00,000 05/09/2011 Trfr to: BCCPL 8880 10,00,000 06/09/2011 -do- 11617 10,00,000 07/09/2011 -do- 11405 10,00,000

07/09/2011 -do- 11618 10,00,000 08/09/2011 -do- 11620 10,00,000 09/09/2011 -do- 8883 10,00,000 12/09/2011 -do- 11507 20,00,000 16/09/2011 -do- 12052 10,00,000 19/09/2011 -do- 11630 10,00,000 19/09/2011 Trfr from: Nitin R Narke 15,00,000 27/09/2011 Trfr from: Blue Chip 13,00,000 Corporation 28/09/2011 Trfr to: Blue Cheap Corporation 10,00,000 03/10/2011 -do- 14,00,000 10/10//011 Trfr to: BCCPL 12851 20,00,000 12/10/2011 -do- 12260 11,00,000 13/10/2011 -do- 13002 15,00,000 17/10/2011 -do- 12096 27,00,000 19/10/2011 -do- 12864 1,14,00,000 19/10/2011 Trfr to: Nitin R Narke 12262 10,00,000 20/10/2011 Trfr to: Nitin Narke Investment 12871 10,00,000 24/10/2011 Trfr to: Nitin Narke Investment 13005 25,00,000 24/10/2011 Trfr from: BCCPL 50,00,000 25/10/2011 -do- 50,00,000 25/10/2011 Trfr from: Nitin R Narke 10,00,000 25/10/2011 Trfr to: Nitin Narke Investment 12155 25,00,000 31/10/2011 Trfr to: Blue Chip Commodities 11490 20,00,000 Broking Pvt. Ltd. 01/11/2011 Trfr to: BCCPL 8907 10,00,000 03/11/2011 Trfr from: Milestone Inv 20,17,846 03/11/2011 Trfr to: BCCPL 11443 23,26,669 03/11/2011 Trfr from: Nitin Narke Inv 29,48,137 03/11/2011 Trfr from: Nitin R Narke 16,84,614 04/11/2011 Trfr from: Nitin R Narke 18,09,345 08/11/2011 Trfr from: Nitin Narke 66,36,560 08/11/2011 Trfr from: Nitin Narke 38,19,238 Investment 08/11/2011 Trfr from: Nitin Narke 24,33,382 08/11/2011 Trfr to: BCCPL 12199 1,00,00,000 09/11/2011 Trfr from: Nitin Narke 57,62,392 09/11/2011 Trfr from: Blue Chip 20,00,000 Corporation Pvt Ltd 09/11/2011 Trfr to: BCCPL 11446 57,00,000 14/11/2011 Trfr to: Yourself for DD 13030 12,00,000 14/11/2011 Trfr from: Nitin R Narke 1,50,00,000 14/11/2011 Trfr to: BCCPL 13094 1,50,00,000 14/11/2011 Trfr from: Nitin R Narke 1,50,00,000

15/11/2011 Nitin R Narke 8912 18,00,000 16/11/2011 Trfr from: Nitin R Narke 11,27,992 16/11/2011 Trfr to: BCCPL 12958 1,00,00,000 16/11/2011 Trfr to: BCCPL 15477 19,00,000 17/11/2011 Trfr from: Nitin R Narke 50,00,000 Investment 17/11/2011 Trfr to: BCCPL 13040 50,00,000 17/11/2011 Trfr from: BCCPL 25,00,000 18/11/2011 Trfr to: Nitin Narke 15408 10,00,000 18/11/2011 Trfr from: BCCPL 50,00,000 19/11/2011 Trfr from: BCCPL 10,00,000 21/11/2011 Trfr to: BCCPL 14190 22,00,000 22/11/2011 Trfr to: Nitin R Narke 11534 30,00,000 22/11/2011 Trfr from: BCCPL 55,00,000 22/11/2011 -do- 20,00,000 23/11/2011 Trfr to: BCCPL 11648 12,00,000 23/11/2011 Trfr from: Nitin R Narke 12,00,000 Investment 25/11/2011 Trfr to: BCCPL 15426 15,00,000 28/11/2011 Trfr to: BCCPL 15543 18,00,000 28/11/2011 Trfr to: BCCPL 15545 11,00,000 29/11/2011 Trfr from: BCCPL 10,00,000 29/11/2011 Blue Chip Investment 14205 10,00,000 10/12/2011 Trfr from: BCCPL 60,00,000 12/12/2011 Trfr from: Blue Chip 40,00,000 12/12/2011 Trfr from: Nitin R Narke 11,32,000 13/12/2012 Trfr from: Nitin R Narke 21,00,000 14/12/2011 Trfr from: BCCPL 10,00,000 14/12/2011 -do- 10,00,000 11/01/2012 Trfr to: BCCPL 11536 17,00,000 18/01/2012 Cash paid self 11546 11,00,000

Table 3: Bank account in the name of M/s Blue Cheap Investment

Account Details (sample Name: Blue Cheap Investment transactions above `5 lacs only) No. 147505500007 Name of Bank: ICICI Bank, Fatima Nagar, Pune Period : 01/04/2011 to 13/02/2012 Date Particulars Cheque Withdrawals (`) Deposits (`) No. 21/06/2011 Trfr to: Blue Cheap Inv 8751 9,00,000 11/07/2011 Trfr to: Nitin Narke 7119 10,00,000

04/10/2011 Cash paid self 10259 10,00,000 19/10/2011 Trfr from: Blue Cheap 13485 9,00,000 31/10/2011 Trfr from: Blue Cheap 14551 9,00,000 03/11/2011 Trfr to: Blue Cheap Inv 13486 20,17,846 14/11/2011 Trfr from: Blue Cheap Inv 10,00,000 15/11/2011 Cash paid self 15799 8,00,000 16/11/2011 Cash paid self 14463 8,00,000 17/11/2011 Cash paid self 15676 25,00,000 17/11/2011 Trfr from: Blue Cheap 25,00,000 18/11/2011 Trfr from: Blue Cheap 80,00,000 18/11/2011 Trfr to: Blue Cheap 14599 72,00,000 18/11/2011 Cash paid self 14598 8,00,000 19/11/2011 Cash paid self 15826 30,00,000 10/12/2011 Blue Cheap Investment 30,00,000 10/12/2011 Cash paid self 17045 30,00,000 10/01/2012 Cash paid self 18676 13,00,000 18/01/2012 Trfr to: Nitin Rajaram Narke 19745 24,00,000 20/01/2012 Trfr to: Nitin Rajaram Narke 19761 22,00,000 21/01/2012 Trfr to: Nitin Rajaram Narke 15673 25,00,000 06/02/2012 Cash paid self 20826 25,00,000 Table 4: Bank account in the name of M/s Milestone Investment Account Details (above `5 Lacs) Name: Milestone Investment No. 147505500021 Name of Bank: ICICI Bank, Fatima Nagar, Pune Period : 01/04/2011 to 13/02/2011 Date Particulars Cheque Withdrawals (`) Deposits (`) No. 21/06/2011 By cash 9,00,000 21/06/2011 Trfr to Blue Cheap Inv. 8751 9,00,000 29/06/2011 By cash 9,50,000 11/07/2011 BMA Wealth Creato 50,00,000 11/07/2011 Trfr to Nitin Narke 7119 10,00,000 17/09/2011 By cash 9,50,000 04/10/2011 Cash paid self 10259 10,00,000 14/10/2011 By cash 9,50,000 18/10/2011 By cash 9,00,000 19/10/2011 Trfr to Blue Cheap 13485 9,00,000 31/10/2011 By cash 9,00,000 31/10/2011 Trfr to Blue Cheap 14551 9,00,000 03/11/2011 Trfr to Blue Cheap Inv 13486 20,17,846 17/11/2011 Trfr from Blue Cheap 25,00,000 17/11/2011 Cash paid self 15676 25,00,000 18/11/2011 Trfr from Blue Cheap 80,00,000

18/11/2011 Trfr to Blue Cheap 14599 72,00,000 18/11/2011 Cash paid self 14598 8,00,000 19/11/2011 Cash paid self 15826 30,00,000 10/12/2011 Trfr from Blue Cheap Inv. 30,00,000 10/12/2011 Cash paid self 17045 30,00,000 10/01/2012 Cash paid self 18676 13,00,000 17/01/2012 Trfr from BMA Wealth Creators 25,00,000 Ltd 18/01/2012 Trfr to Nitin Rajaram Narke 19745 24,00,000 19/01/2012 BMA Wealth Creators 25,00,000 20/01/2012 Trfr to Nitin Rajaram Narke 19761 22,00,000 20/01/2012 Trfr from BMA Wealth Creators 25,00,000 21/01/2012 Trfr to Nitin Rajaram Narke 15673 25,00,000 06/02/2012 BMA Wealth Creators 25,00,000 06/02/2012 Cash paid self 20826 25,00,000

Table 5: Bank account in the name of Mr. Nitin Rajaram Narke

Account Details (sample transactions above Rs 4.0 lacs only)

Date Particulars Cheque No. Withdrawals (Rs) Deposits (Rs)

26/05/2011 Trfr from Blue Cheap 5,00,000 26/05/2011 Cash paid self 8284 5,00,000 21/06/2011 By cash 9,00,000 21/06/2011 Trfr to Blue Cheap Inv. 6626 9,00,000 23/08/2011 Trfr to Blue Chip Corp 11152 4,75,000 05/09/2011 By cash 9,00,000 14/10/2011 By cash 9,00,000 03/11/2011 Trfr to Blue Cheap Inv. 14897 16,84,614 04/11/2011 Trfr to Blue Cheap 14899 18,09,345 08/11/2011 Trfr to Blue Cheap Inv. 16075 66,36,560 09/11/2011 Trfr to Blue Cheap 14874 57,62,392

18/11/2011 Trfr from Blue Cheap 10,00,000 18/11/2011 Cash paid self 16376 10,00,000 19/11/2011 Cash paid self 16377 30,00,000 21/11/2011 Trfr to Blue Cheap Inv. 16476 7,00,000 22/11/2011 Trfr from Blue Cheap 30,00,000 22/11/2011 Cash paid self 16526 30,00,000 13/12/2011 Trfr to Blue Cheap Inv. 17245 21,00,000

14/12/2011 Trfr to Blue Cheap 17349 5,00,000 27/12/2011 Cash paid self 18116 6,00,000 10/01/2012 Cash paid self 19077 8,00,000 11/01/2012 Trfr to Nitin Narke 19189 20,00,000 11/01/2012 Trfr to Blue Cheap Inv. 19188 5,00,000 11/01/2012 Cash paid self 19185 20,00,000

Table: 6 Bank account in the name of M/s Nitin Narke Investment

Account Details (sample transactions above Rs.4 lacs only)

Date Particulars Cheque Withdrawals (Rs) Deposits (Rs) No. 21/06/2011 By cash 9,00,000 21/06/2011 Trfr to Blue Cheap Inv. 8827 9,00,000 11/07/2011 Trfr to Nitin Narke 9477 10,00,000 19/07/2011 Globe Capital 20,36,253.66 06/08/2011 Trfr to Globe Capital 8499 10,00,000 23/08/2011 Trfr to Blue Chip Corp 11302 4,15,000 05/09/2011 By cash 9,00,000 14/10/2011 By cash 9,00,000 15/10/2011 Globe Capital Market 28,34,901 17/10/2011 By cash 9,00,000 20/10/2011 Trfr from Blue Cheap 10,00,000 Inv 21/10/2011 Trfr from Blue Cheap 10,00,000 Inv 24/10/2011 Trfr from Blue Cheap 25,00,000 Inv 24/10/2011 Cash paid self 14966 25,00,000 25/10/2011 Trfr from Blue Cheap 25,00,000 Inv 25/10/2011 Cash paid self 14968 25,00,000 31/10/2011 By cash 9,00,000 31/10/2011 Trfr to Blue Cheap 13975 9,00,000 03/11/2011 Trfr to Blue Cheap Inv 15023 29,48,137 04/11/2011 Trfr from Blue Cheap 7,00,000 04/11/2011 Cash paid self 16133 8,00,000 08/11/2011 Trfr to Blue Cheap Inv 14950 38,19,238 16/11/2011 Blue Chip Investment 50,00,000 17/11/2011 Trfr to Blue Cheap 13925 50,00,000 10/01/2012 Globe Capital 14,00,000 10/01/2012 Trfr from Amol Atre 20,66,526 10/01/2012 Cash paid self 19426 20,00,000 11/01/2012 Trfr to Blue Cheap 19377 12,00,000 11/01/2012 Self 19352 5,00,000

18/01/2012 Trfr from Nitin 10,00,000 Rajaram Narke 18/01/2012 Cash paid self 20277 7,00,000 25/02/2012 Globe Capital Market 6,00,000

Table:7 Bank account in the name of M/s Blue Cheap Investment

Account Details Name: Blue Cheap Investment No. 08378620000057 Name of Bank: HDFC Bank, Fatima Nagar, Pune Period : 01/04/2011 to 01/05/2013 Date Particulars Cheque Withdrawals (`) Deposits (`) No. 09/04/2011 Funds transfer – Wanowrie* 5,00,000 09/04/2011 Funds transfer – Wanowrie 5,00,000 15/04/2011 Chq paid – Wanowrie / Pune 208270 8,00,000 20/04/2011 Chq paid – Wanowrie / Pune 211901 8,00,000 15/05/2011 Blue Chip Corporation Pvt Ltd 208685 1,00,000 01/06/2011 Funds transfer – Wanowrie 4,00,000 13/06/2011 Funds transfer – Wanowrie 5,00,000 16/06/2011 Funds transfer – Wanowrie 9,50,000 17/06/2011 Chq paid – Wanowrie / Pune 217676 5,00,000 18/06/2011 Chq paid – Wanowrie / Pune 215651 5,00,000 20/06/2011 Chq paid – Wanowrie / Pune 210804 6,00,000 12/07/2011 Funds transfer – Wanowrie 10,00,000 12/07/2011 Funds transfer – Wanowrie 10,00,000 12/07/2011 Funds transfer – Wanowrie 5,00,000 12/07/2011 Funds transfer – Wanowrie 5,00,000 12/07/2011 Funds transfer – Wanowrie 5,00,000 12/07/2011 Pravin B Darawade 215652 20,00,000 18/07/2011 Funds transfer – Wanowrie 10,00,000 30/07/2011 Blue Chip Commodities 211778 1,00,000 10/08/2011 Chq paid – Blue Cheap Invest 218715 48,00,000 27/08/2011 Chq paid – Wanowrie / Pune 227036 24,00,000 04/10/2011 Chq paid – Wanowrie / Pune 211793 10,00,000 13/10/2011 Chq paid – Wanowrie / Pune 222897 30,00,000 14/10/2011 Chq paid – Wanowrie / Pune 227046 15,00,000 21/10/2011 Chq paid – Wanowrie / Pune 230652 12,00,000 31/10/2011 Blue Chip Corporation Pvt Ltd 222899 3,00,000 18/11/2011 Chq paid – Wanowrie / Pune 234080 25,00,000 22/11/2011 Chq paid – Wanowrie / Pune 230654 10,00,000 27/11/2011 Blue Chip Corporation Pvt Ltd 203405 1,00,000 28/11/2011 Funds transfer – Wanowrie 10,00,000 08/12/2011 BCCPL 230665 1,00,000

08/12/2011 Blue Chip Commodities 230666 50,000 10/01/2012 BCCPL 235303 1,00,000 10/01/2012 Blue Chip Commodities 235304 50,000 11/01/2012 Blue Chip Commodities 230674 1,00,000 20/01/2012 BCCPL 235313 1,00,000 30/01/2012 BCCPL 234099 3,00,000 31/01/2012 BCCPL 234100 50,000 14/02/2012 Narke Nitin Rajaram 244784 30,000 18/02/2012 Narke Nitin Rajaram 249064 2,00,000 06/03/2012 Narke Nitin Rajaram 244793 15,00,000

12.8 The following are noted from the abovementioned bank transactions: (i) Large number of cash deposits were made in the bank accounts of M/s Blue Chip Investment, M/s Blue Cheap Investment, M/s Milestone Investment, Mr. Nitin Rajaram Narke. (ii) It is mentioned in the interim order-cum-SCN that in the bank account of M/s Blue Chip Investment, it is noted that out of total deposit of Rs.18,60,82,019/-cash deposit was to the tune of Rs.8,58,55,000/-. (iii) Frequent movement of funds were noticed in the bank accounts held by Mr. Nitin Rajaram Narke, M/s Milestone Investment, BCCPL, M/s Blue Chip Investment, M/s Blue Cheap Investment, BCCBPL, by way of withdrawal as well as deposits. (iv) In almost all the bank accounts, money was withdrawn, mostly by way of self-cash withdrawal/cash paid self, fund transfer to the personal bank account of Mr. Nitin Rajaram Narke and again withdrawing cash from that bank account or by way of self-demand draft. (v) Funds were transferred from the above bank accounts to BCCPL, BCCBPL, BMA Wealth Creators Ltd. (stock broker) and Globe Capital Markets Ltd. (stock broker) suggesting that money of the investors was utilised in the securities markets including commodities. (vi) The bank statements also show that small amounts in cheque/cash was being credited into the accounts suggesting collection of money from investors and there were also debits of small amount by way of cheque/cash/funds transfer, suggesting repayment of the amount so collected. (vii) Type of transactions in all the said bank accounts are similar, i.e., deposits by way of cash, cheques, inter se fund transfers from one account to another account and payments also were made to either of the said accounts and mostly amounts withdrawn by Mr. Nitin Rajaram Narke.

In the light of the facts mentioned above, it is clearly established that money was collected by Mr. Nitin Rajaram Narke through various bank accounts opened in the name of M/s Blue Cheap Investment and M/s Blue Chip Investment, M/s Nitin Rajaram Narke Investments, M/s Nitin Narke Investments, etc.

12.9 Further, Mr. Nitin Rajaram Narke also floated several firms, including sole proprietorship firm as well as a partnership firm with Ms.Bhavana Chadha and solicited money from general investors to make investment in the securities market on their behalf by promising them high returns. The fund transfers to the Stock Brokers also denotes that Mr. Nitin Rajaram Narke was also managing the funds of investors in the nature of portfolio manager for the purpose of investments in the securities market. Such activities can only be done by a SEBI registered portfolio manager. The Noticees were not registered with SEBI as a portfolio manager at any point of time. In view of the aforesaid, I note that the Noticees misled the investors to believe that they were authorized to do the activities as described above as a portfolio manager. They did so by misusing the SEBI registration, which it had obtained to act as a stock broker. Hence, I find that the charges against the Noticees that they acted as unregistered portfolio manager in violation of Section 12(1) of SEBI Act read with Regulations 3 of the PMS Regulations, 1993 stands established.

12.10 It is noted that several investors of the Noticees have claimed repayment of their investments. Investors had also lodged several police complaints against Mr. Nitin Rajaram Narke pursuant to which he was arrested. It is noted from the investor complaints and the information received from Pune Police and the fund transfers in various bank accounts that the Noticees had collected funds and deposits from the investors through misrepresentation as a portfolio manager by using the certificate of registration issued to BCCPL as a stock broker by promising high returns. In view of the same, I find that the Noticees have clearly devised a scheme which is 'fraudulent' as defined in regulation 2(1) (c) of the PFUTP Regulations. It is clear that the Noticees made misrepresentations in a fraudulent and deceitful manner and mobilised large amounts from the public. In the light of the same I find that the Noticees have acted in fraudulent and deceitful manner in violation of Section 12A (a) (b) and (c) of the SEBI Act and Regulation 3 (b), (c) and (d) and Regulation 4(1) and 4(2) (k) of the PFUTP Regulations.

12.11 Considering the fact that BCCPL and its promoters/directors were carrying out fund based activities through various firms and thus indulged in fund based activities involving personal financial liability, which being a stock broker it cannot undertake, in view of the prohibitions contained in Rule 8(3)(f) of SCRR. As per Rule 8 (3) (f) of SCRR, a member of the Stock Exchange is prohibited from engaging in any business other than that of securities or commodity derivatives except as a broker or agent not involving any personal financial liability. In view of the same, I find that BCCPL by undertaking the above activities violated the provisions of Rule 8(3)(f) of SCRR.

12.12 As per the information furnished by the stock exchanges, I note that NSE suspended the membership of BCCPL for its various defaults. Further, MCX and NCDEX also declared BCCBPL as a defaulter. I note that BCCPL as a SEBI registered Broker/Sub-broker at the relevant time was duty bound to follow the conditions of granting of certificate of registration and also to abide by the code of conduct prescribed under the Brokers Regulations. BCCPL and its Promoter Directors by misusing the status as Broker/Sub-broker solicited collected money from the members of public through various fraudulent schemes as detailed above promising them high returns. BCCPL was also closed their office without intimation to the exchanges and clientsHence, I find that the Noticees failed to maintain high standards of integrity, promptitude and fairness prescribed for an intermediary, therefore violated regulation 9(f) and 17(2) of the Brokers Regulations read with clauses A(1) and A(5) of Schedule II of the Regulations.

12.13 Mr. Rajaram Narke vide his replies dated November 19, 2015 (sent from Jail) and subsequently on August 31, 2017 contended that he was not connected with any of the firms, not collected any money from investors as alleged by HPIA and there was no evidence for the same. In this regard, it is pertinent to mention that SEBI has conducted a preliminary inquiry into the allegation of fund mobilisation against the Noticees. As part of the inquiry, SEBI sought information from various banks, NSE, MCX, NCDEX etc. It is pertinent to mention that the deposits of cash, transfer of funds etc. reflected in the bank accounts have not been disputed by the Noticees. Based on the said information and also the evidence such as collection of money, issuance of cheques to investors, fund transfers etc. which have not been rebutted by the Noticees. In view of this, I find that the violations committed by the Noticees stands established.

The Noticee has also raised a contention regarding the authority of the Hon’ble Whole Time Member who passed the ex-parte order. As regards, the same it is observed that as per Section 19 of the SEBI Act, the powers and functions under the Act may be delegated by the Board to any member or officer of the Board as may be deemed fit. As per the work allocation, the instant matter was listed before the then Hon’ble Whole Time Member and considering the material available on record the ex-parte order was passed, I find that the ex-parte order does not suffer from any lack of authority as contented by the Noticees. 12.14 It is also noted that the Noticees failed to comply with the directions issued by SEBI in the ex-parte order dated November 09, 2015 as regards furnishing complete details of amounts collected from investors, full inventory of their assets, etc. As regards the direction for attachment of bank accounts of the Noticee, it is noted from the information provided by banks that the bank accounts of BCCPL, Mr. Nitin Rajaram Narke, Blue Cheap Investment were blocked. Further, bank accounts of Mr. Parvin B. Darawade and Ms. Bhavan Chadda were already closed. As regards, Blue Cheap Investments and Nitin Narke Investment no accounts maintained/no records found with HDFC. Further, Axis bank vide e-mail dated November 18, 2015 confirmed freezing of accounts of Mr. Pravin B. Darawade and Ms. Bhavana Chadda.

13. SEBI has been entrusted with the important mandate of protecting investors and safeguarding the integrity of the securities market. In this regard, necessary powers have been conferred upon it under the securities laws. It is, therefore, necessary that SEBI exercises these powers firmly and effectively to insulate the market and its investors from the fraudulent actions of any of the participants in the securities market, thereby fulfilling its legal mandate. A basic premise that underlines the integrity of securities market is that persons connected with securities market conform to high standards of transparency, good governance and ethical behavior prescribed in securities laws and do not resort to fraudulent activities. In view of the gravity of the violations perpetrated by the Noticees viz., Mr. Nitin Rajaram Narke, Mr. Pravin. B.Darawade and Ms. Bhavana Chadda through their firms/companies as brought in the foregoing paragraphs I am of the opinion that they should not be allowed to have access to the securities market in view of the possible danger to the investors at large.

14. In view of the foregoing, I, in exercise of powers conferred upon me by virtue of Section 19 read with Sections 11(1), 11(4) and 11B of the SEBI Act do hereby pass the following Directions :

i. Blue Chip Corporation Pvt. Ltd. (PAN: AAECB5060A), Mr. Nitin Rajaram Narke (PAN: AECPN7019L), Mr. Pravin B. Darawade (PAN: ATUPD8449F), Ms. Bhavana Chadha (PAN: AFNPC9292G), M/s Milestone Investment (PAN: AASFM5213B), M/s Nitin Narke Investment (PAN: ATUPD8449F), M/s Blue Cheap Investment (PAN: AECPN7019L) and M/s Blue Chip Investment (PAN: AECPN7019L) are prohibited from mobilizing or pooling any fresh funds from their clients, other general investors or members of public in whatever form for a period of ten (10) years from the date of this Order; ii. Blue Chip Corporation Pvt. Ltd. (PAN: AAECB5060A), Mr. Nitin Rajaram Narke (PAN: AECPN7019L), Mr. Pravin B. Darawade (PAN: ATUPD8449F), Ms. Bhavana Chadha (PAN: AFNPC9292G), M/s Milestone Investment (PAN: AASFM5213B), M/s Nitin Narke Investment (PAN: ATUPD8449F), M/s Blue Cheap Investment (PAN: AECPN7019L) and M/s Blue Chip Investment (PAN: AECPN7019L) shall refund the monies so collected from its clients and other investors through various schemes along with income, profits or returns promised to them under such schemes or interest at the rate of 10% per annum, whichever is higher, from the date of investment till the date of refund within a period of ninety (90) days; iii.

Blue Chip Corporation Pvt. Ltd. (PAN: AAECB5060A), Mr. Nitin Rajaram Narke (PAN: AECPN7019L), Mr. Pravin B. Darawade (PAN: ATUPD8449F), Ms. Bhavana Chadha (PAN: AFNPC9292G), M/s Milestone Investment (PAN: AASFM5213B), M/s Nitin Narke Investment (PAN: ATUPD8449F), M/s Blue Cheap Investment (PAN: AECPN7019L) and M/s Blue Chip Investment (PAN: AECPN7019L) shall submit a repayment report to SEBI in the following format as certified by two independent Chartered Accountants who are in the panel of any public authority or public institution:. S. Name of PAN of Address Refund Details No. Client / Client / of Client/ From To Amount Investor Investor Investor Cheque No./ Name of the Cheque No./ Demand Draft/ Bank Demand Draft/ NEFT details NEFT details iv. Blue Chip Corporation Pvt. Ltd. (PAN: AAECB5060A), Mr. Nitin Rajaram Narke (PAN: AECPN7019L), Mr. Pravin B. Darawade (PAN: ATUPD8449F), Ms. Bhavana Chadha (PAN: AFNPC9292G), M/s Milestone Investment (PAN: AASFM5213B), M/s Nitin Narke Investment (PAN: ATUPD8449F), M/s Blue Cheap Investment (PAN: AECPN7019L) and M/s Blue Chip Investment (PAN: AECPN7019L) shall provide a full inventory of all assets and properties and details of all its bank accounts, demat accounts and holdings of shares/securities. v. Blue Chip Corporation Pvt. Ltd. (PAN: AAECB5060A), Mr. Nitin Rajaram Narke (PAN: AECPN7019L), Mr. Pravin B. Darawade (PAN: ATUPD8449F), Ms. Bhavana Chadha (PAN: AFNPC9292G), M/s Milestone Investment (PAN: AASFM5213B), M/s Nitin Narke Investment (PAN: ATUPD8449F), M/s Blue Cheap Investment (PAN: AECPN7019L) and M/s Blue Chip Investment (PAN: AECPN7019L) directed not to access the securities market directly or indirectly, and are further restrained and prohibited from buying, selling or otherwise dealing in the securities market, directly or indirectly for a period of ten (10) years from the date of this Order.

This shall not prohibit the Noticees from effecting the repayments to their investors.

15. This order shall come into force with immediate effect. The stock exchanges and the depositories are directed to ensure that the above directions are strictly enforced.

16. The above directions are without prejudice to the right of SEBI to take any other action that may be initiated against the Noticees in accordance with law including the actions of imposing monetary penalties, suspension/ cancellation of registration etc.

Place : Mumbai S. RAMAN Date : September 04, 2017 WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA