Order in respect of Mr.Dinesh Krishnan in the matter of Hitech Drilling Services India Ltd.

ORDER Under Sections 11, 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 read with Regulation 11 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003.

In respect of Mr. Dinesh Krishnan in the matter of Hitech Drilling Services India Limited. 1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') conducted an investigation into the affairs relating to the acquisition of Hitech Drilling Services India Limited (hereinafter referred to as 'the company') by Aban Loyd Chiles Offshore Limited (hereinafter referred to as 'Aban') and in respect of the trading in the shares of the company for the period March 12, 2001 to April 06, 2001 (Investigation Period). The shares of the company during the Investigation Period were listed on BSE, NSE and DSE. 2. The investigations revealed that :- (a) On March 18, 2001, Aban bought 45,78,308 shares (22.5%) of the company of `10 each at `92 per share from Tata Industries Limited. DSP Merrill Lynch (DSPML) acted as the buy side advisers to Aban. The news of this transaction was first reported in The Economic Times dated March 19, 2001. The price of the scrip went up from `34 on March 12, 2001 to `85 on March 22, 2001. The price per share for the above acquisition of shares was finalized on the evening of March 13, 2001. From March 14, 2001, the scrip touched the upper circuit limit prices continuously till March 16, 2001. (b) In compliance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, Aban had made an open offer to acquire the remaining 77.5% shares at the price of ` 92 per equity share for fully paid up and ` 87 per equity share for partly paid -up shares.

(c) The stock broker S. A. Deshpande, a member of BSE had high purchase concentrations in the scrip just before the announcement of the open offer. It was also seen that the broker placed buy orders continuously at upper circuit prices to get price - time priority. (d) Between March 7 and 16, 2001, Ishita Investments (Ishita) had bought total of 1,59,321 shares of the company through S. A. Deshpande. Further, S. A. Deshpande bought shares of the company for Ishita on NSE through Jaideep V Mehta (a member of NSE). Total purchases on NSE by Ishita Investments in the scrip of the company between March 7 to 16, 2001 have been 1,58,351 shares. Ishita in turn had traded for Mr. Paresh Thakkar and Mr. Bharat Palan. Mr. Bharat Palan is the uncle of Mr. Paresh Thakkar. Mr. Paresh Thakkar was an ex-employee of DSPML. The bills with regard to these transactions were issued in the name of Vinayak Investments, which was owned by Mr. Naresh Thakkar, a relative of Mr. Bharat Palan. Ishita made payments of around ` 1.4 Crores to Mr. Bharat Palan and his associate entities during the period March to July 2001. (e) DSPML had informed SEBI that, during its internal inquiry it had found that i. Mr. Apurva Shah, Assistant Vice President, Mergers & Acquisition in DSPML at the time of the negotiations of takeover of the company by Aban, was involved in the said negotiations. ii.

Mr. Apurva Shah had divulged the information regarding the same and the subsequent open offer, to Mr. Ramamurthy Srinivasan who was also an employee of DSPML at that time but was not a part of the core team handling the takeover deal. (f) In March, 2001, Mr. Ramamurthy Srinivasan spoke to Mr. Paresh Thakkar many times and appeared to have passed on the unpublished price sensitive information (UPSI), in respect of the said acquisition, to him. (g) Mr. Dinesh Krishnan was working with DSPML as Vice President, Investment Banking, at the time of acquisition of the company by Aban. He had admitted that he knew Mr. Paresh Thakkar, who worked in DSPML during the period June 1999 to July 2000. (h) Mr. Dinesh Krishnan gave a loan of `7.5 lac to Mr. Paresh Thakkar on March 16, 2001. He had submitted during investigation that the loan was given to Mr. Paresh Thakkar to pay for the shares of the company bought by Mr. Paresh Thakkar based on market rumor and that he had a profit sharing agreement with Mr. Paresh Thakkar. Mr. Dinesh Krishnan had given a written statement to DSPML on July 24, 2001, stating that Mr. Paresh Thakkar called him in mid-March 2001, and told that DSPML is doing a deal and the price at which the deal was being done was probably much higher than the ruling price.

He had also stated that he gave the above loan to Mr. Paresh Thakkar so that he and his uncle Mr. Bharat Palan can use the same to trade in the shares of the company and that he had a profit sharing agreement with Mr. Paresh Thakkar. 3. Accordingly, SEBI issued show cause notice (SCN) dated February 03, 2006 to Shri Dinesh Krishnan (hereinafter referred as 'the noticee'). It was alleged that the noticee gave a loan to Mr. Paresh Thakkar to trade in the shares of company based on UPSI and had a profit sharing agreement with Mr. Paresh Thakkar and thereby had violated regulation 3 read with read with regulation 2(c)(2) and 2(c)(4) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 1995 (PFUTP

Regulations, 1995). The SCN called upon the noticee to show cause as to why action should not be taken/ direction be issued against him under section 11 and 11B of the SEBI Act, 1992 for violating regulation 3 read with regulation 2(c)(2) and regulation 2(c)(4) of PFUTP Regulations, 1995. 4. The noticee did not reply to the SCN despite service thereof. Reminders dated March 24, 2006 and April 8, 2006 were also issued to the noticee. Opportunities of personal hearing were granted to the noticee on May 29, 2007, July 20, 2007, January 6, 2009 and March 5, 2009. Hearing notice dated June 29, 2007 for hearing on July 20, 2007 was also posted on SEBI website. However, the notices with regard to other dates of personal hearings could not be served upon him. 5. One more opportunity was provided to the noticee on July 18, 2012 and the hearing notice was pasted on the last known address of the noticee. Further attempts were made to locate the entity by contacting his erstwhile employer, DSPML who provided with the bank account number of the noticee. The bank was contacted and the noticee was traced in Canada. The noticee was contacted by email and asked to provide his address in order to complete the proceedings in compliance of principles of natural justice.

6. On receipt of the address of the noticee, another opportunity for personal hearing was provided to the noticee on November 21, 2012, December 19, 2012 and January 29, 2013. As per the request of the noticee, a copy of the SCN was provided to him on January 09, 2013 with advice to submit his reply. The date of hearing was again rescheduled for March 18, 2013 as per the request of the noticee. The noticee vide his letter dated March 15, 2013 filed his reply to the SCN and also appeared for personal hearing on March 18, 2013 and made submissions on the lines of his reply dated March 15, 2013. 7. The noticee inter alia made the following submissions: a) That he was employed with DSPML as Vice President in the Investment Banking Department and that he was not part of the Mergers & Acquisition team, which was responsible for the deal of acquisition of the company by Aban. b) At no stage prior to the deal being publicly announced was he aware of the deal or any unpublished price sensitive information. It has also been confirmed by DSPML that he was not part of the core team undertaking the deal and was not aware at any time of the said deal.

Accordingly, he was not an “insider” under 2(e) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 (PIT Regulations) and was not in possession of any UPSI. c) Mr. Paresh Thakkar had informed him of the possibility of some deal based on some market rumours. The noticee extended a loan of ` 7,50,000 via a cheque to Mr. Paresh Thakkar to tide over his financial troubles, however, he did not provide any money to his uncle, Mr. Bharat Palan for the purchases of the shares of the company. Referring to SEBI order number WTM/KMA/IVD/02/2010 dated February 15, 2010 in respect of Mr. Bharat Palan wherein it has been stated that “in this regard, the notice stated that he had not received any money from Mr. Paresh Thakkar or from Mr. Dinesh Krishnan for Purchasing the shares of the Company.” the noticee has submitted that that there is no direct connection between his loan to Mr. Paresh Thakkar and purchases of shares of the company by Mr. Bharat Palan. d) Mr. Paresh Thakkar returned the loan amount of `7,50,000 back to him in three cheques and no profit of any kind or interest on the amount was paid to him. e) The noticee has mentioned that he has not purchased shares of the company either directly or indirectly based on any UPSI and has not benefited in any way and was not at anytime aware of or in possession of any UPSI with respect to the company. f) The noticee has not violated regulation 3 read with regulation 2(c) (2) and regulation 2(c) (4) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 1995. g) The noticee has reiterated his apologies for the extremely poor judgment in extending loan to Mr. Paresh Thakkar.

He has expressed deepest regrets and has stated that he paid a heavy price in terms of termination of employment and a very successful career as Vice President with DSPML. He has moved to a completely different line of business in the Information Technology industry afresh in Canada and is in no way connected with investment banking or securities. h) The noticee has not purchased any shares of any company in the Indian Stock Exchanges since 1997 and has not and will not be involved in any such arrangement. 8. I have considered the SCN, the oral as well as written submissions made by him and other materials available on record. It is an undisputed fact that the noticee was working with DSPML as Vice President, Investment Banking at the time of acquisition of the company by Aban. From the written statement dated August 09, 2001 of the noticee, I note that the noticee had given a loan of `7.50 lac to Mr. Paresh Thakkar on March 16, 2001. I further note that prior to the noticee lending money, Mr. Paresh Thakkar had already purchased shares and then approached the noticee to lend him an amount of `7-8 lac in order to take delivery of shares of the company purchased based on market rumours.

The noticee has also confirmed that the money was returned back to him during the month of June 2001. 9. I find that there is no charge on the noticee to deal in shares of the company while in possession of any UPSI or communicating the same or that he was connected with Mr. Paresh Thakkar or Mr. Bharat Palan. Further, there is no material to show that the noticee facilitated, aided or abetted their dealings in the shares of the company during the relevant time. Further, there is no evidence on record to suggest that the noticee had actively concealed any fact from anyone having knowledge and believe of the fact. I, therefore, am satisfied that the loan given by him to Mr. Paresh Thakkar was not part of any device, scheme or artifice to defraud any person or to fraudulently deal in securities. 10. In view of the above, I find that the charges of violation of provision of regulation 3 read with regulation 2(c) (2) and regulation 2(c) (4) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 1995 against the noticee are not established and no action as contemplated in the SCN need to be taken against the noticee.

11. The show cause notice is accordingly disposed of.

RAJEEV KUMAR AGARWAL DATE: May 30th, 2013 WHOLE TIME MEMBER PLACE: MUMBAI SECURITIES AND EXCHANGE BOARD OF INDIA