Order in respect of Satish Kumar Dhawan - In the matter of four SME scrips

WTM/GM/ISD/ 07/Jan/2017 SECURITIES AND EXCHANGE BOARD OF INDIA ORDER UNDER SECTIONS 11 AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 - IN THE MATTER OF ECO FRIENDLY FOOD PROCESSING PARK LIMITED, ESTEEM BIO ORGANIC FOOD PROCESSING LIMITED, CHANNEL NINE ENTERTAINMENT LIMITED AND HPC BIOSCIENCES LIMITED AND IN CONTINUATION OF THE CONFIRMATORY ORDER DATED FEBRUARY 17, 2016. Entity: Satish Kumar Dhawan (PAN- AALPD0474G) in the matter of HPC Biosciences Limited.

1. Securities and Exchange Board of India (“SEBI”) vide an ad interim ex-parte order dated June 29, 2015 read with Corrigendum dated January 04, 2016 (hereinafter collectively referred to as “interim order”) restrained 254 entities including Eco Friendly Food Processing Park Limited (hereinafter referred to as "Eco"), Esteem Bio Organic Food Processing Limited (hereinafter referred to as "Esteem"), Channel Nine Entertainment Limited (hereinafter referred to as "CNE") and HPC Biosciences Limited (hereinafter referred to as "HPC") [collectively referred to as "the scrips/the companies", listed on the Small and Medium Enterprise (“SME”) Segment of the Bombay Stock Exchange Limited ("BSE")] from accessing the securities market and further prohibited them from buying, selling or dealing in securities in any manner whatsoever, till further directions. Satish Kumar Dhawan (hereinafter referred to as "noticee") is one of 254 entities on whom the above restraints were made applicable.

Order in the matter of four scrips in SME Segment

2. Out of the 254 entities against whom such restraint orders were issued, the directions were confirmed in the case of 104 entities including the noticee, vide order dated February 17, 2016, as they failed to file replies or avail personal hearing despite the passage of seven months from the date of interim order.

3. Subsequently, the noticee herein challenged the confirmatory order dated February 17, 2016 before the Hon’ble SAT in Appeal No. 163 of 2016 alleging that no opportunity of personal hearing was granted to him before passing the confirmatory order. He further contended that in the absence of any evidence to show that he had any connection with the promoter / director of the company, he could not be said to have violated any provisions of the securities laws. Hon'ble SAT vide order dated November 04, 2016 disposed the Appeal granting liberty to the Appellant to file objections if any, within two weeks for confirmation of the ex-parte ad-interim order qua the appellant and directed SEBI to grant an opportunity of hearing to the appellant within four weeks from the date of the receipt of such objections and thereafter pass appropriate order thereon as expeditiously as possible.

4. The noticee filed his objections vide letter dated November 05, 2016 which was received by SEBI on November 18, 2016. In compliance with the directions of the Hon’ble SAT, an opportunity of personal hearing was granted to the noticee on December 16, 2016. The noticee chose not to appear for the personal hearing and requested SEBI to proceed in the matter on the basis of written submissions made, which is on record, vide email dated December 15, 2016.

5. The submissions of noticee in brief are as under: a) That he had bought 10,000 shares of Rs. 10 each of HPC Biosciences Ltd. from M/s All Time Buildtech Pvt. Ltd. and payments were made through cheque;

b) That an Invoice and payment receipt were issued by M/s. All Time Buildtech Pvt. Ltd. for the purchase of said shares of HPC Biosciences Ltd; c) That the noticee sold the shares of HPC Biosciences Ltd. during the period from April 2014 to February 2015 through stock broker SMC Global Securities Ltd; d) That the noticee has no direct dealing with HPC Biosciences Ltd. and has independently purchased the shares through M/s All Time Buildtech Pvt. Ltd. in a bonafide manner; e) That nothing can be alleged against the noticee for any financial arrangement made by M/s HPC Biosciences Ltd; f) That on the date of purchase, noticee did not know as to how the share prices will move in coming years and it was a calculated risk taken by the noticee; g) That the noticee has not made any illicit gain as the investments were genuine and bonafide; h) That the noticee has not indulged in any wrong/malafide transaction and therefore the action initiated against him is unwarranted and liable to be quashed and i) That in view of the above, the directions issued against him in interim order may be withdrawn and may be provided any other reliefs as deemed fit may be granted.

6. Along with the reply, the noticee submitted copies of the invoice dated 30.12.2012 by All Time Build Tech Pvt. Ltd. to noticee; receipt dated 05.01.2013 issued by All Time Build Tech Pvt. Ltd.; ledger extract of noticee; account statement of noticee from 01.04.2014 to 06.07.2014; contract notes for the period April 2014 to February 2015 from SMC Global Securities to noticee and ITR return filed by noticee for the assessment year 2015-16.

7. I have considered the allegations levelled against Shri Satish Kumar Dhawan in the interim order, his reply/written submission and other documents and material available on record. I note that in the instant case, the directions issued against the noticee are interim in nature and have been issued on the basis of prima facie findings. SEBI had issued directions vide the interim order in the matter in order to protect the interests of investors in the securities market. Detailed investigation in the matter is still in progress. Thus, the issue for consideration at this stage is whether the interim directions, issued against the noticee vide the interim order, need to be confirmed, vacated or modified in any manner, during the pendency of investigation in the matter.

8. The noticee had contended that he has not directly dealt with HPC Biosciences and independently purchased shares through All Time Buildtech Pvt. Ltd. in a bonafide manner. He has further contended that he had no financial arrangement with HPC Biosciences Ltd. I note that the basis of connection/relation of noticee with the company is through the off market transfer by All Time Buildtech Pvt. Ltd. by way of Preferential Allotment.

9. As detailed investigation in the matter is still in progress and the facts and veracity of the submissions along with the documents may be looked into by the investigation, I do not deem it appropriate to deal with the all submissions made by the noticee at this juncture. Given the gravity of the allegations levelled against the noticee, I am not inclined to revoke the restrictions imposed on the noticee vide the confirmatory order dated February 17, 2016. At the same time, I find no good reason as to why partial reliefs or permissions may not be granted to the noticee, at par with the reliefs granted to several other entities vide confirmatory order dated August 25, 2016.

10. Considering the above, I, in exercise of the powers conferred upon me under section 19 of the SEBI Act, read with sections 11(1), 11(4) and 11B thereof, hereby confirm the directions issued vide ad interim ex parte order dated June 29, 2015 as against the noticee subject to the reliefs detailed hereunder with immediate effect:- (a) Carry on delivery based transactions in cash segment in the securities covered in NSE Nifty 500 Index scrips and/ or S&P BSE 500 scrips; (b) Subscribe to units of the mutual funds including through SIP and redeem the units of the mutual funds so subscribed; (c) Deal in Debt/Government Securities; (d) Invest in ETF (e) Avail the benefits of corporate actions like rights issue, bonus issue, stock split, dividend, etc.; (f) Tender / sell the shares (other than the shares of the companies which are suspended from trading by the concerned stock exchange and the shares of the four scrips in the SME segment covered under this order) lying in their demat accounts or in any open offer/delisting offer under the relevant regulations of SEBI, as on the date of the interim order, with the condition that the sale proceeds should be deposited in an interest bearing Escrow account with a nationalized bank. (g) Deal with or utilize the sale proceeds lying in the aforesaid escrow account under the supervision of the concerned stock exchange as provided under:- i. the sale proceeds may be utilised for investments permitted in para 9 (a) to (e) above; ii. upto 25% of the value of the portfolio as on the date of the interim order or the amount* in excess of the profit made /loss incurred or value of shares purchased to give exit, whichever is higher, may be utilized for business purposes and/or for meeting any other exigencies or address liquidity problems.

* The amount will include the value of portfolio in the demat account Explanation: For the purposes of determining the portfolio value of the entities, the value of portfolio of securities lying in the demat account/s (individual and joint both) on the date of the interim order after excluding the value of shares that have been suspended from trading as on the date of the communication shall be considered. (h) The aforesaid reliefs shall be subject to the supervision of exchanges and depositories. The stock exchanges may use the existing mechanism available for implementing the similar interim relief earlier granted to some of the entities.

11. These directions against the noticee shall continue to be in force until modified.

12. A copy of this order shall be served on all recognized stock exchanges and depositories to ensure compliance with above directions.

DATE: January 12, 2017 G. MAHALINGAM PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA