Order in the matter of Mahankal Capital Ajay Thakur

1. The genesis of the present proceeding lies in complaints received by the Securities and Exchange Board of India (hereinafter referred to as "SEBI") against certain entities, who were allegedly involved in the activities of rendering investment advisory during April, 2019 to November 26, 2019, without obtaining requisite registration from SEBI. 2. Based on the detailed examination of the complaints, certain common factors were observed to be present in the activities of those entities, which are briefly narrated as under: i. The entities were presenting themselves to be in the business of providing investment advisory, relating to investments in the securities market, forex etc. ii. The entities were also having their respective websites, through which the investors and investments were being solicited. On some of the websites, the bank account details for making payments were also provided. iii. None of the entities or their proprietor or partners, as the case may be, were registered with SEBI in the capacity of an investment advisor. iv. Few of such websites had made false claims of having registration with SEBI for the purpose of investment advisory, whereas certain other websites had gone further to the extent of displaying the registration number of a totally unrelated but of an investment advisor registered with SEBI.

Order in the matter of Mahankal Capital –Ajay Thakur v. The entities were receiving money either directly in their respective bank accounts or through payment gateways like PayUmoney, Paytm, etc., and had received payment against the services rendered or to be rendered. 3. As the examination of the activities indicated involvement in carrying out the business activities of an investment adviser for which no requisite registration was sought/obtained from SEBI, it was deemed appropriate to take emergent steps to stop such unauthorised advisory services so as to protect the interest of the investors. Accordingly, a common ad interim ex-parte order dated February 07, 2020 (hereinafter referred to as “the interim order”) was passed restraining such entities from rendering the activities of investment advisory, without having registration. In this respect, the interim order has inter alia observed as: i. The entities were deliberately concealing the fact that they did not have any registration from SEBI; ii. By such an act, the investors were being induced to deal in securities by availing the services of the entities; iii.

The said acts on the part of the entities were prima facie covered under the definition of ‘fraud’ as laid down under regulation 2 (1) (c) of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as “the PFUTP Regulations”); and iv. By such commissions and omissions on their part, the entities have prima facie violated Section 12 (1) of SEBI Act, 1992 read with regulation 3 (1) of the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 (hereinafter referred to as "the IA Regulations"), Section 12 A (a), (b) and (c) of the SEBI Act, 1992 and regulations 3 (b), (c), (d), 4 (1) and 4 (2) of the PFUTP Regulations. 4. Based on the aforesaid prima facie observations, and in order to protect the interest of the investors of the securities market, the interim order has issued the following directions against the said entities therein: i. The Noticees shall cease and desist from acting as an investment advisor including the activity of acting and representing through any media (physical or digital) as an investment advisor, directly or indirectly, and cease to solicit or undertake such activity or any other activities in the securities market, directly or indirectly, in any manner whatsoever, until further orders.

Order in the matter of Mahankal Capital –Ajay Thakur ii. The Noticees shall not access the securities market and buy, sell or otherwise deal in securities in any manner whatsoever, directly or indirectly, until further orders. iii. The Noticees shall not divert any funds raised from investors, kept in bank account(s) and/or in their custody until further orders. iv. The Noticees shall not dispose of or alienate any assets, whether movable or immovable, or any interest or investment or charge on any of assets held in their name, including money lying in bank accounts except with the prior permission of SEBI. v. The Noticees shall immediately withdraw and remove all advertisements, representations, literatures, brochures, materials, publications, documents, websites, communications etc., in relation to their investment advisory activity or any other unregistered activity in the securities market until further orders. vi. The Noticees shall provide a full inventory of all assets held in the name of the proprietorship or the proprietor and firm or the partner, whether movable or immovable, or any interest or investment or charge on any of such assets, including details of all bank accounts, demat accounts and mutual fund investments, immediately but not later than 5 working days from the date of receipt of this order. vii. Any person while working under the above mentioned Noticees as employee or otherwise, shall cease and desist from undertaking the activity of investment advisory services, including the activity of acting and representing through any media (physical or digital) as an investment advisor, directly or indirectly, till further orders. viii. The Banks are directed not to allow any debits/ withdrawals from or credits to the accounts of the Noticees, held jointly or severally, without the permission of SEBI. The Banks are directed to ensure that all the above directions are strictly enforced. ix. The Depositories are directed to ensure that till further directions no debits are made in the demat accounts of the Noticees held jointly or severally. x. The Registrar and Transfer Agents are also directed to ensure that till further directions the securities, including Mutual Fund units, held in the name of the Noticees, jointly or severally, are not transferred or redeemed.

5. As the aforesaid interim order has been issued ex-parte, the entities therein were provided with an opportunity to file their objections within a period of twenty-one (21) days of receipt of the said interim order.

Order in the matter of Mahankal Capital –Ajay Thakur

6. The list of the entities restrained under the interim order also included the Noticee herein, viz. Mahankal Capital through its sole proprietor Mr. Ajay Thakur. It is noted from the records that the copy of the interim order was served upon the Noticee by post on February 15, 2020. The records further indicate that the Noticee vide his letter dated March 12, 2020, sought time to file a reply by engaging a legal consultant to understand the nuances of the regulatory framework governing investment advisors. The reply so submitted has also stated that he has an educational qualification of 12th class only and he was not aware that registration from SEBI is required for rendering (investment) advisory services. The Noticee further submitted that someone had contacted him to start the business and made a promising proposal, and he handed over his documents like Aadhar Card and PAN Card, and the said person asked to open a bank account and took some documents to obtain some license. 7. The personal hearing of the Noticee took place through Video Conferencing on July 22, 2021, wherein the Authorised Representative of the Noticee appeared on its behalf and contended that before replying to the allegations made in the interim order, all the documents relied upon need to be furnished to him to enable him to file a proper response to the allegations made in the show cause notice cum interim order.

Accordingly, in compliance with the principles of natural justice, vide letter dated July 23, 2021, copies of all such documents that were relied upon while issuing the interim order were furnished to the Noticee. The next personal hearing of the Noticee in the matter took place on July 05, 2022 when the Authorised Representative made oral arguments on behalf of the Noticee. Based on such arguments, certain queries were raised and the Noticee, vide email dated July 21, 2022, submitted his response to the queries. It was noted that though the Noticee had stated in the said email that the copies of his Income Tax Returns, (as was advised to be submitted), have been attached, but the same were not attached in the said email. Accordingly, the same was pointed out to the Noticee through email dated July 22, 2022, however, it is noted that no copy of such ITRs has been submitted till date. 8. The submissions made by the Noticee made during the personal hearing and in his reply, written submissions etc., are summarised hereunder: i. The Noticee, while residing in a small village came to know about a vacancy at Mahankal Computers and after he visited the said office on May 07, 2018, he got a job of a Order in the matter of Mahankal Capital –Ajay Thakur delivery boy at a salary of INR 8,500.

The Noticee also submitted copy of his PAN card, Aadhar etc., for verification. ii. After one month, he was offered a salary of INR 20,000 on the condition that he should sign some paper, to which he agreed and his signatures were also taken on a blank Bank account opening form. Apart from the same, he has also given his photograph and other details. iii. The Noticee does not have any knowledge of the authorised signatory of the bank account so opened, in his name. iv. The Noticee worked at Mahakal Computers from May, 2018 to October, 2019, and for last three months, no salary has been paid to him despite repeated follow ups and the Noticee does not know the whereabouts of its owner. v. The complaint lodged with SEBI alleging payment by one complainant to RW Advisors (a separate entity which is registered with SEBI as Investment Adviser) also does not mention about the Noticee. Further, the examination of SEBI does not reveal any document which shows any complaint pending against the Noticee. vi. A complaint dated November 23, 2019 has been lodged by the Noticee with the concerned police station stating therein that the Noticee has worked with Mahakal Computers (Mr.

Mukesh Chauhan being its owner) from the period of May 10, 2018 to October 29, 2019. The said complaint had also alleged that the Noticee has signed certain blank documents, which he apprehends to have been misused. vii. The interim order fails to substantiate as to whether the alleged activities were in the nature of investment advice or research analyst. The reading of the definition of investment advice would indicate that the activities carried out by Mahankal Computers is not falling within the ambit of investment advisory. 9. Before adverting to the facts of the case, it is apposite to refer to the relevant provisions of law alleged against the Noticee in the interim order cum SCN and the same are reproduced herein for ready reference:

Order in the matter of Mahankal Capital –Ajay Thakur

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. No person shall directly or indirectly— (a)use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be listed on 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 thereunder; (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;” SEBI (Investment Adviser) Regulations, 2013 Regulation 3 (1): “On and from the commencement of these regulations, no person shall act as an investment adviser or hold itself out as an investment adviser unless he has obtained a certificate of registration from the Board under these regulations”.

Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 Regulation 2 (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;

Order in the matter of Mahankal Capital –Ajay Thakur (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 …” “Prohibition of certain dealings in securities 3. No person shall directly or indirectly— ………………………………. (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) disseminating information or advice through any media, whether physical or digital, which the disseminator knows to be false or misleading and which is designed or likely to influence the decision of investors dealing in securities”

Order in the matter of Mahankal Capital –Ajay Thakur

10. I observe that the Noticee has sought an alibi from the charges by claiming that he was working as a delivery boy and his documents have been misused by one Mr. Mukesh Chauhan, and further to support the said claim, a copy of a complaint lodged by him with the police has also been filed with the reply. I have carefully perused the claim made by the Noticee, and have also perused the documents filed by the Noticee. However, when the said documents/submissions are confronted with the material on record, the contradictions and evasiveness of such claims get exposed, rendering his explanations to be blatantly specious and not sufficient enough to demolish the allegations levelled against him in the SCN, for the following reasons: i. At the outset, it is noted that the claim of the Noticee of having worked with Mahankal Computer (Mr. Mukesh Chauhan) is a bald assertion and no evidence whatsoever, supporting such claim or even supporting the existence of Mahankal Computer/Mr. Mukesh Chauhan has been brought to the table. The documentary evidence showing any kind of employee-employer relationship between the Noticee and Mahankal Computer/Mr.

Mukesh Chauhan like appointment letter, salary statements, bank account credit entries of salary, income tax filings, TDS certificates, or any other documentary evidence like provident fund statements etc., are conspicuously absent from the submissions of the Noticee so as to lay credence on the claim that he had no role to play directly or otherwise, with the alleged rendering of investment advisory to investors. Notwithstanding the above, I observe that the allegation in the SCN is not against the Mahankal Computers but against the Mahankal Capital, a firm whose sole proprietor is Mr. Ajay Thakur and therefore, the assertion that Mr. Ajay Thakur initially joined Mahankal Computer as an employee would not in isolation be adequate to successfully discharge him from the allegations made in the SCN, when the records inter alia, Bank Account, Nomination in the Bank Account, Email id etc., bear undisputed evidence that is sufficient to hold these allegations. ii. Even as per the submission, it is observed that the Noticee has not disputed and rather has admitted to have given all his details and KYC documents to one Mr. Mukesh voluntarily against the offer of getting his salary doubled.

In this respect, assuming his allegation of misuse of his documents is to be accepted as true, it is observed that while admitting such a covert action for which he has been monetarily rewarded, the Noticee

Order in the matter of Mahankal Capital –Ajay Thakur cannot escape his liability for willingly permitting the alleged misuse of his KYC documents by others, more so when, except for providing the name of Mahankal Computers/Mr. Mukesh, no other details about the actual persons who were according to him were behind the said alleged activity of unregistered investment advisory, have been put forward. Therefore, the above claim of misuse of his personal documents is not sufficient to aspire confidence to grant the Noticee exoneration from the allegation when, it is not the defence of the Noticee that he had no clue about the same as nothing has been placed on record to suggest as to why no queries were ever raised by him against the offer he received for doubling his salary, which he rather willingly accepted without making an iota of enquiry as to what the person making such offer is going to do with his KYC documents and with the bank account that was opened in his name. iii. Further, had the claim of the Noticee been bonafide, he was expected to have taken this claim as a defence from the very outset of the proceedings.

Surprisingly enough, in the first reply dated March 12, 2020, filed by the Noticee, he sought only an extension of time to file a reply but remained conspicuously silent on any aspect of the so called misuse of his documents by others nor did the said reply whisper anything about the purported job of delivery boy that he claims to have taken or about any police complaint having ever lodged by the Noticee. The said reply is rather an admission on the part of the Noticee of the alleged violations when he pleads ignorance about any law governing regulation of investment advisory services and then seeks time to engage a legal representative to understand the legal framework governing the investment advisory business. In exact words, the said letter inter alia submitted that: यह सूचित करना िाहूंगा की म ैंकेवल 12वी ूं उत्तीर् णउम्मीदवार हूँ और मुझे जानकारी नही ूंकी सलाहकर सेवा प्रदान करने के ललए सेबी पंजीकरण प्राप्त करना आवश्यक है। चकसी ने मुझसे सूंपकण चकया और मुझे व्यवसाय शुरू करने के चलये पैन कार्ण और आधार कार्ण देने के चलए आकर्णक प्रस्‍ताव चदया और मेरे दस्तावेज़ ले चलए। उन्हनूंे बैंक खाता खहलने के चलये भी कहा और कुछ लाइसेंस प्राप्त करने के चलए भी दस्तावेज़ चलए। आपस े अनुरहध ह ै की कृपया सभी प्राप्त करन े वाल े दस्तावेज़हूं, सूिनाओ ूं और अन्य आवश्यक वैधताओ ूं कह इकठ्ठा करन े और इस सूंदभ ण म े कुछ कानूनी सलाहकर चनयुक्त करन ेके चलय ेकृपया एक मचहन ेका समय दे।

Order in the matter of Mahankal Capital –Ajay Thakur

म ैं उस आदेश कह पूरी तरह स े समझन े म ें अस्मर् ण ह ूँ चजसके चलए मुझ े कानूनी सलाहकर कह चनवेश सलाहकर के रूप म ें काम करन े के चलए बनाए गए कानूनी चनयमह ूंऔर चनयमह ूंकह समझन ेकी आवश्यकता है। (emphasis supplied) From the above, even if for a moment it is believed that some benefit of doubt needs to be extended to the Noticee on the basis of to his statement that someone had contacted him and took his documents, the same again falls short for acceptance as he candidly admits that he had received a lucrative business proposal in lieu of giving his KYC documents with his own consent, for being used by others (व्यवसाय शुरू करने के चलये पैन कार्ण और आधार कार्ण देने के चलए आकर्णक प्रस्‍ताव चदया). Having accepted that he had received an offer to initiate a business proposal, the Noticee in the subsequent written reply dated August 31, 2021 makes a quick turn back and seeks shelter under a plea that he is a victim of fraud by claiming that his personal documents have been misused by Mr. Mukesh in lieu of extra salary. The said claim is being supported by a police complaint dated November 23, 2019, i.e., prior to the filing of the first reply dated March 12, 2020. Having gone through the said police complaint placed on record, it is observed that the same is in the category of a non-cognisable complaint.

Therefore, during the personal hearing, the Noticee was asked to furnish the steps taken by him to pursue his complaint lodged with the police, however, no details of any such follow up action have been given by the Noticee so as to lend any credence to the claim advanced by him so as to dispel the allegations made on him in the SCN. Even, in the post hearing submissions, the Noticee has merely reiterated that he has lodged a complaint but no updated status or any further details with respect to so called Mr. Mukesh Chauhan, have been furnished. Under the circumstances, it is found beyond comprehension that a person who is facing regulatory action and who seeks exoneration on the ground that he has been wrongly implicated or proceeded with, as his documents were misused by another person, opts to rest on record only a complaint that he claims to have lodged just before the interim order was passed which cannot be found to be enough to accept such a submission. iv. The contradictions and speciousness in the claim of the Noticee do not end here. The ambiguity in the claim of the Noticee being a victim is further observed when the Order in the matter of Mahankal Capital –Ajay Thakur records before me show that the bank account opening form contains the same email id, from which the Noticee has filed his post hearing written submissions.

I cannot fathom the claim that some third person purportedly used his personal documents and coerced him to sign the bank account opening form including mentioning the email id of the Noticee (which has not been denied as not being pertained to the Noticee) and surprisingly, the said email id is still being used by the Noticee even as on the day for responding to the regulatory queries during the present proceedings. I must also hasten to add here that despite the fact that the whole defence of the Noticee hinges on the claim of his documents having been misused, the Noticee has not been able to demonstrate that the bank account opened in his name purportedly by Mr. Mukesh was indeed under the control of and being operated by Mr. Mukesh and consequently, nothing has been asserted with supporting evidence to contend that he had no knowledge about the transactions carried out in the said above bank account. Rather, the mobile number mentioned in the police complaint, i.e., 982XXXX016 is the same number as mentioned in the bank account opening form which further belies the claim of the Noticee. v. The ambiguity and unreliability in the claim of the Noticee is further exposed on perusing the records.

In this respect, a perusal of the Account Opening Form shows that the in the column pertaining to the nomination, the name of one Mr. Vijay Thakur (Date of birth: 02/10/1998) has been filled in, who is found to be the brother of the Noticee, At this stage, I note from the records that the interim order was passed against multiple entities and one of such entities was Money Capital Investment, which has also been alleged to be rendering investment advisory without having registration and the proprietor of the above Money Capital Investment is Mr. Vijay Thakur, i.e., the brother of the present Noticee. When the brother of the Noticee was already engaged in giving unauthorised investment advisory services and is also the Nominee in the bank account opened in the name of the Noticee, it is difficult to accept his claim that some third person mischievously took the personal documents of the Noticee, got a bank account opened in the name of the Noticee and at the same time inserted his brother as a nominee in the said account, without his knowledge even though he signed the said account opening form.

Order in the matter of Mahankal Capital –Ajay Thakur vi. I also observe that the present proceedings are being conducted to decide the culpability of the Noticee, for the allegations levelled in the interim order, hence in order to vindicate his case, the Noticee is under an obligation to provide clinching evidence to dispel the allegations made against him. However, the Noticee has merely attempted to shift the blame of regulatory violations by putting up some story, without any credible evidence to corroborate such a story. vii. Thus, all in all, there does not appear to be a case furthering the claim of the Noticee that his documents were misused by someone against his will, knowledge and consent to open a bank account in his name filling in all his actual details in the bank account form, moreso when there is no concrete finding of police authorities yet on the complaint lodged by the Noticee. The above claim also fails to aspire credence when it is looked from the undisputed fact, that the Noticee is not an illiterate person. The Noticee is 12th pass and has tendered his documents against a lucrative personal gain promised to him.

Another claim put forth by him is that he was not aware at that point in time that to engage in rendering advisory it requires registration of any kind. This argument of the Noticee is further found to be self-contradictory to his earlier contention of someone misusing his personal documents/information and not advancing his claim, hence, deserves rejection without any further consideration. viii. I further note that the conduct of the Noticee in the present proceedings has further compounded the allegation against him. As noted earlier, during the personal hearing, the Noticee was advised to furnish copies of his income tax returns, which have been claimed to be have been filed by him. However, despite categorically confronting the Noticee with the fact that the email sent by him did not contain any attachment of copy of ITRs as claimed by him, the Noticee has not paid any heed to furnish those documents (IT Returns). I observe that in such a case where a complex alibi in the name of third person having misused his personal documents/information is being made, it was incumbent upon the Noticee to come out clean and produce all the relevant documentary evidence including the documents such as I.T.

Returns called from him for better appreciation of his contentions. In the absence of any evidence to support his cause, I am constrained to have an adverse observation on the Noticee as I have no

Order in the matter of Mahankal Capital –Ajay Thakur documentary evidence to see as to what income he has disclosed during relevant period before the tax authorities. 11. Insofar as the facts of the present case (that led to passing of the interim order) are concerned, it is noted from the records that an email dated October 09, 2019 was received by SEBI from one complainant/investor. The said complaint has inter alia alleged that he has paid an amount of INR 1,46,450 and supported the payment by enclosing the invoices issued to him by RW Advisors. 12. From the scrutiny of the records, it emerged that RW Advisors is a SEBI registered Investment Adviser (INA200XXX342), based out of Bengaluru. It was further noticed that the name of the said registered investment adviser has been fraudulently misused by some other entity/person in Bhopal for which a First Information Report has also been lodged by the said investment advisor. 13. Reverting back to the complaint, it is noted from the interim order that Easebuzz Payment Gateway, which was used to process the payment made by the complainant, had provided the following information about the account and transaction carried out in the said payment gateway: Table 1 Sr .No Payment Transaction id Merchant Name as per receipt 1 45000 MP3OO1WQ Rwadvisory 2 10000 1MITXB98 Rwadvisory 3 32000 WNTGVPVN Rwadvisory

4 30000 28B2B9VP Rwadvisory

14. Further, the beneficiary details of the account to which payments were made were also furnished by Easebuzz vide its email dated October 10, 2019. The said details are captured in the following tables:

Order in the matter of Mahankal Capital –Ajay Thakur

Table 2 Name Moneyviaresearch Email info@moneyviaresearch.com Bank Details HDFC BANK, Account details- 50200038380901, AshtaSehore.

PAN BHPPT1291P Business Mahankal Capital

Table 3 Name Forex Factory Email info@moneyviaresearch.com Bank Details HDFC BANK, Account details- 50200038380901, AshtaSehore. PAN BHPPT1291P Business Mahankal Capital Name 15. Based on the aforesaid information so furnished by the payment gateway, HDFC Bank was advised to furnish more details with respect to the beneficiary of the bank account connected with the aforesaid account with the payment gateway. 16. As can be noted from the interim order, the information furnished by the bank revealed that the Noticee firm is a proprietorship firm, with Mr. Ajay Thakur, resident of Aroliya, Jewar as its sole proprietor/owner. The bank account is a current account with respect to which the nature of activity of the firm has been mentioned as “trading of commercial equipment” and the nature of business has been mentioned as “Real Estate”, in the bank account opening forms. It is observed that in the said bank account, a total amount of INR 85,02,755/- has been received/credited during the short period of April 1, 2019 to September 11, 2019. 17. At the time of passing of the interim order, a website with the link www.rwadvisor.com, was operational and the said website was having an address of Bhopal. However, it is observed that presently, the said website is not functional. Nevertheless, it is noted from the interim order that the said website had claimed that the Noticee was acting in the field of investment advisory services by offering recommendations/customised packages in Cash, Futures, Index, Bullions,

Order in the matter of Mahankal Capital –Ajay Thakur

Metals, Energy, NCDEX Commodity. The relevant portions of a few of the assertions made on the website read as: RW Advisors provides best tips in EQUITY (Stocks, Future, Option) & COMMODITY (MCX, NCDEX) Segments… RW Advisor, is one of the most leading company in share and commodity market. Company provides good recommendation and tips in all segments. Every trader joins share market for RW Advisor, but if you are facing continuous loss then you are at the right place with right advisor to recover your money. We provide most accurate services like Stock tips, equity tips, commodity tips, stock future tips, mcx tips, ncdex tips, option tips for experiencing the accuracy of our services just fill the free trial form here and make your trading risk free” (emphasis supplied) 18. From a perusal of the facts noted in the interim order and other materials available made before me, it is now succinctly observed that: I. The Noticee firm was presenting itself, through Digital Media (website), as an investment advisor, by using/misusing the name of another registered investment adviser, located in Bengaluru.

II. It can’t be therefore ruled out that the Noticee through the proprietor’s physical media/physical interactions with public, was also similar such misrepresentation in the name of another registered investment adviser thereby projecting itself to be a registered investment advisor for rendering investment advisory services. III. The afore-stated banking transactions strongly indicate that the Noticee was acting as an investment advisor as per the complaint filed against it and was evidently soliciting and collecting money in lieu of such investment advisory services rendered by it. In the process, Noticee has received such payments during the period of the aforesaid six months, as found from its bank account. 19. On examining the said act on the part of the Noticee as described above through the lens of the definition of investment advice as envisaged under the IA Regulations, there is no iota of doubt that the Noticee has indulged in the activities of rendering investment advice to the investors. Regulation 2(1) (l) of the IA Regulations defines investment advice as: advice relating to investing in, purchasing, selling or otherwise dealing in securities or investment products, and advice on Order in the matter of Mahankal Capital –Ajay Thakur investment portfolio containing securities or investment products, whether written, oral or through any other means of communication for the benefit of the client and shall include financial planning, whereas Regulation 2 (1) (m) defines investment adviser as any person, who for consideration, is engaged in the business of providing investment advice to clients or other persons or group of persons and includes any person who holds out himself as an investment adviser, by whatever name called.

20. In the light of the above provisions of law, an in-depth examination of the materials on record pertaining to the act, omission and conduct of the Noticees, clearly reveals that the Noticee has inter alia through the above mentioned website, engaged itself in investment advisory activities pertaining to trading in shares/commodities in lieu of monetary consideration and such acts of the Noticee qualify all the ingredient required for an act to be termed as an act of investment advisory service. In this respect, it is further found that the interim order categorically alleges that the acts of the Noticee were in the nature of investment advisory for which no registration certificate was possessed by the Noticee. I further note that a legal argument has been made by the Noticee that the definition of “investment advice” and “research analyst” provides justification that whatever work has been carried out by Mahankal Computers (the entity where the Noticee was purportedly working as a delivery boy), is not falling within the ambit of investment advice. In this regard, I observe that the said argument is infructuous and is misplaced on the facts of the case.

The Noticee has merely referred to the definition of Investment Advisor and Research Analyst but has not taken any pain to elaborate as to how the activity alleged in the interim order is not falling within the definition of “investment advice” when the evidences on record and circumstances of the case clearly suggest that the Noticee has held itself out as an investment adviser and has also charged consideration from the public towards rendering such services to them. I may also hasten to add here that the two conflicting stands of the Noticee, i.e., one feigning total ignorance about the activities of investment advisory carried out in its name; and the other stand “attempting” to defend such unauthorised activity so as to avoid the clutches of law, do not go hand in hand, and rather such an attempt on the part of Noticee further dilutes its other stand of being a victim of misuse of his personal documents by others. It is also observed that the Noticee has not made any submission disputing the ownership of the website nor has made any kind of denial that the said website did not belong to the Noticee.

He has also not advanced any submission denying the contents published on the website disclosing that his proprietary firm was providing tips, pertaining to trading in equity, commodity derivatives, stock futures etc.,

Order in the matter of Mahankal Capital –Ajay Thakur and was also giving mcx tips, ncdex tips, option tips and further was claiming that for experiencing the accuracy of services, investors may fill in the free trial form before making trading risk free. It is also observed that no explanation has been offered with respect to the details of source of those credit entries in the bank account which belonged to the Noticee. Moreover, the disclosures made on the website, the account details provided to the public to deposit money for availing such services and further details provided in the website pertaining to the Easebuzz Payment Gateway are sufficient to hold that the Noticee has deliberately engaged itself in the activities of rendering investment advisory pertaining to securities market. To sum up, I observe that the Noticee has not been able to persuade me that the activities of investment advisor, as alleged in the interim order to have been committed by it, were not in the nature of investment advisory. Another factor relevant for the present proceedings is that no dispute has been raised by the Noticee with respect to the amounts received in the bank account as unearthed by SEBI which have apparently been received in the absence of anything to the contrary, against the unregistered investment advisory services rendered by it to various investors.

21. Section 12 of the SEBI Act, 1992 read with the provisions of the IA Regulations, prohibits such activities, in case the same is carried out without having proper registration from SEBI. The interim order alleges that the Noticee firm has not been registered with SEBI, and as noted earlier, it has fraudulently used the name of a totally unrelated registered investment adviser. 22. The above said acts of fraudulent misrepresentation and unauthorised advisory services on the part of the Noticee are clearly an expression of falsehood and concealment of reality, with the sole aim to induce the gullible investors to deal in securities. I would have no hesitation to hold here that such an act on the part of the Noticee to use the name of another registered investment adviser so as to further its illegal activities of providing investment tips without holding a bonafide registration from SEBI, has certainly caused strong inducement to the gullible investors, who would never have paid him their hard-earned money as fees, had the said misrepresentation not been made by the Noticee to them through its website or otherwise.

In this regard, the observation recorded by the Hon’ble Supreme Court of India in the matter of SEBI Vs. Kanaiyalal Baldevbhai Patel [(2017) 15 SCC 1] is worth quoting: “…A person can be said to have induced another person to act in a particular way or not to act in a particular way if on the basis of Order in the matter of Mahankal Capital –Ajay Thakur facts and statements made by the first person the second person commits an act or omits to perform any particular act. The test to determine whether the second person had been induced to act in the manner he did or not to act in the manner that he proposed, is whether but for the representation of the facts made by the first person, the latter would not have acted in the manner he did…” Thus, applying the aforesaid test in the present case, it would not be a mere surmise that the investors would not have fallen trap to the aforesaid unauthorised investment advisory services indulged in by the Noticee, had the Noticee not made such false claims before them without having a proper and valid registration from SEBI. Therefore, I am constrained to observe that the above acts of the Noticee of resorting to misrepresentation spreading falsehood about its status as an investment adviser and deliberate concealment of facts are fraudulent in nature, having the potential to fraudulently induce the investors to deal in securities by availing the services of the Noticee.

23. It is noted that the Preamble of SEBI Act, 1992 inter alia stipulates that the establishment of SEBI is primarily for the purposes of protection of interest of the investors in the securities market. In furtherance of the same, Section 11 empowers SEBI to take measures as deemed fit to achieve the avowed objective of the Act. Section 11 (2) (b) of the SEBI Act inter alia provides that SEBI may take measures so as to register and regulate the working of investment advisers and Section 12 (1) casts an obligation on entities to take registration from SEBI before acting as an investment adviser. Similar such condition of obtaining registration from SEBI, before acting as an investment adviser, is also stipulated under Regulation 3 (1) of the IA Regulations. It is also relevant to note here that Hon’ble Courts of the country have time and again held the SEBI Act, 1992 to be a social welfare legislation. To cite one of such case, reference may be made to the observations of Hon’ble Supreme Court passed in the matter of SEBI Vs. Ajay Agarwal (Civil Appeal no. 1697 of 2005; date of decision: February 25, 2010): “…The said Act is pre-eminently a social welfare legislation seeking to protect the interests of common men who are small investors…” 24. Similarly, in the matter of N. Narayanan Vs. Adjudicating Officer, SEBI, (date of decision: April 26, 2013), Hon’ble Supreme Court has observed inter alia as: “…Prevention of market abuse and preservation of market integrity is the hallmark of Securities Law.

Section 12A read with Regulations 3 and 4 of the Regulations 2003 essentially intended to preserve market integrity and to prevent Market abuse. The object of the SEBI Act is to protect the interest of investors in securities and to promote the development and to regulate the securities market, so as to promote orderly, healthy growth of securities market and to promote investors

Order in the matter of Mahankal Capital –Ajay Thakur protection. Securities market is based on free and open access to information, the integrity of the market is predicated on the quality and the manner on which it is made available to market. Market abuse impairs economic growth and erodes investors confidence…………” ………………………………………………………………………………………………. SEBI, the market regulator, has to deal sternly with companies and their Directors indulging in manipulative and deceptive devices, insider trading etc. or else they will be failing in their duty to promote orderly and healthy growth of the Securities market. Economic offence, people of this country should know, is a serious crime which, if not properly dealt with, as it should be, will affect not only country’s economic growth, but also slow the inflow of foreign investment by genuine investors and also casts a slur on India’s securities market. Message should go that our country will not tolerate “market abuse” and that we are governed by the “Rule of Law”. Fraud, deceit, artificiality, SEBI should ensure, have no place in the securities market of this country and ‘market security’ is our motto….

SEBI has the duty and obligation to protect ordinary genuine investors and the SEBI is empowered to do so under the SEBI Act so as to make security market a secure and safe place to carry on the business in securities...” 25. I may elaborate here that stipulating a condition of registration is not a mere paper formality to grant a license to operate in the field of investment advisory. A holistic perusal of the IA Regulations would indicate that the basic networth, qualification, experience criteria etc., have been laid down in the said Regulations. Further, after obtaining registration, it is incumbent upon the investment adviser to act in a fiduciary capacity while dealing with its clients and to follow numerous stipulations as laid down in the IA Regulations, with the underlying objective of protection of the interest of investors who would avail the services of such investment adviser. The IA Regulations also outline the Code of Conduct that needs to be adhered to by the registered investment adviser. Besides, on any occasion when the investor feels aggrieved, he may very well set the complaint redressal system of SEBI in motion so as to seek redressal of his grievance against such registered investment adviser.

Thus, in totality, the ultimate objective that is intended to be achieved by prescribing registration from SEBI before acting as an investment adviser, is to comply with the statutory mandate of protection of the interest of investors. 26. In the facts of the case, as observed above, the Noticee has blatantly held himself out as an investment adviser, for which no registration has been obtained from SEBI. The Noticee has not been able to put forth any argument or submission to constrain me to even doubt the prima facie findings, recorded in the interim order. Based on the complaint received by SEBI which shows that payments have actually been received into the bank account of the Noticee

Order in the matter of Mahankal Capital –Ajay Thakur from the investors and also from the contents of the website which provided a payment gateway link connected to the bank account of the Noticee, it is clear that the Noticee was rendering investment advice in lieu of monetary consideration and asked its clients to pay to it through the said payment gateway that was linked to his bank account. It is not clear from the records as to how many investors have been catered by the Noticee, however, the transactions noticed from the bank account of the Noticee have revealed that as much as INR 85 Lakh (approx.) have been credited in the said account. Further, it is noted from the information furnished by the HDFC Bank that the business activity that has been mentioned in the bank account of the Noticee is trading of commercial equipment and real estate, however, there is no information submitted by the Noticee if it ever has indulged in any such business activities nor the Noticee has made any claim that the amounts so received into his account, indeed pertained to any transactions in commercial equipment or real estate.

Therefore, the nature of business activities as mentioned in the account opening form, appears to be another false declaration made by the Noticee to the bank without any factual support. Moreover, the Noticee has rather been found to have used the name of another registered investment adviser, which can be best termed as a subterfuge to trap more and more innocent investors. A feeble attempt to project himself as the victim of a fraud which was infact created by himself, has been made which has been rendered nugatory for the reasons recorded in details in the previous paragraphs of this order. Under the circumstances, I am convinced that the Noticee has violated Section 12 (1) of SEBI Act, 1992 read with regulation 3 (1) of IA Regulations, as it has illegally acted as an investment adviser without obtaining the requisite registration from SEBI. Further, the Noticee has also violated Section 12 A (a), (b), (c) of SEBI Act, 1992; Regulation 3 (b), (c), (d), 4 (1), 4 (2) (k), due to its fraudulent conduct of falsely claiming to be a SEBI registered investment adviser. 27. In view of the foregoing discussion and my observations and to protect the interest of investors, I, in exercise of the powers conferred upon me under Sections 11(1), 11(4), 11B(1), 11 D read with Section 19 of the Securities and Exchange Board of India Act, 1992and Regulation 11of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003, hereby pass the following directions:

Order in the matter of Mahankal Capital –Ajay Thakur i. The Noticee shall within a period of three months from the date of this Order, refund the money received from the clients/investors, as fees/compensation or in any other form, in respect of its unregistered investment advisory activities. ii. To give effect and implement the above direction, the Noticee shall cause public notice to be issued in all editions of two National Dailies (one English and one Hindi) and in one local daily with wide circulation, detailing the modalities for refund, including the details of their contact person such as names, addresses and contact details, within 15 days of coming into force of this Order; iii. The repayments to the clients/investors shall be effected only through Bank Demand Draft or Pay Order or electronic fund transfer or through any other appropriate banking channels, which ensures audit trails to identify the beneficiaries of repayments; iv. The Noticee and its proprietor Mr. Ajay Thakur are restrained from selling their assets, properties and holding of mutual funds/shares/securities held by them in demat and physical form except for the sole purpose of making the refunds as directed above. Further, the banks are directed to allow debit only for the purpose of making refunds to the clients/investors who were availing the investment advisory services from the Noticee, as directed in this order, from the bank accounts of the Noticee, wherein debit has been frozen by virtue of interim order dated February 07, 2020. v. After completing the aforesaid repayments, the Noticee shall file a report within a period of 15 days of such completion with SEBI addressed to Division Chief, Market Intermediaries Regulation and Supervision Department, SEBI Bhavan-II, Plot No. C4 A, G Block, Bandra Kurla Complex, Bandra (East) Mumbai –400051, showing the completion of refund as directed above and the said report shall be duly certified by an independent Chartered Accountant and the direction at paragraph 27 (iv) above shall cease to operate upon filing of such report on completion of refunds to complainants/investors. vi. The above direction for refund does not preclude the clients/investors to pursue the other legal remedies available to them under any other law, against the Noticee refund of money or deficiency in service.

Order in the matter of Mahankal Capital –Ajay Thakur vii. The Noticee is hereby restrained from accessing the securities market and further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner whatsoever, for a period of six (06) months from the date of this order or till the expiry of six (06) months from the date of completion of refunds to investors, as directed above, whichever is later. viii. The Noticee shall cease and desist from acting as an investment advisor including the activity of acting and representing through any media (physical or digital) as an investment advisor, directly or indirectly, and cease to solicit or undertake such activity or any other activities in the securities market, without obtaining a certificate of registration from SEBI as required under the securities laws. 28. It is further clarified that during the period of restraint, the existing holding of securities including the holding of units of mutual funds of the Noticee shall remain frozen. 29. The directions issued under the interim order against the employees of the Noticee are directed to be discontinued. 30. Subject to above, the interim order stands disposed of qua the Noticee. 31. The Order shall come into force with the immediate effect. 32. A copy of this order shall be forwarded to the Noticee, all the recognized Stock Exchange, depositories and registrar and transfer agents for ensuring compliance with the above directions.

-Sd- DATE: SEPTEMBER 29TH, 2022 S. K. MOHANTY PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA

Order in the matter of Mahankal Capital –Ajay Thakur