Order issued to Mr. Rakesh Sanghvi in the matter of IFSL Ltd.

WTM/RKA/ISD/24/2012 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: RAJEEV KUMAR AGARWAL, WHOLE TIME MEMBER ORDER Under Sections 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 (SEBI Act) read with Regulation 11 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (PFUTP Regulations), Regulation 44 of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 (Takeover Regulations) and Regulation 11 of SEBI (Prohibition of Insider Trading) Regulations, 1992 (PIT Regulations). In respect of the show cause notice No. ISD/AS/VS/SCN/25146/9/2010 dated November 01, 2010 issued to Mr. Rakesh Singhvi In the matter of IFSL Ltd. Date of Hearing: July 17, 2012 Appearances: For Noticee: 1. Mr. Rakesh Singhvi, and 2. Mr. Rajesh Jain. For SEBI: 1. Mr. Santosh Kumar Shukla, Joint Legal Advisor 2. Mr. Debashis Bandyopadhyay, Dy. General Manager 3. Mr. Amitesh Kumar, Asst. Legal Advisor, and 4. Mr. Rahul Kelapure, Asst. Legal Officer. 1. By an ex-parte ad-interim order dated September 28, 2005, SEBI had directed inter alia the promoters, directors including Mr. Rakesh Singhvi and the interconnected group of clients who dealt in the shares of IFSL Ltd. ('IFSL') not to buy, sell or deal in the securities of IFSL, directly or indirectly, till further directions in this regard. While the SEBI investigations were on-going, the directions issued by the ex parte ad-interim order were confirmed by an order dated June 16, 2006.

2. After completion of the investigation in the matter, it was observed that IFSL had made several false and premature announcements towards its activities in power sector but could not produce any document to substantiate its claims. It was also found that the promoters of IFSL in connivance with some of the board of directors simultaneously created artificial rise in price and volume in the shares of IFSL through group of interconnected entities and have induced the lay investors to deal in the shares of IFSL.

3. A show cause notice (SCN) dated November 01, 2010 was, therefore, issued by SEBI, inter alia, to Mr. Rakesh Singhvi under sections 11(4) and 11B of the SEBI Act read with regulation 11 of the PFUTP Regulations, Regulation 44 of the Takeover Regulations and Regulation 11 of PIT Regulations.

4. Mr. Rakesh Singhvi filed his reply vide letter dated February 10, 2011. An opportunity of personal hearing was granted to him before me on July 17, 2012 wherein he appeared and made oral submissions.

5. I have considered the SCN, the reply, oral submissions of the noticee and other material available on record. Mr. Rakesh Singhvi has submitted as under: (a) He had been appointed as an independent non -executive director in IFSL on April 15, 2005 and held this position only for 20 days when he resigned from the Board of Directors of IFSL on May 05, 2005 and the same can be verified from Form 32 filed with Registrar of Companies. He had attended only one Board meeting i.e. on April 25, 2005. (b) During his course of tenure and association with IFSL, he had never participated into the day-to-day affairs of the company nor was part of any committee of the company. Further, he had not signed any document or participated in any discussion relating to diversification or expansion, etc. (c) All the major announcements by IFSL were made after his tenure as director of IFSL as the first announcement was made by it on May 09, 2005. (d) He does not have any demat account nor he has traded in any kind of shares and therefore he has not violated any provisions of law during his tenure (i.e. April 15, 2005 to May 05, 2005).

6. I note that Mr. Rakesh Singhvi was appointed as director of IFSL on April 15, 2005. Perusal of Form 32 submitted by Mr. Rakesh Singhvi shows that he had resigned on May 05, 2005. I also note that the investigation has revealed that the first false and premature announcement by IFSL was made on May 09, 2005. I further note that the investigation has not brought out any evidence suggesting that Mr. Rakesh Singhvi had dealt in the shares of IFSL. In my view, therefore, Mr. Rakesh Singhvi cannot be held liable for violation of various provisions of law as alleged in the SCN.

7. Considering the aforesaid facts and circumstances of the case, I am of the view that it would be in fairness of things to dispose of the SCN without passing any further direction against him, as contemplated in the SCN. Therefore, in exercise of the powers conferred upon me by virtue of Section 19 read with sections 11(4) and 11B of the Securities and Exchange Board of India Act,

1992, I, hereby dispose of show cause notice No. ISD/AS/VS/SCN/25146/9/2010 dated November 01, 2010 issued to Mr. Rakesh Singhvi in the matter of IFSL Limited without passing any further direction against him. Accordingly, the directions passed by SEBI vide earlier orders dated September 28, 2005 and June 16, 2006 qua Mr. Rakesh Singhvi shall not continue.

8. A copy of this order shall be served on all recognized stock exchanges and depositories for necessary consequential action.

9. This Order shall come into force with immediate effect.

RAJEEV KUMAR AGARWAL DATE: July 24th, 2012 WHOLE TIME MEMBER PLACE: MUMBAI SECURITIES AND EXCHANGE BOARD OF INDIA