Order issued to Mr. Ramesh Chandra Jain in the matter of IFSL Ltd.

WTM/RKA/ISD/ 25/2012 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). In respect of the show cause notice No. ISD/AS/VS/SCN/25152/32/2010 dated November 01, 2010 issued to Mr. Ramesh Chandra Jain In the matter of IFSL Ltd. Date of Hearing: July 17, 2012 Appearances: For Noticee: Mr. Ramesh Chandra 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 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, these directions issued by the ex-parte ad-interim order were confirmed vide 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. Mr. Ramesh Chandra Jain was in the group of interconnected entities who had dealt in the shares of IFSL.

3. A show cause notice (SCN) dated November 01, 2010 was, therefore, issued by SEBI to Mr. Ramesh Chandra Jain under sections 11(4) and 11B of the SEBI Act read with regulation 11 of the PFUTP Regulations. Mr. Ramesh Chandra Jain filed his reply vide letter dated January 06, 2011. An opportunity of personal hearing was granted to him before me on July 17, 2012 wherein he appeared and made oral submissions.

4. I have considered the SCN, the reply, oral submissions of the noticee and other material available on record. Mr. Ramesh Chandra Jain has submitted that he had traded only 2000 shares of IFSL. He further submitted that he had not introduced Mr. Vikas Nanavar to Adolf Pinto as alleged in the SCN and has referred an order of SEBI dated December 15, 2009 in this regard passed under adjudication proceedings in some other matter where a finding has been given that he had not introduced Mr. Vikas Nanavar. He also contended that even if assumed, that he had introduced Mr. Vikas Nanavar to Adolf Pinto, he has not committed any wrong by doing so. He further stated that the SCN is general and common which does not reflect his exact role to whom the allegation of committing fraud is being made.

5. I note that the only linkage as brought out in the SCN is that Mr. Ramesh Chandra Jain had introduced another person of the group Mr. Vikas Nanavar to the stock broker Adolf Pinto. Even this is disputable more so when SEBI itself has given a finding that Mr. Ramesh Chandra Jain had not introduced Mr. Vikas Nanavar to the stock broker Adolf Pinto, albeit in different matter. There is no other evidence of his connection either with any of the promoter, director of IFSL or any other entity of the interconnected group. Further, Mr. Ramesh Chandra Jain has bought only 2000 shares of IFSL during the relevant time. In my view, these evidences are not sufficient for holding Mr. Ramesh Chandra Jain liable for violation of various provisions of law as alleged in the SCN.

6. Considering the 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 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/25152/32/2010 dated November 01, 2010 issued to Mr. Ramesh Chandra Jain in the matter of IFSL Limited without passing any direction against him.

7. 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