Orders against First Custodian Fund (I) Ltd.in the matter of BPL Ltd., Videocon International Ltd. and Sterlite Industries Ltd.

WTM/RKA/IVD/ID-9/23/2014 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA ORDER Under section 12(3) of the Securities and Exchange Board of India Act, 1992, Regulation 13(4) of the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 read with Regulation 28(2) and Regulation 38(2) of the SEBI (Intermediaries) Regulations, 2008 In respect of First Custodian Fund (India) Limited (Member, NSE, SEBI Registration No. INB 230638130) In the matter of BPL Limited, Videocon International Limited and Sterlite Industries Limited 1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") conducted investigations into the trading in the scrips of BPL Limited, Videocon International Limited and Sterlite Industries Limited (hereinafter referred to as "BPL", "Videocon" and "Sterlite", respectively) during the period April and May 1998 ("the investigation period"). 2. Investigations revealed that certain brokers of Bombay Stock Exchange Limited (hereinafter referred to as "BSE") and National Stock Exchange of India Limited (hereinafter referred to as "NSE") including First Custodian Fund (India) Ltd. (hereinafter referred to as "the Noticee") acted in a concerted manner to create an artificial market in these scrips and manipulated their prices by building up large positions during the investigation period. During the period from April 1, 1998 to June 4, 1998, while the BSE Sensex showed a decline of 11% i.e. from 3969 to 3546 and NSE Nifty showed a decline of 5% from 1081 to 1027, the price of BPL share rose by 148% from ₹180/- to ₹446/-, the price of Videocon shares rose by 255% from ₹47/-to ₹167/- and the price of Sterlite Industries shares increased by 71% from ₹227/- to ₹388/-. The volume in these shares also rose abnormally both at the BSE and NSE during this period. The price movement in these scrips was also found to be abnormal in comparison to other scrips belonging to the same industry. 3. Investigations also revealed that these brokers had dealt with a common set of clients i.e. Damayanti Finvest Pvt. Ltd., CDP Fincap and Leasing Pvt. Ltd., KRN Finvest and Leasing Pvt. Ltd., Rijuta Finvest Pvt. Ltd., Ikshu Finvest Pvt. Ltd. and Burlington Order the matter of BPL Limited, Videocon International Limited and Sterlite Industries Limited

Finance Pvt. Ltd. (collectively referred to as "Damayanti Group") who were acting as front entities for Late Mr. Harshad Mehta, suspended broker of BSE and an accused in the Securities Scam of 1992. 4. Investigations further revealed that three brokers i.e. the Noticee, Harvest Deal Securities Private Limited (hereinafter referred to as "Harvest Deal") and Shrikant G. Mantri (hereinafter referred to as "Mantri") were associate concerns and operated from the same office. Mr. Rajendra Banthia, an elected director of BSE, was a director of Harvest Deal and Mr. Shrikant G. Mantri was the proprietor of Mantri. Their close relatives were directors of the Noticee. Mr. Rajendra Banthia mainly looked after the affairs of these three broking concerns. There were several instances of transfer of large amounts between the Noticee, Harvest Deal and Mantri and they also acted as a client for each other. It was also revealed that these brokers including the Noticee built up large purchase positions in the scrips of BPL, Videocon and Sterlite 5. It is alleged that the Noticee had linkages with the Damayanti Group.

An entity named Archana Investments (sub-broker of Harvest Deal) was being used as a front entity for routing the transactions of Damayanti Group in the scrips of BPL and Videocon on behalf of Damayanti Group through the Noticee, Harvest Deal and Mantri. For camouflaging the transactions of Damayanti Group, all the transactions were shown in the name of Archana Investments. Archana Investments also carried out certain transactions through the Noticee on behalf of CDP Fincap and Leasing Pvt. Ltd. ("CDP"), a Damayanti group entity, and also routed certain funds between CDP and the Noticee. 6. It was found that the Noticee received several amounts from various other brokers of BSE on behalf of Damayanti Group though credit was being shown to the account of Archana Investments. These transfers were out of the profit on trading, sale proceeds, etc. which Damayanti Group entities had in their account. These amounts were transferred to other brokers who were also dealing for Damayanti Group for building up further positions in these scrips, payment of margins, pay-in liabilities, etc. The Noticee and all other brokers dealing for Damayanti Group while acting in concert facilitated the routing of funds in this manner.

It is alleged that the Noticee was aware that these entities were also dealing in a concerted manner with several other brokers of BSE and NSE and that these entities were acting as front entities for Late Mr. Harshad Mehta. 7. It was found that the Noticee, Harvest Deal and Mantri built up large positions in the scrips of BPL, Videocon and Sterlite in their vyapar account that contributed in cornering of these scrips. The Noticee increased its trading exposure substantially in and Sterlite Industries Limited

BPL, Videocon and Sterlite at a time when these scrips were nearing their highest levels. Even the pay-in liabilities towards these trades were met largely by raising loans from third parties. 8. It is also alleged that the Noticee did not intentionally provide correct information to SEBI about trading in the scrips of BPL, Videocon and Sterlite even though it was dealing for Damayanti Group entities which were the front entities of Late Mr. Harshad Mehta and part of manipulation process for creating artificial market. 9. It is further alleged that even though the Noticee was actually dealing with Damayanti Group, it executed trades in the garb of vyapar account transactions and also routed through a sham sub-broker i.e. Archana Investments. The trading and carry forward position of the Noticee and Harvest Deal in the scrips of BPL, Videocon and Sterlite was on account of Archana Investments which was dealing on behalf of Damayanti Group. The Noticee also traded in these scrips on its own account in respect whereof it did not have the financial capacity to discharge its commitments to the exchange out of its own resources and some of the pay-in commitments were met by securities received from Damayanti Group in an indirect manner.

The Noticee's cumulative trading positions on its own account and on behalf of Archana Investments together with the positions by a set of brokers were abnormal and responsible for creation of artificial market and price manipulation in these scrips. 10. It was found that the Noticee, by building up large positions and cornering a substantial portion of the traded stock in these three scrips, was instrumental in creating an artificial market and manipulation of the prices of these scrips. Such act of the Noticee also induced purchase and sale in these scrips by other investors. Thus, it is alleged that the Noticee had violated rregulation 4(d) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 ("PFUTP Regulations, 1995") read with sections 11(1), 11(2)(b) and (e)) of Securities and Exchange Board of India Act, 1992 ("SEBI Act"). 11. Pursuant to the investigations, SEBI initiated proceedings against the Noticee under the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty), Regulations 2002 ("Enquiry Proceedings Regulations").

After the repeal of the Enquiry Proceedings Regulations, proceedings against the Noticee were continued under the corresponding provisions of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 (hereinafter referred to as the "Intermediaries Regulations"). The Designated Authority (hereinafter referred to as “DA”) appointed in these proceedings submitted his Report dated March 28, 2011 under regulation 27 read and Sterlite Industries Limited with regulation 38(2) of the Intermediaries Regulations. The observations of the DA in the report are summarized as under: i. Regarding the issue whether the prices of the three scrips were manipulated, the DA found the price fluctuations in the scrips to be abnormal in comparison to the market and industry standards. The DA took note of the contention of the Noticee that the price fluctuation could have been because of political, economical and international factors, but observed that the magnitude of the fluctuation and the outcome following the price fall indicted that the price of these scrips were artificially taken to abnormally higher levels by the concerted efforts of certain clients and stock brokers led by Late Mr. Harshad Mehta acting behind the scene. ii.

The DA noted that Late Shri Harshad Mehta, a notified person under the Special Courts Act, 1992 and a suspended broker of BSE recommended the scrip of BPL on his website www.harshad.com during the month of July, 1997 when the price of the scrip was hovering around ₹ 50/-. The building up of positions in the scrip started simultaneously. A set of clients i.e. Damayanti Finvest Pvt. Ltd., CDP Fincap and Leasing Pvt. Ltd., KRN Finvest and Leasing Pvt. Ltd., Rijuta Finvest Pvt. Ltd., Ikshu Finvest Pvt. Ltd. and Burlington Finance Pvt. Ltd. ("Damayanti Group") were acting as front entities for Mr. Harshad Mehta All these entices, had a common address and had common directors. Two of the directors of these entities were brother-in-laws of Mr. Harshad Mehta and two other directors (who were employee directors) were not financially sound and had no past experience of dealing in the securities market. These Damayanti Group entities built up large positions in the three scrips acting as clients for various brokers including the Noticee. In case of most of these brokers, the entities belonging to the Damayanti Group were introduced as clients by other brokers who had previously dealt for the Damayanti Group.

There was also transfer of funds among the brokers on behalf of the Damayanti group. The cumulative positions of Damayanti Group were more than 70% of the total trading of each of these brokers in the scrips of BPL, Sterlite and Videocon. iii. The DA observed that these brokers were acting in a concerted manner and were aware that these clients belonging to the Damayanti Group were simultaneously dealing with other brokers also. The DA noted that it is inconceivable that the brokers, many of whom had dealt with the Damayanti Group for the first time, would deal with unknown entities and would permit them to build up large positions without securing their own financial interests. The DA also observed that these entities belonging to the Damayanti group were front entities of late Mr. Harshad Mehta. and Sterlite Industries Limited iv. The DA observed that brokers transferred funds among each other by way of cheques or kaplis outside the banking system, even from one stock exchange to another on behalf of the Damayanti group. This enabled Damayanti group entities to build up large trading positions in the three scrips which were beyond their financial capacity. v. The DA observed that while the delivery based volume in the three scrips was lower, there were large positions in the carry forward positions at BSE which increased over settlements.

These purchase positions exceeded several times the equity capital of the three companies. The positions in these scrips were abnormally large and were not in consonance with the general trend of similarly traded scrips. The large purchase positions were due to the concerted buying by the Damayanti group and the brokers acting in concert with them. vi. The DA observed that the Damayanti Group (acting on behalf of Late Mr. Harshad Mehta) traded through a set of brokers who traded in concert and cornered a substantial stock of the trading stock of BPL, Sterlite and Videocon. This resulted in creation of artificial market in the scrips which was detrimental to the interest of investors as a large number of market participants and investors got induced into trading in these scrips and when the prices of the scrips crashed, the investors got trapped as they could not find an exit for their holdings in these scrips which were purchased at high prices. The Damayanti group of entities and the brokers acted in concert in respect of the transactions in the three scrips and therefore perpetuated a fraud on the market and unsuspecting investors. vii.

As regards the role of the Noticee, the DA observed that it is an admitted position of the Noticee, Harvest Deal and Mantri that they operate from the same office and shares facilities like telephone, fax and other infrastructure. The close relatives of Mr. Banthia (director of Harvest Deal) and Mr. Mantri were directors of the Noticee. There were several instances of transfer of large amounts between these three brokers and they also acted as a client of each other. Archana Investments, a registered sub-broker of the Noticee also acted as a client of the Noticee. The DA found that the Noticee under its vyapar account and client account built up large positions in the scrips of BPL, Sterlite and Videocon with a manipulative intent to artificially raise the prices of the scrips with a view to induce the purchase and sale of securities by others and manipulating the prices of these scrips. The Noticee's dealings and conduct were manipulative, unprofessional and unbecoming of a broker. The DA also found that the Noticee acted in concert with other brokers for Damayanti Group operating as a front for Late Mr. Harshad Mehta and also and Sterlite Industries Limited created a false market in the scrips by cornering the shares in a manner detrimental to the interest of the investors and with a view to interfere with the fair and smooth functioning of the market.

Further, the Noticee also took exposure that were beyond its financial means and those of its clients. 12. Based on the above, the DA found that Noticee has violated the provisions of regulation 4(d) of PFUTP Regulations, 1995 read with section 11(1), 11(2)(b) and (e) of SEBI Act. The DA has recommended that the certificate of registration granted to the Noticee as a stock broker be suspended for a period of two weeks. 13. After considering the Report, a Show Cause Notice dated October 14, 2011 ("SCN") was issued to the Noticee calling upon it to show cause as to why action as recommended by the DA should not be taken against it or a higher penalty as deemed fit should not be imposed upon it. A copy of the Report was also forwarded to the Noticee along with the SCN. The Noticee submitted its reply to the SCN vide letter dated February 8, 2012. The submissions of the Noticee are, inter alia, as under: (a) Despite repeated requests by the Noticee, SEBI has failed and refused to provide documents and records including a copy of the complete investigation report, complete trade and order logs of NSE, (relating to the scrips of BPL, Videocon and Sterlite during the investigation period), copies of statements of all persons (including Noticee's clients) which have been relied upon by SEBI for arriving at the allegations and findings in the SCN, documents and records based on which SEBI has come to the conclusions stated in the SCN and the Enquiry Report.

The Noticee had also requested for an opportunity to cross-examine all persons whose statements have been relied upon by SEBI but the same was denied by SEBI despite repeated requests. The Enquiry Officer brushed aside the Noticee's requests for providing documents and records and grant of an opportunity of cross-examination as being "dilatory tactics". By denying the said documents and records, SEBI/Enquiry Officer have effectively denied the Noticee an opportunity to defend itself against the charges and allegations made in the SCN. The aforesaid failure / refusal of SEBI/Enquiry Officer is in gross violation of the principles of natural justice and on this ground alone Enquiry Officer's report should be rejected and the Noticee be discharged from the present proceedings. (b) The Noticee did not act together / in a concerted manner with any other broker or person. It did not deal for a common set of clients nor did it act as a "front" for Late Harshad S. Mehta. (c) The Enquiry Officer has failed to consider that considerable time had elapsed since the impugned trades and the initiation of the enquiry.

(d) It is erroneous to compare the movements in the price of the said three scrips with the movement of BSE SENSEX or NIFTY since these scrips were not part and Sterlite Industries Limited of SENSEX or NIFTY. There were cogent reasons for increase in the price of the three scrips during the relevant period and the same could not be treated as being artificial or abnormal. The price fluctuations cannot be considered as abnormal, unusual or artificially induced. Further, the movement of the price of Sterlite was mostly in line with that of the SENSEX. It is untrue that the price movement of companies in similar business have a linear correlation. (e) The Noticee is not concerned with the recommendations made by Late Mr. Harshad Mehta on his website in July, 1997 or with the alleged "building up of positions". It is pertinent to note that neither the SCN dated November 12, 1998 nor the extracts of the investigation report (enclosed therewith) referred to the alleged "building up of positions". (f) The Noticee is not aware of and not concerned with the trading by Damayanti Finvest Pvt. Ltd., CDP Fincap and Leasing Pvt. Ltd., KRN Finvest and Leasing Pvt. Ltd., Rijuta Finvest Pvt. Ltd., Ikshu Finvest Pvt. Ltd. and Burlington Finance Pvt. Ltd. The Noticee is also not aware of and is not concerned that the said entities were allegedly acting as a front for late Mr. Harshad Mehta or the connections between the said entities.

The Noticee is not aware of the constitution of the alleged Damayanti Group or the positions taken by Group (except for the positions taken by the constituents of its clients). (g) During the investigation period, the Noticee also traded on behalf of other clients in various scrips. The Noticee was not aware that the clients who had traded in the three scrips during the period under investigation had also traded through other stock brokers or as part of the said "Damayanti group". (h) The financial transactions of the Noticee with other brokers were in the normal course of business and not related to the trades in the three scrips. (i) It is not clear from the pre-enquiry SCN and Enquiry Report as to how and on what basis the Enquiry Officer has come to a conclusion and finding that the clients who belonged to the Damayanti Group and who traded in the said three scrips did not have any financial standing or professional expertise in dealing in securities. (j) The finding of the Enquiry Officer that other stock brokers and the Noticee ought to have known the identity of the actual persons behind the said alleged "Damayanti Group” is erroneous.

The Noticee is not required to do a detailed investigation if its clients and their relationship with other entities nor it has the wherewithal or legal sanction to do so. (k) The position of the Noticee in the three scrips during the period of investigation was negligible when compared to the total turnover on NSE. Therefore, there is no question of its positions being abnormally large or concentrated and hence, it could not said that its positions influenced the price of the three scrips. and Sterlite Industries Limited (l) At the time of placing orders, the Noticee was not aware of the fact that there were large carry forward positions at NSE and that the same were increasing over settlements. (m) Merely because close relatives of Mr. Mantri and a director of Harvest Deal are directors of the Noticee and because the Noticee shares some common facilities like fax, etc. with Harvest Deal and Mantri, it cannot be assumed that the said entities have acted together with the Noticee or that exposures given by them to their clients should be considered together. Each of the entities is a separate legal entity and has no common controlling mind.

(n) The Noticee is not aware of and is not concerned with the relationships between Archana Investments and Harvest Deal or Mantri, and has no knowledge about the allegation that Archana Investments credited ₹ 81 lakh to the account of CDP which was received from Sovereign Securities and this amount was used to make payment of ₹ 80 lakh to the Noticee. (o) The Noticee did not act with manipulative intent to allegedly artificially increase the price of the three scrips and did not interfere with the fair and smooth functioning of the securities market. 14. An opportunity of personal hearing was granted to the Noticee on November 26, 2013, but the Noticee did not avail the said opportunity nor did it make any further communication to SEBI in that regard. In view thereof, I find that principles of natural justice have been complied with in the present case and I shall now deal with the present proceedings on merits. 15. I have carefully considered the Report submitted by the DA, SCN issued to the Noticee and written submissions of the Noticee. The text of the provisions alleged to have been violated by the Noticee is reproduced as under: "PFUTP Regulations, 1995 4. No person shall - ……………………………………………….

(d) enter into a purchase or sale of any securities, not intended to effect transfer of beneficial ownership but intended to operate only as a device to inflate, depress, or cause fluctuations in the market price of securities; SEBI Act 11. (1) Subject to the provisions of this Act, it shall be the duty of the Board to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit. and Sterlite Industries Limited (2) Without prejudice to the generality of the foregoing provisions, the measures referred to therein may provide for - …………………………………………………… (b) registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities markets in any manner; ……………………………………………………………………………. (e) prohibiting fraudulent and unfair trade practices relating to securities markets;" 16. The Noticee has contended that despite its repeated requests, SEBI has failed and refused to provide documents and records including a copy of the complete investigation report, complete trade and order logs of NSE, (relating to the scrips of BPL, Videocon and Sterlite during the investigation period), copies of statements of all persons (including Noticee's clients) which have been relied upon by SEBI for arriving at the allegations and findings in the SCN, documents and records based on which SEBI has come to the conclusions stated in the SCN.

I note that the Noticee had raised the same contention before the DA and the DA had observed on the basis of the available records that the Noticee was granted inspection of documents and was provided with copies of various documents relied upon in the case as sought by it. On the basis of the material available on record, I do not find any reason to differ from the findings of DA in this regard and reject the said contention of the Noticee. 17. The Noticee has contended that the price fluctuations in the three scrips cannot be considered as abnormal and the comparison of the movements in price of the three scrips with movement of BSE SENSEX or NIFTY is erroneous. I note that the DA has found in the Report that the price fluctuations in the said scrips were abnormal compared to market and industry standards. I further note that the DA, after examining the contentions of the Noticee in this regard, has concluded that the magnitude of the fluctuation and outcome following the price fall indicate that the price of these scrips were artificially taken to abnormal higher levels by the concerted efforts of certain clients and stock brokers led by Late Mr. Harshad Mehta, acting behind the scene.

I find that the Noticee in its reply has not been able to provide sufficient explanation for the abnormal fluctuations in the price of the scrips of BPL, Sterlite and Videocon. In view thereof, I do not find any merit in this contention of the Noticee. 18. The Noticee has further contended that it had not acted together with Harvest Deal and Mantri, I note that close relatives of Mr. Rajendra Banthia (a director of Harvest Deal) and Mr. Mantri are the directors of the Noticee. Further, the Noticee, Harvest Deal and Mantri used to operate from the same office and shared facilities like telephone, fax and and Sterlite Industries Limited other infrastructure. I note that at the relevant point of time Mr. Rajendra Banthia, director of Harvest deal mainly looked after the affairs of these three concerns and there were several instances of transfer of large amounts between these concerns. I further note that each of these concerns also operated as a client of the other concerns. I find that the above facts and observations clearly establish the connection between the Noticee, First Custodian and Mantri.

I, therefore, do not find merit in this contention of the Noticee and reject the same. 19. I note that a common set of clients belonging to the Damayanti Group traded majorly in the scrips of BPL, Sterite and Videocon during the investigation period. All these entities had a common address for correspondence. The same address was being used as an office by Late Mr. Harshad Mehta. Mr. Anil D Doshi and Mr. Dinesh D Doshi were the common directors for all these entities and were the cousin brothers of Late Mr. Harshad Mehta. Certain other relatives and associates of Late Mr. Harshad Mehta were looking after the affairs of these entities. On the basis of these facts, I find that these Damayanti group entities were closely connected to Late Mr. Harshad Mehta. 20. I note that Archana Investments was the proprietary concern of Mr. Ram Ballabh Boob and a registered sub-broker of Harvest Deal. I further note that Mr. Ram Ballabh Boob was an Accountant with a business concern of Mr. Rajendra Banthia and had given his address as C/o. Shrikant G Mantri to Nedungadi Bank. His son, Mr. Ram Kishore Boob, a former employee of Mr. Rajendra Banthis, was a director of Harvest Deal at the time of its corporatisation.

I note that Archana Investments dealt in the scrips of BPL and Videocon on behalf of the Damayanti Group entity, CDP through Harvest Deal and the Noticee. I further note that Mr. Anil Doshi (a representative of CDP) was known to Mr. Vasant Soni, a representative of Archana Investments. The bank transaction details of Archana Investments for the period January to June 1998 showed that the only transactions pertaining to value of more than ₹ 5 lac were relating to transactions for CDP. The records also showed that Archana Investments had never transacted in such heavy volumes and big amounts in the past. On one instance, Archana Investments also received funds from Mantri and deposited them into CDP's account. In another instance, Archana Investments credited ₹ 81 lac received from another broker of BSE (i.e. Sovereign Securities) which was in turn used to make payments of ₹ 80 lac to the Noticee. I also note that Mr. Rajendra Banthia and Mantri had linkages with Late Mr. Harshad Mehta since the days of the securities scam. I note that an amount of ₹ 11.50 crore belonging to Late Mr. Harshad Mehta was lying with Mr. R R Mohta, BSE broker and was transferred to Mantri on the directions of Late Mr. Harshad Mehta and that the Special Court dealing with the cases pertaining to the securities scam levied an interest of approximately ₹ 1.50 crore on this amount which and Sterlite Industries Limited was paid by Mr. R R Mohta who received the said amount from Mantri.

On the basis of these facts, I find that the Noticee had linkages with First Custodian, Mantri and Archana Investments, and all these entities were inter-connected and traded on behalf of the Damayanti Group which was ultimately acting for Late Mr. Harshad Mehta. 21. I note that the cumulative trading position of Harvest Deal and Mantri in the scrips of BPL, Videocon & Sterlite was very large and was amongst the top 15 trading positions at the BSE during the investigation period. I further note that the Noticee received several amounts from various other brokers of BSE and built up large positions in the three scrips. The Noticee has contended that these financial transactions were in the ordinary course of business. However, it is noted that these transfers to the Noticee were out of the profits of trading, sale proceeds, etc. of the Damayanti Group entities. The Noticee and other brokers acting in concert with it facilitated the routing of funds from the Damayanti Group for building up positions in the three scrips. The Noticee also used to show the trading in these scrips in its vyapar account, whereas it actually traded on behalf of the Damayanti Group using the funds transferred by them.

The Noticee acting in concert with other stock brokers took large positions in the scrips of BPL, Sterlite and Videocon, which were in excess of several times of the equity share capital of the companies. These artificially inflated volumes induced several investors to trade in the three scrips at higher prices. I find that the aforesaid facts show that the Noticee along with other brokers traded in the scrips of BPL, Sterlite and Videocon to create artificial market in these scrips without effecting the transfer of beneficial ownership of the shares and manipulate the prices thereof. The said acts were fraudulent in terms of regulation 2(c) of the PFUTP Regulations, 1995. 22. Considering the above facts and circumstances, I am of the view that the alleged violations of regulation 4(d) of the PFUTP Regulations, 1995 read with regulation 13(2) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 and section 11(1), 11(2)(b) and (e) of the SEBI Act against the Noticee sand established. 23. I find that considerable time has elapsed since the initiation of these proceedings against the Noticee.

While delay in itself cannot be a ground for exonerating the Noticee, it can be treated as a mitigating factor. Thus, I am of the view that the suspension of certificate of registration of the Noticee for a period of two weeks would be commensurate with the violations established against it. 24. I, therefore, in exercise of powers conferred upon me by virtue of section 19 read with section 12(3) of the SEBI Act and regulation 13(4) of the Enquiry Proceedings Regulations read with regulation 28(2) of the Intermediaries Regulations, hereby and Sterlite Industries Limited suspend the certificate of registration of the Noticee, i.e. First Custodian Fund (India) Limited (Member, NSE, SEBI Registration No. INB 230638130) for a period of two weeks. 25. This order shall come into force on expiry of twenty one days from the date of this order. 26. A copy of this order shall be served upon the Noticee and NSE in accordance with regulation 30 of the Intermediaries Regulations and also to the depositories for ensuring compliance of this Order.

DATE: May 15, 2014 RAJEEV KUMAR AGARWAL PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA and Sterlite Industries Limited