BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. EAD-5/SVKM/AO/01/2016-17]
UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF
INDIA ACT, 1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR
HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING
OFFICER) RULES, 1995AGAINST
SHRI SANTOSH KUMAR JAIN
(PAN ACQPJ7823E)
10, Princep Street, 2nd Floor,
Kolkata 700072

Inthe Matter of SRG INFOTECH LIMITED

__________________________________________________________________
BACKGROUND IN BRIEF

1.

Securities and Exchange Board of India (SEBI) conducted investigation

into the irregular trading in the scrip of SRG Infotech Ltd. (hereinafter
referred to as "SRG/Company"). SRG had come out with a Rights Issue
in 1995 and also stated that software development and exports, computer
education, multimedia and Registrar and Share Transfer Agents as their
business activities. SRG had not carried out any of the afore-mentioned
activities except that of Registrar and Share Transfer Agent. The price of
the scrip was rigged up in the no-delivery period wherein it rose from ` 9
to ` 20, an increase of 122%. Arihant Equity Fund Ltd. (Now known as
Universal Media Network Ltd.) and New Age Shares and Stock Brokers
Pvt. Ltd are the promoters of SRG and also dealt in the scrip in large
quantities. These two entities entered orders for large quantities and

Adjudication Order against Shri Santosh Kumar Jain in the matter of SRG Infotech Ltd.Page 1 of 11

subsequently deleted them either after updating the price or after part
execution of the order.

2.

The Investigating Authority (IA) issued Summons dated June 16, 2004 to
Shri Santosh Kumar Jain (herein after referred to as Noticee) for
production of documents and personal appearance to ascertain his role in
the irregularities in the scrip of SRG.

3.

Pursuant to the aforesaid summons, Noticee appeared before the IAon July
16, 2004 and allegedly made incorrect statementthat he was not aware of
the dealings in the scrip of SRGby Arihant Equity Fund Ltd. in which he
was a Promoter & Director.SEBI initiated adjudication proceedings
against the Noticee,under Section 15HB of SEBI Act, 1992 (hereinafter
referred to as SEBI Act) for violationof the provisions of Sections
11C(3), (5) and (6) of SEBI Act.

APPOINTMENT OF ADJUDICATING OFFICER

4.

Shri Satya Ranjan Prasad was appointed as the Adjudicating Officer (AO)
vide communication of proceedings dated 16.11.04 and consequent upon
the transfer of Shri Satya Ranjan Prasad, Shri A Sunil Kumar was
appointed as the AO vide communication of proceedings dated
15.01.2015. Consequent to the transfer of Shri. A. Sunil Kumar,the
undersigned,

was

appointed

as

the

Adjudicating

Officer

vide

communication of proceedings dated June03, 2015 to inquire into and

adjudge under Section 15HB of the SEBI Act, the alleged violation of the

Adjudication Order against Shri Santosh Kumar Jain in the matter of SRG Infotech Ltd.Page 2 of 11

provisions of Section 11C(3), (5) and (6) of SEBI Act, 1992, by the
Noticee.
SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING

5.

Show Cause Notice dated December 07, 2015 (hereinafter referred to as

SCN) was issued to the Noticee in terms of Rule 4 of SEBI (Procedure
for Holding Inquiry and Imposing Penalties by Adjudicating Officer)
Rules, 1995 (hereinafter referred to as the Adjudication Rules) read
with section 15I of SEBI Act, 1992 to show cause as to why an inquiry
should not be initiated and penalty be not imposed under section 15HB of
SEBI Act, for the alleged contravention of the provisions of Sections
11C(3), (5) and (6) of SEBI Act. Copies of the documents relied upon
were also provided to the Noticee along with the SCN.It was alleged in the
SCN that the Noticee had made incorrect statement before the IA that he
was not aware of the dealings in the scrip of SRG, by Arihant Equity Fund
Ltd(Now known as Universal Media Network Ltd.) in which he was
promoter & Director.

6.

In response to the SCN, Noticee submitted his reply vide letter dated
14.01.2016and the relevant portionsare reproduced verbatim hereunder:-

6.1 I was not being aware of any transactions held in the scrip of M/s
SRG Infotech limited during the period 15-12-1998 to 30-06-1999
and the same has already been submitted personally before the
concerned SEBI official on 16.07.2004. Pursuant to my aforesaid
submissions, I understand that no such suspicion or query was there
on the part of the SEBI, hence , I had not been penalized nor have
Adjudication Order against Shri Santosh Kumar Jain in the matter of SRG Infotech Ltd.Page 3 of 11

been

debarred

vide

SEBI

Order

number

WTM/TCN/46/ID3/SEPT/2008 dated 23.09.2008. To the best of my

knowledge & behalf, I was never aware of opening of Bank A/c or
operation in that a/c of shares of SRG Infotech Ltd.

6.2 I would also like to bring into your kind notice that pursuant to my
aforesaid submissions in 2004, I respectfully submit that to the best of
my knowledge and information, I was neither in receipt of any letters/
notice from the SEBI since 2004 to till date. Further, I also failed to
understand that why SEBI initiated such against me after an elapse of
more than fifteen (15) years. I would also like to draw your kind
attention towards the fact that since I am more than 62 years old I
was unable to recall the entire information/ facts and also it should
be kindly noted that due to the occurrence of massive fire, in the
Registered Office of my Company on 14.04.2012 at around 9 p.m. due
to short circuit of electricity, resulted into disruption of many vital
documents/ letter from my office and hence was unable to submit any
documents, therein.

6.3 Thus, I respectfully pray to your good self; to not to initiate any legal
proceedings against me for the captioned matter and request your
good self to kindly drop the proceedings against me.

7.

Thereafter, Noticee was granted an opportunity of personal hearing on

February 10, 2016. Vide letter dated 06.02.2016 Noticee reiterated the
contents of reply dated 14.01.2016 and requested for the personal hearing
at Kolkata. Noticee was informed vide email dated 08.02.2016 that the
personal hearing as scheduled on 10.02.2016 would be held at Mumbai.

Adjudication Order against Shri Santosh Kumar Jain in the matter of SRG Infotech Ltd.Page 4 of 11

Vide letter dated 09.02.2016 Noticee requested for adjournment.A final

opportunity of personal hearing was given to the Noticee on February 22,
2016 at SEBI Bhavan, Mumbai. However, again the Notice vide letter
dated 18.02.2016 reiterated his earlier submissions and failed to appear for
personal hearing.
8.

I observe that the Noticee was provided with fair & reasonable
opportunity to be heard which he failed to avail of and therefore, the
matter is being disposed of based on the material available.

CONSIDERATION OF ISSUES AND FINDINGS

9.

I have carefully perused the written submissions of the Noticee and the
documents available on record. The issues that arise for consideration in
the present case are :
a)

Whether the Noticee had made incorrect statement before the IA and
whether he violated the provisions of section 11C(3), 11C(5)and
11C(6) of SEBI Act, 1992?

b)

Whether the Noticee is liable for monetary penalty under section

15HB of SEBI Act, 1992?

c)

What quantum of monetary penalty should be imposed on the Noticee

taking into consideration the factors mentioned in Section 15J of the
SEBI Act?

Issue I Violations of the provisions of section 11C(3), 11C(5)and 11C(6) of

SEBI Act, 1992?

Adjudication Order against Shri Santosh Kumar Jain in the matter of SRG Infotech Ltd.Page 5 of 11

10.

Before moving forward, it is pertinent to refer to the relevant provisions of

Section 11C (3), (5) and (6) of SEBI Act, 1992 which reads as under:

Section 11C(3), 11C(5) and Section 11C(6) of the SEBI Act, 1992

Section 11C(3): The Investigating Authority may require any intermediary

or any person associated with securities market in any manner to furnish
such information to, or produce such books, or registers, or other
documents, or record before him or any person authorized by it in this
behalf as it may consider necessary if the furnishing of such information
or the production of such books, or registers, or other documents, or
record is relevant or necessary for the purposes of its investigation.
Section 11C(5): Any person, directed to make an investigation under subsection (1), may examine on oath, any manager, managing director,
officer and other employee of any intermediary or any person associated
with securities market in any manner, in relation to the affairs of his
business and may administer an oath accordingly and for that purpose
may require any of those persons to appear before it personally.
Section 11C(6): If any person fails without reasonable cause or refuses
(a) to produce to the Investigating Authority or any person authorised by
it in this behalf any book, register, other document and record which is his
duty under sub-section (2) or sub-section (3) to produce; or
(b) to furnish any information which is his duty under sub-section (3) to
furnish; or
(c) to appear before the Investigating Authority personally when required
to do so under sub-section (5) or to answer any question which is put to
him by the Investigating Authority in pursuance of that sub-section; or
(d) to sign the notes of any examination referred to in sub-section (7), he
shall be punishable with imprisonment for a term which may extend to one
year, or with fine, which may extend to one crore rupees, or with both, and
also with a further fine which may extend to five lakh rupees for every day
after the first during which the failure or refusal continues.

11.

Against the backdrop of unusual price rise in the scrip of SRG from ` 9 to
` 20 and entering of large quantities of orders and subsequently deletion

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of the same either after updating the price or after part execution of the
order by Arihant Equity Fund Ltd. and New Age Shares and Stock
Brokers Pvt. Ltd who are the promoters of SRG, Summons dated June 16,
2004 was issued to the Noticee who was promoter Director of Arihant
Equity Fund Ltd. for production of documents and personal appearance to
ascertain his role in the irregularities in the scrip of SRG.

12.

I note that the Noticee appeared before the IA on July 16, 2004 and, inter
alia, made statement that he was not aware of the dealings in the scrip of
SRG, in the name of Arihant Equity Fund Ltd. It was alleged that this
statement made by the Noticee before IA was incorrect. The Charges
against the Noticee is that he made incorrect statement to IA stating that
he was not aware of the dealings of Arihant Equity Fund Ltd in the scrip
of SRG. Extract of his statement dated 16.07.2004 made before the IA is
reproduced below.
9.I am showing you the submissions of Shri Ashok Agarwal wherein he
has commented on you and Shri Pramod Kr Jain. Please comment.
Ans. I can only say that the Delhi based Directors who have been named
above have might have dealt in the shares of SRG. However I would like
to reiterate that the Head office/Registered office of Arihant Equity Fund
were never informed of these transactions by the Delhi bases Directors. I
in my individual as well as official capacity was also never aware nor
informed of the dealings in SRG Infotech by the Delhi based Directors
in the name of Arihant Equity Fund ltd..
According to the questionnaire extracted above, Shri Ashok Agarwal (who
is since deceased) has commented on the Noticeefor which the IA has
sought the comments of the Noticee and the response of the Noticee is

Adjudication Order against Shri Santosh Kumar Jain in the matter of SRG Infotech Ltd.Page 7 of 11

extracted above. Therefore, one has to go back to the statement of Shri

Ashok Agarwal to ascertain what was the comments made by him about
the Noticee. Statement of Shri Ashok Agarwal (since deceased) dated
09/07/04 refers only once to the Noticee in the said statement.It is in
response to Question 11 which relates to dealings in the Scrip of SRG by
one Mr. Sanjeev Bansal. In reply Shri Ashok Agarwal has stated that
Arihant Equity Fund Ltd was managed by Mr. Santosh Kumar Jain
(Noticee herein) and Mr. Pramod Jain of ATN international Ltd. There is
no other reference to the Noticee being aware of any dealings in the scrip
of SRG in the entire statement. Such uncorroborated statement cannot be
relied upon to establish that the Noticee made a false statement to SEBI.

13.

On the basis of the letter dated 01.06.2004 which is a letter written by

Universal Media Network Ltd to Depository Participant (DP), Integrated
Master Securities (IMS), the Noticee is charged for making incorrect
statement. The charge is that although he knew about the dealings of
Arihant Equity Fund Ltd in SRG, he has stated to the contrary to the IA as
extracted above. Since this letter is crucial, based on which the charges are
levelled. The said lettersigned by the Noticee is reproduced below.
UNIVERSAL MEDIA NETWORK LIMITED

10 Princep Street
2nd Floor
Kolkata 700 072

Regd. With A/D

Date: 01/06/04
To, The Depository Participant,
M/s. Integrated Master Securities Pvt. Ltd.,
DP ID No.IN 300724,
48, Todarmal Road, Bengali Market,
New Delhi 110 001
Dear Sirs,

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Ref: Our reminder letters dt. 29/09/03,12/01/04,27/02/04 and 30/03/04 seeking your
confirmation as to updation of your records pertaining to our holdings under
Beneficiary Account No. 10008017 consequent upon changes in the name of the
Company and its Banker
Re: Pending rectification of Interim Dividend Warrant (2003-04) No. 0029521 for
Rs.600 bearing old name as well as Banking particulars of the Company.
Sub: Non-receipt of your confirmation as to updation of your records relating to our
holdings under reference SOS for doing your needful at the earliest- Reg.
With reference to the above, this to remind you with great regret that you have not yet
confirmed us about the updation of your records - required by MCS Ltd., the R & T A of
HPCL, for rectification of aforesaid I/Dividend Warrant - pertaining to our holdings
under above referred Beneficiary Account: though a prolonged period of time have
passed since we have given you our mandate in this regard.
In the light of the above, you are therefore, earnestly requested to please furnish MCS
Limited with your updated records pertaining to the changed name and banking
particulars of our Companys holdings under the beneficiary account with you to enable
them to issue fresh I/Dividend Warrant in the changed name and banking particulars of
our Company under intimation to us at your earliest and oblige.
Thanking you,
Yours faithfully,
For Universal Media Network Ltd.
(Signature of Santosh Kumar Jain)
Director
C.C. to:
National Securities Depository Ltd.
Trade World, 4th& 5th Floor,
Kamala Mills Compound,
Lower Parel, Mumbai - 400013

The letter is self explanatory and

requires your immediate action to
sort out our long outstanding
problem.

14.

It can be seen from the above letter that the said letter nowhere mentions
the Scrip of SRG, leave alone any knowledge that can be attributed to the
Noticee about the dealings by Arihant Equity Fund Ltd in the scrip of
SRG.As the subject of the letter indicates, it is a letter written by Arihant
Equity Fund Ltd regarding non receipt of confirmation from the DP
regarding updating of DP records on their holdingsas requested by MCS

Adjudication Order against Shri Santosh Kumar Jain in the matter of SRG Infotech Ltd.Page 9 of 11

ltd, the R & TA of HPCL for rectification of a Dividend Warrant.

Therefore through the said letter the DP was requested to furnish MCS ltd
regarding change of name and banking particulars of Arihant Equity Fund
Ltd for issuance of fresh Dividend Warrant. The said letter does not even
remotely discuss anything with regard to trading by Arihant Equity Fund
Ltd in the scrip of SRG or suggest that the Noticee was aware of any
trading in the scrip of SRG by Arihant Equity Fund Ltd.

15.

I, findthatvide letter dated 01.06.2004 Noticee has requested IMS for

updation of DP account no. 10008017 with regard to change of name &
banking particulars of the Company and non-receipt of dividend in other
scrip and he also made reference of his earlier letters dated 29/09/03,
12/01/04,27/02/04 and 30/03/04.This is the only evidence based on which
it was alleged that the Noticee was aware about the dealings in the scrip of
SRG during the period December 1998 to June 1999. I notethat the
aboveletter was written in the year 2004 and has made the reference of
other letters which also belonged to the year 2003 and 2004. Further there
was nowhere any reference of the scrip of SRG in the said letter. The
statement was made on 16.07.2004 and the letter is dated 01.06.2004 the
impugned transactions in the scrip of SRG took place between December
1998 & June 1999 and there is nothing either in the statement or in the
letter extracted above to even remotely suggest that the Noticee is aware
of the dealings of Arihant Equity Fund Ltd in the scrip of SRG
Infotech.Anylink between the dealings in the scrip of SRG by Arihant
Equity Fund Ltd and the knowledge of the Noticee of the same could not
be established.There is no other evidence in support of the charge. It is
therefore, not established that the Noticee made a false statement to SEBI

Adjudication Order against Shri Santosh Kumar Jain in the matter of SRG Infotech Ltd.Page 10 of 11

or that he was aware about dealings in the scrip of SRG during the period
December 1998 to June 1999 based on the letter dated 01.06.2004.

ORDER

16.

In view of the findings at para 12-15 above, violation of provision of

section 11C (3), (5) and (6) have not been established against the Noticee
and therefore theNoticee is not liable for monetary penalty under Section
15HB of the SEBI Act, 1992.

17.

The matter is disposed of accordingly.

18.

In terms of rule 6 of the Rules, copies of this order are sent to the Noticee
and also to the Securities and Exchange Board of India.

Date: April27, 2016

Place: Mumbai

S. V. Krishnamohan
Chief General Manager & Adjudicating Officer

Adjudication Order against Shri Santosh Kumar Jain in the matter of SRG Infotech Ltd.Page 11 of 11