Securities Appellate Tribunal
Sebi vs Shriram Asset Management Company ... on 24 October, 2002
ORDER
G.N. Bajpai, Chairman
1. In the wake of sudden payment crisis in the month of June 1998, on The Stock Exchange, Mumbai (hereinafter called BSE) and National Stock Exchange of India Limited (hereinafter called NSE) and allegations of manipulation in the scrips of BPL Limited, Videocon International Limited (Videocon) and Sterlite Industries Limited, investigations were initiated by Securities and Exchange Board of India (hereinafter called SEBI). There were media reports also that some Mutual Funds were involved in bail out of brokers of BSE having payment problems and that shares were purchased by Mutual Funds in pursuance to buy-back arrangement. Investigations were ordered in the affairs of Shriram Mutual Fund (SRMF) to look into the irregularities, if any, in the purchase of scrip of Videocon in June 1998.
2. Investigations revealed that SRMF purchased 1,20,600 shares of Videocon on BSE, through broker Jaysukhlal Jagjivan Stock Brokers Pvt. Ltd. (JSBL). This transaction was by way of a cross deal between SRMF as buyers and M/s. Springfield Securities Ltd. (SSL), an associate concern of Shriram group and operating from the same premises i.e. Dalamal Towers, Nariman Point, Mumbai 400 021, as sellers. Scrutiny of the order / trade log generated by BSE computerized system showed that transaction took place on 24/6/98. It was also seen that even the contract notes issued by the broker were dated 24/6/98.The purchase price of the shares as per contract was Rs.84 per share, though the prevailing market price on that day was Rs.63 per share. Shri Gadgil was the Managing Director of Shriram Asset Management Company (SAMC), which was the Investment Manager when the impugned shares were purchased. The Asset Management Company took investment decisions through Investment Management Committee. Shri Gadgil was the Chief of this Committee which took the decision to purchase the shares of Videocon International @Rs84/-per share when the shares were available at the rate of Rs 62-Rs63 per share. SRMF showed in their records that the impugned transaction took place on 19/06/98 when the price of the shares was Rs.84/ per share. This was not correct in view of the following :
SSL, the counter party (seller) for the cross deal on 24/6/98 itself purchased the Videocon shares on 19/6/98 after the closure of trading hours (i.e. about 1600 hours) which was a Friday, the last day of Settlement No.13. Out of around 5,00,000 shares purchased on 19.6.1998 by SSL, 1,20,600 shares were sold to SRMF.
3. Next two days i.e.20th and 21st of June were Saturday and Sunday when the market was closed. Thus, the earliest date when the sale of the above shares could be made by SSL was 22/6/98 only. It was further observed that on 22/6/98 and 23/6/98 the volume of shares of Videocon transacted at BSE was merely 900 and 2,600 respectively. This meant that the impugned 1,20,600 shares were not sold on these two days i.e. 22/6/1998 and 23/6/1998.
4. The broker Jaysukhlal Jagjivan (JSBL) also stated that the date of the transaction was 24/06/98 . It was explained by Mr. Nitin Doshi, director of JSBL, that they purchased 2,14,100 shares of Videocon on account of SSL as part of bail out transactions after the closure of the trading hours at around 4:00 p.m. on 19/6/1998 and out of these shares 1,20,600 shares of Videocon were sold by SSL to Shriram Mutual Fund on 24/6/98 as a negotiated deal. This transaction was routed through his terminal as cross deal.
5. Springfields gave instructions to the broker vide letter dated 23/6/98 asking the broker to sell 1,20,000 shares of Videocon. Since the letter is dated 23/06/98 the sale could have taken place on or after this date and definitely not on 19/06/98.
6. Shriram Mutual Fund claimed that the impugned transaction (s) took place on June 19, 1998 in pursuance of mandate given to broker vide letter dated 15/6/98 and in support of this they produced letter issued by the broker dated June 19, 1998 confirming the purchase of 1,20,600 shares of Videocon for the orders placed by Mutual Fund on 15/06/98. However, Shri Nitin Doshi, director JSBL, admitted that the letter dated June 19, 1998 issued by JSBL to SRMF was backdated at the request of SRMF. He further clarified that, the letter purported to have been written by SRMF to the broker on 15/6/98 placing order for purchase of Videocon shares, was actually received by the office of the broker only on 22/6/98. Thus this letter was back dated also to create evidence of purchase on 19/6/98. The letter was back dated becomes apparent from the fact the letter dated 15.6.98 written by Mutual Fund to the broker was the only written communication between the broker and the mutual fund during the business relation spanning one and half year.
7. Investigations revealed that the purchase of 1,20,600 shares of Videocon by SRMF prima facie was for extraneous considerations. This can be seen from the following facts :
Mr. Surin Usgaonkar of Springfields stated that the Vice President of Stock Exchange, Mumbai (BSE) Mr. Rajendra Banthia, called him to help certain brokers of BSE who had payment problem on account of large carry forward positions in Videocon. Consequently, he (Mr. Surin )agreed to buy 5 lakh shares of Videocon from these brokers. It was stated by Mr Surin that out of these five lakh shares 2,14,100 shares were purchased through broker Jaysukh Jagjivan. It was observed from the trade logs of BSE during the course of investigations that the position of Mahico Pvt. Ltd. who was facing payment problems was transferred to Jaysukh Jagjivan broker of SSL, as "All or None" deal, at pre-determined rates and quantities by synchronizing the timing of logging in of the trades by the buyers and the sellers. This transaction was entered pursuant to an arrangement worked out by Mr. Banthia to help out brokers having payment problems. Scrutiny of distinctive no. revealed that out of these 2,14,100 shares purchased from Mahico Pvt. Ltd. as bail out package 1,20,600 shares were sold to SRMF.
8. Mr Surin also admitted that 1,20,600 were sold to SRMF as cross deal on 24/6/98. The counter parties for this cross deal precisely knew about the transaction they were going to enter into . This is quite apparent from the fact that both buyer and seller belonged to the Shriram group and operated from the same office. Further Mr. Usgaonkar in his statement also admitted that he had informed Mr. Gadgil of SRMF regarding purchase of Videocon shares prior to actually buying of the shares and that he also told Mr. Gadgil that he might be borrowing funds from Mr. Gadgil for these purchases.
9. Investigations also revealed that there were close links between Shriram group and Videocon group. This is evident from the following :
A memorandum of understanding (MOU) between Shriram Investments Services Ltd. and Joy Holdings Pvt. Ltd was also seen during the course of investigations. This MOU states that Joy Holdings would acquire 5,25,000 shares of Videocon International Limited from Shriram Investments Ltd., a Shriram Group company @ Rs.130/- per share on or before 11.6.99. It was also stipulated in the agreement that Videocon Leasing & Industrial Finance Ltd., a company belonging to Videocon Group which was to recover Rs.3.68 crores from Shriram Transport Finance Co. and Shriram Investments Ltd., would not insist on recovery of the said amount till the transaction between Joy Holdings Private Limited and Shriram Investments was not completed. It was also agreed that in the event of Joy Holdings Private Limited failed to honour this arrangement, Shriram Investment could recover this amount of 3.68 crores from Shriram Transport Finance Co. and its associate. This agreement was signed by Shri D. A. Gadgil of SRMF and Shri Shelgikar of Joy Holdings Private Limited .
10. Further, it was also brought out during the course of investigations that Chairman of Shriram Group and the advisor of Videocon are directors in one Credential Finance, a finance company. Apart from this, both the groups have entered into a lease portfolio transaction for large amounts (to the tune of Rs.15/- to Rs.20/- crores).
11. Investigations brought out that M/s. Springfields (SSL) who were the sellers in this cross deal with SRMF received payments to the extent of Rs.108 lakhs from M/s. Joy Holdings Pvt. Ltd. to meet its liabilities arising out of the purchase of these Videocon shares. It was also observed that M/s. Joy Holding belong to Videocon Group of Companies. SSL tried to justify this receipt of 108 lakhs from JHPL and stated that SSL purchased these Videocon shares @ Rs.90/- per share, though the contract note shows the rate of Rs.111.60 per share. The difference between the contract price and the agreed price(which works out to Rs.108 Lacs for 5,00,000 shares) was separately collected from the brokers. Enquiries with JHPL and SSL revealed inconsistencies and contradictions. Joy Holding has treated this amount of Rs.108 lakhs as ICD (loan) to SSL but SSL in turn has not considered this as a loan but has accounted this amount as receipts for losses incurred by Joy Holding in purchase of 5 lac shares of Videocon. This simply meant that SSL does not intend to repay this alleged ICD to Joy Holding. It was also observed that SRMF transferred 38 lacs to SSL, which was paid by SSL to the broker towards purchase of 5 lac shares.
12. In view of the above findings, Shriram Asset Management Co. Ltd. (SAMC) was issued a show-cause notice. SAMC was asked to explain why the investment of funds by SAMC was not carried out in the best interest of the unit holders and why they failed to ensure that their acts did not give any undue or unfair advantage to entities having association with the sponsors. They were also asked to explain why they acted contrary to the provisions of the trust deed and mutual fund regulations of SEBI. SAMC was also asked to explain why the above mentioned purchase of Videocon shares @ Rs.84/- when the market price was @ Rs.63/- should not be treated as violation of Sub Regulation (1) & (6) of Code of Conduct read with Regulation 25 (1), (2), (10) and (16) of SEBI (Mutual Fund) Regulations, 1996.
13. In response to this show-cause notice, a written reply was furnished by SAMC vide letter dated July 20, 1999. A personal hearing was also granted on August 23, 1999 by Chairman which was duly attended by Shri S.Alagappan and Shri R.Narayanan, Managing Director and Chairman of Shriram Asset Management Co. Ltd. respectively. A further written communication by the Shriram Asset Management Co. Ltd. on September 8, 1999 was received wherein they enclosed a letter dated August 28, 1999 received from the broker Jaysukhlal Jagjivan to the effect that purchase of 1,20,000 shares of Videocon International Limited on behalf of Mutual Fund was made on 19/6/1998. Subsequent to this, a clarification was obtained from the broker to the effect that actual transactions took place on June 24, 1998. The broker reiterated the earlier statements given to SEBI. This was also forwarded to the Shriram Asset Management Co. Ltd. for comments. Later, a copy of MOU entered between Shriram Investment Co. Limited and Joy Holding (Pvt) Limited was also forwarded to Shriram Asset Management Co. Ltd. for comments on21/10/1999.
14. It was stated in their reply dated August 23, 1999 that Trustees of the Mutual Funds and the Directors of the Shriram Asset Management Co. Ltd. were persons of vast experience and experts in their chosen fields. The decision to invest in Videocon by SRMF was a professional and considered decision and not for any extraneous reasons as It was claimed that persons in the Investment Committee were well qualified to carry out their responsibilities and after deliberating on the possible future of electronic industry Investment Committee decided that acquisition of shares of Videocon International Limited which had substantial book value would be a good investment if the shares were available at a rate lower than Rs.170/-. After looking into prevailing market rates, mandate was given for purchase of shares of Videocon International Limited at a price not higher than Rs.85/- per share.
15. It was argued that this purchase was through a regular market deal and it was not consequent to a cross or negotiated deal. It was explained that broker was given mandate to buy shares on June 15, 1998. The broker later informed SRMF about the purchases and also gave written confirmation vide letter dated June 9, 1998. It was contended that the names of different schemes were supplied by Shriram Asset Management Co. Ltd. on June 22, 1998 and it was assumed that contract would be received in due course especially when the broker had confirmed the purchase on June 19, 1998. It was stated that SRMF did receive the contracts on June 24, 1998 and that there was nothing wrong in the deal of purchase of Videocon shares which was completed on 19/06/98 when the share price was @ Rs.84/ .
16. As regards the association of Shriram Mutual Fund with SIS Share and Stock Brokers Ltd (SIS) and SSL it was stated that, there was no connection with SSL and it was incorrect to say that SSL or SIS (company which introduced SSL to Jaysukhlal Jagjivan) belong to Shriram group. So the statement of Shri Sureen Usgaonkar, that SSL was part of Shriram group, was not factually correct. Regarding SAMC, SIS and SSL have their offices at Dalamal Towers, Nariman Point., it was admitted that all the three entities had common office. However, it was argued that no nexus can be established between SSL and Shriram Mutual Fund , just on the basis of the two operating from the same office. SAMC also denied that they were involved at any stage in any bail out operations.
17. As regards the allegations that the letter of broker dated June 19, 1998, (confirming the purchase of Videocon shares for Mutual Fund ) was back dated at the instance of the SAMC, it was vehemently stated that they do not agree with these allegations. It was stated that if the purchase, as claimed by the broker, was done on June 24, 1998, then the brokers had no authority to issue contract at Rs.84/- per share when the actual market price was Rs.62.75. It was stated that they have asked the broker to reimburse to them a sum of Rs.25,62,750/- being the differential amount between the rates at which the contract was issued and the prevailing rate.
18. It was stated that though Shriram Mutual Fund had sold certain shares during the period June 24, 1998 and June 26, 1998, but the shares were sold in the normal course of portfolio reshuffling and not for raising payment for the purchase of the Videocon shares as the company had sufficient funds to meet its payment-in obligations.
19. As regards MOU between Videocon Leasing and Shriram Investment Services Ltd. showing buy back arrangement for purchase of Videocon shares purchased by Shriram Mutual Fund, it was stated that Shriram Asset Management Co. Ltd. was not party to the said MOU and this document was not available on the records of the Mutual Fund. Further, it was indicated that the MOU was dated 29th December 1998 while the purchases were made in June 1998.
20. Upon considering the findings of investigations and also the submissions made by SAMC, SEBI passed an order, the operative portion of which read as follows:-
"In view of the above, I am of the view that decision by SAMC to purchase shares of Videocon @ Rs. 84/- when the market price was Rs. 62. 75 was not in the best interest of the unit holders. Further, simultaneous selling of shares by Mutual Fund of fundamentally sound companies in a falling market to pay for the impugned purchase show that schemes of the Mutual Fund were not handled in a prudent, diligent manner which is expected from a fund manager acting professionally. In fact, the way these transactions were done, it was detrimental to the interest of the investors. In the light of these, I hold that SAMC violated the provisions of SEBI Act, 1992 read with Regulation 25 (1) (2) and (16) of SEBI (Mutual Fund) Regulations and Sub Regulations 1&6 of the Code of Conduct as prescribed in Schedule V of these Regulations. Consequent to initiation of proceedings Shri Gadgil has resigned from the office of Managing Director (with effect from November 1998) Since Shri Gadgil has already resigned as Managing Director and Director of Sriram Group, issuing any directions asking him to resign from the office of Managing Director and Director at this state would be infructuous. He was assisted by Mr. Shenoy and Mr.Prakash in these operations and they are still with SAMC. I, therefore, in the interest of fostering investor confidence and for promoting transparency and the integrity in the capital market, direct that Shri Mr.Shenoy and Mr.Prakash should be asked to resign with immediate effect. It is further directed that Shri Gadgil shall not be eligible to hold any public position in any capital market related public institution for a further period of 3 years with immediate effect. I also find that loss has been caused to the unit holders by the decision of SAMC in purchasing 1,20, 600 shares of Videocon International Ltd. I, D.R.Mehta, therefore, in the exercise of the powers given to me under section 11 and 11B of the SEBI Act, read with section 3(4) in the interest of investors and securities market, hereby direct the sponsors to pay, towards the corpus of the concerned schemes of Shriram Mutual Fund, the sum of Rs. 25, 62, 750/- (i.e. difference between the purchase price of Rs. 84/- and market price on the date of purchase of Rs.62.75) with 15% interest per annum, being the loss caused to the unit holders of the Mutual Fund. The sponsors of Shriram Mutual Fund are further directed to implement the directions asking them to pay the loss caused with interest within a month of receipt of this order".
21. Aggrieved by the aforestated order, Shri Gadgil filed an appeal before the Hon'ble Securities Appellate Tribunal stating that the order directing him not being eligible to hold in any capital market related public institution for a period of 3 years was issued without sufficient notice/without giving him an opportunity of being heard. The Hon'ble Tribunal remanded the case to SEBI asking SEBI to afford him an opportunity to be heard and explain to him the charges against him by issuing a show cause notice. SEBI in observance of the Hon'ble Tribunal's direction issued Shri Gadgil, a show cause notice dated November 6, 2000 by which Shri Gadgil was asked to show cause as to why directions should not be issued against him under Section 11B of SEBI Act 1992 including directions for declaring him ineligible for holding any office as trustee/fund manager of the Mutual Fund or of Director /Senior functionary of public financial institutions-ICICI, IDBI, UTI/Stock Exchange/Depositories like CDSL or NSDL for a suitable period, be not issued. All the documents in support of the charges framed therein were also annexed thereto. It was also mentioned in the said notice that if he wants inspection of any document he may do so by taking an appointment.
22. In response to the aforesaid show-cause notice, Shri Gadgil sent a reply on December 11, 2000 denying all the charges leveled against him. Shri Gadgil in his reply sent through his lawyer stated that the decision to purchase or sell shares was always taken by an investment committee at SAMC. As regards the allegation that the decision to purchase the shares at a rate higher than the market price, it was stated in the reply that the same was taken by the investment committee at SAMC at a time when the price was around Rs 170-175 in the beginning of June, 1998 and hence the purchase was in the interest of all unit holders.
23. Pursuant to the above, Shri.Gadgil was granted opportunity of hearing before ex-chairman vide letter No.IES/ID2/RKK/21821/2001 dated January 18, 2001 to which he replied vide letter dated 24, January, 2001 stating that the date was not convenient for him and also expressed his desire to examine Mr.Jaysukhlal Jagjivan and Mr.Nitin Doshi of JSBL during such hearing. Thereafter another letter dated February 23, 2001 was issued to him affording him an opportunity of personal hearing on March 1, 2001. He had repeated his request for cross-examination through another letter of his dated 27th February, 2001.On March 01, 2001 Shri Gadgil along with his lawyer had appeared before the ex-Chairman and argued on the right for cross-examination. In the course of the hearing, Chairman directed Shri Gadgil to submit written submissions. Thereafter, a letter dated 7 March, 2001 was sent by the lawyer for Shri Gadgil wherein he submitted a note in support of his right to cross examine in which he repeatedly insisted for an opportunity to cross examine. In the note submitted, he had cited cases in favour of his right for cross examination. However, no written submission on merits or other aspects was submitted by him. After having waited till October 17, 2001, SEBI sent a letter to the Advocates for Shri Gadgil, M/s Bhaishankar Kanga and Girdharlal asking them to file written submissions. In response to the said letter, the Advocate for Shri Gadgil sent another letter dated October 19, 2001 referring to their note attached to the earlier letter of theirs dated March 7, 2001 on cross-examination. They had also attached a copy of their correspondence dated March 7, 2001.
24. On January 22, 2002 SEBI had issued a letter to the Advocate for Shri Gadgil asking them to clarify how Shri Gadgil would be prejudiced in the absence of an opportunity to cross-examine. A copy of the same was sent to Shri Gadgil also. A letter dated January 22 2002 was issued to Shri Gadgil stating that a personal hearing was scheduled before the Chairman, SEBI on February 15, 2002, a copy of which was also sent to his Advocate. SEBI received a communication dated 28.01.2002 from the advocate for Shri Gadgil asking for confirmation for the presence of Shri Nitin Doshi and Shri Jaysukhlal Jagjivan during the hearing. Again another letter dated January 30, 2002 was sent to SEBI in which it was said that if SEBI proceeds by relying on the statements made by Shri Nitin Doshi and Jaysukhlal Jagjivan, it would cause prejudice to the client if they are not afforded an opportunity to cross-examine those witnesses. A letter dated February 11, 2002 was sent to Shri Gadgil stating that the hearing has been adjourned to February 15, 2002. Since the Ex-Chairman had retired on February 20, 2002 there was a change in the date of hearing and it was kept for May 30, 2002 which was communicated to Shri Gadgil vide letter dated April 24, 2002. In response thereof, another letter dated 17 May 2002 was sent by the Advocate for Shri Gadgil asking for an adjournment of hearing. Thereafter, a communication was sent by SEBI informing about the date of hearing being scheduled for August 24, 2002 which was again rescheduled for August 26, 2002. This was communicated vide letter dated August 16, 2002. By letter dated August 23, 2002 SEBI had informed the Advocate for Shri Gadgil that in the scheduled hearing, they may submit their arguments w.r.t. cross-examination and also on the merits of the case since there was a change in the hearing authority. The hearing took place on August 28, 2002. Shri Gadgil appeared with his counsel. The counsel argued on their right to cross-examine Shri Nitin Doshi and Shri Jaysukhlal Jagjivan and insisted for a ruling on the issue of cross-examination. I advised the counsel to make submissions on the merits of the case also so that I can take a decision and pass an appropriate order in the matter. However, he insisted on the stand and did not make any submission on the merits of the case. In view of this I advised them to file written submissions, which they agreed. The written submissions were submitted by the counsel vide the letter September 4, 2002 which was received by SEBI by September 6, 2002.
25. The main contentions of Shri Gadgil as expressed in the written replies and during the hearing were that 1) he was not afforded an opportunity to examine the witnesses. It is a settled principle of law that if the adjudicating authority is of opinion that particular statements are not relied upon, an opportunity for cross-examination need not be given. True that in the procedure for exercising powers under section 11 B, SEBI is required to observe the principles of natural justice. However it varies from case to case and in the present case the right of cross examination does not exist. Another important aspect to be seen is whether the denial of cross-examination would prejudice the person. In the present case, there is sufficient proof in so far as the date of purchase is concerned. The contract note itself is sufficient to implicate Shri Gadgil. The fact that he had entered into such deal for a price higher than the prevailing market rate endangering the interests of all the unit holders is in itself sufficient to warrant action.
26. The actual transaction took place on June 24, 1998. Therefore the argument that such decision to purchase shares was taken early cannot be believed. In a fluctuating market one cannot make decision and then wait for long to implement the same so far as investments are concerned. The contention of Shri Gadgil that the contract notes are not relevant so far as the dates are concerned also has no basis and hence cannot be accepted. It has again been reiterated by Shri Gadgil in his reply that the transaction took place on June 19, 1998 and not on June 24, 1998 as indicated in the show cause. However, this is also not true since there are sufficient proof to show that the transaction took place on June 24, 1998. The order as passed against SAMC stands and they have undergone their period of punishment and also complied with the directions of SEBI. The charges against Shri Gadgil have been framed in the light of such basic facts that led to the finding against SAMC and there is no doubt about their reliability.
27. The contentions Shri Gadgil raised against the Regulations being not applicable to him also do not hold good. By making an investment decision prejudicial to the interests of unitholders as the managing director of SMF and the Chairman of the investment committee, he is responsible for the violation of Regulation 25(1), (2), (10) and (16) and Code of Conduct of SEBI (MF) Regulations, 1996. Shri Gadgil was the Managing Director of Shriram Mutual Fund and also the Chairman of the Investment Committee that has taken the decision to purchase the impugned shares and hence cannot evade the responsibility for the huge loss caused to the unit holders. As regards the argument on the powers under Section 11B of SEBI Act, the action proposed to be taken is remedial or rather preventive in nature and not as a penalty. The argument of SAT having allowed the appeal by Videocon has no relevance since the facts remain undisputed in the instant case.
28. Further, it does not make any difference whether Shri Gadgil alone or the investment committee of AMC took the decision to purchase the shares on June 24, 1998. As a prudent fund manager, the investments made has to be in the interests of unit holders. Whereas the same was not only against the interests of unit holders, it was highly detrimental to the unit holders since the price at which the purchase was done was too high when compared to the prevailing market price. SEBI has mainly relied on the contract note and the date of purchase as entered in the system. The statements of Shri Nitin Doshi or Shri Surin Usgoankar of Jaysukhlal Jagjivan only corroborates the facts. SEBI's findings, show cause notice and the previous order are all based on these basic facts and there is nothing to disprove the same. At no point has, the show cause notice or SEBI for that matter, treated the date of dealing as 19-06-1998.
29. Therefore, it is clear that acts of omission and commission of Shri Gadgil, who was at the relevant time the managing director of SAMC were prejudicial to the interest of the Unit holders of the SMF and that such acts amount to breach of trust, since Shri Gadgil's actions were in fiduciary capacity. As such Shri Gadgil:
failed to ensure that the investment of the funds was carried out as a prudent businessman and in the best interest of the unit holders;
failed to ensure that investment of the funds did not give any undue or unfair advantage to entities having association with the sponsors and Shri Gadgil managed the portfolio of the schemes of the SMF in the interest of associates of the sponsors and not in the interest of ordinary unit holders;
failed to exercise due diligence to ensure that the investment of funds is not contrary to the provisions of trust deed and SEBI (Mutual Fund) Regulations;
purchase of the shares was for extraneous consideration of bailing out the brokers facing payment problems for their trading in Videocon shares and in pursuance of clandestine buy back arrangement with Videocon group;
30. Shri Gadgil tried to create false documentary evidence with a view to mislead the investigations by preparing ante dated correspondence between SMF and the broker to give an impression that the shares were purchased on a date different from the actual date of transaction;
31. Shri Gadgil submitted that in view of the earlier order dated 1st February 2000 he had suffered a ban on eligibility for a period of more than 6 months till the order was set aside by SAT on 11th August 2000. He pleaded that considering the lapse of time and the nature and circumstances of the case, it is a fit case for SEBI not to pass any further orders against him as there is no blemish on his conduct for the last more than 4 years to warrant any direction by way of preventive measure.
32. In the facts and circumstances of the case, upon consideration of the fact that he has suffered a ban on eligibility for 6 months and also that there is a considerable lapse of time, I am of the view that it would meet the ends of Justice if the restriction imposed on Shri Gadgil run for a further period of one year. Therefore, in the interest of the investors and integrity of the capital market and in exercise of powers conferred upon me by Section 4 (3) read with Section 11B of SEBI Act, 1992, I hereby direct that Shri D A Gadgil shall not be eligible to hold any public position in any capital market related institution for a period of one year, with effect from date of communication of this order to Shri Gadgil .