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1.9 The unusual financial accommodation provided by Padmini to the said Delhi and Kolktata based allottees indicated that they did not have their own financial standing to acquire such a large quantity of shares. This was also corroborated from their bank statements that they did not have requisite funds at the time of issue of cheques for purchase of shares. As such, the said allottees had served as a temporary parking point and later as a conduit for channelising the shares to KP entities. It has been alleged that there was nexus between KP entities and the promoter of Padmini and that Padmini and its promoters played a major role in the manipulation of the share price of Padmini. SEBI had also found that there were delay in transfer / demat of shares of Padmini.

3.38 Shri Vivek Nagpal has been contended that the applicable regulation in respect of the alleged violation is the provisions of FUTP Regulations and not 2003 Regulations. I note that Padmini and its whole time directors have been charged for violating the provisions of FUTP Regulations (95 Regulations) and not the provisions of 2003 Regulations. Only proceedings are continued under the provisions of 2003 Regulations for the violations of 1995 Regulations, as specified in regulation 13 of 2003 Regulations. The contention that it is not a party to contract for attracting regulation 2 (c) of the FUTP regulations is not tenable as it has been discussed in detail above that by aiding the allottees (by way of unusual financial accommodation), not only it had violated the provisions relating to preferential allotment but also it had become a party to the subsequent manipulation of the shares of Padmini made by the KP entities. Therefore it is fairly established that by issuing certificates which were found to be false Padmini and its whole time directors have committed the violations of the provisions of 6 (a) (d) of the FUTP Regulations.

3.39 The fact that Padmini had made a presentation at Hotel Taj Bengal, Kolkatta around March-April 1999 has not been disputed. The contention of Padmini that there was nothing illegal in conducting such presentation. I note that all the Kolkatta based allottees amongst others had appeared in the said presentation. Shri Sunil Kishorepuria represented the entities listed at sr. nos. 2 to 7 in Table 3 above. Padmini & its promoter namely Shri. Vivek Nagpal were known to Shri Sunil Kishorepuria since 1993-94, as he had business dealings with Padmini It appeared that Shri Sunil Kishorepuria had served as the main contact point for facilitating preferential allotments to other Kolkatta based allottees and that Padmini had agreed that the cheques of the allottees would be presented for collection only after obtaining their consent. It appears that the financial accommodation as above might have been mediated by Shri Sunil Kishorepuria to the Kolkatta based allottees and accordingly, preferential shares were allotted on June 20, 1999 to the said allottees without the actual receipt of consideration and the allotment letters were also issued to the allottees. The investigations conducted by SEBI further revealed that at the instance of the Kolkatta based allottees for exiting out of the allotment, one Shri Sanjay Kumar was deputed by the management of Padmini to Kolkatta based allottees. Shri. Sanjay Kumar, Chartered Accountant approached the allottees and offered to purchase allotments of all the allottees at their cost price. The said move is an indication of the fact that the Kolkata based allottees were used to channelise the transactions. That apart, the fact remains that the Kolkata based allottees ultimately sold to KP entities and paid back allotment money on realization of such sale proceeds and in that view, the role of Shri Sanjay Kumar is purely indicative, providing necessary insights into the whole colorable arrangement. In that perspective, when the case turns on established facts, there is no need to allow cross examination of Shri Sanjay Kumar. The fact that the application/allotment money was not received at the time of the allotment, especially when such allotment was made after knowing that the Kolkata based allottees were persons acting in concert will lead to the conclusion that the presentation was made for driving the entire game plan.

3.40 I note that there was nexus between Padmini and Goenka Group as 54 lacs shares were allotted on preferential basis to various companies forming part of Goenka group and that unusual financial accommodation was given by Padmini to Goenka group by way of late acceptance of cheques as mentioned in the preceding para. It was found that the companies belonging to Goenka Group did not have the required funds at the time of allotment. It was only after consideration was received from KP entities towards shares that payment was made to Padmini. I also note that Goenka Group also sold shares through M/s Triumph International, Member, NSE (KP entity) to SBI Mutual Fund, which had decided to acquire the shares in pursuance to a presentation made by Padmini. I also note that the director of VB Impex Pvt. Ltd. namely Shri Vinod Kumar and director of JP Promoters namely Shri Pradeep Kumar the same address as D-323, Nawada Housing Complex, Vipin Garden, New Delhi. I also note that the said companies apparently belonged to the same group and Shri Sanjay Kumar, Chartered Accountant was also associated with the said companies as he mediated and arranged payment from the said companies to various Kolkatta based allottees for acquisition of preferential allotment shares. In light of the allotment of shares on preferential basis, unusually generous financial accommodation extended by Padmini to the allottees with regard to payment against these shares; purchase of shares of some of the Kolkata based allottees by JP Promoters and payment to various Kolkata based allottees by VB Impex, it becomes evident that Padmini, its management and the VB Impex group entities were in league in crafting together the whole deal under the guise of preferential allotment wherein the beneficiaries turned out to be name - lenders beguiling the true purport of the transactions.