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I thus hold Krishna Texport & Capital Market Ltd., guilty of charges levelled against them."

4. When the appeal was taken up for disposal, Shri D. J. Khabatta, learned Counsel appearing for the Appellant explained the background in which the Respondent SEBI had passed the order and stated that SEBI has ignored vital facts, that would show non involvement of the Appellant in the pre public issue and post public issue developments. He submitted that the Appellant's involvement in the matter is only as a professional financier, that it had advanced money in the normal course of its business to Shri Gopal Khadaria to earn interest after providing adequate safeguards, and it was in no way connected or associated with the promoters of MFL and not a party to the alleged manipulation in any manner. In this context he referred to the copy of the Agreement dated 7.10.1995 (the Agreement) entered into between the Appellant and Gopal Khadaria (Respondent No. 2) and submitted that from the Scheme of the agreement it is clear that it is essentially a funding agreement and such agreements are normally entered into by financiers while advancing money to persons who seek funds for subscribing the shares offered in public issues, that it has been made clear in the Agreement that the BORROWER (i.e. Gopal Khadaria) was desirous of applying for 60 lakhs equity shares of Rs. 10/- each for an amount of Rs. 6 crores out of the public issue of MFL, that since he did not have liquidity to pay the application money he requested the INVESTOR (i.e. the Appellant) to provide him financial accommodation to the extent of Rs. 6 crores to enable him to apply for the said shares and for the said financial accommodation, he agreed to pay interest at the rate of 24% per annum from the date of stockinvest to the date of allotment and also agreed to pay interest @ 30% p.a. from the date the stockinvest gets debited into the bank to the date of final payment made by him, that in the event of funds not refunded to the Appellant within seven days after intimation to take delivery of the shares, he was required to pay interest @ 36% p.a. In this context learned Counsel referred to clause (f) of the Agreement which stipulated that "To ensure repayment of Financial Accommodation BORROWER has offered to pledge in favour of the INVESTOR the shares to be allotted by Manu Finlease Ltd., and for this purpose has suggested that the INVESTOR apply for the said shares in own name or in the name of its nominees" Learned Counsel in support of his contention that the financial arrangement with Gopal Khadaria was a purely financial arrangement and nothing more than that, referred to the following terms and conditions of the Agreement dated 7.10.1995.

"1. The INVESTOR shall provide Financial Accommodation of Rs. 6, 00, 00, 000/- to BORROWER from the date of the Stock Invest till the receipt of Share Certificates on allotment.
2. In consideration of the INVESTOR providing the said Financial Accommodation to BORROWER, BORROWER shall pay to the INVESTOR interest at the rate mentioned in para (d) & para (e) on page No. 2 (exclusive of the return on stock invest) for the said period.
3. On or before the earliest closing date the INVESTOR shall submit application for the said Equity Shares at the instance of BRROWER together with the application amounts agreed to be provided to BORROWER as Financial Public Issue of Manu Finlease Ltd.
4. In the event allotment of the Shares is not made or partly made by Manu Finlease Ltd. such moneys are refunded by Manu Finlease Ltd. to the INVESTOR shall be treated as repayment/part repayment of the Financial accommodation.
5. The Shares allotted by Manu Finlease Ltd. shall pledge to the INVESTOR by BORROWER to secure repayment of the above Financial accommodation.
6. BORROWER has agreed to repay to the INVESTOR the entire amount if for any reason, the allotment of Shares and/or refund of application money, as the case may be, is not effected by Manu Finlease Ltd. and / or the Registrar above, BORROWER agrees that the entire amount of the financial assistance of Rs. 6, 00, 00, 000 (Rupees Six Crores Only) or such part thereof, as may be shall be repaid by them alongwith interest refund in clause '2' above to the INVESTOR.

35. It is an admitted fact that one of the business activities of the Appellant is that of financing. The Appellant has claimed that it is a professional financier. It advances money against high rate of interest. In the instant case also it had done the same thing. It agreed to provide financial accommodation to the tune of Rs. 6 crores to Gopal Khadaria against 24% interest per annum. In this context the Agreement dated 7.10.1995 entered into between the Appellant and the said Gopal Khadaria assumes relevance. It is to be noted that whether the terms and conditions of the agreement was adequate or not or that security offered by the borrower was adequate to cover the risk involved etc. are not matters of concern to others. Risk coverage is the concern of the lender. It is for the lender to protect his interest. If he fails to exercise requisite diligence, then he is the person to face the consequences. On a perusal of the Agreement dated 7.10.1995 I find that Shri Gopal Khadaria had stated the reason for seeeking financial accommodation from the Appellant. He had no choice but to state the reason that the rest of the structure of the agreement from the angle of security against the loan provided therein is linked to the shares which he was planning to purchase. It is true that the Appellant has advanced application money to the extent of Rs. 6 crores through stock invests to subscribe for 60 lakh shares, though the net public offer was only for 11, 80, 000 shares. The Respondent has taken this as a major point to establish the role of the Appellant in the alleged market manipulation. In this context it is to be noted that the Appellant is a financier. It's goal is to maximise its profit. By giving large sum for short duration by way of advances, its gain through interest collection increases. The financier as such is not normally expected to exercise any control on the number of shares one proposes to purchase in a public issue for which financial accommodation is availed from the financier. The Appellant, in my view, undoubtedly knew the total number of shares offered to the public by MFL and also that Shri Gopal Khadaria was applying for more shares than the total quantity of shares offered to the public. It is to be noted that the Appellant was acting as financier for maximising his profit and not as a counsellor to the borrower. The Appellant had agreed to give financial accommodation upto a sum of Rs. 6 crores and it had put safe guards considered necessary to protect its interests. In that context how the said Rs. 6 crores was to be utilised was a matter for the borrower to decide. Borrower desired to make 6 applications., The Appellant made six applications in the name of the nominees of the Appellant. It was necessary to apply in the name of nominees of the Appellant to protect its interest as the shares to be allotted was to be kept with the Appellant as security. On receipt of shares and receiving the interest on the entire Rs. 6 crores from Shri Gopal Khadaria, the Appellant handed over the shares to Shri Gopal Khadaria and with that the Agreement ceased to be operative. In this context it is to be noted that the Appellant handed over the shares to Shri Gopal Khadaria. It did not trade in those shares. It acted as per the terms of the agreement. It is also to be noted that against 60 lakh shares applied for, the Appellant's nominees received only 97, 800 shares which accounted only for 8.28% of the net shares issued to the public. The percentage is still less at 4.65% if the total public issue of 21, 00, 000 shares is taken as the base. There is nothing on record to show the Appellant's involvement after the closure of the transactions covered in the Agreement dated 7.10.1995.