WTM/SM/IVD/ID3/15009/2021-22

SECURITIES AND EXCHANGE BOARD OF INDIA

CORAM: S. K. MOHANTY, WHOLE TIME MEMBER

ORDER

UNDER SECTIONS 11(1), 11(4), 11B(1) 11B(2) AND 11(4A), OF THE

SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ
WITH RULE 5 OF SEBI(PROCEDURE FOR HOLDING INQUIRY AND
IMPOSING PENALTIES) RULES, 1995
In respect of
Sl. Name of the Noticees PAN
No.
1. Money Mishra Financial Services AAZFM1357R
2. Money Mishra Overseas Pvt. Ltd. AAJCM8612N
3. Mr. Awanish Kumar Mishra AGOPM7538H
4. Mr. Jitendra Kumar Tiwari ALBPT6629A

In the matter of transfer of mutual fund units by Money Mishra Financial

Services and others
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BACKGROUND
1) Securities and Exchange Board of India (hereinafter referred to as “SEBI”)
received the following complaints against Allied Financial Services Pvt. Ltd.
(hereinafter referred to as “AFSPL”), a Depository Participant(“DP”) of the
National Securities Depository Limited (hereinafter referred to as “NSDL”),
alleging unauthorized transfer of mutual fund units (hereinafter referred to as
“MF Units”):
i. Complaint dated February 08, 2019, from Finsec Law Advisor on behalf of
its clients Dalmia Cement East Limited (hereinafter referred to as “DCEL”)
and OCL India Limited (hereinafter referred to as “OCL”) alleging
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 unauthorised transfer of MF Units worth INR 344.07 Crore by AFSPL
(these complainants are hereinafter collectively referred to as “Dalmia
Group”).
ii. Complaint vide SCORES registration no. SEBI/WB18/0001138/1 dated
December 31, 2018 and letters dated January 18, 2019 and January 21, 2019
from Novjoy Emporium Private Limited (hereinafter referred to as
“NEPL”) alleging unauthorized transfer of its MF Units worth INR 21
Crore by AFSPL.
2) A preliminary examination of the contents of the complaints showed that the
alleged acts of AFSPL and other entities were not carried out in a fair and
transparent manner and the same appeared to have contravened the provisions
of law pertaining to securities market. Such preliminary findings led to the
initiation of an investigation into the matter for the period from February 20,
2017 to February 08, 2019 (hereinafter referred to as the “Investigation
Period”) to determine as to whether the alleged acts of AFSPL and other entities
if any, are in possible violations of provisions of the Securities and Exchange
Board of India Act, 1992 (hereinafter referred to as “SEBI Act”) and the SEBI
(Prohibition of Fraudulent and Unfair Trade Practices relating to Securities
Market) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations”).
As a part of the said investigation, SEBI also carried out a forensic audit through
Sarath & Associates for a detailed examination of the business affairs of AFSPL
for better understanding of the role of AFSPL in the alleged transfer of securities
from accounts of its aforesaid clients. SEBI further, directed the National Stock
Exchange of India Limited (hereinafter referred to as “NSE”) to undertake
another forensic audit of AFSPL for the period April 01, 2017 to January 31,
2019.
3) Pursuant to conclusion of the investigation, a common Show Cause Notice dated
July 30, 2021 (hereinafter referred to as “SCN”) was issued inter alia, to Money
Mishra Financial Services, Money Mishra Overseas Pvt. Ltd., Mr. Awanish
Kumar Mishra and Mr. Jitendra Kumar Tiwari (hereinafter collectively referred

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 to as “Noticees”). The relevant facts arising out of the said investigation qua the
Noticees as contained in the SCN are as under:
i. The Noticee no. 1 i.e., Money Mishra Financial Services (hereinafter also
referred to as “MMFS”) is a partnership firm where the Noticee nos. 3 (Mr.
Awanish Kumar Mishra) and 4 (Mr. Jitendra Kumar Tiwari) are its
partners. Similarly, the Noticee no. 2 i.e., Money Mishra Overseas Pvt. Ltd.
(hereinafter also referred to as “MMOPL”) is a private limited company
where the Noticee nos. 3 and 4 are directors and are holding 99.9% and 0.1%
shares of MMOPL, respectively.
ii. The Noticee nos. 3 and 4 who are partners/directors in MMFS (Noticee no.
1) and MMOPL (Noticee no. 2) are also directors of AFSPL (where the
Noticee nos. 3 is the Promoter & MD and the Noticee no. 4 is the Additional
Director, respectively) and consequently the Noticees are affiliated entities
of AFSPL as they are under common control of the Noticee nos. 3 and 4.
Further, the Noticee nos. 1, 2 and 3 are also clients of AFSPL as they hold
trading and demat accounts with AFSPL.
iii. The Noticee nos. 1, 2 and 3 received MF Units from the demat accounts of
DCEL, OCL and NEPL into their own demat accounts and actively
permitted these MF Units to be transferred out of their accounts to the
pool account of AFSPL, which further got transferred to IL&FS Securities
Services Limited (hereinafter referred to as “ISSL”), a clearing member of
AFSPL during the Investigation Period for being utilised as collateral for
taking trade exposure in the Future & Option (hereinafter referred to as
“F&O”) segment on behalf of the Noticee nos. 1, 2 and 3.
iv. The Noticee nos. 3 and 4, as partners and directors in the Noticee nos. 1 and
2, respectively, raised no objection to the receipt of such large value MF
Units from the demat accounts of beneficial owners (approx. INR 5371.28
Crore) for which primarily no consideration was found to have been paid
and thereafter, transferred these MF Units to AFSPL. Further, the Noticee
no. 3, in his role as partner and director of the Noticee nos. 1 and 2,

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 respectively, was the authorized signatory to sign Delivery Instruction Slip
(hereinafter referred to as “DIS”) and by signing the DIS caused the
transfer of the MF Units from the demat accounts of the Noticee nos. 1 and
2, to AFSPL.
v. The Noticee no. 4 along with the Noticee no. 3, in his capacity as partner of
the Noticee no. 1, has signed a declaration that has authorized the Noticee no.
3 to carry out all acts on behalf of the Noticee no. 1. Similarly, in his capacity
as director of the Noticee no. 2, he has signed the Board Resolution that has
made the Noticee no. 3 the authorised signatory to sign and execute DISs.
vi. The above acts on the part of Noticee nos. 1, 2 and 3, where they have been
noticed to have overtly or covertly acted in securing the transfer of MF
Units to their own demat accounts to be used subsequently as
collateral/margins by ISSL for trades executed on their behalf, are alleged
to be a fraudulent and unfair trade practice within the realm of the PFUTP
Regulations, 2003, wherein the Noticee no. 3 in particular, in his capacity as
partner/director/authorised person has knowingly and intentionally
perpetrated the said fraudulent and unfair acts.
vii. It is also alleged that the Noticee no. 4 has knowingly by not undertaking
/observing due diligence measures including keeping a check on the
transactions in the demat accounts, tracking the use of the DIS for transfer
of MF Units, etc., has committed deliberate neglect on his part by allowing
the above acts to be carried out by the Noticee nos. 1, 2 and 3 and thereby
becoming liable for the above acts, since the acts of the Noticee nos. 1 and
2 are attributable to his negligence being a partner and director of the
Noticee nos. 1 and 2, respectively. Consequently, the aforesaid fraudulent
acts and negligence committed on the part of the Noticees have been alleged
to be in violation of regulation 3 (a) and regulation 4(1) of the PFUTP
Regulations, 2003.
viii. In view of the aforesaid findings, the Noticees have been asked to show
cause as to why suitable directions under Sections 11B(1), 11(4) read with

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 11(1) of the SEBI Act, 1992 should not be issued against them for the
alleged violations of the relevant provisions of the PFUTP Regulations,
2003. The Noticees have also been called upon to show cause as to why
appropriate order/direction imposing monetary penalty under Sections
11B(2) and 11(4A) read with Sections 15HA of the SEBI Act, 1992 read
with SEBI(Procedure for Holding Inquiry and Imposing Penalties) Rules,
1995 (hereinafter referred to as “Rules”) should not be issued against
them for the alleged violations of the aforementioned provisions of the
PFUTP Regulations, 2003.
4) I note from the records before me that the SCN was duly served upon the Noticees
as detailed here under:

Noticee Date of delivery of SCN Mode of delivery

Noticee no. 1(Money
July 30, 2021 Email
Mishra Financial Services)
Noticee no. 2 (Money July 30, 2021
Email
Mishra Overseas Pvt. Ltd.)
Noticee no. 3 (Mr. Awanish July 30, 2021
Email and letter
Kumar Mishra)
Noticee no. 4 (Mr. Jitendra August 14, 2021
Affixture
Kumar Tiwari)

REPLY, PERSONAL HEARING AND SUBMISSIONS

5) Pursuant to receipt of the SCN, one Mr. Manish Kumar Mishra (hereinafter
referred to as “Mr. Manish”), claiming to be a younger brother of the Noticee no.
3, vide his email dated August 25, 2021 (received from email address
manishk75@gmail.com) and letter dated August 25, 2021 has inter alia requested
SEBI to keep the present SCN and related proceedings in abeyance for the
reasons stated therein which are summarised in para 6 below. As the Noticees have
not filed any reply refuting the charges/allegations made in the SCN within the
stipulated time as indicated therein, in order to provide them with fair and
sufficient opportunity as also to comply with principle of natural justice, a
reminder letter cum hearing notice dated September 13, 2021 was issued to them

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 advising them to file their written replies to the SCN by October 12, 2021 and to
avail an opportunity of personal hearing scheduled for them on October 20,
2021. However, I note that the Noticees failed to file any written response on the
charges made /allegations levelled in the SCN and have also chosen not to attend
the personal hearing on October 20, 2021 despite receiving the said letter cum
hearing notice dated September 13, 2021 that was served on them. Meanwhile, I
note that Mr. Manish vide his email dated October 12, 2021 has reiterated his
submissions earlier made on behalf of the Noticee no. 3 vide his earlier email dated
August 25, 2021.
6) The submissions made by Mr. Manish on behalf of the Noticee no. 3 are
summarised as under:

i. In an earlier proceedings initiated by SEBI on the basis of a separate show

cause notice issued on December 09, 2019, an inquiry has already been held
against the Noticee no. 3 in his capacity as the Managing Director and
Promoter of AFSPL based on which SEBI vide its order dated July 02, 2021
has imposed penalty on AFSPL as well as on Mr. Awanish Kumar Mishra
(i.e., the Noticee no. 3) in his capacity as the MD and Promoter of AFSPL.
While doing so, respected Whole Time Member of SEBI has extensively
discussed the role of the Noticee no. 1, 2 as well as that of the Noticee no. 3. As
such, issuing of the present SCN and initiating another proceeding against
the Noticee no. 3 and other entities all over again would clearly amount to
multiple and parallel proceedings for the same allegations under the same
law and against the same person seeking to penalize him twice.
ii. Apart from the levy of penalty as above, various assets owned by the Noticee
no. 3 i.e., Mr. Awanish Kumar Mishra and AFSPL have already been frozen
by SEBI.
iii. In addition to the above, the Economic Offences Wing (EOW) of Delhi
Police has registered an FIR No. 0046/2019 dated March 26, 2019 against
the Noticee no. 3 in a complaint made by Mr. Puneet Dalmia/Dalmia Bharat
Group. At this stage, nothing has been determined against him as the trial is
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 far off from commencement. However, after the filing of the said FIR the
Noticee no. 3 was first arrested by EOW on August 16, 2019 and confined to
custody at various points in time over the last 2 years or so. An interim bail
was eventually granted on July 13, 2019 and which stood extended until
March 20, 2021. The Noticee no. 3 has been in custody after having
surrendered on March 21, 2021.
iv. The Noticee no. 3 has no access to any relevant papers, documents and records
to prepare a suitable reply to the SCN. Further, an attempt is being made to
prepare and file an appeal before the Hon’ble Securities Appellate Tribunal
as soon as possible, against SEBI order dated July 02, 2021 despite the fact
that the family and lawyer of the Noticee no. 3 have extremely limited access
to him.
v. In the above circumstances, where order dated July 02, 2021 has already been
passed against the Noticee no. 3 widely discussing his role and that of the other
entities in the allegations, his assets are under freeze and he is under
restrictive access, it is requested to keep the present SCN and related
proceedings on hold for a period of at least 4 months.
vi. The Noticee no. 3 is not in a position to attend the hearing fixed on October
20, 2021.

CONSIDERATION OF ISSUE AND FINDINGS

7) I have carefully perused the SCN, the replies dated August 25, 2021 and October
12, 2021 filed on behalf of the Noticee no. 3 and materials/details available on the
record. After considering the allegations made/charges levelled against the
Noticees in the instant matter as spelt out in the SCN, the issue which arises for
my consideration and adjudication in the present proceeding is as under:
I. Whether the acts of receipt of MF Units in the accounts of the Noticee nos.
1, 2 and 3 without consideration from the demat accounts belonging to
others and subsequent transfer of these units for utilization as collateral/

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 margins for their trade exposure taken in derivative segments, are in
violation of regulations 3(a) and 4(1) of the PFTUP Regulations, 2003?
8) Before dealing with the issue framed above, the charges levelled against the
Noticees and submissions made by the Noticees, it would be appropriate to refer to
the relevant provisions of law alleged to have been violated in the matter, extract
whereof is reproduced below:
THE (PFUTP) REGULATIONS, 2003
3. Prohibition of certain dealings in securities
No person shall directly or indirectly –
(a) buy, sell or otherwise deal in securities in a fraudulent manner;
4. Prohibition of manipulative, fraudulent and unfair trade practices
(1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent
or an unfair trade practice in securities.
9) Before proceeding to deal with the aforesaid issue in the context of the allegations
made/charges levelled in the SCN, I find it appropriate to deal with the
preliminary objections/issues raised on behalf of the Noticee no. 3 stating that
issuance of the present SCN has amounted to multiple and parallel proceedings
against him for the same allegations under the same law and against the same
person thereby, seeking to penalize the same persons twice since, SEBI had
already imposed penalty on AFSPL as well as on the Noticee no. 3 in his capacity
as Promoter and MD of AFSPL vide another order dated July 02, 2021. It has
been further contended that the present proceedings are required to be kept in
abeyance on account of his inability to prepare and file a suitable reply for want
of access to relevant papers, documents and records in this regard.
10) The aforesaid submissions made before me on behalf of the Noticee no. 3 may
appear to be attractive on the first blush, however, on a closure scrutiny, it is
noticed that the earlier proceedings being referred to by the Noticee no. 3 were
initiated against AFSPL and its three directors for alleged violations of the
applicable provisions of SEBI (Depositories and Participants) Regulations, 1996
(hereinafter referred to as “DP Regulations”) read with the PFUTP

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 Regulations, 2003 and various Circulars issued from time to time, wherein the
Noticee nos. 3 and 4 were made noticees in their specific role as Promoter and
Director of AFSPL and more specifically against the Noticee no. 3 as Promoter
and MD of AFSPL and against the Noticee no. 4 in the capacity of as an Additional
Director only. It is further noticed that the scope of the earlier proceedings
mentioned by the Noticee no. 3 was primarily limited to the role of AFSPL and its
three directors in vicarious capacities, as a registered intermediary and its
management team and the same proceedings went into the commission of
violations as alleged in that show cause notice pertaining to the transfer and
utilisation of MF Units by AFSPL as a DP for being utilised as collateral/margins
for the trades executed on behalf of its various clients. Thus the said proceedings
were initiated against AFSPL and its directors for their alleged acts in the capacity
of a registered intermediary and accordingly, after having analysed, considered
and heard the submissions on the alleged violation of the DP Regulations, the
PFUTP Regulations and applicable Circulars, the said proceedings were disposed
of vide order dated July 02, 2021 wherein the said alleged violations were found
to be established on the reasons and findings recorded therein. Whereas in the
present proceedings before me the alleged fraudulent role of the Noticees as clients
(i.e., the Noticee nos. 1, 2 and 3) of AFSPL per se is under consideration and in the
SCN that is under adjudication before me the Noticees are alleged to have acted
as conduits who knowingly and purposefully facilitated the transfer of units of
MFs purportedly belonging to the beneficial owners by routing them through
their demat accounts of the pool accounts to the AFSPL so as to utilise those
units as collaterals towards margin money for their trades executed in the
securities market. Therefore, the scope of the present proceedings is limited to
obtain a satisfactory explanation from the Noticee no. 3 with respect to the receipt
of units of MFs in their respective demat accounts without paying any
consideration, which have been alleged as a fraudulent acquisition of those MF
Units in violations of applicable provisions of the PFUTP Regulations. In this
respect, the roles of the Noticee nos. 3 and 4 have been alleged as partners and
directors in the Noticee nos. 1 and 2 which is different from their alleged roles as
MD & Promoter and Director, respectively of AFSPL, a registered intermediary
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 of the securities market which was the subject matter of the earlier order dated
July 02, 2021.
11) It is thus evident from above that Noticee no. 1 and 2 have not been proceeded
with previously and the remaining two Noticees were proceeded against in the
earlier proceedings in their respective capacity of Promoter & MD and Additional
Director of AFSPL. Therefore, the roles of the Noticee nos. 1 and 2 and the roles
of their partners and directors, respectively (the Noticee nos. 3 and 4) were neither
discussed nor subjected to any proceedings before the present proceedings. To
put it differently, the issues that were under consideration in earlier proceedings
were against AFSPL as a registered Depository Participant and its three directors
as co-conspirators whereas the scope of the instant proceedings is in respect of
the role and acts of the Noticees as clients of AFSPL, who are alleged to have acted
as conduits in receiving the MF Units and further facilitating unauthorised
transfer of the said units from the accounts of the beneficial owners for being
used as collateral by AFSPL for the trades of the Noticee nos. 1, 2 and 3 in the
securities market. In view of the aforesaid, it is abundantly clear that the alleged
acts and roles of the Noticees which are the subject matter of the present
proceedings were never part of the earlier proceedings which got disposed of
vide order dated July 02, 2021 and resultantly were never examined nor any
finding thereon has ever been arrived at in the earlier proceedings. In view of the
above, I am of the considered view that merely because the Noticee nos. 3 and 4
have been proceeded against in another previous proceedings and the charges
against them were found to be established in the said proceedings in their capacity
as persons responsible for the management & affaires of AFSPL as a DP, such
earlier proceedings would not entitle them to claim immunity (double jeopardy)
from the alleged violation committed by them (the Noticee nos. 3 and 4) in their
capacity as partners and directors of the Noticee nos. 1 and 2 in the present
proceedings.
12) As regards the other preliminary issue raised by the Noticee no. 3 that he is unable
to prepare a suitable reply because he has no access to any relevant papers,
documents and records and therefore the proceedings should be kept on hold, I
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 see no merit in the same as the Noticee no. 3 has neither brought to my notice as
to which specific documents/records he proposed to rely upon which are not
accessible by him nor has he provided any insight as to how he will have access
to those particular documents after few months which are beyond his reach now.
In this respect, it is brought to my notice that the Noticee no. 3 in the earlier
proceedings, in his capacity as Promoter and MD of AFSPL has already filed a
detailed reply and additional submissions and the same have been dealt with
extensively in the relevant order dated July 02, 2021. Nonetheless, apart from
submitting that he has no access to any relevant papers, documents and records
to prepare a suitable reply to the SCN, I find that the Noticee no. 3 has not specified
as to what relevant papers, documents and records he is referring to whose non-
availability obstructs him to file a suitable reply especially when all the relevant
details/documents have already been supplied to him as part of the SCN which
he has already received. Moreover, Mr. Manish (who has made submission on
behalf of the Noticee no. 3 and claims to be his brother) is at liberty to collect the
relevant records/documents to submit a suitable reply to the SCN and it has not
been brought to my notice if he has any impediments in doing so. Thus, I do not
find any merit in the submissions of the Noticee no. 3 that he is unable to prepare
and file suitable reply to this SCN on account of lack of access to the relevant
papers and documents (who has already filed a detailed reply on behalf of AFSPL
in the earlier proceedings originating from the same matter in the capacity of MD
of AFSPL) hence the same is rejected.
13) Moving on to the main allegation against the Noticees, I find that the Noticees have
allegedly played a role/part in a scheme of unjustified receipt and transfer of the
MF Units before the same were transferred to ISSL for use as collateral/margins
against the trade exposure in F&O segment inter alia on behalf of the Noticee no.
1, 2 and 3. The investigation has revealed that the above Noticees have received
in large number (of very high value) of MF Units into their demat accounts
without having paid any consideration in lieu of receiving those MF Units nor
have they raised any objection when those MF Units owned by the beneficial
owners were transferred into those demat accounts. Further, those large

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 quantities of units of MFs have been subsequently transferred and used by the
Noticee nos. 1, 2 and 3 as collateral in respect of trades executed on their behalf.
In this regard, the Noticee no. 4, is alleged to be liable for the acts of the Noticee no
1 and 2 and the Noticee no. 3 being the partner, director and authorised person is
alleged to be liable for the receipt and transfer of units of MFs. Thus, the
aforesaid acts of buy, sell or otherwise dealing in securities are alleged to have
been conducted by following fraudulent and an unfair trade practice in securities
and are in violation of regulations 3(a) and 4(1) of the PFUTP Regulations, 2003.
14) It is noted that none of the Noticees has been able to advance any justification or
evidence or any submissions refuting the allegations/charges levelled against
them in the SCN. Moreover, the Noticees have chosen to remain absent during
the personal hearing granted to them on October 20, 2021 despite the reminder
cum hearing notice having been duly served on them as noted above. Under the
circumstances, absence of any reply or response to the allegations made in the
SCN, leaves no other impression except that the Noticees have nothing to offer in
their defence against the charges levelled in the SCN and have by their deliberate
silence, admitted to their role in the aforesaid fraudulent manipulative scheme as
has been alleged against them in the SCN. Such an adverse view has also been
well recognised as a legitimate item that can be taken in such circumstances, in
various decisions of Hon’ble Securities Appellate Tribunal (hereinafter referred
to as “SAT/Tribunal”). I would seek reference to and reliance on the
observations of Hon’ble SAT, in the matter of Classic Credit Ltd vs. SEBI (Appeal
No. 68 of 2003, decided on December 8, 2006), wherein it was inter alia, held that
“……...the appellants did not file any reply to the second show-cause notice. This being so, it
has to be presumed that the charges alleged against them in the show-cause notice were admitted
by them”. It is also pertinent to refer to the observations of Hon’ble SAT in the
matter of Sanjay Kumar Tayal & Others vs SEBI (Appeal No. 68/2013, decided on
February 11, 2014) wherein while endorsing the above view, the Hon’ble SAT
has inter alia held as follows:
“…. As rightly contented by Mr. Rustomjee, learned senior counsel for respondents, appellants
have neither filed reply to show cause notices issued to them nor availed opportunity of personal
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 hearing offered to them in the adjudication proceedings and, therefore, appellants are presumed
to have admitted charges levelled against them in the show cause notices…”
15) Without prejudice to the aforesaid view, in the interest of clarity and better
appreciation of facts, I move on to examine the charges made in the SCN and
note that DCEL and OCL had opened their demat accounts with AFSPL on
February 20, 2017 and May 10, 2017, respectively. The examination reveals that
MF Units of large values were credited into the demat accounts belonging to the
Noticee nos. 1, 2 and 3 from the demat account of DCEL and OCL. The market
values of such MF Units received in the demat account of the Noticee nos. 1, 2 and
3 on several occasions from DCEL and OCL during the period April 01, 2017
to January 31, 2019 were found to be as under:
Table 1: Transfer of MF Units from Demat Accounts of Dalmia Group

Dalmia Client of AFSPL which received Value of MF Units

Group entity MF Units from Dalmia Group Received (INR)
Noticee no. 01-Money Mishra Financial
2263,06,89,606
Services

OCL India Noticee no. 02-Money Mishra Overseas

112,03,82,323
Limited Pvt. Ltd.
Noticee no. 03-Awanish Kumar Mishra 204,42,27,365
Total 2579,52,99,294
Noticee no. 01-Money Mishra Financial
2516,41,98,449
Dalmia Services
Cement East
Noticee no. 03-Awanish Kumar Mishra 253,63,09,191
Limited
Total 2770,05,07,640
Grand Total 5349,58,06,934

16) Subsequent to receipt of the aforesaid MF Units into the demat accounts of the
Noticee nos. 1, 2 and 3 as indicated above, those MF Units were onward transferred
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 to the pool account of AFSPL by the Noticee nos. 1, 2 and 3 and thereafter, these
MF Units were placed with ISSL (by AFSPL), a clearing member of NSE clearing
Ltd. and ISSL in turn utilized those MF Units as collateral inter alia for taking
huge amounts of trade exposure in the F&O segment in the trading accounts of
the Noticee nos. 1, 2 and 3. As noted above, the common link between the Noticee
nos. 1 and 2 and AFSPL can be found in the Noticee nos. 3 and 4 who are co-
partners and co-directors in the Noticee nos. 1 and 2, respectively and are also co-
directors in AFSPL wherein the Noticee no 3 is also the Promoter & MD and the
Noticee no. 4 serves as on Additional Director of AFSPL.
17) As regards to the mystery surrounding the receipt and further transfer of those
MF Units by the Noticee nos. 1, 2 and 3 in the manner as narrated above, no
explanation till date has been submitted by the Noticees as to how & why such
large quantities of MF Units worth of INR 5349.58 Crore came to their demat
accounts without involving any purchase transactions or payment of
consideration. I further note that an endeavour was made during the fact finding
exercise by SEBI so as to ascertain the justification for the end use of these large
quantities of MF Units as collateral by AFSPL. In this respect, it is noted from
the Annexure B to the SCN that the Noticee no. 3 has provided an unsubstantiated
lame excuse by claiming that in terms of various member-client agreements
entered into between AFSPL/Noticee no. 1/Noticee no. 2 and certain Dalmia Group
affiliated entities, the MF Units were made available to the Noticee nos. 1, 2 and 3
to be used as collateral for the benefit of these Dalmia Group affiliated entities.
18) As noted above, the primary objective of the instant proceedings is to examine
the legality and justification for receipt of the aforesaid securities (i.e., MF Units
of OCL & DCEL) in the demat accounts of the Noticee nos. 1, 2 and 3 and their
further transfer to the pool demat account of AFSPL for utilisation as collaterals
against derivatives trading of these three noticees. I have found that no plausible
justification has so far been provided by any of the Noticees in respect of the same.
Even assuming for a moment that the aforesaid claim put forth by Noticee no. 3 is
true in so far as the clause of the said member client agreement provided that the
MF Units were available to be used as margin for the trades of the affiliated
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 entities, the Noticees are under obligation to provide the reason as to why in such
case, the said MF Units were not directly transferred out from demat account of
OCL & DCEL to the account of the Intermediary (ISSL) and instead were
transferred to the accounts of the Noticee nos. 1, 2 and 3 through which, these
units finally were transferred to the account of the ISSL. Additionally, a perusal
of the clauses of the agreements as relied upon by the Noticee no. 3 shows that
there is no such clause in the said member-client Agreements which allows use
of MF Units belonging to third parties, including the complainants, to be used as
collateral by AFSPL for its clients. On the contrary, a perusal of one of such
agreements dated March 24, 2017 entered into between one of the Dalmia Group
affiliated entities i.e., Cointribe Technologies Private Limited with AFSPL and
the Noticee nos. 1 & 3 (supplied to the Noticees as Annexure-C to the SCN) it is
observed that the said agreement contains a clause that mandates one of the
obligations to be performed by AFSPL as under:
“3. OBLIGATION OF AFSL
a) Any transfer of the securities to and from the accounts of the investor shall be made by
AFSL only on the basis of a written order, instruction, direction or mandate duly authorised
by the investor and that AFSL shall maintain adequate audit trail of such authorisation.
The investor may also give standing instructions with regard to the crediting of securities in
its Demat Account and AFSL shall act according to such instructions.”
It is evident from the perusal of the aforesaid clause of the above cited agreement
that a written instruction/order from the investor was a mandatory pre-condition
to effect any transfer of securities to and from the accounts of the beneficial
owners/investors, which certainly leaves no scope for using any securities
belonging to such investors / beneficial owners even in the form of units of MF
as collateral by AFSPL that too for the trades of the Noticee nos. 1, 2 and 3.
19) I have already found above that nothing has been brought forth by the Noticees
either during the course of facts finding exercise or in defence to the charges
levelled in the SCN in the instant proceedings, to refute the allegations made in
the SCN with supporting documentary evidence to either show that the MF Units

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 of such huge amounts were transferred and got credited to their demat accounts
in lieu of proper & adequate consideration or even to prove that those MF Units
transferred to their demat accounts in due compliances of the provisions of
clauses of the member-client agreements as referred to above. I further note from
the above that the member-client agreements referred to and relied upon by the
Noticee no. 3 were actually entered into and executed primarily between AFSPL
and affiliated entities of Dalmia Group, whereas what is alleged in the SCN is
that the units of MF worth of INR 5349.58 Crore were transferred and got
credited in the demat accounts of the Noticee nos. 1 , 2 and 3 (who are not the
trading members but clients of AFSPL) before the same were finally made
available to ISSL for being used as collateral for the trades in F & O segment of
securities executed by the above three noticees and not by any of the beneficial
owners (DCEL and OCL) who were the actual owners of these MF Units.
20) I note that SEBI’s investigation has further unearthed documents based on which
it is understood that the aforesaid MF Units were prohibited from being used as
collateral even in respect of trades of the owners of those units thereby further
exposing the fraudulent intent behind the usage of those units for the trades of
the Noticee nos. 1, 2 and 3. It is now an undisputed fact that the above referred
units of MFs were transferred to the pool account of AFSPL as soon as they
were recorded in the demat account of the Noticee nos. 1, 2 and 3 and AFSPL
being an entity primarily controlled and owned by the Noticee nos. 3 and 4, it
constraints me to observe that the Noticees have by means of deliberate strategy,
managed to get those MF Units transferred to their own demat accounts. The
Noticees have not brought any material before me to exhibit that they had taken
any measures or steps either to prevent the said transfer of MF Units to their
demat accounts or to prevent the misutilisation of those MF Units as collateral
on their behalf, which further constrains me to hold that the above stated acts of
getting the MF Units transferred and using them as collaterals, were done with
their knowledge and complicity.
21) In the previous table-1, it is indicated how the Noticee nos. 1, 2 and 3 had
unauthorisedly received MF Units worth INR 5349.58 Crore (in aggregate) in
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 their demat accounts from the demat accounts of the beneficial owners (i.e.,
DCEL and OCL). During the investigation it is also noticed that MF Units worth
INR 5014.03 Crore were transferred/delivered back from the demat accounts of
the Noticee nos. 1, 2 and 3 to the accounts of the beneficial owners (i.e., DCEL
and OCL). In this regard, details of value of MF Units which were
delivered/returned back to the demat accounts of the beneficial owners and the
balance outstanding unreturned MF Units which were misappropriated towards
their collateral requirements, as alleged in the SCN, are indicated below:
Table 2: Return of MF Units to DCEL and OCL
Value of Net Value of
returned/tran balance
Client of AFSPL
Dalmia sferred/delive outstanding
which returned MF
Group entity red back MF unreturned MF
Units
Units (INR) Units used as
collateral (INR)
Noticee no. 1- Money 2099,49,04,165 163,57,85,441
Mishra Financial
Services
Noticee no. 2-Money 64,37,04,921 47,66,77,401
OCL India Mishra Overseas Pvt.
Limited Ltd.
Noticee no. 3-Awanish 145,36,16,230 59,06,11,135
Kumar Mishra
Total 2309,22,25,316 270,30,73,977
Noticee no. 1-Money 2516,41,98,449 NA
Mishra Financial
Dalmia Services
Cement East
Noticee no. 3-Awanish 188,38,55,908 65,24,53,283
Limited
Kumar Mishra
Total 2704,80,54,357 65,24,53,283

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 Value of Net Value of
returned/tran balance
Client of AFSPL
Dalmia sferred/delive outstanding
which returned MF
Group entity red back MF unreturned MF
Units
Units (INR) Units used as
collateral (INR)
Grand Total 5014,02,79,673 335,55,27,260

In this regard also, I note that the Noticees have once again failed to furnish any
explanation or reason or evidence to justify under what circumstances some of
the MF Units were transferred back to the demat accounts of the beneficial
owners from whose accounts the units were initially discreetly and unauthorisedly
transferred into the demat accounts of the Noticee no. 1, 2 and 3. In fact it shows
how, the Noticee no. 1, 2 and 3 had unrestricted access to the demat accounts of
the beneficial owners so much so that they were able to transfer the MF Units
out of their beneficial owners’ demat accounts as well as transfer back MF Units
into the said demat accounts of the beneficial owners at ease and seamlessly at
their liberty without obtaining any consent of the beneficial owners and purely
on their own whims & fancy.
22) Similarly, the SCN also states and records the transfer of units of MF from
another beneficial owner (NEPL) to the accounts of the Noticee nos. 1 and 3. In
this regard, it is noted that NEPL had opened a demat account with AFSPL on
November 13, 2018. MF Units worth INR 21.70 Crore were transferred to the
demat accounts of the Noticee nos. 1 and 3, and ultimately got transferred to ISSL
through AFSPL for being utilized as collateral for the trades executed by AFSPL
for their clients. The market value of those MF Units transferred from the
account of NEPL by the Noticee no. 1 and 3 is as under:

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 Table 3: Transfer of units from NEPL by the Noticee nos. 1 and 3

Name of the
Entity from client of AFSPL Value of
Value of
whose account to whose Value of MF MF
MF
MF units were account the MF Received delivered
unreturned
originally units were (INR) back
(INR)
transferred ultimately (INR)
transferred)

Noticee no. 1 -
Money Mishra 12,01,50,428 - 12,01,50,428
Financial Services
NEPL
Noticee no. 3-
Awanish Kumar 9,68,54,309 - 9,68,54,309
Mishra
Total 21,70,04,737 21,70,04,737

With respect to the above noted transfer of MF Units also, the Noticees have not
furnished any defence with any supporting evidence to justify if the aforesaid
dealing in securities in the form of units of MFs was bonafide and executed in
the normal course of dealing in securities.
23) Keeping the aforesaid in view, it is now relevant to identify the modus operandi of
the Noticees as far as receipt of the MF Units from the demat account of the
beneficial owners to the demat accounts of the Noticee nos. 1, 2 and 3 is concerned.
In this context, I note from the order dated July 02, 2021 passed in the earlier
proceedings discussed in the beginning that the transfer of MF Units from the
account of the above noted beneficial owners (DCEL, OCL and NEPL) was
done by AFSPL (which happens to be an entity controlled by the Noticee nos. 3
and 4) through issuance of DIS. It was observed that to give effect to their act of
transfer of MF Units from the accounts of the aforesaid beneficial owners to the
demat accounts of the Noticee no 1, 2 and 3, AFSPL had deliberately entered
incorrect details in the Depository Participant Module (DPM) system of NSDL
with respect to the contact details of beneficial owners, so that transfers of MF
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 Units could be done successfully from their demat accounts without causing any
alert to the beneficial owners while making transfers of the said securities. The
aforesaid finding about such a malicious acts on the part of the Noticees further
suggests that in order to give credit of MF Units in the pool demat account of
AFSPL and to avoid regulatory detection, a scheme was successfully
implemented by devising the transfer of those MF Units to AFSPL through the
accounts of the Noticee nos. 1, 2 and 3, who being aware of the intimated intended
usage of those assets, did not allow parking of those MF Units in their demat
accounts and rather permitted further transfer of those securities through their
account to the accounts of AFSPL for using those securities as margin for their
trades in the securities market. The scheme was implemented in such a manner
that the DP i.e., AFSPL kept the beneficial owners under a belief that the MF
Units were held intact in their demat accounts by sending false holding
statements, making false representations and sharing a false NSDL signed and
stamped holding statement with them etc.
24) In this context, it is pertinent to reiterate that AFSPL was primarily acting
through its one of the directors i.e., the Noticee no. 3 who was Promoter and MD
of AFSPL and who once again, as the principal partner and director of the Noticee
nos. 1 and 2, respectively in the present proceedings, is responsible for the acts of
these two noticees as explained in detail in the succeeding paragraphs. Therefore,
I find that the Noticee no. 3 has cunningly leveraged/misused his position/
knowledge as MD and Promoter of the DP i.e., AFSPL in a nefarious manner by
easily effecting the act of receipt and transfer of the MF Units into/from the
accounts of the Noticee nos. 1, 2 and 3 in a seamless manner without alerting the
beneficial owners because he is also partner and a director of the Noticee nos. 1
and 2, respectively.
25) In view of the above, I find from the material that the credit and transfer of MF
Units belonging to the beneficial owners into/from the respective accounts of
the Noticee nos. 1 to 3 were not genuine nor were those transfers of MF Units
executed in due compliance of procedure and law so as to be held as bonafide
transfers from one demat account to another demat account. Instead,
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 considering the overall conduct of the Noticees and their decision to ignore and
keep silence over the allegations made in the SCN it constrains me to record that
the acts of dealing in securities on the part of these Noticees while securing credit
of units of MFs in their respective demat accounts in a fraudulent manner behind
the back of the beneficial owners, fulfill the necessary ingredients to be held as
fraudulent and unfair dealing of securities under the provisions of the PFUTP
Regulations, 2003.
26) Having dealt with the apparently illicit acts of the Noticees behind the aforesaid
receipts and transfers of the MF Units into/from their demat accounts in the
preceding paragraphs, I now find it appropriate to deal with the respective roles
and part played by each of the Noticees in the aforesaid fraudulent acts of receipt
and transfer of the MF Units. As noted above, the receipt and transfer of the MF
Units took place into/from the demat accounts of the Noticee nos. 1, 2 and 3. In
this regard, I observe that the Noticee no. 1 (a partnership firm) and the Noticee no.
2 (a private limited company) are juristic persons and thus are bound to act
through a natural person. As noted earlier, the Noticee nos. 3 and 4 are the partners
and directors of the Noticee nos. 1 and 2. In this context, from the KYC of the
Noticee no. 1, I note that the Noticee no. 3, partner of the Noticee no. 1, has been
authorized to sell, purchase, transfer, etc. on behalf of the Noticee no. 1. This
declaration has been signed by both the partners (i.e., the Noticee nos. 3 and 4) of
the Noticee no. 1. Further, in terms of KYC of the Noticee no. 2, it is noticed that
the Noticee no. 3, director of the Noticee no. 2, has been authorized through a Board
Resolution to sign the DIS on behalf of the Noticee no. 2 and the said Board
Resolution has been signed by the Noticee no. 4. Thus, I find that the Noticee no.
3, in his role as partner and director of the Noticee nos. 1 and 2, respectively, was
the authorized signatory to sign the DISs which were used to effect the transfer
of the MF Units from the demat accounts of Noticee nos. 1 and 2 that were
received from the demat accounts of the beneficial owners without having any
proper authorization and hence was responsible for the acts of dealing in
securities in the account of Noticee nos. 1 and 2. As the Noticee no. 3, in his capacity
as partner and director of the Noticee nos. 1 and 2 respectively, has dealt in

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 securities in a manner that was blatantly in violation of the provisions of the
PFUTP Regulations, he renders himself liable for such illicit acts of the Noticee
nos. 1 and 2. The Noticee no. 3 has also received and transferred some of the MF
Units in/from his individual demat account as noted above which also makes
him responsible for the fraudulent dealings in securities in his individual account
as well.
27) I have noted above that the Noticee no. 4 along with the Noticee no. 3 (as partners
and directors of the Noticee nos. 1 and 2, respectively) has signed the declaration
through which he has authorized the Noticee no. 3 to carry out all acts on behalf
of the Noticee no. 1. Similarly, the Noticee no. 4 by signing the Board Resolution as
a director of the Noticee no. 2 has made the Noticee no. 3 the authorized signatory
to sign the DIS on behalf of the Noticee no. 2. From the above, it may appear at
first glance that the Noticee no. 4 may not have a role to play in the affairs and
management or acts done by or on behalf of the Noticee nos. 1 and 2. However,
I cannot ignore the facts that he was also holding a post of Director in the AFSPL
of which the Noticee no. 3 was the Promoter and MD. The entire facts unearthed
by the investigation show as to how the impugned securities (MF Units) reached
the pool demat account of AFSPL through layering of transfers and finally
reached ISSL inter alia to be used as margin for trading exposure of the Noticee
nos. 1, 2 and 3 in the securities market. Analyzing the facts from the above
perspective, I see no reason to believe that the Noticee no. 4 was not aware or
cognizant of the above said acts or the scheme through which the MF Units were
stealthily transferred out of the demat accounts of the beneficial owners to the
demat accounts of the Noticee nos. 1, 2 and 3 merely for the reason that it was the
Noticee no. 3, who was having authorization to officially act on behalf of the Noticee
nos. 1 and 2.
28) On the contrary, looking at the entire chain of facts which are intricately linked
with each other, disclosing how securities moved from the demat accounts of the
Noticee nos. 1, 2 and 3 to the pool demat account of AFSPL and then to a clearing
member where it was used as collateral/margin for the F & O trades executed by
the Noticee nos. 1, 2 and 3, it becomes difficult to believe that throughout these
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 chain of transactions the Noticee no. 4 was ignorant and unware of these
transactions. Instead, it forces me to observe that the Noticee no. 4 has knowingly
facilitated (through the aforesaid Board resolution and authorization) the smooth
transition of securities from one account to another and has consciously ignored
to take any corrective steps either as a partner or Director of Noticee no. 1 and 2.
Further, by remaining absent from the personal hearing and preferring not to file
any reply, the Noticee no. 4 has not cared at all to bring any material on record to
demonstrate that the said acts of the Noticee no. 1 and 2 were done with proper
checks and balances in place or under his vigilant watch. Therefore, I have to
come to a view that the Noticee no. 4 has knowingly neglected to take any due
diligence measures including keeping a check on the transactions in the demat
account, tracking the use of the DIS for unauthorized transfer of units of MFs
etc. As a result of such glaring negligence on the part of the Noticee no. 4, I can
observe that commission of such fraudulent acts by the Noticee nos. 1 and 2 was
further facilitated. It would not be out of context to refer to and rely upon
Section 166 of the Companies Act, 2013 which cast certain duties with respect
to the obligation of directors of a company. Perusal of this statutory provision
would indicate that a director of a company shall exercise independent
judgement. Further, a director of a company shall not assign his office and any
assignment so made in favour of others, shall be void. In the context of the
above stated statutory provision dealing with the duty of a director under law, I
note that the Noticee no. 4 has a statutory obligation to take his office with due
diligence on account of the fiduciary obligation being carried by him vis-à-vis the
company i.e., the Noticee no. 2.
29) Having discussed the acts and roles played by the Noticees in the foregoing
paragraphs in the entire episode involving unauthorized transfer of MF Units and
their misutilisation towards margin money/collaterals by the Noticee no. 1, 2 and
3 through AFSPL, I can clearly observe that the aforesaid illegal & unauthorized
transfer of securities to and from the accounts of the Noticee nos. 1, 2 and 3 is
inexplicable since neither the Noticee nos. 1, 2 and 3 have raised any alarm at the
time of receipt of such a large number and value of MF Units into their demat

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 accounts for which no consideration was ever paid by them, nor have they
assigned any reason whatsoever when some of these units were again transferred
back to the demat accounts of the beneficial owners. On the contrary from the
conduct of the Noticees and their decision to remain silent when all these illegal
transfers of securities were going on, force me to observe that such huge amounts
of MF Units owned by the beneficial owners were first brought into and then
were transferred out of their demat accounts to AFSPL in an illegal manner and
further were used as collateral/margins for their trades with their active
connivance and under their full knowledge and permission. As noted above, the
common link between the Noticee nos. 1 and 2 are the Noticee nos. 3 and 4. In their
capacity as partners and directors in the Noticee nos. 1 and 2 they (the Noticee nos.
3 and 4) raised no objection to the receipt of such large value MF Units and
instead went on to transfer these MF Units to AFSPL, whose affairs were also
being managed by the Noticee nos. 3 and 4 and in this process they have
intentionally and knowingly used those units as margin money for trading
undertaken in the securities market on behalf of the Noticee no. 1 and 2.
30) In order to understand and ascertain the reason behind commission of the above
acts by the Noticees, I find it relevant to note from the trade details as submitted
by the NSE to SEBI during the course of investigation which revealed that
substantial amounts of open positions in the Options segment were taken by the
Noticees in the accounts of the Noticee nos. 1 and 2 during December 2018. In this
regard, as per the information received from the NSE Clearing Ltd., as on the
last trading day i.e., February 28, 2019, against the total margin requirement of
INR 436.1 Crore from AFSPL as a broker / trading member of NSE, the margin
required for the trade positions in respect of the Noticee nos. 1, 2 and 3 (through
AFSPL) stood at INR 368.45 Crore (84.50%), a break-up of which is as under:
Table 4: Margin requirements of the Noticee nos. 1, 2 and 3
Total Margin (in
Day Date Client Name
INR)
Noticee no. 1-Money Mishra Financial
28-Feb-19 150,95,47,888.98
Services
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 Noticee no. 2-Money Mishra Overseas Pvt
28-Feb-19 76,95,16,371.57
Ltd
28-Feb-19 Noticee no. 3-Awanish Kumar Mishra 140,54,41,138.02
Total 368,45,05,398.57

31) It is therefore self-evident from the above table that in order to meet their huge
margin requirements to the tune of INR 368.45 Crore, the Noticees have indulged
in such illegal activities involving unauthorized transfer of MF Units from the
demat accounts of the beneficial owners to their own accounts and again through
their demat accounts, ultimately to ISSL for meeting their margin requirements.
The aforesaid findings are also fortified from the fact that the cumulative market
value of balance outstanding unreturned MF Units to DCEL & OCL (INR
335.55 Crore-Table 2) and NEPL (INR 21.70 Crore-Table 3) aggregated to a sum
of INR 357.25 Crore as against the margin requirements of INR 368.45
Crore(Table-4) against the trade of the Noticee nos. 1, 2 and 3 and as pointed out
in the SCN such unreturned MF Units were utilized by the Noticee nos. 1, 2 and 3
to replenish the margin requirements through the clearing member i.e., ISSL.
32) The above discussions now make it absolutely clear that the Noticees have engaged
and played an important role in securing illicit receipt and onward transfer of the
MF Units of very high magnitude belonging to the beneficial owners into their
demat accounts, for which no bonafide explanations have been furnished by the
Noticees in their defense so that such transfers can be held as acts committed in
the normal course of dealing in securities. As noted above, the aspect of active
collusion by the Noticees is evident from the fact that the control of AFSPL, in its
capacity as a stock broker and DP, as well as the control over the affairs of the
Noticee nos. 1 and 2 (the clients of AFSPL) rested in the hands of the Noticee nos. 3
and 4 and, there was a glaring meeting of minds amongst all the Noticees and
AFSPL in commission of the aforesaid actions & illicit transfers of MF Units to
meet the margin obligations of the Noticees. It now clearly appears that the Noticee
nos. 1, 2 and 3 have acted as conduits for the deceitful transfer of MF Units from
the demat accounts of the beneficial owners, and Noticee no. 4 by knowingly
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 neglecting to take any due diligence regarding the use of the DIS for transfer of
those units of MFs, from the accounts of the Noticee nos. 1 and 2 and also by
continuing to neglect his duties as a Director, has also contributed in commission
of those fraudulent acts by the Noticee nos. 1, 2 and 3 to meet their margin
obligations to the clearing member. Therefore, I hold that the scheme for the
transfer of the MF Units would not have been possible without the active role of
all the Noticees who have acted together harmoniously to facilitate such a
fraudulent scheme.
33) In this regard, it is worth noting that as per Section 25 of Indian Partnership Act,
1932 every partner is liable, jointly with all the other partners and also severally,
for all the acts of the firm done while he is partner. Further, it is a trite law that
any company, though a legal entity, cannot act by itself and it can act only through
its directors. The directors are expected to exercise their power on behalf of the
company with utmost care, skill and diligence. In terms of Section 179 of the
Companies Act, 2013, the Board of Directors of a company shall be entitled to
exercise all such powers and do all such acts and things which the company is
authorized to exercise and to do. Therefore, the Board of Directors, being
responsible for the conduct of the business of a company, is liable for any non-
compliance of law by the company and such liability shall also devolve upon the
individual directors because of whose non-compliance or negligence the
company has breached the law. The aforesaid position/principle is also
reiterated/embodied in the provisions of Section 27 of the SEBI Act, 1992 which
fasten liability on directors who are in charge of the affairs of the company at the
time of the commission of any alleged violations by the company. I deem it
appropriate here to refer to the observations of Hon’ble Supreme Court of India
in the matter of N Narayanan vs Adjudicating Officer, SEBI decided on April 2, 2013,
wherein the Court observed as follows:
“33. Company though a legal entity cannot act by itself, it can act only through its Directors.
They are expected to exercise their power on behalf of the company with utmost care, skill and
diligence. This Court while describing what is the duty of a Director of a company held in
Official Liquidator v. P.A. Tendolkar (1 SCC 602 that a Director may be shown to be placed
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 and to have been so closely and so long associated personally with the management of the company
that he will be deemed to be not merely cognizant of but liable for fraud in the conduct of business
of the company even though no specific act of dishonesty is provide against him personally. He
cannot shut his eyes to what must be obvious to everyone who examines the affairs of the company
even superficially.
34) To put the aforesaid findings and discussions in a perspective, I note that the
above conduct of the Noticees has not only breached the ethical standards but also
shows the kind of unscrupulous act the entities have resorted to fulfill their own
selfish objectives deceptively at the cost of others. Hence after considering the
entire issue holistically, I have no hesitation in holding that the acts and conduct
as narrated in detail in the preceding paragraphs are sufficient, not only to qualify
as “unfair trade practice’ but also those acts & conducts have led to further acts
of dealing in securities in a fraudulent manner thereby breaching the PFUTP
Regulations. Therefore, I find that the conduct of the Noticees as elaborated above
falls, squarely into the label of a fraudulent, prohibited and unfair trade practices
under the provisions of the PFUTP Regulations.
35) Under the circumstances, the above narrated acts of receiving units of MF Units
carrying huge sums of value to their demat accounts in an illegal manner for
which the Noticees have not been able to provide any bonafide reason with any
supporting evidence which can evoke any contrary opinion, compel me to hold
that the allegations/ charges made in the SCN against the Noticees stand
established. The Noticees have failed to rebut the said allegations in any manner
and instead the facts of the case have strongly pointed out that the Noticee no. 1,
2 and 3 did not have any valid authority to receive the MF Units from the demat
account of the beneficial owners which were used as collateral on their behalf.
In view of the above findings and deliberations, I find that the issue framed for
consideration earlier at paragraph 7 is answered in the affirmative.
36) Having already held in the preceding paragraphs that the Noticees have engaged
in a fraudulent scheme/act/course of business, and thus have violated
regulations 3 (a) and 4(1) of the PFUTP Regulations, I note that the Noticees are
liable for:
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 i. Issuance of appropriate directions under Sections 11B (1) and 11(4) read
with Section 11(1) of the SEBI Act, 1992, and
ii. Imposition of monetary penalty under Sections 11B (2) and 11(4A) read
with Sections 15HA (penalty for fraudulent and unfair trade practices) of
the SEBI Act, 1992.
37) The provisions of the aforesaid sections are reproduced below for ease of
reference:
SEBI Act, 1992
Penalty for fraudulent and unfair trade practices.
15HA. If any person indulges in fraudulent and unfair trade practices relating to securities, he
shall be liable to a penalty which shall not be less than five lakh rupees but which may extend
to twenty-five crore rupees or three times the amount of profits made out of such practices,
whichever is higher.
38) Keeping in view the aforesaid finding that the Noticees having committed
fraudulent acts and unfair trade practice, I find that the Noticees are liable for
imposition of monetary penalty under Section 15HA of the SEBI Act, 1992. In
this regard, I note that factors as provided under Section 15J of the SEBI Act,
1992 have been taken into consideration while adjudging the quantum of penalty
to be levied on the Noticees.
39) With respect to the Noticee nos. 1, 2 and 3 it has been found that the aforesaid
violations were done with their active involvement and in collusion with AFSPL
whereas the Noticee no. 4 was found to have committed the violations as alleged
in the SCN, by his deliberate acts of negligence, lack of due diligence as a partner
and director of the Noticees no. 1 and 2 as well as by his apparent active connivance
with other Noticees thereby facilitating the commission of the aforesaid fraudulent
acts (by assigning his duties as a partner and director to the Noticee no. 3).
Therefore, such acts of negligence & abatement need to be taken into account
while issuing directions and imposing penalty on him.

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Order in the matter of transfer of mutual fund units by Money Mishra Financial Services and
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 DIRECTIONS AND PENALTIES

40) In view of the above, in exercise of powers conferred upon me under sections
11(1), 11(4), 11(4A),11B(1) and 11B(2) read with section 19 of the Securities and
Exchange Board of India Act, 1992, in order to protect the interest of investors
and the integrity of the securities market, I hereby issue the following directions:
i. The Noticee nos. 1 (Money Mishra Financial Services), 2 (Money Mishra
Overseas Pvt. Ltd.) and 3 (Mr. Awanish Kumar Mishra) are restrained
from accessing the securities market and further prohibited from buying,
selling or dealing in securities, either directly or indirectly, in any manner
whatsoever, for a period of two (02) years from the date of this Order.
ii. The Noticee no. 3 i.e., Mr. Awanish Kumar Mishra is restrained from
associating with a listed entity, a material subsidiary of a listed entity or a
SEBI registered intermediary in any capacity, either directly or indirectly,
in any manner whatsoever, for a period of two (02) years from the date of
this Order.
iii. The Noticee no. 4 i.e., Mr. Jitendra Tiwari is restrained from accessing the
securities market and from buying, selling or dealing in securities, either
directly or indirectly, in any manner whatsoever, for a period of one (01)
year from the date of this Order.
iv. The following penalty is levied on the Noticees:
Under MMFS MMOPL Mr. Awanish Mr.
Section Kumar Mishra Jitendra
Tiwari
Section INR INR INR 50,00,000 INR
15HA of 50,00,000 50,00,000 /-(INR Fifty 5,00,000/-
the SEBI
Act, 1992 /-(INR /-(INR Lakh ) (INR Five
Fifty Lakh ) Fifty Lakh ) Lakh )

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41) It is further clarified that during the period of restrain the existing holding of
securities, including the units of mutual funds shall remain under freeze in respect
of the aforesaid Noticees.
42) The penalty shall be paid by the Noticees within a period of forty-five (45) days,
from the date of receipt of this order. Payment can be made online by following
the below path at SEBI website www.sebi.gov.in
ENFORCEMENT →Orders →Orders of Chairman/Members →Click on
PAY NOW or at
https://siportal.sebi.gov.in/intermediary/AOPaymentGateway.html and
selecting Type of Category as 11B orders.
43) The obligation of the Noticees, in respect of settlement of securities, if any,
purchased or sold in the cash segment of the recognized stock exchange(s), as
existing on the date of this Order, can take place irrespective of the
restraint/prohibition imposed by this Order only, in respect of pending unsettled
transactions, if any. Further, all open positions, if any, of the Noticees debarred in
the present Order, in the F&O segment of the stock exchanges, are permitted to
be squared off, irrespective of the restraint/prohibition imposed by this Order.
44) The Order shall come into force with the immediate effect.
45) If there is a failure to pay the penalty, as mentioned above, SEBI may recover
the amount from the Noticees as per applicable law.
46) A copy of this order shall be served upon the Noticees, the Stock Exchanges, the
Registrar and Transfer Agent and the Depositories for ensuring compliance with
the above direction.
Sd/-
DATE: FEBRUARY 18, 2022 S. K. MOHANTY
PLACE: MUMBAI WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA

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