Order in respect of Mr. P. J. Mathew, former Managing Director of the Inter-connected Stock Exchange...

8/9/2019 Order in respect of Mr. P. J. Mathew, former Managing Director of the Inter-connected Stock Exchange of India Limited

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WTM/PS/90 /MRD/MAR/2015

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIACORAM : PRASHANT SARAN, WHOLE TIME MEMBER

ORDER

Und! "#$%&n 12A &' $( S#)!%$%" C&n$!*#$" +R)-*$%&n. A#$, 195 !*d %$( "#$%&n" 11, 11+.

*nd 11B &' $( S#)!%$%" *nd E#(*n B&*!d &' Ind%* A#$, 1992

In !"3#$ &' M!4 P4 4 M*$(, '&!6! M*n*%n D%!#$&! &' $( In$!7#&nn#$d S$

E#(*n &' Ind%* L%6%$d

14 Securities and Exchange Board of India (hereinafter referred to as "the SEBI") had conducted an

inspection of the Inter-connected Stock Exchange of India Liited (hereinafter referred to as "ISE" or

"the Stock Exchange") during !ctoer #$ to #%& 2#1#' he inspection as conducted to ascertain

hether the usiness acti*ities and affairs of ISE are eing conducted in accordance ith the pro*isions

of the Securities +ontracts (,eguations) .ct& 1/0$ ("the S+,.")& the Securities +ontracts (,eguations

,ues& 1/07 ("the S+,,")& the Securities and Exchange Board of India .ct& 1//2 ("the SEBI .ct")&

+ircuars issued SEBI& ,ues& eorandu and .rtices of .ssociation (o.) and Be-as of the

Stock Exchange' he inspection had focused on the o*era anageent& adinistrati*e onitoring and

contro& onitoring of the orking of the susidiar the exchange and to a iited extent aout the

present financias status of ISE' 3urther& as SEBI had recei*ed a proposa fro ISE ith respect to its

re-coenceent of trading patfor& the inspection aso focused on the anner of granting contracts

for de*eopent of soutions for trading'

24 Based on the findings of the inspection and the suse4uent in*estigation& SEBI issued a Sho

+ause 5otice dated 6une 2$& 2#1 (hereinafter referred to as "the S+5") to r' P' 6' athe& ho as

the forer anaging 8irector (hereinafter referred to as "the noticee") of the ISE and aeged the

fooing 9

A4 I!!)-*!%$%" %n **!d%n #&n$!*#$ '&! $( $!*d%n 3-*$'&!69

(a) 8uring the eeting of the Board of 8irectors of ISE on Septeer 1& 2##7& the 8irectors

expressed their interest to re-coence trading on its patfor' herefore& a Business 8e*eopent

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+oittee (:the BDC;) coprising of the fooing ten persons as fored ISE for recoending

seection of *endors 9

1' 8r' '


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ISE (to the S+5 issued to it) to SEBI& it as oser*ed that .+L suitted a re*ised 4uote on on .pri

2%& 2##% i'e' after the eeting of B8+ recoending the nae of .+L to the Ao*erning Board' .s

regards the re*ised 4uotes fro +S (the other idder)& the noticee infored SEBI that +S as not

interested in re*ising of 4uote& though no docuentar support to that effect had een furnished'

(d) 3urther it as noted that the B8+ report as not signed 8r' '


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(g) It as therefore aeged that noticee as fu aare of the third part softare icense agreeen

at the tie of aard of the contract to .+L and that it appeared to ha*e een deierate co*ered

upFignored hie isting out the reati*e strengths of the *endors B8+FBoard' It as aso aeged that

the noticee faied to percei*e that .+L as practica eha*ing as a re-seer of third part softare

instead of a softare pro*ider'

(h) he S+5 aso stated that the *endor (.+L) seected the B8+ coud not dei*er and tha

resuted in oss of one (i'e' paent to aers (to the tune of ,s' 17 akhs) to reco*er ,s' 0# akhs

fro .+L) and oss of tie' In addition& gi*en the fact that +aridge actua oned the softare tha

.+L agged the order for& and aso gi*en the fact that the order as to e gi*en to an entit ith the

softare read for instaation& and that .+L did not on the softare read for instaation& it as

aeged that the B8+ shoud not ha*e paced the order ith .+L at a' 3urther& +aridge ( )rom whom

ACL was buing the order ) coud ha*e een gi*en the opportunit to id'

In *ie of the ao*e& the S+5 aeged that the noticee eing the anaging 8irector ( during the relevan

period ) of ISE& a eer of the B8+ coittee and eing part of the group ho *isited 8uai and

8haka to ensure that the softare of +S and .+L are read for use as directed B8+& had faied to

ensure the fair anner of *endor seection& hich resuted in the seection of rong *endor and

sustantia oss to ISE'

B4 F*%-)! $& n")! #&63-%*n# %$( $( S#)!%$%" C&n$!*#$" +R)-*$%&n. +M*nn! &

In#!*"%n *nd M*%n$*%n%n P)-%# S(*!(&-d%n %n R#&n%d S$ E#(*n". R)-*$%&n"200 +;$( MIMPS R)-*$%&n";.:

a' In order to ensure& aongst others& a greater transparenc in deaings& accountaiit& arket

discipine& to reo*e conficts of interests& to ha*e a aanced approach& to take into account the

interests of other paers& to e4uip an exchange to face and ithstand copetition etc& hich oud

not otherise e a*aiae in a utuaised stock exchange& SEBI *ide +ircuar ref' no'

+ir'5o'S8FPoicF+ir-F# dated 6anuar #& 2##& had introduced the schee of

corporatiDation and deutuaiDation for stock exchanges and fixed a tie frae for sitch o*er to

the said schee'

' In order to ensure that the stock exchanges deutuaise these*es in true spirit and purpose

SEBI had aso prescried the anner in hich iniu puic share hoding shoud e increased

F aintained in stock exchanges' he IPS ,eguations ere foruated SEBI to pro*ide for



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the manner in hich stock exchanges oud ha*e to restructure their capita fooing a schee of

corporatiDation and deutuaiDation' 3urther reguation 11 of the said ,eguations oigates the

Stock exchange to ensure that its sharehoders cop ith reguations % and / of the IPS

,eguations'

c' 8uring the course of inspection& it as oser*ed that in disregard of the aforesaid pro*isions& one

of the sharehoders of the ISE& nae& ,eigare echno*a Liited (",L") as hoding ore than

21 of the e4uit hoding of the Exchange& direct and through persons acting in concert'

d' SEBI *ide etter dated Septeer 21& 2##0 ad*ised ISE that Puic Interest 8irectors (hereafter

referred to as :PID";) oud e seected the Board of 8irectors of the Exchange fro SEBI

constituted pane of PI8s and that the sae sha e suita incorporated in .rtices& ,ues of ISE'

3urther& ased on a carification sought ISE& SEBI *ide etter no

,8F8S.F+J8FSLF1>>$F#% dated 5o*eer #$& 2##% ad*ised ISE to suita aend cause

1''0 herein the ord KeectedH sha e repaced ith the ord KseectedH'

e'

In this regard& in the eeting of the Board of ISE hed on 5o*eer 2#& 2##/ it as decided to

ca for poing representati*es of ,eigare Aroup and +hairan of the Board r' =' ,a@endran

5air accepted the sae'

f' he decision to ao poing on the atter of appointent of PI8s herein it as said that the

PI8s oud e seected the Board of directors of the Exchange fro a pane constituted

SEBI as in copete defiance to the ao*e directi*es F etters of SEBI'

g' 3urther& on perusa of the inutes of EA of the Exchange hed on 5o*eer 2#& 2##/ it as

oser*ed that four indi*iduas& nae& r' =iran ?aida& r' ,a*i Batra and r' =api Sangh*i

J s' Shruti Aupta had represented se*era corporate sharehoders of the Exchange and had *oted

in the eeting' Each of these indi*iduas (except s' Shruti Aupta and r' =api Sangh*i ho

represented one sharehoder) had represented to or ore of such sharehoders siutaneous in

the said eeting' 8etais of the sae is as foos9

S-4N&4 N*6 &' "(*!(&-d! N*6 &'!3!"n$*$%>#2 .+E +E Ltd' =iran ?aida >'>0%

Shu Lah India arketing J +onsutants P*t'Ltd' =iran ?aida 1'7$

> .,+ 3inance Ltd' ,a*i Batra 2'$700 8ecent 3inancia Ser*ices P*t' Ltd' ,a*i Batra #'/$>$ 8ecent Sur*eors P*t' Ltd' ,a*i Batra #'%077 astin arketing P*t' Ltd' ,a*i Batra #'/2/% i-orth Securities P*t' Ltd' ,a*i Batra #'%21



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/ !spro 3inancia J In*estent P*t' Ltd' ,a*i Batra #'%711# Breakthrough ieniu rading J arketing

P*t' Ltd'Shruti Aupta #'/1>

11 Sha Stock J 3inanciers P*t' Ltd' =api Singh*i 2'>0#T&$*- 21412

h' !n further scrutin& it as oser*ed that the ao*eentioned representati*es of the corporate

sharehoders are the epoees of ,eigare Aroup' he detais of their epoent ith the,eigare Aroup are as under9

S-4N&

N*6 &' "(*!(&-d! N*6 &'!3!"n$*$%

1 ,eigare echno*a Ltd' ,ahu ,an@an .sst' ?P J +opan Secretar of,eigare echno*a 'reigaretechgoa'co

2 .+E +E Ltd' =iran ?aida anaging 8irector In*estentBanking& ,eigare +apita arketsLiited 'reigare'in

Shu Lah India arketingJ +onsutants P*t' Ltd'

=iran ?aida -do-

> .,+ 3inance Ltd' ,a*i Batra +opan Secretar J +opiance!fficer& ,eigare& 'reigare'in

0 8ecent 3inancia Ser*icesP*t' Ltd'

,a*i Batra -do-

$ 8ecent Sur*eors P*t' Ltd' ,a*i Batra -do-7 astin arketing P*t' Ltd' ,a*i Batra -do-% i-orth Securities P*t'

Ltd',a*i Batra -do-

/ !spro 3inancia JIn*estent P*t' Ltd'

,a*i Batra -do-

1# Breakthrough ieniu rading J arketing P*t'Ltd'

Shruti Aupta Sr' anager& In*estent Banking at,eigare +apita arkets Ltd' 'reigarecapitaarkets'co

11 Sha Stock J 3inanciersP*t' Ltd'

=api Singh*i anager at ,eigare +apita arketsLtd' 'reigarecapitaarkets'co

i' In*estigation re*eaed that in an attept to co*er up its design to ac4uire shares co*ert eond

the prescried iits& the said ,eigare group had used *arious corporate entities to ac4uire shares

in the stock exchange and the shares ere hed on its ehaf'@'

ore than sixt thousand shares ere ac4uired entities (shon in tae eo) hich ere

represented the epoees of the ,eigare Aroup in @ust to das fro one ,a@u ahtane

(constituting another >'>> percentage of sharehoding of the exchange) as detaied eo9

S!4 N*6 &' $( T& (&6 "(*!" D*$ &' N&4 &'



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N&4 "(*!(&-d! &' ISE $!*n"'!!d $!*n"*#$%&n "(*!"1 ,a@u ' ahtane 8ecent Sur*eors P*t' Ltd' 12'11'2##/ 12###2 ,a@u ' ahtane astin arketing P*t' Ltd' 12'11'2##/ 1### ,a@u ' ahtane i-orth e4uities P*t' Ltd' 12'11'2##/ 110##> ,a@u ' ahtane Shu Lah India arketing

and +onsutants P*t' Ltd'12'11'2##/ 122%%

0 ,a@u ' ahtane 8ecent 3inancia Ser*ices P*t'Ltd'

1'11'2##/ 10##

T&$*- 22??

k' 3ro the ao*e it can e seen that the transferees ere entities ho ere represented in the EA

the epoees of ,eigare& there suggesting that theses shares ere rought the entities on

ehaf of ,eigare'

' he S+5 aso aeged that apart fro the ao*e& the cose and direct ink eteen these entities

and ,eigare as aso e*ident fro the fooing9

a) . print out of the ree*ant pages fro the esite of ,eigare 'reigare'in shos

,eigare +apita arkets under the head +*ur other websites, and ,eigare echno*a Ltd' under

the head +*ther group companies, ' he S+5 aeged that a the ao*e entioned 11 entities

ere reated to each other and their sharehoding of 21'1>2 in ISE& as in *ioation of the

pro*isions of IPS ,eguations'

)

3urther& fro the esite of inistr of +orporate .ffairs it is oser*ed that the fooing

entities ha*e the sae eai id i'e' osasuni'coMgai'co registered ith the @

a' 8ecent 3inancia Ser*ices P*t' Ltd'

'

8ecent Sur*eors P*t' Ltd'

c'

astin arketing P*t' Ltd

d'

i-orth Securities P*t' Ltd'

e' Shu Lah India arketing J +onsutants P*t' Ltd'

f'

Breakthrough ieniu rading J arketing P*t' Ltd'

g' !spro 3inancia J In*estent P*t' Ltd'

c) 3ro the detais otained fro the esite of inistr of +orporate .ffairs& the residentia

addresses of r' 5arendra =uar Aousha (one of the directorGs of .rch 3inance Ltd')& r

,achand Aousha (one of the directorGs of Breakthrough ieniu rading J arketing

P*t' Ltd' and !spro 3inancia J In*estent P*t' Ltd') and r' 8e*endra =uar Aousha

(director of i-orth Securities P*t' Ltd') are sae i'e' -ouse .o/( Section 1A( aridabad

#2#003( -ariana( 4ndia ' 3urther fro the etter heads of astin arketing (P) Ltd' and



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8ecent Sur*eors (P) Ltd'& it as oser*ed that the ha*e offices at %1& 8aragan@& Second

3oor& 5e 8ehi'

' ,eguation 11 of the IPS ,eguations casts an oigation on the stock exchange to ensure that

its sharehoding is in copiance ith ,eguations % and / of the ,eguations hich prescrie

onership restrictions of 0 on an entit read ith reguation 02 of the SE++ ,eguations& 2#12

ISE as continuous fiing undertakings (as re4uired under ,eguation 11 of the IPS reguations)

that it is in copiance ith the prescried nors' In *ie of the ao*e& it as aeged that the

decarations fied in this regard are incorrect and ha*e een fase fied o*er a ong period of tie' .s

the ,eigare group aong ith its P.+s contros F hods a sustantia sharehoding (i'e' 21'1>2) i

is aeged that the ISE did not ensure copiance ith the IPS ,eguations'

n' In the ight of ao*e oser*ations and aegations in the S+5 (ref

,8F8S.FISEFS+5F1/%F2#11 dated 6anuar 12& 2#11) SEBI had issued suons to the

fooing 1# entities9

S!4N&4 N*6 &' "(*!(&-d!1 .+E +E Ltd'2 Shu Lah India arketing J +onsutants P*t' Ltd' .,+ 3inance Ltd'> 8ecent 3inancia Ser*ices P*t' Ltd'0 8ecent Sur*eors P*t' Ltd'$ astin arketing P*t' Ltd'7 i-orth Securities P*t' Ltd'% !spro 3inancia J In*estent P*t' Ltd'

/ Breakthrough ieniu rading J arketing P*t' Ltd'1# Sha Stock J 3inanciers P*t' Ltd'

o' he suons ere sent seeking the fooing inforation9

i' ,easons on h and ho the particuar sharehoder as associated ith the epoee

of ,eigare group so as to gi*e hiFher an authoriDation etter to attend eetings of

ISE'

ii' ,easons for gi*ing an authoriDation for prox instead of eing present for the purpose

of *oting in the aforesaid eeting of 5o*eer 2#& 2##/& ha*ing knon the agenda ofthe eeting'

iii' Expain regarding reationshipFassociation of the sharehoder ith ree*ant epoee of

,eigare group in periods efore and after the said eeting and hether the



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sharehoder had gi*en cear indication aout *ies in fa*our of or against the agenda in

the aforeentioned eeting'

i*' ,ationae for gi*ing prox to epoee of ,eigare group& especia gi*en the fact that

,eigare echno*a Ltd'& a ,eigare group copan hed >'>> of ISE at the tie of the

aforeentioned eeting'

p' !ut of the aforeentioned ten sharehoders except for i-orth Securities P*t' Ltd'& a the other

nine sharehoders ade siiar suissions& as eo9

i' he sharehoders ere origina aottees and had ought shares in ISE assuing tha

the in*estent oud generate significant *aue o*er a period of tie'

ii' .rch 3inance iited in its etter dated 10th !ctoer 2##/ dre attention of other

sharehoders to the state of affairs at ISE raising se*era issues incuding a) soe 4ueries

reated to accounting and financias ) ISE is aking operationa osses c) ad*ertising

and puicit costs are incurred hie ISE akes osses d) anageria reuneration has

increased fro 3< #% to 3< #/ in the tie of econoic sodon e) in*estents

ade at huge osses f)ad*ances gi*en to susidiar copanies g) dea in paing ser*ice

tax dues'

iii' .+L rote a etter dated 8eceer & 2##/ to a sharehoders intiating tha

anageent of ISE as orking ith aafide intention and had no *ision to de*eop

the exchange and agreed to ead the process for a the sharehoders' In addition to

soe issues reated to financias& it had aso raised other issues incuding a) no effort

had een ade existing anageent to de*eop a roust usiness ode ) atters

reated to interference of ISE& especia r' P 6 athe in the da to da affairs such

as ,& utiiDing cient funds& changing of cient code etc' of the susidiar copan of

ISE i'e'& ISE Securities Ltd' c) registering of ISE as an SE Exchange in the ight of the

copetition faced ISE'

i*' he sharehoders eie*ed that initiati*es of .+L i enefit the inorit sharehoders

and therefore the supported it'

*' he sharehoders had gi*en their cear *ies on the agenda ites to e discussed on

2#th

5o*eer& 2##/' 3ro the agendaFnotes pro*ided ISE it is noted that the onagenda of the said eeting as to aend e-as in accordance ith directi*es of

SEBI' oe*er& it appears fro the etter of .+L entioned at pt ao*e& that the

agenda appears to e ore than that and aso that the +hairan ight ha*e ade

iseading and coerci*e stateents'



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4' 3ro a of the ao*e it as aeged that the anageent of ISE& especia the noticee and Board

of ISE ere 4uite infored aout the foration of a group of sharehoders that ere eha*ing ike

persons acting in concert (P.+) and aeged chose to ignore these acti*ities' herefore& it as

aeged that ISE anageent did not find it necessar to take cue of the connections aong

*arious sharehoders o*ious a*aiae in puic doain& hich oud ha*e een checked as a

part of the onitoring echanis' his o*erturns the concept of deutuaiDation& as the

sharehoders are acting in concert'

r' .s regards the onitoring echanis for detecting *ioations of IPS ,eguations& in*estigation

had re*eaed that the onitoring echanis of ISE ain consisted of reing upon the

decarations of the sharehoders at the tie of uing shares of ISE and checking naes of the

directors etc fro the esite of inistr of +opan .ffairs' In case of origina aottees at the

tie of deutuaiDation& a ist of directors as pro*ided the sharehoders (aso knon as origina

aottees)' In case of sharehoders transferring their shares& the detais of the transferee are pro*ided

the transferor and transferee& ith an undertaking that the are coping ith the pro*isions of

the IPS ,eguation and are not acting in concert ith an other sharehoder of ISE' Aenera

ISE *erifies detais (ain naes) of the directors of its corporate sharehoders ith the detais

a*aiae on the esite of +. ( http9FFca'go*'in )' oe*er& addresses of the sharehoders as

appearing in the +. esite ere not checked for P.+' .ddresses of the directors as appearing

on the +. esite ere aso not checked' In case of corporate sharehoder& if the anageent

of the corporate sharehoder changed& a fresh undertaking as not taken as it as understood that

the undertaking gi*en the earier anageent hed good' In case of change of nae of the

sharehoders& +. esite as checked again for *erifing coon directors' ISE reies upon the

undertaking gi*en the sharehoders ith respect to hether the acted as P.+s or not and

checks for coon directors aong *arious sharehoders as per inforation a*aiae on the

+. esite' oe*er& in case coon directors ere to e found and the aggregate hoding of

those sharehoders ere ore than 0 of the tota paid up e4uit of the ISE& then ISE oud

report to SEBI for taking appropriate action' Beond this no other steps are taken ISE'

s' Nith respect to the ao*e said 11 entities& the S+5 aeged that ISE did not carr out a proper

scrutin& e*en after recei*ing the S+5 re) no 5R&1&SA14S61SC.1#78120## dated "anuar #220##C fro SEBI' he S+5 ( issued in the instant matter against 5r 9 " 5athew ) further aeged tha

the ao*e conduct of ISE as practica the sae as ha*ing a Gcheck-ist approachG to a serious

atter of pre*enting *ioations of IPS ,eguations ISE'



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t' .s regards the eeting hed on 5o*eer 2#& 2##/& it as aeged that the sae as one of its

kind& herein a set of peope associated ith .+L (i'e' reated to 1# out of >1 (as on #'#/'2#1#)

sharehoders) tried to infuence decision aking at ISEHs genera od eeting' his instance

shoud ha*e propted soe action ISE' oe*er& it as aeged that ISE neither took an

action nor infored the sae to SEBI' he S+5 aso aeged that ith respect to a copaint fied

one S',a*i ith SEBI& ISE had infored (*ide rep dated 8eceer 7& 2##/) SEBI that soe

sharehoders ere foring a carte' he etter aso stated that : group o) shareholders had issued

re:uisition dated "ul #/( 200 ;& :new shareholders )or whom 5r Ravi is soliciting support are all acting in concer

with Religare; and that


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C4 A--*$%&n &' P!&> &$%n > M!4 P44 M*$(:

a' SEBI *ide etter dated Septeer 21& 2##0 ad*ised ISE that PI8s oud e seected the Board

of 8irectors of the Stock Exchange fro SEBI constituted pane of PI8s and that the sae sha

e suita incorporated in .rtices& ,ues of ISE' 3urther& ased on a carification sought ISE

SEBI *ide etter no' ,8F8S.F+J8FSLF1>>$F#% dated 5o*eer #$& 2##% ad*ised ISE to

suita aend cause 1''0 herein the ord KeectedH sha e repaced ith the ord KseectedH'' In this regard& in the eeting of the Board hed on 5o*eer 2#& 2##/ it as decided to ca for

poing representati*es of ,eigare Aroup and +hairan of the Board r' =' ,a@endran 5air

accepted the sae' he S+5 had aeged that the decision to ao poing on the atter of

appointent of PI8s& pursuant to SEBI directi*es& as in copete defiance to the ao*e

directi*es F etters of SEBI'

c'

.s entioned in the S+5 (,8F8S.FISEFS+5F1/%F2#11 dated 6anuar 12& 2#11)& during the

course of inspection& it as oser*ed that the noticee& hie representing the go*erning oard of

the Exchange as Ex-!fficio eer of the Exchange in the EAF.A& in tota disregard of

pro*isions of corporatiDation and deutuaiDation and the duties expected of a 8& had acted as a

prox for certain indi*idua share hoders of the Exchange in the EA of the Exchange for the

eeting hed on 2#th 5o*eer 2##/'

d' 8etais of the prox *otes cast the noticee on ehaf of certain persons are gi*en eo9

SN&

N*6 &' $( S(*!(&-d! N*6 &' $(R3!"n$*$%


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certain sharehoders of the stock exchange and casting prox *otes for indi*idua sharehoders

of the exchange& e*en though the noticee as representing the anageent of the Exchange'

g' he eha*ior corroorates the aeged pattern that the noticee had een orking in snc ith

sharehoders instead of eing neutra to the *ies of the sharehoders and act in the e-eing of

ISE'

h' he conduct of the noticee in induging in prox *oting for an agenda of a eeting specifica hed

to ipeent SEBI directi*es hie representing the anageent as aeged to e a confict of

interest'

i' he S+5 had aso aeged that aeged *oting on ehaf of sharehoders& the noticee had

defeated the spirit of corporatiDation and deutuaiDation schee'

4 In *ie of the ao*e& the S+5 aeged that @ 5r 9 " 5athew had violated

Regulation ## read with Regulations 8 and o) the 5459S Regulations read with Regulation 2 o) S6CC Regulations

20#2( S6?4 circular no .oS5&19*LC4>1CirB7107 dated "anuar 70( 2007( code o) conduct1corporate governancenorms prescribed b S6?4 vide its letter noLS1221200# dated 5a #8( 200# D letter no

5R&1&SA1CD&100/10 dated September 2#( 200( code o) conduct )or the directors stipulated b S6?4 vid

letter noLS1221200# dated 5a #8( 200# and letter no 5R&1&SA1CD&100/10 dated September 2#(

200 read with S6?4,s Circular .oS5&19*LC4>1CirB7107 dated "anuar 70( 2007@

4 he S+5 ad*ised the noticee to sho cause as to h appropriate directions as deeed fit and

proper under section 12. of the Securities +ontracts (,eguation) .ct& 1/0$ (hereinafter referred to as

"the S+,.") and sections& 11& 11(>) and 11B of the Securities and Exchange Board of India .ct& 1//2

(hereinafter referred to as "the SEBI .ct")& shoud not e issued against hi for the aeged *ioations

he S+5 aso ad*ised the noticee to fie his rep and indicate hether he desired a persona hearing in

the atter'

54 he noticee fied his repies to the S+5 *ide etters dated 6u 12& 2#1 and 6u 1/& 2#1' e as

afforded an opportunit of persona hearing on .ugust #0& 2#1& hen the noticee aong ith r' S'8'

Israni& .d*ocate and r' iind 5iga& +opan Secretar of ISE& appeared and ade suissions

he noticee aso tendered his ritten suissions dated .ugust #0& 2#1'

4 he fooing ere inter alia the suissions ade the noticee in respect of the aegations9



14/27

Page 1> of 27

S)6%""%&n" %$( !"3#$ $& $( *--*$%&n &' %!!)-*!%$%" %n $( **!d &' #&n$!*#$ '&! "$$%n )3

$!*d%n 3-*$'&!69

1' .t the tie of corporatisation and deutuaisation& ISE had proised its ne sharehoders that it

oud re*i*e its trading patfor' .ccording& the go*erning Board of ISE constituted a Business

8e*eopent +oittee (B8+) on Septeer 1& 2##7 to e*auate and recoend to the Ao*erning

Board the parties to e considered for aarding the contract for setting up the rading Patfor of ISE'

2' .fter se*era rounds of eetings ith the *endors i'e' .+L (aso referred to as ,AL) and +S

the *endors suitted the coercia proposa as foos 9

O3$%&n 1 : O)$!%($ P)!#(*" O3$%&n +*-) %n C!&!".

D"#!%3$%&n TCS RTGL

Softare Licence 3ees 1# -

ardare F !perating

Softare > 12'##Ipeentation 1'2$ 1'2

+ost ti go i*e 10'2$ 1'2

.+ 2' 2'>

O3$%&n 2 : P*!$ P*>6n$ #)6 !


15/27

Page 10 of 27

e*auating and short isting the prospecti*e *endors& the +onstitution of the Ao*erning Board underent

a change ith the addition of the fooing fi*e ne eers 9

(i) r' S ,a*i& Puic Interest 8irector and +hairan'

(ii) r' = ,a@endran 5air& Puic Interest 8irector

(iii) r' aninder Singh Area& Sharehoder 8irector

(i*) r' San@ee* Puri& Sharehoder 8irector

(*) r' ,a@ee* ?ohra& rading eer 8irector

Nhen the recoendations of the B8+ ere paced efore the ne Ao*erning Board& the Ao*erning

Board in its eeting hed on arch #7& 2##% unanious suggested the B8+ to re*ie its

recoendation after considering the fooing points 9

(i) Scaaiit of the softare

(ii) 8etais ith respect to the patfor ti then the are estaished

(iii) ,eferras fro the then existing cients and

(i*) . technica report fro an independent I professiona regarding the superiorit of the softare

of the to'

hereafter& the B8+ caed oth the *endors i'e' ,AL and +S on .pri 27& 2##% for further

negotiation' In the said process& ,L proposed to offer an aternati*e ode for pro*iding the trading

softare and hardare at a uch oer costs to ISE' he aternati*e proposa of ,AL as as foos

S!4 N& D"#!%3$%&n &' $( C&"$ RTGL P!&3&"*- *" &n 2/0/200?1 rading Patfor Softare +ost igher of aount as coputed in options (a) and

) entioned eo 9 (a),e' 1 per ,s'1##### of traded *aue Qcoputed taking oth egs appicae for a trades executedthrough sste' his i e referred to as ransaction +harges here onards in thisproposa' () acoitted paent of ,s' 17### per onth' his i e referred to as onth iniu+harges here onards in this proposa'

Q he traded *aue eing coputed as 4tutipied executed price in case of e4uities' he traded *aue eing coputed as 4t utipied executed price in case of futures he traded *aue eing coputed as 4t utipied preiu in case of options' ,8 N8 1F>th



16/27

Page 1$ of 27

2 !perating Sste and SsteSoftare to support the tradingpatfor Softare

of the exchange charges pus '0 crores BankAuarantee'

Ipeentation +ost 1 +rore

ota 3ixed +ost 0'$ +rore (1 +rore Ipeentation' 3ees O1'1'3ixe +ost per ear O'0 +rores) incudes hFand !S sste SFs

> .+ on ardare Softare and!perating Sste Softare 5i

oe*er& +S had expressed its inaiit to re*ise its 4uote suitted to ISE'

he B8+ had considered the technica aspects and coercias of oth the *endors' .s the initia

outfo as on ,s'1 crore in the case of ,AL as against ,s'/'2$ crores in the case of +S& the B8+

had recoended ,AL as the softare *endor for setting up of trading patfor' he B8+ as *er

e aare aout the in*o*eent of third part softare icense and therefore suggested '&eposition o)

Source code o) third part so)tware license in a separate ban% account G' he recoendation of B8+ as paced

efore the Ao*erning Board in the eeting hed on .pri 2#& 2##% herein the fooing directors had

attended9

i' r' = ,a@endran 5air& Puic Interest 8irector& +hairan

ii'

r' S' ,a*i& Pui Interest 8irector and +hairan'

iii' r' aninder Singh Area& Sharehoder 8irector

i*'

r' San@ee* Puri& Sharehoder 8irector

*'

r' = .nandakuar& Sharehoder 8irector *i'

r' 5 5aar& Sharehoder 8irector

*ii' r' = 8 Aupta& Sharehoder 8irector

*iii'

r' P Si*akuar& Sharehoder 8irector

ix' r' ,a@ee* ?ohra& rading eer 8irector

x' r' 6uu =uar 6ain& rading eer 8irector

xi' P' 6' athe& anaging 8irector ( the noticee )

he Ao*erning Board had unanious appro*ed the recoendation of B8+ for aarding the

contract to ,AL for setting up the trading patfor of ISE' 3urther& the present directors of ISE& ho

ere aso on the Board hen the contract as aarded to ,AL& ha*e confired that the ere aare

aout the in*o*eent of the Third 9art So)tware License ' herefore& the aegation that the Ao*erning



17/27

Page 17 of 27

Board as not aare aout the in*o*eent of third part softare icense is factua incorrect as it is

contrar to facts'

It is a atter of record that +S had aso confired that the had attended the eeting for three

negotiations' herefore& the aegation of not gi*ing opportunit to +S to renegotiate is factua

incorrect'

he Ao*erning Board aso confired in its eeting hed on 6anuar 20& 2#11 that "The 5anaging &irecto

has disclosed all the )acts and details available to him and re:uired to be %nown prior to awarding the contract There was

no )urther in)ormation eEpected )rom him to consider the proposals( hence( it is )actuall incorrect to state that the 5anaging

&irector )ailed to give his transparent opinion and acted in concert with the dominant shareholder 4t is also )actuall

incorrect to sa that there is a dominant shareholder 9lease note that all actions o) 5r 5athew were in good )aith and

onl in the interest o) the 6Echange -e strongl re)utes the allegation that he had sided with an shareholder( he would li%e

to rea))irm that at no stage he had sided with an shareholder( he has wor%ed in the interest o) 4S6 There)ore( in th

circumstances we re:uest ou to %indl withdraw our said allegation "'

.s regards the aegationFoser*ation in the S+5 that "''' 4n addition given the )act that Cambridge actuall

owned the so)tware RTGL bagged the order )or( also given the )act that to be given to an entit with the so)tware were read

)or installation and that RTGL did not own the so)tware read )or installation and it is alleged that ?&C should not hav

order to RTGL )urther Cambridge )rom whom RTGL was buing the order should have been given the opportunit to

bid "& the noticee suitted the fooing9

Both +S and ,AL did not ha*e readi usae softare for the purpose of the trading patfor' he

B8+ and the Board of 8irectors& after considering the initia cash outfo& conscious took a decision

to gi*e order to ,AL since initia cash outfo as on ,s' 1 crore ut in the case of +S it as /'2$

crore' he go*erning Board insisted to deposit the source code in an escro account for the es

interest of the stock exchange' .fter terinating the contract ith ,AL& ISE had aarded the

contract to +S and +S took ore than one ear' In case of +S& there as no third part icense

agreeent and therefore the Ao*erning Board did not insist on the deposit of source code in an escro

account' he noticee again reiterated that the Ao*erning Board of ISE as aare of third part icenses

agreeent in the case of ,AL' .s regards the oser*ation that ISE did not pro*ide an opportunit to

+aridge for instaing the softare in ISE& the noticee suitted that hen the contract as aarded

to +S after terinating the ,AL contract& ISE had ade an ad*ertiseent in the nespaper'



18/27

Page 1% of 27

oe*er& +aridge had neither shon an interest nor appied in the process' .ccording to the

noticee& the aegation that ISE did not pro*ide opportunit to id +aridge as incorrect'

Nith respect to the aegation that "4n the investigation( that the ?&C report is not signed b &r 5 > han

94&( Chairman o) the Committee and as well as other / members o) the Committee namel &r 4srani( Shri 5ahesh L

soneFi( Shri 5anoF umar =iFaa and Shri Ashish 9are%h( out o) the total 8 members thus a total o) out o) 8 member

eEcluding eEchange emploees had not signed the report and there is no mention o) the absence or dissent note in the report

urther the 7 remaining members who are shareholders directors and trading members o) 4S6 " the noticee suitted

the fooing 9

"The ?&C meeting held on April 2( 2008( 8 members were present in the meeting A)ter the meeting the reports wer

prepared in the evening the same has to be placed in the neEt da ?oard meeting so the decision o) ?&C in the previous

da were signed b those ?&C members who are also the members o) the Governing ?oard who attended the ?oard meeting

The decision o) the ?&C was unanimous 9lease note that ?&C role is onl recommendator The ?oard is having

authorit to approve or reFect the recommendations o) the committee All ?oard 5embers unanimousl approved th

recommendation 4) 4 had an intention to do something wrong 4 would have been ta%en the signature )rom the other ?&Cmembers a)ter the ?oard meeting but 4 did not do the same 9lease note that 4 have acted with total transparenc and th

competent authorit ie The Governing ?oard unanimousl approved to award the contract to RTGL So the abov

mentioned allegations does not have an merits "'

Nith respect to the aegation "4t is alleged that ou being 5& o) 4S6( member o) the ?&C committee and being par

o) the group who visited &ubai and &ha%a to ensure that the So)tware o) Asian C6RC and TCS as directed b ?&C

has )ailed to ensure that vendor selection was carried out in a )air manner which resulted in selection o) a wrong vendor and

substantial loss to 4S6"& the noticee suitted that "?&C and Governing ?oard has considered that initial out)low o)

the compan and also the were ver much aware about the third part license agreement or protecting the interest o) thcompan the board had decided to incorporate the clause in depositing the source code in an 6scrow Account Since RTGL

violated the 5SA the compan had terminated the contract and recovered the advance paid to them 4n an commercia

transaction the amount paid to lawer )or recovering the advance amount paid to the vendor is a necessit 4) 4 had been

helping RTGL 4 would not have ta%en steps to cancel the contract and would not have reported the lapses o) RTGL to

Governing ?oard so the allegations is totall incorrect and 4 totall den the allegations "'

he noticee suitted that he had acted and ipeented on the directions of the Ao*erning Board of

ISE in the est interest of the copan' is contention therefore as that the aegations against hiare factua incorrect' he noticee further stated that hen the terination of contract of ,AL took

pace& the representati*e of ,L& on the then Ao*erning Board of ISE threatened that the noticee oud

e a peranent ene of ,eigare and that ith a their connections in SEBI& the i tr to destaiiDe

ISE'



19/27

Page 1/ of 27

S)6%""%&n" %$( !"3#$ $& '*%-)! $& #&63-> %$( $( MIMPS R)-*$%&n":

a' he noticee stated that the aegation that he had gi*en rong decaration ith respect to

IPS ,eguations to SEBI as rong and as not orne out facts'

' .s SEBI had not prescried an poic or guideines for onitoring the IPS ,eguations& ISE

on its on had foruated a poic for onitoring the IPS ,eguations' he sae as asosuitted to SEBI'

c' Based on the criterion foruated ISE for onitoring the IPS ,eguations& ISE coud not

concude that an of its sharehoders ere acting in concert'

d' 5e*ertheess& ISE found that fe sharehoders ere acting against the interest of ISE'

herefore& ISE intiated to SEBI *ide its etter dated 8eceer #7& 2##/ aout the action of

fe sharehoders such as *oting against the resoution for aending the .rtices of .ssociation in

ine ith SEBI directions re4uisitioning the caing for EA for derecogniDing ISE' oe*er

no direction as recei*ed fro SEBI'

e'

!n receipt of SEBIGs sho cause notice& ISE issued etters to those sharehoders to confir

hether the ere acting in concert' +opies of confiration recei*ed fro those sharehoders

that the ere not acting in concert had aread een suitted to SEBI'

f' herefore& as per the a*aiae records& ISE as unae to concude as to hether an of the

sharehoders ere acting in concert' herefore the aegation that the noticee had gi*en rong

decaration ith respect to IPS ,eguations to SEBI is incorrect as the had tried their est to

ascertain the correct status'

In the .A hed on Septeer 2/& 2##/& aong ith the nora .A agenda ites& SEBI andated

aendents to the .rtices ere aso paced' But a fe sharehoders defeated the SEBI andated

aendents saing that those ere against their fundaenta rights' Suse4uent ISE caed an EA

on 5o*eer 2#& 2##/ on for passing SEBI andated aendents' 3e sharehoders again defeated

the resoution' he outcoes of the EA and .AGs i'e' inutes of the to eetings ere

forarded to SEBI on 6anuar 1%& 2#1#'

Nith respect to .+E Ltd& hich hed ore than > e4uit stake ISE *erified hether the said

copan as acting in concert ith the ,eigare Aroup' .fter *isiting their office and eeting their

8irectors& it as gathered that the ere not connected ith ,eigare Aroup' In case of .+E Ltd

athough the had gi*en prox to an epoee of ,eigare for the *oting at the EA hed on 5o*eer



20/27

Page 2# of 27

2#& 2##/& the had authorised r' =' ?' hoas ho as representing the ,egiona Stock Exchange a

the EA hed on 5o*eer 12& 2#1#' ence& according to the noticee& it oud not e appropriate to

construe that .+E Ltd as acting in concert ith ,eigare'

he noticee aso contended that a person acting as a prox for another oud not ean that he is acting

in concert as credentias of a the entities ho ere naed in the S+5 ere checked ith the nors

foruated ISE and aso the confirations recei*ed fro such entities that the do not act as P.+s'

S)6%""%&n" %$( !"3#$ $& P!&> &$%n > $( n&$%#:a' ISE had caed an .A on Septeer 2/& 2##/ to appro*e the routine agenda of the Aenera

eeting such as adoption of .nnua .ccounts& 8ecaration of 8i*idend

.ppointentF,eappointent of 8irectors and .ppointent F,eappointent of .uditors'

' .part fro the routine agenda& there as an agenda to aend the .rtices of .ssociation of ISE

in ters of SEBI etter no' ,8F8S.F+J8F0##>/F#0 dated Septeer 20& 2##0 and Letter

no' ,8F8S.F+J8FSLF1>>$F#% dated 5o*eer $& 2##%' he sharehoders passed a the

other agenda ites except the aendents to the artices hich as re4uired to e passed in

ters of the directi*es of SEBI' he aterations of the .rtices re4uired specia resoution to e

passed the eers of ISE'

c'

Suse4uent& an EA& as caed on 5o*eer 2#& 2##/ and the on agenda as for

aending the .rtices of .ssociation in ters of the ao*e said SEBI etter' Soe of the

sharehoders had re4uested& in riting& the noticee to accept their prox and to *ote in fa*our of

the resoution re4uired to e passed for aending the artices in ters of the SEBI directi*es'

d' he finding of inspection as ade ithout considering the *er fact that the directi*es of SEBI

if not ipeented oud ca the *er existence of ISE into 4uestion and oud ha*e exposed

the exchange to the charge of ha*ing disregarded and *ioated the SEBI directi*es'

e' It as the noticees eief that as per .rtice 1/0 of .o. of the +opan& it as his dut to

ipeent the SEBI directi*es' e had no persona interest hatsoe*er other than ipeenting

the SEBI directi*es' It as aso entioned to SEBI officias an ties that proxies as

accepted on to ipeent SEBI directi*es and not for an persona reasons'

f'

herefore& there as no 4uestion of an confict of interest as the noticee as acting pure in hisprofessiona capacit to discharge his duties and as such did not *ioate the code of conduct fo

directors' .ccording to hi& e*en under the +opanies .ct& 1/0$& there as no ar against the

anaging 8irector fro accepting a prox' he noticee had accepted proxies on to ipeent

the SEBI directi*es as he fet that it as his prie dut to ipeent the SEBI directi*es' is



21/27

Page 21 of 27

conduct as in the est interest of the copan to ensure that necessar resoution is passed

the eers'

g' 3ro the foregoing& SEBI oud oser*e that a his actions ha*e een ao*e oard and done

pure to discharge his duties toards the exchange'

h' he noticee stated that he had een ade a scapegoat through the design of soe peope

anting to destaiise ISE and aso harass hi for not gi*ing into their nefarious designs'

he proxies hich ere accepted the noticees ere ith specific directions fro the Sharehoders to

ipeent the SEBI directi*e'

T( n&$%# *-"& 6*d $( '&--&%n n!*- ")6%""%&n"9

• he noticee as a a aiding professiona and had an uneished record of 2> ears

association ith the capita arket' he noticee suitted that he as a Aenera anager

ith +ochin Stock Exchange and as associated ith it for 12 ears' Pursuant to thishe as an Executi*e 8irector of the adras Stock Exchange for 0 ears and thereafter

@oined ISE 'e'f .ugust 2##7'

• he noticee suitted that during his association ith the +apita arket and hoding

responsie positions in the stock exchanges he as not ser*ed ith an notice SEBI

or those stock exchanges'

• he noticee suitted that he has aas discharged his duties strict in accordance ith

SEBI ,eguations and had scrupuous fooed the rues go*erning the functioning of

stock exchanges'

• he noticee suitted that ISE had recei*ed a sho cause notice on 6anuar 12& 2#11

and the aegations e*eed against the Board of 8irectors ere 9 (i) Lack of ransparenc

in aarding the contract (ii)+asting of prox *ote the 8 (iii) 3aiure to ensure

copiance ith IPS' ISE forarded its rep and the persona hearing schedued in

that atter as postponed' he noticee suitted that no hearing had een conducted in

respect of the said sho cause notice' he noticee suitted that the ne sho cause

notice issued to hi on 6une 2$& 2#1 containing ore or ess the sae aegations as inthe earier S+5 i'e' (i) irreguarities in aarding contract for the trading patfor (ii)

3aiure to ensure copiance ith the IPS ,eguations' (iii) Prox *oting P6

athe'



22/27

Page 22 of 27

• ISE as aiting for the ast to and a haf ears for the outcoe of the 1st sho cause

notice' oe*er& ISE did not recei*e an counication hich eant that ISE had

satisfactori expained a the aegations'

• he noticee suits that hen ISE sent the proposa for his reappointent as anaging

8irector hich as fooed ith a reinder& he recei*ed the captioned S+5' he

noticee suits that the contents of oth the sho cause notices (the S+5 issued to ISEand the present S+5 issued to hi) are the sae and has aeged that he is *ictiiDed

soe interested persons'

4 I ha*e considered the S+5& the repies of the noticee& suissions and ritten suissions

tendered during the persona hearing and other ateria a*aiae on record' I proceed to consider the

aegations e*eed against the noticee aong ith his suissions' he first charge against the noticee is

that he& as the anaging 8irector of the ISE had faied to ensure the fair anner of *endor seection

hich resuted in the seection of rong *endor and sustantia oss to ISE' In this regard& the noticeehad contended that the Board of 8irectors had confired that the anaging 8irector (i'e'& noticee) had

gi*en a the ree*ant inforation to the Board in respect of aarding the contract to ,AL' 3urther& as

per the eeting of the Ao*erning Board hed on 6u 1$& 2#1& the Board as satisfied that the a*aiae

records in ISE and aso the confiration ade the present directors (ho ere part of the Ao*erning

Board hen the contract as aarded to ,AL)& shoed that the anaging 8irector (i'e'& the noticee)

had infored the then Ao*erning Board aout the in*o*eent of the hird Part Softare License at

the tie of negotiations ith ,AL efore aarding the contract& hich as aso incuded in the S.

It as aso suitted that this S. as *etted an externa independent agenc du appointed the

Ao*erning Board of ISE' he noticee had aso contended that the inutes of the Ao*erning Board hed

on 6u 20& 2##% shoed that the hird Part License .greeent and Escro .greeent as ith the

knoedge and appro*a of the Ao*erning Board' he inutes of B8+ eeting hed on 6u /& 2##%

aso entioned aout the third part agreeent appro*a' .s per the noticee& these to docuents

cear shoed that the Ao*erning Board and the B8+ ere e aare of the hird Part License

agreeent' he noticee aso suitted that the GS.G as signed on on .ugust 7& 2##% hich as after

the aforesaid appro*a gi*en the Board' .ccording& the S.& executed eteen ,AL and ISE& hada cause for depositing the source code of the hird Part Softare License in a Bank' .ccording to the

noticee& the present Ao*erning Board aso had taken note of the sae' In *ie of the ao*e

suissions& the noticee had contended that the aegation that he had Gco*ered up the hird Part

License .greeentG as factua incorrect'



23/27

Page 2 of 27

I ha*e considered the ao*e suissions of the noticee' he aegations are tofod' !ne is the

irreguarit in aarding the contract for setting up trading patfor in ISE and the second is that "notice

was )ull aware o) the third part so)tware license agreement at the time o) award o) the contract to ACL and that it

appeared to have been deliberatel covered up1ignored while listing out the relative strengths o) the vendors b ?&C1?oard "

he S+5 had aso stated "''''''''' 4n view o) the above( the noticee being the 5& o) 4S6 !during the relevant period$( a

member o) the ?&C committee and being part o) the group who visited &ubai and &ha%a to ensure that the so)tware o)

TCS and ACL are read )or use as directed b ?&C( had )ailed to ensure the )air manner o) vendor selection( which

resulted in the selection o) wrong vendor and substantial loss to 4S6"'

I note that the noticee in his suissions had stated that the B8+ had considered the technica aspects

and coercias of oth the *endors' 3urther& the initia outfo as ,s'1 crore in the case of proposa

fro ,AL& hereas the sae as ,s'/'2$ crores in the case of +S' herefore the B8+ had

recoended ,AL as the softare *endor for setting up of trading patfor' he noticee had aso

suitted that B8+ as *er e aare aout the in*o*eent of third part softare icence and

therefore suggested G8eposition of Source code of third part softare icense in a separate ank

accountG' he recoendation of B8+ as paced efore the go*erning Board in the eeting hed on

.pri 2#& 2##%' he Ao*erning Board of ISE had aso confired the sae' he noticee had aso

suitted that the GS.G as signed on on .ugust 7& 2##% hich is after the aforesaid appro*a gi*en

the Board' .ccording to the noticee& the Board of 8irectors ha*e confired that the anaging

8irector had gi*en a the ree*ant inforation to the Board in respect of aarding the contract to

,AL' he Ao*erning Board in its eeting hed on 6u 1$& 2#1& satisfied that the a*aiae records in

ISE and aso the confiration ade the present directors ho ha*e een part of the Ao*erning

Board hen the contract as aarded to ,AL& shoed that the anaging 8irector had infored the

then Ao*erning Board aout the in*o*eent of the hird Part Softare License at the tie of

negotiations ith ,AL efore aarding the contract& hich as aso incuded in the S. ha*ing een

*etted an externa independent agenc du appointed the Ao*erning Board of ISE' .ccording

the S. executed eteen ,AL and ISE had a cause for depositing the source code of the hird

Part Softare License in a Bank'

I ha*e aso perused the S. (dated #7'#%'2##%)& herein in cause >'1(ii)& there is a ention of Ghird

Part Softare .ppicationsG' he S. had aso andated that the ser*ice pro*ider (.+L) sha ensure

that the hird Part Softare License .greeent (incusi*e of escro arrangeent) is executed ithin #



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das and that faiure to dei*er a cop of such agreeent is considered as a ateria reach' .rtice 7 of

the S. deas ith Source +ode Escro' .s per these pro*isions& the ser*ice pro*ider sha ha*e right

to access the source code of the third part softare and aso the right to odif such softare for

aintenance& enhanceent and support of the softare appications' In *ie of the sae& it a not e

reasonae to hod the noticee iae for not inforing the Board aout the third part softare

arrangeent'


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Page 20 of 27

etters to the sharehoders to confir hether the ere acting in concert and had reied upon the

confirations recei*ed fro those entities that the did not act as P.+s'

he noticee suitted that .+E Liited& hich hed > in ISE& cannot e construed as a P.+' .s

per the noticee& though this entit had re4uested for prox *oting fro an epoee of ,eigare& it had

re4uested Gr' ='?' hoas ho as representing the ,egiona Stock Exchange at the EA hed on

5o*eer 12& 2#1#G to *ote as prox' he noticee had aso contended that a person acting as a prox

for another need not e that entitGs P.+'

.s 8 of a SEBI recogniDed Stock Exchange& it as the dut of the noticee to ipeent the

pro*isions of the IPS ,eguations in etter and spirit' he fact that an epoee of ,eigare as

approached to act as prox for an aeged P.+ gi*es an indication that the coud e acting ith a

coon purpose' ISE shoud not ha*e een satisfied ith a routine 4uer and accepted a and denia

he shoud ha*e tried to further expore the reationship aongst the aeged P.+s and in case of

dout shoud ha*e infored SEBI' he 8Fstock exchange coud ha*e sought guidance fro SEBI

ith respect to copiance ith the IPS ,eguations' he noticee did not foo the prudent path

and sip kept 4uiet and therefore had not acted in the est interest of the securities arket'

94 he third and ast aegation against the noticee is that he had acted as a prox for fe

sharehoders of the stock exchange in respect of a resoution to aend the .rticesFrues as directed

SEBI' In this regard& I note that SEBI *ide etter dated Septeer 21& 2##0 ad*ised ISE that PI8s

oud e seected the Board of 8irectors of the Stock Exchange fro SEBI constituted pane of

PI8s and that the sae sha e suita incorporated in .rtices& ,ues of ISE' 3urther& ased on a

carification sought ISE& SEBI *ide etter no' ,8F8S.F+J8FSLF1>>$F#% dated 5o*eer #$

2##% ad*ised ISE to suita aend cause 1''0 of the .rtices of .ssociation herein the ord Kelected

sha e repaced ith the ord Kselected, ' he S+5 entioned that instead of aending the ree*an

rues& the ISE had caed for an .A on Septeer 2/& 2##/ and an EA on 5o*eer 2#& 2##/ for

the purposes of aking such aendents and in the EA and aeged that the noticee had accepted and

acted as a GproxG for a fe sharehoders' .s per the S+5& the noticee had acted as prox for thefooing persons9



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D$*%-" &' $( 3!&> $( n&$%# &n (*-' &' $( '&--&%n 3!"&n":

SN&

N*6 &' $( S(*!(&-d! N*6 &' $(R3!"n$*$%) and 11B thereof and section



27/27

12. of the Securities +ontracts (,eguation) .ct& 1/0$& here restrain the noticee& r' P' 6' athe

( )ormer 5anaging &irector o) the erstwhile 4nterBconnected Stoc% 6Echange o) 4ndia Limited ) fro accepting an

position as anaging 8irector or +hief Executi*e !fficer in an of the SEBI recogniDed Stock

Exchanges for a period of one ear'

124 he S+5 dated 6une 2$& 2#1 issued to the ao*e noticee stands disposed off according'

PRASHANT SARANWHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIAD*$ : M*!#( 19$(, 2015P-*# : M)6*%

Order in respect of Mr. P. J. Mathew, former Managing Director of the Inter-connected Stock Exchange...

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Transcript of Order in respect of Mr. P. J. Mathew, former Managing Director of the Inter-connected Stock Exchange...