Ipo Order

SECURITIES AND EXCHANGE BOARD OF INDIA
ORDER
UNDER SECTIONS 11, 11B AND 11(4) OF SECURITIES AND

EXCHANGE BOARD OF INDIA ACT, 1992 AND SECTION 19 OF
DEPOSITORIES ACT, 1996 IN THE MATTER OF
INVESTIGATION INTO INITIAL PUBLIC OFFERINGS
WTM/GA/60/ISD/04/06
1.0. Background
1.1.As a part of ongoing surveillance activity by SEBI into the various aspects of working
of securities market, SEBI had initiated probe and advised BSE and NSE to look into
the dealings in the shares issued through Initial Public Offerings (IPOs) before the
shares are listed on the stock exchanges. For the purpose of the examination, the off-
market transactions data as obtained from the depositories were provided by SEBI to
the stock exchanges. In October 2005, the stock exchanges submitted their
preliminary observations on the IPO of Yes Bank Ltd. (YBL) which hinted at the
possibility of large scale off- market transactions immediately following the date of
allotment and prior to the listing on the stock exchanges. SEBI therefore carried out a
preliminary scrutiny by calling for data from the depositories and the Registrar to the
Issue (RTI). It was found that large number of multiple dematerialized accounts with
common addresses were opened by a few entities. On noticing the irregularities and
widespread abuse, SEBI acted against the entities who were responsible for the
irregularities by passing interim order restraining them from participating in all future
IPOs and also directing the depositories to effectively freeze their dematerialized
accounts. Close on the heels of the order in the case of Yes Bank IPO, SEBI
examined the dealings in another major IPO of IDFC wherein the very same players
were suspected to have played a major role in cornering the shares. SEBI issued ad
interim orders in the case of IDFC also along the similar lines as done in the case of
Yes Bank.
1.2.In the course of investigations pursuant to interim orders in the cases of Yes Bank and
IDFC, SEBI has noticed that some of these multiple accounts were opened in June
2003. The involvement of these accounts in Initial Public Offerings prior to that of
Yes Bank and IDFC were looked into.
2.0.Modus Operandi
2.1.Consequent to the preliminary scrutiny, SEBI found that certain entities had cornered
IPO shares reserved for retail applicants by making applications in the retail category
through the medium of thousands of fictitious / benami IPO applicants with each of
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the application being for small value so as to be eligible for allotment under the retail
category. Subsequent to the receipt of IPO allotment these fictitious / benami allottees
had transferred shares to their principals who in turn transferred the shares to the
financiers that had originally made available the funds for executing the game-plan.
The financiers in turn sold most of these shares on the first day of listing thereby
realising the windfall gain of the price difference between IPO price and the listing
price.
2.2.It was found that almost all the dematerialized accounts that were in the names of
fictitious / benami entities were held through the depository participant Karvy Stock
Broking Ltd. (Karvy-DP). Inspection of Karvy – DP by NSDL and CDSL has
revealed that the DP has obtained letters from the concerned banks towards proof of
identity (POI) and proof of address (POA) for the purpose of opening dematerialized
accounts. In terms of SEBI circular ref: MRD/DoP/Dep/Cir-29/2004 dated August 24,
2004, an identity card / document issued by Scheduled Commercial Banks containing
the applicant’s photo / address may be accepted as POI and POA. The circular further
clarified that “the aforesaid documents are the minimum requirement for opening a
BO Account. The Depository Participants (DPs) must verify the copy of the
document with the original before accepting the same as valid. While opening a BO
Account, the DPs are required to exercise due diligence while establishing the
identity of the person to ensure the safety and integrity of the depository system.”
Thus it appears that first the bank accounts were opened in the names of fictitious /
benami entities and this facilitated the fictitious / benami bank account holders to
open dematerialized accounts.
2.3.The entire modus operandi as detailed above, led to the suspicion that the thousands
of entities in each of whose names separate dematerialized accounts and bank
accounts had been opened and IPO applications made were merely name- lenders or
non-existent. SEBI had earlier made reference to Reserve Bank of India (RBI) in this
regard.
2.4.The findings of RBI also confirm the preliminary findings of SEBI that these
thousands of name- lenders are fictitious. Even the key persons (master account
holders) who had executed the game plan were merely intermediaries acting on behalf
of financiers. These key persons and their financiers are not investors but mere rank
opportunists who seek to make a killing by disposing the IPO shares cornered by
them on the date of listing. The banks have also played their part by opening bank
accounts and providing loan to these fictitious entities with the objective of earning
interest and other charges.
3.0.Further Actions taken by SEBI consequent to the Orders Passed
3.1.As already mentioned, SEBI has issued suitable directions against the above
mentioned key operators prohibiting them from dealings in securities. The financiers
and other related entities have been directed not buy, sell or deal in IDFC / YBL
shares and in other ensuing IPOs. As regards, opening of dematerialized accounts in
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the names of fictitious / benami entities, SEBI has directed the major DPs involved,
namely, Karvy-DP and Pratik-DP not to open new dematerialized accounts till further
directions. References have been made to RBI and Income Tax department
communicating the findings of SEBI.
3.2.In addition, the following actions have been taken:
a. Karvy Stockbroking Ltd. and Pratik Stock Vision P Ltd., the Depository
Participants involved in the said two IPOs have been inspected by SEBI.
The inspection has revealed numerous violations by these DPs. Besides
the detailed verification relating to the dematerialized accounts opened by
Karvy-DP has revealed that Karvy-DP has violated the various norms
prescribed by SEBI with regard to the operations of a DP including failure
to follow the ‘know your client’ norms laid down by SEBI.
b. Karvy Computershare Ltd., the Registrar to the Issue in the two IPOs has
been inspected.
c. References have been made to RBI, Income Tax department and CBI
communicating the findings of SEBI in this matter. SEBI has also filed
complaints with CBI.
d. SEBI is initiating prosecution proceedings against the concerned entities.
e. As directed by SEBI, the depositories i.e. NSDL and CDSL have advised
their respective DPs to verify the genuineness of the dematerialized
account-holders where 20 or more dematerialized account-holders have a
common address and to close those dematerialized accounts where the
DPs are unable to do the above verification.
f. During the course of the above verification it was noticed that certain DPs
had large number of dematerialized account- holders sharing a few
common addresses. Some of these DPs have been inspected by the
depositories as well as an independent Chartered Account Firm engaged
by SEBI. The above inspections of the DPs disclosed various irregularities
and appropriate actions will be taken against the concerned DPs.
g. The depositories have been directed to form a co-ordination committee to

co-ordinate with the surveillance department of SEBI for monitoring
abnormal transactions in dematerialized accounts.
h. As an interim measure to check misuse through off- market transfer prior

to listing, SEBI, vide circular dated January 19, 2006, has advised the
depositories that in case of IPOs they should activate the ISINs only on the
date of commencement of trading on the stock exchanges.
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i. Since some of the demat accounts that were used in the IPOs of Yes Bank
and IDFC were opened during the year 2003, the depositories were
advised to identify all the other IPOs during 2003, 2004 and 2005 wherein
the same modus operandi has been adopted by the identified entities and to
identify other entities besides those already identified by SEBI who were
suspected to be indulging in the same modus operandi.
3.3.Further, SEBI conducted detailed investigations in the matter. In the course of the
investigations, SEBI has obtained the bank account statements of the concerned
entities held with Bharat Overseas Bank (‘BhOB’), Vijaya Bank, ICICI Bank and
HDFC Bank and has also recorded the statements of the officials of BhOB,
Ahmedabad, Chennai, Goregaon and Worli branches and Vijaya Bank, Ambavadi,
Ahmedabad.
3.4.SEBI has also obtained information from Karvy Stock Broking Ltd. (‘Karvy-DP’)
and Karvy Computershare Ltd. (‘Karvy-RTI’). Further, SEBI has received references
from various Government Agencies including Reserve Bank of India (‘RBI), Serious
Fraud Investigation Office (‘SFIO’) and Intelligence Bureau (‘IB’). Various investor
complaints have also been received alleging irregularities in various IPOs.
3.5.The trends and patters as gleaned from detailed investigations conducted by SEBI are
given below:
4.0. Definition of Terms
For the purpose of this order the following terms would mean:
(a) “Financier” is a person who either on his own or alongwith others provided the
finance for IPO subscriptio n and are the ultimate beneficiaries in the scheme of
cornering retail allotment and forking out a big gain on sale immediately afer
listing.
(b) “Master Account Holders / Key Operators ” are the 24 entities identified in the
sweep of this order who allowed their demat accounts for temporarily parking
credits received from a multitude of afferent accounts before transfer to
financiers.
(c) “Afferent Accounts” (benami / fictitious accounts) would refer to countless
demat accounts in benami and fictitious names, the credits from where found its
confluence in the master accounts.
The modus operandi adopted for cornering of retail portion of IPO shares is pictorially
represented below:
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Market
Afferent A/c Sale
(IPO applicant) Financier
Afferent A/c Key Operator Financier Market

(IPO applicant) Sale
Financier Market
Afferent A/c Sale
(IPO applicant)
5.0.Examination of IPOs during 2003-2005
5.1.SEBI advised the depositories to examine all the IPOs during the period from January
2003 to December 2005 in respect of those dematerialized accounts that had received
20 or more credits reckoning the period from the date of close of respective IPO to
the first day of trading on listing (both days including). Since the pay- in / pay-out for
shares listed on the stock exchanges commences two days after the date of listing on
the stock exchanges, it stands to reason that trades done till one day after listing
would necessarily involve dealing in IPO shares. For the purpose of the above
examination, SEBI obtained the details of all IPOs during the above period from the
stock exchanges i.e. BSE and NSE and forwarded the same to NSDL and CDSL. The
details of IPOs during 2003-2005 as obtained from the stock exchanges are as given
below:
Table 5.1 – IPOs during 2003 – 2005

Desig Issue size Issue Issue Issue
Sr. Name of the Type of Nated (no.of open close Price Listing
No. company Issue St. Exch. shares) date date (Rs.) date
Radaan Madras
Mediaworks India Stock
1 Limited IPO Exchange 2,700,200 5-Feb-03 8-Feb-03 40 2/27/2003
Divi's
2 Laboratories Ltd. IPO NSE 3,204,684 17/02/2003 21/02/2003 140 3/12/2003
Maruti Udyog
3 Ltd. IPO BSE 72,243,300 12/06/2003 19/06/2003 125 7/9/2003
4 UCO Bank IPO NSE 200,000,000 03/09/2003 12/09/2003 12 10/9/2003
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6 B.A.G. Films Ltd. IPO NSE 14,860,000 06/09/2003 17/09/2003 10 10/17/2003

IPO
Vardhman (Offer
7 Acrylics Limited for Sale) NSE 27,568,527 15-Sep-03 19-Sep-03 10 9/30/2003
Jai Balaji Sponge
9 Limited IPO NSE 10,126,900 21-Oct-03 31-Oct-03 10 12/9/2003
Indraprastha Gas
10 Ltd. IPO BSE 40,000,000 28/11/2003 05/12/2003 48 12/26/2003
T.V.Today
11 Network Ltd. IPO BSE 14,500,000 18/12/ 2003 27/12/2003 95 1/16/2004
Surya
Pharmaceuticals
12 Ltd. IPO NSE 3,000,000 18/12/2003 22/12/2003 45 1/21/2004
Patni Computer
13 Systems Ltd. IPO BSE 18,724,000 27/01/2004 05/02/2004 230 2/25/2004
14 Four Soft Ltd. IPO NSE 7,950,000 16/02/2004 23/02/2004 25 3/12/2004

Petronet LNG
20 Ltd. IPO BSE 260,979,900 01/03/2004 09/03/2004 15 3/26/2004
22 Biocon Ltd. IPO NSE 10,000,000 11/03/2004 18/03/2004 315 4/7/2004
23 PTC India Ltd. IPO BSE 58,499,990 01/03/2004 08/03/2004 16 4/7/2004

Bank of
24 Maharashtra IPO BSE 100,000,000 25/02/2004 04/03/2004 23 4/12/2004
Dishman Pharma.
25 & Chemicals Ltd. IPO NSE 3,433,500 29/03/2004 07/04/2004 175 4/22/2004
Ramkrishna
27 Forgings Ltd. IPO NSE 6,125,000 02/04/2004 10/04/2004 20 5/5/2004
Datamatics
28 Technologies Ltd. IPO BSE 10,300,000 12/04/2004 19/04/2004 110 5/7/2004
New Delhi
29 Television Ltd. IPO BSE 15,571,428 21/04/2004 28/04/2004 70 5/19/2004
IPO
Vishal Exports (Offer
30 Overseas Limited for Sale) NSE 6,000,000 29-Apr-04 7-May-04 45 5/28/2004
Tata Consultancy
31 Services Ltd. IPO NSE 63,770,480 29/07/2004 05/08/2004 850 8/25/2004
Indiabulls
Financial Services
32 Ltd. IPO BSE 27,187,519 06/09/2004 10/09/2004 19 9/24/2004
Crew B.O.S.
33 Products Ltd. IPO BSE 4,000,724 19/08/2004 27/08/2004 35 9/24/2004
Sah Petroleums
34 Ltd. IPO NSE 9,080,000 30/08/2004 06/09/2004 35 9/24/2004
MSK Projects
35 (India) Ltd. IPO BSE 6,000,000 27/09/2004 08/10/2004 40 11/4/2004
National Thermal
Power
36 Corporation Ltd. IPO NSE 865,830,000 07/10/2004 14/10/2004 62 11/5/2004
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S.A.L. Steel
37 Limited IPO NSE 42,000,000 01/11/2004 05/ 11/2004 14 11/24/2004
Deccan Chronicle
39 Holdings Ltd. IPO BSE 9,215,060 25/11/2004 02/12/2004 162 12/22/2004
Bharati Shipyard
40 Ltd. IPO BSE 12,500,000 02/12/2004 08/12/2004 66 12/30/2004
Dwarikesh Sugar
41 Industries Ltd. IPO BSE 5,000,000 29/11/2004 03/12/2004 65 12/31/2004
Indoco Remedies
42 Ltd. IPO NSE 3,000,000 17/12/2004 23/12/2004 245 1/14/2005
Impex Ferro Tech
43 Ltd. IPO BSE 8,000,000 22/12/2004 31/12/2004 10 2/3/2005
Jet Airways
45 (India) Ltd. IPO NSE 17,266,801 18/02/2005 24/02/2005 1100 3/14/2005
UTV Softare
Communications
46 Ltd. IPO NSE 6,999,950 21/02/2005 25/02/2005 130 3/17/2005
Gateway
49 Distriparks Ltd. IPO BSE 21,000,000 9-Mar-05 14/03/2005 72 3/31/2005
Jaiprakash Hydro-
51 Power Ltd. IPO NSE 180,000,000 22/03/2005 29/03/2005 32 4/18/2005
52 3I Infotech Ltd. IPO NSE 23,000,000 30/03/2005 04/04/2005 100 4/22/2005

Gokaldas Exports
53 Ltd. IPO BSE 3,125,000 30/03/2005 06/04/2005 425 4/27/2005
54 Saksoft Limited IPO NSE 2,500,000 30-Mar-05 7-Apr-05 30 5/9/2005

Shringar Cinemas
56 Ltd. IPO BSE 8,150,000 05/04/2005 11/04/2005 53 4/29/2005
Allsec
57 Technologies Ltd. IPO NSE 3,141,200 13-Apr-05 20/04/2005 135 5/9/2005
59 India Infoline Ltd. IPO NSE 11,878,138 21-Apr-05 27/04/2005 76 5/17/2005

Mangalam Drugs
60 & Organics Ltd. IPO BSE 6,500,000 19-Apr-05 26/04/2005 22 5/23/2005
Shoppers Stop
61 Ltd. IPO BSE 6,946,033 28-Apr-05 04/05/2005 238 5/23/2005
Cyber Media
62 (India) Ltd. IPO NSE 2,822,500 4-May-05 09/05/2005 60 6/10/2005
63 Nandan Exim Ltd. IPO BSE 6,000,000 12-May-05 20/05/2005 20 6/13/2005

Shree Ganesh
64 Forgings Ltd. IPO BSE 5,000,000 18-May-05 24/05/2005 30 6/22/2005
Uniply Industries
67 Ltd. IPO BSE 5,000,000 09/06/2005 16/06/2005 24 7/6/2005
Provogue (India)
68 Ltd. IPO BSE 4,049,402 10/06/2005 16/06/2005 150 7/7/2005
69 Yes Bank Ltd. IPO BSE 70,000,000 15/06/2005 21/06/2005 45 7/12/2005

MSP Steel &
70 Power Ltd. IPO BSE 16,000,000 20/06/2005 24/06/2005 10 7/18/2005
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Nectar
71 Lifesciences Ltd. IPO NSE 3,870,000 22/06/2005 28/06/2005 240 7/18/2005
SPL Industries
72 Ltd. IPO NSE 9,000,000 29/06/2005 05/07/2005 70 7/26/2005
IL&FS
73 Investsmart Ltd. IPO NSE 11,400,000 04/07/2005 08/07/2005 125 7/27/2005
Shri Ramrupai
76 Balaji Steels Ltd. IPO NSE 20,000,000 08/07/2005 14/07/2005 22 8/2/2005
Infrastructue
Development
77 Finance Co. Ltd. IPO NSE 403,600,000 15/07/2005 22/07/2005 34 8/12/2005
Vivimed Labs
79 Ltd. IPO NSE 2,500,000 09/07/2005 13/07/2005 70 8/17/2005
80 HT Media Ltd. IPO BSE 6,995,000 4-Aug-05 10-Aug-05 530 9/1/2005

Sasken
Communication
81 Technologies Ltd. IPO BSE 5,000,000 11-Aug-05 17-Aug-05 260 9/9/2005
Amar Remedies
82 Ltd. IPO BSE 15,000,000 25-Aug-05 31-Aug-05 28 9/16/2005
FCS Software
83 Solutions Ltd. IPO BSE 3,500,000 22-Aug-05 26-Aug-05 50 9/21/2005
Suzlon Energy
85 Ltd. IPO NSE 29,340,000 23-Sep-05 29-Sep-05 510 10/19/2005
Aurionpro
87 Solutions Ltd. IPO BSE 3,000,000 27-Sep-05 4-Oct-05 90 10/25/2005
Shree Renuka
88 Sugars Ltd. IPO BSE 3508722 7-Oct-05 14-Oct-05 285 10/31/2005
Paradyne Infotech
90 Ltd. IPO BSE 3,300,000 30-Sep-05 7-Oct-05 42 11/10/2005
K. M. Sugar Mills
91 Ltd IPO BSE 6400000 14-Oct-05 19-Oct-05 52 11/14/2005
Bannari Amman
Spinning Mills
92 Ltd. IPO NSE 7000000 19-Oct-05 25-Oct-05 135 11/14/2005
Prithvi
Information
93 Solutions Ltd. IPO BSE 5000000 25-Oct-05 28-Oct-05 270 11/16/2005
PBA
94 Infrastructure Ltd IPO BSE 5000000 24-Oct-05 28-Oct-05 60 11/24/2005
Vikash Metals
95 Ltd. IPO BSE 18902900 24-Oct-05 28-Oct-05 20 11/28/2005
Bombay Rayon
96 Fashions Ltd IPO BSE 13475000 11-Nov-05 17-Nov-05 70 12/5/2005
Pyramid Retail
97 Ltd. IPO BSE 9,000,000 10-Nov-05 16-Nov-05 120 12/6/2005
ABG Shipyard
98 Ltd. IPO BSE 8500000 18-Nov-05 24-Nov-05 185 12/13/2005
AIA Engineering
100 Ltd. IPO NSE 4700000 17-Nov-05 22-Nov-05 315 12/14/2005
101 Everest Kanto IPO BSE 5625000 22-Nov-05 25-Nov-05 160 12/15/2005
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Cylinder Ltd.
Kernex
Microsystems
103 (India) Ltd. IPO BSE 3960444 28-Nov-05 3-Dec-05 250 12/20/2005
104 Repro India Ltd IPO BSE 2620037 26-Nov-05 1-Dec-05 165 12/22/2005
Compulink
105 Systems Ltd. IPO NSE 4538462 25-Nov-05 30-Nov-05 60 12/28/2005
5.2.SEBI advised the depositories viz. NSDL and CDSL to examine the above 105 IPOs
with respect to off- market transactions during the period from the date of close of
respective IPO to the first day of trading on listing (both days including) for
identifying master account holders that had received IPO shares from numerous
afferent demat accounts. Since the pay- in / pay-out for shares listed on the stock
exchanges commences two days after the date of listing on the stock exchanges, it
stands to reason that off- market trades done till one day after listing would
necessarily involve dealing in IPO shares..
5.3.NSDL and CDSL submitted data in respect of the IPOs during 2003-2005 regarding
the above. From the data submitted by NSDL it is seen that there are a total of 1579
dematerialized account-holders that have received IPO shares from 20 or more
dematerialized accounts and in the case of CDSL there were 700 such dematerialized
account-holders.
5.4.The floor level of 500 or more is adopted in this order for determining the suspect
multiple demat accounts in typical samples, as samples with lesser numbers may not
be truly representative of the “suspect” character, especially having regard to the
large incidence of multiple accounts in any IPO with genuine combinations at lower
levels. Further a sample of more than 500 multiple demat account would impart the
necessary focus and direction to the whole exercise of tracking down the real culprit
accounts in cornering the IPO allotment and dealing with them effectively in a
demonstrative regulatory action. Also any group / cluster activity involving 500 or
more demat accounts in IPO allotment excites a genuine suspicion in the context of
off- market transfers from such accounts to one account which would normally be
possible, if only such afferent accounts were dummies with unity of control resting
with the master account holders. Definitely, synchronized off- market transfers in
large numbers to a common master account have something uncommon about them,
while suggesting control exercised by that master account holder in moving those
afferent accounts, which have no existence of their own.
5.5.This is however not to state that where there are less than 500 afferent accounts, the
same would pass off as genuine. The focus of the SEBI investigations has been on
entities indulging in off- market transactions prior to listing and commencement of
trading on the stock exchanges.
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5.6.In the case of NSDL 23 master account holders had received shares from 500 or more
afferent account in 21 IPOs during the years 2003-2005 whereas in the case of CDSL
there were three such master account holders who had received shares in 9 IPOs
during the year 2005.
5.7.Accordingly, the IPOs in which the dematerialized account- holders received credit of
IPO shares from 500 or more dematerialized accounts were identified. It is seen that
in the case of NSDL there were 21 IPOs in which 23 dematerialized account-holders
received off- market credit of shares from 500 or more dematerialized account-holders
having certain commonalities. The details in respect of the these IPOs are
summarized below:
Table 5.7 (a) - IPO – NSDL

Sl. Company Name Client Name Dp Name CLIENT ID CREDITS No. of
No. >500 shares
received
1. Amar Remedies Ltd Roopalben Karvy Stock 11920868 884 221000
Nareshbhai Broking
Panchal Limited
2. Datamatics Technologies Roopalben Karvy Stock 11920868 1549 77450
Ltd. Nareshbhai Broking
Panchal Limited
3. Dishman Pharma. & Roopalben Karvy Stock 11920868 1958 97900
Chemicals Ltd. Nareshbhai Broking
Panchal Limited
4. FCS Software Solutions Sugandh Karvy Stock 14405199 1624 162400
Ltd. Estates And Broking
Investments Limited
Pvt Ltd
Roopalben Karvy Stock 11920868 1594 328800
Nareshbhai Broking
Panchal Limited
5. Gateway Dispriparks Lrd Purshottam Anagram 10093022 988 88920
Budhwani Stockbroking
Ltd
Roopalben Karvy Stock 11920868 971 87390
Nareshbhai Broking
Panchal Limited
6. Gokaldas Export Purshottam Anagram 10093022 953 14295
Ltd
7. ILFS Investmart Roopalben Karvy Stock 11920868 5162 258100
Nareshbhai Broking
Panchal Limited
Sugandh Karvy Stock 14405199 2135 106750
Estates And Broking
Investments Limited
Pvt Ltd
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No. >500 shares
received
8. Indraprasth Gas Eq Devangi Karvy Stock 11933458 623 62300
Dipakbhai Broking
Panchal Limited
9. Infrastructue Roopalben Karvy Stock 11920868 12258 7204610
Development Finance Co. Nareshbhai Broking
Ltd. Panchal Limited
Estates And Broking
Investments Limited
Pvt Ltd
Parag P Jhaveri Karvy Stock 10004600 2083 554078
Broking
Limited
Kelan Atulbhai Karvy Stock 12501284 1970 524286
Doshi Broking
Limited
Purshottam Anagram 10093022 1379 366814
Ltd
Dharmesh Karvy Stock 40081967 1206 320796
Bhupendra M Broking
Limited
Kamal P Karvy Stock 10004626 883 234878
Jhaveri Broking
Limited
Biren Kantilal Karvy Stock 15530980 829 220514
Shah Broking
Limited
Dharmesh K Karvy Stock 40080736 749 207714
Katakia Broking
Limited
Dhaval K Karvy Stock 40080719 700 186200
Katakia Broking
Limited
Deepakkumar Pravin Ratilal 10403856 686 236859
Shantilal Jain Sh & Stk
Dhaval A. Khandwala 10139886 660 175560

Mehta Int.Fin.S.Pv.L
10. Jet Airways (India) Ltd Deepak Hdfc Bank Ltd 10315404 633 8862
Madhukant
Patel
Opee Stock - Pravin Ratilal 10127493 553 12039
Link Ltd. Sh & Stk
11. Nandam Exim Ltd Roopalben Karvy Stock 11920868 1982 495500
Nareshbhai Broking
Panchal Limited
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No. >500 shares
received
12. National Thermal Power Roopalben Karvy Stock 11920868 7386 1580818
Corporation Ltd. Nareshbhai Broking
Panchal Limited
Estates And Broking
Investments Limited
Pvt Ltd
Doshi Broking
Limited
D B Mehta Karvy Stock 40064516 710 151940
Broking
Limited
13. Nectar Lifesciences Ltd Roopalben Karvy Stock 11920868 4004 100100
Nareshbhai Broking
Panchal Limited
Doshi Broking
Limited
Bhupendra M Broking
Limited
14. Patni Computer Systems Arjav Karvy Stock 11932970 2541 127050
Ltd. Nareshbhai Broking
Panchal Limited
15. Sasken Communication Roopalben Karvy Stock 11920868 1598 55075
Technologies Ltd. Nareshbhai Broking
Panchal Limited
Estates And Broking
Investments Limited
Pvt Ltd
16. Shoppers Stop Ltd Roopalben Karvy Stock 11920868 1553 38825
Nareshbhai Broking
Panchal Limited
Bhupendra M Broking
Limited
Ltd
17. SPL Industries Ltd Roopalben Karvy Stock 11920868 1331 167800
Nareshbhai Broking
Panchal Limited
Bhupendra M Broking
Limited
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No. >500 shares
received
18. Suzlon Energy Ltd. Roopalben Karvy Stock 11920868 8996 143936
Nareshbhai Broking
Panchal Limited
Dhaval A. Khandwala 10139886 3863 61808
Mehta Int.Fin.S.Pv.L
Ltd
Jhaveri Jhaveri 10005806 1009 27667
Securities Pvt. Securities P
Ltd. Ltd
Biren Kantilal Karvy Stock 15530980 888 14320
Shah Broking
Limited
Chandrakant Khandwala 10183690 803 12833
Amratlal Int.Fin.S.Pv.L
Parekh
Pratik Mafatlal Goldmine 10068824 710 15595
Shah Stocks Pvt Ltd
Himani N Patel The Kalupur 10005792 635 10160
Com.Co.Bank
19. T.V.Today Network Ltd. Devangi Karvy Stock 11933458 862 86200
Dipakbhai Broking
Panchal Limited
20. Tata Consultancy Roopalben Karvy Stock 11920868 7228 123942
Services Ltd. Nareshbhai Broking
Panchal Limited
Estates And Broking
Investments Limited
Pvt Ltd
Ambuja Estate Karvy Stock 13997078 1665 29788
And Holdings Broking
Pvt Ltd Limited
Ltd
Doshi Broking
Limited
Indiabulls Indiabulls 10131283 559 13939
Securities Ltd. Securities Ltd
21. Yes Bank Ltd Roopalben Karvy Stock 11920868 6315 947250
Nareshbhai Broking
Panchal Limited
Estates And Broking
Investments Limited
Pvt Ltd
Page 13 of 252
Interim Order - IPO

No. >500 shares
received
Bhupendra M Broking
Limited
Dharmesh K Karvy Stock 40080736 525 78750
Katakia Broking
Limited
Table 5.7 (b) - IPO – CDSL

Sr Name of company Client ID Entity Name Number of No. of
No. Shares accounts from
which shares
received
1. Infrastructure 1301440000307503 Roopal Nareshbhai 3934140 14790
Development Panchal
Finance Company 1301440000247208 Purshottam 750386 2821
Limited (July 2005) Ghanshyamdas
Budhwani
1301440000051951 Manojdev Seksaria 529074 1989
.
1202020000006413 Budhwani 343938 1293
Purshottam
2. FCS Software 1301440000307503 Roopal Nareshbhai 156300 1563
Solutions Limited Panchal .
(August 2005)
3. Suzlon Energy 1301440000051951 Manojdev Seksaria 22704 1419
Limited (September .
2005) 1202020000006413 Budhwani 19520 1220
Purshottam
1301440000247208 Purshottam 16288 1018
Ghanshyamdas
Budhwani
4. Shoppers Stop 1202020000006413 Budhwani 23400 936
Limited (April-May Purshottam
2005)
5. Nectar Lifesciences 1202020000006413 Budhwani 18800 752
Limited (June 2005) Purshottam
6. Yes Bank Limited 1202020000006413 Budhwani 110100 734
(June 2005) Purshottam
7. SPL Industries 1202020000006413 Budhwani 69500 695
Limited (June-July Purshottam
2005)
8. Sasken 1301440000307503 Roopal Nareshbhai 15150 606
Communication Panchal .
Technologies 1301440000051951 Manojdev Seksaria 13025 521
Limited (August .
2005) 1301440000247208 Purshottam 12950 518
Ghanshyamdas
Budhwani
9. IL & FS Investmart 1202020000006413 Budhwani 26400 528
Limited (July 2005) Purshottam
Page 14 of 252
Interim Order - IPO
6.0.Summary of the major IPOs
6.1.The details regarding the six IPOs, identified on the basis of entity-wise analysis as
discussed in detail in later paragraphs, wherein the above modus operandi for
cornering retail portion of IPOs have been adopted on a large scale is given below. In
this context it may be mentioned that the largest number of multiple / benami /
fictitious applications have occurred in the IPO of IDFC and the same have been
discussed in detail in the SEBI interim order dated January 12, 2006, and hence has
not been included in the narration below. Further it is seen that the first IPO in
which the key operators have participated was the IPO of Maruti Udyog Ltd.
(June 2003); however the fictitious/benami demat accounts used by the key
operators in the Maruti IPO were not in significant numbers (i.e. less than 500)
and hence is not covere d in the sweep of this order. The last IPO in which the
same modus operandi for cornering the retail portion of the IPO had been
adopted was Suzlon Energy Ltd. (21,692 afferent accounts) which IPO was
during September 2005.
6.2.Suzlon Energy Limited came out with a public issue of 29,340,000 equity shares
consisting of a fresh issue of 26,762,680 equity shares by Suzlon Energy Limited and
an offer for sale of 2,577,320 equity shares by Citicorp International Finance
Corporation Inc for cash at a price of Rs. 510 per equity share (including a share
premium of Rs 500 per equity share) aggregating Rs. 14,963,400,000.
6.3.Out of 29,340,000 equity shares offered in the public issue, 8,626,500 equity shares
(allocation on proportionate basis) was offered to Retail Individual Investors. The
pre-issue capital of Suzlon Energy Limited consisted of 260,768,700 Equity Shares
and the post issue capital of Suzlon Energy Limited was to be 287,531,380 equity
shares. The issue constituted 10.20% of the fully diluted post issue paid-up capital of
the company.
6.4.The IPO opened on September 23, 2005 and closed on September 29, 2005. J M
Morgan Stanley Private Limited and Enam Financial Consultants Pvt. Ltd. were the
Book Running Lead Managers to the issue, CLSA India Ltd. was the Senior Co-Book
Running Lead Manager and Yes Bank Ltd. was the Co-Book Running Lead Manager
and Karvy Computershare Private Ltd. was the Registrar to the Issue.
6.5.The retail portion of the issue was oversubscribed by 6.04 times and the non-
institutional portion was oversubscribed by 40.27 times.
6.6.The basis of allotment was finalized on October 11, 2005. The shares were credited to
the IPO allottees on October 13/14, 2005. On October 19, 2005, the shares of Suzlon
Energy Limited got listed on the Stock Exchanges.
Page 15 of 252
Interim Order - IPO
6.7.The key operators who cornered the retail portion of Suzlon Energy IPO were
Roopalben Nareshbhai Panchal, Dhaval A. Mehta, Purshottam Budhwani, Manojdev
Seksaria, Jhaveri Securities Pvt. Ltd., Biren Kantilal Shah, Chandrakant Amratlal
Parekh, Pratik Mafatlal Shah and Himani N Patel. The above key operators have used
21,692 afferent accounts to corner 323023 shares representing 3.74% of the total
number of shares allotted to the retail individual investors. Their financiers were
Saumil A Bhavnagari, Jayesh P Khandwala HUF, Rajan Vasudev Dapki, Umang R
Shah, Chirag Jayendrakumar Shah and Sheelu Lalwani.
6.8.Jet Airways (India) Ltd. came out with a Public offer of 17,266,801 equity shares
comprising a fresh issue of 14,245,111 Equity Shares by Jet Airways (India) Limited
and an Offer for Sale of 3,021,690 Equity Shares by Tail Winds Limited) of Rs.10
each for cash at a price of Rs. 1100 per Equity Share, aggregating to Rs. 18,993
million.
6.9.Out of the public issue, 4,016,700 equity shares (allocation on proportionate basis)
was offered to Retail Individual Investors. The pre-issue capital of Jet Airways
(India) Ltd. consisted of 72,088,900 equity shares and the post issue capital of Jet
Airways (India) Ltd. was to be 86,334,011 equity shares. The Offer constituted 20%
of the fully diluted post Offer paid- up equity capital of the Company.
6.10. The IPO opened on February 18, 2005 and closed on February 24, 2005. Deutsche
Equities India Private Ltd., HSBC Securities and Capital Markets India) Private
Limited, UBS Securities India Private Limited, Citigroup Global Markets India
Private Limited, DSP Merrill Lynch Limited and Kotak Mahindra Capital Company
Limited were the Book Running Lead Managers to the issue, CLSA India Ltd. war
the Senior Co-Book Running Lead Manager and Yes Bank Ltd. was the Co-Book
Running Lead Manager and Karvy Computershare Private Ltd. was the Registrar to
the Issue.
6.11. The retail portion of the issue was oversubscribed by 2.99 times and the non-
6.12. The basis of allotment was finalized on March 8, 2005. The shares were credited
to the IPO allottees on March 9/10,2005. On March 14, 2005 the shares of Jet
Airways (India) Ltd. got listed on the Stock Exchanges.
6.13. The key operators who cornered the retail portion of Jet Airways IPO were
Deepak Madhukant Patel and Opee Stock - Link Ltd. The above key operators used
1186 affferent accounts for cornering 20901 shares representing 0.52% of the total
number of shares allotted to the retail individual investors. Their financiers were
Bagrecha Ashok K. and Rupesh Bipinchandra Shah.
6.14. National Thermal Power Corporation Ltd. came out with a Public Issue of
865,830,000 Equity Shares consisting of a Fresh Issue of 432,915,000 Equity Shares
Page 16 of 252
Interim Order - IPO
of Rs. 10 each by Natio nal Thermal Power Corporation Limited and an Offer for Sale
of 432,915,000 equity shares of Rs. 10 each by the President of India acting through
the Ministry of Power, Government of India of Rs. 10 each for cash at a price of Rs
62 per equity share aggregating Rs.53,681.46 million.
6.15. Out of the public issue, 211,303,750 equity shares (Allocation on a proportionate
basis) was offered to Retail Individual Investors. The pre- issue capital of National
Thermal Power Corporation Ltd. consisted of 7,812,549,400 Eq uity Shares and the
post issue capital of National Thermal Power Corporation Ltd. was to be
8,245,464,400 Equity Shares. The Issue constituted 10.5% of the fully diluted post
Issue paid- up capital of the Company.
6.16. The IPO opened on October 7, 2004 and closed on October 14, 2004. ICICI
Securities Limited, Enam Financial Consultants Pvt Ltd and Kotak Mahindra Capital
Company Limited were the Book Running Lead Managers to the issue and Karvy
Computershare Private Ltd. was the Registrar to the Issue.
6.18. The basis of allotment was finalized on October 27, 2004. The shares were
credited to the IPO allottees during October 29, 204 to November 02, 2004. On
November 05, 2004 the shares of National Thermal Power Corporation Ltd. got listed
on the Stock Exchanges.
6.19. The key operators who cornered the retail portion of NTPC IPO were Roopalben
Nareshbhai Panchal, Sugandh Estates and Investments Pvt Ltd, Kelan Atulbhai Doshi
and D B Mehta. The above key operators had used 12,853 afferent accounts for
cornering 2750730 shares representing 1.30% of the total number of shares allotted
to the retail individual investors. Their financiers were Devangi Dipakbhai Panchal,
Hina Bhargav Panchal, Jayantilal Jitmal, Sanjay Rameshchandra Shah, Himanshu
Piyushkumar Cholia, Rajesh Jhaveri Stock Brokers Pvt. Ltd., Zenet Software Ltd. and
Karvy Stock Broking Ltd.
6.20. Tata Consultancy Services Ltd. came out with a Public Issue of 63,770,480
Equity Shares consisting of a Fresh Issue of 22,775,000 Equity Shares of Re. 1 each
by Tata Consultancy Services Limited and an Offer for Sale of 32,677,600 Equity
Shares by Tata Sons Limited and certain other shareholders of Tata Consultancy
Services Ltd. of Re. 1 each for cash at a price of Rs. 850 per Equity Share aggregating
Rs. 47,134,710,000. Out of the public issue, 12,476,840 Equity Shares was offered to
Retail Individual Investors.
6.21. The IPO opened on July 29, 2004 and closed on August 05, 2004. JM Morgan
Stanley Private Limited, DSP Merrill Lynch Limited and JP Morgan India Private
Limited were the Book Running Lead Managers to the issue and Karvy
Computershare Private Ltd. was the Registrar to the Issue.
Page 17 of 252
Interim Order - IPO
6.23. The basis of allotment was finalized on August 18, 2004. The shares were
credited to the IPO allottees during August 19-23, 2004. On August 25, 2004 the
shares of Tata Consultancy Services Ltd. got listed on the Stock Exchanges.
6.24. The key operators who cornered the retail portion of TCS IPO were Roopalben
Nareshbhai Panchal, Sugandh Estates and Investments Pvt Ltd, Ambuja Estate and
Holdings Pvt Ltd, Purshottam Budhwani, Kelan Atulbhai Doshi and Indiabulls
Securities Ltd. The above key operators had used 14,619 afferent accounts to corner
2,61,294 shares representing 2.09% of the total number of shares allotted to the retail
individual investors. Their main financiers were Jayantilal Jitmal, Bhargav
Ranchodlal Panchal, Tauras Infosys, Vasudev Gordhandas Dapki, Gautam N Jhaveri,
Dipak Jashvantlal Panchal, Patel Rajeshkumar, Deep Stock Broking Pvt. Ltd., Excel
Multitech Ltd., Arth Stock Broking Pvt. Ltd., Anagram Securities Ltd. and Ajay
Kumar Gupta.
6.25. Patni Computer Systems Ltd. came out with a Public Issue of 18,724,000 equity
shares comprising fresh issue of 13,400,000 equity shares of Rs.2 each at a price of
Rs.230 for cash aggregating Rs.3,082.0 million and offer for sale of 5,324,000 equity
shares of Rs.2 each at a price of Rs.230 for cash aggregating Rs.1,224.5 million.
6.26. Out of the public issue, 4,681,000 equity shares (allocation on a proportionate
basis) were offered to Retail Individual Investors. The pre- issue capital of Patni
Computer Systems Ltd. consisted of 111,420,849 equity shares and the post issue
capital of Patni Computer Systems Ltd. was to 124,820,849 equity shares. The offer
constituted 15% of the fully diluted post offer paid-up capital of the company.
6.27. The IPO opened on January 27, 2004 and closed on February 5, 2004. DSP
Merrill Lynch Limited and Kotak Mahindra Capital Company Limited were the Book
Running Lead Managers to the issue and Karvy Consultants Limited was the
Registrar to the Issue.
6.29. The basis of allotment was finalized on February 17, 2004. The shares were
credited to the IPO allottees on February 19, 2004. On February 25, 2004 the shares
of Patni Computer Systems Ltd. got listed on the Stock Exchanges.
6.30. The key operator who cornered the retail portion of Patni Computer Systems Ltd.
IPO was Arjav Nareshbhai Panchal. He had used 2541 afferent accounts for cornering
1,27,050 shares representing 2.71% of the total number of shares allotted to the retail
individual investors. His main financiers were Dipak Jashvantlal Panchal, Shah
Kantilal Jitmal and Vasudev Gordhandas Dapki.
Page 18 of 252
Interim Order - IPO
6.31. T. V. Today Network Ltd. came out with a Public issue of 14,500,000 equity
shares of Rs.5 each at a price of Rs.95 comprising fresh issue of 10,000,000 equity
shares for cash aggregating Rs.950 million and offer for sale of 4,500,000 equity
shares for cash aggregating Rs.427.5 million.
6.32. Out of the public issue, 3,625,000 Equity Shares (allocation on a proportionate
basis) were offered to Retail Individual Investors. The pre- issue capital of Patni
Computer Systems Ltd. consisted of 48,000,000 equity shares and the post issue
capital of Jet Airways (India) Ltd. was to 58,000,000 equity shares. The Issue
constituted 25% of the fully diluted post issue paid- up capital of the Company.
6.33. The IPO opened on December 18, 2003 and closed on December 27, 2003. JM
Morgan Stanley Private Limited was the book running lead managers to the issue and
MCS Limited was the registrar to the issue.
6.35. The basis of allotment was finalized on January 8, 2004. The shares were
credited to the IPO allottees on January 10, 2004. On January 16, 2004 the shares of
T. V. Today Network Ltd. got listed on the Stock Exchanges.
6.36. The key operator who cornered the retail portion of T. V. Today Network Ltd.
IPO was Devangi Dipakbhai Panchal. She has used 862 afferent accounts for
cornering 86,200 shares representing 2.37% of the total number of shares allotted to
the retail individual investors. Her financiers were Vasudev Gordhandas Dapki and
Arth Stock Broking Pvt. Ltd.
6.37. Further, it is seen that in NSDL and CDSL taken together in respect of 21
IPOs, 24 dematerialized account-holders (hereinafter referred to as ‘master
account holders’) have received shares in off-market transactions from 500 or
more demat transferors during the pre -listing period.
7.0.Examination Relating to Key Operators
7.1.Having identified the IPOs and the key operators with off- market transfers from 500
or more accounts which are in the nature of multiple accounts, the scrutiny is focused
on the scale of operation of the key operators.
7.2.The details in respect of the 23 key operators in the case of NSDL are summarized
below:
Page 19 of 252
Interim Order - IPO
Table 7.2 – 23 Key Operators in NSDL

Sr. Name of Entity DP Name Client ID Names of IPOs Number of No of shares
No. demat transferred
accounts from
which shares
received
1 ROOPALBEN KARVY STOCK 11920868 1 Infrastructue 12258 7204610

NARESHBHAI BROKING Development Finance Co.
PANCHAL LIMITED Ltd.
2 Suzlon 8996 143936
Energy Ltd.
3 National 7386 1580818
Thermal Power
Corporation Ltd.
4 Tata 7228 123942
Consultancy Services Ltd.
5 YES BANK 6315 947250
LTD
6 ILFS 5162 258100
INVESTMART
7 NECTAR 4004 100100
LIFESCIENCES LTD
8 NANDAM 1982 495500
EXIM LTD
9 Dishman 1958 97900
Pharma. & Chemicals
Ltd.
10 Sasken 1598 55075
Communication
Technologies Ltd.
11 FCS Software 1594 328800
Solutions Ltd.
12 SHOPPERS 1553 38825
STOP LTD
13 Datamatics 1549 77450
Technologies Ltd.
14 SPL 1331 167800
INDUSTRIES LTD
15 GATEWAY 971 87390
DISPRIPARKS LRD
16 AMAR 884 221000
REMEDIES LTD
2 SUGANDH KARVY STOCK 14405199 1 Infrastructue 10194 2712402
ESTATES AND BROKING Development Finance Co.
INVESTMENTS LIMITED Ltd.
PVT Ltd 2 National 3322 710882
Thermal Power
Corporation Ltd.
3 Tata 3197 57332
Consultancy Services Ltd.
4 ILFS 2135 106750
INVESTMART
Page 20 of 252
Interim Order - IPO
5 FCS Software 1624 162400

Solutions Ltd.
6 YES BANK 1315 197250
LTD
7 Sasken 816 20400
Communication
Technologies Ltd.
3 DHAVAL A. KHANDWALA 10139886 1. Suzlon Energy Ltd. 3863 61808
MEHTA INT.FIN.S.PV.L 2. Infrastructue 660 175560
Development Finance Co.
Ltd.
4 ARJAV KARVY STOCK 11932970 1. Patni Computer 2541 127050
NARESHBHAI BROKING Systems Ltd.
PANCHAL LIMITED
5 PARAG P KARVY STOCK 10004600 1. Infrastructue 2083 554078
JHAVERI BROKING Development Finance Co.
LIMITED Ltd.
6 KELAN KARVY STOCK 12501284 1. Infrastructue 1970 524286

ATULBHAI BROKING Development Finance Co.
DOSHI LIMITED Ltd.
2. National Thermal 1435 307090
Power Corporation Ltd.
3. Tata Consultancy 979 16660
Services Ltd.
4. NECTAR 930 23250
LIFESCIENCES LTD
7 AMBUJA KARVY STOCK 13997078 1. Tata Consultancy 1665 29788
ESTATE AND BROKING Services Ltd.
HOLDINGS PVT LIMITED
Ltd
8 PURSHOTTAM ANAGRAM 10093022 1. Infrastructue 1379 366814
BUDHWANI STOCKBROKING Development Finance Co.
LTD Ltd.
2. Suzlon Energy Ltd. 1131 36704
3. Tata Consultancy 991 19633
Services Ltd.
4. GATEWAY 988 88920
DISPRIPARKS LRD
5. GOKALDAS 953 14295
EXPORT
6. SHOPPERS STOP 663 24975
LTD
9 DHARMESH KARVY STOCK 40081967 1. Infrastructue 1206 320796
BHUPENDRA M BROKING Development Finance Co.
LIMITED Ltd.
2. NECTAR 704 17600
LIFESCIENCES LTD
3. SHOPPERS STOP 702 17550
LTD
4. SPL INDUSTRIES 577 57700
LTD
5. YES BANK LTD 556 83550
Page 21 of 252
Interim Order - IPO
10 JHAVERI JHAVERI 10005806 1. Suzlon Energy Ltd. 1009 27667

SECURITIES SECURITIES P
PVT. LTD. LTD
11 BIREN KARVY STOCK 15530980 1. Suzlon Energy Ltd. 888 14320
KANTILAL BROKING
SHAH LIMITED 2. Infrastructue 829 220514
Development Finance Co.
Ltd.
12 KAMAL P KARVY STOCK 10004626 1. Infrastructue 883 234878
JHAVERI BROKING Development Finance Co.
LIMITED Ltd.
13 DEVANGI KARVY STOCK 11933458 1. T.V.Today Network 862 86200

DIPAKBHAI BROKING Ltd.
PANCHAL LIMITED
14 CHANDRAKANT KHANDWALA 10183690 1. Suzlon Energy Ltd. 803 12833
AMRATLAL INT.FIN.S.PV.L
PAREKH
15 DHARMESH K KARVY STOCK 40080736 1. Infrastructue 749 207714
KATAKIA BROKING Development Finance Co.
LIMITED Ltd.
2. YES BANK LTD 525 78750
16 D B MEHTA KARVY STOCK 40064516 1. National Thermal 710 151940
BROKING Power Corporation Ltd.
LIMITED
17 PRATIK SHAH 10533279 1. Suzlon Energy Ltd. 710 15595
MAFATLAL INVESTOR'S
SHAH HOME LTD
GOLDMINE 10068824
STOCKS PVT
LTD
18 DHAVAL K KARVY STOCK 40080719 1. Infrastructue 700 186200
KATAKIA BROKING Development Finance Co.
LIMITED Ltd.
19 DEEPAKKUMAR PRAVIN 10403856 1. Infrastructue 686 236859
SHANTILAL RATILAL SH & Development Finance Co.
JAIN STK Ltd.
20 HIMANI N THE KALUPUR 10005792 1. Suzlon Energy Ltd. 635 10160
PATEL COM.CO.BANK
21 DEEPAK HDFC BANK 10315404 1. JET AIRWAYS 633 8862
MADHUKANT LTD (INDIA) LTD
PATEL
22 INDIABULLS INDIABULLS 10131283 1. Tata Consultancy 559 13939
SECURITIES Ltd SECURITIES Services Ltd.
LTD
23 OPEE STOCK - PRAVIN 10127493 1. JET AIRWAYS 553 12039
LINK LTD. RATILAL SH & (INDIA) LTD
STK
7.3.The details in respect of the three key operators in the case of CDSL are summarized
below:
Page 22 of 252
Interim Order - IPO
Table 7.3 – Three Key Operators in CDSL

Sr. Name of Entity DP Name Client ID Names of IPOs No. of No. of
No. demat shares
accounts received
from
which
shares
received
1 ROOPALBEN KARVY STOCK 130144000 1 Infrastructue
NARESHBHAI BROKING LIMITED 0307503 Development
PANCHAL Finance Co. Ltd. 14790 3934140
2 FCS Software
Solutions Ltd.
Suzlon Energy Ltd. 1563 156300
3 Sasken
Communication
Technologies Ltd. 606 15150
2 Purshottam KARVY STOCK 130144000 1 Infrastructue 4114 1094324
Ghanshyamdas BROKING LIMITED 0247208 Development Finance (2821+
Budhwani Co. Ltd. 1293)
PRATIK STOCK 120202000 2238
VISION P LTD. 0006413 (1220+1
2 Suzlon Energy Ltd. 018) 35808
3 Shoppers Stop
Limited 936 23400
4 Nectar Lifesciences
Limited 752 18800
5 Yes Bank Limited 734 110100
6 SPL Industries
Limited 695 69500
7 IL & FS Investmart 26400
Limited 528
8 Sasken
Communication
3 Manojdev KARVY STOCK 130144000 1 Infrastructue
Seksaria BROKING LIMITED 0051951 Development Finance
Co. Ltd. 1989 529074
2 Suzlon Energy Ltd. 1419 22704
3 Sasken
Communication
7.4.It appears that the entities (dematerialized account- holders) that have received IPO
shares from 500 or more dematerialized accounts through off- market transfers during
the prelisting period are the key operators that have abused the IPO allotment
process through the means of making multiple applications in fictitious / benami
names for cornering the retail portion of the IPOs. In the case of NSDL there are 23
such key operators / master account holders and in the case CDSL there are three
such master account holders/key operators (including two which are common for both
NSDL and CDSL).
Page 23 of 252
Interim Order - IPO
7.5.From the above discussions relating to key operators (dematerialized account-

holders in NSDL and CDSL taken together) of the IPO abuse it follows that a
total of 24 key operators have indulged in abusive practices in respect of 21
IPOs.
7.6.The above 24 master account holders have 34 demat accounts and out of these 34
demat accounts as many as 16 demat accounts are held with Karvy DP. Also out of
the above 24 master account holders as many as 14 master account holders have their
dematerialized accounts with Karvy-DP. It may be seen from the discussions
elsewhere in this order that almost all the afferent demat accounts that served as
conduits for these master account holders were also held with Karvy-DP.
7.7.Many of these master account holders are found to have in turn made offmarket
transfer of the IPO shares to various common groups of entities who appear to be
their principals. It is seen that some of the master account holders have also made off-
market transfers amongst themselves. This shows that there are inter linkages
amongst the master account holders as well as between groups of master account
holders and their principals.
7.8.Financial transactions amongst the master account holders as well as between the
master account holders and Karvy have been noticed thereby leading to the view that
there are strong interlinkages amongst the master account holders as well as between
Karvy and the master account holders. The interse linkages between the 24 master
account holders as well as their principals have been discussed in detail in later
portion of this order.
8.0.Examination of Demat Accounts acting as Conduits – demat accounts opened on

the same date
8.1.The data relating to the demat accounts that had acted as conduits (hereinafter
referred to as ‘afferent accounts’) for the above 23 entities was obtained from NSDL.
It is seen that there are 37,240 demat accounts that had acted has afferent accounts for
the above 23 entities. NSDL has informed that out of the above 37,240 dematerialized
accounts, as many as 31,818 demat accounts have been closed. In respect of the
remaining 5422 accounts, NSDL has advised its DPs to confirm whether they have
the KYC documents for such accounts. Subsequent information furnished by NSDL
relating to 4602 demat accounts, shows that in many of the cases the DPs had
obtained KYC documents towards POI and POA. However, in respect of six demat
accounts (4 with DP ICICI Bank, 1 with ING Vysya Bank and 1 with Shah Investor's
Home Ltd), there were neither POI nor POA. In respect of 820 accounts pertaining to
HDFC Bank (684 accounts) and Karvy DP (136 accounts), NSDL informed that the
same would be provided in due course.
Page 24 of 252
Interim Order - IPO
8.2.Further, it was noticed that many of the above afferent accounts were opened in bulk
on certain days. The details where 500 or more accounts were opened on the same
date is given below:
Table 8.2 – NSDL Demat accounts opened on same date

Sr DATE OF Number of Name of Status Comments
No OPENING demat major Accounts
OF DEMAT accounts DP
ACCOUNT opened
1. 8/16/2004 7751 Karvy- Closed – Most of the
DP 7735 dematerialized
(7641) Suspended – account-holders
1 addresses are the
Active - 15 same as that of
Roopalben
Panchal or
SEIPL
(2157) Active – 27 account-holders
addresses are the
same as that of
SEIPL
(1855) Actuve - 20 account-holders
addresses are the
same as that of
Kelan Atulbhai
Doshi
(1684) Active – 7 account-holders
addresses are the
same as that of
SEIPL (Parag P
Jharveri)
5. 2/16/2004 1535 Karvy- Closed – Almost all the
DP 1531 account holders
(1529) Active – 4 have the same
address as
Roopalben
Panchal
6. 7/20/2005 1535 Karvy- Closed – 1531 accounts
DP 1531 have the same
(1531) Active – 4 address as
Page 25 of 252
Interim Order - IPO
Roopalben
Panchal
(1101) Active – 12 address as
Roopalben
Panchal
(1096) Active - 2 address as
SEIPL
9. 8/5/2005 1050 Karvy- Closed / All the closed
DP Suspended – accounts have
(1043) 1043 the address of
Active - 7 Kelan Atulbhai
Doshi ( 606
accounts) or
Shah Biren
Kantilal (437
accounts)
10. 7/19/2005 1007 Karvy- Closed – All the closed
DP 1002 accounts have
(1002) Active - 5 the address of
Roopalben
Panchal
11. 8/17/2004 987 Karvy- Closed – Almost all the
DP (981) 986 closed accounts
Active – 1 have the address
of Roopalben
Panchal or
SEIPL or Kelan
Atulbhai Doshi
12. 10/25/2004 856 Karvy- Closed – Out of the 830
Active – 26 819 have the
address of
SEIPL
13. 10/16/2004 766 Karvy- Closed – Out of 752
Active – 14 627 have the
address of
SEIPL
14. 7/21/2005 765 Karvy- Closed – All the 761
Active – 4 have the address
of Roopalben
Page 26 of 252
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Panchal
DP (749) 749 accounts have
Active – 4 the address of
Roopalben
Panchal or
Jayantilal Jitmal
16. 11/6/2003 574 Karvy- Closed / All the closed
DP (570) suspended – accounts have
570 the address of
Active – 4 Roopalben
Panchal
DP (522) 522 accounts have
Active – 7 the address of
Roopalben
Panchal or
Jayantilal Jitmal
Total 26058 25776 Closed / --
Suspended –
25895
Active - 163
8.3.Based on the data furnished by NSDL it is seen that the 37,240 afferent accounts
were held with 55 DPs. It is seen that out of the above 37,240 afferent accounts as
many as 34,924 afferent accounts (representing about 94% of the afferent
accounts) were held with seven DPs with each of these DPs having 500 or more
afferent accounts. Karvy DP alone had 29,309 afferent accounts representing
about 80% of the total afferent accounts in NSDL. The details are as below:
Table 8.3 – NSDL DPs of Afferent Accounts

Sr No. SOURCE DP NAME SOURCE CLIENT ID
1. KARVY STOCK BROKING LIMITED 29309
2. HDFC BANK LTD 1793
3. KHANDWALA INT.FIN.S.PV.L 1153
4. IDBI BANK LIMITED 1017
5. JHAVERI SECURITIES P LTD 598
6. ING VYSYA BANK LIMITED 544
7. PRAVIN RATILAL SH & STK 510
Total 34,924
8.4.The data relating to the demat accounts that had acted as conduits (herein
referred to as ‘afferent accounts’) for the three master account holders (key
operators ) was obtained from CDSL. It is seen that there are 21,698 demat
Page 27 of 252
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accounts that had acted as afferent accounts for the three master account
holders in CDSL and all these afferent demat accounts were held with Karvy DP
or Pratik DP. 20,399 afferent accounts (representing about 95% of the afferent
accounts in CDSL) were held with Karvy DP and 1299 accounts were held with
Pratik DP. As per information furnishe d by CDSL it is seen that out of the above
21,698 afferent accounts, as many as 21,612 accounts have been closed.
8.5.Further, it was noticed that many of the above afferent accounts were opened in bulk
on certain days. The details where 500 or more accounts were opened on the same
date is given below:
Table 8.5 - CDSL DPs of Afferent Accounts

DATE OF Status of Name of DP Comments
OPENING OF Accounts
DEMAT Number of demat
ACCOUNT accounts opened
Closed – 9937 Karvy-DP All the addresses
16072005 9943 Active -6 are of Roopalben
Panchal
15072005 4886 Active-7 are of Roopalben
Panchal
Closed – 3915 Karvy-DP Almost all the
Active-43 addresses are of
Purshottam
22072005 3958
Budhwani and
Manojdev
Seksaria
25072005 572 Active-5 are of Manojdev
Seksaria
Active-2 are of Purshottam
17082005 551 Budhwani and
Manojdev
Seksaria
Closed – 19847
Total 19910
Active-63
8.6.In NSDL and CDSL taken together, a total of 58,938 accounts had been used as
afferent accounts for cornering the retail portion of the IPO. Out of these 58,938
accounts 49,708 accounts representing about 84% of the total afferent accounts
were held with Karvy DP.
8.7.Also, in the case of both NSDL and CDSL, many of the afferent accounts have been
opened in bulk on a few dates and the dematerialized account-holders have the same
address as that of the master account holders viz. Roopalben Panchal, SEIPL,
Purshottam Budhwani, Manojdev Seksaria, Kelan Atulbhai Doshi, Shah Biren
Kantilal or Jayantilal Jitmal.
Page 28 of 252
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8.8.Significantly as many as 14 out of the 24 master account holders also had their
respective demat accounts with Karvy-DP. Thus, it appears that Karvy-DP was
actively in league by opening demat accounts for ma ny of the master account holders
and also for most (about 84%) of the afferent accounts that served as conduits for the
master account holders. Also the numbers are too significant to be dismissed as
the normal incidence of business while the stunning percentage in terms of
concentration of suspect accounts cannot but tar Karvy DP with the same brush.
9.0. Verification of Genuineness of Demat Account Holders
9.1. Upon examination of the details of afferent accounts that served as conduits for the
master account holders, it is seen that multiple demat accounts were opened in large
numbers since November 2003. More multiple demat accounts got opened in 2004
and the process continued till August 2005. Another common feature of the above
conduit accounts is that most of these dematerialized account-holders were found to
share common addresses which are the same as that of the master account holders.
9.2.The methodology based on 500 or more dematerialized account- holders making off-
market transfers during the prelisting period to one dematerialized account- holder for
determining multiple accounts would not capture instances of benami / fictitious
dematerialized account-holders where such off- market transfers did not take place or
where such off- market transfers took place a few days after the date of listing.
9.3.Hence, SEBI advised NSDL and CDSL to advise their DPs to verify the genuineness
of demat account holders where 20 or more account holders share common address.
The observations on the reports submitted by the depositories in this regard are given
below:
9.4.Verification by CDSL
9.5.CDSL initially stated “… we observed that 36 DPs were having instances of more
than 20 accounts opened with the same name / address. We advised these 36 DPs to
specifically confirm about the genuineness of all the accounts opened with them and
had also furnished them the list of BO IDs. In response to this, we received
confirmation from 36 DPs…” Subsequently, CDSL informed SEBI that “During
further checking it was observed that 16 more DPs have multiple accounts with same
name / address. We have instructed these DPs to submit confirmation regarding
verification of genuineness of account holders alongwith steps taken by January 30,
2006” Thereafter CDSL informed SEBI that “Further, with reference to our
telephonic discussions, we wish to inform you that in case of HDFC Bank, we had
found that 787 accounts with same name / same address.” As per information
furnished by CDSL, it is seen that 53 DPs of CDSL had 20 or more demat account
holders sharing common addresses. Upon perusal of the information submitted by
CDSL in this regard it is seen that the following six DPs had 500 or more demat
account-holders sharing common addresses.
Page 29 of 252
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Table 9.5 – Six DPs of CDSL with demat account-holders sharing common addresses
Sr. DP name No. of multiple Comments
no. accounts sharing
common addresses
1. Centurion Bank Ltd 25943 (25872+71) Inspection and physical verification
of the DP by a CA firm engaged by
SEBI as discussed in later
paragraphs revealed various
irregularities including opening of
demat accounts in the names of
benamis / non-existent persons etc.
2. IL&FS 3421 Same as above
3. Pratik Stock Vision 1203 Inspection of the DP by SEBI
Pvt. Ltd. brought out observations such as
opening of demat accounts
exclusively for the purpose of
investment in IPOs, opening of
demat accounts in bulk by procuring
applications through IPO sub-
brokers.
4. HDFC Bank 787 Inspection of the DP by the CA firm
engaged by SEBI as well as by the
firm engaged by CDSL brought out
various violations.
5. Motilal Oswal 697 Inspection of the DP by a CA firm
Securities Ltd. engaged by CDSL found various
violations and the same have been
narrated elsewhere in this order
6. Wellworth Shares 533 (260+273) Verification done by a firm engaged
and Stock Broking by CDSL as well as by an
Ltd. independent CA firm engaged by
SEBI brought out violations in terms
of opening of multiple demat
accounts in the names of the
directors and their family members
using various permutations and
combinations of names, failure to
obtain proof of identity and proof of
address, etc.
9.6.In this context it may be mentioned that the verification done by CDSL does not
include closed / frozen accounts and accordingly, Karvy-DP which had closed as
many as 38,409 accounts held with CDSL during the course of the verification of
genuineness of account holders sharing common addresses does not appear in the
Page 30 of 252
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table given above. The details of these demat accounts closed by Karvy-DP have been
discussed in detail elsewhere in this order.
9.7.It is seen that while Karvy DP had closed 38,409 CDSL demat accounts during the
course of verification, 20,399 CDSL dematerialized accounts of Karvy DP had served
as afferent accounts for abusing the IPO process. Thus it follows that 18,010 suspect
demat accounts with Karvy DP were probably meant to be used in later IPOs.
9.8.All the 53 DPs have confirmed to CDSL that the KYC documentation in respect of
the above dematerialized accounts is complete in all respects.
9.9.However, SEBI decided to conduct further verification relating to the above DPs.
Accordingly, SEBI engaged an independent CA firm to conduct inspection / audit.
The above DPs were also inspected by CDSL. The inspection by SEBI appointed CA
firm as well as by CDSL brought out numerous violations and the findings of the
inspection are discussed elsewhere in this order.
9.10. Verification by NSDL
9.11. The verification by NSDL regarding genuineness of dematerialized account-

holders revealed that there were 56216 dematerialized accounts wherein 20 or more
account holders were sharing common addresses. These 56216 demat accounts were
held with 105 DPs. The details of the 21 DPs wherein 500 or more account holders
were sharing common addresses is given below:
Table 9.11 – 21 DPs of NSDL with demat account-holders sharing common addresses
Sl. No. Name of DP No. of account holders
sharing common addresses
1. HDFC BANK LTD 10213
2. KARVY STOCK BROKING LIMITED 6745
3. KOTAK SECURITIES LIMITED 6456
4. ICICI BANK LIMITED 3965
5. STANDARD CHARTERED BANK 1990
6. UTI BANK LIMITED 1908
7. KOTAK MAHINDRA BANK LTD 1725
8. KHANDWALA INT.FIN.S.PV.L 1399
9. INDUSIND BANK LTD. 1295
10. CITIBANK N.A. 1113
11. ING VYSYA BANK LIMITED 1075
12. INTEGRATED ENT. (I) LTD 1031
13. ACTION FIN SERV (I) LTD. 858
14. JHAVERI SECURITIES P LTD 686
15. STOCK HLDG CORP OF I LTD 662
16. BNP PARIBAS 642
17. PRATIK STOCK VISION P LT 630
18. THE KALUPUR COM.CO.BANK 614
19. SSKI INVESTOR SER.PVT.L 596
20. INFINITE FIN SRV PVT LTD 524
Page 31 of 252
Interim Order - IPO
21. UCO BANK 510
9.12. From the above table it is seen that in NSDL, the DP HDFC Bank had the largest
number of demat account holders sharing common addresses. The inspection of the
DP by the CA firm engaged by SEBI brought out numerous violations which have
been discussed in detail elsewhere in this Order.
9.13. NSDL originally reported that out of the above 56216 demat accounts, KYC
documentation was absent or incomplete in respect of 8307 accounts. Subsequently,
NSDL informed that out of the above 8307 demat accounts, the DPs could identify
the clients in person in respect of 2521 accounts. Further NSDL informed that 4283
accounts had been frozen until the clients were identified and the balance 1503
accounts had been closed.
10.0. Financiers of the Key Operators
10.1. As per data obtained from NSDL and CDSL, it is seen that the 24 key operators
have in turn made off- market transfers to various entities during the prelisting
period. It stands to reason that these entities who received shares through off- market
transfers from the 24 key operators would have provided finance to the key operators
which finance was used for cornering the retail portion of the IPO shares. Since the
financiers have received the shares from the key operators it would appear that these
financiers are the ultimate beneficiaries of the IPO abuse committed by the key
operators. As observed in the cases of Yes Bank and IDFC, it would be seen that
many of the financiers might have sold the shares immediately on listing and
commencement of trading on the stock exchanges thereby profiting from the higher
listing price as compared to the issue price. Even in a few cases where the financiers
may not have actually sold the shares in the market, still they have made notional
gains from the higher listing price. The details of the financiers of each of the key
operators are given below:
10.2. Financiers of Roopalben Panchal
The details of financiers of Roopalben Panchal are given below:
Table 10.2 - Financiers of Roopalben Panchal

Name Of
Receiving
Dp Client Company Demat A/Ct No. of Date of
Name Client ID Name Name Holder Dp Name Client ID Shares Transaction
Karvy
Stock Roopalben
Broking Nareshbhai Hasmukhlal N. H.Nyalchand
Ltd 11920868 Panchal IDFC Ltd. Vora Fin. Ser.Ltd 10026782 555000 8/9/2005
Karvy IDFC Ltd. Welvet
Stock Roopalben Financial
Broking Nareshbhai Advisers Pvt Khandwala
Ltd 11920868 Panchal Ltd Int.Fin.S.Pv.L 10148905 417000 8/9/2005
Page 32 of 252
Interim Order - IPO
Name Of
Receiving
Karvy IDFC Ltd.
Stock Roopalben
Broking Nareshbhai Jayesh P Khandwala
Limited 11920868 Panchal Khandwala Huf Int.Fin.S.Pv.L 10000579 338000 8/9/2005
Karvy IDFC Ltd.
Stock Roopalben
Broking Nareshbhai Gautam N ASE Capital
Limited 11920868 Panchal Jhaveri Markets Ltd 10045158 234000 8/9/2005
Karvy IDFC Ltd.
Stock Roopalben Excell
Broking Nareshbhai Multitech H.Nyalchand
Limited 11920868 Panchal Limited Fin. Ser.Ltd 10009317 658000 8/9/2005
Karvy IDFC Ltd.
Stock Roopalben
Broking Nareshbhai Zenet Software H.Nyalchand
Karvy IDFC Ltd.
Stock Roopalben
Broking Nareshbhai Tauras Infosys H.Nyalchand
Limited 11920868 Panchal Ltd Fin. Ser.Ltd 10008962 130000 8/9/2005
Karvy IDFC Ltd.
Stock Roopalben
Broking Nareshbhai Seer Finlease H.Nyalchand
Limited 11920868 Panchal Private Ltd. Fin. Ser.Ltd 10026774 465000 8/9/2005
Karvy IDFC Ltd.
Stock Roopalben Devangi Karvy Stock
Broking Nareshbhai Dipakbhai Broking
Limited 11920868 Panchal Panchal Limited 11933458 1000000 8/11/2005
Karvy IDFC Ltd.
Stock Roopalben Dipak Karvy Stock
Broking Nareshbhai Jashvantlal Broking
Karvy IDFC Ltd.
Stock Roopalben
Broking Nareshbhai Shilpa Rajan ASE Capital
Limited 11920868 Panchal Dapki Markets Ltd 10029340 50000 8/11/2005
Karvy IDFC Ltd. ASE Capital
Stock Roopalben Markets Ltd
Broking Nareshbhai Shilpa Rajan
Limited 11920868 Panchal Dapki 10029340 69700 8/11/2005
Broking Nareshbhai Rajan Vasudev
Stock Roopalben Bhargav Markets Ltd
Broking Nareshbhai Ranchhodlal
Limited 11920868 Panchal Panchal 10003008 8290 8/11/2005
Broking Nareshbhai Hina Bhargav
Karvy IDFC Ltd.
Stock Roopalben
Broking Nareshbhai Jayantilal ASE Capital
Limited 11920868 Panchal Jitmal Markets Ltd 10004296 11990 8/11/2005
Karvy 11920868 Roopalben IDFC Ltd. Dipak Karvy Stock 11933474 700000 8/11/2005
Page 33 of 252
Interim Order - IPO
Name Of
Receiving
Stock Nareshbhai Jashvantlal Broking
Broking Panchal Panchal Limited
Limited
Karvy IDFC Ltd.
Stock Roopalben Dipak
Broking Nareshbhai Jashvantlal ASE Capital
Limited 11920868 Panchal Panchal Markets Ltd 10005706 10374 8/12/2005
Karvy IDFC Ltd.
Stock Roopalben Bhanuprasad
Broking Nareshbhai Dipakkumar Khandwala
Limited 11920868 Panchal Trivedi Int.Fin.S.Pv.L 10147757 1100000 8/13/2005
Karvy
Stock Roopalben
Broking Nareshbhai IL&FS Tauras Infosys H.Nyalchand
Limited 11920868 Panchal Investsmart Ltd Fin. Ser.Ltd 10008962 10650 7/25/2005
Karvy IL&FS
Stock Roopalben Investsmart
Karvy IL&FS
Stock Roopalben Investsmart Excell
Karvy IL&FS
Broking Nareshbhai Hasmukhlal N. H.Nyalchand
Limited 11920868 Panchal Vora Fin. Ser.Ltd 10026782 23400 7/25/2005
Karvy IL&FS
Karvy IL&FS
Stock Roopalben Investsmart Devangi Karvy Stock
Karvy IL&FS
Karvy
Stock Roopalben Nectar Devangi
Broking Nareshbhai Lifesciences Dipakbhai Ase Capital
Limited 11920868 Panchal Ltd Panchal Markets Ltd 10004133 10000 7/18/2005
Karvy Nectar
Stock Roopalben Lifesciences
Broking Nareshbhai Ltd Hasmukhlal N. H.Nyalchand
Limited 11920868 Panchal Vora Fin. Ser.Ltd 10026782 52500 7/18/2005
Karvy Nectar
Broking Nareshbhai Ltd Hdfc Bank
Limited 11920868 Panchal Umang R Shah Ltd 40247217 150 7/19/2005
Karvy Nectar
Broking Nareshbhai Ltd Jayantilal ASE Capital
Karvy Roopalben Nectar Gautam N Ase Capital
Stock 11920868 Nareshbhai Lifesciences Jhaveri Markets Ltd 10045158 7625 7/19/2005
Page 34 of 252
Interim Order - IPO
Name Of
Receiving
Broking Panchal Ltd
Limited
Karvy
Stock Roopalben Sujal Leasing
Broking Nareshbhai Nandan Exim And Finance H.Nyalchand
Limited 11920868 Panchal Ltd Pvt Ltd. Fin. Ser.Ltd 10026812 20000 6/10/2005
Karvy Nandan Exim
Stock Roopalben Ltd Excell
Karvy Nandan Exim
Stock Roopalben Ltd
Karvy Nandan Exim
Stock Roopalben Ltd Devangi
Broking Nareshbhai Dipakbhai ASE Capital
Karvy Nandan Exim
Stock Roopalben Ltd
Karvy Nandan Exim
Stock Roopalben Ltd
Karvy Nandan Exim
Stock Roopalben Ltd
Broking Nareshbhai Sarvani Stock Hldg
Limited 11920868 Panchal Choudhary Corp Of I Ltd 15391897 5000 6/10/2005
Karvy Nandan Exim
Stock Roopalben Ltd Anand
Broking Nareshbhai Netanand The Kalupur
Limited 11920868 Panchal Choudhary Com.Co.Bank 10442065 5000 6/10/2005
Karvy Nandan Exim
Stock Roopalben Ltd Netanand
Broking Nareshbhai Surjaram The Kalupur
Limited 11920868 Panchal Bhambu Com.Co.Bank 10442080 5000 6/10/2005
Karvy Nandan Exim
Stock Roopalben Ltd Bhargav
Broking Nareshbhai Ranchhodlal ASE Capital
Karvy Nandan Exim
Stock Roopalben Ltd
Broking Nareshbhai Rajan Vasudev ASE Capital
Karvy Nandan Exim
Stock Roopalben Ltd Ramesh Anagram
Broking Nareshbhai Chimanlal Stockbroking
Limited 11920868 Panchal Shah Ltd 10161819 4250 6/13/2005
Karvy Nandan Exim
Stock Roopalben Ltd
Broking Nareshbhai Netanand Stock Hldg
Limited 11920868 Panchal Bhambu Corp Of I Ltd 15391547 2000 6/13/2005
Karvy Roopalben Devangi Karvy Stock
Stock Nareshbhai Dipakbhai Broking
Broking 11920868 Panchal Yes Bank Ltd Panchal Limited 11933458 170000 7/11/2005
Page 35 of 252
Interim Order - IPO
Name Of
Receiving
Limited
Karvy Yes Bank Ltd
Stock Roopalben Devangi
Karvy Yes Bank Ltd
Stock Roopalben
Karvy Yes Bank Ltd
Karvy Yes Bank Ltd
Stock Roopalben
Karvy Yes Bank Ltd
Stock Roopalben
Karvy Yes Bank Ltd ASE Capital
Broking Nareshbhai Rajan Vasudev
Karvy Yes Bank Ltd ASE Capital
Stock Roopalben Bhargav Markets Ltd
Broking Nareshbhai Ranchhodlal
Karvy Yes Bank Ltd
Stock Roopalben
Broking Nareshbhai Jayantilal ASE Capital
Karvy
Stock Roopalben
Broking Nareshbhai Gateway Zenet Software H.Nyalchand
Limited 11920868 Panchal Distriparks Ltd Limited Fin. Ser.Ltd 10009298 87390 3/30/2005
Karvy
Stock Roopalben
Broking Nareshbhai Shoppers’Stop Seer Finlease H.Nyalchand
Limited 11920868 Panchal Ltd Private Ltd. Fin. Ser.Ltd 10026774 14250 5/19/2005
Karvy Shoppers’Stop
Stock Roopalben Ltd
Stock Roopalben Ltd
Stock Roopalben Ltd
Karvy
Broking Nareshbhai SPL Industries Multitech H.Nyalchand
Limited 11920868 Panchal Ltd Limited Fin. Ser.Ltd 10009317 65300 7/25/2005
Page 36 of 252
Interim Order - IPO
Name Of
Receiving
Karvy SPL Industries
Stock Roopalben Ltd Devangi Karvy Stock
Stock Roopalben Ltd
Stock Roopalben Ltd
Stock Roopalben Ltd Devangi
Stock Roopalben Ltd
Broking Nareshbhai Gautam N Ase Capital
Stock Roopalben Ltd
Broking Nareshbhai Rajan Vasudev Ase Capital
Karvy
Stock Roopalben Devangi Karvy Stock
Broking Nareshbhai Amar Remedies Dipakbhai Broking
Limited 11920868 Panchal Ltd Panchal Limited 11933458 221000 9/16/2005
Karvy
Stock Roopalben
Broking Nareshbhai Suzlon Energy Saumil A Ase Capital
Limited 11920868 Panchal Ltd Bhavnagari Markets Ltd 10027303 110000 10/17/2005
Karvy Suzlon Energy
Stock Roopalben Ltd
Broking Nareshbhai Jayesh P Khandwala
Limited 11920868 Panchal Khandwala Huf Int.Fin.S.Pv.L 10000579 16000 10/17/2005
Karvy Suzlon Energy
Stock Roopalben Ltd
Karvy Suzlon Energy
Stock Roopalben Ltd
Broking Nareshbhai Saumil A Ase Capital
Limited 11920868 Panchal Bhavnagari Markets Ltd 10027303 10500 10/19/2005
Karvy Suzlon Energy
Stock Roopalben Ltd
Broking Nareshbhai Hdfc Bank
Karvy Masat
Stock Roopalben Texturising
Broking Nareshbhai And Twisting Khandwala
Limited 11920868 Panchal FCS Software Private Ltd Int.Fin.S.Pv.L 10089898 42700 9/21/2005
Karvy FCS Software
Stock Roopalben
Karvy 11920868 Roopalben FCS Software Excell H.Nyalchand 10009317 40000 9/21/2005
Page 37 of 252
Interim Order - IPO
Name Of
Receiving
Stock Nareshbhai Multitech Fin. Ser.Ltd
Broking Panchal Limited
Limited
Karvy FCS Software
Stock Roopalben
Karvy FCS Software
Stock Roopalben
Karvy FCS Software
Stock Roopalben
Karvy FCS Software
Stock Roopalben
Broking Nareshbhai H.Nyalchand
Limited 11920868 Panchal Chirag Desai Fin. Ser.Ltd 10026732 200 9/21/2005
Karvy FCS Software
Stock Roopalben
Limited 11920868 Panchal Bakul Desai Fin. Ser.Ltd 10026758 200 9/21/2005
Karvy FCS Software
Stock Roopalben
Limited 11920868 Panchal Hemlata Desai Fin. Ser.Ltd 10026740 200 9/21/2005
Karvy FCS Software
Stock Roopalben
Broking Nareshbhai Vinita A The Kalupur
Karvy FCS Software
Stock Roopalben
Broking Nareshbhai Jayantilal Ase Capital
Karvy FCS Software
Stock Roopalben Bhargav
Broking Nareshbhai Ranchhodlal Ase Capital
Karvy FCS Software
Stock Roopalben
Karvy FCS Software
Stock Roopalben
Broking Nareshbhai Hdfc Bank
Karvy FCS Software
Stock Roopalben
Limited 11920868 Panchal Chirag Desai Fin. Ser.Ltd 10026732 200 9/22/2005
Karvy FCS Software
Stock Roopalben
Limited 11920868 Panchal Bakul Desai Fin. Ser.Ltd 10026758 200 9/22/2005
Karvy Roopalben FCS Software H.Nyalchand
Stock 11920868 Nareshbhai Hemlata Desai Fin. Ser.Ltd 10026740 200 9/22/2005
Page 38 of 252
Interim Order - IPO
Name Of
Receiving
Broking Panchal
Limited
Karvy FCS Software
Stock Roopalben
Broking Nareshbhai Vinita A The Kalupur
Karvy FCS Software
Stock Roopalben
Broking Nareshbhai Jayantilal Ase Capital
Karvy FCS Software
Stock Roopalben Bhargav
Broking Nareshbhai Ranchhodlal Ase Capital
Karvy FCS Software
Stock Roopalben
Karvy
Stock Roopalben
Broking Nareshbhai Sasken Jayesh P Khandwala
Limited 11920868 Panchal Commtech Ltd Khandwala Huf Int.Fin.S.Pv.L 10000579 6500 9/5/2005
Karvy Sasken
Stock Roopalben Commtech Ltd
Karvy Sasken Welvet
Stock Roopalben Commtech Ltd Financial
Broking Nareshbhai Advisers Pvt Khandwala
Limited 11920868 Panchal Ltd Int.Fin.S.Pv.L 10148905 1625 9/5/2005
Karvy Sasken
Karvy Sasken
Karvy Sasken
Stock Roopalben Commtech Ltd Devangi
Broking Nareshbhai Dipakbhai Ase Capital
Karvy Dishman
Stock Roopalben Pharmaceuticals
Broking Nareshbhai & Chemicals Zenet Software H.Nyalchand
Limited 11920868 Panchal Ltd. Limited Fin. Ser.Ltd 10009298 72900 4/22/2004
Karvy Dishman
Stock Roopalben Pharmaceuticals Dipak
Broking Nareshbhai & Chemicals Jashvantlal Ase Capital
Limited 11920868 Panchal Ltd. Panchal Markets Ltd 10005706 14700 4/22/2004
Karvy Dishman
Stock Roopalben Pharmaceuticals Vasudev
Broking Nareshbhai & Chemicals Gordhandas Ase Capital
Limited 11920868 Panchal Ltd. Dapki Markets Ltd 10007265 1650 4/22/2004
Karvy Roopalben Dishman
Stock Nareshbhai Pharmaceuticals Zenet Software H.Nyalchand
Broking 11920868 Panchal & Chemicals Limited Fin. Ser.Ltd 10009298 8100 4/22/2004
Page 39 of 252
Interim Order - IPO
Name Of
Receiving
Limited Ltd.
Karvy
Stock Roopalben Datamatics Dipak
Broking Nareshbhai Technologies Jashvantlal Ase Capital
Karvy
Stock Roopalben Datamatics Dipak
Broking Nareshbhai Technologies Jashvantlal Ase Capital
Karvy
Stock Roopalben Datamatics Vasudev
Broking Nareshbhai Technologies Gordhandas Ase Capital
Limited 11920868 Panchal Ltd Dapki Markets Ltd 10007265 3350 5/5/2004
Karvy
Stock Roopalben Datamatics
Broking Nareshbhai Technologies Zenet Software H.Nyalchand
Limited 11920868 Panchal Ltd Limited Fin. Ser.Ltd 10009298 66600 5/5/2004
Karvy
Stock Roopalben Tata
Broking Nareshbhai Consultancy Jayantilal Ase Capital
Limited 11920868 Panchal Services Ltd. Jitmal Markets Ltd 10004296 1275 8/26/2004
Karvy
Stock Roopalben Tata Bhargav
Broking Nareshbhai Consultancy Ranchhodlal Ase Capital
Limited 11920868 Panchal Services Ltd. Panchal Markets Ltd 10003008 1581 8/26/2004
Karvy
Broking Nareshbhai Consultancy Tauras Infosys H.Nyalchand
Limited 11920868 Panchal Services Ltd. Ltd Fin. Ser.Ltd 10008962 20100 8/26/2004
Karvy
Stock Roopalben Tata Vasudev
Broking Nareshbhai Consultancy Gordhandas Ase Capital
Limited 11920868 Panchal Services Ltd. Dapki Markets Ltd 10007265 3870 8/26/2004
Karvy
Broking Nareshbhai Consultancy Gautam N Ase Capital
Limited 11920868 Panchal Services Ltd. Jhaveri Markets Ltd 10045158 5400 8/26/2004
Karvy
Stock Roopalben Tata Vasudev
Broking Nareshbhai Consultancy Gordhandas Ase Capital
Limited 11920868 Panchal Services Ltd. Dapki Markets Ltd 10007265 6000 8/25/2004
Karvy
Broking Nareshbhai Consultancy Gautam N Ase Capital
Limited 11920868 Panchal Services Ltd. Jhaveri Markets Ltd 10045158 6000 8/25/2004
Karvy
Stock Roopalben Tata Dipak
Broking Nareshbhai Consultancy Jashvantlal Ase Capital
Limited 11920868 Panchal Services Ltd. Panchal Markets Ltd 10005706 10842 8/25/2004
Karvy
Broking Nareshbhai Consultancy Tauras Infosys H.Nyalchand
Limited 11920868 Panchal Services Ltd. Ltd Fin. Ser.Ltd 10008962 45000 8/25/2004
Karvy National
Stock Roopalben Thermal Power Devangi Karvy Stock
Broking Nareshbhai Corporation Dipakbhai Broking
Limited 11920868 Panchal Ltd. Panchal Limited 11933458 1500000 11/4/2004
Page 40 of 252
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Name Of
Receiving
Karvy National
Stock Roopalben Thermal Power Karvy Stock
Broking Nareshbhai Corporation Hina Bhargav Broking
Limited 11920868 Panchal Ltd. Panchal Limited 12509057 21400 11/4/2004
Karvy National
Stock Roopalben Thermal Power
Broking Nareshbhai Corporation Jayantilal Ase Capital
Limited 11920868 Panchal Ltd. Jitmal Markets Ltd 10004296 19260 11/4/2004
Karvy National
Stock Roopalben Thermal Power Sanjay Anagram
Broking Nareshbhai Corporation Rameshchandra Stockbroking
Limited 11920868 Panchal Ltd. Shah Ltd 10083599 10700 11/4/2004
Karvy National
Stock Roopalben Thermal Power Himanshu
Broking Nareshbhai Corporation Piyushkumar Infra Leas &
Limited 11920868 Panchal Ltd. Choliya Fin Ser Ltd 10685148 1070 11/4/2004
Karvy National
Stock Roopalben Thermal Power Anagram
Broking Nareshbhai Corporation Stockbroking
Limited 11920868 Panchal Ltd. Sanjay R. Shah Ltd 10099329 10700 11/4/2004
10.3. It is seen that Roopalben Panchal has made off- market transfers during the pre-
listing period to the various entities mentioned above. Further it is seen from bank
account statements that many of the entities such as Hasmuklal N Vora, Jayesh P
Khandwala HUF, Gautam N Jhaveri, Excel Multitech Ltd., Zenet Software Ltd., etc.
have provided finance to Roopalben Panchal for making applications in various
IPOs.
10.4. SEBI worked out a preliminary estimate of the profits made (real or notional) by
the above financiers of Roopalben Panchal by comparing the closing price (on NSE)
on the first day of listing in respect of each of the above IPOs with the issue price of
the respective IPOs. The calculations are given below:
Table 10.4 - Profits made by the financiers of Roopalben Panchal

Company Name Name Of the financier No. of Close Issue Diff. in Gain
Shares price on Price Price (Rs.) (Rs.)
the date (Rs.)
of
listing
IDFC Ltd. Hasmukhlal N. Vora 555000 69.50 34.00 35.50 19,702,500.00
IDFC Ltd. Welvet Financial Advisers 417000 69.50 34.00 35.50 14,803,500.00
Pvt Ltd
IDFC Ltd. Jayesh P Khandwala Huf 338000 69.50 34.00 35.50 11,999,000.00
IDFC Ltd. Gautam N Jhaveri 234000 69.50 34.00 35.50 8,307,000.00
IDFC Ltd. Excell Multitech Limited 658000 69.50 34.00 35.50 23,359,000.00
IDFC Ltd. Zenet Software Limited 275000 69.50 34.00 35.50 9,762,500.00
IDFC Ltd. Tauras Infosys Ltd 130000 69.50 34.00 35.50 4,615,000.00
IDFC Ltd. Seer Finlease Private Ltd. 465000 69.50 34.00 35.50 16,507,500.00
IDFC Ltd. Devangi Dipakbhai Panchal 1000000 69.50 34.00 35.50 35,500,000.00
IDFC Ltd. Dipak Jashvantlal Panchal 1000000 69.50 34.00 35.50 35,500,000.00
Page 41 of 252
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the date (Rs.)
of
listing
IDFC Ltd. Shilpa Rajan Dapki 50000 69.50 34.00 35.50 1,775,000.00
IDFC Ltd. Shilpa Rajan Dapki 69700 69.50 34.00 35.50 2,474,350.00
IDFC Ltd. Rajan Vasudev Dapki 119700 69.50 34.00 35.50 4,249,350.00
IDFC Ltd. Bhargav Ranchhodlal 8290 69.50 34.00 35.50 294,295.00
Panchal
IDFC Ltd. Hina Bhargav Panchal 11000 69.50 34.00 35.50 390,500.00
IDFC Ltd. Jayantilal Jitmal 11990 69.50 34.00 35.50 425,645.00
IDFC Ltd. Dipak Jashvantlal Panchal 700000 69.50 34.00 35.50 24,850,000.00
IDFC Ltd. Dipak Jashvantlal Panchal 10374 69.50 34.00 35.50 368,277.00
IDFC Ltd. Bhanuprasad Dipakkumar 1100000 69.50 34.00 35.50 39,050,000.00
Trivedi
IL&FS Investsmart Tauras Infosys Ltd 10650 185.15 125.00 60.15 640,597.50
IL&FS Investsmart Zenet Software Limited 10650 185.15 125.00 60.15 640,597.50
IL&FS Investsmart Excell Multitech Limited 44000 185.15 125.00 60.15 2,646,600.00
IL&FS Investsmart Hasmukhlal N. Vora 23400 185.15 125.00 60.15 1,407,510.00
IL&FS Investsmart Seer Finlease Private Ltd. 55550 185.15 125.00 60.15 3,341,332.50
IL&FS Investsmart Devangi Dipakbhai Panchal 60000 185.15 125.00 60.15 3,609,000.00
IL&FS Investsmart Gautam N Jhaveri 10100 185.15 125.00 60.15 607,515.00
Nectar Lifesciences Devangi Dipakbhai Panchal 10000 260.10 240.00 20.10 201,000.00
Ltd
Nectar Lifesciences Hasmukhlal N. Vora 52500 260.10 240.00 20.10 1,055,250.00
Ltd
Nectar Lifesciences Umang R Shah 150 260.10 240.00 20.10 3,015.00
Ltd
Nectar Lifesciences Jayantilal Jitmal 200 260.10 240.00 20.10 4,020.00
Ltd
Nectar Lifesciences Gautam N Jhaveri 7625 260.10 240.00 20.10 153,262.50
Ltd
Nandan Exim Ltd Sujal Leasing And Finance 20000 50.20 20.00 30.20 604,000.00
Pvt Ltd.
Nandan Exim Ltd Excell Multitech Limited 40000 50.20 20.00 30.20 1,208,000.00
Nandan Exim Ltd Seer Finlease Private Ltd. 160000 50.20 20.00 30.20 4,832,000.00
Nandan Exim Ltd Devangi Dipakbhai Panchal 41000 50.20 20.00 30.20 1,238,200.00
Nandan Exim Ltd Tauras Infosys Ltd 55000 50.20 20.00 30.20 1,661,000.00
Nandan Exim Ltd Zenet Software Limited 120000 50.20 20.00 30.20 3,624,000.00
Nandan Exim Ltd Sarvani Choudhary 5000 50.20 20.00 30.20 151,000.00
Nandan Exim Ltd Anand Netanand Choudhary 5000 50.20 20.00 30.20 151,000.00
Nandan Exim Ltd Netanand Surjaram Bhambu 5000 50.20 20.00 30.20 151,000.00
Nandan Exim Ltd Bhargav Ranchhodlal 1750 50.20 20.00 30.20 52,850.00
Panchal
Nandan Exim Ltd Rajan Vasudev Dapki 33000 50.20 20.00 30.20 996,600.00
Nandan Exim Ltd Ramesh Chimanlal Shah 4250 50.20 20.00 30.20 128,350.00
Nandan Exim Ltd Netanand Bhambu 2000 50.20 20.00 30.20 60,400.00
Yes Bank Ltd Devangi Dipakbhai Panchal 170000 60.80 45.00 15.80 2,686,000.00
Yes Bank Ltd Devangi Dipakbhai Panchal 50000 60.80 45.00 15.80 790,000.00
Yes Bank Ltd Seer Finlease Private Ltd. 332875 60.80 45.00 15.80 5,259,425.00
Yes Bank Ltd Excell Multitech Limited 161180 60.80 45.00 15.80 2,546,644.00
Yes Bank Ltd Tauras Infosys Ltd 80590 60.80 45.00 15.80 1,273,322.00
Page 42 of 252
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the date (Rs.)
of
listing
Yes Bank Ltd Zenet Software Limited 92855 60.80 45.00 15.80 1,467,109.00
Yes Bank Ltd Rajan Vasudev Dapki 44100 60.80 45.00 15.80 696,780.00
Yes Bank Ltd Bhargav Ranchhodlal 2550 60.80 45.00 15.80 40,290.00
Panchal
Yes Bank Ltd Jayantilal Jitmal 4350 60.80 45.00 15.80 68,730.00
Gateway Distriparks Zenet Software Limited 87390 112.05 72.00 40.05 3,499,969.50
Ltd
Shoppers’Stop Ltd Seer Finlease Private Ltd. 14250 372.60 238.00 134.60 1,918,050.00
Shoppers’Stop Ltd Tauras Infosys Ltd 5375 372.60 238.00 134.60 723,475.00
Shoppers’Stop Lt d Gautam N Jhaveri 3900 372.60 238.00 134.60 524,940.00
Shoppers’Stop Ltd Zenet Software Limited 9800 372.60 238.00 134.60 1,319,080.00
SPL Industries Ltd Excell Multitech Limited 65300 103.35 70.00 33.35 2,177,755.00
SPL Industries Ltd Devangi Dipakbhai Panchal 34800 103.35 70.00 33.35 1,160,580.00
SPL Industries Ltd Zenet Software Limited 23900 103.35 70.00 33.35 797,065.00
SPL Industries Ltd Zenet Software Limited 9000 103.35 70.00 33.35 300,150.00
SPL Industries Ltd Devangi Dipakbhai Panchal 7100 103.35 70.00 33.35 236,785.00
SPL Industries Ltd Gautam N Jhaveri 21200 103.35 70.00 33.35 707,020.00
SPL Industries Ltd Rajan Vasudev Dapki 6500 103.35 70.00 33.35 216,775.00
Amar Remedies Ltd Devangi Dipakbhai Panchal 221000 56.05 28.00 28.05 6,199,050.00
Suzlon Energy Ltd Saumil A Bhavnagari 110000 692.85 510.00 182.85 20,113,500.00
Suzlon Energy Ltd Jayesh P Khandwala Huf 16000 692.85 510.00 182.85 2,925,600.00
Suzlon Energy Ltd Rajan Vasudev Dapki 6000 692.85 510.00 182.85 1,097,100.00
Suzlon Energy Ltd Saumil A Bhavnagari 10500 692.85 510.00 182.85 1,919,925.00
Suzlon Energy Ltd Umang R Shah 220 692.85 510.00 182.85 40,227.00
FCS Software Masat Texturising And 42700 179.10 50.00 129.10 5,512,570.00
Twisting Private Ltd
FCS Software Tauras Infosys Ltd 16500 179.10 50.00 129.10 2,130,150.00
FCS Software Excell Multitech Limited 40000 179.10 50.00 129.10 5,164,000.00
FCS Software Zenet Software Limited 31000 179.10 50.00 129.10 4,002,100.00
FCS Software Seer Finlease Private Ltd. 30000 179.10 50.00 129.10 3,873,000.00
FCS Software Saumil A Bhavnagari 47500 179.10 50.00 129.10 6,132,250.00
FCS Software Chirag Desai 200 179.10 50.00 129.10 25,820.00
FCS Software Bakul Desai 200 179.10 50.00 129.10 25,820.00
FCS Software Hemlata Desai 200 179.10 50.00 129.10 25,820.00
FCS Software Vinita A Choudhary 2200 179.10 50.00 129.10 284,020.00
FCS Software Jayantilal Jitmal 500 179.10 50.00 129.10 64,550.00
FCS Software Bhargav Ranchhodlal 1200 179.10 50.00 129.10 154,920.00
Panchal
FCS Software Rajan Vasudev Dapki 11800 179.10 50.00 129.10 1,523,380.00
FCS Software Umang R Shah 1100 179.10 50.00 129.10 142,010.00
FCS Software Chirag Desai 200 179.10 50.00 129.10 25,820.00
FCS Software Bakul Desai 200 179.10 50.00 129.10 25,820.00
FCS Software Hemlata Desai 200 179.10 50.00 129.10 25,820.00
FCS Software Vinita A Choudhary 2200 179.10 50.00 129.10 284,020.00
FCS Software Jayantilal Jitmal 500 179.10 50.00 129.10 64,550.00
FCS Software Bhargav Ranchhodlal 1200 179.10 50.00 129.10 154,920.00
Page 43 of 252
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the date (Rs.)
of
listing
Panchal
FCS Software Rajan Vasudev Dapki 11800 179.10 50.00 129.10 1,523,380.00
Sasken Commtech Jayesh P Khandwala Huf 6500 464.55 260.00 204.55 1,329,575.00
Ltd
Sasken Commtech Saumil A Bhavnagari 12500 464.55 260.00 204.55 2,556,875.00
Ltd
Sasken Commtech Welvet Financial Advisers 1625 464.55 260.00 204.55 332,393.75
Ltd Pvt Ltd
Ltd
Ltd
Sasken Commtech Devangi Dipakbhai Panchal 10450 464.55 260.00 204.55 2,137,547.50
Ltd
Dishman Zenet Software Limited 72900 541.25 175.00 366.25 26,699,625.00
Pharmaceuticals &
Chemicals Ltd.
Dishman Dipak Jashvantlal Panchal 14700 541.25 175.00 366.25 5,383,875.00
Pharmaceuticals &
Chemicals Ltd.
Dishman Vasudev Gordhandas Dapki 1650 541.25 175.00 366.25 604,312.50
Pharmaceuticals &
Chemicals Ltd.
Dishman Zenet Software Limited 8100 541.25 175.00 366.25 2,966,625.00
Pharmaceuticals &
Chemicals Ltd.
Datamatics Dipak Jashvantlal Panchal 250 127.20 110.00 17.20 4,300.00
Technologies Ltd
Datamatics Dipak Jashvantlal Panchal 5750 127.20 110.00 17.20 98,900.00
Technologies Ltd
Datamatics Vasudev Gordhandas Dapki 3350 127.20 110.00 17.20 57,620.00
Technologies Ltd
Datamatics Zenet Software Limited 66600 127.20 110.00 17.20 1,145,520.00
Technologies Ltd
Tata Consultancy Jayantilal Jitmal 1275 987.95 850.00 137.95 175,886.25
Services Ltd.
Tata Consultancy Bhargav Ranchhodlal 1581 987.95 850.00 137.95 218,098.95
Services Ltd. Panchal
Tata Consultancy Tauras Infosys Ltd 20100 987.95 850.00 137.95 2,772,795.00
Services Ltd.
Tata Consultancy Vasudev Gordhandas Dapki 3870 987.95 850.00 137.95 533,866.50
Services Ltd.
Tata Consultancy Gautam N Jhaveri 5400 987.95 850.00 137.95 744,930.00
Services Ltd.
Tata Consultancy Vasudev Gordhandas Dapki 6000 987.95 850.00 137.95 827,700.00
Services Ltd.
Tata Consultancy Gautam N Jhaveri 6000 987.95 850.00 137.95 827,700.00
Services Ltd.
Tata Consultancy Dipak Jashvantlal Panchal 10842 987.95 850.00 137.95 1,495,653.90
Services Ltd.
Tata Consultancy Tauras Infosys Ltd 45000 987.95 850.00 137.95 6,207,750.00
Services Ltd.
National Thermal Devangi Dipakbhai Panchal 1500000 75.55 62.00 13.55 20,325,000.00
Power Corporation
Ltd.
Page 44 of 252
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the date (Rs.)
of
listing
National Thermal Hina Bhargav Panchal 21400 75.55 62.00 13.55 289,970.00
Power Corporation
Ltd.
National Thermal Jayantilal Jitmal 19260 75.55 62.00 13.55 260,973.00
Power Corporation
Ltd.
National Thermal Sanjay Rameshchandra 10700 75.55 62.00 13.55 144,985.00
Power Corporation Shah
Ltd.
National Thermal Himanshu Piyushkumar 1070 75.55 62.00 13.55 14,498.50
Power Corporation Choliya
Ltd.
National Thermal Sanjay R. Shah 10700 75.55 62.00 13.55 144,985.00
Power Corporation
Ltd.
Total Gains of the Principals of Roopalben Panchal 458,182,764.35
10.5. Thus, as per the above calculations, it is seen that total gains of the financiers of
Roopalben Panchal in all the IPOs during 2003- 2005 works out to Rs.45.82 crores.
10.6. Financiers of Sugandh Estates & Investments P Ltd. (SEIPL)
The details of financiers of SEIPL are given below:
Table 10.6 – Financiers of SEIPL

Dp Client Company Name of No. Of Date Of
Name Client ID Name Name financier Dp Name Client ID Shares Transaction
Karvy Sugandh
Stock Estates And Excell
Broking Investments Multitech H. Nyalchand
Limited 14405199 Pvt Ltd IDFC Ltd. Limited Fin. Ser.Ltd 10009317 46550 8/8/2005
Karvy Sugandh IDFC Ltd.
Stock Estates And Sujal Leasing
Broking Investments And Finance H. Nyalchand
Limited 14405199 Pvt Ltd Pvt Ltd. Fin. Ser.Ltd 10026812 490504 8/8/2005
Stock Estates And
Broking Investments Tauras Infosys H. Nyalchand
Limited 14405199 Pvt Ltd Ltd Fin. Ser.Ltd 10008962 251902 8/9/2005
Stock Estates And Karvy Stock
Broking Investments Dushyant Broking
Limited 14405199 Pvt Ltd Natwarlal Dalal Limited 40033412 196574 8/9/2005
Stock Estates And
Broking Investments Monal Y. Khandwala
Limited 14405199 Pvt Ltd Thakkar Int.Fin.S.Pv.L 10112752 79800 8/9/2005
Broking Investments Broking
Limited 14405199 Pvt Ltd Vinod Modha Limited 10004691 66234 8/9/2005
Karvy 14405199 Sugandh IDFC Ltd. Amadhi Khandwala 10154728 265468 8/9/2005
Page 45 of 252
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Stock Estates And Investments Int.Fin.S.Pv.L
Broking Investments Ltd
Limited Pvt Ltd
Stock Estates And
Broking Investments Seer Finlease H.Nyalchand
Limited 14405199 Pvt Ltd Private Ltd. Fin. Ser.Ltd 10026774 7000 8/9/2005
Stock Estates And
Broking Investments Zenet Software H.Nyalchand
Limited 14405199 Pvt Ltd Limited Fin. Ser.Ltd 10009298 73150 8/9/2005
Stock Estates And
Broking Investments Jayesh P Khandwala
Limited 14405199 Pvt Ltd Khandwala Huf Int.Fin.S.Pv.L 10000579 398202 8/9/2005
Stock Estates And
Stock Estates And
Broking Investments Ritaben R. Khandwala
Stock Estates And
Broking Investments Gautam N Ase Capital
Limited 14405199 Pvt Ltd Jhaveri Markets Ltd 10045158 263340 8/10/2005
Stock Estates And
Broking Investments Jitendra Khandwala
Limited 14405199 Pvt Ltd Lalwani Int.Fin.S.Pv.L 10153198 263606 8/11/2005
Stock Estates And
Broking Investments And Finance H.Nyalchand
Stock Estates And
Broking Investments Tauras Infosys H.Nyalchand
Stock Estates And
Stock Estates And
Broking Investments Jitendra Khandwala
Limited 14405199 Pvt Ltd Lalwani Int.Fin.S.Pv.L 10153198 1064 8/12/2005
Stock Estates And
Page 46 of 252
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Stock Estates And
Limited 14405199 Pvt Ltd Jhaveri M arkets Ltd 10045158 31000 8/13/2005
Karvy Sugandh
Stock Estates And
Broking Investments IL&FS Ritaben R. Khandwala
Limited 14405199 Pvt Ltd Investsmart Thakkar Int.Fin.S.Pv.L 10112980 1800 7/25/2005
Karvy Sugandh IL&FS
Stock Estates And Investsmart
Broking Investments Veenaben Y. Khandwala
Karvy Sugandh IL&FS
Stock Estates And Investsmart Karvy Stock
Karvy Sugandh IL&FS
Stock Estates And Investsmart Sujal Leasing
Broking Investments And Finance H.Nyalchand
Karvy Sugandh IL&FS
Stock Estates And Investsmart Excell
Broking Investments Multitech H.Nyalchand
Limited 14405199 Pvt Ltd Limited Fin. Ser.Ltd 10009317 3650 7/26/2005
Karvy Sugandh IL&FS
Broking Investments Tauras Infosys H.Nyalchand
Karvy Sugandh
Broking Investments IL&FS Broking
Limited 14405199 Pvt Ltd Investsmart Vinod Modha Limited 10004691 6550 7/27/2005
Karvy Sugandh IL&FS
Broking Investments Monal Y. Khandwala
Karvy Sugandh IL&FS
Broking Investments Ritaben R. Khandwala
Karvy Sugandh
Stock Estates And Amadhi
Broking Investments FCS Investments Khandwala
Limited 14405199 Pvt Ltd Software Ltd Int.Fin.S.Pv.L 10154728 10800 9/19/2005
Karvy Sugandh
Stock Estates And Excell
Broking Investments FCS Multitech H.Nyalchand
Limited 14405199 Pvt Ltd Software Limited Fin. Ser.Ltd 10009317 11100 9/19/2005
Karvy Sugandh
Broking Investments FCS Broking
Limited 14405199 Pvt Ltd Software Parag P Jhaveri Limited 10004600 8200 9/19/2005
Karvy Sugandh
Stock Estates And
Broking Investments FCS Zenet Software H.Nyalchand
Karvy Sugandh
Stock Estates And FCS Tauras Infosys H.Nyalchand
Broking 14405199 Investments Software Ltd Fin. Ser.Ltd 10008962 19300 9/19/2005
Page 47 of 252
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Limited Pvt Ltd
Karvy Sugandh
Stock Estates And
Karvy Sugandh
Stock Estates And
Karvy Sugandh
Broking Investments FCS Puloma Broking
Limited 14405199 Pvt Ltd Software Dushyant Dalal Limited 40033429 24600 9/20/2005
Karvy Sugandh
Stock Estates And Amadhi
Broking Investments FCS Investments Khandwala
Limited 14405199 Pvt Ltd Software Ltd Int.Fin.S.Pv.L 10154728 27400 9/21/2005
Karvy Sugandh
Broking Investments Yes Bank And Finance H.Nyalchand
Limited 14405199 Pvt Ltd Ltd Pvt Ltd. Fin. Ser.Ltd 10026812 156750 7/8/2005
Karvy Sugandh
Stock Estates And
Broking Investments Yes Bank Ritaben R. Khandwala
Limited 14405199 Pvt Ltd Ltd Thakkar Int.Fin.S.Pv.L 10112980 19650 7/8/2005
Karvy Sugandh
Stock Estates And
Broking Investments Yes Bank Veenaben Y. Khandwala
Limited 14405199 Pvt Ltd Ltd Thakkar Int.Fin.S.Pv.L 10113005 19650 7/8/2005
Karvy Sugandh Sasken
Stock Estates And Commtech Karvy Stock
Broking Investments Ltd Dushyant Broking
Stock Estates And Commtech
Broking Investments Ltd Jayesh P Khandwala
Limited 14405199 Pvt Ltd Khandwala Huf Int.Fin.S.Pv.L 10000579 6175 9/3/2005
Stock Estates And Commtech Karvy Stock
Broking Investments Ltd Broking
Limited 14405199 Pvt Ltd Parag P Jhaveri Limited 10004600 2375 9/5/2005
Stock Estates And Commtech Amadhi
Broking Investments Ltd Investments Khandwala
Limited 14405199 Pvt Ltd Ltd Int.Fin.S.Pv.L 10154728 4700 9/5/2005
National
Karvy Sugandh Thermal
Stock Estates And Power Rajesh Jhaveri
Broking Investments Corporation Stock Brokers Ase Capital
Limited 14405199 Pvt Ltd Ltd. Pvt. Ltd. Markets Ltd 10023175 42158 11/3/2004
National
Karvy Sugandh Thermal
Stock Estates And Power
Broking Investments Corporation Zenet Software H.Nyalchand
Limited 14405199 Pvt Ltd Ltd. Limited Fin. Ser.Ltd 10009298 739558 11/3/2004
Karvy Sugandh Tata
Stock Estates And Consultancy
Broking Investments Services Patel H.Nyalchand
Limited 14405199 Pvt Ltd Ltd. Rajeshkumar Fin. Ser.Ltd 10000047 4500 8/24/2004
Page 48 of 252
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Karvy Sugandh Tata
Stock Estates And Consultancy Deep
Broking Investments Services Stockbroking H.Nyalchand
Limited 14405199 Pvt Ltd Ltd. Private Limited Fin. Ser.Ltd 10000272 10000 8/24/2004
Karvy Sugandh Tata
Stock Estates And Consultancy Excell
Broking Investments Services Multitech H.Nyalchand
Limited 14405199 Pvt Ltd Ltd. Limited Fin. Ser.Ltd 10009317 36500 8/24/2004
Karvy Sugandh Tata
Stock Estates And Consultancy Arth
Broking Investments Services Stockbroking Ase Capital
Limited 14405199 Pvt Ltd Ltd. Pvt.Ltd Markets Ltd 10007166 3000 8/25/2004
10.7. SEBI worked out a preliminary estimate of the profits made by the above
financiers of SEIPL by comparing the closing price (on NSE) on the first day of
listing in respect of each of the above IPOs with the issue price of the respective
IPOs. The calculations are given below:
Table 10.7 – Profits made by financiers of SEIPL

Close
price
on the Issue
Company No. Of date of Price Diff. in
Name Name Of financier Shares listing (Rs.) Price (Rs.) Gain (Rs.)
(a) (b) (c) (d) (e) (f) (c) * (f)
FCS Software Amadhi Investments Ltd 10800 179.10 50.00 129.10 1,394,280.00
FCS Software Excell Multitech Limited 11100 179.10 50.00 129.10 1,433,010.00
FCS Software Parag P Jhaveri 8200 179.10 50.00 129.10 1,058,620.00
FCS Software Tauras Infosys Ltd 19300 179.10 50.00 129.10 2,491,630.00
FCS Software Zenet Software Limited 2100 179.10 50.00 129.10 271,110.00
FCS Software Puloma Dushyant Dalal 24600 179.10 50.00 129.10 3,175,860.00
FCS Software Amadhi Investments Ltd 27400 179.10 50.00 129.10 3,537,340.00
IDFC Ltd. Excell Multitech Limited 46550 69.50 34.00 35.50 1,652,525.00
IDFC Ltd. Sujal Leasing And
Finance Pvt Ltd. 490504 69.50 34.00 35.50 17,412,892.00
IDFC Ltd. Tauras Infosys Ltd 251902 69.50 34.00 35.50 8,942,521.00
IDFC Ltd. Dushyant Natwarlal Dalal 196574 69.50 34.00 35.50 6,978,377.00
IDFC Ltd. Monal Y. Thakkar 79800 69.50 34.00 35.50 2,832,900.00
IDFC Ltd. Vinod Modha 66234 69.50 34.00 35.50 2,351,307.00
IDFC Ltd. Amadhi Investments Ltd 265468 69.50 34.00 35.50 9,424,114.00
IDFC Ltd. Seer Finlease Private Ltd. 7000 69.50 34.00 35.50 248,500.00
IDFC Ltd. Zenet Software Limited 73150 69.50 34.00 35.50 2,596,825.00
IDFC Ltd. Jayesh P Khandwala Huf 398202 69.50 34.00 35.50 14,136,171.00
IDFC Ltd. Seer Finlease Private Ltd. 192234 69.50 34.00 35.50 6,824,307.00
IDFC Ltd. Ritaben R. Thakkar 79800 69.50 34.00 35.50 2,832,900.00
IDFC Ltd. Jitendra Lalwani 263606 69.50 34.00 35.50 9,358,013.00
IDFC Ltd. Gautam N Jhaveri 580 69.50 34.00 35.50 20,590.00
Page 49 of 252
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on the Issue
(a) (b) (c) (d) (e) (f) (c) * (f)
IDFC Ltd. Sujal Leasing And
Finance Pvt Ltd. 532 69.50 34.00 35.50 18,886.00
IDFC Ltd. Dushyant Natwarlal Dalal 798 69.50 34.00 35.50 28,329.00
IDFC Ltd. Tauras Infosys Ltd 266 69.50 34.00 35.50 9,443.00
IDFC Ltd. Seer Finlease Private Ltd. 266 69.50 34.00 35.50 9,443.00
IDFC Ltd. Jitendra Lalwani 1064 69.50 34.00 35.50 37,772.00
IDFC Ltd. Gautam N Jhaveri 3000 69.50 34.00 35.50 106,500.00
IL&FS
Investsmart Ritaben R. Thakkar 1800 185.15 125.00 60.15 108,270.00
IL&FS
Investsmart Vinod Modha 6550 185.15 125.00 60.15 393,982.50
IL&FS
Investsmart Veenaben Y. Thakkar 1900 185.15 125.00 60.15 114,285.00
IL&FS
Investsmart Dushyant Natwarlal Dalal 19650 185.15 125.00 60.15 1,181,947.50
IL&FS Sujal Leasing And
Investsmart Finance Pvt Ltd. 40600 185.15 125.00 60.15 2,442,090.00
IL&FS
Investsmart Excell Multitech Limited 3650 185.15 125.00 60.15 219,547.50
IL&FS
Investsmart Tauras Infosys Ltd 20350 185.15 125.00 60.15 1,224,052.50
IL&FS
Investsmart Monal Y. Thakkar 5800 185.15 125.00 60.15 348,870.00
IL&FS
Investsmart Ritaben R. Thakkar 6450 185.15 125.00 60.15 387,967.50
National
Thermal Power Rajesh Jhaveri Stock
Corporation Ltd. Brokers Pvt. Ltd. 42158 75.55 62.00 13.55 571,240.90
National
Thermal Power
Corporation Ltd. Zenet Software Limited 739558 75.55 62.00 13.55 10,021,010.90
Sasken
Commtech Ltd Dushyant Natwarlal Dalal 7150 464.55 260.00 204.55 1,462,532.50
Sasken
Commtech Ltd Jayesh P Khandwala Huf 6175 464.55 260.00 204.55 1,263,096.25
Sasken
Commtech Ltd Parag P Jhaveri 2375 464.55 260.00 204.55 485,806.25
Sasken
Commtech Ltd Amadhi Investments Ltd 4700 464.55 260.00 204.55 961,385.00
Tata
Consultancy
Services Ltd. Patel Rajeshkumar 4500 987.95 850.00 137.95 620,775.00
Tata
Consultancy Deep Stockbroking
Services Ltd. Private Limited 10000 987.95 850.00 137.95 1,379,500.00
Tata
Consultancy
Services Ltd. Excell Multitech Limited 36500 987.95 850.00 137.95 5,035,175.00
Tata
Consultancy
Services Ltd. Arth Stockbroking Pvt.Ltd 3000 987.95 850.00 137.95 413,850.00
Yes Bank Ltd Sujal Leasing And 156750 60.80 45.00 15.80 2,476,650.00
Page 50 of 252
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price
on the Issue
(a) (b) (c) (d) (e) (f) (c) * (f)
Finance Pvt Ltd.
Yes Bank Ltd Ritaben R. Thakkar 19650 60.80 45.00 15.80 310,470.00
Yes Bank Ltd Veenaben Y. Thakkar 19650 60.80 45.00 15.80 310,470.00
Total 148,970,199.30
10.8. Thus, from the above calculations, it is seen that the gain of the principals of
SEIPL in various IPOs during 2003 – 2005 works out to Rs.14.90 crores.
10.9. Financiers of other Master Account Holders
The details of financiers of the master account holders are given below:
Table 10.9 – Financiers of master account holders

Client Id Client Name Company Name Of Dp Name Client Id No. Of Date Of
Name financier Shares Transaction
10093022 Purshottam Tata Anagram Anagram 10153985 3750 8/26/2004
Budhwani Consultancy Securities Stockbroking Ltd
Services Ltd. Limited
10093022 Purshottam Gateway Dushyant Karvy Stock 40033412 38340 3/31/2005
Budhwani Distriparks Ltd- Natwarlal Dalal Broking Limited
10093022 Purshottam Shoppers'stop Magnum Equity Indusind Bank 10003221 5000 5/24/2005
Budhwani Limited Equity Services Limited Ltd.
Share
10068824 Pratik Suzlon Energy Chirag Hdfc Bank Ltd 40869873 18 10/20/2005
Mafatlal Shah Ltd Jayendrakumar
Shah
10004600 Parag P Idfc Ltd-Eq Jitendra Lalwani Khandwala 10153198 554078 8/11/2005
Jhaveri Int.Fin.S.Pv.L
10127493 Opee Stock - Jet Airways Bagrecha Ashok Ratnakar 10128206 2520 3/15/2005
Link Ltd. (India) Limited- K. Sec.Pvt.Ltd.
Eq
12501284 Kelan Idfc Ltd-Eq Kelan Atulbhai Anagram 10148567 524552 8/9/2005
Atulbhai Doshi Stockbroking Ltd
Doshi
12501284 Kelan National Kelan Atulbhai Anagram 10148567 22042 11/2/2004
Atulbhai Thermal Power Doshi Stockbroking Ltd
Doshi Corporation
Ltd.
Doshi Corporation
Ltd.
Doshi Corporation
Ltd.
12501284 Kelan Tata Kelan Atulbhai Anagram 10148567 2000 8/25/2004
Atulbhai Consultancy Doshi Stockbroking Ltd
Doshi Services Ltd.
12501284 Kelan Nectar Kelan Atulbhai Anagram 10148567 23250 7/14/2005
Atulbhai Lifesciences Doshi Stockbroking Ltd
Doshi Limited-Eq
10004626 Kamal P Idfc Ltd-Eq Jitendra Lalwani Khandwala 10153198 234612 8/11/2005
Jhaveri Int.Fin.S.Pv.L
Page 51 of 252
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10131283 Indiabulls Tata Ajay Kumar Indiabulls 10069837 17 8/26/2004
Securities Consultancy Gupta Securities Ltd
Ltd. Services Ltd.
40080719 Dhaval K Idfc Ltd-Eq Ashmi Financial Khandwala 10148913 39900 8/10/2005
Katakia Consultancy Pvt Int.Fin.S.Pv.L
Ltd
40080719 Dhaval K Idfc Ltd-Eq CHIMANLAL PRABHUDAS 12011300 11100 8/13/2005
Katakia GIRDHARLAL LILLADHER 00056161
SHAH PVT LTD
10139886 Dhaval A. Suzlon Energy Sheelu Lalwani Khandwala 10113966 14576 10/18/2005
Mehta Ltd Int.Fin.S.Pv.L
10139886 Dhaval A. Idfc Ltd-Eq Ashmi Financial Khandwala 10148913 146832 8/11/2005
Mehta Consultancy Pvt Int.Fin.S.Pv.L
Ltd
40081967 Dharmesh Idfc Ltd-Eq Welvet Financial Khandwala 10148905 43624 8/9/2005
Bhupendra M Advisers Pvt Ltd Int.Fin.S.Pv.L
40081967 Dharmesh Idfc Ltd-Eq Pratik Pulp P Stock Hldg Corp 14168053 25270 8/10/2005
Bhupendra M Ltd Of I Ltd
40081967 Dharmesh Idfc Ltd-Eq Sonal N Dadia Uti Bank Limited 10266634 3325 8/10/2005
Bhupendra M
40081967 Dharmesh Idfc Ltd-Eq Kiran D Dadia Uti Bank Limited 10266595 3325 8/10/2005
Bhupendra M
40081967 Dharmesh Idfc Ltd-Eq Jayesh N Dadia Uti Bank Limited 10266600 6650 8/10/2005
Bhupendra M
40081967 Dharmesh Idfc Ltd-Eq Dadia Finvest Uti Bank Limited 10203650 24472 8/10/2005
Bhupendra M Limited
40081967 Dharmesh Idfc Ltd-Eq Deepak N Dadia Uti Bank Limited 10266659 3325 8/10/2005
Bhupendra M
40081967 Dharmesh Idfc Ltd-Eq Jasmina J Dadia Uti Bank Limited 10266618 10108 8/10/2005
Bhupendra M
40081967 Dharmesh Idfc Ltd-Eq Natvarlal N Uti Bank Limited 10266562 3325 8/10/2005
Bhupendra M Dadia
40081967 Dharmesh Idfc Ltd-Eq Pratik Pulp P Stock Hldg Corp 14168053 25270 8/12/2005
Bhupendra M Ltd Of I Ltd
40081967 Dharmesh Idfc Ltd-Eq Jasmina J Dadia Uti Bank Limited 10266618 10108 8/12/2005
Bhupendra M
40081967 Dharmesh Idfc Ltd-Eq Natvarlal N Uti Bank Limited 10266562 3325 8/12/2005
Bhupendra M Dadia
40081967 Dharmesh Idfc Ltd-Eq Kiran D Dadia Uti Bank Limited 10266595 3325 8/12/2005
Bhupendra M
40081967 Dharmesh Idfc Ltd-Eq Sonal N Dadia Uti Bank Limited 10266634 3325 8/12/2005
Bhupendra M
40081967 Dharmesh Idfc Ltd-Eq Deepak N Dadia Uti Bank Limited 10266659 3325 8/12/2005
Bhupendra M
40081967 Dharmesh Idfc Ltd-Eq Jayesh N Dadia Uti Bank Limited 10266600 6650 8/12/2005
Bhupendra M
40081967 Dharmesh Nectar Natvarlal N Uti Bank Limited 10266562 560 7/19/2005
Bhupendra M Lifesciences Dadia
Limited-Eq
40081967 Dharmesh Nectar Deepak N Dadia Uti Bank Limited 10266659 560 7/19/2005
Bhupendra M Lifesciences
Limited-Eq
40081967 Dharmesh Nectar Welvet Financial Khandwala 10148905 12000 7/19/2005
Bhupendra M Lifesciences Advisers Pvt Ltd Int.Fin.S.Pv.L
Limited-Eq
40081967 Dharmesh Shoppers'stop Ashmi Financial Khandwala 10148913 12700 5/24/2005
Bhupendra M Limited Equity Consultancy Pvt Int.Fin.S.Pv.L
Share Ltd
40081967 Dharmesh Shoppers'stop Dadia Finvest Uti Bank Limited 10203650 2079 5/24/2005
Bhupendra M Limited Equity Limited
Share
Page 52 of 252
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40081967 Dharmesh Spl Industries Welvet Financial Khandwala 10148905 7300 7/23/2005
Bhupendra M Limited - Eq Advisers Pvt Ltd Int.Fin.S.Pv.L
40081967 Dharmesh Yes Bank Ltd - Welvet Financial Khandwala 10148905 55000 7/13/2005
Bhupendra M Equity Shares Advisers Pvt Ltd Int.Fin.S.Pv.L
40081967 Dharmesh Idfc Ltd-Eq Motilal Oswal 12010900 4708 8/10/2005
Bhupendra M Neha Narendra Securities 00195905
Dadia Limited
Bhupendra M Dhaval Narendra Securities 00194838
Dadia Limited
Bhupendra M Narendra Harilal Securities 00193380
Dadia Limited
Bhupendra M Kashmira Securities 00193376
Narendra Dadia Limited
11933458 Devangi Tv Today Vasudev Ase Capital 10007265 6900 1/15/2004
Dipakbhai Network Gordhandas Markets Ltd
Panchal Limited Dapki
11933458 Devangi Tv Today Arth Ase Capital 10007166 28200 1/15/2004
Dipakbhai Network Stockbroking Markets Ltd
Panchal Limited Pvt.Ltd
11933458 Devangi Tv Today Arth Ase Capital 10007166 13000 1/15/2004
Dipakbhai Network Stockbroking Markets Ltd
Panchal Limited Pvt.Ltd
11933458 Devangi Indraprasth Gas Panchal Bhargav Karvy Stock 10067238 2900 12/26/2003
Dipakbhai Eq Ranchhodlal Broking Limited
Panchal
11933458 Devangi Indraprasth Gas Vasudev Ase Capital 10007265 4900 12/26/2003
Dipakbhai Eq Gordhandas Markets Ltd
Panchal Dapki
10315404 Deepak Jet Airways Rupesh Anagram 10084010 244 3/15/2 005
Madhukant (India) Limited- Vipinchandra Stockbroking Ltd
Patel Eq Shah
40064516 D B Mehta National Karvy Stock Karvy Stock 40003868 7500 11/5/2004
Thermal Power Broking Limited Broking Limited
Corporation
Ltd.
40064516 D B Mehta National Karvy Stock Karvy Stock 40003868 50000 11/5/2004
Thermal Power Broking Limited Broking Limited
Corporation
Ltd.
15530980 Biren Kantilal Suzlon Energy Jayesh P Khandwala 10000579 12800 10/17/2005
Shah Ltd Khandwala Huf Int.Fin.S.Pv.L
15530980 Biren Kantilal Idfc Ltd-Eq Jayesh P Khandwala 10000579 135096 8/11/2005
Shah Khandwala Huf Int.Fin.S.Pv.L
11932970 Arjav Patni Computer Dipak Ase Capital 10005706 2250 2/23/2004
Nareshbhai Systems Ltd. Jashvantlal Markets Ltd
Panchal Panchal
11932970 Arjav Patni Computer Shah Kantilal Ase Capital 10007964 1550 2/23/2004
Nareshbhai Systems Ltd Jitmal Markets Ltd
Panchal
11932970 Arjav Patni Computer Vasudev Ase Capital 10007265 10250 2/23/2004
Nareshbhai Systems Ltd Gordhandas Markets Ltd
Panchal Dapki
11932970 Arjav Patni Computer Dipak Ase Capit al 10005706 35000 2/25/2004
Nareshbhai Systems Ltd Jashvantlal Markets Ltd
Panchal Panchal
11932970 Arjav Patni Computer Dipak Ase Capital 10005706 35000 2/25/2004
Nareshbhai Systems Ltd Jashvantlal Markets Ltd
Panchal Panchal
13997078 Ambuja Tata Patel H.Nyalchand Fin. 10000047 5000 8/24/2004
Estate And Consultancy Rajeshkumar Ser.Ltd
Holdings Pvt Services Ltd.
Ltd
13997078 Ambuja Tata Gautam N Ase Capital 10045158 20000 8/24/2004
Estate And Consultancy Jhaveri Markets Ltd
Page 53 of 252
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Holdings Pvt Services Ltd.
Ltd
13997078 Ambuja Tata Arth Ase Capital 10007166 1500 8/25/2004
Estate And Consultancy Stockbroking Markets Ltd
Holdings Pvt Services Ltd. Pvt.Ltd
Ltd
10.10. The gains made by the above financiers of the master account holders were
worked out by comparing the closing price (on NSE) on the first day of listing in
respect of each of the above IPOs with the issue price of the respective IPOs. The
calculations are given below:
Table 10.10 – Gains of Financiers of master account holders

Client Name Company Name Of No. Of Shares Close Issue Price Gains
Name Financier price on
the date
of listing
Purshottam Gateway Dushyant 38340 112.05 72.00 1,535,517.00
Budhwani Distriparks Ltd- Natwarlal Dalal
Parag P Jhaveri Idfc Ltd-Eq Jitendra Lalwani 554078 69.50 34.00 19,669,769.00
Kelan Atulbhai Idfc Ltd-Eq Kelan Atulbhai 524552 69.50 34.00 18,621,596.00
Doshi Doshi
Kamal P Jhaveri Idfc Ltd-Eq Jitendra Lalwani 234612 69.50 34.00 8,328,726.00
Dhaval K Katakia Idfc Ltd-Eq Ashmi Financial 39900 69.50 34.00 1,416,450.00
Consultancy Pvt
Ltd
Dhaval K Katakia Idfc Ltd-Eq Chimanlal 11100 69.50 34.00 394,050.00
Girdharlal Shah
Dhaval A. Mehta Idfc Ltd-Eq Ashmi Financial 146832 69.50 34.00 5,212,536.00
Consultancy Pvt
Ltd
Dharmesh Idfc Ltd-Eq Welvet Financial 43624 69.50 34.00 1,548,652.00
Bhupendra M Advisers Pvt Ltd
Dharmesh Idfc Ltd-Eq Pratik Pulp P Ltd 25270 69.50 34.00 897,085.00
Bhupendra M
Dharmesh Idfc Ltd-Eq Sonal N Dadia 3325 69.50 34.00 118,037.50
Bhupendra M
Dharmesh Idfc Ltd-Eq Kiran D Dadia 3325 69.50 34.00 118,037.50
Bhupendra M
Dharmesh Idfc Ltd-Eq Jayesh N Dadia 6650 69.50 34.00 236,075.00
Bhupendra M
Dharmesh Idfc Ltd-Eq Dadia Finvest 24472 69.50 34.00 868,756.00
Bhupendra M Limited
Dharmesh Idfc Ltd-Eq Deepak N Dadia 3325 69.50 34.00 118,037.50
Bhupendra M
Dharmesh Idfc Ltd-Eq Jasmina J Dadia 10108 69.50 34.00 358,834.00
Bhupendra M
Dharmesh Idfc Ltd-Eq Natvarlal N Dadia 3325 69.50 34.00 118,037.50
Bhupendra M
Dharmesh Idfc Ltd-Eq Pratik Pulp P Ltd 25270 69.50 34.00 897,085.00
Bhupendra M
Dharmesh Idfc Ltd-Eq Jasmina J Dadia 10108 69.50 34.00 358,834.00
Bhupendra M
Dharmesh Idfc Ltd-Eq Natvarlal N Dadia 3325 69.50 34.00 118,037.50
Bhupendra M
Dharmesh Idfc Ltd-Eq Kiran D Dadia 3325 69.50 34.00 118,037.50
Bhupendra M
Dharmesh Idfc Ltd-Eq Sonal N Dadia 3325 69.50 34.00 118,037.50
Bhupendra M
Dharmesh Idfc Ltd-Eq Deepak N Dadia 3325 69.50 34.00 118,037.50
Bhupendra M
Page 54 of 252
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the date
of listing
Dharmesh Idfc Ltd-Eq Jayesh N Dadia 6650 69.50 34.00 236,075.00

Bhupendra M
Dharmesh Idfc Ltd-Eq Neha Narendra 4708 69.50 34.00 167,134.00
Bhupendra M Dadia
Dharmesh Idfc Ltd-Eq Dhaval Narendra 4708 69.50 34.00 167,134.00
Bhupendra M Dadia
Dharmesh Idfc Ltd-Eq Narendra Harilal 7062 69.50 34.00 250,701.00
Bhupendra M Dadia
Dharmesh Idfc Ltd-Eq Kashmira 7062 69.50 34.00 250,701.00
Bhupendra M Narendra Dadia
Biren Kantilal Idfc Ltd-Eq Jayesh P 135096 69.50 34.00 4,795,908.00
Shah Khandwala Huf
Devangi Indraprasth Gas Panchal Bhargav 2900 119.20 48.00 206,480.00
Dipakbhai Panchal Eq Ranchhodlal
Devangi Indraprasth Gas Vasudev 4900 119.20 48.00 348,880.00
Dipakbhai Panchal Eq Gordhandas Dapki
Opee Stock - Link Jet Airways Bagrecha Ashok 2520 1304.20 1100.00 514,584.00
Ltd. (India) Limited- K.
Eq
Deepak Jet Airways Rupesh 244 1304.20 1100.00 49,824.80
Madhukant Patel (India) Limited- Vipinchandra
Eq Shah
Kelan Atulbhai National Kelan Atulbhai 22042 75.55 62.00 298,669.10
Doshi Thermal Power Doshi
Corporation
Ltd.
Kelan Atulbhai National Kelan Atulbhai 89238 75.55 62.00 1,209,174.90
Corporation
Ltd.
Kelan Atulbhai National Kelan Atulbhai 225556 75.55 62.00 3,056,283.80
Corporation
Ltd.
D B Mehta National Karvy St ock 7500 75.55 62.00 101,625.00
Thermal Power Broking Limited
Corporation
Ltd.
D B Mehta National Karvy Stock 50000 75.55 62.00 677,500.00
Thermal Power Broking Limited
Corporation
Ltd.
Kelan Atulbhai Nectar Kelan Atulbhai 23250 260.10 240.00 467,325.00
Doshi Lifesciences Doshi
Limited-Eq
Dharmesh Nectar Natvarlal N Dadia 560 260.10 240.00 11,256.00
Limited-Eq
Dharmesh Nectar Deepak N Dadia 560 260.10 240.00 11,256.00
Limited-Eq
Dharmesh Nectar Welvet Financial 12000 260.10 240.00 241,200.00
Bhupendra M Lifesciences Advisers Pvt Ltd
Limited-Eq
Arjav Nareshbhai Patni Computer Shah Kantilal 1550 233.20 230.00 4,960.00
Panchal Systems Ltd Jitmal
Arjav Nareshbhai Patni Computer Vasudev 10250 233.20 230.00 32,800.00
Panchal Systems Ltd Gordhandas Dapki
Arjav Nareshbhai Patni Computer Dipak Jashvantlal 35000 233.20 230.00 112,000.00
Panchal Systems Ltd Panchal
Panchal Systems Ltd Panchal
Page 55 of 252
Interim Order - IPO
the date
of listing
Panchal Systems Ltd. Panchal

Purshottam Shoppers'stop Magnum Equity 5000 372.60 238.00 673,000.00
Budhwani Limited Equity Services Limited
Share
Dharmesh Shoppers'stop Ashmi Financial 12700 372.60 238.00 1,709,420.00
Bhupendra M Limited Equity Consultancy Pvt
Share Ltd
Dharmesh Shoppers'stop Dadia Finvest 2079 372.60 238.00 279,833.40
Bhupendra M Limited Equity Limited
Share
Dharmesh Spl Industries Welvet Financial 7300 103.35 70.00 243,455.00
Bhupendra M Limited - Eq Advisers Pvt Ltd
Pratik Mafatlal Sunlon Energy Chirag 18 692.85 510.00 3,291.30
Shah Ltd Jayendrakumar
Shah
Dhaval A. Mehta Sunlon Energy Sheelu Lalwani 14576 692.85 510.00 2,665,221.60
Ltd
Ltd
Ltd
Biren Kantilal Suzlon Energy Jayesh P 12800 692.85 510.00 2,340,480.00
Shah Ltd Khandwala Huf
Purshottam Tata Anagram 3750 987.95 850.00 517,312.50
Budhwani Consultancy Securities Limited
Services Ltd.
Kelan Atulbhai Tata Kelan Atulbhai 2000 987.95 850.00 275,900.00
Doshi Consultancy Doshi
Services Ltd.
Indiabulls Tata Ajay Kumar 17 987.95 850.00 2,345.15
Securities Ltd. Consultancy Gupta
Services Ltd.
Ambuja Estate Tata Patel Rajeshkumar 5000 987.95 850.00 689,750.00
And Holdings Pvt Consultancy
Ltd Services Ltd.
Ambuja Estate Tata Gautam N Jhaveri 20000 987.95 850.00 2,759,000.00
And Holdings Pvt Consultancy
Ltd Services Ltd.
Ambuja Estate Tata Arth Stockbroking 1500 987.95 850.00 206,925.00
And Holdings Pvt Consultancy Pvt.Ltd
Ltd Services Ltd.
Devangi Tv Today Vasudev 6900 181.35 95.00 595,815.00
Dipakbhai Panchal Network Gordhandas Dapki
Limited
Devangi Tv Today Arth Stockbroking 28200 181.35 95.00 2,435,070.00
Dipakbhai Panchal Network Pvt.Ltd
Limited
Devangi Tv Today Arth Stockbroking 13000 181.35 95.00 1,122,550.00
Dipakbhai Panchal Network Pvt.Ltd
Limited
Dharmesh Yes Bank Ltd - Welvet Financial 55000 60.80 45.00 869,000.00
Bhupendra M Equity Shares Advisers Pvt Ltd
Total 100,643,676.75
10.11. Thus, from the above calculations, it is seen that the gain of the financiers of other
key operators in various IPOs during 2003 – 2005 works out to Rs.10.06 crores.
10.12. Financiers of Key Operators in CDSL
Page 56 of 252
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10.13. Upon examination of the CDSL transactions of the three key operators , it is
seen that Roopalben Panchal has transferred 39,43184 shares of IDFC and
1,56,300 shares of FCS on August 11, 2005 (i.e. prior to listing) and September
21, 2005 respectively from her CDSL account (ID: 1301440000307503 held with
Karvy DP) to her NSDL account (ID: 11920868 held with Karvy-DP). This is an
interesting feature showing that Roopalben Panchal did not use her CDSL
account for effecting off-market transfers to her financiers and used her NSDL
account exclusively for such transfers.
10.14. In the case of Suzlon Energy Ltd. (ISIN: INE040H01013), Purshottam Budhwani
(BoID: 1301440000247208 with Karvy-DP), Himalaya Bldg B/2 Asalfa Milind
Nagar Ghatkopar W, Mumbai 400084 has transferred 16,304 shares to one Shri. M
Kishanmurari Seksaria (apparently Manojdev K. Seksaria ) (Demat account client ID:
1202020000030991 held with Pratik DP) , 33 Maheshwari Niketan 5/3 Peddar Road,
Mumbai 400026 on October 20, 2005 i.e. one day after listing on the stock exchange
and prior to commencement of pay in / pay out on the secondary market trades. This
off- market transfer of IPO shares from Purshottam Budhwani to Manojdev Seksaria
clearly shows the linkage between Purshottam Budhwani and Manojdev Seksaria.
10.15. Upon perusal of the off market transaction details of Purshottam Budhwani, B/4,
Panchsheel Building, Nath Pai Nagar, Ghatkopar (East) Mumbai 400077 in the client
id 1202020000006413 held with Pratik DP (demat account opened on June 26, 2003),
as obtained from CDSL, it is seen that he has made off- market transfer of IPO shares
to the following entities:
Table 10.15 -
Scrip name TxnDate Shares CtrBOID Ctrboname Ctr. BO Address
Nectar Life 18072005 13500 IN30247040033429 Puloma Dushyant Flat No 4 A

Sciences Ltd. Dalal & Chandan 4th Floor,
Dushyant Natwarlal 62 B Dr
Dalal Gopalraodeshmukh
Marg, Peddar Road,
Mumbai 400026
Suzlon Energy 18102005 14120 IN30247040033318 Rasila Natwarlal & Flat No 4 A
Ltd. Natwarlal Chandan 4th Floor,
Thakordas 62 B Dr Gopalrao
Deshmukh Marg,
Peddar Road,
Mumbai
Suzlon Energy 19102005 1412 IN30160410023690 Nimisha Kadakia 402 A Mahavideh
Ltd. Chandavarkar Road,
Near Ramdev Park
Borivali (West),,
Mumbai,
IDFC 08082005 40000 IN30112715754364 Rajkumar Jain 31/5, Vasant Mahal,
'C' Road,
Churchgate,
Mumbai 400020
IDFC 12082005 15000 IN30220110108120 Balvinder Office No 9
Page 57 of 252
Interim Order - IPO
Gurmukhsingh Samarpan Complex,

Purswani Sector -17, Hira
Ghat Road,
Ulhasnagar
421003
IDFC 13082005 144000 IN30247040033326 Natwarlal Flat No 4 A
Thakordas & Chandan 4th Floor,
Dushyant Natwarlal 63 B Dr Gopalrao
Dalal Deshmukh Marg,
Peddar Road,
Mumbai 400026
IDFC 13082005 56000 IN30160410023690 Nimisha Kadakia 402 A Mahavideh
Chandavarkar Road,
Near Ramdev Park
Borivali (West),,
Mumbai, 400092
IDFC 16082005 2800 IN30002010339768 Meenakshi L 400/501 Mangal
Phulwani & Archana, 15th Rd,
Laxminarain L Bandra W, Mumbai
400050
Phulwani
IDFC 16082005 665 IN30002011215270 L L Phulwani 400/501 Mangal
Archana, 15th Road
5th Floor, Bandra
West, Mumbai 400050
IDFC 16082005 2500 IN30154919159063 Jayprakash A 65 Shantipark Soc,
Girdharilal B/H Amitnagar,
Karelibaug Vip
Road, Baroda
390022
IDFC 16082005 10500 IN30002010328963 Laxminarain L 400/501, Mangal
Phulwani & Archana, 15th Rod
Meenakshi Bandra, Mumbai
400050
Phulwani
IDFC 16082005 35275 IN30220110108120 Balvinder Office No 9 Samarpan
Gurmukhsingh Complex, Sector -17,
Purswani Hira Ghat Road,
Ulhasnagar
421003
IDFC 16082005 2500 IN30154919159070 Niranjan Girdharilal A 65 Shantipark Soc,
B/H Amitnagar,
Karelibaug Vip
Road, Baroda
390022
IDFC 16082005 6000 IN30115113063951 Gurmukhdas C- 44 Troika
Rameshkumar Apartment, B Hi
Giyamalani Point Restaurant,
Swami Samarth Nagar
, X Road 3, Andheri
West, Mumbai
400053
IDFC 16082005 665 IN30082910551158 Mehta Bansilal 901, Kent Tower,
Narsing Lane,,
Vardhman Nagar,,
Malad (W), Mumbai
400064
IDFC 24052005 15000 IN30015910003221 Magnum Equity 103, Harganga Mahal,
Services Limited Annexe Khodadad
Circle, Dadar T.
Mumbai. 400014
Page 58 of 252
Interim Order - IPO
IDFC 24052005 8425 IN30220110093022 Purshottam R. No. 2, Crystal

Budhwani Premises, 2nd Floor,
3rd Road, Khar(W),
Mumbai 400052
MSP Steel and 18072005 20200 IN30247040033429 Puloma Dushyant Flat No 4 A Chandan
Power Ltd. Dalal & 4th Floor, 62 B Dr
Gopalraodeshmukh
Dushyant Natwarlal
Marg, Peddar Road,
Dalal
Mumbai 400026
Provogue India 07072005 7160 IN30247040033429 Puloma Dushyant Flat No 4 A Chandan
Ltd. Dalal & 4th Floor, 62 B Dr
Dushyant Natwarlal Gopalrao Deshmukh
Marg, Peddar Road,
Dalal
Mumbai 400026
Provogue India 08072005 840 IN30247040033429 Puloma Dushyant Flat No 4 A
Ltd. Dalal & Chandan 4th Floor,
Dushyant Natwarlal 62 B Dr Gopalrao
Dalal Deshmukh Marg,
Peddar Road,
Mumbai 400026
10.16. From the above table it is seen that Purshottam Budhwani has made off market
transfers of IPO shares to Puloma Dushyant Dalal & Dushyant Natwarlal Dalal, a
Chartered Accountant, Rasila Natwarlal & Natwarlal Thakordas, Natwarlal
Thakordas & Dushyant Natwarlal Dalal, Nimisha Kadakia, Rajkumar Jain, Balvinder
Gurmukhsingh Purswani, Jayprakash Girdharilal, Niranjan Girdharilal, Gurmukhdas
Rameshkumar Giyamalani, Mehta Bansilal and Magnum Equity Services Limited. It
appears that the above entities may have acted as financiers of Purshottam Budhwani
for cornering the retail portion of the IPOs.
10.17. SEBI worked out the gains made by the above financiers of Purshottam Budhwani
by comparing the closing price (on NSE) on the first day of listing in respect of each
of the above IPOs with the issue price of the respective IPOs. The calculations are
given below:
Table 10.17 -
Company Name Name Of Financier No. of Close Issue Profit
Shares price on Price made
the date
of listing
Nectar Life Sciences Puloma Dushyant Dalal & Dushyant 13500 260.1 240 271350
Ltd. Natwarlal Dalal
Suzlon Energy Ltd. Rasila Natwarlal & Natwarlal 14120 692.85 510 2581842
Thakordas
Suzlon Energy Ltd. Nimisha Kadakia 1412 692.85 510 258184.2
IDFC Rajkumar Jain 40000 69.5 34 1420000
IDFC Balvinder Gurmukhsingh Purswani 15000 69.5 34 532500
IDFC Natwarlal Thakordas & Dushyant 144000 69.5 34 5112000
Natwarlal Dalal
IDFC Nimisha Kadakia 56000 69.5 34 1988000
IDFC Meenakshi L Phulwani & 69.5 34 99400
Laxminarain L Phulwani 2800
Page 59 of 252
Interim Order - IPO
IDFC L L Phulwani 665 69.5 34 23607.5

IDFC Jayprakash Girdharilal 2500 69.5 34 88750
IDFC Laxminarain L Phulwani & 10500 69.5 34 372750
Meenakshi Phulwani
IDFC Balvinder Gurmukhsingh Purswani 35275 69.5 34 1252262.5
IDFC Niranjan Girdharilal 2500 69.5 34 88750
IDFC Gurmukhdas Rameshkumar 6000 69.5 34 213000
Giyamalani
IDFC Mehta Bansilal 665 69.5 34 23607.5
IDFC Magnum Equity Services Limited 15000 69.5 34 532500
IDFC Purshottam Budhwani 8425 69.5 34 299087.5
MSP Steel and Power Puloma Dushyant Dalal & Dushyant 20200 15.3 10 107060
Ltd. Natwarlal Dalal
Provogue India Ltd. Puloma Dushyant Dalal & Dushyant 7160 247.95 150 701322
Natwarlal Dalal
Provogue India Ltd. Puloma Dushyant Dalal & Dushyant 840 247.95 150 82278
Natwarlal Dalal
Total 16048251.2
10.18. Thus, from the above calculations, it is seen that the gain of the financiers of
Purshottam Budhwani in various IPOs during 2003 – 2005 works out to Rs.1.6 crores.
10.19. From the above calculations of the gains made by the financiers of Roopalben
Panchal, SEIPL and other key operators, it is seen that the total gains of these
financiers, in both NSDL and CDSL, works out to roughly Rs. 72.38 crores. I note
that this estimate of the gains made by the financiers is close to that unearthed by the
Income Tax Department during the course of their investigations into the
irregularities relating to IPOs. In this regard Income Tax department has stated that
“The investigation wing of the Income-tax Department has carried out investigations
to determine the unexplained investment made, income earned and tax liability arisen
from IPOs and to ensure that the taxes are paid as per provisions of the I.T. Act 1961.
As a consequence of investigations made, the assessees have admitted total income of
Rs.60.62 crores from 01/04/2004 till the IPO of Renuka Sugar Ltd. on 14.10.2005
and paid total tax of Rs.14.66 Crores.”
10.20. As regards the IPO of Renuka Sugar Ltd. it is understood that the key operators
had not made off- market transfers of the IPO shares cornered by them during the pre-
listing period and accordingly the same does not appear in the IPO information
submitted by the depositories. However, the off- market transfers were to the account
of Roopalben Panchal which has otherwise been covered while delaing with accounts
of key operators.
10.21. Upon perusal of the CDSL off market transaction details of Manojdev Seksaria 33
Maheshwar Niketan 5B Peddar Rd MumbaI 400026 in the client id
1301440000051951held with karvy DP (demat account opened on July 8, 2005), as
obtained from CDSL, it is seen that he has made off market transfer of IPO shares to
the following entities:
Page 60 of 252
Interim Order - IPO
Table 10.21 -
Scrip name TxnDate Shares CtrBOID Ctrboname Ctr Bo Address
Suzlon Energy 20102005 18624 IN30220110093022 Purshottam R. No. 2, Crystal

Budhwani
Ltd. Premises, 2nd Floor, 3rd
Road, Khar(W),
Mumbai 400052
FCS Software 22092005 100 IN30203310004049 Manojdev 33 Maheshwar Niketan 5b
Ltd. Seksaria . Peddar Rd
10.22. In the case of Suzlon Energy Ltd. (ISIN: INE040H01013), Manojdev Seksaria .33
Maheshwar Niketan 5B Peddar Rd Mumbai 400026 in the client id
1301440000051951held with karvy DP has transferred 18,624 shares to Purshottam
Budhwani (client ID IN30220110093022 held with Anagram Stcok Broking Ltd.) R.
No. 2, Crystal Premises, 2nd Floor, 3rd Road, Khar (W), Mumbai 400052 on
October 20, 2005 i.e. one day after listing on the stock exchange and prior to
commencement of pay in / pay out on the secondary market trades.
11.0. Linkages amongst the Key Operators and Financiers
11.1. From a perusal of NSDL and CDSL accounts of the key operators, it is seen that,
in CDSL, on October 20, 2005 Purshottam Budhwani transferred 16,304 shares of
Suzlon Energy to Manojdev Seksaria and on the same day Manojdev Seksaria
transferred back 18,624 shares to Purshottam Budhwani. These off- market transfers
between Purshottam Budhwani and Manojdev Seksaria done prior to commencement
of pay in / pay out on the stock exchanges clearly bring out the linkages between
them.
11.2. It is also seen that in CDSL, Purshottam Budhwani has made off- market transfers
of IPO shares to various entities namely Puloma Dushyant Dalal & Dushyant
Natwarlal Dalal, Rasila Natwarlal & Natwarlal Thakordas, Natwarlal Thakordas &
Dushyant Natwarlal Dalal, Nimisha Kadakia, Rajkumar Jain, Balvinder
Gurmukhsingh Purswani, Jayprakash Girdharilal, Niranjan Girdharilal, Gurmukhdas
Rameshkumar Giyamalani, Mehta Bansilal and Magnum Equity Services Limited. It
is also seen that in NSDL, SEIPL had made off- market transfers of IDFC shares to
Puloma Dushyant Dalal & Dushyant Natwarlal Dalal in NSDL thus showing that
SEIPL and Purshottam Budhwani had made off- market transfers to a common set of
entities. Further, in NSDL, Roopalben Panchal and SEIPL have made off- market
transfers to common sets of entities such as Zenet Software, Seer Finlease, Excel
Multitech, Tauras Infosys, etc.
11.3. It is seen that Dharmesh Bhupendra Mehta, a key operator and a major client of
BHOB Goregaon branch who had been introduced by Karvy to BHOB, had
transferred around 43,624 shares of IDFC to M/s. Welvet Financial Advisers Pvt Ltd.
(Welvet Financial) on August 11, 2005 i.e. just before listing of shares on stock
exchanges. The scrip was listed on stock exchanges on August 12, 2005. It is seen
that Roopal Panchal had also transferred 4,17,000 shares of IDFC to Welvet Financial
Page 61 of 252
Interim Order - IPO
on August 9, 2005. SEBI queried Dharmesh Mehta about his relationship with Welvet
Financial and he interalia stated as below:
11.4. “8. What is your relationship with M/S. Welvet Financial Advisors Ltd. and
transactions with them.
11.5. M/s. Welvet Financial Advisors Ltd. have approached us for lending us
money in subscribing for IPO. They have lent me Rs.78 lakhs for the purpose of
making margin for retail application to my group. After getting allotment of
IDFC, we have transferred 43,000 equity shares of IDFC as per their instruction
and balance amount of Rs.64 lakhs returned by cheque payment.”
11.6. Upon examination of the bank transaction statement of Welvet Financial it was
observed that Welvet Financial had paid Rs 76,56,250 to Dharmesh Mehta and
apparently there is no receipt of Rs 64 lakhs by Welvet from Dharmesh Mehta. In
view of the above it appears that Welvet Financial had approached Dharmesh Mehta
for making applications in the retail category and provided the necessary finance for
the same. Upon receipt of allotment, it is seen that Dharemesh Mehta has transferred
the IPO shares to Welvet Financial while retaining some of these shares as his
commission for executing the transactions.
11.7. In this context it is seen that in the month of June 2005, Welvet Financial had
directly applied for 60,75,000 shares in the public issue of Yes Bank for Rs 27 crores
and was allotted only 1,39,073 number of shares. It apperars that Welvet Financial
had applied in the non- institutional (High Networth) category in the IPO of YES
Bank and hence had failed to get allotment of large number of shares in the YES
Bank IPO. In view of the above, apparently, Welvet Financial had approached
Dharmesh Mehta and Roopalben Panchal for the purpose of making applications in
the retail category in the IPO of IDFC since Dharmesh Mehta and Roopalben Panchal
had large number of demat accounts under their control.
11.8. Thus, there was apparently arrangement between Dharmesh Mehta and Welvet
Financial for cornering the retail portion of the IDFC IPO and this arrangement was
sought to be given the color of loan transaction. Since Roopalben Panchal has also
made off- market transfers to Welvet Financial as done by Dharmesh Mehta, it
appears that similar arrangements might have existed between Roopalben Panchal
and Welvet Financial. Thus Welvet Financial has acted as financier for both
Roopalben Panchal and Dharmesh Mehta.
11.9. Upon examination of Roopalben Panchal’s bank account statement with BHOB
Worli Branch, it is seen that Roopal Panchal had brought in margin money for IPO
finance to the tune of Rs 22.03 crores which correlates with the margin money for
4,663 applications. Upon examination of the source of funds of Roopalben Panchal
for the margin money brought in by her, the following entities appear to have
provided her finance for making the above applications:
Page 62 of 252
Interim Order - IPO
Table 11.9 -
Name of the entity Amount transferred Date of Transfer Amount given as
margin money to
BHOB, Worli Branch
Seer Finlease Pvt. Ltd 9,50,00,000 20.06.05 Rs 22,03,50,375 (which
Tauraus Infosys Ltd 3,30,00,000 20.06.05 includes Rs
Excell Multitech Ltd 4,60,00,000 20.06.05 20,05,00,000)
Zenet Software Ltd 2,65,00,000 20.06.05
Total amount 20,05,00,000
11.10. Based on discussions in the earlier paragraphs relating to Dharmesh Mehta and
Welvet Financial, it appears that the arrangement between Roopalben Panchal and the
above entities / financiers were also an arrangement for cornering retail portion of
IPO which has been sought to be given a color of pure financing transaction.
11.11. As per the bank account opening form of Kantibhai who holds an account no.
8.100.17442 with BHOB Worli branch and whose account was used for the purpose
of providing margin money for entities related to Roopalben Panchal in the case of
IDFC issue, it was observed that this account was introduced by Panchal and there
were also funds transfer from the account of Roopalben Panchal to the account of
Kantibhai. Similary, Jhaveri Group also transfered funds to Kantibhai and vice versa.
Thus it appears that the account in the name of Kantibhai was a central account for
both Roopal and Jhaveri Group (Sugandh Group). The details of the above
transactions in the bank account of Kantibhai are given below.
• On 08.07.2005 there was a credit of Rs 6.56 crores from the saving account of
Roopalben Panchal.
• On 22.07.2005, there were credit entries of Rs 31.30 lakhs, Rs 2.15 crore and
Rs 5.01 crores from saving accounts of Kirti M Jhaveri ( 8.100.19904), Kamal
P Jhaveri ( 8.100.19890) and Parag P Jhaveri (8.100.19883) respectively.
• On 17.08.2005, there were credit entries of Rs 1.70 crore, Rs 1.70 crores and
Rs 3.41 crores from the savings accounts of Kamal P Jhaveri (8.100.19890),
Parag P Jhaveri (8.100.19883) and Dhaval A Mehta (8.100.19997)
respectively
11.12. Thus there appear to be inter-linkages between Roopalben Panchal group and
Jhaveri group, comprising of SEIPL, Parag Jhaveri and others.
11.13. Additional linkages, besides the above, between the Panchal group (consisting of
Roopalben Panchal and others) and Jhaveri group (consisting of SEIPL and others)
are also noticed and the same have been discussed in detail in later paragraphs. These
linkages include the following: Dipakbhai Panchal and Bhargav Ranchodlal Panchal
who belong to the Panchal group and Kamal Priyakant Jhaveri who belongs to the
Jhaveri group are common directors in Arth Stock Broking P Ltd., a broker of
Ahmedabad Stock Exchange. Also, Arth Realty P Ltd. (which has the same address
as that of SEIPL) and Devangi Dipakbhai Panchal are the two largest shareholders in
Arth Stockbroking P Ltd. Further Grace Consultancy- C\O Dipak J Panchal, Arth
Page 63 of 252
Interim Order - IPO
Realty P Limited (which has the address same as SEIPL), Purshottam Budhwani and
Manoj Seksaria are all sub-brokers of Karvy-DP and are amongst the top four sub-
brokers in terms of number of applications for demat accounts procured for Karvy-
DP.
11.14. Finacial transactions are also noticed among the key operators. Purshottam
Budhwani and Manojdev Seksaria have transferred funds among themselves.
Roopalben Panchal, SEIPL, Purshottam Budhwani and Manojdev Seksaria have
transferred funds to Karvy Consultants. Karvy Consultants also has financial
transactions with Anagram Securities Ltd., Anagram Stock Broking, Balwinder
Purswani and Dushyant Natwarlal Dalal. These financial transactions also support the
view that there are strong interlinkages amongst the key operators as well as between
Karvy group and the key operators. The details of the financials transactions have
been narrated in detail else where in this order.
11.15. Findings relating to HDFC Bank
11.16. SEBI obtained the bank account statements for the period May - October, 2005
and the account opening forms in respect of the following entities which were
identified in the SEBI orders in the cases of Yes Bank and IDFC and having their
accounts with HDFC Bank:
Table 11.16
Sr. Name Address Name of the Bank Bank Account
No. and Branch No.
1. Welvet B-25/A 68 GATE NO 6, HDFC BANK Current

Financial MALWANI, MALAD FORT BRANCH, 0602320009328
Advisors WEST, MUMBAI 400095 MUMBAI 400001
Pvt. Ltd.
2. Kelan 68 SAMAST B SOCIETY, HDFC BANK LTD Savings

Atulbhai OPP. PINAKIN SOCIETY, HDFC HOUSE, 0061300039845
Doshi PALDI, AHMEDABAD NR. MITHAKALI
380007 SIX ROAD,
NAVRANGPURA,
AHMEDABAD
380009
Page 64 of 252
Interim Order - IPO

No. and Branch No.
3. Hasmukhlal 20, BASANT BAHAR, HDFC BANK LTD Current

N. Vora NR. PURSHOTTAM HDFC HOUSE, 0062340000028
NAGAR BUS STAND, NR. MITHAKALI
BOPAL, AHMEDABAD SIX ROAD,
380058 NAVRANGPURA,
AHMEDABAD
380009
4. Seer H.N. HOUSE, 2ND HDFC BANK LTD Current

Finlease Pvt. FLOOR,, NR. OLD HIGH HDFC HOUSE,, 0060340005966
Ltd. COURT RLY CROSSING, NR.
NAVRANGPURA,, AHM MITHAKHALI
380009 SIX ROAD,,
NAVRANGPURA,
AHMEDABAD
380009
5. Excell 3RD FLOOR, H. N. HDFC BANK LTD Current
Multitech HOUSE,, NR. OLD HIGH HDFC HOUSE,, 0062340000347
Ltd. COURT RAILWAY NR.
CROSSING,, MITHAKHALI
NAVRANGPURA,380009 SIX ROAD,,
NAVRANGPURA,
AHMEDABAD
380009
6. Jay Shah 1134, Girdharlal, No HDFC BANK LTD Savings
Khancho, Khadia, KAMDHENU 5062000001288
Ahmedabad – 380001 COMPLEX,, NR
SAHAJANAND
COLLEGE,,
PANJARAPOLE,,
AHMEDABAD
380015
7. Shilpa 163,KAMDHENU HDFC BANK LTD Current
Rajan Dapki COMPLEX,, PANJARA Silicon Valley Co 0482100000451
POLE,, AHMEDABAD op Hsg Soc, B
380015 Tower Satellite
Road, Vejalpur,
Ahmedabad
380015
Page 65 of 252
Interim Order - IPO

No. and Branch No.
8. Jayesh P B-81, '' PARISEEMA '' HDFC BANK Current

Khandwala COMPLEX, C.G.ROAD, MITHAKALI SIX 0061000026320
HUF ELLISDBRIDGE, ROADS,
AHMEDABAD 380006 MITHAKALI,
AHMEDABAD
380009
9. Zenet 3RD FLOOR, H. N. HDFC HOUSE, Current

Software HOUSE,, NR. OLD HIGH NR. MITHAKALI 0062340000330
Ltd. COURT RAILWAY SIX ROAD,
CROSSING,, NAVRANGPURA,
NAVRANGPURA, 380009 AHMEDABAD,
380009
10. Tauras 3RD FLOOR, H. N. HDFC HOUSE, Current

Infosys Ltd. HOUSE,, NR. OLD HIGH NR. MITHAKALI 0062340000357
COURT RAILWAY SIX ROAD,
CROSSING,, NAVRANGPURA,
NAVRANGPURA,, AHMEDABAD,
380009 380009
11. Shri B/4, Panchsheel Building, HDFC Bank, Fort, Savings

Purshottam Nath Pai Nagar, Ghatkopar Mumbai 400023 0602100001225
Ghanshyam (East), Mumbai-400077
Budhwani (or) B-2,Himalaya Society
Milind Nagar, Asalfa
Ghatkopar (West),
Mumbai -400084
12. Shri 33 Maheshwar Niketan 5B HDFC Bank Ltd., savings

Manojdev Peddar Rd Mumbai Tirupati Apts., 0051000024513
Seksaria 400026 Shop No. 10,
Bhulbhai Desai
Road, Mumbai –
400026
11.17. The above period was chosen based on the dates of the IPOs of M/s. YES Bank
Ltd. and M/s. IDFC Ltd. SEBI examined the bank account statements of the above
entities relating to fund transfers to the bank account of Ms.Roopalben Panchal.
Page 66 of 252
Interim Order - IPO
Client Account Opening forms were also scrutinized vis-à-vis the name of the
introducer, address etc.
11.18. The details of funds received by Ms. Roopalben Panchal from the HDFC Bank
accounts of the identified entities are summarized below.
Table 11.18 -
Date of Amount Through Source of original funds Remarks
Trxn in lakhs
16.08.05 55.00 Zenet ß Parklight BSE Additional Base ---
Capital (ABC) Release
17.08.05 112.05 Zenet ß Nyalchand NSE ABC Release ---
17.08.05 100.00 Zenet ß Nyalchand (broker NSE Payout The fund
of NSE) transfer is
on account
of payout to
Zenet
17.08.05 74.57 Seer ß Parklight BSE Payout No payout
was due to
Seer
17.08.05 479.73 Seer ß Nyalchand NSE Payout No payout
was due to
Seer
18.08.05 70.00 Seer ß Nyalchand NSE Payout No payout
was due to
Seer
24.08.05 105.41 Seer ß Parklight (broker of BSE Payout The fund
BSE) transfer is
on account
of payout to
Seer
07.07.05 33.50 Excell ß Parklight (broker BSE ABC Release ---
of BSE)
24.08.05 42.27 Excell ß Nyalchand NSE Payout The fund
(broker of NSE) transfer is
on account
of payout to
Excell
27.06.05 480.00 HasmukhHUFßDhirenVor NSE Payout The fund
aß Nyalchand transfer
from
Nyalchand
to Dhiren
Vora to the
extent of Rs.
175 lacs is
on account
of payout
27.06.05 196.90 HasmukhHUFß Rajesh NSE Payout No payout
Patel ß Nyalchand was due to
Rajesh Patel
27.06.05 206.25 HasmukhHUFß NSE Payout The fund
HasmukhVoraß Nyalchand transfer of
(broker of NSE) Rs.141.67
Page 67 of 252
Interim Order - IPO

Trxn in lakhs
lakhs from
Nyalchand
to Hasmukh
Vora is on
account of
payout
Hasmukh HUF ß NSE Payout The fund
Hasmukh Vora ß transfer of
Nyalchand Rs.44.58
lakhs is on
account of
payout to
Excell
HasmukhHUFß Hasmukh --- Shah have
Voraß Parklight ß H S transferred
Shah, N S Shah and Mittal Rs.20.00
Shah lakhs to
Parklight.
27.06.05 48.65 HasmukhHUFß Sujal NSE Payout No payout
Leasingß Nyalchand was due to
Sujal
Leasing
28.06.05 56.40 HasmukhHUFßDhirenVor NSE Payout The fund
aß Nyalchand (broker of transfer is
NSE) on account
of payout to
Dhiren Vora
28.06.05 250.00 HasmukhHUFßHasmukhV NSE Payout The fund
oraß transfer is
Nyalchand (broker of NSE) on account
of payout to
Hasmukh
Vora
07.07.05 200.00 HasmukhHUFßZealousTra --- ---
dingß Khandwala
Integrated Fin. Serv. Ltd.
07.07.05 50.00 HasmukhHUFß Parklight BSE ABC Release ---
07.07.05 215.66 HasmukhHUFßNyalchand HDFC MF Credit The
redemption
pertains to
short term
parking of
funds in the
HDFC Cash
Managemen
t Fund.
07.07.05 10.00 HasmukhHUFßTaurusInfo --- ---
ßSputnik Steels Pvt. Ltd.
07.07.05 35.00 HasmukhHUFßSonalVora BSE ABC Release ---
ß Parklight
07.07.05 46.50 HasmukhHUFßParklightS BSE Payout Inani
ecß GirdhariBhatia -Inani Securities
Commodities Pvt. Ltd. transferred
Page 68 of 252
Interim Order - IPO

Trxn in lakhs
ßInani Securities Ltd. Rs. 25 lacs
to Inani
Commoditie
s which in
turn
transferred
the same to
Girdhari
Bhatia. The
fund transfer
to the extent
of Rs. 6.78
lacs is on
account of
payout to
Girdhari
Bhatia
HasmukhHUFßParklightS --- Girdhari
ecßGirdhariBhatiaß Inani Bhatia
Commodities received Rs.
24 lacs from
Inani
Commoditie
s which in
turn had
received the
funds
through
redemption
of units of
JM Mutual
Fund.
08.07.05 300.00 HasmukhHUFßTaurusInfo --- ---
ßLok Prakashan
06.07.05 150.00 ExcellßSputnikSteels Pvt. --- ---
Ltd.
07.07.05 100.00 ExcellßShrutiShah --- ---
07.07.05 118.75 ExcellßShreyansShah --- ---
07.07.05 437.50 ExcellßLokprakashan --- ---
30.08.05 500.00 ExcellßLokprakashan --- ---
07.07.05 437.50 TaurusßLokprakashan --- ---
07.07.05 437.50 ZenetßLokprakashan --- ---
08.07.05 218.75 ZenetßBahubaliShah --- ---
30.08.05 500.00 ZenetßLokprakashan --- ---
20.06.05 330.00 TaurusInfo --- The
redemption
pertains to
short term
parking of
funds in the
HDFC Cash
Managemen
t Fund.
Page 69 of 252
Interim Order - IPO

Trxn in lakhs
24.05.05 35.91 Seer --- The
redemption
pertains to
short term
parking of
funds in the
HDFC Cash
Managemen
t Fund.
20.06.05 950.00 Seer --- The
redemption
pertains to
short term
parking of
funds in the
HDFC Cash
Managemen
t Fund.
20.06.05 460.00 Excell --- The
redemption
pertains to
short term
parking of
funds in the
HDFC Cash
Managemen
t Fund.
20.06.05 265.00 Zenet --- The
redemption
pertains to
short term
parking of
funds in the
HDFC Cash
Managemen
t Fund.
28.06.05 380.00 HasmukhHUF --- The
redemption
pertains to
short term
parking of
funds in the
HDFC Cash
Managemen
t Fund.
11.19. It may be seen from the above table that in most of the cases the original source of
funds were either BSE/NSE additional base capital release or BSE/NSE payout or
redemption of funds in the HDFC Cash Management Fund. This shows that some of
the financiers of Roopalben Panchal and others were brokers of BSE or NSE.
Page 70 of 252
Interim Order - IPO
11.20. It may be seen from the above that Zenet Software had received Rs. 1688.30 lakhs
from Parklight, Nyalchand, Lokprakashan, Bahubali Shah and redemption of funds in
the HDFC Cash Management Fund, all put together.
11.21. Seer Finlease had received Rs. 1715.62 lakhs from Parklight, Nyalchand and
redemption of funds in the HDFC Cash Management Fund, all put together.
11.22. Excell Multitech had received Rs. 1842.02 lakh from Parklight, Nyalchand,
SputnikSteels Pvt. Ltd., Shruti Shah, Shreyans Shah, Lokprakashan and redemption
of funds in the HDFC Cash Management Fund, all put together.
11.23. Tauras Infosys had received Rs.767.50 lakhs from Lokprakashan and redemption
of funds in the HDFC Cash Management Fund, both put together.
11.24. Hasmukh HUF has received received in all Rs. 2475.36 lakhs from various sets of
entities viz. Dhiren Vora, Rajesh Patel, Hasmukh Vora, Sujal Leasing, Zealous
Trading, Tauras Infor, Sonal Vora, Girdhari Bhatia-Inani Commodities Pvt. Ltd. and
redemption of funds in the HDFC Cash Management Fund. The original sources of
the funds in most of the instances were Parklight (a BSE broker) or Nyalchand (a
NSE broker) or SputnikSteels Pvt. Ltd. or Lokprakashan or H S Shah, N S Shah and
Mittal Shah or Khandwala Integrated Fin. Ser. Ltd. or Inani Securities Ltd. or Inani
Commodities.
11.25. In respect of the entities identified in the cases of YES Bank and IDFC, having
their bank accounts with HDFC, transactions of Rs. 1 Crore or more in these accounts
during the period from May to October 2005 were examined and the findings are
tabulated below:
Table 11.25 -
From a/c. no. Transferor To a/c. no. Transferee Date Amount
Zenet Hasmukhlal
0062340000330 Software Ltd. 0062340000028 N Vora 14/10/05 39,800,000.00
Tauras Infosys Hasmukhlal
0062340000357 Ltd. 0062340000028 N Vora 08/07/05 30,000,000.00
Zenet Hasmukhlal
0062340000357 Ltd. 0062340000028 N Vora 22/09/05 21,690,000.00
0062340000357 Ltd. 0062340000028 N Vora 29/09/05 21,000,000.00
Excell Hasmukhlal
0062340000347 Multitech Ltd. 0062340000028 N Vora 13/10/05 20,000,000.00
Zenet
Hasmukhlal N Software
0062340000028 Vora 0062340000330 Ltd. 09/08/05 19,378,000.00
Hasmukhlal N Tauras
0062340000028 Vora 0062340000357 Infosys Ltd. 12/07/05 19,000,000.00
Zenet Hasmukhlal
Page 71 of 252
Interim Order - IPO
Zenet Hasmukhlal
Zenet
0062340000028 Vora 0062340000330 Ltd. 22/09/05 14,200,000.00
Zenet Hasmukhlal
Excell Hasmukhlal
Hasmukhlal N Tauras
0062340000028 Vora 0062340000357 Infosys Ltd. 29/08/05 13,200,000.00
Zenet Hasmukhlal
Zenet
0062340000028 Vora 0062340000330 Ltd. 23/09/05 10,000,000.00
Zenet Hasmukhlal
Zenet Hasmukhlal
Excell Hasmukhlal
11.26. From the above table it is seen that Shri Hasmukhlal N Vora had received large
amount of funds from Zenet Software Ltd., Tauras Infosys Ltd. and Excell Multitech
Ltd. and has also given large amount of funds to the above entities.
11.27. The client account opening forms of the identified entities having their bank
accounts with HDFC Bank were examined (except in the cases of Purshottam
Budhwani and Manojdev Seksaria which have been discussed elsewhere in this order)
and the observations are summarized below:
Table 11.27 -
Name Type of Account No. Bank and Branch Introducer
Account
Zenet Software Current 0062340000330 HDFC Bank, Nimesh G.
Ltd. Account Navrangpura, Gandhi
Ahmedabad
Taurus Infosys Current 0062340000357 HDFC Bank, Nimesh G.
Account Navrangpura, Gandhi
Ahmedabad
Seer Finlease Current 0060340005966 HDFC Bank, Uday H. Vora
Ltd. Account Navrangpura,
Ahmedabad
Excell Current 0062340000347 HDFC Bank, Nimesh G.
Multitech Ltd. Account Navrangpura, Gandhi
Ahmedabad
Jay Shah Savings 5062000001288 HDFC Bank, ASE ST Investments
Page 72 of 252
Interim Order - IPO
Account Branch
Shilpa Rajan Current 0482100000451 HDFC Bank, No Name of
Dapki Account Ahmedabad Introducer
Welvet Current 0602320009328 HDFC Bank, Fort No Name of
Financial Account Introducer
Advisors P Ltd
Kelan A.Doshi Savings 0061300039845 HDFC Bank, No Name of
Account Navrangpura, Introducer
Ahmedabad
11.28. As per the client account opening forms of Zenet Software Ltd., Excell Multitech
Ltd.and Taurus Infosys Ltd.it is seen that these companies have the same set of
directors viz. Saryuben Vora, Rajesh Patel, Kirtiben Patel and Vishal Patel and have
been introduced to HDFC Bank by the same person namely, Shri Nimesh G. Gandhi.
11.29. As per the client account opening form of Seer Finlease Ltd. it is seen that Sonal
Vora and Saryuben Vora are the authorized signatories for the account maintained by
the company.
11.30. As per the client account opening form of Welvet Financial Advisors Pvt. Ltd. it
is observed that it is seen that Hasmukh K Modi is the authorized signatory for the
account maintained by the company. The client account opening forms of
Hansmukhlal Vora HUF and Jayesh P.Khandwala HUF are yet to be provided by
HDFC Bank.
11.31. Examination of HDFC Bank Account of Purshottam Budhwani by the CA

Firm
11.32. The CA firm engaged by SEBI also examined the HDFC Bank account
transactions of Purshottam Budhwani and the major observations emerging from the
examination is given below:
11.33. Perusal of the statement of the principal account of Purshottam Budhwani

(account no. 0602100001225 with HDFC Bank Limited, Fort Branch) for the year
2005 revealed the following:
Table 11.33 -
Particulars Debit Credit
Payment Received
Anagram Securities Ltd. 20,026,460.43 32,781,000.00
Anagram Stock Broker Pt. Ltd. 3,402,482.07 13,899,000.00
Balvinder P.G. - 29,216,841.76
D.J.Shah Securities 24,415,000.00 16,000,000.00
Dushyant Nathalal Dalal 654,572,434.00 547,147,340.00
Enam Securities Ltd. - 284,347.00
Girdharlal C. HUF - 1,000,000.00
Page 73 of 252
Interim Order - IPO
Particulars Debit Credit

Payment Received
Jayesh Maniar 250,000.00 -
Karvy Consultants 288,877,726.00 289,059,200.00
Karvy Stock Broking - 30,576,060.80
Manoj G. Seksaria 1,300,000.00 1,300,000.00
Total 992,844,102.50 961,263,789.56
11.34. From the above, it can be seen that Purshottam Budhwani has received from and
made payments to, interalia Manoj G. Seksaria, Dushyant Nathalal Dalal and Karvy
Consultants. The above financial transactions between Purshottam Budhwani and
Manojdev Seksaria shows the interlinkages between them. In this context it may be
mentioned that during October 2005 there were off- market transactions in the shares
of Suzlon Energy between Purshottam Budhwani and Manojdev Seksaria and the
details of the same have been narrated earlier in this order.
11.35. It is also seen that Purshottam Budhwani has received Rs. 54.71 crores from
Dushyant N Dalal and has paid Rs. 65.45 crores to him. In this context it may be
mentioned that Dushyant N Dalal is amongst the principals who have financed master
account holders such as SEIPL.
11.36. It appears that Karvy Consultants has provided loans/IPO financing to Purshottam
Budhwani as evidenced from the fact that it has provided funds to Purshottam
Budhwani and has also received back the same. Whereas Karvy Stock Broking has
only made payments to Purshottam Budhwani. Apparently these payments made to
Purshottam Budhwani who is a sub broker of Karvy Stock Broking, represent the
fees/commissions for procuring demat clients for Karvy DP and also for acting as sub
broker for the IPOs marketed by Karvy group. The examination of bank account
statement of Karvy Consultants, discussed in detail in the later paragraphs, also
corroborates this finding.
11.37. The above discussions bring out the interlinkages between Purshottam Budhwani,
some of the other master account holders, some of the finaiciers of the master account
holders and Karvy.
11.38. In view of the inter linkages amongst the master account holders and their
financiers, it appears that a few common sets of entities were indulging in
irregularities in a large scale in the various IPOs, indicating interlacing and
interlocking operation with a common control.
12.0. Inspection of Depository Participants
12.1. SEBI conducted inspection of the two major DPs viz. Karvy-DP and Pratik-DP
identified in the interim orders in the cases of Yes Bank and IDFC. Further, during
the course of verification of the dematerialized accounts done by NSDL and CDSL, it
Page 74 of 252
Interim Order - IPO
was found that five DPs namely, HDFC Bank Ltd.(HDFC), Dindayal Biyani Stock
Brokers Ltd.(DBSBL), Centurion Bank of Punjab Ltd.(CBPL), Infrastructure Leasing
& financial Services Ltd. (ILFS) and Wellworth Shares and Stock Broking Ltd.
(WSSBL) had large numbers of dematerialized account-holders sharing a few
common addresses. Accordingly, SEBI engaged an independent Chartered
Accountant (‘CA’) firm to conduct an investigative audit of the DPs. CDSL has also
conducted inspection of five DPs namely HDFC, CBPL, ILFS, WSSBL and Motilal
Oswal Securities Ltd. The findings of SEBI inspection of Karvy DP have been
narrated under the heading “Examination of the Role, Activities and Demat account
related documents of Karvy-DP”. The significant findings emanating from the
inspection / audit of the other DPs are given below:
12.2. Inspection of Pratik-DP by SEBI:
SEBI has conducted a limited purpose inspection of books of accounts, documents and
other records of M/s. Pratik Stock Vision Private Limited, (hereinafter referred to as
“entity” or “Pratik” or “member” or “DP” or “participant” or “PSVPL”) member of
National Stock Exchange of India Limited(NSE), depository participant (DP) of National
Securities Depository Limited (NSDL) and Central Depository Services (India) Limited
(CDSL) having SEBI Registration Numbers INB23754839, IN-DP-CDSL-107-2000, IN-
DP-NSDL-171-2000.
12.3. The inspection which was conducted by a team of SEBI officials was carried out
using sample and random test check method for inspecting the books of account and
other records of the entity. In addition to this, the inspection team also verified
documents such as Account opening Forms (AOF), client agreements, Know Your
Client (KYC), issuance and processing of Delivery Instruction Slips (DIS), client
ledgers etc selected on a random basis. The various operations of the entity were also
discussed with the management.
12.4. The trading terminal of Pratik was deactivated by NSE w.e.f December 11, 2003
as a risk containment measure. The withdrawal of the trading facility was due the
arrest of Shri Rajendra Jhunjhunwala, a dominant shareholder and director of PSVPL.
The terminal of the member was re-enabled by NSE on July 06, 2005, but the
member has not commenced trading. During the discussions with PSVPL, it was
stated that they have not undertaken any broking activity since the arrest of one of its
directors.
12.5. The inspection team followed the sample and random test check method for
inspecting the books of account and other records of the entity. In addition to this, the
inspection team has also verified documents such as Account opening Forms (AOF),
client agreements, Know Your Client (KYC), issuance and processing of Delivery
Instruction Slips (DIS), client ledgers etc selected on a random basis. The various
operations of the entity were also discussed with the management.
Page 75 of 252
Interim Order - IPO
12.6. Pratik DP Inspection findings relating to Account Opening
12.7. PSVPL has 3581 active/operative accounts at CDSL and 2108 operative/active
accounts at NSDL as at the end of December 2005. As per the details submitted by
PSVPL, the number of active accounts, accounts opened and closed during each
month at both the depositories for the period from April to December 2005 is
tabulated as under:
Table 12.7 – No.of operative/active accounts at NSDL and CDSL from April till Dec’05
Particulars April May June July August September October November December Total
CDSL
Opening 3543 3519 3539 3831 4095 4078 4071 4064 4046 3543
balance
new 13 22 293 265 1 0 0 0 0 594
account
opened
during
month
Account 37 2 1 1 18 7 7 18 465 556
closed
during
month
Closing 3519 3539 3831 4095 4078 4071 4064 4046 3581 3581
balance at
the end of
the month
NSDL
Opening 2363 23367 2366 2048 2039 2370 2359 2350 2241 2363
balance
new 19 6 42 12 46 0 0 0 0 125
account
opened
during
month
Account 15 7 0 81 15 11 9 109 133 380
closed
during
month
Closing 23367 2366 2048 2039 2370 2359 2350 2241 2108 2108
balance at
the end of
the month
12.8. From the above table it could be seen that at CDSL during the months of June and
July 2005 there was a sudden spurt in the opening of the BO accounts while during
the month of December 2005 a large number of the accounts were closed. Similarly at
NSDL during the month of June and August 2005 there was an increase in the
opening of new accounts while during the months of November and December 2005
large number of accounts were closed. The observations of the inspection team based
Page 76 of 252
Interim Order - IPO
on the analysis of the accounts opened and closed during the period under
examination is as under:
• 160 accounts out of 293 new accounts opened at CDSL during June 2005
were pertaining to the Budhwani group. These accounts were opened mainly
on June 14, 2005, June 15, 2005 and June 16,2005 with the address as
B/2,Himalaya Society, Milind Nagar, Asalaf, Ghatkopar (West) Mumbai –
400084 .
• With respect to the 265 accounts opened at CDSL during July 2005,
approximately 13 accounts were opened on July 13, 2005 with the address as
16/1, Khatau Building, Alkesh Dinesh Mody, Fort Mumbai – 400023. These
accounts pertain to Arti Rajendra Jhunjhunwala and Rajendra Prasad
Jhunjhunwala in various combinations of first, middle and last names.
• Similarly, 9 accounts with the address A-52 or B13, Kalumal Estate, Opp.
Juhu Post Office, Juhu, Mumbai – 400049 were opened in the names of Dipen
Jain and Hemlata Jain in various combinations.
• Out of the 465 accounts closed in December 2005, 110 accounts had same
address as c/o Kamala Bordia with address 201-Neehar Apts., Kokhani Lane,
Nr.Rly Station, Ghatkopar E, Mumbai – 400077 and were closed on
December 26, 2005.
• Further, 54 accounts of the Bajaj group were closed on December 27, 2005,
December 28, 2005 and December 29, 2005 with address 1, "Kalpana"
Building, Ground Floor, "H" Road, Marine Drive, Mumbai – 400002.
• Similarly , it was observed that 74 accounts of Purswani /Ledhwani /Bhatia /
Mangtani / Taal/ Talreja group having address as Office No. 9, Samar Hira
Ghat, Section, Ulhasnagar, Mumbai – 421003 were also closed during the
month of December 2005.
• 74 accounts of Dhanuka and Seth group having address as Happy Home
Society No 23, Nehru Road, Vile Parle (East), Mumbai – 400057 were closed
in the last week of December.
• With respect to NSDL out of the 81 accounts closed during July, 2005, 29
accounts were closed on July 15, 2005. Those accounts were pertaining to
various persons having same address as Rich Feel Health And Beauty Centre,
Link Komal Apts.,Opp. Rajesh Lib, Next to HDFC Bank , Linking Road,
Santacruz (West), Mumbai.
• Out of the 133 accounts closed in December, 21 accounts pertaining to the
address c/o Kamla Boradia, 201- Neehar Apt, Khokhani Lane, Nr. Rly.
Station, Ghatkopar (East), Mumbai - 400077 and the accounts were belonging
to the Bordia, Ranka and Kanther families. Further, it was observed that all
accounts were opened on June 26, 2003 and were closed on December 27,
2005.
• Similarly, 28 accounts of the Bajaj group, having address 1, Kalpana
Building, Ground Floor, H Road, 96, Marine Drive, Mumbai. – 400002 were
closed.
• Further, 49 accounts in various names but having a common address as Link
Komal Co-Op Society, Opp. Rajesh Library, Next to HDFC, Santacruz
Page 77 of 252
Interim Order - IPO
(West), Mumbai; all of which were opened on January 5 and 6, 2004 were
closed on December 19, 2005 .
12.9. From the above analysis it is seen that during the month of June and July 2005 a
large number of accounts were opened by Pratik DP. Majority of these accounts were
pertaining to Purshottan Budhwani Group. While the accounts which were closed by
PSVPL were pertaining to various groups such as Kamla Bordia, Bajaj group,
Dhanuka group, Sheth group etc. These accounts were apparently closed consequent
to SEBI’s order in the matter of Yes Bank Ltd.
12.10. During the discussions with the officials of the PSVPL, it was stated that the
Account Opening Forms (AOF) along with the Know Your Client (KYC) forms is
received at the office of the DP and after the scrutiny of AOF and KYC and
verification of documents submitted with the original documents, the account is
opened. It was however observed that in some cases the DP had opened the accounts
without having a valid proof of identity (POI) and proof of address (POA) in violation
of SEBI circular number SMDRP/POLICY/CIR- 36/2000 dated August 4, 2000.
12.11. The DP had opened many accounts of the same person with varying combination
of names (e.g. interchanged the names or by abbreviating the names or by expanding
the names or by adding some alphabets or adding some titles such as Shri, Kum,
Miss, Mrs, Bahan, Devi, Bhai, Dev, Smt etc) and with the same set of photographs,
POI and POA..
12.12. The DP opened number of accounts wherein there are discrepancies observed in
the address proof submitted and address captured in the DPM system. The details of
few instances are as under:
Table 12.12 : Discrepancies in address in Address proof supplied and address captured
in the DPM system
Name of account Account Number Address in DPM Address in POA submitted
holder
Swati Agarwal 10002955 PM-18 Rotunda Building 703, Su jata Apts., August
Mezz Floor, Mumbai Kranti Marg, Kemps Corner,
Samchar Marg, Fort, Mumbai-36
Mumbai - 400023
Shelar Santosh P 1202020000015937 B/4, Panchsheel, Nath Pai 4-99 Bim Nagar, H-Part-4,
Nagar, Ghatkopar (E) LBS Marg,
Mumbai - 400077 Ghatkopar (W), Mumbai-86
Smt Veena 1202020000019566 353 , Mani Mahal, 101, Dilraag Building No. 2,
Agarwal 4th Floor, Room No.6 A, N.S.Road No. 9
Kalbadevi,Mumbai- 400002 JVPD Scheme, Mumbai-49
Niket Agarwal 1202020000019663 353 , Mani Mahal, 101, Dilraag Building No. 2,
4th Floor, Room No.6 A, N.S.Road No. 9
Kalbadevi,Mumbai- 400002 JVPD Scheme,Mumbai-49
Veena Agarwal 1202020000019570 353 , Mani Mahal, 101, Dilraag Building No. 2,
4th Floor, Room No.6 A, N.S.Road No. 9
Kalbadevi,Mumbai- 400002 JVPD Scheme,Mumbai-49
Page 78 of 252
Interim Order - IPO
12.13. The above discrepancy is probably due to the DP capturig the correspondence
address in the depository system while accepting POA for permanent address.
12.14. PSVPL in certain cases opened accounts on the basis of banker’s verification for
POI and POA submitted by the investor. Discrepancies were observed in such
banker’s verification certificate. The details of certain such discrepancies are as
under:
Ø In case of Madanlal Mohanlal Bordia, Client ID 10031237 the BO had
submitted Bankers verification certificate from one The Deccan Merchants
Co-operative Bank Limited. The banker’s certificate was issued on April
20, 2002 while the account was opened on January 02, 2004.
Ø The banker’s certificate from The Deccan Merchants Co-operative Bank
Limited and Punjab National Bank does not contain the unique specimen
signature code, issued by the bank. Further the Banker’s verification
certificate was not on the Bank’s stationary. E.g. client ids10031260,
10031245, 10031157, 10031122, 10031259, 10031114 etc.
12.15. In certain cases the DP had taken bank statements along with sample cheque
leaves for the POA for the correspondence address of the investor. On random sample
check basis of such KYC’s following are the observations.
Ø In case of the accounts having correspondence address as Room No. 2, Crystal
Premises, 2nd Floor, 3rd Road Khar (W), the Photocopy of the voter ID was
submitted as proof of identity and permanent address. However for the
correspondence address there was no written request by the BO holder. For the
correspondence address the DP had relied upon the cheque leaf provided by the
BO wherein one Purshottam Budhwani was the first holder and the bank
statement was in name of Purshottam Budhwani. In these cases the bank accounts
were opened in six joint names with the branches of HDFC Bank Limited and
ICICI Bank Limited. Further in all these BO accounts the central point for off-
market transfers pertaining to IPO allotments were the account of Purshottam
Budhwani.
Ø In case of the accounts having correspondence address as B/2 Himalaya Society,
Milind Nagar, Asalfa, Gatkopar (W), Mumbai the Photocopy of the voter ID was
submitted as proof for Identity and permanent address. However for the
correspondence address there was no written request by the BO holder. For the
correspondence address the DP had relied upon the cheque leaf provided by the
BO wherein one Prushottam Budhwani was the first holder and the bank
statement was in the name of Purshottam Budhwani. In these cases the bank
accounts were opened in six joint names with the HDFC Bank Limited. Further in
all these BO accounts the central point for off- market transfers pertaining to IPO
allotments were the account of Prushottam Budhwani.
Ø In case of the accounts having correspondence address as c/o Kamla Boradia,
201-Neehar Apts., Khokhani Lane, Nr. Ray. Station, Ghatkopar (E), Mumbai-77
the proof of identity and proof of address was given as banker’s certificate.
Further for the address the DP had relied upon the cheque leaf provided by the
BO wherein one Kamla Bordia was one of the joint holders. In these cases the
bank accounts were opened in various joint names with the branches of Punjab
Page 79 of 252
Interim Order - IPO
National Bank and the Deccan Merchant Co-operative Bank Limited. In these
accounts the central point for off- market transfers was a BO account held with
ICICI Bank Limited at NSDL having Client ID 10537568.
Ø In certain cases wherein the address was 353, Mani Mahal, 4th Floor, Room No. 6,
Kalbadevi Road Mumbai-2, the POI and POA was banker’s certificate. However
the banker’s certificate certified that “the signature agrees with the one on our
records”. In such certain cases one Nitin Ganeriwal was one of the joint holders
having bank account with branches of HDFC bank Limited. Further in these
accounts the central point for off- market transfers pertaining to IPO allotments
were the account of Nitin Ganeriwal. Further in some of the cases such accounts
were opened during September 2003 while the banker’s verification was dated
November 2005.
Ø During the inspection of PSVPL it was revealed that the DP had opened a large
number of accounts at same or similar address. On scrutinizing the transactions in
such accounts it was revealed that these accounts were opened mainly for getting
allotment in the Initial Public Offer (IPO) of various companies. Details of large
number of accounts at same/similar addresses are tabulated as under:
Table 12.15 - Large number of accounts at same or similar address
Sr. Address Account associated with Approximate number of
accounts at both deposiotries
1. C\o 32 Trinity Street, Opp Jain 239
Temple, Dhobi Talao, Mumbai -
400020
2. Rich Feel Health & Beauty Cent 105
Link-Komal Co-Op.Society,
Linking Road, Santacruz (West)
Mumbai - 400054
3. Flat No.10,Kailas Deep , 2nd Floor, 43
In Of Bajaj Road,
Vithalbhai Road, Vile Parle (W)
Mumbai - 400056
4. C/o L and T Finance 32
802,Swastik Chambers, CST Road
Chembur Mumbai - 400071
5. A-16, Mirani Nagar 30
Ganesh Gavde Road, Mulund
(West) Mumbai - 400080
6. Kalpana Bldg or 1 Kalpana Bldg, Bajaj Group 223
Gr Floor,H-Road, 96, Netaji
Subhash Rd Next To Marine Lines
Station W or Marine Drive,
Mumbai – 400002
7. Happy Home Society No 23, Dhanuka/Seth group 86
Nehru Road, Vile Parle (East),
Mumbai – 400057
8. 201-Neehar Apts.; Kokhani Lane; Kamla Bordia group 185
Nr.Rly Station ;Ghatkopar (E)
Mumbai - 400077
Page 80 of 252
Interim Order - IPO
Sr. Address Account associated with Approximate number of

accounts at both deposiotries
9. 33 Maheshwar Niketan, Manojdev Seksaria 193
5/3 Peddar Road Mumbai - 400026
10. Dilraj Building, 1st Floor, Nitin Ganeriwal group 25
North South Road, Behind Krishna
Temple Mumbai - 400049
11. 353 Mani Mahal 4th Floor 92
Room No 6 Kalbadevi Road,
Kalbadevi Mumbai - 400002
12. B/4,Panchsheel Bldg., Purshottam Budhwani 573
Nath Pai Nagar, Ghatkopar (East) group
Mumbai - 400077
13. B/2; Himalaya Society; 556
Milind Nagar; Asalafa; Ghatkopar
(West) Mumbai - 400084
14. Room No.2, Crystal Premises, 85
2nd Floor, 3rd Road, Khar(West)
Mumbai – 400052
15. Office No. 9, Samarpan Complex 73
Hira Ghat, Section - 17, Ulhasnagar
Mumbai - 421003
16. Sujata Bldg, Rani Sati Marg Sharad Singhania group 118
Flat No 10, Malad (East)
Mumbai - 400097
Total 2658
12.16. On a quick analysis of the data of PSVPL it was observed that there were more
than 16 sets of addresses where the number of accounts was more than 20. Further the
accounts having such common addresses were approximately 2658 which belong to
various groups of persons such as Purshottam Budhwani, Kamla Bordia/Boradia,
Nitin Ganeriwal, Purswani /Talreja / Ledhwani, Manojdev Seksaria and Sharad
Singhania etc. The combined client master of PSVPL at NSDL and CDSL shows the
total number of BO accounts (active, inoperative, closed and suspended) with PSVPL
since its inception were totaling to 8853. Thus the above accounts constituted nearly
30.3% of total accounts.
12.17. PSVPL had offered a scheme through CDSL with effect from August 15, 2003
called “Investor IPO”. The charges in this scheme were minimal and were to attract
those investors who were mainly investing in IPO’s only. The charges under this
scheme were less as compared to other normal investors as tabulated under:
Table 12.17 - Comparison of charges levied by PSVPL on investors through CDSL
w.e.f. 15-08-2003
Services Schemes
Investor Investor IPO
Annual Membership Rs. 300/- Rs. 130/-
Purchase/receipt Market & Off-market 0.01% (Min Rs. 5/-) N.A.
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Services Schemes
Investor Investor IPO
Sale/Deliveries Market & Off-market 0.02% (Min Rs. 10/-) 0.02% (Min Rs. 7.50/-)
12.18. Further PSVPL had stated in its schedule of charges that the clients under scheme
“Investor IPO” to pay all transaction charges at the time of delivering instructions
upfront together with service tax. It shows that the DP was opening account s of
investors only for the specific purposes of IPO’s. It was observed that large number
of beneficiary accounts opened by DP was of those investors who were basically
investing in public issues only. Further there were off market transfers to a set of
other BO accounts from these Investor IPO accounts, maintained within the Pratik or
within the depository or in other depository, from these IPO accounts
12.19. Pratik DP Inspection findings relating to Delivery Instruction Slips (DIS)
12.20. During the discussions with the officials of the DP it was stated that DP while
issuing the DIS to its clients, it updates the corresponding DIS in its back office
system. It was, however, observed that in some cases the DIS numbers issued to the
BO holders were not captured in the back office system of the DP. Further in some
cases it was observed that the PSVPL had received the DIS on a day earlier to its
issuance date as per the entry in the back office system of PSVPL. Certain such
examples wherein DIS not captured into the back-office system of PSVPL or DIS
issue date is later than the date of receipt by PSVPL is as tabulated below:
Table 12.20 - Discrepancy in DIS issuance
DIS number Issued to client Id Date of Issue as per Date of receipt Used by
PSVPL Back office by PSVPL
20147537 Not available Not entered 12/08/2005 1202020000006791
20147701 1202020000032511 13/08/2005 12/08/2005 1202020000032511
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20147702 1202020000032526 13/08/2005 12/08/2005 1202020000032526

20147744 1202020000033095 13/08/2005 12/08/2005 1202020000033095
12.21. PSVPL had submitted that it had issued loose DIS on personal request to various
clients namely Nitin Ganeriwal & other, Sharad Singhania & others, Shanuka &
others, Purshottam Budhwani & others, Gurmukh Purswani & others, Boradia &
others and Manoj Seksaria & others which were mainly transacting in IPO’s..
12.22. During the discussions with the officials of the DP it was stated that DP while
processing the DIS it matched the signatures of BO holders with the signatures
captured in DPM. It was, however, observed that in some cases, there was mismatch
between signature on DIS and the signature captured in DPM. The details of some
instances is as tabulated under:
Table 12.22 - Discrepancy in DIS processing
Client ID DIS number Execution Date Remarks
1202020000013171 20117950 10/08/2005 Signature Mismatch
12.23. It was observed that the depository participant has not exercised proper care and
precautions as stipulated under regulation 42(2), 42(3) and regulation 20A of SEBI
(depositories and Participant) Regulations 1996, while processing of the DIS for
transfer of securities.
12.24. Pratik DP Inspection findings relating to Off-Market Transfers
12.25. The inspection revealed that the DP had executed off- market transfers in certain
scrips which had recently come out with an IPO as tabulated below. These off market
transfers were executed prior to the date on which scrip was made available by the
exchange for trading or get listing at the exchanges. There were large number of off-
market transfers into a particular beneficiary account pertaining to the groups
mentioned above.
Table 12.25 - Transfers executed by DP prior the commencement of listing and trading
on exchanges
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Scrip Date of Date of first transfer Date of listing at

allotment* executed by the DP Exchange*
IDFC 5-Aug-05 08-Aug-2005 12-Aug-2005
IL&FS Investsmart Ltd 21-Jul-05 22-Jul-2005 27-Jul-05
Jet Airways (India) Ltd. 9-Mar-05 11-Mar-05 14-Mar-05
MSP Steel & Power Ltd 8-Jul-05 11-Jul-2005 18-Jul-05
3i Infotech Ltd. 15-Apr-05 16-Apr-2005 22-Apr-2005
Goads Exports Ltd 20-Apr-05 22-Apr-2005 27-Apr-05
Nectar Life sciences Ltd 11-Jul-05 14-Jul-2005 18-Jul-05
Siskin Communication Technologies 31-Aug-05 02-Sep-2005 9-Sep-05
SPL Industries Ltd 18-Jul-05 20-Jul-05 26-Jul-05
*source Stock Exchanges
12.26. The inspection of the DP had revealed that there were large numbers of off-
market transfers effected in a particular set of accounts from various BO’s in a
particular quantity. Such off- market transfers were mainly done in that scrip which
had recently come out with Initial Public Offerings (IPO) or Follow-on Public
Offerings (FPO). Observations on the off- market transfers from these accounts are as
under:
Ø In case of scrip IDFC Limited there were off- market transfers of 266 hares each
from approximately 1298 CDSL accounts (held with PSVPL) into the account of
Purshottam Budhwani having client Id 1202020000006413 (held on CDSL) with
PSVPL. All these transfers were executed mainly on August 08, 2005, August 12,
2005 and August 25, 2005. These transfers amount to 345268 shares of IDFC.
Ø In case of scrip Yes Bank there were off- market transfers of 150 hares each from
approximately 734 CDSL accounts (held with PSVPL) into the account of
PSVPL. All these transfers were executed mainly on July 11, 2005 and July 13,
2005. These transfers amount to 110,100 shares of Yeas Bank.
Ø In case of BO accounts at address c/o Kamala Boradia, 201-Neehar Apts.,
Konkani Lane, Nr. Rely. Station, Ghatkopar (E), Mumbai-77, there were off-
market transfer in scrip IDFC Limited to account number 1201090000103405
(CDSL) mainly on August 02, 2005. These were approximately 136 transfers of
266 shares each amounting to 36176 shares.
Ø In case of scrip Suzlon Energy there were off- market transfers of 16 hares each
PSVPL. These transfers amount to 19520 shares.
Ø In case of BO accounts at address Kalpana Bldg OR 1 Kalpana Bldg, Gr Floor,H-
Road, 96, Netaji Subhash Rd Next To Marine Lines Station W OR Marine Drive,
Mumbai – 400002 there were off- market transfer in scrip IDFC Limited to
account numbers 1201090000012841, 1201090000014657, 1201090000017681,
1201090000007341 (CDSL) mainly on August 08, 2005. These were
approximately 85 transfers of 266 shares each amounting to 22610 shares.
from approximately 58 accounts held with PSVPL into the account of
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Priyamvadha Ganeriwal having client Id 10007314 (held on NSDL) with PSVPL.

These transfers amount to 30798 shares.
from approximately 72 accounts held with PSVPL into the account of Nitin
Ganeriwal having client Id 1202020000001421 (held on CDSL) with PSVPL. These
transfers amount to 19152 shares.
Ø In case of the Scrip SPL industries Limited there were off- market transfers of 100
shares each from approximately 38 CDSL accounts (held with PSVPL) into the
account of Nitin Ganeriwal having client Id 1202020000001421 on CDSL with
PSVPL. All these transfers were executed mainly on July 25, 2005
Ø In case of scrip SPL industries Limited there were off- market transfers of 100
shares each from approximately 696 CDSL accounts (held with PSVPL) into the
account of Purshottam Budhwani having client Id 1202020000006413 held on
CDSL with PSVPL. All these transfers were executed mainly on July 26, 2005
and 27, 2005. Further from the CDSL account with PSVPL Purshottan Budhwani
had done inter depositary off- market transfers of 15000 and 46465 shares
respectively to IN301127/15754364 and IN302201/10093022 on August 02 and
08, 2005.
Ø In case of scrip SPL scrip SPL industries Limited there were off- market transfers
of 100 shares each from approximately 66 NSDL accounts (held with PSVPL)
into the account of ManojDev Seksaria having client Id 10004049 held on NSDL
with PSVPL. All these transfers were executed on a single day of July 29, 2005
Ø In case of CDSL accounts at address c/o Kamla Boradia, 201-Neehar Apts.,
Khokhani Lane, Nr. Rly. Station, Ghatkopar (E), Mumbai-77, there were off-
market transfer in scrip Shri Ramrupai Balaji Steels Limited to account number
1201090000103405 (CDSL) mainly on August 02, 2005. These were
approximately 92 transfers of 250 shares each amounting to 23000 shares.
Ø In case of scrip IDFC Limited there were off- market transfers of 266 shares each
from approximately 141 accounts at NSDL/CDSL (held with PSVPL) into the
account of Sharad Singhania having client Id 10003337 at NSDL with PSVPL. Al
these transfers were executed mainly on August 12, 13 and 16, 2005
Ø In case of scrip Gokaldas Exports Limited there were off- market transfers of 15
shares each from approximately 57 accounts of CDSL (held with PSVPL) into the
account of Priyamvadha Ganeriwal having client Id 10007314 at NSDL with
PSVPL. All these transfers were executed mainly on April 25 and 26, 2005
Ø In case of scrip K. M. Sugar Mills Ltd there were off- market transfers of 100
shares each from approximately 81 accounts of CDSL (held with PSVPL) into the
account of Priyamvadha Ganeriwal having client Id 10007314 at NSDL with
PSVPL. All these transfers were executed mainly on November 17 and 18, 2005
Ø In case of NSDL accounts at address c/o Kamla Boradia, 201-Neehar Apts.,
Khokhani Lane, Nr. Rly. Station, Ghatkopar (E), Mumbai-77, there were off-
market transfer in scrip Suzlon Energy Limited to client ID 10537568 maintained
with ICICI bank DP of NSDL mainly on October 18 and 2005. These were
approximately 38 transfers of 16 shares each.
Ø In case of scrip SPL scrip Yes Bank Limited there were off- market transfers of
150 shares each from approximately 88 NSDL accounts (held with PSVPL) into
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the account of ManojDev Seksaria having client Id 10004049 held on NSDL with
PSVPL. All these transfers were executed on July 11and 12, 2005.
Vinod F. Goyanka HUF having client Id 1202020000022465 (held on CDSL)
with PSVPL. All these transfers were executed mainly on August 09, 2005, and
August 11, 2005. These transfers amount to 12502 shares of IDFC.
12.27. Thus various BO accounts namely Nitin Ganeriwal (1202020000001421),

Purshottam Budhwani (1202020000006413), Manoj Dev Seksaria (10004049),
Sharad Singhania (10003337), Priyamvadha Ganeriwal (10007314), Vinod F.
Goyanka HUF (1202020000022465) were acting as central account or convergence
account for transferring IPO allotments through off- market transfers from various BO
accounts for offloading or transferring the holdings to other persons. Similarly the
BO accounts maintained with PSVPL were used to transfer the allotment of IPO to
accounts maintained with other DP’s. For examples in case of addresses at 201-
Neehar Apts., Khokhani Lane, Nr. Rly. Station, Ghatkopar (E), Mumbai-77, the
shares were transferred to 1201090000103405 (CDSL) or 10537568 held with ICICI
bank at NSDL.
12.28. Pratik DP Inspection findings relating to Client Ledger
12.29. Normally transaction charges are debited to the respective accounts periodically.
It was observed that most of the IPO accounts opened by clients related to the groups
mentioned elsewhere in the report, such charges were not debited to the respective
accounts on a periodical basis. For instance no charges were debited to the accounts
of clients (BO IDs 1202020000016282, 1202020000016297, 1202020000016303,
1202020000029397 and 1202020000029403) related to Budhwani group after
October 14, 2004, though there were debit transactions in the accounts. However
there was a narration in the client ledger stating “ to being transferred to a/c. no.
6413”. Similarly, in approximately 400 odd cases it was observed that the ledgers of
such BO accounts were having a narration “to being transferred to a/c. no. 6413”.
Account Number 6413 in CDSL belongs to Purshottam Budhwani. Further in all such
cases there were off- market transfers only to the account of Purshottam Budhwani.
12.30. Summary of Findings relating to Inspection of Pratik DP
12.31. Pratik is a broker DP though they have not been undertaking any broking activity
since December 2003. Even their DP registration is expired in 2005 and they were
not opening any new DP accounts since September 2005. Pratik has about 5,000 plus
active BO accounts at both the depositories put together. A significant number of
accounts were opened exclusively for IPO purpose under their “Investor IPO
scheme”. Accounts opened under the scheme are at special tariff.
12.32. Apparently, many IPO sub brokers brought in clients and opened accounts under
the “Investor IPO sche me”. During the month of June and July 2005, the time when
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large IPOs hit the market, more than 600 accounts were opened. These accounts were
opened in most cases with the same correspondence address i.e. the address of the
IPO sub broker. The DP opened BO accounts in similar manner with 16 set of
addresses where the number of accounts were more than 20. The accounts on such
addresses were approximately 2,658 which belonged to various groups of persons
such as Purshottam Budhwani, Kamla Bordia/Boradia, Nitin Ganeriwal, Purswani
/Talreja / Ledhwani, Seksaria, Singhania etc. Some of these entities may not figure as
key operators identified in this order as they have apparently used less than 500 demat
accounts as conduits. The combined client master of Pratik DP at NSDL and CDSL
shows the total number of BO accounts (active, inoperative, closed and suspended)
with Pratik DP since its inception were 8853. Thus the above accounts constituted
nearly 30.3% of total accounts.
of names with the same set of photographs, proof of identity and address. In certain
cases proof of identity and address were not taken. The proof of address taken varied
from the address captured in the Depository Participant Module (DPM) system in
certain cases. There were various discrepancies in banker’s certificates obtained as
proof of identity and address since the certificates do not contain unique specimen
signature code and the certificates issued were not on bank’s stationery. The DP has
also taken bank statement along with cheque leaf as proof of address. The bank
accounts in such cases are opened in joint names of six or more persons. In certain
cases the DP has taken photo copy of the voter ID as proof of identity and permanent
address. However, the DPM system captured correspondence address for which no
proof was taken and there was no written request from the account holder to
incorporate the correspondence address.
12.34. In certain cases the details of DIS issued to BO was not captured in back office
system. Loose DISs were issued to the clients who have opened accounts under the
IPO scheme on personal requests. In certain cases mismatch of signature in the
account opening form and DIS was observed.
12.35. There were large numbers of off market transfers executed from various accounts
opened under the IPO scheme to certain accounts apparently of the IPO sub brokers
immediately after the allotment of IPO.
12.36. Normally DP charges are debited to the respective BO accounts periodically.

However, it was observed that for the clients connected to the Budhwani group, the
charges were debited to the account of Shri Budhwani and settled with him.
12.37. The findings of inspection of Pratik DP by SEBI as narrated above indicate that
the internal control procedures at Pratik DP with respect to the account opening
procedures were inadequate. The DP has not exercised proper care and due diligence
as stipulated under regulation 20A of SEBI (Depositories and Participant)
Regulations 1996 while opening beneficial owners account. The depository
participant has not exercised proper care and precautions as stipulated under
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regulation 42(2), 42(3) and regulation 20A of SEBI (depositories and Participant)
Regulations 1996, while processing of the Delivery Instruction Slip (DIS) for transfer
of securities.
12.38. Findings of inspection / audit of five DPs:
12.39. Subsequent to the SEBI interim orders in the cases of Yes Bank and IDFC, as
mentioned earlier, SEBI advised the depositories to carry out verification of
genuineness of verification of dematerialized account-holders where 20 or more
account holders were sharing common addresses. In reply thereto CDSL initially
stated that “… we observed that 36 DPs were having instances of more than 20
accounts opened with the same name / address. We advised these 36 DPs to
specifically confirm about the genuineness of all the accounts opened with them and
had also furnished them the list of BO IDs. In response to this, we received
confirmation from 36 DPs…” Sub sequently, CDSL informed SEBI that “During
further checking it was observed that 16 more DPs have multiple accounts with same
name / address. We have instructed these DPs to submit confirmation regarding
verification of genuineness of account holders alongwith steps taken by January 30,
2006” Thereafter CDSL informed SEBI that “Further, with reference to our
telephonic discussions, we wish to inform you that in case of HDFC Bank, we had
found that 787 accounts with same name / same address.” Based on the information
furnished by CDSL, it was noticed that six DPs namely Centurion Bank Ltd (25943
account holders sharing common addresses), IL&FS (3421), Pratik Stock Vision Pvt.
Ltd. (1203), HDFC Bank(787), Motilal Oswal Securities Ltd. (697) and Wellworth
Shares and Stock Broking Ltd. (533). While Pratik DP had been inspected by SEBI
officials and Motilal Oswal was inspected by a CA firm engaged by CDSL, SEBI
engaged a CA firm to conduct inspection of the remaining four DPs namely HDFC
Bank Ltd., Centurion Bank of Punjab Ltd(CBPL)., Infrastructure Leasing & financial
Services Ltd.(IL&FS) and Wellworth Shares and Stock Broking Ltd. (WSSBL) and
one another DP namely Dindayal Biyani Stock Brokers Ltd.(DBSBL) (339 account
holders sharing common addresses as per CDS L data) having regard to the sheer
number of demat account holders sharing common addresses in respect of these five
DPs.
12.40. Summary of Findings of inspection of Five DPs:
12.41. I have carefully considered the findings of the independent CA firm in respect of
each of these DPs. I find that the following are the major observations in respect of
the inspection of these three DPs (except for CBPL and HDFC Bank which ha ve been
discussed in detail separately):
12.42. DBSBL the depository participant is exclusively serving the interest of the
director’s family members and has not quite associated with any public customers. In
the absence any public association it can as well use the services of any other
Depository participants. DBSBL presently has permitted opening of multiple
accounts within the family in permutation and combinations of names. This
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facilitated BO to make multiple applications for shares in IPOs under the retail
category by indicating separte Demat accounts in the respective application forms. It
is apparent that there is a conflict of interest between the activities DBSBL as a DP
and that of its directors as multiple applicants in the IPOs.
12.43. The activities of WSSBL DP are of a piece with the pattern as noticed in the case
of DBSBL. DBSBL has opened accounts in the names of Directors and their family
members. In the absence of dealings with public, the DP registration granted to
WSSBL and DBSBL does not serve any meaningful purpose as its directors can open
demat accounts with other DPs for their securities market activities.
12.44. ILFS has been predominantly entertaining IPO financing in its operations for
catering to the BO/Demat accounts. It funds the publis issues by accepting very little
margin and providing finance for the remaining major portion. e.g. in the case of
IDFC, the issue was for Rs.36/- per share, while it financed Rs.34.50 and accepted
Rs.1.50 as margin. ILFS have accepted a mandate from every BO/loanee that on
receipt of the allotted shares, it will have to be transferred through off- market
transfers to any other demat account of their choice and DP. This sort of arrangement
is not in the interest of securities market as the same may result in creation of name
lenders and not genuine investors.
12.45. As mentioned earlier, CDSL (either on its own or through CA firms) had also
conducted inspection of the above DPs and findings of these inspection also support
the findings of inspection by SEBI and those conducted by the CA firm engaged by
SEBI.
12.46. Findings of Inspection of DP Centurion Bank of Punjab Ltd. by CA Firm engaged

by SEBI
12.47. CBPL predominantly floated IPO financing scheme to garner support for its retail
lending operations and also for sourcing business for its Demat business activities.
CBPL was found to lack the wherewithal to ascertain the genuineness of the
individuals in whose names it opened demat accounts. Consequently many of
applicants for Demat accounts ended up being mere name lenders or benamis for
other market operators.
12.48. CBPL financed 50% of the IPO application amount. The BO had to only issue
cheque equivalent to the margin which was 50% of the application amount. CBPL
only charged interest and Demat account opening charges for opening a limited
purpose demat account and for providing IPO finance. In the Loan document, CBPL
had taken a mandate for closure of Demat account on the successful completion of the
IPO process. The amount collected from the demat account holders/BOs was received
in a common current account of CBPL. CBPL had also taken upfront One delivery
slip duly signed by the BO for prompt transfer of shares on allotment to a designated
BO/Demat account other than the one used in the IPO financing scheme.
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12.49. Since the key operators provided funds for the IPO applications, they took the
route of the Delivery slip mandate in their favour for transferring the IPO shares to
their demat accounts. Upon scrutiny of IPO applications, it was found that the names
were in multiple combinations of initials, surnames, first names, middle names and in
very many permutations and combina tions. In other words the same name have been
used in different permutation and combinations.
12.50. In CBPL the cheques received for margin were deposited into one current
account. This helped the key operators to deposit money thru name lenders. In certain
cases the name lenders deposited cash into the savings bank account and then issued
cheques for margin in the IPO finance. On allotment the shares were duly transferred
directly to the key operator and the refunds were given to the BO. The BO in turn
deposited the refund orders into the bank and withdrew cash. Obviously such cash
withdrawls strongly indicate that funds came from sources other than the name
lenders.
12.51. In the case of CBPL it was found that the public issues were marketed by
agencies which were also acting as marketing agents for the IPO financing scheme of
the Bank. This allowed the marketing agents to bring in fictitious/benami names.
Examination of savings bank accounts of the dematerialized account-holders
indicated that the funds were provided from the single account of the key operator
and distributed to other BO/Demat account holders’ bank accounts and in reverse the
refunds were credited to the Savings bank account of the individual dematerialized
account-holders from where the funds were transferred back to the main operator’s
account. Thus it is seen that the funds for making IPO applications in the names of
the fictitious/benami applicants had come by way of cash deposits into their SB
accounts or by way of transfer of funds from the key operators which went into a
common account.
12.52. Findings of Inspection of DP Centurion Bank of Punjab Ltd. by CDSL
12.53. As per information furnished by CDSL, it was noticed that Centurion Bank of
Punjab Ltd. (CBPL) was the DP with largest number of dematerialized account-
holders sharing common addresses. As per data obtained from CDSL, 25,943
dematerialized account- holders of CBPL were sharing common addresses. In view of
the above, CDSL advised the DP to verify the genuineness of the dematerialized
account-holders. In reply thereto the DP stated that
“(1) At the time of account opening, relevant documents as mentioned in SEBI

circular ref no. 29/2004 dated August 24, 2004 are being obtained. The
formalities in this regard are being adhered scrupulusly. (2) As mentioned in our
point no. 1 above we adhere to all the norms prescribed for opening of depository
accounts including documentation for both correspondence and the permanent
address.”
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12.54. To verify the genuineness of the dematerialized account- holders of CBPL, CDSL
conducted inspection at the office of the DP situated at 101, Central Bombay Infotech
Park, Mahalaxmi, Mumbai during January 27 – 31, 2006. The inspection by CDSL
revealed that the above confirmation given by CBPL was incorrect. A Summary of
the findings of inspection by CDSL is given below:
i. 27 account opening forms were not avaliable with the DP and were not produced
for verification during the inspection. The DP claimed that three account
opening forms were destroyed in the fire on October 29, 2004 and the same were
being reconstructed.
ii. In 93 instances the DP did not obtain proof of identity from the dematerialized
account-holders. In 92 instances, the DP did not obtain proof of address from
the dematerialized account-holders. In 10 instances the proof of identity and
proof of address as recorded by the DP in the depository system did not match
with the account opening form. In 30 instances the DP had not verified the
copies of POI and POA with the original. In 17 instances the DP did not obtain
photograph of the dematerialized account-holders. In 12 instances the
documents obtained by the DP towards POI and POA were found to be invalid.
iii. In seven instances where the DP had obtained bank verification letters towards
POI and POA, it was found that the bank verification letters did not contain the
signature of the bank mananger alongwith his employee code. In 22 instances
the permanent and correspondence address have been shown to be the same as
Centurion Bank. This leads to the inference that the DP had failed to obtain
proof of permanent address before obtaining the demat accounts.
iv. In ten instances, the permanent address mentioned in the account opening forms
have not been entered into the depository system by the DP. In two instances the
DP did not obtain the signature of the account holders in the account opening
forms and the DP – BO agreement. In 36 instances the DP had not obtained the
signature of the dematerialized account-holders across the photographs. In
seven instances the same sets of persons appear to have signed for two groups of
dematerialized account-holders. In one instance the DP has opened the demat
account in a name different from that mentioned in the account opening form. In
one instance while the account opening form contains details of only two
account holders, the DP has captured three account holders in the depository
system.
v. In 22 instances the DP did not obtain the signature of the account holder in the
DP – BO agreement. In five instances the DP had entered a different name in the
agreement which does not match with the name of the account holder in the
account opening form as well as depository system. In nine instances the DP has
not obtained authentication from the account holder for corrections in account
opening form and agreement and the other related documents. In 49 instances
the DP has not completed the details such as date and place of agreement and
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complete name and address of BO in the DP - BO agreement. In three instances

it was found that the signature of the dematerialized account-holders in account
opening form and agreement were different.
vi. The DP did not have any record of the persons who were authorized to sign the
agreements on behalf of the DP and hence the DP was unable to identify the
persons who had signed the agreements on behalf of the DP.
vii. In 29 instances it was found that the DP had not mentioned the name of the
nominee in the nomination form signed by the account holder. Also in 23
instances the nomination details were no t captured in the depository system.
viii. It was found that the DP was obtaining account closure forms signed by the
dematerialized account- holders at the time of the opening of the demat accounts.
The account closure form authorized the DP to initiate closure of the demat
account without any prior notice to the dematerialized account- holders. Apart
from causing inconveinence to the account holder this practice of CBPL cast a
lot of uncertainity about continuation of services to the account holder.
12.55. Findings of Physical Verification of the BOs of CBPL by CA firm
12.56. As mentioned earlier, a large number of dematerialized account-holders of the DP

CBPL were found to share common addresses. This raised suspicion as to whether
these thousands of dematerialized account-holders of CBPL were genuine. The
various irregularities relating to the opening of demat accounts and other activities of
the DP as found during the course of inspection of the DP by CDSL also supported
this suspicion. Hence SEBI advised the CA firm that had done inspection of the DP
to conduct physical verificatio n in respect of randomly selected dematerialized
account-holders purportedly sharing a few addresses situated at Ahmedabad. The
physical verification by the CA firm confirmed that many of the dematerialized
account-holders were not found at the addresses given by the DP and a summary of
the findings of physical verification by the CA firm is given below.
a. CBPL did not exercise due diligence while opening of the Beneficiary Owner
(Demat) accounts for IPO financing.
b. The BOs of CBPL were only name lenders (benamis) to the IPO issues. Mr.
Mahesh Shah, Director of Infinite Financial Services Private Limited, acting
on behlaf of one of the key operators, has informed that they had used the
names of certain persons to open many demat accounts and had given few
common addresses to faciliate receipt of IPO allotment advices and refund
orders. Mr. Mahesh Shah also indicated the involvement of Mr. Tushar Shah
and Mr. Paragbhai, who are the directors of a key operator viz. SEIPL.
c. CBPL was approached by the sourcing agents whenever there were IPO issues
and CBPL also did active campaigning for its scheme of IPO Financing.
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d. When asked about the procedure followed for opening of the demat accounts,
the Ahmedabad Branch head of CBPL informed that the applications were
received, verified and then sent to some outsourcing agency for data entry
alongwith the sticker slips. Slips with details of name, BO ID, and address and
other reference were generated and affixed on the application forms and sent
to the office of CBPL DP at Mumbai. The agreements and stamping were
done at Ahmedabad. The officials of CBPL agreed that there might have been
negligence/inadvertence due to large volume of IPO financing applications.
The Applicants either came personally or CBPL’s executives visited the
applicants to obtain their signatures. Despite the denial of CBPL it appears to
be a case of active collusion.
e. CBPL used to send the application forms either directly to BO or through the
sub-Brokers. The BOs were not required to visit the branches of CBPL for
collecting the application forms.
f. The findings of the verifications in respect of suspected benami / fictitious

demat clients of DP CBPL are given below:
Table 12.56(f) - Benami/ Fictitious demat clients of DP CBPL
Name of Address Comments/ Observations/ Remarks

BO
Various 1195, Dev ni Sheri, The BO does not stay here. One Mr. Tagaram Choudhary
BO A/c. Mandvi Ni Pole, present at the address informed that he is staying there on
Holders Manekchowk, rent. Neighbours informed that the bo had sold the house
identified Ahmedabad. some nine to ten years back.
Various 85-88, City Centre, Mahesh K. Shah, Whole -time Director of Infinite
BO A/c. C. G. Road, Financial Services Private Limited (IFSPL) has informed
Holders Navrangpura, that he had opened the account of various BOs with CBPL
identified Ahmedabad. by collecting their POI and POA and further opened their
bank accounts with his name as first name and others as
joint holders in Apni Sahakari Bank Ltd, Ahmedabad.
He further informed that he has opened accounts in
various names for his financial benefits and he has
financed the margins for the funding accounts opened with
CBPL. Further Mr. Tushar Shah and Mr. Paragbhai of
SEIPL are active participants in his activities.
Various 5-104, Potalia Slum The BO is a lady and illiterate . When asked to sign she
BO A/c. Quarters, Saraspur, informed that she can only put the “thumb impression”.
Holders Ahmedabad Her son informed her voter’s ID card was given to Mr.
identified Maheshbhai.
Various 8/188, Potalia Slum The BO first denied having any BO account opened with
BO A/c. Quarters, Saraspur, CBPL, Ahmedabad. Later on he informed that his son had
Holders Ahmedabad taken documents from him and given the same to one Mr.
identified Gunvantbhai who must have in turn given to Mr.
Maheshbhai.
Various Various house They are slum hutments, dominated by labour class
BO A/c. numbers viz. 10, persons/ daily wagers. It was found that Shri Mahesh K
Page 93 of 252
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Name of Address Comments/ Observations/ Remarks

BO
Holders 11,12, Shah of Infinite Financial Services had collected voter
identified 13,17,19,23,24,31, IDs and other related documents from the dwellers and
32, 48,49, 55, 56, had opened demat accounts with CBPL in their names
57, 58, 654, 9 in
Jajakeshaavni
Chali, Near Nutan
Mills, Saraspur,
Ahmedabad
Various 1003-B-46, One of the BO Jitendra Solanki has opened the various
BO A/c. Aryanagar, Society, BO accounts in the names of his relatives and his friends
Holders Kankaria Road, who used his address. He is a peon in a BIFR company
identified Jamalpur,Ahmedab “Unipon India Limited.” He informed that he had done
ad this at the behest of Parag Jhaveri of SEIPL.
Ajay J 1003/B-51, It was found that there was no such BO at the address and
Leuva Aryanagar Society, the residents at the address given denied knowledge of
Nr. Football such BO.
Ground, Kankaria,
Ahmedabad –
380022
Swati B/51/813 Krishna No such BO stays at this address. The BO’s neighbours do
Shah Nagar, Saijpur not know such BO.
Bogha, Naroda
Road , Ahmedabad
– 382346
Various Anuj 26, Samast The address is in the name of Mr. Gaurang M Doshi of
BO A/c. Brahmachatriya Anuj Securities, who is a sub-broker with Anagram Stock
Holders Society, Near Broking. He could not verify the other BO who used his
identified Shantivan Society, address for opening demat accounts with CBPL.
Narayannagar
Road, Paldi,
Ahmedabad.
Various D-97, Ground This address belongs to a Sub Broker – Mr. Jayesh P
BO A/c. Floor, Kamdhenu Shah, Remisier – Anagram Stock Broking Limited.
Holders Complex, Opp.
identified Sahjanand College,
Ambawadi,
Ahmedabad.
Page 94 of 252
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12.57. Physical Verification of the BOs of CBPL by SEBI and Examination of CBPL
Official
12.58. Centurion Bank is registered with SEBI as a depository participant of NSDL and
CDSL under the category of Scheduled Bank. The bank introduced the product of
IPO finance to individuals from July 2005 onwards. The bank had provided Rs. 12.49
crores to around 2956 customers in the issue of IDFC. Out of which, Centurion Bank,
Ahmedabad Branch had financed 2200 customers for around Rs. 7.00 crores. The
bank had not provided finance in the issue of Yes Bank.
12.59. For availing finance, the bank had made it mandatory for individuals to open
CDSL demat account s with CBPL for crediting the shares on allotment. CBPL had
made it mandatory for their demat clients to mention the correspondence address of
these accounts as the address of Centurion Bank, Mumbai. This was done to get the
refund amount directly to the bank. The bank then adjusted the refund against the IPO
finance availed by the customer and the balance amount was refunded to the customer
through warrant. The bank dispatched the refund warrants to the permanent addresses
of the customers which was maintained separately by CBPL.
12.60. It was seen that since the launch of IPO finance scheme in July 2005, the bank
had opened around 24000 odd CDSL demat accounts for the purpose of providing
IPO finance. On verification of data of 24000 CDSL demat accounts information
provided by the bank, it was found that there were instances of many persons sharing
common permanent addresses. The details of the addresses where 30 or more demat
clients of CBPL were sharing common addresses are given below:
Table 12.60 – Demat clients of CBPL sharing common addresses

Sl. Permanent Address No. of
No. persons
stated to have
been staying
at the said
address
1. 46 Aryanagar Society, Kankaria Road, Kankaria, 144
Ahmedabad, 380022
2. "Anuj" 26, Samast Brhahmchhatriya Society, Nr. Shantivan 105
Society, Naayannagar Road, Paldi, Ahmedabad, 380007
3. 56 Jaja Keshvni Millas, Nr Nutan Mills, Sarasput, 75
Ahmedabad, 380018
4. 57 Jajakeshav Ni Chali, Nr Nutan Mills, Saraspur, 70
Ahmedabad 380018
5. C 15 Rushika Apartment, Girdharnagar, Shahi Baug, 61
Ahmedabad, 380004
6. 23 Jajakeshwani Chali, Saraspur, Ahmedabad, 380018 60
7. 15 Paritosh Bunglows, Opp Ashwamegh -1, Ring Road 55
Satellite, Ahmedabad-380015
Page 95 of 252
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Sl. Permanent Address No. of

No. persons
stated to have
been staying
at the said
address
8. VIR-1, Gayatri Darsan Bunglow, Opp Hare Ram Flat, 49
Bhjawahar Nagar Soc, Paldi, Ahmedabad, 380007
9. 112 Ground Floor, Kamdhenu Complex, Ambawadi, 47
Ahmedabad, 380015
10. 155 Dharam Nagar Society, Part 2, Sabarmati, Ahmedabad, 42
380005
11. A 3 Sutirth Apartment, Behind Prerna Tower, Vastrapur 42
Rd., Boadkdev, Ahmedabad, 380054
12. 155 Dharam Nagar Society, Part 2. Sabarmati, Ahmedabad, 42
380005
13. 85/88 City Center, C G Road, Navrangpura, Ahmedabad, 40
380009
14. 20/237 Adarsh Nagar, Nr. Vijaynagar, Naranpura, 37
Ahmedabad, 380013
15. G 1 Shalibhadra Appartment, Opp Abu Vihar Hall, 37
Sabarmati, Ahmedabad, 380005
16. 13 Judgekeshavni Chali, Asarwa, Ahmedabad, 380016 35
17. 7 Sejal Palace, Merchant Park, Near Jain Merchant Society, 35
Paldi, Ahmedabad, 380007
18. 22 Ushadeep Society, Behind L D Engg. Hostel, Gulbai 35
Tekra, Ahmedabad, 380015
19. 1195 Devni Sheri, Mandvi Ni Pole, Manekchowk 34
Ahmedabad, 380001
20. 49 Jajakeshaavni Chali, Asarva, Ahmedabad, 380016 33
21. C 1 Shubham Flat, Opp. Abhilaxmi Flat, Labh Soc Road, 33
Vastrapur, Ahmedabad, 380015
22. 104 Honey Avenue, New Bramkhasiriya Society, 33
Narannagar Road, Paldi, Ahmedabad, 380007
23. 40, Ashwa Megh Bunglows Part-III,,B/h. Someshwar Jain 31
Temple, 132 Feet Ring Road, Satellite, Ahmedabad, 380015
24. 4 Jay National Society, Nr. Aradhana Flats, Naranpura Char 30
Rasta, Ahmedabad, 380013
25. RA 21, Maruti Raw House, Subhash Chowk, Gurukul 30
Road, Ahmedabad, 380052
Total 1235
12.61. SEBI officials conducted physical verification of some of the above addresses by
visiting these locations on February 28, 2006 and March 1, 2006 in order to verify
whether these persons were staying at said addresses as stated in the depository
system and the details of the same are given below:
Page 96 of 252
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Table 12.61 –Physical verification of demat clients of CBPL sharing common

addresses
Sl. No. Address Number Findings of Physical
of verification
persons
stated
to be
residing
in the
address
1. 46 Aryanagar Society, 144 Except for one or two persons
Kankaria Road, Kankaria, the other dematerialized
Ahmedabad, 380022 account-holders were not
residing at the said address.
2. B-46, Arya Nagar Society, 139 Except for one or two persons
Near Football ground, the other dematerialized
Kankaria, Ahmedabad account-holders were not
3. Anuj 26, Samast 89 Except for one or two persons
Brahmachhatriya Society, the other dematerialized
Near Sahntivan Society, account-holders were not
Narayannagar Road, Paldi, residing at the said address.
Ahmedabad
4. 112 Ground Floor, 47 Except for one or two persons
Kamdhenu Complex, the other dematerialized
Ambawadi Ahmedabad, account-holders were not
380015 residing at the said address.
5. VIR-1, Gayatri Darshan 46 Except for one or two persons
Bunglow, Opp. Hare Ram the other dematerialized
Flat, Behind Jawahar Nagar account-holders were not
Society, Paldi, Admedabad residing at the said address.
6. 85-88, City Centre, CG 40 Except for one or two persons
Road, Navrangpura, the other dematerialized
Ahmedabad account-holders were not
7. 20/237, Adarshnagar, 37 Except for one or two persons
Nr.Vijaynagar the other dematerialized
Naranpura, Ahmedabad, account-holders were not
8. 22 Ushadeep Society, 35 Except for one or two persons
Behind L D Engg. Hostel the other dematerialized
Gulbai Tekra, Ahmedabad, account-holders were not
9. 1195, Devni Sheri, 34 Except for one or two persons
Mandvini Pole, the other dematerialized
Manekchowk, Ahmedabad account-holders were not
Page 97 of 252
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Sl. No. Address Number Findings of Physical

of verification
persons
stated
to be
residing
in the
address
10. 104 Honey Avenue, New 34 Except for one or two persons
Brahm Kshtriya Society, the other dematerialized
Narayan Nagar Road, Paldi, account-holders were not
Ahmedabad- 380007 residing at the said address.
11. A3 Sutirth Apartment, 29 Except for one or two persons
Behind Prerna tower, the other dematerialized
Vastrapur Rd., Bodakdev, account-holders were not
Ahmedabad, 380054 residing at the said address.
12. 38 Tribhovan Market, Near 27 Except for one or two persons
Ashirwad Market, Kalupur, the other dematerialized
Ahmedabad account-holders were not
13. D-97 Kamdhenu, Complex, 25 Except for one or two persons
Gr. Floor, Opp sahajaanand the other dematerialized
college, Ambawadi, account-holders were not
Ahmedabad- 380015 residing at the said address.
14. 412 Ashwamegh Avenue, 23 Except for one or two persons
Nr. Mithakhali Circle, the other dematerialized
Navarngpura, Ahmedabad account-holders were not
12.62. Some of the persons present at the above addresses have stated that they have
used the names of relatives, friends for making multiple applications and they had
opened bank accounts in joint names and the money required for the applying in the
issue was arranged by them and the details of the same are given below:
1. Sr. no. 6 of the above Table: Address: 85-88, City Centre, CG Road,
Navrangpura, Ahmedabad: It was found that the office at the said address
belonged to a SEBI registered stock broker viz. Infinite Financial Services Ltd.
The director of the company Shri Mahesh K Shah stated that they had used about
150 names with common address at 85-88, City Centre, CG Road, Navrangpura,
Ahmedabad for making applications in various IPOs such as IDFC, Kernex,
Suzlon, ICICI etc. Shri Shah submitted that the IPO finance for the above
applications were arranged by them. He also stated that the bank account of the
clients were either opened by him or introduced by him. Analysis of some bank
statements of the clients with Apna Sahakari Bank Ltd. reveals that the accounts
Page 98 of 252
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are opened in the name of Shri Mahesh K Shah and about three names are added
to the account as joint names.
2. Sr. no. 5 of the above Table: Address VIR-1, Gayatri Darshan Bunglow,
Opp. Hare Ram Flat, Behind Jawahar Nagar Society, Paldi, Admedabad: It
was found that the address was the residence of one Shri Samir K Mehta. Shri
Mehta submitted that the 50 accounts, which belonged to his relatives and friends,
were opened for applying shares in IPOs. He also stated that bank accounts in
respect of these persons were opened by him in Nutan Nagarik Co-op Bank Ltd.
jointly with his name as the first name.
3. Sr. No. 12 of the above Table: Address 38, Tribhovan Market, Near
Ashirwad Market, Kalupur, Ahmedabad: It was found that the office at the
said address belonged to Shri Ashish Shah who is a cloth merchant. Shri Ashish
Shah and his brother Shri Vikas Shah submitted that the 27 accounts were opened
by them in the name s of their friends and relatives for the purpose of applying for
shares in the IPOs of Punj Lyod, Royal Orchid, Bannari Spinning, GSPL,
Gitanjali Gems etc. It was submitted that after the allotment, the shares were
transferred to the demat A/c of one Shri Pradip Shah (one of their relative)
maintained with the DP Khandwala Integrated Financial Services Pvt. Ltd. For
this purpose, they used to collect Delivery Instruction slips in advance from the
above mentioned Demat A/c holders for this purpose. For the margin money of
the IPO finance, they used their own funds and also arranged finance from friends
and relatives. The shares were sold through broker Khandwala Integrated
Financial Services Pvt. Ltd.
4. Sr. No. 3 of the above Table - Anuj 26, Samast Brahmachhatriya Society,
Near Sahntivan Society, Narayannagar Road, Paldi, Ahmedabad: It was
found that the address was the residence of one Shri Gaurang M Doshi, who is a
sub-broker of Anagram Stock Broking Ltd. It was informed that he had opened 89
demat accounts in CBPL in the name s of his close relatives giving his address, for
applying in various IPOs.
5. Sr. No. 11 of the above Table: A3/Sutirth Apartment, Behind Prerna tower,
Vastrapur Rd., Bodakdev, Ahmedabad, 380054: It was found that the address
was the residence of one Shri Madhukar K Patel. It was informed that he had
opened 29 demat accounts in the names of his relative, friends and employees.
The bank accounts in respect of these persons were opened by him in Naroda Co-
op Bank Ltd, Gurukul branch. He availed IPO finance from CBPL and IDBI Bank
Ltd and the margin money was paid from the accounts of his family members in
Naroda Co-op Bank Ltd, Gurukul branch. After the allotment of shares, these
shares were transferred to his demat account maintained with HDFC bank,
Navrangpura and were sold subsequently through Gaurang Doshi, a sub broker of
Anagram Stock Broking.
Page 99 of 252
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12.63. The details of the above findings of physical verification were shown to the
branch manager of CBPL, Ahmedabad branch. When asked to comment on the above
finding, he stated that they need to look into the matter and would inform SEBI after
verifying the same. However no reply has been received in this regard till date.
12.64. SEBI appointed CA firm also had carried out a physical verification of the
beneficiary owners (BOs) along with the Branch Manager of CBPL, Ahmedabad
branch during February 24 to 26, 2006. It was seen that in some cases the BOs were
not present at their permanent address. It was also found that some of the BOs were
not aware that they had availed IPO finance from CBPL. It was noticed that around
250 persons had their permanent address at Jajakeshavani Chali. During the course of
inquiry some of the residents stated that they had given their voter ID in bulk to one
Mr Maheshbhai who has his office at Sakar-1, Near Ellisbridge, Ahmedabad and the
said Maheshbhai had opened demat accounts with CBPL on their behalf. The account
holders were mostly illiterate and they were not even aware of the room number in
which they were residing. When asked to comment on the above findings, the Branch
Manager of CBPL stated that “during the course of physical verification on the said
dates, it was found that the persons did exist even though not present there at the time
of the visit. In Jajakeshavani Chali the addresses were matching as given in the
election card on sample verification which was captured in the system. In the sample
check, nearly everyone had a proof of identity and proof of residence.”
12.65. When confronted with the fact that the opening of multiple demat accounts with
the same address should have alerted the bank as to the genuineness of the individuals
who have taken IPO finance, the branch manager stated that they needed to look into
the matter and would inform after verifying the same. So far no reply has been
received from CBPL in this regard.
12.66. Summary of findings relating to CBPL DP:
12.67. From the above discussions relating to the examinations and physical verifications
relating to the demat account operations and demat clients of CBPL DP, it follows
that CBPL has failed to exercise even basic due diligence or adhere to the KYC
norms prior to the opening of demat accounts in the names of thousands of clients
who upon verification ultimately turned out to be men of straw.
12.68. Besides various glaring lapses in documentation that were noticed during the
course of random checks, it was also seen that CBPL did not care to ascertain the
genuineness of the persons in whose name it opened dematerialized accounts. The
physical verifications carried out by SEBI as well as by the CA firm revealed that
many of the dematerialized account-holders of CBPL simply did not exist. In some
cases where they did exist it was found that they were merely name- lenders who did
not have the wherewithal to open and operate demat accounts or deal in securities
market.
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12.69. CBPL Ahmedabad branch has provided IPO finance to the tune of Rs.7 crores to
about 2200 applicants in the case of IDFC issue. In the light of the findings of the
physical verifications as narrated above, it appears that many of the customers to
whom CBPL has provided IPO finance may be fictitious/benami. The glaring lapses
in the demat operations of CBPL is accentuated by the fact that it not only opened
demat accounts in the names of the non-existent/fictitious/benami entities but also
provided IPO finance to these entities without conducting basic customer due
diligence of its borrowers.
12.70. Physical verification at the addresses of the demat clients of CBPL DP by SEBI
officials as well as by the CA firm engaged by SEBI has revealed that many of the
demat clients were not residing at the addresses as per the records of CBPL. In some
cases, the addresses were located in chawls and the account holders were men of
straw whose voter ID and other identity documents were exploited by Mahesh Shah
and his associates/principals such as SEIPL for opening multiple demat accounts.
12.71. The statement of the Branch Manager of CBPL, as given in the earlier paragraphs,
are nothing but self-serving assertions since the field verification coupled with other
lapses found during inspection as well as the system of having common bank account
for making IPO applications, preponderantly imdicate a prevalent abuse.
12.72. Findings of Inspection of HDFC Bank by CA Firm
12.73. The documents relating to some of the demat accounts of HDFC bank were
scrutinised by the CA firm on a random and test check basis. While various
irregularties were noticed in respect of account holders sharing the common address -
B-2, Himalaya Society, Milind Nagar, Asalafa, Ghatkopar (W), Mumbai – 400 084,
the most glaring example is cited below
Name : Maniben Hirji Dand

Address on Voters ID Card: H.No.I-8, Kutch Castle-1, Deraser Lane
(South)
Demat Account No. : 1301240000083423
Demat A/c. activated on : 3-10-2004
E.Credit Mandate : HDFC Bank, Fort, Mumbai
Savings A/c.No. : 0601000173157
12.74. Upon scrutiny of the documents relating to the above dematerialized account-
holder of HDFC bank, it is seen that the Voters ID card produced as identity shows
age as on 01-01-1991 as 81 years which means that as on the date of opening of
demat account, the age of the BO was around 94 years. It is highly improbable that a
94 year old person would be interested in opening a demat account and transacting in
securities. This suspicion regarding the genuineness of the dematerialized account-
holder is further strengthened by the fact that Purshottam Budhwani’s bank account
held with HDFC Bank, Ghatkopar (W), Mumbai with A/c.No.0601000173157 has
Page 101 of 252

Interim Order - IPO
been used for bank verification while opening the above demat account. The said
account of Purshottam Budhwani does not contain the above account holder’s name.
12.75. The payment of charges in respect of the account has been made through HDFC
Bank Fort, Mumbai – S.B.A/c.No.0601000173113 which is the account of
Purshottam Budhwani.
12.76. Further it is seen that a common correspondence address has been mentioned in
respect of various dematerialized account s though the election card carries different
address of residence.
Instances of Identical signatures of different BOs of HDFC bank
12.77. While verifying the CDSL demat account opening forms of HDFC bank, it was
found that in some instances the signatures of various dematerialized account-holders
appeared to be identical. However the photographs as well as POI and POA attached
to the respective account opening documents were different. Instances of the same are
given below
Table 12.77- Discrepancies in photographs of demat clients of HDFC Bank

Demat A/c.No. Name & address BO Savings A/c.No.
1301240000083535 Santoshkumar Dadasaheb Kabadi, HDFC, Fort, Mumbai
(CDSL) G-2, Valmiknand Chawl, - 0601000173167
R.B. Kadam Road (N), Kurla,
Bombay
1301240000083860 Santosh Jaywant Ahire, HDFC, Fort, Mumbai
(CDSL) G-5, Janabai Mohite Chawl, - 0601000173287
Kirolgaon, Ghatkopar (W), Bombay
1301240000088761 Santosh Bhimrao Bansode, HDFC, Ghatkopar,
(CDSL) Htmt 272, Bhimanagar Htmt Area-5, Mumbai
Lal Bahadur Shastri Marg (W), - 1181000047210
Ghatkopar (W), Bombay
1301240000089254 Santosh Mahadev Prabhu, HDFC, Fort, Mumbai
(CDSL) T-7, Saiyyad Gadakori Chawl, - 0601000173098
R. B. Kadam Road (N), Kurla,
Bombay
Page 102 of 252

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12.78. It is seen that Purshottam Budhwani has 286 Savings Accounts under different
Customer ID with various joint account holders with various branches of HDFC
Bank. A list of such savings bank accounts with HDFC Bank is as below:
Table 12.78 – 286 SB accounts of Purshottam Budhwani

Sr.No. Customer ID No. Branch Name SB. Bank A/c.No.
1 478897 Fort 0602100001225

2 478897 Fort 0601000001527
3 478897 Fort 0601000001534
4 478897 Fort 0601000001551
5 478897 Fort 0601000173010
6 478897 Fort 0601000173061
7 478897 Fort 0601000173071
8 478897 Fort 0601000173088
9 478897 Fort 0601000173098
10 478897 Fort 0601000173106
11 478897 Fort 0601000173113
12 478897 Fort 0601000173123
13 478897 Fort 0601000173130
14 478897 Fort 0601000173157
15 478897 Fort 0601000173167
16 478897 Fort 0601000173174
17 478897 Fort 0601000173184
18 478897 Fort 0601000173191
19 478897 Fort 0601000173209
20 478897 Fort 0601000173219
21 478897 Fort 0601000173226
22 478897 Fort 0601000173243
23 478897 Fort 0601000173260
24 478897 Fort 0601000173270
25 478897 Fort 0601000173287
26 478897 Fort 0601000173297
27 478897 Fort 0601000173322
28 478897 Fort 0601000173339
29 478897 Fort 0601000173349
30 478897 Fort 0601000173572
31 478897 Fort 0601000173589
32 478897 Fort 0601000173599
33 478897 Fort 0601000173607
34 478897 Fort 0601000173614
35 478897 Fort 0601000173624
36 478897 Fort 0601000173631
37 478897 Fort 0601000173641
38 478897 Fort 0601000173668
39 478897 Fort 0601000173675
40 478897 Fort 0601000173685
41 478897 Fort 0601000173692
42 478897 Fort 0601000173700
43 478897 Fort 0601000173710
44 478897 Fort 0601000173727
45 478897 Fort 0601000173737
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46 478897 Fort 0601000173744

47 478897 Fort 0601000173754
48 478897 Fort 0601000173761
49 478897 Fort 0601000173771
50 478897 Fort 0601000173788
51 478897 Fort 0601000173798
52 478897 Fort 0601000173806
53 478897 Fort 0601000173813
54 478897 Fort 0601000173823
55 478897 Fort 0601000186524
56 478897 Fort 0601000186534
57 478897 Fort 0601000186541
58 478897 Fort 0601000186551
59 478897 Fort 0601000186647
60 478897 Fort 0601000186654
61 478897 Fort 0601000186664
62 478897 Fort 0601000186671
63 478897 Fort 0601000186681
64 478897 Fort 0601000186698
65 478897 Fort 0601000186706
66 478897 Fort 0601000186716
67 478897 Fort 0601000186723
68 478897 Fort 0601000186733
69 478897 Fort 0601000186740
70 478897 Fort 0601000186774
71 478897 Fort 0601000186784
72 478897 Fort 0601000186791
73 478897 Fort 0601000186802
74 478897 Fort 0601000186819
75 478897 Fort 0601000186826
76 478897 Fort 0601000186836
77 478897 Fort 0601000186843
78 478897 Fort 0601000186853
79 478897 Fort 0601000186860
80 478897 Fort 0601000186870
81 478897 Fort 0601000186887
82 478897 Fort 0601000186897
83 478897 Fort 0601000186905
84 478897 Fort 0601000186912
85 478897 Fort 0601000186922
86 478897 Fort 0601000186939
87 478897 Fort 0601000186956
88 478897 Fort 0601000186966
89 478897 Fort 0601000186973
90 478897 Fort 0601000186990
91 478897 Fort 0601000187007
92 478897 Fort 0601000187120
93 478897 Fort 0601000187672
94 478897 Fort 0601000200847
95 478897 Fort 0601000200857
96 478897 Fort 0601000201227
97 478897 Fort 0601000201234
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98 478897 Fort 0601000201244

99 478897 Fort 0601000201251
100 478897 Fort 0601000201261
101 478897 Fort 0601000201278
102 478897 Fort 0601000201288
103 478897 Fort 0601000201295
104 478897 Fort 0601000201303
105 478897 Fort 0601000201313
106 478897 Fort 0601000201320
107 478897 Fort 0601000205121
108 478897 Fort 0601000205158
109 478897 Fort 0604470118926
110 478897 Fort 0604470118943
111 478897 Fort 0604470118950
112 478897 Fort 0604470118960
113 478897 Fort 0604470118977
114 478897 Fort 0604470118987
115 478897 Fort 0604470118994
116 478897 Fort 0604470119001
117 478897 Fort 0604470126056
118 478897 Mumbai Central CPU 4953500027462
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152 478897 Ghatkopar 1181000047210
153 478897 Ghatkopar 1181000050911
154 478897 Ghatkopar 1181000050921
155 478897 Ghatkopar 1181000050938
156 478897 Ghatkopar 1181000050999
157 478897 Ghatkopar 1181000051541
158 478897 Ghatkopar 1182100001543
159 478897 Ghatkopar 1182100001550
160 478897 Ghatkopar 1182100001560
161 478897 Ghatkopar 1182100001577
162 478897 Ghatkopar 1182100001204
163 478897 Ghatkopar 1182100001214
164 478897 Ghatkopar 1182100001248
165 478897 Ghatkopar 1182100001258
166 478897 Ghatkopar 1182100001265
167 478897 Ghatkopar 1182100001275
168 478897 Ghatkopar 1182100001282
169 478897 Ghatkopar 1182100001292
170 478897 Ghatkopar 1182100001300
171 478897 Ghatkopar 1182100001351
172 478897 Ghatkopar 1182100001361
173 478897 Ghatkopar 1282100001378
174 478897 Ghatkopar 1182100001403
175 478897 Ghatkopar 1182100001430
176 478897 Ghatkopar 1182100001447
177 478897 Ghatkopar 1182100001491
178 478897 Ghatkopar 1182100001509
179 478897 Ghatkopar 1182100001516
180 478897 Ghatkopar 1182100001526
181 478897 Ghatkopar 1182100001533
182 478897 Ghatkopar 0011000029355
183 478897 Ghatkopar 0011000029372
184 478897 Ghatkopar 0011000029424
185 478897 Ghatkopar 0011000029441
186 478897 Ghatkopar 0011000029451
187 478897 Ghatkopar 0011000029468
188 478897 Ghatkopar 0011000029485
189 478897 Ghatkopar 0011000029492
190 478897 Ghatkopar 0011000029520
191 478897 Tulsiani Chamber, 0011000029537
Nariman Point
192 478897 Khar 0021000124617
193 478897 Sandoz House, Worli, 2401000042507
Mumbai
194 478897 Sandoz House, Worli, 2401000042514
Mumbai
195 478897 Vashi 4891000000143
196 478897 Vashi 4891000000150
197 478897 Chembur 0131000229003
198 3942953 Fort 0602910034323
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199 3942953 Fort 0601330013453

200 8303427 Fort 0601000207057
201 8303427 Fort 0601000207030
202 8303427 Fort 0601000207040
203 8303427 Fort 0601000207067
204 8303427 Fort 0601000207074
205 8303427 Fort 0601000207084
206 8303427 Fort 0601000207091
207 8303427 Fort 0601000207109
208 8303427 Fort 0601000207119
209 8303427 Fort 0601000207143
210 8303427 Fort 0601000207280
211 8303427 Fort 0601000207290
212 8303427 Fort 0601000207308
213 8303427 Fort 0601000207315
214 8303427 Fort 0601000207325
215 8303427 Fort 0601000207332
216 8303427 Fort 0601000207342
217 8303427 Fort 0601000207359
218 8303427 Fort 0601000207369
219 8303427 Fort 0601000207376
220 8303427 Fort 0601000207386
221 8303427 Fort 0601000207393
222 8303427 Fort 0601000207401
223 8303427 Fort 0601000207411
224 8303427 Fort 0601000207428
225 8303427 Fort 0601000207438
226 8303427 Fort 0601000207445
227 8303427 Fort 0601000207455
228 8303427 Fort 0601000207462
229 8303427 Fort 0601000207472
230 8303427 Fort 0601000207489
231 8303427 Fort 0601000207499
232 8303427 Fort 0601000207507
233 8303427 Fort 0601000207514
234 8303427 Fort 0601000207541
235 8303427 Fort 0601000207558
236 8303427 Fort 0601000207568
237 8303427 Fort 0601000207575
238 8303427 Fort 0601000207585
239 8303427 Fort 0601000207592
240 8303427 Fort 0601000207600
241 8303427 Fort 0601000207610
242 8303427 Fort 0601000207627
243 8303427 Fort 0601000207637
244 8303427 Fort 0601000207644
245 8303427 Fort 0601000207654
246 8303427 Fort 0601000207661
247 8303427 Fort 0601000207671
248 8303427 Fort 0601000207688
249 8303427 Fort 0601000207698
250 8303427 Fort 0601000207706
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251 8303427 Fort 0601000207713

252 8303427 Fort 0601000207723
253 8303427 Fort 0601000207730
254 8303427 Fort 0601000207740
255 8303427 Fort 0601000207757
256 8303427 Fort 0601000207767
257 8303427 Fort 0601000207774
258 8303427 Fort 0601000207784
259 8303427 Fort 0601000207791
260 8303427 Fort 0601000207809
261 8303427 Colaba 0851000063910
262 8303427 Colaba 0851000063927
263 8303427 Colaba 0851000063944
264 8303427 Colaba 0851000063954
265 8303427 Colaba 0851000063961
266 8303427 Colaba 0851000063971
267 8303427 Colaba 0851000063988
268 8303427 Colaba 0851000063998
269 8303427 Colaba 0851000064005
270 8303427 Colaba 0851000064012
271 8303427 Colaba 0851000064022
272 8303427 Colaba 0851000064039
273 8303427 Colaba 0851000064049
274 8303427 Colaba 0851000064056
275 8303427 Colaba 0851000064066
276 8303427 Colaba 0851000064073
277 8303427 Colaba 0851000064083
278 8303427 Colaba 0851000064090
279 8303427 Colaba 0851000064108
280 8303427 Colaba 0851000064118
281 8303427 Colaba 0851000064125
282 8303427 Colaba 0851000064135
283 8303427 Colaba 0851000064142
284 8303427 Mumbai Central 5221000000014
285 8303427 Mumbai Central 5221000000021
286 8303427 Mumbai Central 5221000000031
12.79. Out of the above 286 accounts, it is seen that the account at sl. No. 1 above having
account no. 0602100001225 held with HDFC Bank, Fort branch has been used by
Purshottam Budhwani as his principal account. The sheer number of savings
accounts of a single account holder, which is uncommon, should have alerted HDFC
Bank to keep a close watch on the activities of Purshottam Budhwani. The findings
of the detailed examination of some of the bank accounts with HDFC Bank are given
in the later part of this order.
12.80. Findings of Inspection of HDFC Bank by CDSL
12.81. During the course of verification of genuineness of demat accout holders of

various DPs, CDSL found that 787 dematerialized account- holders of HDFC Bank
DP were sharing common addresses. Hence, CDSL engaged a CA firm to conduct
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inspection of HDFC Bank DP. Some of the major findings of the said inspection are
summarised below:
12.82. In some cases the Agreement was not duly executed before account was activated
in Depository system (called CDAS). It is seen that the inspection report has
identified 471 such instances. A randomly selected sample of 10 such instances is
reproduced below:
Table 12.82– HDFC Bank - Agreements not executed before activation in depository
system
Sr. BOID BO Name Agreement CDAS Date
No. Date
1 1301240000084412 BHALERAO EKNATH 21.10.04 14.10.04
2 1301240000084427 KADAM MALTI 21.10.04 14.10.04
3 1301240000084431 RUPAVATE ROHINI 21.10.04 14.10.04
4 1301240000084446 BHALERAO JITENDRA 21.10.04 14.10.04
5 1301240000084450 RUPAWATE RAVINDRA 21.10.04 14.10.04
6 1301240000084465 KAMBLE SHIVAJI 21.10.04 14.10.04
7 1301240000084471 KAMBLE GANGUBAI 21.10.04 14.10.04
8 1301240000084484 KAMBLE UTTAM 21.10.04 14.10.04
9 1301240000084499 JOSHI MANGAL 21.10.04 14.10.04
10 1301240000084505 JADHAV VITHABAI 21.10.04 14.10.04
12.83. In some cases there are lookalike signatures for different BOs. Instances of the
same are given below:
Table 12.83 – HDFC Bank - Lookalike signatures of different BOs

Sr. No. BO ID Name of BO
1 1301240000090272 Santosh Kumar
1301240000088761 Santosh Lal
1301240000083535 Santosh Kumar
2 1301240000084013 Vajpai Rajendra
1301240000084085 Morye Rajendra
3 1301240000088780 Meena Rathod
1301240000083685 Mina Abhang
4 1301240000082512 Vivek Barbe
1301240000082599 Vivek Lad
5 1301240000083628 Vijay Sudam
1301240000084110 Vijay Jadhav
6 1301240000083731 Asha Ben
1301240000083968 Asha Mara
8 1301240000083520 V.D.Kadam
1301240000083161 Vasant Rokde
9 1301240000089123 Shalini Salunkhe
1301240000090331 Shalini Ahire
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12.84. In some cases the permanent address of the BO ID are not mentioned. All the BOs
have same correspondence address. Instances of the same are given below:
Table 12.84 – HDFC Bank - Account holders having same correspondence address
Sr. No. BOID BO Name
1 1301240000083818 LATA VISHWAS
2 1301240000083822 ANANDA PARVATI
3 1301240000083837 DATTATRAY VAYKAR
4 1301240000083841 ISHWAR PURUSHOTTAM
5 1301240000083856 REKHA BAI
6 1301240000083860 SANTOSH KUMAR
7 1301240000083881 DATTARAM BANE
8 1301240000083894 TUKARAM THORAT
9 1301240000083915 SUBHADRA BAI
10 1301240000083921 R K GHADIGAOKAR
11 1301240000083987 MITBAUKAR DATTARAM
12 1301240000083991 DICHOLKAR MANDHAR
13 1301240000084009 NADEKAR BHASKAR
14 1301240000084013 VAJPAYI RAJENDRA
15 1301240000084028 THAKRE DIGAMBER
16 1301240000084032 NADEKAR RUPALI
17 1301240000084047 NADEKAR LAXMAN
18 1301240000084051 KULWADE KAMAL
19 1301240000084066 KORADE SURESH
20 1301240000084070 CHAVHAN NAGOJI
21 1301240000084085 MORYE RAJENDRA
22 1301240000084091 DAPHALE PANDURANG
23 1301240000084163 WAGHMARE PUTALABAI
12.85. In some cases the photo identity proof is not clearly visible. Instances of the same
are given below:
Table 12.85 – HDFC Bank - Photoidentities not clear

Sr. No BOID Name
1 1301240000082546 Sunil Batwal
2 1301240000086779 Uma Devi
3 1301240000086842 Bhalinge D.N
4 1301240000087001 Kamal Patil
5 1301240000087014 Chandrabhaga Malusare
6 1301240000087556 Namdeo L. Saval
7 1301240000087637 Ananth Ghavane
8 1301240000087641 Rajendra Nirbhavane
9 1301240000087660 Nana Tekale
10 1301240000087694 Krishna Walawkar
11 1301240000087787 Dattatray Bharmal
12 1301240000087958 Suryakant Karande
13 1301240000087962 Mahadev Pangat
14 1301240000088037 Anusaya Pashte
15 1301240000088060 Daji Walavkar
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16 1301240000088723 Anand Babu

17 1301240000088776 Bhimrao Bansode
18 1301240000089119 Kailash Navale
19 1301240000089902 Mohanlal Hire
20 1301240000090726 Chahabai Bhangare
21 1301240000091871 Sitaram J. Karanjkar
22 1301240000091962 Rukmini Sakpal
23 1301240000091977 Vijay Pawar
24 1301240000091981 Ratna Navale
25 1301240000091996 K.B.Rathod
26 1301240000092003 Ravindra Kedare
27 1301240000092018 Vijaya Chavan
28 1301240000092022 Savitri Bansode
29 1301240000092037 Ravindra Gaikawad
30 1301240000092041 Vijaylal Pawar
31 1301240000092056 Kamal Ben
32 1301240000092075 Asha Bhosale
33 1301240000092121 Eknath Dada
34 1301240000092153 Shetty Babu Modliyar
35 1301240000092187 Kantilal Rathod
36 1301240000092208 Mahadev Kamble
37 1301240000092212 Chahabai Bhangare
12.86. Many of the Duplicate Accounts in Ahemadabad were closed on 31st January
2006. Instances of the same are given below:
Table 12.86 – HDFC Bank - Duplicate demat accounts closed
Sr.No Active BO ID Names Closed BO ID
1 1301240000107521 Ranjan M. Shah 1301240000093600
Lilavati S. Shah
Monika S. Shah
2 1301240000107405 Shrenik M. Shah 1301240000093518
Lagni B. Shah
Monika S. Shah
3 1301240000107502 Monika S. Shah 1301240000093581
Bhadresh S. Shah
Lagni B. Shah
4 1301240000107249 Mahendra S. Shah 1301240000092947
Shrenik M. Shah
Ranjan M. Shah
5 1301240000107516 Monika S. Shah 1301240000093556
Mahendra S. Shah
Shrenik M. Shah
6 1301240000107234 Mahendra S. Shah 1301240000093615
Monika S. Shah
Lagni B. Shah
7 1301240000107384 Lagni B. Shah 1301240000092909
Bhadresh S. Shah
Lilavati S. Shah
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8 1301240000107221 Lagni B. Shah 1301240000092991

Shrenik M. Shah
Ranjan M. Shah
9 1301240000107272 Bhadresh S. Shah 1301240000093030
Ranjan M. Shah
Mahendra S. Shah
10 1301240000107574 Ranjan M. Shah 1301240000092966
Mahendra S. Shah
Shrenik M. Shah
11 1301240000107561 Ranjan M. Shah 1301240000093621
Monika S. Shah
Bhadresh S. Shah
12 1301240000107517 Ranjan M. Shah 1301240000093064
Lagni B. Shah
Lilavati S. Shah
13 1301240000107589 Ranjan M. Shah 1301240000092795
Shrenik M. Shah
Lagni B. Shah
14 1301240000107399 Shrenik M. Shah 1301240000092985
Ranjan M. Shah
Bhadresh S. Shah
15 1301240000107411 Bhadresh S. Shah 1301240000093537
Monika S. Shah
Shrenik M. Shah
16 1301240000107287 Bhadresh S. Shah 1301240000093575
Monika S. Shah
Ranjan M. Shah
17 1301240000107215 Lagni B. Shah 1301240000093478
Ranjan M. Shah
18 1301240000107200 Lagni B. Shah 1301240000092928
Mahendra S. Shah
19 1301240000107540 Lagni B. Shah 1301240000092841
Lilavati S. Shah
Shrenik M. Shah
20 1301240000107424 Lagni B. Shah 1301240000092801
Ranjan M. Shah
Mahendra S. Shah
12.87. During the course of the inspection CDSL noticed that the funds were received
from few accounts and then the funds were transferred back to few Accounts like
0602100001225 (principal account of Purshottam Budhwani), 1182100001204,
1182100001248 and 1182100001258, as a result of which the balances in the BO’s
account at the end of a period was always close to minimum balance.
12.88. Summary Findings relating to HDFC Bank
12.89. Based on the findings of inspection of DP operations of HDFC Bank by the CA

firm engaged by SEBI as well as the firm engaged by CDSL, as detailed above, it
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emerges that HDFC bank has failed to exercise due diligence and has opened demat
accounts in the names of fictitious / benami entities. Numerous irregularities and
non-adherence to the prescribed KYC norms have been brought out by the inspection
reports. During the course of verification of genuineness of account holders done by
the depositories at the instance of SEBI, HDFC bank DP has confirmed that it has
complied with the KYC norms in respect of its demat account clients. In the light of
the findings of the inspections, the above confirmation by HDFC Bank DP appears to
be totally divorced from reality as established. 286 SB accounts with a key operator
is clearly proof enough for the plan of action to open multiple dematerialized
accounts and channelise the funds in a manner that would bury the audit trail.
12.90. With regard to the banking operations of HDFC bank it is seen that some of the
bank account transactions as examined by SEBI as well as the CA firm engaged by
SEBI are of suspicious nature and appear to be tarred with the same brush as noticed
in relation to HDFC Bank as DP. The details of these transactions have been
discussed in the later part of this order. In any case I note that RBI has also conducted
inspection of HDFC bank in the context of the irregularities noticed relating to
opening of bank accounts in fictitious / benami names and providing IPO funding. I
note that the inspection by RBI revealed violation of KYC norms for IPO
subscrription and cornering of retail portion of IPO through fictitious/benami demat
accounts and RBI has levied monetary penalty on HDFC bank. In that view, the role
of HDFC Bank, despite stated confirmation regarding compliance to KYC norms,
raises serious concerns on its compliance while suggesting it had truck with
Purshottam Budhwani in so far as it had actively lent its system to be misused by wily
operators.
12.91. Inspection of DP Motilal Oswal Securities Ltd. by a CA firm Engaged by

CDSL
12.92. During the course of verification it was found that in the case of the CDSL, the
DP Motilal Oswal Securities Ltd (MOSL) had 697 demat clients sharing common
addresses. In view of the above CDSL engaged a CA firm to conduct inspection of
the DP. Upon consideration of the findings of inspection of MOSL done by a CA
firm engaged by CDSL the following facts emerge :
a) In some cases proof of identity of second and/or third holder not obtained.
Instances of the same are given below:
Sr. No. B.O.I.D. Sr. No. B.O.I.D. Sr. No. B.O.I.D.
1 *99501 3 *99461 5 *37048
2 *20361 4 *99590
* Introduction is available.
b) In some cases proof of identity is not visible Instances of the same are given
below:
1 859761 3 120883 5 785723
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2 704731 4 895678 6 190147
c) In some cases proof of permanent address not obtained Instances of the same
are given below:
1 *22326 4 *936962 7 *142582
2 *45958 5 *46060
3 *650349 6 *22174
* Obtained during the course of audit
d) In few cases proof of corrospondence address not obtained. Instances of the

Sr. No. B.O.I.D. Sr. No. B.O.I.D.
1 142223 2 142582
e) Name of second holder and/or third holder not written in agreement. Instances
of the same are given below:
1 558989 7 704691 13 599616
2 565956 8 704731 14 781689
3 565825 9 746808 15 781674
4 565831 10 485389 16 233338
5 528907 11 741341 17 505235
6 528998 12 766377 18 586011
Rectified during the course of audit
f) In some cases corrections in various details on Account Opening Forms were

not authenticated by the B.O. Instances of the same are given below:
1 22267 9 99396 16 46060
2 155245 10 99246 17 3491
3 155298 11 141992 18 36941
4 46212 12 142257 19 46396
5 142086 13 99305 20 155298
6 224591 14 46227 21 155148
7 7475 15 7986 22 8301
8 820900
* We have been informed that most of the cases rectified during the course of audit.
g) In few cases of H.U.F. declaration of family member not obtained. Instances of

the same are given below:
1 *506623 3 *613342 5 6773
2 99776 4 8301
* Obtained during the course of aud it.
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h) In some cases Bank details is not obtained. Instances of the same are given
below:
1 155298 4 155251 7 45958
2 45939 5 142582 8 46060
3 142373 6 142660
i) In some cases supporting documents are not verified against original. Instances
for the same are given below:
Sr. No. B.O.I.D. Sr. No. B.O.I.D. Sr. No. B.O.ID.
1 142675 6 22140 11 750939
2 142681 7 109834 12 769481
3 819384 8 109931 13 890099
4 628509 9 29642 14 916160
5 628492 10 853259
j) In some cases date & place is not written in the agreement. Instances for the
1 630860 4 646349 7 670532
2 704718 5 819291 8 819350
3 819481 6 618925 9 248610
k) In some cases details & signature of two witnesses not found on agreement.
Instances for the same are given below:
1 485389 4 505220 7 561134
2 528421 5 593062 8 525302
3 505235 6 485389 9 525277
Rectified during the course of audit
l) In some cases across signature not obtained properly on photograph.

1 322046 6 142052 11 142451
2 22024 7 142694 12 42597
3 142675 8 142447 13 46362
4 45939 9 142335 14 155245
5 142641 10 46358 15 142068
m) In case of B.O.I.D. 586476 & 939034 PMS account proof of corrospondence

address taken in system is MOSL’s address although B.O. has written different
corrospondence address on Account Opening Forms.
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12.93. Summary of findings of Inspection of DP MOSL
12.94. From the above inspection findings it is seen that the DP has not exercised due
diligence while opening demat accounts. Various irregularities noticed during the
course of inspection such as failure to obtain proof of identity, failure to obtain proof
of address, not including the names of second and third holders in the DP – BO
agreement, not verifying the photocopies of documents received towards POI and
POA with the originals etc. show that the DP MOSL has not been adhering to the
KYC norms applicable to DPs as prescribed by SEBI.
12.95. Inspection of ILFS DP by CA firm engaged by CDSL
12.96. During the course of verification of genuineness of dematerialized account-

holders, CDSL found that in the case of DP Infrastructure Leasing & Financial
Services Ltd. (ILFS) 3421 demat account holders were sharing a few common
addresses. Therefore CDSL advised ILFS DP to confirm the genuineness of the
dematerialized account-holders. In reply there to ILFS DP stated that “IL&FS-DP
opens demat account on receipt of duly filled up Account Opening Form along with
necessary KYC documents as prescribed by SEBI vide their circular no.
MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004 as updated from time to time.
Instructions/Communiques received from the Depository from time to time are also
complied with. While accepting the documents, either the client visits DP office or
DP representative visits client office/residence to verify the genuineness and original
documents.”
12.97. Further to the above, CDSL engaged a CA firm to conduct special inspection of
the DP. The major findings of the inspection by the CA firm are given below:
Discrepancies In KYC Norms
1. Permanent address / POA details are not entered into CDAS system:-
It is observed that Permanent address / POA details are not entered into CDAS system in
all cases. Illustrative list of cases is reproduced here under:-
Sr.No. BO Code BO Name

1 45555 SAT NARAIN JINDAL
2 24617 SAURABH JAIN
3 30312 SANTOSH KHANDELWAL
4 24581 SANTOSH KUMARI
5 27681 SANTOSH DEVI BAGRODIA
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2. Changes made in Account opening form without Clients Authentication
It was observed that correspondence address of BOs had been changed in Account
opening form using White Ink without obtaining BO’s authentication. Illustrative list of
cases is reproduced here under:-

1 58047 BINITA DEVANG SHAH
2 63380 ASHISH POPATLAL SHAH
3 58898 DEVANG S SHAH
4 59376 SAROJBEN GUNVANTLAL SHAH
5 61588 AMITKUMAR CHOPRA
6 58051 DEVANGBHAI KANTILAL SHAH
7 58110 MUKESH BABULAL JAIN
8 53642 PRAVIN RAMANLAL SHAH
9 55831 KETANKUMAR ARVINDBHAI SHAH
10 52653 AMIT SHYAMLAL SHAH
11 60930 JASVANT R SHAH
3. No signature across the photo
It was observed that BO’s signature had not been not obtained across the photo.
Illustrative list of cases is reproduced here under:-

1 25965 ASHOK KUMAR LADDA
2 23058 ASHISH CHANDRAKUMAR SHAH
3 56259 BHANUBEN VASANTLAL SHAH
4 43995 B NAGABHUSHANAM
5 25167 ASHOK KUMAR JAIN
6 34486 BHARAT MITHABHAI PATEL
7 25395 H S SHIVASWAMY
8 36770 HANUMAN JHUNJHUNWALA
9 24218 HASMUKH SHAH
10 61588 AMITKUMAR CHOPRA
11 35481 DEVEN SHANTILAL SHAH
12 41643 HEMANT KUMAR BOHRA
13 36177 ANAND AJMERA
14 23894 H R JAYAKUMAR
15 24957 JAI SHEKHAR
16 36314 MEGHNA SHAILESH PATEL
17 29309 RAMESH MAYYA MAYYA
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4. Photographs stapled and not affixed
It was observed that BO’s photograph were stapled & not affixed as per CDSL
guidelines. Illustrative list of cases is reproduced here under:-

1 57155 ANITABEN NAYHALCHAND SHAH
2 56599 BHARAT INDRAMAL SHAH
3 24218 HASMUKH SHAH
4 35481 DEVEN SHANTILAL SHAH
5 41643 HEMANT KUMAR BOHRA
6 23894 H R JAYAKUMAR
7 27958 MANEPALLI SURYAMANIKYAM
8 38881 MUKESH K NAHAR
9 29581 PERUMALLA PURNACHANDRA RAO
10 39961 ANUP BHAIYA
11 26405 S SRINIVAS
5. BOs’ account opened with Xerox copy of NSDL account opening forms
It was observed that copy of NSDL DP account opening form was used to open an
account with CDSL instead of using CDSL account opening form. Illustrative list of
cases is reproduced here under:-

1 33138 HEMANT KUMAR BAJORIA
2 31392 PRAKASH CHAND JAIN
3 31369 PRAFULLA K KOTHARI
4 38972 N CHANDRAN
5 23495 JAGDISH PRASAD KAYAL
6 28455 BABULAL DHARIWAL
7 26253 BHANWARLAL C JAIN
8 38949 ASHOK KUMAR AGARWAL
9 28841 ASHISH NAVANITLAL SHAH
10 34355 BABURAO RAMAKANT NAIK
6. Second holder of account is IL&FS
It was observed that major accounts were opened with the IL&FS as second holder.

2 38972 N CHANDRAN
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5 37599 B S RAO
6 32461 ASHOK KUMAR LODHA
7 32795 MANJULATA MAHESHWARI
8 39562 JAGDISH KUMAR KHANNA
9 29254 JAGDISH PRASAD KABRA
10 47060 ARVIND V SHAH
7. BOs account name differ in Account opening form and system.
There is discrepancy between the name of the BO as given in the account opening form
and as entered in the depository system. Though the DP may claim that these are minor
data entry errors, it proves the lack of MAKER CHECKER concept at DP’s end.
Sr.No. BO Code Name as per CDAS Name as per form
1 51153 MEENA L SAWANT MEERA L. SAWANT
2 55859 ARVIND MANEKLAL SHAH ARUN MANEKLAL

SHAH
3 51780 BHAVIKA K PATEL BHAVIKA G. PATEL
4 60911 NAHENDRA C SHAH MAHENDRA C SHAH
5 62904 NAINABEN M SHAH NAINA S SHAH
6 50808 NAYAN P MERCHAND NAYAN P MERCHANT
7 50603 DEEP M DEDHIA DEEPA M DEDHIA
8 51265 POOMA J NEMWAMI POONAM J NEMWANI
8. Proof of address not latest / mismatch of address
It was observed that in some cases that cancelled passports had been accepted as a proof
of identity and address. Illustrative list of cases is reproduced here under:-
Sr.No. BO Code BO Name Remarks
1 51153 MEENA L SAWANT PROOF OF ADDRESS

NOT LATEST
2 26253 BHANWARLAL C JAIN MISMATCH OF
ADDRESS
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3 49906 BHARTI S SHANGHAVI MISMATCH OF

ADDRESS
4 58674 INDRAKUMAR MITHALAL PROOF OF ADDRESS
RAWAL NOT LATEST
5 61383 JAYESHKUMAR D SHAH PROOF OF ADDRESS

NOT LATEST
6 56375 HIMATLAL MOHANLAL PROOF OF ADDRESS
SHAH NOT LATEST
7 36162 BHARAT P SHAH Cancelled Passport

submitted
8 34448 SANJAY KOTHARI Cancelled Passport
submitted
9. Discrepancies in Agreement
It was observed that the space for execution dates had been left blank and dates were not
mentioned on the agreement. Illustrative list of cases is reproduced here under:-
Sr.No. BO Code BO Name Remarks
1 56599 BHARAT INDRAMAL SHAH Execution dates are left

blank and dates are not
mentioned on agreement.
2 52463 JAYANTILAL CHIMANLAL Execution dates are left
ADANI blank and dates are not
mentioned on agreement
3 36124 ARCHANA CHINUBHAI SHAH Execution dates are left
4 46242 SHARDA V JAIN Execution dates are left
5 59133 DIVYAKANT INDRAVADAN Execution dates are left
SHAH blank and dates are not
6 29936 ANILRAJ PROMOTERS & Copy of Agreement
FINCON PVT LTD. between BO & Member
not found
10. BOs signature not scanned in CDAS System
It was observed that BO’s signatures were not scanned in CDAS system. In case of joint
Accounts, signatures of first holder were not scanned. In cases where IL&FS is the
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second holder, only signature of IL&FS is scanned and signature of BO i.e. first holder is
not scanned. Illustrative list of cases is reproduced here under:-

1 45010 NEERAJ RAJKRISHNA KAPOOR
2 44999 SUSHIL P LALWANI
3 44931 S SHANKAR
4 44821 V S VENKATRAMAN
5 44625 N RAJESH
6 44868 C KRISHNACHANDER
7 45122 PRASAD VENKATESH MAHULI
8 45063 SWATI MANDAR JOSHI
11. Account Closure request form signed by POA
It was observed that in some cases that ILFS as POA holder has signed the Account
closure form on behalf of the first holder and the second holder. Illustrative list of cases is
reproduced here under:-

1 32311 FEMINABEN VINODKUMAR
2 32305 GAUTAMCHAN
3 32299 VIVEK
4 32284 SAJJAN RAJ
5 32271 BHAVESH MEHTA
6 26521 SKCS FINVEST PRIVATE LTD.
7 26439 PARADISE MERCHANTS PRIVATE LTD.
12. Proof of Address & identity not submitted
It was observed that the DP had not obtained POI and POA from the BOs. Instances of
the same are given below:-
Sr.No. BO BO Name Discrepancies

Code
1 28835 ACHARYA SEC. PVT 1. Certificate of Incorporation does not
LTD bear the Seal of Registrar of Companies
& hence not valid proof of identity.
2. “Verified with original” stamp not
affixed on Memorandum & Article of
Association
3 30601 EXIM SCRIPS 1. Certificate of Incorporation not
DEALEARS PVT LTD Submitted.
2.Memorandum & Article Of
Association not submitted.
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13. Large Number of Accounts opened on one single day
Month wise analysis of the accounts opened By ILFS DP during the period from April
2004 to January 2006 is given below:
Sr.No. Month & Year No. of Remark

Accounts
opened
1 Apr 04 50
2 May 04 32
3 June 04 31
4 July 04 38
5 Aug 04 64
6 Sept 04 64
7 Oct 04 844 Abnormally large no of Accounts
Opened
8 Nov 04 104
9 Dec 04 245
10 Jan 05 68
11 Feb 05 182
12 Mar 05 441
13 Apr 05 51
14 May 05 68
15 June 05 122
16 July 05 282
17 Aug 05 43
18 Sept 05 1662 Suzlon Energy Ltd. Issue opened on
23/9/05, closed on 29/09/05. No. of
Accounts opened on 29/09/05 – 1452 .
19 Oct 05 55
20 Nov 05 73
21 Dec 05 65
22 Jan 06 101
From the above it can be seen that large number of demat accounts were opened by ILFS
DP during the period of major IPOs. This abnormal increase in the number of
dematerialized accounts should have alerted the DP to exercise due care and diligence.
14. Similar style of BO’s signature in various account opening forms
It appears that the same persons have signed many Account opening forms which are
evident from the similarity in style of hand writing. Illustrative list of cases is reproduced
here under:-
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1 48197 GAUTAMCHAND NEMICHAND CHORADIA
2 58182 NEMICHAND BHAGWANCHAND CHORDIYA
3 60303 DAKSHA P SHAH
4 59513 SHEELA R SHAH
5 60166 SINGHI KENA RAVIKUMAR
6 59435 HARSAD P SHAH
7 59416 SUSHILA J SHAH
8 59492 HARSAD H SHAH
9 59420 MONA H SHAH
10 50048 ANITA M SHAH
11 64857 B SUBBA LAKSHMI.
12 63815 RAJENDRAKUMAR KANTILAL SHAH
13 62281 TUSHAR HIMATLAL SHAH
14 48917 DARSHAN K SHAH
15 58714 PUYUSH SHAH
15. List of Documents not provided by IL &FS
Following Account Opening forms not available with DP

1 29687 ASHOK KUMAR AGARWAL
2 35494 BHANU PRASAD R V A
3 30424 VASUDEVA MOORTHY V
4 58851 SHAH ARCHANA JIGNESHKUMAR
Following Account closure forms not available with DP.

1 44585 PALLASSANA NARAYAN DOROVSWAMY
2 47417 DHANSUKHLAL AMRITLAL PAREKH
16. Multiple agreements signed by same witness without mentioning name & address
It was observed that BOs’ witness signatures were similar in many cases and name &
address of BOs’ witness were not mentioned. Illustrative list of cases is reproduced here
under:-
Sr.No. BO Code Client Name

1 55538 ARVINDKUMAR SHESHMAL SHAH
2 62980 ARVINDKUMAR JASRAJBHAI SHAH
3 51153 MEENA L SAWANT
4 54553 MEHULKUMAR CHANDRAKANT SHAH
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5 58499 BHARATKUMAR PRATAPCHAND SHAH

6 58450 JIGNESH R SHAH
7 58412 MITTALKUMAR KANHIYALAL SHAH
8 54515 MAHENDRAKUMAR MAFATLAL SHAH
9 58391 TARUN KANHIYALAL SHAH
10 59114 SANDIPBHAI JASVANTLAL PATEL
11 54481 GAUTAMCHAND NEMICHAND JAIN
12 51552 SHASHIKANT K SHAH
13 63190 HASUMATIBEN DHIRAJLAL SHAH
17. Monthly Statements of Accounts not send to BOs
It was observed that monthly statements of Accounts are not send to any of the BO’s.

2 38972 N CHANDRAN
5 37599 B S RAO
6 32461 ASHOK KUMAR LODHA
7 32795 MANJULATA MAHESHWARI
8 39562 JAGDISH KUMAR KHANNA
9 29254 JAGDISH PRASAD KABRA
10 47060 ARVIND V SHAH
18. Summary of the findings of the inspection of ILFS DP by the CA firm engaged
by CDSL
A summary of the findings of the inspection of ILFS DP by the CA firm engaged by

CDSL is given below
Ø Maker Checker Concept not fully implemented

Ø BO’s details not entered in CDAS system
Ø PODs of Account Opening / Closing intimation not available and hence it
appears that the same ha ve not been sent to BO’s.
Ø Data Entry Errors
Ø Account closure forms signed by POA i.e. IL&FS
Ø Signature of IL&FS Officials Scanned instead of BO’s signature
Ø Monthly Statement of Accounts not sent to BOs
Ø In many demat accounts IL&FS DP is the second holder
Ø Proof of Identity & Address not obtained in few cases
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Ø All Securities Allotted in IPO transferred to other account by way of Off Market /
Inter Depository transfer
Ø Large No of Accounts Opened on last day of Closure of Big IPO ( e.g. Suzlon
Energy Ltd)
Ø Some of the Account Opening Forms & Account Closure Forms were not
available for verification.
13.0. Examination of the Role, Activities and Demat account related documents of
Karvy-DP
13.1. Karvy-DP is depository participant of National Securities Depository Limited

(NSDL) and Central Depositories Securities Ltd (CDSL). Karvy-DP is registered
with SEBI as depository participant under the category of Registrar. The registered
office of the Depository Participant is located at 21, Avenu 4, Street No 1, Banjara
Hills, Hyderabad 500 034. Karvy group of companies are engaged in various
activities relating to securities market like stock broking, registrar, DP etc.
13.2. In the cases of Yes Bank and IDFC IPOs, it was found that there were large
numbers of off market transfers from thousands of demat accounts into a few
accounts just before the listing of the scrip and subsequently sold in the market at
huge gain. The above findings in the said two cases raised concern about the
possibility of existence of fictitious / benami demat accounts with Karvy-DP which
were being used only for the purpose of IPO on both the depositories. In view of the
above, the role of depository participant and the compliance level of account opening
formalities prescribed by SEBI were examined through the scrutiny of documents
relating to the demat accounts opened with Karvy-DP, on a sample and test check
basis. Further, SEBI had inspected the operations, systems and procedures of Karvy
group at Hyderabad. Examinations of refunds made by Karvy RTI in Yes Bank and
IDFC IPOs, as narrated in detail in later paragraphs, shows that in the IPO of Yes
Bank, Karvy RTI had issued a single refund order number 400002 favouring BHOB
for Rs.53.89 crores in respect of 12,676 IPO applicants and in the IPO of IDFC,
Karvy RTI had issued single refund order no. 610003 for Rs.27.35 crores favouring
BHOB in respect of 6878 IPO applicants.. The findings emerging from the scrutiny of
documents relating to the demat accounts held with Karvy-DP, as detailed in the
succeeding paragraphs, when taken together with the findings of SEBI’s inspection of
Karvy group and the fact that Karvy RTI had made consolidated refund favouring
BhOB in respect of thousands of IPO applicants and Karvy group was directing the
movement of funds in respect of IPO applications as well as refunds, paint a dismal
picture of the standards of integrity and professional code of conduct being
maintained / followed by Kavy group in its various operations relating to securities
market as SEBI registered intermediary. The lucubrations of the lugubrious state
of affairs in the prolixity of details are apt to discredit the operations of Karvy
group in what appears to be a prime mover lead in crass deviousness.
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13.3. Arrangement between Karvy-DP and BhOB
13.4. It was found during the course of investigation that Chairman, BhOB had on
December 19, 2005 directed an internal comprehensive investigation in the IPO
financing undertaken by the Bank. The internal report submitted by the concerned
BhOB official covering the aspects relating to compliance, control and corrective
steps was obtained and the same was perused. The following insights are available
therefrom:
13.5. During the year 2003, there were many public issues / Initial Public Offer of
equity shares by premier companies in the public sector such as Maruti Udyog Ltd,
UCO Bank, Vijaya Bank and others. This is apart from, other blue chip companies
raising capital by issuance of shares in the primary market.
13.6. In order to enlarge client base, expand low cost deposit base, extend self-
liquidating short term loans and augment revenue on the personal banking area,
BhOB, in June 2003, came up with a referral with Karvy Investor Services Ltd.
(Karvy) who were to direct to BhOB their DP clients/ other individuals who were
interested in participating in public offer of shares by Maruti Udyog Ltd., which IPO
opened on June 12, 2003.
13.7. Karvy presented an idea paper and a process flow. As per the process flow, the
IPO applications would be filled in by the investor and a cheque/DD in favour of the
Bank towards the margin amount shall be deposited. The investor would need to open
the D- mat account with Karvy who would place a lien on the shares deposited into
the investor's account until the investor clears the loan with the Bank. The client
would deposit the payment instrument and bid form with the Bank along with the
account opening document and documents for the loan. The Bank would ensure that
the Savings Bank (SB) account opened by the Bank is mentioned in the relevant
column in the bid form as the Bank account to which the refund is to be sent. The
Bank would issue Pay order for the amount of the application by debiting loan
account and margin money of the respective applicants. If the investor is not allotted
shares against the IPO application, refunds are made to investor by the registrar
through the Bank and the refund order credited to the account, after liquidating the
loan. In case of allotment, the inve stor is required to bring in the required amount if
there is shortfall and fulfill the obligation with the Bank along with the interest after
which the lien is released by the Bank and informed to the DP for release of Bank's
lien on the demat account.
13.8. Thus it appears that the idea presented by Karvy to BhOB started as a practicable
business proposition but contained potential ingredients for future mischief, as it
turned out in the final denouement.
13.9. The said process flow presented by Karvy also contained a clause that there were
no chances for cases such as benami applications, multiple applications, fraudulent
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investors etc. These aspects did give solace to the Bank to venture into this segment.
A beginning was made with the financing of IPO relating to Maruti Udyog Ltd. and
an allocation of amount was advised to various branches of BhOB.
13.10. The above was communicated to the branches along with other RBI stipulations
to the effect that maximum permissible individual finance for an individual is only
upto Rs.10 lacs and the minimum margin is to be maintained at 40% (subsequently
revised to 50%).
13.11. The Branch Managers in charge of the branches were to sanction loans under their
discretionary powers called MDP i.e. Manager's Discretionary Powers by receiving,
processing, sanctioning; disbursing, servicing, monitoring and finally recovering the
loans within the overall ceiling fixed for the branch. A check list of terms and
conditions to be complied with was made available by BhOB to its individual
branches with instructions to report compliance.
13.12. While the Bank made foray into this business due to the attractive returns offered,
it subsequently transpired that there were violation of KYC norms and Customer Due
Diligence at a few of the Branches, as an overarching business ambition gave short
shrift to such checks and balances, while early successes in smaller multiple accounts
gave way to a grandiose design of building up an elaborate edifice of make-believe
with myriads of such fictitious/benami accounts in intractable moves of deceit and
depradations on confidence carefully beguiled in seemingly acceptable constructs that
made the bank to drop the guard, while key operators and financiers found the coast
clear to shore up their gameplan of opening multiple account s and making off- market
transfers amongst such accounts in a guided move for cornering the IPO shares.
13.13. As per BhOB, it was because of the presence of Karvy, the branches took it for
granted that existence of a demat account with Karvy - DP pre-supposes compliance
with the Know Your Client (KYC ) norms. This finding of the internal
investigation done by BhOB gives rise to the inference that the demat accounts
were opened first before the opening of bank accounts and providing of IPO
finance by BhOB. This inference duly supported by various other findings relating
to the operations of Karvy DP as discussed in the later paragraphs gives lie to the
possible claim of Karvy DP that it had obtained letters issued by BhOB towards proof
of identity and proof of address before opening demat accounts.
13.14. This comfort led to a blind trust on the part of the branches in particular where
IPO financing was allocated and they became the dupe of a strange delusion.. The
branches also became permissive and lax on account of Karvy's presence in the entire
portfolio. In fact, even as per the AML (Anti-Money Laundering) Policy of the
Reserve Bank of India, considerable onus is cast on the intermediaries for compliance
of KYC norms and Customer Due Diligence. It was gathered during the course of
internal investigation by BhOB that all the branches viz., Worli, Goregaon and
Ahmedabad had representatives of Karvy Consultants coming in, which led to the
Managers/Officers/staff members drawing total comfort from them. In short, the
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presence of Karvy Consultants, their representatives, their sourcing of

applications, their stamps on the Bid-cum-Application Forms, their demat
accounts - all contributed to a blasé state of easy acceptance without questioning,
besides presupposing compliance with Customer Due Diligence and KYC norms.
This needless to say, proved to be quite fatal. Also, having floated the Idea Paper,
Karvy has made it work, was in full control of its implementation in a conducive
environment wherein the Bank meekly came under the leading strings of Karvy
and in due course, a part of the manipulative assemblage and this continue d so
long as the Bank got its margins and revenues without any risk, while the risk of
exposure to scrutiny was lost sight of in the burgeoning volume of business in
several IPOs.
13.15. A careful perusal of the process flow envisaged for IPO funding as spelt out by
Karvy reveals that there was a specific assuring clause to the effect that there were no
chances for cases such as benami applications, multiple applications, fraudulent
investors etc., While it added to the comfort level of the Bank, virtually lulling them
into a sense of complacence, what actually transpired was that there were indeed
several cases of multiple applications with dubious entities mustering in at some of
the branches with ease by faking identities.
13.16. Though the Retail Banking Division (RBD) fixed exposure limit for each issue of
IPO funding at various branches, in a few cases it was observed that the branches
breached the exposure limit and no ratification was sought from Head Office of
BhOB for e.g., Worli branch exceeded exposure limit for IDFC & ILFS by Rs.42 lacs
and Rs.45.50 lacs respectively.
13.17. The Asst. General Manager, RBD, requested the then Territory Head - Mumbai to
examine the procedure followed by Ahmedabad Branch in respect of IPO funding.
The Territory Head after investigation replied that the branch was opening various
joint accounts with 25 to 30 joint holders and that on the date of loan, respective SB
account was debited for the margin money and on receipt of the refund orders the
proceeds of the instruments were credited to the respective SB account.
13.18. The Territory Head, Mumbai of BhOB informed RBD that Ahmedabad branch as
well as Worli and Goregaon branches were following different procedures while
adding that group accounts/group investors were opening accounts and sought
guidance. However, the RBD despite acknowledging did not react to the changed
procedure being followed at the branches. The routineness attributed to this mail was
indicative of laxity. A random check could have been initiated by deputing the
official handling the IPO financing to at least one of the branches, which had
considerable exposure in the segment.
13.19. As regards Ahmedabad branch, an inspection/audit on IPO financing was carried

out by the Senior Manager, Fort Branch, Mumbai and the Territory Head. The report
mentioned a few irregularities in IPO financing including opening of group accounts
of the depositors at the branch.
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13.20. The Inspection report on Worli branch of BhOB brought out the following aspects
of non-compliance:
1. When the conditions laid down by BhOB stipulated that Savings Bank account was
to be opened by producing proof of identity and photograph by following KYC norms
on customer identification, actually the individual accounts in the name s of borrowers
were not opened by the branch (barring very few).
2. Applicants were required to submit documents as detailed in individual sanction
letters such as request letter, promissory note, letter of authority etc. but it was found
that complete set of blank documents were obtained and kept as such. The documents
were obtained through share brokers and mailed to Worli branch of BhOB by courier.
On scrutiny of documents, it was observed that the address of the borrowers given in
the application forms was either blank or was bearing common address of that of the
share broker. The signatures in the documents were of the same flow and seemed to
have been executed by a single person. It is understood that the investors did not call
at the branch while opening SB accounts or while signing documents to avail the
loan.
3. Initially a BhOB guideline had stipulated individual demand loan account for each
of the borrower. Subsequently a single loan account with the title of "loan account-
IPO concerned" was permitted to be opened with individual loan account to be
opened manually in a separate register. The Worli branch of BhOB opened only one
account for the total quantum of loan for all applicants per issue without complying
with the direction to maintain individual loan account manually. Thus if the client
seeks a statement of loan account for the documents executed, no statement of
account is possible to be given as per Banker's Book of Evidence Act.
4. As per the extant guidelines, the branch is required to prepare a pay order for
demand loan plus margin amount (by debiting the demand loan account and the
applicant's Savings Bank account respectively). The branch after receiving the
application to be financed, was receiving the margin money for the entire loan
accounts through a few accounts of share brokers. Both the loan proceeds and margin
money were credited to Current Account opened for the purpose with the title such as
NTPC - IPO and pay orders were issued to the debit of such current accounts. The
pay orders along with bid forms were handed over to representative of Karvy. It
was also observed that in due course of time, the Worli branch of BhOB dispensed
with opening of SB account of the investor but nevertheless extended finance to
investors based on margin provided by a share broker.
5. As against the guidelines that when a refund order is received, the applicant's SB
account should be credited and then SB account should be debited and the amount
transferred to close the Demand Loan account, the refund orders were received in the
form of individual payment or collectively through one General Account. The refunds
were credited to the Current Account, which was already opened with the title such as
NTPC-IPO etc. Subsequently, the refunds of margin money were credited to various
accounts maintained by the share broker and other associates with other branches.
6. On September 20, 2005, Panchal brought to Worli branch, 25,094 refund
instruments for Rs.74,65,74,000 in different names. The branch sent a letter to the
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Interim Order - IPO
ICICI Bank seeking payment over the counter for 25,094 instruments and ICICI Bank
remitted the amount through Real-time Gross Settlement System (RTGS) and the
entire amount was credited to the account of Panchal, thereby exposing the Bank to
various risks and losing protection under NI Act. As per the instructions of the
account holder an amount of Rs.42,11,00,000 was remitted to Standard Chartered
Bank, Ahmedabad for credit of Panchal’s account and Rs.29.89 crores was remitted
to Karvy at Hyderabad for credit of their account with HDFC Bank.
7. In Worli branch of BhOB, large sums of money from the account of Panchal was
used as Margin money for all the accounts. On receipt of refund amount, after
liquidating the loan, the balance amount was credited back to the account of Panchal,
which was subsequently withdrawn on the same day by cheques. The above go to
show that in the transactions under examination, Roopalben Panchal was the
only genuine entity, with others being just names. Also the DP and the bank
branches knew it to be so.
8. It may be pertinent to mention that while the Manager at Ahmedabad branch of
BhOB authorized the opening of Panchal group of accounts for IPO financing, on his
transfer to Worli branch the same group of accounts was permitted to open the
accounts at Worli branch of BhOB. It appears certain that the same group of
depositors would have availed the facilities for availing IPO financing at both the
branches thereby making multiple applications for share allotments to take benefit of
retail investors quota.
13.21. SEBI obtained from BhOB Head Office, the details of IPO financing done by
BhOB pursuant to the above arrangement with Karvy. The details of IPO financing
done by BhOB in various IPOs is given below:
Table 13.21 – IPOs financed by BHOB (Rs. In Lakhs)
Bank
Indrapr Patni of
Maruti UCO Vijaya astha TV Compute Mahar
Udyog Bank Bank Gas Ltd. Today rs ashtra Biocon TCS NTPC
Funding
Branch in Lacs
Ahmedabad 261.51 125.74 80.93 902.16 1747.90 1663.59 31.51 27.72 1349.46 976.13
Goregaon 132.83 136.51 381.60 443.18 462.99 182.62 587.75 999.94
Baroda 76.73 26.40 14.40 39.12 19.44 35.88 34.37 13.62 56.59 101.04
Camac Street 1.04 1.99
Rajkot 8.64 9.01 1.61 4.01 0.32 11.11 11.90
Bangalore 14.70 10.54 34.00 2.33 6.77
Chennai Main 17.64 58.98 8.55 28.75 10.81 4.73 6.75 3.27
NA 180.86 87.78 126.73 3.97 1019.28
Visakhapatnam 0.69 9.65 1.92 0.23 0.92 2.47 4.72 2.78 0.61
Aurangabad 0.68 2.76 2.12 7.54
Hyderabad 199.28 25.83 25.06 131.04 128.16 94.76
Kukatpally
Surat
Indore 1.20
Pune
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Nasik
Chandigarh 11.66 0.60
Connaught Place
Total 552.91 321.34 318.19 1707.69 2446.92 2415.23 83.17 236.49 2040.16 3120.31
No. of
applications
relating to
suspect entities 725 1020 878 4631 8503 10386 347 1487 7605 10473
Prthv
Jay i Pyr
Jet Prakash Yes Com ami Suzlo ICI
Airways Hydro Bank SPL ILFS Sasken m. d IDFC n CI
Branch
Ahmedabad 10.63 34.80 9.69 200.90 1667.31 1638.00 5.67 6.37 850.61
Goregaon 591.33 315.84 695.05 434.63 745.42
Baroda 18.66 19.44 26.47 0.15
Camac
Street
Rajkot 2.94
Bangalore
Chennai
Main
NA 97.92 2299.89 745.50 1593.70 842.28
Visakhapatn
am 96.39 0.57
Aurangabad
Hyderabad 7.09
Kukatpally
Surat
Indore 1.00
Pune
Nasik
Chandigarh
Connaught
Place
Total 718.01 468 3038.19 635.53 2412.81 3977.12 5.67 6.37 1693.46 2.94 0.15
No. of
applications
relating to
suspect
entities 3084 1950 12778 2594 11030 16123 12 16 6898 12 1
13.22. From the above table, it is seen that the highest amount financed by BhOB was in
the IPO of Sasken (Rs.39.77 crores) followed by NTPC (Rs.31.20 crores). Further it
is noticed that in respect of many of the above IPOs that were financed by BhOB,
Roopalben Panchal has made numerous multiple applications as detailed in an earlier
paragraph. It appears that while IPO financing to the extent of 50% was provided by
BhOB to Roopalben Panchal, the balance 50% was provided by the financiers. It
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appears that the same set of financiers as identified in the SEBI orders in the cases of
Yes Bank and IDFC amy have financed Roopalben Panchal in respect of other IPOs
also. The examination of the bank records of the financiers as discussed in later
paragraphs also supports this finding. The details of off market transfers made by
Roopalben Panchal in various IPOs have already been elaborated in the earlier
paragraphs and the same also supports the above findings.
13.23. Statement of Chairman of Karvy group
13.24. The statement of Shri C Parthasarathy, Chairman, Karvy Group was recorded by
SEBI on 3rd February 2006 at his office ‘Karvy Centre’ Road No. 10, Banjara Hills,
Hyderabad 500 034. The salient questions and his replies are extracted below:
“2. Which are the companies in the Karvy Group and also give details of the businesses
they undertake?
The Karvy Group comprises of - Karvy Stock Broking Limited, Karvy Computershare
Private Limited., Karvy Commodities Broking Limited, Karvy Insurance Broking
Limited, Karvy Investor Services Limited, Karvy Global Services Ltd, Karvy Consultants
Limited, and Karvy Inc.
Karvy Computershare Pvt. Ltd. (KCPL) is a Category I Registrar to Issues and Share
Transfer Agent. This company is a 50:50 JV between KCL and Computershare of
Australia. KCPL has handled as registrars to issue for over 800 offerings comprising of
IPOs, Offer for Sale, Rights, Buybacks, open offer, New fund Offers etc.. KCPL services
over 250 corporate who comprise of the who's who of the Indian Industry and also
services various prominent AMCs as registrars to Mutual Fund. The registry business
was the first business in the capital market arena commenced by Karvy and it has over 20
years of experience in this business.
Karvy Stock Broking Ltd (KSBL) is a member of NSE, BSE and HSE and offers trading
on both the cash and derivative segments. It is also a member of the WDM segment of
the NSE. The broking services are provided across over 480 branches spread across over
300 cities and towns through an owned network of branches. We also have a few
registered sub-brokers at various locations. In the capital market segment, we have over
280000 registered customers and on any average trading day put through over 160000
trades. Over 25000 investors trade through our network everyday. In terms of the daily
turn over, we do approx Rs. 800 crs per day. In the NSE cash segment we have over 4.5%
market share. The broking business caters largely to the retail and the mass affluent
segment of investors. KSBL is a depository participant with both NSDL and CDSL and
has over 7.20 lacs account holders who are serviced through our network of branches.
Karvy also markets various equity IPOs, bonds, Mutual Funds and other financial
products. As a distributor for IPOs, Karvy has been consistently ranked among the top
distributors primarily due to the large volume of retail participation that happens through
our network. As a distributor of equity IPOs and MFs. we service over 500000 investors.
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Karvy Commodities Broking Ltd is a member of both NCDEX and MCX and offers
trading in commodities on both the exchanges through this network.
Karvy Insurance Broking Pvt Ltd. is an IRDA approved direct Insurance Broker and
markets both life and non life products specifically focusing on the retail segment.
Karvy Investor Services Ltd is a category I Merchant Banker and has been ranked
amongst the top 10 merchant bankers by PRIME for the last financial year. .
Karvy Global Services Ltd is a newly incorporated Company which will focus on the
international business process outsourcing.
Karvy Consultants Ltd (KCL), the first company in the group which used to undertake
registry services (now undertaken by KCPL), depository services (now undertaken by
KSBL) and NBFC activities (to be undertaken by KFSL). Currently, it is a quasi holding
company and also undertake some domestic BPO activities.
Karvy Financial Services Ltd (KFSl) is a company incorporated for carrying on the
business of NBFC. The company has applied for the NBFC license and awaiting
approval'.
Karvy Inc is a company incorporated in the USA and is a registered member of

NASDAQ.
The total number of employees in Karvy across all businesses and across the network of
over 480 branches number over 6300.
3. What is the position that you hold in each of these entities?
I am one of the founder promoters of the Karvy group and I am on the board of all the
companies mentioned above. Specifically, the details of my directorships in these
companies are
KCL – Chairman
KSBL – Director
KISL – Managing Director
KCPL – Managing Director
KCBL – Director
KIBL – Director
Karvy Inc – Director
Karvy Global – Director
4. Who are the other directors on the Board of various companies?
Mr. M. Yugandhar and Mr .M.S. Ramakrishna are on the board of all the companies
mentioned above. Mr. Prasad V. Potluri is a Director in KCL. Mr. Stuart Crosby, Mr.
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Chandra Balaraman and Mr. Mark Davis are nominee Directors of Computershare on the
board of KCPL. Mr. Akash Mehta and Mr. Sam Sung Cheung are nominee directors of
the Pacific Century group on the board of KSBL. Mr. GG Krishnamacharyulu is in the
board of KFSL where I am not a director.”
13.25. Inspection of Karvy-DP by SEBI
13.26. As mentioned earlier SEBI conducted a limited purpose inspection of books of

accounts, documents and other records of M/s. Karvy Stock Broking Limited,
(hereinafter referred to as “entity” or “DP” or “participant” or “KSBL”) and Karvy
Computerhare private Limited (KCPL) pursuant to the SEBI orders in the matter of
Yes Bank and IDFC. The inspection team examined the various findings relating to
Karvy group contained in the interim orders in the cases of Yes Bank and IDFC.
13.27. During January – February 2006 a team of SEBI officials carried out inspection of
Karvy DP. The inspection was carried out on the basis of books of accounts, records,
documents and various other records maintained and furnished by Karvy. The
inspection team followed the sample and random test check method for inspecting the
books of account and other records of the entity. The inspection team has verified
documents such as Account opening Forms (AOF), client agreements, issuance and
processing of Delivery Instruction Slips (DIS) IPO applications, allotment/refund
records, weeding out procedure of multiple and invalid applications, reports and
certificates related to the public issues etc. The various operations of the entity were
also discussed with the management of the entity. A summary of the findings of the
inspection conducted by SEBI is given below:
13.28. Inspection findings relating to Accounts opening- Karvy-DP
13.29. The inspection team verified the account opening module of the DPM (the
Depository Participant Module which is the record of all depository transactions) and
observed that there were mandatory fields such as name, address, bank name, account
number and signature. However, the system does not check the compliance of
documentary requirements such as identity proof; address proof, agreement date etc.
Further, it was observed that the physical account opening forms did not bear the
signature of the official verifying and approving the opening of the account.
However, there are initials of officials verifying the proof of identity and address with
the original documents.
13.30. Besides the groups identified by SEBI in its order, the inspection identified
another 147 sets of addresses on NSDL and 37 sets of addresses on CDSL having
more than 20 clients. Major observations in respect of such accounts are as under:
13.31. 798 BO account holders were having common addresses as 23, Payal Complex,
Sayaji Gunj, and Baroda. 792 out of 798 accounts were closed and the remaining 6
are under freeze. On random sample check basis of KYC’s it was observed that all the
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account holders have their bank account with TamilNad Mercantile Bank Limited.
The address proof given in all cases is a photocopy of the bank passbook. The bank
accounts were opened in the joint names of five persons with one Biren Kantilal Shah
as the first holder which was common to all the bank accounts. Photocopy of Voter
ID/ Driving license is taken as the identity proof. These accounts were mainly
opened during the month July 2005. Apparently, these accounts are connected to
Biren Kantilal Shah. Analysis of these accounts shows that the account of Shri Biren
Kantilal Shah (Client ID 15530980 with KSBL DP) served as the central point for all
other accounts which showed IPO transactions.
13.32. 300 account holders were having common addresses as C/o ABS10 Shriniketan
Society Shantinagar Vadaj Ahmedabad. All the accounts have been closed. On
random sample check basis of KYC’s it was observed that all the account holders
have their bank account with Ambavadi Branch of Vijaya Bank at, Ahmedabad. The
address proof in these accounts was through a bank letter signed by one Shri S.R.
Bhandari, Bank Manager. The POI and POA submitted by these account holders were
the banker’s certification obtained from Vijaya Bank. All these banker’s certificate
were dated mainly on November 20, 2003. The banker’s certificate however does not
have the photograph of the BO account holder. The photograph is instead pasted on
the account opening form and a stamp of Vijaya Bank on the photograph as
attestation is given. These accounts were mainly opened during the month of
November 2003. Analysis of these accounts shows that they served mainly as
conduits for IPO allotments which were finally credited to the account of Kamal P
Zhaveri (apparently related to Parag P Zhaveri) account no. 10004626.
13.33. 198 accounts were opened by Shri Parag Jhaveri and his associates and having
common address as A/3 Embassy Apartment Dr V S Road Ambawadi Ahmedabad.
193 accounts have been closed while the remaining 5 have been suspended. On
random sample check basis of KYC’s it was observed that all the account holders
have their bank account with Vijaya Bank at, Ahmedabad. Apparently these 198
accounts belong to Parag Jhaveri and his family members.
13.34. Approximately 76 accounts were having common addresses as Shop No 8 Ratan
Palace Pushpa Vihar Hotel Garodia Nagar Ghatkopar (E) Mumbai. All these accounts
have been closed by Karvy. On verification of KYC on sample basis it was noticed
that the address proof for the permanent address was given as the copy of ration card,
while for the correspondence address there was neither a proof nor any letter by the
client intimating that they want correspondence at the address other than that of
permanent address. The sample KYCs which were verified by the inspection teams
were submitted to Karvy DP in August 2004.
13.35. Approximately 185 accounts were having common addresses as Tower Kailas, A
Wing Flat A-105, Opposite Odeon Shopping Centre, Ghatkopar (East) Mumbai. All
these accounts have been closed by Karvy DP. On verification of KYC on sample
basis it was noticed that copies of ration card/driving license had been submitted
towards address proof for the permanent address. It was seen that no proof had been
submitted evidencing the correspondence address and there were no letters by the
clients intimating Karvy DP that they wanted correspondence at the address other
than the permanent address.
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13.36. Apparently majority of these above mentioned BO accounts at the depositories

were brought in by the IPO sub-brokers of the Karvy’s IPO distribution arm. Further
it was revealed that the correspondence addresses in such accounts were those of
these IPO sub-brokers.
13.37. In case of the accounts opened at the address Shop No 8 Ratan Palace Pushpa
Vihar Hotel Garodia Nagar Ghatkopar (E) Mumbai, Karvy DP had accepted for the
proof of identity the identity card issued by the railways for railway pass which is not
a valid poof of identity and hence DP had violated SEBI circular number
SMDRP/POLICY/CIR- 36/2000 dated August 4, 2000.
13.38. The observations on the account opening procedures shows that the KSBL as a
DP had not exercised proper care and not acted diligently, as warranted under
Regulation 20A of SEBI (depositories & Participant) regulations 1996, while
opening of the BO’s accounts. KSBL’s enquiry report on the area of account opening
had also emphasized on being more diligent in future.
13.39. Inspection findings relating to Delivery Instruction Slips – Karvy-DP
13.40. It was found during the inspection that the issuance of welcome Kit which
contains the DIS was decentralized and the Regional Managers were the authorized
signatories for issuing the Welcome Kit to the investors. It was noticed that the
welcome kit for IPO clients who were referred through the IPO sub-brokers of Karvy
contained only single leaf DIS booklets along with the DIS booklet requisition slip.
The correspondence addresses in respect of the accounts referred through IPO sub-
brokers were those of the IPO sub-brokers. The Welcome Kit were sent to the
correspondence address of demat clients and hence went to the IPO sub-brokers.
13.41. It was found during the course of inspection that the DIS issued to various BOs,
who had opened the accounts introduced by the sub-brokers under the IPO scheme,
were in continuous serial numbers.
13.42. It was seen that these DIS were pre-printed and contained all the material details
such as ISIN number, company name, name of the BO, quantity, execution date etc.
The verification of DIS revealed that the one person had signed on behalf of the BOs.
13.43. Some transactions were executed where the DIS was not signed by the BO but the
DP rectified the same during SEBI inspection. Further, in some cases the signature on
DIS and the signature captured in DPM did not match. Hence it appears that the
depository participant had not exercised proper care and precautions while processing
the DIS.
13.44. The above observations show that Karvy DP had not exercised proper care and
diligence, as warranted under Regulation 20A of SEBI (Depositories & Participants)
Regulations 1996 while executing the DIS.
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13.45. Inspection findings relating to consolidated payment for various accounts –

Karvy-DP
13.46. The inspection of Karvy DP revealed that the DP had accepted third party
cheques for dues payable by various BOs. In case of 225 accounts, Karvy DP had
accepted a single cheque (Cheque Number 273329 issued by HDFC Bank
Navranpura, Ahmedabad) towards their dues. Similarly in case of 1276 accounts a
single cheque (Cheque Number 699328 issued by HDFC Bank, Navrangpura,
Ahmedabad) was accepted by Karvy DP. It was further observed that the DP had
issued a single receipt in case of the amount paid on behalf of various accounts.
Similarly in various accounts of Panchal Family/group a single consolidated cheque
had been deposited by a third party on behalf of these account holders to settle the
outstanding dues. Such practices are at variance with the prescribed ones and clearly
demonstrate tha Karvy DP knew for certain that it was only dealing with Roopalben
Panchal or other key operators while purporting to deal with others on paper. Karvy
DP knew that the various BO account holde rs were fake as otherwise they would
be facing questions while accepting payment from third parties or their agents
or refunding to third party accounts without reference to the account holders,
had such account holders been genuine .
13.47. It was further observed that in certain BO’s which were having common
addresses, the account opening and transaction charges were received in cash.
Therefore, it is difficult to determine whether a single entity/person has made the
consolidated payments for such accounts having common addresses.
13.48. Inspection findings relating to Special treatment to the accounts referred by IPO
sub-brokers
13.49. The DP was encouraging the investors to open more and more BO accounts
especially for the IPO purposes. The charges for these kind of the accounts were very
minimal and further the charges on the BO’s accounts which were being referred to
Karvy by its IPO sub-brokers was very less as compared to the investor who comes
directly to open the BO account mainly under the IPO scheme.
13.50. The above findings of inspection by SEBI establishes failure on the part of Karvy
DP Ahmedabad and Mumbai branches in exercising due care and diligence in account
opening and issuance and processing of DIS. While Karvy DP seemingly complied
with the guidelines pertaining to proof of address and identity, exercise of caution
while processing the forms would have alerted the DP to the wrong doing on the part
of the demat account holders. This has facilitated Roopalben Panchal, Purshottam
Budhwani, Manojdev Seksaria and others in opening large number of DP accounts in
various names for the purpose of cornering of shares and misusing IPO allotment
process.
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13.51. The question is whether it is a failure simpliciter or an intelligent feint being in

the lead of its own gameplan of chicanery.
13.52. Verification of demat account opening documents of Karvy-DP
13.53. The above inspection findings raised a doubt as to whether Karvy DP really failed
to get alerted to the abuse of its systems by Roopalben Panchal and others or whether
there was active collusion by Karvy with its clients for abusing the IPO process and
for sharing the gains arising from the same. As may be seen from the discussions in
the following paragraphs, it appears that Karvy DP having strategised the business
plan for wrenching the IPO market, aided, abetted and actively colluded with
Roopalben Panchal and other clients by not only opening thousands of dematerialized
accounts in fictitious / benami names in gross disregard of KYC norms and providing
/ arranging IPO finance to these benami / fictitious entities but also by indulging in
fabrication of documents to cover the tracks.
13.54. SEBI guidelines relating to opening of demat accounts
13.55. SEBI vide circular dated SMDRP/Policy/CIR- 36/2000 dated August 4, 2000, has
prescribed detailed procedure to be followed by all depository participants at the time
of opening beneficiary account. The said circular prescribed the documents which can
be accepted by the DPs for the purpose of proof of identity and proof of address. In
respect of proof of identity the documents prescribed are PAN Id, Voter Id, Ration
Card, Passport etc and for proof of address the documents prescribed are Telephone
Bill, Electricity bill etc. Subsequently, vide circular ref: MRD/DoP/Dep/Cir-29/2004
dated August 24, 2004 SEBI stipulated that an identity card / document issued by
Scheduled Commercial Banks containing the applicant’s photo / address may be
accepted as POI and POA. The circular further clarified that “the aforesaid documents
are the minimum requirement for opening a BO Account. The Depository
Participants (DPs) must verify the copy of the document with the original before
accepting the same as valid. While opening a BO Account, the DPs are required to
exercise due diligence while establishing the identity of the person to ensure the
safety and integrity of the depository system.”
13.56. All depository participants are required to comply with procedures prescribed in
the said circular while opening any client account to ensure that none of the accounts
are opened without obtaining valid proof of identity and proof of address. Thus, the
primary documents essential for opening client account with depository participant
are proof of identity and proof of address. Therefore, every depository participant
should exercise utmost care, due diligence while opening beneficiary accounts in
terms of compliance of the circular to ensure that benami accounts are not opened.
All the documents submitted by the applicants should be verified with the original
documents and only upon satisfaction of the authenticity of the documents submitted
that depository participant should proceed with opening clients account.
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13.57. Approaches to opening of demat accounts by DPs
13.58. Depository Participant generally adopts any of the two approaches stated below
for processing accounting opening form.
1. Centralization of account opening

2. Decentralization of account opening.
13.59. In the centralized approach, all the account opening forms are collected at various
branches termed as “collection centres”. The collection centres receives the
applications forms and verifies for the proof of identity and address along with the
original documents and affixes the stamp “Verified with Original” on the photocopies
attached with the account opening forms. Thereafter, collection centers after
satisfying with the requirements of the account opening forms, gives
acknowledgment to the applicants across the counter.
13.60. Subsequently, the applications are entered in their back office system which is
integrated with the Head Office and all the data entered are electronically transferred
to the HO. Thereafter, physical applications forms are sent to the HO for verification
and opening of client account. HO re-verifies (Maker – Checker) the documents with
the data received through back office and then uploads / enters the data in the DPM
(Depository Participant Module) which is live terminal having direct connectivity
with the depository system. The data is uploaded in the depository system for
generation / activation of the client account number.
13.61. Thereafter, Depository Participant dispatches the account opening kit along with
the Delivery Instruction Slip (which is similar to cheque book in Bank terminology)
and delivers at the address mentioned in the account opening form or hands over
personally to account holder.
13.62. In the decentralized approach The procedure followed would be exactly similar to
centralized processing of account opening form except that all the accounts are
verified and uploaded at the DPM ((Depository Participant Module) available at the
branch itself. In other words, decentralization would mean processing of application
at branch of the depository participant which has separate DPM set up by the
depository. In order to have a DPM, permission of Depository is required. The client
account opening forms are either kept at respective branches or sent to the Head
Office.
13.63. It is observed that Karvy DP follows both decentralized and centralized

processing of account opening - Decentralized processing in respect of NSDL and
centralized processing in respect of CDSL.
13.64. The compliance of the account opening formalities prescribed by SEBI shall be
effective only when the person who receives the applications at the collection centre
is well versed with the requirements of account opening formalities. However, in
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cases where persons handling the account opening are not conversant with the DP
operations (which is possible if the personnel of broking or other activities are used
for the purpose of DP operations), there is always a possibility of laxity in
supervision, control etc with the concomitant incidence of brazen non-compliance.
Therefore, in order to make the depository participants responsible, regulations 46 of
DP regulations provided that every participant shall have adequate mechanism for the
purposes of reviewing, monitoring and evaluating the participant's internal accounting
controls and systems.
13.65. Examination of documents relating to demat accounts opened by Karvy DP
13.66. Based on the information obtained from the depositories it is seen that Karvy DP
has opened demat accounts inlarge numbers on a few days and the details are as
below:
Sr. Date of opening Address Number Number of

no account of demat demat
accounts accounts
opened in opened in
CDSL NSDL
1 February 16, 2004 C/o Karvy 754 -
April 20, 2004 803, Abhijeet I Mithakhali Circle, - 1,097
Ellisbridge, Ahmedabad (same as
Sugandh Estates)
2 August 16-17, 2004 402 403, Shashwat, Opp Gujarat College, - 2,385
Ellisbridge, Ahmedabad – 380006 (same
as Roopal Panchal)
C/o. SEIPL, G-1, Devpath Complex B/h. 4,241

Lal Bunglow, Ahmedabad. ( same as
Sugandh Estates)
October, 15 - 25, 2004 C/o. SEIPL, G-1, Devpath Complex B/h. - 5,776
Sugandh Estates)
3 July 15, 2005 Office No 403, Shashwat Bldg nr. Hotel 5,000
Kanak Ellisbridge Ahmedabad ( same as
Roopal Panchal)
4 July 16, 2005 307, Shashwat Opp Gujarat College, 5,000 -
Ellisbridge, Ahmedabad ( same as Roopal
Panchal)
406, Shashwat Opp Gujarat College, 5,000

Ellisbridge, Ahmedabad ( same as Roopal
Panchal)
5 July 19, 2005 402 403, Shashwat, Opp Gujarat College, - 1,004
Ellisbridge, Ahmedabad – 380006
( same as Roopal Panchal)
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Sr. Date of opening Address Number Number of

no account of demat demat
accounts accounts
opened in opened in
CDSL NSDL
6 July 20, 2005 402 403, Shashwat, Opp Gujarat College, - 1,532
7 July 21, 2005 402 403, Shashwat, Opp Gujarat College, - 755
3 July 22, 2005 B/2 Himalaya Asalaya Ghatkopar, W, 1,800 -

Mumbai. ( same as Purshottam
Bhudhwani)
1,025
Niketan Maheshwar, 33, Peddar Road, 5B
( same as Manoj Sekseria)
4 July 25, 2005 Niketan Maheshwar, 33, Peddar Road, 522 -
5B( same as Manoj Sekseria)
August 5, 2005 68, Samashta B Society Opp Pinakin Soc - 618
Paldi, Ahmedabad (same as Ketan Atul
bhai Doshi)
387
3, Payal Complex, Sayajigunj, Paldi,
Baroda, 3900053 ( same as Biren Kantilal
Shah)
5 August 17, 2005 B/2 Himalaya Asalaya Ghatkopar, W, 5,504 -
Mumbai. ( same as Purshottam
Bhudwani)
6 August 27, 2005 C/o. SEIPL, G-1, Devpath Complex B/h. 2,500 -
Sugandh Estates)
7 September 22, 2005 Office No 402, Shashwat Bldg, Nr. Hotel 10,000** -
Kanak Ellisbridge, Ahmedabad ( same as
Roopal Panchal)
Total 37,105 17,795
** - accounts opened but not activated. Probably were meant to be used later
In respect of the above stated accounts, it is seen that 18,347 accounts have been opened
on CDSL on only 4 days during the period of July 15, 2005 to July 22, 2005.
13.67. It is seen that many dematerialized account-holders of Karvy DP share a few

common bank accounts. A bank-wise breakup of the accounts held by the demat
clients of Karvy DP is given below:
Karvy DP clients on CDSL
Sr. Number of Karvy DP Bank account held with Number of
No clients Bank
Accounts
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1 10,716 HDFC Bank 514

2 1,075 IDBI Bank 68
3 1,720 Bharat Overseas Bank 237
Total 13,511 819
Karvy DP clients on NSDL

Sr. No Number of Karvy Name of the Bank Number of
DP clients Bank
Account
1. 271 HDFC Bank 23
2. 2048 Bharat Overseas Bank 216
3. 1239 Vijaya Bank 100
4. 1033 Tamilnadu Mercantile Bank 51
Total 4591 390
13.68. From the above it is seen that numerous demat clients of Karvy DP were sharing a
few common bank accounts.
13.69. As advised by SEBI, CDSL and NSDL submitted the account opening documents
collected by them during the course of their inspection of Karvy DP. CDSL
submitted 204 account opening forms and NSDL submitted 11 account opening
forms. Based on the scrutiny of the account opening forms it is seen that majority of
the account opening forms have only one enclosure for the purpose of proof of
identity and address i.e. letter from Bharat Overseas Bank, Vijaya Bank or HDFC
Bank with name, address, account number and photograph of the client attested by a
bank official
13.70. In order to verify the authenticity of the bank letters, SEBI officials visited Bharat
Overseas Bank Ltd, Goregaon Branch and Worli Branch on February 16, 2006 and
March 4, 2006 respectively and the statement of the branch incharge of these
branches were recorded. Shri R Srinivasan, Officiating manager, BhOB, Goregaon
Branch, in his statement to SEBI on February 13, 2006 inter alia replied as below:
“9.You are now shown the demat account opening form of Karvy consultants Ltd of
AB Mehta (271026), A lalitha Kumari (32611), Babu Nanji Patel (227029) wherein
one of the documents enclosed i.e. letter dated July 18, 2005, February 8, 2004, July
18, 2005 respectively were signed by your branch letter head. Kindly comment the
authenticity of these letters?
Ans: The letters are not issued by our branch nor there is any official in the
name of the signatory i.e. Deshmukh. Besides, it is not in our standard
letterhead. The copy of the sample letter head is submitted for information.
10. I am showing you a list of few demat account holders, holding their respective
demat accounts with DP Karvy. All these account holders have indicated that their
bank accounts are held with your branch. I am showing you the bank accounts
numbers purportedly held with your branch. Please Confirm?
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Ans: We have checked the sample accounts and found that some of them do not
exist, whereas others that exist have photographs, address and signature (that)
differs from the one shown to us. It was observed that the accounts which are
existing have been … introduced by Karvy Consultants.”
13.71. Thus it is seen that the bank official has denied having issued the letters that had
been accepted by Karvy DP towards POI and POA for opening of demat accounts.
Besides the bank official has pointed out various discrepanc ies and stated that the
stationery of their banks is totally different and also submitted a specimen copy of
their Bank letter head. It is further seen that some of the bank accounts indicated
against the demat accounts held with Karvy did not exist and in some cases where
they existed the bank accounts had been introduced by Karvy Consultants. Thus, it is
clear that the bank letters that had been accepted by Karvy DP towards POI and POA
for opening of demat accounts are fabricated documents.
13.72. It is significant that in respect of those account holders who had their bank
accounts with BhOB, the photographs on the bank account opening forms are
different from that affixed on the bank letter head that was accepted by Karvy DP for
opening demat accounts. This indicates possible fraud or misuse of photographs at
the end of either the DP or the Bank. Examination of the documents such as ration
card, election card that are enclosed to the bank account opening forms shows that the
photographs affixed on the ration card, election card which were accepted by the bank
towards POI matches with the photographs affixed on the bank account opening
forms thereby indicating that the documents with the bank are in order thereby
casting a doubt on the genuineness of the documents with Karvy DP, purported
to have been submitted by the said branch.
13.73. On March 4, 2006 SEBI recorded the statement of Shri S V Rajan, erstwhile
branch manager of BhOB, Worli branch. He inter alia stated as below:
“5. During your tenure, please state briefly how these groups (Roopalben Panchal
group, Kantibhai group, Mukesh Popat group, Parag Jhaveri group) were introduced to
your branch and which was the first group which availed IPO finance?
All the groups stated above are introduced by Karvy. In re spect of Mukesh Popat
Group, they have approx 200 savings accounts in the Worli branch, all of which
have been introduced by Karvy including the related documents for complying
KYC norms of the bank. In respect of Roopal Panchal Group, Kantibhai Group,
Parag Jhaveri Group savings accounts were already being maintained at our
Ahmedabad Branch introduced by Karvy (along with documents for compliance of
KYC norms) during my tenure as branch manager of Ahmedabad Branch.
6. Please provide details of the accounts number of these groups along with the
account opening forms available at Worli branch?
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AOF of these groups are being submitted. The details of the accounts are as follows.
Sr.no. Name of the account holder Account number

1 Roopal Panchal and Devengi Panchal 8.100.17394
2 Kantilal J. Shah 8.100.17422
3 Parag B Jhaveri and Kamal Jhaveri 8.100.19883
4 Kirit Jhaveri and Shripal Manubhai Jhaveri 8.100.19904
5 Kamal P Jhaveri and Parag Jhaveri 8.100.19890
6 Mukesh Popat 200 account (already submitted)
7. What is the process / methodology for any client who wish to avail IPO finance from
your branch and also explain the guidelines if any prescribed by your Head Office?
As per HO instructions, we are permitted to finance persons who are having Demat
accounts with Karvy. The first IPO financed by worli branch was indraprastha Gas Ltd
on December 3, 2003. For IPO Financing, we do not entertain any clients directly
other than through Karvy consultants. For each and every IPO Funding, HO issues
sanction letters; copies may be obtained from the branch.
For IPO financing, the funds are allocated for each issue branch wise by Head
Office in consultation with Karvy based on which Karvy provides the loan
applications . Thereafter after ensuring that the margin money has been provided for each
applicant in the pooling account, single loan comprising of number of applications
multiplied by the amount financed is also credited to the pooling account. The details of
individual applicants are given in the form of email or floppy by the respective groups.
The details include, serial number, share applications number, name of the party, demat
account number, no of shares applied, margin money provided, loan amount requested
and the banker cheque number. Thereafter, individual pay order are prepared to the
debit of the pool account and handed over to the representative of Karvy.
After complying with the terms and conditions of sanction, the list of applicants
financed are used to be sent to HO and to Karvy by way of email to mark our lien.
As regards refund of IPO, HO gets the refund for all branches and then transfers the
funds pertaining to individual branches with instruction to recover the loan dues from
the same.
8. Have you followed the above procedure in respect of IPO, yes Bank and IDFC Ltd.
Yes.
9. As per the instructions of HO vide letter dated June 13, 2005, it was noted that every
branch should verify that the bank details are properly mentioned in the application
form, applicants SB account with BOBL must be mentioned, address should be of
Bharat Overseas Ltd. Likewise other detailed procedures have been prescribed. Kindly
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confirm whether you have followed the same and physically verified the applications
form.?
Since the share applications are handled by Karvy and (due to) volume nature of
transactions, inadequacy of staff and considering the pressure involved in completing the
entire process within a day or so, the physical verification of individual share
applications / documents could not be carried out and relied on Karvy for
correctness of the documents provided. Further, we are also not trained and conversant
with the procedures to be followed for demat related transactions.
10. Please state whether Roopal panchal and other groups have directly approached
your branch to avail the finance. In case they have not approached, please explain how
your branch financed them. It has been observed that in respect of Yes Bank and IDFC
Ltd, your branch has sanctioned around Rs. 23 crores and Rs 7.45 croes respectively and
margin money towards the loan sanctioned was brought by Roopal Panchal, Mukesh
Popat and Jhaveri implying that loan is being availed only by these entities. However, it
was observed that you have issued 9735 individual pay orders in case of Yes Bank and
3539 individual pay order in case of IDFC. Please explain the due diligences exercised
by you while issuing so many pay orders and handed over the to representative of Karvy
especially when it was observed that you have not complied with the instructions of HO
regarding the processing of IPO financing as replied above.
The branch has not sent any request for sanctioning loan for IPO financing. Branch was
also not in the know how of basis / level of exposure the Bank was taking and the
details of branches and the basis on which allocation was being done. The branch used
to receive only the amounts of funds allocated for a particular IPO issue from the HO.
Copy of the sanction letter from HO, may be obtained from the branch from which you
will find that HO has not clearly mentioned the individual applicants to whom the
branch should lend. The practice was and which was being followed in earlier years
with which the branch was comfortable right from identifying the applicant till the
closure of the loan account from the past dealing that the branch will entertain the
applicants sponsored by Karvy purely based on the fact that the applicants were
maintaining demat accounts with them.
In this case, Roopal panchal and other applicants had individual demat account with
Karvy as per the details of applicants furnished to branch as an attachment to the email
from respective groups.
The branch after satisfying that the applicant have a demat account with Karvy
extended the IPO finance to these groups. We have obtained individual loan
application, demand promissory notes for the loan amount, lien authorization and
letter to karvy for marking lien and sale of shares to recover the outstanding if any.
However, only one loan account was opened for administrative and other reasons
mentioned elsewhere in this statement. In this way I have ensured due diligence.
11. You have replied in the above question that you have ensured that the group
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entities have opened demat account with Karvy. Please confirm how you were able to
confirm the same, when the list forwarded to you by group only contained only details
of the clients account no and the DP ID. e.g IN300094 14352341 and
1301440000040399 and does not have mention about the depository participants?
From our past experience having handled more than 5 IPO with through karvy with
average funds outlay of Rs 4 to 5 crores from the DP ID, we could know that it has
emanated from Karvy.
12. You are now shown the demat account opening form of Karvy consultants Ltd of
A Jitendra Mehta, J Rasmikant Doshi, B Haresh Doshi, B Dhomi Patel wherein one
of the documents enclosed i.e. letter dated July 18, 2005 respectively were signed by
your branch letter head. Kinldy comment on the authenticity of these letters?
The letter shown is not in our branch letter head. There is no authorized signatory in
the name of B R Deshmukh in the bank rolls.
13. You are now shown the few demat accounts, holding their respective demat
accounts with DP Karvy. All these accounts holders have indicted that their bank
accounts are held with your branch. I am showing you the bank account numbers
purportedly held with your branch. Please Confirm
I have checked the sample accounts and found the account number in the demat
account opening form are maintained with the branch ie 16088, 16628, 16569, 16590,
whereas photographs maintained in the branch records and that is affixed in the demat
account do not match.”
13.74. From the above statement of the official of BHOB it is seen that Karvy DP had
played a central role by introducing bank accounts to BHOB, opening demat accounts
and arranging IPO finance for the fictitious/benami entities. Admitedly no
independent verification was done by BHOB and it had relied on Karvy DP for this
purpose.
13.75. Based on the information obtained from BHOB Worli and Goregaon branches, it
is seen that there were various groups like Roopal panchal group, Mukesh group,
Jhaveri Group, at Worli branch which represented various clients. Similarly,
Dharmesh Mehta and Dhaval Katakia groups represent for various clients at
Goregoan branch. It appears that many of the clients represented by the above groups
are not genuine, although claimed to be ‘friends and relatives’of the key operators.
For the sake of convenience the clients have been categorized as groups. These
groups have introduced various bank accounts primarily for the purpose of availing
IPO finance. Further, all mandatory documents for the purpose of opening savings
and beneficiary accounts have also been routed through the key operators. Besides,
the margin money for the purpose of IPO finance for the clients they represent has
also been arranged by the key operators. Thus, they had control over the savings bank
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accounts and demat accounts introduced by them. A summary of savings and

beneficiary accounts of the clients represented by these groups is given below.
Sr. No No of savings No of demat

accounts ( accounts
approx) (approx)
Mukesh Group ( BHOB Worli Branch ) 180 400
Dharmesh Katakia Group (BHOB Goregaon Branch) 175 675
Dharmesh Mehta Group (BHOB Goregaon Branch) 400 875
Total 755 1,950
13.76. In order to ascertain whether Karvy had indeed introduced the savings account to
BHOB Worli and Goregaon branches, SEBI recorded the statement of Shri Avinish
Shukla, Deputy General Manager, Karvy Stock Broking Ltd, Mumbai office on
March 7, 2006. He inter alia stated as below:
“4. Please state whether you have dealt with Bharat Overseas Bank ltd,
Goregaon Branch and Worli Branch in the Past. If so reasons thereof?
Ans: Yes, we have de alt with BHOB Goregaon and Worli Branch. Since all
the clients were having demat accounts with Karvy, we were told to
introduce savings accounts for the said clients of sub brokers. Therefore, we
introduced all the saving bank accounts with the Karvy Stock Broking Pvt.
Ltd, stamp, as per bank instructions.”
13.77. Thus it is clear that Karvy DP had indeed introduced the savings account of its
demat clients to BHOB Worli and Goregaon branches.
13.78. From the above statement of the official of Karvy DP, it is seen that there was a
tweak in the sequence of account opening. Normally the opening of bank account
precedes the opening of demat accounts where the bank has provided letters towards
POI and POA for opening demat accounts. The official Karvy DP has claimed that
Karvy introduced the savings bank account since the demat accounts existed with
them. This leads to the inference that the bank accounts did not exist at the time of
opening of demat accounts. Thus it follows that the bank letters purportedly accepted
by Karvy DP towards POI and POA for opening demat accounts could not have
existed at the time of opening of demat accounts. This twist in the sequencing carries
its ominous portents regarding the role of Karvy DP in the thickening plot.
13.79. SEBI also examined some of the major clients who had been given IPO finance
by BhOB Worli and Goregaon branches. Accordingly SEBI on March 27, 2006
recorded the statement of Shri Dharmesh B Mehta who alongwith his ‘friends and
relatives’ had 400 bank accounts with BhOB Goregaon branch and 875 demat
account with Karvy DP. He inter alia stated as below:
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“4. Please provide the list of documents given by you for the purpose of opening
th above said bank accounts and also comment your relationship with Karvy.
In 2003-04, being a sub-broker, Karvy marketing people approached me and

my friends for opening demat account with them. They have also informed
that they can arrange IPO finance with some of the banks know to them.
Keeping our future requirement of IPO applications and IPO finance, we
have given them given all document with respect to opening demat account
and bank account with BHOB to Karvy’s personnel and bank personnel.
Some of the bank account opening forms were directly delivered by some of
our group members to the BHOB Goregaon branch. The Karvy Personnel
got opened for all of us demat account with NSDL / CDSL. Bank account
with BHOB Goregaon Branch were opened simultaneously. In 2005, we used
these accounts for the purpose of making IPO application the issue of Yes
Bank and IDFC.
These savings accounts / current accounts have been opened mainly for the
purpose of availing finance for IPO applications. As regards the documents
for opening these savings / current accounts such as PAN card copy, Ration
Card copy and photographs required for the purpose of opening accounts
have been submitted to Karvy and also to BhOB.
………………….
6. You are now shown the demat account form of some of your friends / relatives
stated above bearing account no. 1301440000030821 (Ahire Y L),
1301440000032911 (Ahire Yogesh Kumar L), 1301440000032611 (A Lalitha
Kumari), 1301440000040327 (A A Shiek) of CDSL. Please confirm whether the
phtograph attached in the applications and the name stated in the application are
of the same person. Further, please confirm whether you have submitted the bank
certificate enclosed with the said demat application forms.
I have seen the above stated demat application forms and to the best of my
knowledge and belief that the photographs attached in the demat account
opening forms are not of the persons (who are my relatives / friends) named
in the application. The actual photographs of the persons mentioned in the
demat application form are available in the bank account opening form with
BHOB Goregaon (which was submitted by us). As regards the bank
certificate of BHOB enclosed along with the demat opening forms are not
submitted by us while opening of the demat account. Further, no such
request for issue of such letters shown to me from the BHOB Goregaon
branch was made by us at any point of time.
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……………
8. What is your relationship with M/S. Welvet Financial Advisors Ltd. and
transactions with them.
M/s. Welvet Financial Advisors Ltd. have approached us for lending us

money in subscribing for IPO. They have lent me Rs.78 lakhs for the
purpose of making margin for retail application to my group. After getting
allotment of IDFC, we have transferred 43,000 equity shares of IDFC as per
their instruction and balance amount of Rs.64 lakhs returned by cheque
payment.
……….
11. Please confirm whether you are registrered primary market sub-broker of
Karvy. Do you have any other relationship with Karvy in secondary market
operations.
Yes, one of us are registered with Karvy as sub broker for the purpose of
primary market issues.”
13.80. The above statements of Shri Dharmesh B Mehta further confirms that the bank
letters accepted by Karvy DP towards POI and POA for opening demat accounts were
fabricated and were apparently not submitted by the clients.
13.81. Also Shri Dharmesh Mehta has stated that the photographs on the bank letters are
not that of the persons named in the letters. This is not possible if the bank had indeed
introduced the demat clients.
13.82. Shri Dharmesh Mehta has also stated that Karvy personnel approached him for
opeing demat accounts and bank accounts and the personnel took the relevant
documents from him. This leads to the possible inference that the documents may
have been fabricated by the DP itself after opening of demat account merely to
show seeming compliance with the KYC requirements prescribed by SEBI. The
examinations in the later part of the order revealed that this was indeed the case.
13.83. Also it may be noted that in the earlier part of this order Dharmesh Mehta
and Welvet Financial Advisers Pvt. Ltd. have been identified as one of the
master account holders and a financier of the master account holders
respectively.
13.84. The statement of Dhaval Katakia who represents 175 bank accounts with BHOB,
Goregaon Branch and 675 demat accounts with Karvy DP was recorded by SEBI on
March 27, 2006. He inter alia stated as below:
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“4. Please provide the list of documents given by you for the purpose of
opening the above said bank accounts and also comment your relationship
with Karvy.
In 2004, Karvy marketing people approached me and my friends for opening

demat account with them. They have also informed that they can arrange IPO
finance with some of the banks know to them. Keeping our future requirement of
IPO applications and IPO finance, we have given them given all document with
respect to opening demat account and bank account with BHOB to Karvy’s
personnel and bank personnel. Some of the bank account opening forms were
directly delivered by some of our group members to the BHOB Goregaon branch.
The Karvy Personnel got opened for all of us demat account with NSDL / CDSL.
Bank account with BHOB Goregaon Branch. In 2005, we used these accounts for
the purpose of making IPO application the issue of Yes Bank and IDFC. In order
to reduce our cost of applications we had requested Karvy to make one of our
group members as a sub-broker and take the brokerage for the allotment made to
our group.
These saving accounts / current accounts have been opened mainly for the
purpose of making IPO applications. As regards the documents for openig these
savings / current accounts such as PAN card copy, Ration Card copy and
photographs required for the purpose of opening accounts have been submitted to
Karvy and also to BHOB.
……………
6. You are now show the demat account form of some of your friends /
relatives stated above bearing account no. 1301440000507106 (Hari Jaiswar),
1301440000036502 (Dange V D), 130440000040399 (J R Rathod),
1301440000271877 (B Z Khan), 1301440000506267 (Hari G Jaiswar)
1301440000271026 (A M Ghosaliya) of CDSL. Please confirm whether the
photograph attached in the applications and the name stated in the
applications are of the same person. Further, please confirm whether you
have submitted the bank certificate enclosed with the said demat application
forms.
I have seen the above stated demat application forms and to the best of my
knowledge and belief that the photographs attached in the demat account opening
form are not of the persons (who are my relatives / friend) named in the
application. The actua l photographs of the persons mentioned in the demat
application form are available in the bank account opening form with BHOB
Goregaon (which was submitted by us ). As regards the bank certificate of
BHOB enclosed along with the demat opening forms are not submitted by us
while opening of the demat account. Further, no such request for issue of such
letters shown to me from the BHOB Goregaon branch was made by us at any
point of time.”
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13.85. Thus it is seen that the statement of Shri Dhaval Katakia is similar to the claims
made by Shri Dharmesh Mehta and confirms the complicity of Karvy in the entire
scheme of things.
13.86. SEBI recorded the statement of Alpesh Lakhani who represents for 180 banks
accounts with BHOB Worli branch and 400 demat accounts with Karvy DP. He inter
alia was stated under.
“6: You are now show the demat account form of some of your friends /
relatives stated above bearing account no 1301440000243387 ( B Haresh
Doshi), 1301440000243431 (A Jitendra Mehta), 1301440000244021 (J
Rasmikant Doshi), 1301440000243923 (B Danji Patel), 13014400000246485 (
B Chimanlal Sanghavi), 13014400000246029 ( B S Mandaliya),
13014400006245992 ( A Hiralal Mehta), 1301440000244454 ( J Pravin
Chandra Shah), 1301440000244868 ( J Sohanlal Jain), 1301440000244129 ( C
Chimanlal Lakhani) of CDSL. Please confirm whether the photograph
affixed in the demat applications and the name stated in the application are
of the same person and also comment on the bank certificate issued by
BHOB Worli which is enclosed with the above stated demat application
forms?
I have seen the above stated demat application form and to the best of my
knowledge and belief that the photograph’s attached are not of the persons (who
are my relatives) named in the application. The actual Photographs of the persons
mentioned in the application form are available in the bank account opening form
with BHOB worli (which was submitted by us)
As regards the bank certificate of BHOB enclosed to the demat opening forms are
not submitted by us while opening the demat account nor any such request for
issue of such letters from BHOB Worli was made by us at any point of time.”
13.87. From the above, it is apparent that bank letters accepted by Karvy DP for POI and
POA were not submitted by the clients at the time of opening the demat account with
Karvy DP. Further, the Bank has also denied having issued any such letter. Therefore,
in light of the denial by the clients regarding the submission of bank letter as
proof of identity / address while opening demat accounts and also the denial by
the bank of having issued such letter, the most likely inference is that the bank
letters may have been fabricated at the end of the DP.
13.88. In order to further ascertain the factual position in what was becoming a tangled
skein, the documents relating to various demat accounts of Karvy DP wherein bank
letters had been accepted as POI and POA were taken up for further scrutiny.
13.89. Based on the contents of the bank letters accepted by Karvy DP towards POI and
POA, it is seen that these bank letters contained details such as name of the account
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holder, bank account number, address of the account holder etc on the Bank letter
head and the letters were purportedly signed by a bank official. The details of the
name and address as mentioned in the bank letter heads were compared with the data
as available on the bank saving account opening form of clients wherever such details
were submitted by the bank. It is seen that the address as mentioned in the bank
application does not exactly match with the details in the bank letter. For example the
saving bank account number 23.100.66707 is held on the name of Harilal Bhai G
Jaiswar and address available on bank records, is Kailash Plaza Bldg, No 126, Near
Kar Ke Ras Hotel Above ICICI Bank, Ghatkopar (e), Mumbai – 400 075. However,
the name as mentioned in the bank letter dated August 26, 2005 enclosed with the
demat account opening form (1301440000507106) is HARI JAISWAR and the
address that is mentioned is PAHELA MALA, ROOM NO.10/5 WING-
A,RAMNARAYAN NARKAR ROAD GHATKOPAR EAST MUMBAI 400075.
The savings bank account number of the demat account holder is mentioned as
2310066707. Thus, it is seen that the address of the applicant as per bank records is
different from what is mentioned on the bank letter. There are several such instances
of mismatch.
13.90. Normally when a customer requests a bank to issue verification letter the bank
would issue the letter with details of name, address and other details as per their
records. However, as mentioned above the address of the client on the forged bank
letterhead and the address as per bank records are different. This further shows that
the letter accepted by Karvy DP for POI and POA were not issued by the bank.
13.91. With a view to further exploring the arcane details in the esoterics of Karvy’s
elaborate design effectively camouflaged to pass muster, SEBI compared the
details as mentioned in the fabricated bank letter with the data as appearing in
the depository system. It is seen that all the details like name , address and bank
account number in the fabricated bank letter exactly matches with the data
available on the depository system, including minutiae like capital letter, space,
comma, full stop etc. For instance the name of a client as appearing in depository
system is HARI JAISWAR. This exactly matches with the name appearing on the
bank letter. It is significant to note that even the full stop which is appearing after
Jaiswar also matches and name is also in capital letter just as entered in the depository
system. Fur ther the address also matches including comma, space etc. For example
one “ROOM NO.10/5 WING-A,RAMNARAYAN” appearing in the depository
system has full stop after NO with no space; similarly there is no space between
WING-A,RAMNARAYAN. The address mentioned in the bank letter is also
exactly in the same format, with the same characteristics in terms of minutiae
making it appear like a carbon copy.
13.92. From the above it can safely be concluded that the bank letter has been generated
after the demat account has been opened because unless the data is entered in the
depository system, it would not have been possible to download the said details for
generating the fabricated documents containing details of account holders that
matches exactly with that of the depository system in a carbon copy fashion. The said
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observation is corroborated by the fact that Karvy DP had downloaded the details of
the BO holders from the depository (which would have served as the basis for
generation of the fabricated documents) many times around the time when large
number of demat accounts were opened by Karvy DP and the details thereof are
discussed in the succeeding paragraphs.
Downloading of data from the depository system by Karvy DP
13.93. In NSDL the data resides in the nodes / terminals of DPs, and hence is directly
accessible to the DPs. In the depository system of CDSL, wherein the depository data
is stored in a central server maintained by CDSL, there is a provision for Depository
Participant to set up request to download the data of BO holders for any specified
period. The report thus set up is called DAP5 report. It has been observed that Karvy
has set up this report 5 times in the month of July 2005, which is the same period
when maximum number of accounts were opened. The details of the CDSL demat
accounts opened by Karvy DP during July 2005 where BHOB is the banker is as
follows.
TABLE 13.93 – Karvy DP CDSL demat accounts with BHOB as Banker
Name of Bank Bank Address Date of account No of account

(2) opening opened
Bharat Overseas Bank Ltd Ahmedabad (AMB) 15.07.05 5,000
Bharat Overseas Bank Ltd Ahmedabad (AMB) 16.07.05 10,000
Bharat Overseas Bank Ltd Goregaon (GON) 22.07.05 1050
Bharat Overseas Bank Ltd Worli (WLI) 22.07.05 448
Bharat Overseas Bank Ltd Ahmedabad (AMB) 22.07.05 519
Total 17,017
13.94. From the above, it is seen that Karvy has opened 17,017 accounts in the month of
July 2005.
13.95. The details of the report DAP5 set up by Karvy DP during the above period, as
provided by CDSL, is given below.
Report Set up date Starting period End period

Name
DAP5 July 23, 2005 July 1, 2005 July 23, 2005
DAP5 July 28, 2005 January 1, 1995 July 28, 2005
13.96. It may mentioned that mere downloading of data from the depository system,
which can also be for routine purposes, cannot be faulted. However in view of the
existence of a host of material circumstances corroborating that such fake letters have
not emanated either from the bank or the parties, and approvingly accepted by Karvy
DP, it stands to reason that Karvy DP has downloaded the account holder data from
the depository system to facilitate fabrication of bank letters. This view is supported
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by the fact that the Bank address as appearing on the bank letter head exactly matches
with the data ava ilable on the depository system, including several of the minutiae.
13.97. As per the existing system in CDSL, the depository system automatically picks up
the address of the bank based on the MICR details entered in depository system by
the depository participant. Thus this information is not entered by the DP. It is seen
that in respect of various BO IDs such as 1301440000227086, 1301440000247121,
1301440000271877, 1301440000040327, 1301440000271026, 1301440000040399,
1301440000032911, 1301440000030821, 1301440000503901, 1301440000507106,
1301440000506267, 1301440000036502, 1301440000227029, 1301440000271653,
1301440000032611 and numerous other BO IDs which have been detailed in later
paragraphs, the address of the Bank as mentioned in the forged letterhead matches
exactly with that in the depository system as picked up from the MICR details which
confirms that the data of bank address given in the forged letterhead has been picked
up from the depository system. Further, the perfect matching of the bank details
including minutiae between that in the depository system and as mentioned in
the forged bank letter shows that the bank letters could not have existed at the
time of opening of demat accounts as the details in the depository system
including the bank MICR details can be picked up only after the opening of
demat account. This further shows that the bank letters were an after thought
for documenting the DP account and make a false appearance of having
complied with the KYC norms prescribed by SEBI for opening of demat
accounts.
13.98. Since there is exact matching of data mentioned in the fabricated letter including
comma and spelling mistake etc, with the data in the depository system including the
address of the bank, it can be concluded that the fabrication has happened at the end
of depository participant for the reason that the data entered in the depository system
is available only to the depository or the depository participant. In my view, the
depositories in the process have allowed themselves to be used in active
manipulation of data by the DP and none of their inspections on DPs have shed
any light on the same, thereby making them a party to the whole episode.
Further, the depositories and DPs share an agent – principal relationship and
the depositories cannot escape responsibility for the acts of the DPs .
13.99. Based on the scrutiny of the 25 sample demat accounts which have saving
accounts of BHOB Goregaon (15) and Worli branch (10), it was observed that all of
the demat accout opening forms had bank letters (which is fraudulent) as enclosure
and also had photographs different to the photographs on the saving account. Thus, it
appears that the various demat accounts opened with bank letters from BHOB, Worli
and Goregaon as proof of identity and address would have photographs different from
the photographs affixed on the savings accounts. The details of the no. of savings
accounts of BHOB Goregaon and Worli branch, which have been used for the
purpose of opening multiple demat accounts are mentioned in the table below.
Remarks No of saving account No of demat account approx

NSDL CDSL
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Goregaon Branch 1431 1301 2462

Worli Branch 206 600 449
Total 1637 1901 2911
13.100. Since the photographs on the fabricated bank letter heads is different from
the photographs on the bank’s savings account documents, it appears that the demat
account opening forms originally did not carry photographs of the clients when the
accounts were opened by Karvy DP. Subsequently in order to seemingly comply
with the KYC norms laid down by SEBI, it appears that the bank letter heads
were forged and the photographs were affixed on both the bank letters and the
demat application forms. Thus, it appears that Karvy DP has done post-event
documentation as an afterthought, perhaps in the wake of SEBI enquiry, to set
the records straight for a possible scrutiny.
13.101. While Karvy DP can possibly claim that its clients had submitted the
forged bank letters at the time of opening of the demat accounts, such claim cannot be
accepted since the demat client information (including the address of the bank as per
MICR data) mentioned in the fabricated bank letters matches exactly with the data in
the depository system while the data in the depository system is available only to the
DP and the depository. It follows that the fabrication could have happened only
at the end of the DP with the connivance of depository.
13.102. It appears that Karvy DP in connivance with Roopal Panchal and other
groups had managed to arrange the photographs which was affixed on the demat
application form and the forged bank letter. In this context it is noted that as per press
release of CBI on Febraury 22, 2006, “CBI has found that the main accused persons
created fictitious accounts by procuring photographs of a large numer of people. For
example, Ms. Roopalben Panchal had inserted advertisements offering to photograph
people free of cost. She used these photographs and false names to open bank
accounts and D-mat accounts.”
13.103. In this context I note that a Karvy group company is also a registrar (RTI)
located at the same address as that of Karvy DP. RTIs normally have the necessary
software / infrastructure to cull out information from any database and also print the
letters as registrar employs the same technique to weed-out invalid applications in
IPOs and to print refund orders. Further it is seen that Karvy has given special
treatment / privileges to the these groups as could be observed from the issue of loose
slips to Roopal Panchal / Purshottam Bhudwani / Manoj Seksaria on behalf of the
various clients they represent thereby facilitating the execution of the off market
transfers from the demat accounts of these benami / fictitious entities to the master
account holders. Further as detailed in later paragraphs, as per the bank account
statements, there is a credit of Rs 1.19 crores from the account of Sugandh
Estates and Rs 29 crores from the account of Roopal Panchal into the account of
Karvy DP. Also as detailed in later paragraphs, in respect of various fictitious /
benami account holders who had their bank accounts with BHOB Worli and
Goregaon, based on the bank transaction statement, it appears that margin funding
was done by Karvy, for certain clients.
Page 155 of 252

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13.104. Karvy DP clients - BHOB GOREGAON BRANCH
13.105. It is seen that Karvy DP has introduced about 1430 savings accounts with
BhOB Goregaon branch. A random sample of 15 demat account opening forms where
the dematerialized account-holders had their bank accounts with BHOB Goregoan
were taken up for detailed scrutiny and the following observations emerge therefrom:
Sr. Bo id Name of the BO Bank account Remarks

No
1 1301440000227086 Babu Patel 2310077284 Saving account does not exist
with bank.
Demat account opened based on

the letter from BHOB with
photograph affixed and signed
by the bank official (which is
fraudulent)
Careful Examination of the

contents of the letter of BHOB
enclosed indicates that the
contents of the letter exactly
matches with the data available
on the depositories including
comma, full stop, spelling
mistake, small letter / capital
letter.
2 1301440000247121 B H Lakhani 2310063265 Photograph affixed on bank

account and demat account are
different.
Signatures on both bank and

demat account are same.

fraudulent)
Saving account exists and was

introduced by Karvy Stock
Broking

Page 156 of 252

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No
letter.
3 1301440000271877 B Z Khan 2310145694 Saving account does not exist
with bank.

fraudulent)

letter.
4 1301440000040327 A A Sheikh 2310067158 Saving account does not exist

with bank.

fraudulent)

letter.
5 1301440000271026 A Ghosaliya 2310046135 Saving account does not exist

with bank.

photograph affixe d and signed
fraudulent)

Page 157 of 252

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No
letter.
6 1301440000040399 J R Rathod 1000066662 Photograph affixed on bank

different.


fraudulent

Broking

letter.
7 1301440000032911 Ahire 23 49268 Saving account does not exist
YogeshKumar with bank.

fraudulent)

letter.
8 1301440000030821 Ahire Y L 59563 Photograph affixed on bank

different.
Page 158 of 252

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No


fraudulent

Broking

letter.
9 1301440000503901 A Prabhudas 1021002220 Saving account does not exist

with bank.

fraudulent)

letter.
10 1301440000507106 Hari Jiswar 2310066707 Photograph affixed on bank

different.


Page 159 of 252

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No
fraudulent

Broking

letter.
11 1301440000506267 Hari G Jaiswar 2310066707 Photograph affixed on bank

different.


fraudulent

Broking

letter.
12 1301440000036502 Dange V D 65062 Photograph affixed on bank

different.

Demat account opened bas ed on
Page 160 of 252

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No
fraudulent

Broking

letter.
13 1301440000227029 Babu Nanji Patel 2310077284 Saving account does not exist
with bank.

fraudulent)

letter.
14 1301440000271653 A B Mehta 2310145438 Saving account does not exist

with bank.

fraudulent)

Page 161 of 252

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No
letter.
15 1301440000032611 A Lalitha Kumari 2329658 Saving account does not exist

with bank.

fraudulent)

letter.
13.106. Karvy DP clients - BHOB WORLI BRANCH
13.107. Karvy DP had introduced about 200 saving accounts to BHOB Worli
Branch A random sample of 10 demat account opening forms where the bank details
were mentioned as BHOB Worli were taken up for detailed scrutiny and the
observations thereon are given below:
Sr. Bo id Name of the BO Bank acct Remarks

No no
1 1301440000243387 B Haresh Doshi 16628 Photographs and signatures on saving
account and demat account differs.
Saving account exists and was introduced

by Karvy Stock Broking.
Demat account opened based on the letter

from BHOB with photograph affixed and
signed by the bank official (which is
fraudulent
Careful Examination of the contents of

the letter of BHOB enclosed indicates
that the contents of the letter exactly
matches with the data available on the
depositories including comma, full stop,
spelling mistake, small letter / capital
letter.
2 1301440000243431 A Jitendra Mehta 16569 Photographs affixed on saving account
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and demat account differs.
Signatures put across the photographs on

demat account and the signature put on
savings account are same.


fraudulent

letter.
3 1301440000245992 A Hiralal Mehta 16498 Saving account does not exist with bank.

fraudulent)

letter.
4 1301440000244129 A Chimanlal Lakhani 16642 Saving account does not exist with
BHOB.

fraudulent)

letter.
5 1301440000246485 B Chimanlal Sanghvi 17031 Photographs and signature on saving


Page 163 of 252

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fraudulent

letter.
6 1301440000243923 B Dhanji Patel 16088 Photographs and signatures on saving


fraudulent

letter.
7 1301440006244021 J Rashmikant Doshi 16590 Photographs affixed on saving account
and demat account differs.
Signatures put across the photographs on

demat account and the signature put on
savings account are same.


fraudulent

letter.
8 1301440000244868 J Sohanlal Jain 17735 Saving account does not exist with
BHOB.
Page 164 of 252

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fraudulent)

letter.
9 1301440000244454 J Pravinchandra Shah 16135 Saving account does not exist with
BHOB.

fraudulent)

letter.
10 1301440000246029 B S Mandaliya 16884 Photographs and signature on saving

by Kavy Stock Broking.

fraudulent).

letter.
13.108. Karvy DP clients - BHOB AHMEDABAD BRANCH
13.109. In respect of BHOB Ahmedabad Branch, the saving account number

mentioned in the Karvy DP demat account opening forms does not exist as confirmed
by BHOB Ahmedabad Branch. However, all the demat account opening forms had
bank letters along with the photograph affixed and signed purportedly by a bank
official. BHOB Ahmedabad Branch has denied having issued any such Bank letter as
Page 165 of 252

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enclosed with the demat account opening forms. The observations on a random
sample of 39 such demat accounts is given below:

No
1 1301440000104534 Garvil Ranka 9550-14825 Bank account does not exist with
BHOB as per email confirmation.
Demat account opened based on the

letter from BHOB with photograph
affixed and signed by the bank official
(which is fraudulent).
Careful Examination of the contents

of the letter of BHOB enclosed
indicates that the contents of the letter
exactly matches with the data
available on the depositories
including comma, full stop, spelling
mistake, small letter / capital letter.
2 1301440000116381 Aakash Desai 9550-1010 Bank account does not exist with
BHOB as per email confirmation.
3 1301440000122564 Champak Desai 9550-1628 Same as above.

4 1301440000202561 Champak Bhatt 9550-9628 Same as above.
5 1301440000102406 Chameli Ranka 9550-14612 Same as above.
6 1301440000117839 Bela Desai 9550-1155 Same as above.
7 1301440000108032 Bhagyesh Pandya 9550-175 Same as above.
8 1301440000077858 Haresh Vania 9550-12157 Same as above.
9 1301440000118034 Bhagyesh Desai 9550-1175 Same as above.
10 1301440000117858 Haren Desai 9550-1157 Same as above.
11 1301440000191749 Fenil Pathak 9550-8546 Same as above.
12 1301440000128055 Haresh Rathi 9550-2177 Same as above.
13 1301440000127830 Bela Rathi 9550-2155 Same as above.
14 1301440000117351 Aditya Desai 9550-1107 Same as above.
15 1301440000177255 Aditi Vala 9550-7097 Same as above.
16 1301440000117254 Aditi Desai 9550-1097 Same as above.
17 1301440000171745 Fenil Barot 9550-6546 Same as above.
18 1301440000177352 Aditya Vala 9550-7107 Same as above.
19 1301440000057358 Aditya Zala 9550-10107 Same as above.
20 1301440000147357 Aditya Gandhi 9550-4107 Same as above.
21 1301440000133823 Jacky Rathi 9550-2754 Same as above.
22 1301440000145860 Bablu Verma 9550-3958 Same as above.
23 1301440000196050 Badal Pathak 9550-8977 Same as above.
24 1301440000106381 Aakash Pandya 9550-10 Same as above.
25 1301440000177451 Agat Vala 9550-7117 Same as above.
26 1301440000187958 Harendra Pathak 9550-8167 Same as above.
27 1301440000186384 Aakash Pathak 9550-8010 Same as above.
28 1301440000151849 Fida Gandhi 9550-4556 Same as above.
29 1301440000058157 Hari Zala 9550-10187 Same as above.
30 1301440000057250 Adita Zala 9550-10097 Same as above.
31 1301440000117955 Harendra Desai 9550-1167 Same as above.
32 1301440000107953 Harendra Pandya 9550-167 Same as above.
33 1301440000197658 Agni Bhatt 9550-9137 Same as above.
Page 166 of 252

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34 1301440000057651 Agni Zala 9550-10137 Same as above.

35 1301440000067554 Agosh Rathod 9550-11127 Same as above.
36 1301440000057552 Agosh Zala 9550-10127 Same as above.
37 1301440000066147 Badren Zala 9550-10986 Same as above.
38 1301440000106054 Badal Banka 9550-14977 Same as above.
39 1301440000136051 Badal Rathi 9550-2977 Same as above.
13.110. Karvy DP clients - VIJAYA BANK AHMEDABAD BRANCH
13.111. The observations with respect to the scrutinity of the sample demat
account opening forms where Vijaya bank was the banker and letters from Vijaya
Bank were enclosed as proof of identity and address, are given below:

No
1 1301440000389178 Harendra M Vakil 2055/154 Bank account does not exist with
Vijaya Bank as per email
confirmation.
Demat account opened based on the

letter from Vijaya Bank with
photograph affixed and signed by the
bank official (which is fraudulent).
Careful Examination of the contents

of the letter of Vijaya Bank enclosed
indicates that the contents of the letter
exactly matches with the data
available on the depositories
including comma, full stop, spelling
mistake, small letter / capital letter.
2 1301440000395175 Harendra M Patni 2055/214 Same as above.

3 1301440000385572 Abhilash K Trivedi 2059/114 Same as above.
4 1301440000375230 Babu Nandbhai 2055/20 Same as above.
5 1301440000391571 Abhilash K Kothari 2059/174 Same as above.
6 1301440000374178 Harendra M Suthar 2055/4 Same as above.
7 1301440000378854 Munni B Mehta 2052/52 Same as above.
8 1301440000386859 Munni B Parmar 2052/132 Same as above.
9 1301440000388856 Munni B Pathak 2052/ 152 Same as above.
10 1301440000380857 Munni B Bhatt 2052/72 Same as above.
11 1301440000374577 Abhilash K Patel 2059/4 Same as above.
12 1301440000387170 Harendra M Shukla 2055/134 Same as above.
13 1301440000393178 Harendra M 2055/194 Same as above.
Rathod
14 1301440000381578 Abhilash K Mody 2059/74 Same as above.
15 1301440000393577 Abhilash K Chopra 2059/194 Same as above.
16 1301440000397231 Babu A bhuta 2055/240 Same as above.
17 1301440000379176 Harendra M Soni 2055/154 Same as above.
18 1301440000385173 Harendra M Vyas 2055/114 Same as above.
19 1301440000377179 Harendra M Mistry 2055/34 Same as above.
Page 167 of 252

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20 1301440000381179 Harendra M Jani 2055/74 Same as above.

21 1301440000397172 Harendra M Jain 2055/234 Same as above.
22 1301440000397571 Abhilash K Buta 2059/234 Same as above.
23 1301440000396850 Munni B Kapadia 2052/232 Same as above.
24 1301440000394853 Munni B Purohit 2052/212 Same as above.
25 1301440000374851 Munni Bhupendra 2051/12 Same as above.
26 1301440000390669 Darji Trikal 2060/163 Same as above.
27 1301440000389826 Darji Amosh M 2051/169 Same as above.
28 1301440000375570 Abhilash 2059/14 Same as above.
Kalyanbhia
29 1301440000395574 Abhilash K Bavisi 2059/214 Same as above.
30 1301440000389577 Abhilash K Gajjar 2059/154 Same as above.
31 1301440000383575 Abhilash K Dave 2059/94 Same as above.
32 1301440000375171 Harendra 2055/14 Same as above.
Madhusudan
33 1301440000387571 Abhilash K 2059/134 Same as above.
Kansara
13.112. From the above it is seen that Vijaya bank, Ahmedabad accounts of the
demat clients of Karvy DP did not exist. The branch manager of Vijaya Bank,
Ahmedabad has also confirmed that the said bank accounts do not exist with the
bank. Hence, it logically follows that the bank could not have given any letter
towards POI and POA to be used for opening of demat accounts with Karvy DP.
Therefore this is an exercise in afterthought by Karvy DP to cover up the tracks
in the wake of SEBI enquiry.
13.113. Observations regarding CDSL demat clients of Karvy DP
13.114. The demat account documents pertaining to various clients of Karvy DP

that had served as conduits for Roopalben Panchal and SEIPL were taken up for
detailed scrutiny and the observations emanating from the scrutiny are summarized
below:
Sr. Client ID Name of the client Remarks

No
1. 1301440000398826 Dharji Amosh M On the application form it is mentioned as
Vijaya Bank which is hand written.
(pertaining to sugandh
Group) Similiary on the bank letter of Vijaya Bank, the
account number 1301440000398826 is
mentioned with pen
2. 1301440000390669 Darji Trikal A On the application form it is mentioned as
(pertaining to sugandh Vijaya Bank which is hand written.
Group)
Similiary on the bank letter of Vijaya Bank, the
account number 1301440000390669 is
mentioned with pen
3. 1301440000056681 Aarti Zala The bank letter of BHOB Ahmedabad Branch,
(pertaining to Roopal the account number1301440000390669 is
Group) mentioned with pen
Page 168 of 252

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No
The stamp of Karvy “verified with Orginal”
also affixed
The Ref No.10040 mentioned in the fabricated

bank letter corresponds with the bank account
of the client.
4. 1301440000122049 Karina Desai The bank letter of BHOB Ahmedabad Branch,
(pertaining to Roopal the account number 1301440000122049 is

of the client.
5. 1301440000145379 Darni Verma The bank letter of BHOB Ahmedabad Branch,
(pertaining to Roopal the account number 1301440000145379 is

of the client.
6. 1301440000177937 Bhadhresh Vala The Ref No.7165 mentioned in the fabricated
(pertaining to Roopal bank letter corresponds with the bank account
Group) of the client.
7. 1301440000187451 Agat Pathak The Ref No.8117 mentioned in the fabricated
8. 1301440000106487 Aanshi Pandhya The Ref No.20 mentioned in the fabricated
9. 1301440000126480 Aanshi Rathi The Ref No.2020 mentioned in the fabricated
10. 1301440000056681 Aarti Zala The Ref No.7165 mentioned in the fabricated
11. 1301440000117936 Bhadhresh Desai The Ref No.1165 mentioned in the fabricated
12. 1301440000127938 Bhadhresh Rathi The Ref No.2165 mentioned in the fabricated
13. 1301440000198501 Akshar Bhatt The Ref No.9222 mentioned in the fabricated
14. 1301440000095869 Bablu Patil The Ref No.13958 mentioned in the fabricated
The stamp of Karvy “verified with Orginal”
also affixed
15. 1301440000187656 Agni Pathak The Ref No.8137 mentioned in the fabricated
16. 1301440000176141 Badren Barot The Ref No.6986 mentioned in the fabricated
Page 169 of 252

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No
17. 1301440000195861 Bablu Pathak The Ref No.8958 mentioned in the fabricated
18. 1301440000136385 AaKash Verma The Ref No.3010 mentioned in the fabricated
19. 1301440000117064 Abhishek Desai The Ref No.1078 mentioned in the fabricated
20. 1301440000127066 Abhishek Rathi The Ref No.2078 mentioned in the fabricated
21. 1301440000078034 Bharyesh Vanja The Ref No.12175 mentioned in the fabricated
22. 13014400000126968 Abhilash Rathi The Ref No.2068 mentioned in the fabricated
23. 13014400000116966 Abhilash Desai The Ref No.1068 mentioned in the fabricated
13.115. The above shows that the Reference Number appearing in the so-called
bank letters has been mechanically reproduced to represent the non-existent bank
account number, while the findings of the same pattern in two different banks clearly
indicate a common source of control.
13.116. Based on the scrutiny of sample account opening forms of CDSL demat
clients of Karvy DP it is seen that in respect of the following accounts it was noticed
that the photograph affixed was the same for different accounts.
Sr. No Client ID Name of the client Remarks

1 1301440000078034 Bhagvesh Vania Same Photograph.
2 1301440000126968 Abilash Rathi Father name different.
3 1301440000116966 Abhilash Desai Same date of opening
4 1301440000195861 Bablu Pathak Same Photograph.
5 1301440000136385 Aakash Verma Father name different.
Same date of opening.
6 1301440000127066 Abhishek Rathi Same Photograph.
7 1301440000117064 Abishek Desai Same father name.
Same date of opening
8 1301440000145372 Dharni Verma Same Photograph.
9 1301440000122049 Karina Desai Father name different.
10 1301440000056681 Aarti Zala Same date of opening
11 1301440000117936 Bhadresh Desai Same Photograph.
12 1301440000127938 Bhadresh Rathi Same father name.
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Sr. No Client ID Name of the client Remarks

13 1301440000198501 Akshar Bhatt Same Photograph.
14 1301440000095869 Bablu Patil Father name different.
15 1301440000187656 Agni Pathak Same Photograph.
16 1301440000176141 Badren Barot Father name different.
17 1301440000177937 Bhadresh Vala Same Photograph.
18 1301440000187451 Agat Pathak Father name different.
19 1301440000106487 Aanshi Pandya Same Photograph.
20 1301440000126480 Aanshi Rathi Same father name.
13.117. This also smacks of after-thought.
13.118. In this context, it may be mentioned that pursuant to the findings of SEBI
in the case of Yes Bank IPO, CDSL had conducted an inspection of Karvy DP during
the period December 23-29, 2005 and the summary of the findings is given below:
13.119. It was noticed from BHOB letters that multiple bank accounts had been
opened by same persons (same photographs) with different names and having the
same address. In many of the cases, the date of opening of BO account was earlier
than the date of issue of bank letters. Signatures of different BOs were found to match
with each other. The inspection of Karvy DP by CDSL stated as below in its
conclusion:
“i. The depository participant has opened the accounts of the investors by obtaining the
supporting documents mechanically and has not taken proper precautions to ascertain the
identity or genuineness of the persons and execution of the DP – BO agreements.
ii. The depository participant has entirely relied upon the documents issued by the
Scheduled Commercial Bank submitted by the investors as documents in support of
“Proof of Identity” and “Proof of Address”, even though the same persons open(ed) BO
accounts in different names.
iii. The depository participant has not exercised proper care and precautions while
processing of the Delivery Instruction slips for transfer of securities.
iv. Such slackness and deficiencies in procedures and manner of conducting the
depository participant operations are not in conformity with the procedures prescribed by
SEBI and CDSL and also the code of conduct stipulated for the depository participants
and not in the interest of the investors.”
13.120. From the above findings of inspection by CDSL, it is seen that same
persons (same photographs) had opened multiple demat accounts with different
names. Various other irregularities were also found during the inspection by CDSL.
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It is seen that the findings of inspection by CDSL corroborates the findings of SEBI
as given in the earlier paragraphs.
13.121. Observations on NSDL demat clients of Karvy DP
13.122. As mentioned earlier, SEBI obtained from NSDL copies of sample

account opening documents collected by NSDL during the course of its inspection of
karvy DP. The observations emerging from the same are summarized below:
Sr. Bo id Name of the BO Date of opening Bank account

No Branch
1 IN300394 Nilima Soni 02-Aug-2004 Photographs on the Bank letter and the
14245132 photograph on the application form
different.
2 IN300394 Dipam Soni 02 –Aug- 2004 Photographs on the Bank letter and the
14245330 photograph on the application form
different.
3 IN300394 Kromesh Pari 03 –Dec- 2003
14245330
4 IN300394 Shah Pawan D 18-Jun- 2003
12313714
5 IN300394 Mahavir 01 –Jun- 2003 The Photographs for all the BO are
12315685 Devichand apparently same
6 IN300394 Divyesh Panchal 31-Jun - 2003
12914707
7 IN300394 Ujjval Luhar 03-Dec -2003
13018929
13.123. In the context of the above observations, it may be mentioned that SEBI,
in its interim order dated December 15, 2005 in the case of Yes Bank, had directed
NSDL to conduct comprehensive inspection of Karvy DP and submit a report to
SEBI regarding its findings. Accordingly, NSDL had submitted the report of its
inspection of Karvy DP and some of the relevant findings are extracted below:
“
4.1. These 7630 accounts (that served as conduits for Roopalben Panchal and SEIPL in
the Yes Bank IPO) have been opened on different dates from June 27, 2003 to October
27, 2004. Bulk of the accounts (more than 80%) have been activated in five days which
are August 16, 2004 (3012), February 16, 2004 (1059), January 05, 2004 (771), January
06, 2004 (762) and December 17, 2003 (542).
4.2. All the accounts have been opened through Ahmedabad branch of the KSBL. None
of the accounts has a joint holding. None of the accounts has nominee. In all these cases,
the address of the client was stamped and not hand written.
4.3. All accounts have taken ‘Bank certificate/attestation’ as a proof of identity and proof
of address. The banks who have given the certificate are Bharat Overseas Bank Ltd. and
Vijaya Bank. In all cases, the bank account details are of these two banks only. For the
accounts opened prior to August 2004, the bank certificate/attestation do not have
photograph of the account holder. However, in most of these cases, there is a stamp and
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signature of the bank officials across the photograph which is also present on the account
opening form. In most of the cases, there is no employee code of the bank manager. In
some cases, there is no name of the bank manager mentioned on the certificate. The
signatures of bank managers are just initials.
4.4. The DP-client agreements for all accounts with the address as 402-403, Shashwat,
Opp Gujarat College, Ellisbridge, Ahmedabad – 380006 have been witnessed by one Mr.
Arjav Panchal.
4.5. While reviewing the records, it was observed that about 109 cases (consisting of 265
forms) had apparently identical photographs. These accounts have been opened during
the period June 27, 2003 to October 24, 2004.
4.6. In some cases, apparently name of the client is that of a male but the photograph
affixed is that of a female or vice versa.
4.7. In a few cases, a common bank account number has been captured for various
accounts. These have been out of those cases where address is ’34 Khetan Tower, Camp
Road, Shahibaug, Ahmedabad – 380004.
4.8. Surname of the client is common across substantial number of forms. The name
mentioned in the column ‘father/husband’ is common at a stretch in around 15-20
accounts.
4.9. In a few cases, the address mentioned in the account opening form is ‘402, Shashwat,
Opp Gujarat College, Ellisbridge, Ahmedabad – 380006,’ but bank certificate has been
issued with the address as ‘402-403, Shashwat, Opp Gujarat College, Ellisbridge,
Ahmedabad – 380006’ In DPM also, 402-403…. has been captured.
4.10 In a few cases, clients have signed in Gujarati as well as in the English in application
form and both the signatures have been captured in DPM. However, clients have signed
in either Gujarati or English in DP Client agreement.
4.11 In a few applications, “PCS appli. No. -------“(7 digit numeric) has been printed on
the bank certificate. This number is printed on account opening forms also. It appears that
these applications were meant for Patni Computers (PCS) IPO and the applicatio n
number may be the IPO application number. The signature of the bank manager is merely
an initial. The name of the bank manager, date of certificate, employee code of the
manager is not there on the certificate. In most of these cases, the bank certificate is not
on the letterhead of the bank.
4.12 In a few cases, the address mentioned in the account opening form is 34 Khetan
Tower, Camp Road, Shahibaug, Ahmedabad. However, the bank certificate gives the
address as "402-403 Shashwat, Opp. Gujrat College, Ellisbridge, Ahmedabad 380 006”.
4.13 Mismatch in signature of client have been observed. (e. g. signature on the account
opening form is in English while that on the DP-client agreement is in Gujarati).”
13.124. It is seen that inspection findings of NSDL and CDSL have various
common features and these findings are in sync with the findings of SEBI with regard
to the abysmal failure of Karvy DP in complying with the KYC norms prescribed by
SEBI.
Delivery Instruction Slips (DIS)
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13.125. Delivery Instructions Slips booklet is issued to the client after the demat
account is opened. DIS is an important document issued to the clients for the purpose
of transferring the securities from one demat account to another account. Before
issuing a DIS booklet to the client, the DP no rmally makes an entry in their back
office system with the details of the starting serial number and the ending serial
number of the DIS booklet allotted to each clients so as to ensure that no DIS is
misused by any unauthorized person while unauthorized use can be easily traced
when presented by any client other than to whom the DIS has been allotted.
13.126. Extant directions provide that DP should strictly ensure that the loose slips
are issued to the clients only after being satisfied with regard to the identity of the
client.
13.127. The following information contained in the website of Karvy

(www.karvy.com), at the location http://www.karvy.com/jurix/jurix13.htm, shows
that Karvy DP had a clear understanding of the rationale for the above directions :
“What are the precautions needed to be observed with respect to Delivery Instruction
Slips (DIS) ?
The Delivery Instruction Slips are to be treated like books issued by banks. Depository
account holders may need to take the following precautions to prevent misuse of these
slips:-
• Ensure and insist on DP to issue DIS book; loose slips should not be accepted.
• Ensure that each form is serially numbered (pre-printed).
• Ensure that your account number (client id) is pre-stamped.
• All details and target account should be filled in by the account holder.
• If only one or a few entries are made in the instruction slip, strike out the
remaining space to prevent its misuse by any one.
• Do not leave signed blank DIS with any one.
• Keep the DIS book under lock and key, like a cheque book.
• If your account is a joint account, all the joint holders have to sign in the
instruction slips. Instruction cannot be executed if all joint holders have not
signed.”
13.128. The above advisory of Karvy DP shows that it was aware that loose DIS
slips should be treated with the same care as a cheque book as they are liable to be
misused. However, they threw the said caution to the wind while issuing loose slips
freely to their demat clients.
13.129. Procudure adopted by DP while Processing DIS
13.130. When a client desires to transfer the securities from his account, he
presents the leaflet of the DIS booklet issued to him with duly filed details of the ISIN
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number, date of the execution, type of transactions, number of shares and then
presents the same at the counter of the DP for verification of the signature etc
13.131. DIS is used for the purpose of transfering the securities to another account
for the following purposes.
1. Market Transactions
2. Off Market Transaction
3. Inter depository Transactions
13.132. Based on the data submitted by CDSL relating to the IPOs of Yes Bank
and IDFC, the off market transfers by the clients of Karvy DP were examined and the
data is summarized below:
13.133. A sample of physical DIS which was made available by CDSL is

mentioned in the following table. Prima-facie, it is observed that these DIS are
computer generated with columns like Bo account number, First holder, ISIN,
security name, Qty, Target client number being pre-printed.
Table 13.131 - KARVY DP – CDSL OFF MARKET TRANSACTIONS IN IDFC
Date of Source Name of the Target Name of the No of shares DIS serial Transacti
execution Bo Id BO id BO id Target BO id no on no
11.08.05 13014400 Trushit Rathi 13014400 Roopal Panchal 266 76948 234442
00127051 00307503
24.08.05* 13014400 Grahi Zala 13014400 Roopal Panchal 266 84808 362117
00056316 00307503
24.08.05* 13014400 Grahi Zala 13014400 Roopal Panchal 266 87056 362117
00056316 00307503
11.08.05 13014400 Diya Desai 13014400 Roopal Panchal 266 76870 234286
00126271 00307503
11.08.05 13014400 Mruja Rathi 13014400 Roopal Panchal 266 77671 235920
00134295 00307503
11.08.05 13014400 Megha Rathi 13014400 Roopal Panchal 266 77672 235922
00134301 00307503
11.08.05 13014400 Nila Rathi 13014400 Roopal Panchal 266 77673 235924
00134316 00307503
11.08.05 13014400 Tanish Rathi 13014400 Roopal Panchal 266 77674 235926
00134320 00307503
11.08.05 13014400 Nisha Rathi 13014400 Roopal Panchal 266 76879 234304
00126364 00307503
11.08.05 13014400 Nirav Rathi 13014400 Roopal Panchal 266 76878 234302
00126351 00307503
11.08.05 13014400 Yagna Rathi 13014400 Roopal Panchal 266 76877 234300
00126345 00307503
11.08.05 13014400 Kunj Rathi 13014400 Roopal Panchal 266 76876 234298
00126330 00307503
11.08.05 13014400 Jayshree Rathi 13014400 Roopal Panchal 266 76875 234296
00126326 00307503
11.08.05 13014400 Grahi Rathi 13014400 Roopal Panchal 266 76874 234294
00126311 00307503
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11.08.05 13014400 Bakula Rathi 13014400 Roopal Panchal 266 76873 234292
00126307 00307503
11.08.05 13014400 Diya Desai 13014400 Roopal Panchal 266 86756 234286
00126271 00307503
11.08.05 13014400 Mruja Desai 13014400 Roopal Panchal 266 76672 233886
00124293 00307503
11.08.05 13014400 Megha Desai 13014400 Roopal Panchal 266 76673 233888
00124301 00307503
11.08.05 13014400 Nila Desai 13014400 Roopal Panchal 266 76674 233890
00124314 00307503
11.08.05 13014400 Tanish Desai 13014400 Roopal Panchal 266 76675 233892
00124329 00307503
11.08.05 13014400 Tanvish Desai 13014400 Roopal Panchal 266 76676 233894
00124333 00307503
11.08.05 13014400 Kunal Rathi 13014400 Roopal Panchal 266 76872 234290
00126290 00307503
24.08.05 13014400 Latish Patil 13014400 Roopal Panchal 266 84845 362191
00088659 00307503
24.08.05 13014400 Lilima Patil 13014400 Roopal Panchal 266 84846 362193
00089593 00307503
24.08.05 13014400 Ami Patil 13014400 Roopal Panchal 266 84847 362195
00090201 00307503
24.08.05 13014400 Malika Patil 13014400 Roopal Panchal 266 84848 362197
00090613 00307503
24.08.05 13014400 Kanak Patil 13014400 Roopal Panchal 266 84849 362199
00090691 00307503
24.08.05 13014400 Grahi Zala 13014400 Roopal Panchal 266 84808 362117
00056316 00307503
* - Two DIS slips have been used for executing the same transaction. It is seen that while
the first DIS slip is not signed by the account ho lder the second one is signed.
13.134. The observation with respect to the above DIS is as follows:
• The DIS serial numbers issued to clients of various groups are in continuous
serial numbers. This is possible only if loose DIS of one booklet are issued to
various clients. Even in such a scenario it is highly unlikely that the DIS executed
by various persons making off-market transfers to one entity will have
continuous serial number. This is possible only if DIS slips had been issued by
the DP to one or few pers ons controlling the alleged group.
It is seen that hundreds of the DIS submitted by each of the following groups are in
continuous serial numbers thereby showing that Karvy DP had issued the DIS slips
pertaining to hundreds of benami / fictitious dematerialized account-holders to a
few purporting to represent the group and the details are as below:
Sr. No Name of the Group DIS Serial no. From No of DIS.

and To.
1 Manoj Sakseria 40,001 – 42,000 1,999
Page 176 of 252

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2 Pushottam Bhudwani 32,001-32,130 129

32,141-32,300 159
32,311-32,845 534
61,001-61,100 100
61,201-62,600 1,399
65,401-66,200 799
3 Roopal Panchal 70,001-84,807 14,806
4 Dhaval A Mehta 19,679 – 20,018 339
5 Dharmesh B Mehta 20,405 – 21,106 701

6 Dhaval A Katakia 21,107-21,027 80
21,172-22,283 1,111
7 Dharmesh K Katakia 21,586-21,711 125
8 Dhaval A Mehta 19679-20,018 339

22541-22,612 71
Total 22,691
13.135. The above table manifestly demonstrates that the key operators as
mentioned above were the only persons who were instrumental for the off- market
transfers.
13.136. When SEBI examined Shri Dharmesh Mehta, one of the Karvy DP clients
mentioned above, he was inter alia queried regarding the DIS booklet issued by
Karvy DP. He inter alia stated as below:
“Yes, initially, Karvy had issued Delivery Instruction book to all of us after
opening the demat accounts. Whenever we are in need of extra instruction
books, we were also supplied loose delivery instruction slips instead of DIS
Booklet on oral request.”
13.137. It may noted that in respect of any offmarket transfer, depository system
automatically generates the debit transaction number which is updated on the physical
Delivery Instruction Slip which is used for debiting the demat account. The same is
used for the purpose of reference and cross check with the depository system.
Similarly, in respect of the BO account which receives the credit, depository system
automatically generates the credit transaction number and the same are included in
the transaction statement of the credit BO account. Thus, for each off- market transfer,
there is a common trade ID and two transaction IDs, one for the debit transaction and
another for the credit transaction. The transaction number is also reflected in the
transaction statement of the respective demat Accounts.
13.138.
13.139. For each off- market transactio n in the depository system, the system
generates a distinct debit transaction number and also a distinct credit transaction
number. The DP executing the DIS mentions the debit transaction number on the
DIS. The DP executing the DIS normally does not have access to the credit
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transaction number and credit transaction number would appear only on the
transaction statement of the receiving dematerialized account-holder.
13.140. In respect of transaction numbers mentioned in Table B above, it is seen

that transaction number mentioned on the DIS is the credit transaction number and is
not the debit transaction number, as is the normal case. It is significant to note that
credit transaction number is not available with the DP at the time of entering the DIS
in the system as the details are only available in the target client account. Incidentally
in this case target client account was also with the same DP ie. Karvy DP and
therefore it was possible for the DP to have the details of the credit transaction ID.
The BO account no. 1301440000307503 which received the credit belongs to Roopal
Panchal. It appears that details of the credit transaction have been entered on the DIS
leaflets based on the transaction statement of the credit BO holder i.e. Roopal
Panchal.
13.141. In this context it is noted that in respect of the off- market transactions
mentioned in the table above, many demat accounts were debited and a single demat
account was credited. Since it is easier to obtain credit transaction number from the
demat account statement of Roopalben Panchal, it appears that the DP has
conveniently used the credit transaction number on the DIS used for debiting various
demat accounts. This is highly unusual. It passes one’s credence as to how Credit
Instruction Number (CIN) could figure in DIS which are used for debiting the demat
account. The very fact that it is so clearly indicates that the DP had no debit
instruction from the afferent account holders and DIS ha d been generated post-
facto to make up the records by conveniently using the CIN available from one
account thereby dispensing with the rigmarole of wading through thousands of
afferent account statements which is cumbersome and laborious. Further it
shows the constructive knowledge and involvement of the DP in the modus
operandi employed by Roopalben Panchal and others and the same is consistent
with the DP’s lead role in the entire scheme .
13.142. Bank Transaction Statement of Karvy Consultants
13.143. The transaction statement of Karvy Consultants Ltd., an associate of

Karvy DP and also the introducer of bank accounts to BhOB of various afferent
dematerialized account-holders of Roopalben Panchal, was obtained from HDFC
Bank. The major transactions in the account number 0210330002047 held in the
name of Karvy Consultants Ltd, Karvy House, 46, Avenue 4, Street No 1, Banjara
Hills, Hyderabad – 500034 are given in the table below.
Transaction Name of the Party Debit (Rs.) Credit (Rs.)

date
21.07.05 Sugandh Estates 1,19,00,000
25.07.05 Purshottam Bhudwani 1,12,80,000
25.07.05 Manoj G Seksaria 98,00,000
26.07.05 Karvy Consultants 59,00,00,000
26.07.05 Manoj G Seksaria 44,00,000
28.07.05 Manoj G Seksaria 2,00,00,000
Page 178 of 252

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date
28.07.05 Ridhi Seksaria 1,90,40,000
28.07.05 Sumitra Seksaria 1,90,40,000
28.07.05 Jaya Bhudwani 1,90,40,000
28.07.05 Sonia Bhudwani 1,90,40,000
28.07.05 Daksh K Doshi 29,51,200
28.07.05 Chhaya J Maniyar 28,56,000
28.07.05 Jitendra H Shah 28,56,000
28.07.05 Pravina S Shah 23,80,000
28.07.05 Vaibhav S Shah 23,80,000
28.07.05 Banuben Shah 19,04,000
30.07.05 Manoj G Seksaria 1,94,51,250
10.08.05 Ridhi Seksaria 1,90,40,000
10.08.05 Sumitra Seksaria 1,90,40,000
10.08.05 Daksha Doshi 23,60,960
10.08.05 Pravin S Shah 19,04,000
10.08.05 Vaibhav Shah 19,04,000
10.08.05 Banuben J Shah 15,23,200
11.08.05 Jaya Bhudwani 1,90,40,000
11.08.05 Sonia Bhudwani 1,90,40,000
11.08.05 Jitendra Shah 22,84,800
03.08.05 Karvy Stock Broking Ltd 1,45,00,000
17.08.05 Karvy Stock Broking Ltd 26,00,00,000
22.08.05 Ghanshym M Katri 18,65,500
22.08.05 Suman Kaushal Shah 18,65,500
22.08.05 Bhaven Jitendra Shah 13,65,500
22.08.05 Hiramani A nenwani 11,83,000
22.08.05 Ritika K Nenwani 11,37,500
22.08.05 Ashok R Nenwani 10,92,000
05.09.05 Ghansyam M Khatri 16,78,950
05.09.05 Hiramani A Nenwani 10,64,700
05.09.05 Ritika K Nenwani 10,23,750
05.09.05 Karvy Consutants Ltd 6,00,00,000
28.09.05 Dharmesh Mehta 1,90,00,000
28.09.05 Dharmesh Mehta 1,90,00,000
28.09.05 Dharmesh K Katakia 1,06,00,000
01.10.05 Purshottam Budhwani 5,00,00,000
05.10.05 Dharmesh K Katakia 1,93,56,800
05.10.05 Dharmesh B Mehta 93,75,600
18.10.05 Daksha Doshi 13,85,000
18.10.05 Jayesh M Maniyar 12,70,000
18.10.05 Daksha Doshi 10,25,000
18.10.05 Jitendra Shah 12,22,000
Page 179 of 252

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date
18.10.05 Bhaven Jitendra Shah 11,46,000
18.10.05 Daksha Doshi 11,12,000
18.10.05 Jitendra Shah 10,75,000
18.10.05 Kaushal J Shah 10,74,000
18.10.05 Daksha Doshi 10,60,000
18.10.05 Kaushal J Shah 10,32,000
18.10.05 Kaushal J Shah 10,26,000
18.10.05 Banuben J Shah 10,25,000
18.10.05 Banuben J Shah 10,24,000
18.10.05 Pravina S Shah 10,20,000
18.10.05 Pravina S Shah 10,20,000
18.10.05 Pravina S Shah 10,20,000
18.10.05 Viabhav Shah 10,20,000
18.10.05 Viabhav Shah 10,20,000
18.10.05 Viabhav Shah 10,20,000
18.10.05 Viabhav Shah 10,20,000
18.10.05 Viabhav Shah 10,20,000
18.10.05 Viabhav Shah 10,20,000
18.10.05 Pravina S Shah 10,20,000
18.10.05 Viabhav Shah 10,20,000
18.10.05 Pravina S Shah 10,20,000
Total 25,59,71,900 98,98,04,560
13.144. From the above, it is seen that Rs 1.19 crores was transferred by SEIPL
(Jhaveri group) on July 21, 2005 to the account of Karvy Consultants. Similary on
September 22, 2005 Roopal Panchal had transferred Rs 29 crores through RTGS to
the account of Karvy Consultant (account no. 0210330002047).
13.145. Further similar such fund transfers were also observed to / from various
accounts like Purshottam Bhudwani, Manoj Seksaria, Dharmesh Mehta, Dhaval
Katakia etc who are amongst the key operators having large number of demat
accounts under their control.
13.146. It appears that Karvy Consultants had provided IPO finance (margin
funding) for Roopalben Panchal, SEIPL and others. The above transfer of funds
between Karvy Consultants and Roopalben Panchal and others probably represents
the repayment of the margin money. Thus it appears that as per the arrangement
between Karvy and BHOB while 50% of the IPO finance was provided by BHOB the
balance (representing the margin money) was funded for Roopalben Panchal and
others by Karvy Consultants. Thus it is seen that the arrangement between Karvy and
BHOB has served as a convenient camouflage for Karvy DP to deploy its funds using
the names of fictitious/benami entities for applying in the retail category of the many
of the IPOs wherein various Karvy Group companies were involved in various roles
as broker to the IPO, Registrar to the Issue etc.
13.147. It is observed that in the IPO of Yes Bank, BHOB Worli branch had
issued around 9,374 pay orders to Roopal Panchal Group and the cheques were
Page 180 of 252

Interim Order - IPO
handed over to Karvy, which had attached the same with the respective application
forms before such applications were made in the IPO. Thus, it is clear that Karvy had
even coordinated the IPO applications besides the banks, as it was required as per the
arrangement between BHOB and Karvy to coordinate with the bank.
13.148. Thus it appears that Karvy was the hub of activity having control
over the whole process from generation of idea paper to the final execution
involving the intricate web of transfers and retransfers through the key
operators in conjunction with afferent accounts. Karvy had opened demat
account, introduced the bank account, , arranged for finance from BHOB,
received pay order from the BHOB, attached the payorder to the application
forms of the various groups and seamlessly perfected the whole scheme of
operations involving minute details in a jig-saw puzzle fit with great finesse,
aplomb and mastery which comes from meticulous planning of the ‘business
model’ with an uncanny eye that s peaks volumes about their direct and intimate
involvement in the show of make-believe with a conjuror’s touch.
13.149. The involvement of Karvy group of companies in the whole scheme of

affairs is stark considering that companies belonging to Karvy group were
acting as DP, RTI as well as IPO broker for the above transactions. Having
steered the course of the scheme in all its twists and turns, Karvy knew all the
strands of the scheme in their true colours, while the make-believe thrown in
good measure was always meant to impart a verisimilitude to the crass effort of
deceit and deception.
13.150. Summary of Observations emerging from examination of role,

activies and demat account opening document of Karvy DP
13.151. Based on the above observations, it appears that Karvy DP as a

depository participant had given short shrift to the highest standards of
intergrity and professional conduct which is expected of market intermediaries.
In view of common directors, employees etc., there appear to be a palpable
interlacing and interlocking amongst its various activities as DP, RTI, broker to
the issue, provider of IPO finance and arrangement of IPO finance from BHOB
etc. Karvy has gone the whole hog by being associated in the complete cycle of
IPO starting from procuring application forms, extending finance to these
groups, opening savings /demat account for these accounts, collecting refund
orders for these groups, putting through offmarket transfers etc.
13.152. Opening of demat account was the first and essential requirement for
making applications (presently, all allotment in IPO should be made in demat form in
all book built issues) and it is observed that Karvy had abjectly failed to comply
with the account opening formalties prescribed by SEBI while straying to the
extent of fabrication of documents / falsification of records to make its account
opening procedure seem seemingly compliant with the regulatory requirements
prescribed by SEBI.
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13.153. Thus, it can be concluded that Karvy was instrumental at the root of
creating rootless wonders by opening demat accounts in thousand of benami /
fictitious names. The various groups of key operators were the necessary
adjuncts in the entire gamut of machinations. Karvy group of companies which
were acting as DP, introducer of bank account, provider of ma rgin finance,
arrangement of IPO finance through tie up with BhOB besides being broker to
the issue and registrar to the issue made the cause, besides making common
cause with the other like minded intermediaries looking for such unfair gains at
the cost of retail investors .
13.154. In view of the above, Karvy is guilty of violation of Regulation 42 (2), 42

(3), 43, 46 and 52 of SEBI (Depositories and Participants) Regulations, 1996 and
clauses 3, 9, 12, 16, 19, 20 and 22 of Code of Conduct as specified in Regulation 20
(a) of SEBI (Depositories and Participants) Regulations, 1996 and also guilty of
violation of Regulation 3 and 4(2) (p) of SEBI (Prohibition of Fraudulent and Unfair
Trade Practices Relating to Securities Markets) Regulations, 2003.
13.155. Examination of Refunds made by Karvy-RTI in Yes Bank and IDFC

IPOs
13.156. SEBI sought and obtained information from Karvy-RTI regarding details
of refunds in respect of applications for an amount of Rs. 50,000/- or less in the IPO
of Yes Bank and in respect of the applications for an amount of Rs. 1,00,000/- or less
in the IPO of IDFC. From the replies furnished by Karvy-RTI it is seen that Karvy-
RTI has issued consolidated refund orders favouring banks / financial institutions in
respect of the applications that were financed by the banks / financial institutions. The
details are as below:
Average
amount of
Refund Amount of each refund
Slno Order No. Single Cheque Name Refund (Rs.) Cases (Rs)
a) IDFC LIMITED
1. 610001 BHARAT OVERSEAS BANK LTD 231336.00 6 38556.00
4. 630001 CENTURION BANK LIMITED 233392626.00 2954 79009.01
5. 640001 IDBI LIMITED 8791210.00 142 61909.93
6. 640002 IDBI LIMITED 2159306.00 51 42339.33
7. 640003 IDBI LIMITED 19223872.00 370 51956.41
8. 640004 IDBI LIMITED 11260324.00 234 48121.04
9. 640005 IDBI LIMITED 901777020.00 16509 54623.36
10. 640006 IDBI LIMITED 18269152.00 137 133351.47
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11. 640007 IDBI LIMITED 3814290.00 73 52250.55

12. 660002 INDIAN OVERSEAS BANK 1002456.00 26 38556.00
13. 660007 INDIAN OVERSEAS BANK 2292722.00 9 254746.89
14. 660001 INDIAN OVERSEAS BANK LTD 80248104.00 2039 39356.60
INFRASTRUCTURE LEASING &

20. 620001 FINANCIAL SERVICES LTD 2420020108.00 41 59024880.68



26. 680001 KOTAK STREET.COM 70206258.00 2655 26443.04
27. 710001 ICICI WEB TRADE LIMITED 1337057700 48983 27296.36
b) YES BANK LIMITED
3. 500001 KOTAK STREET.COM 25232625.00 894 28224.41
4. 700001 ICICI WEB TRADE LIMITED 761602845 29915 25458.90
13.157. From the above table, it is seen that Karvy –RTI has issued a single
refund order (RO No. 610003) payable to Bharat Overseas Bank in respect of
6878 IPO applicants. Similarly, Karvy-RTI has issued consolidated refund
orders favoring Centurion Bank Limited, IDBI Limited, Indian Overseas Bank,
Infrastructure Leasing & Financial Services Ltd, Kotak Street.com and ICICI
Web Trade Limited in respect of thousands of IPO applicants.
13.158. Examination of details of the sub-brokers of Karvy-DP who procured

large number of demat applications
13.159. SEBI vide e- mail dated February 11, 2006 sought information from
Karvy-DP regarding the details of the sub brokers through whom Karvy-DP had
procured the demat accounts from the period January 2004 to December 2005 along
with month-wise number of applications received through each of these sub brokers.
Page 183 of 252

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The details of top five sub-brokers of Karvy-DP in terms of number of applications

procured during 2004 and 2005 is given below:
Sl no Name & Address No of

Accounts
1. GRACE CONSULTANCY,C\O DIPAK J PANCHAL, 402/403, 26858
SHASHWAT OPP GUJARAT COLLEGE, ELLISBRIDGE
AHMEDABAD -380006
2. ARTH REALTY PRIVATE LIMITED,803, ABHIJEET - 1 15511
MITHAKHALI CIRCLE, NAVRANGPURA AHMEDABAD -
380009
3. PURSHOTTAM BUDHWANI, MUMBAI 7137
4. MANOJ SEKSARIA,5 B PEDDER ROAD, 33 MAHSEHWAR 5474

NIKETAN MUMBAI -400026
5. H R BAID,21-2-131/3, BHAGYALAXMI COMML. COMPLEX 2ND 670
FLOOR, CHARKAMAN CHARMINAR, HYDERABAD- 500002
13.160. From the above table, it is seen that Grace Cons ultancy- C\O Dipak J
Panchal, Arth Realty Private Limited (which has the address same as SEIPL),
Purshottam Budhwani and Manoj Seksaria are the top four sub-brokers of Karvy-DP
in terms of number of applications for demat accounts procured who are apparently
the same as or related to the key operators of the irregularities identified by SEBI in
the cases of IPOs of Yes Bank and IDFC.
13.161. Demat Accounts closed by Karvy-DP in the context of verification of

genuineness of Account Holders:
13.162. In the ex parte ad interim order dated January 12, 2006 in the case of
IDFC, SEBI had directed Karvy-DP as below:
“
12.5. I note that Karvy-DP has already been directed by the depositories to verify the
genuineness of the dematerialized account-holders and to close those dematerialized
accounts where it is unable to verify the genuineness of identity and address of the
dematerialized account-holders. The depositories have prohibited Karvy-DP from
opening new dematerialized accounts till the above process has been completed. I
hereby direct Karvy-DP and Pratik-DP to complete the process of verifying the
identity and address of dematerialized account-holders and to close / freeze the
dematerialized accounts where they are unable to do the verification not later than
January 31, 2006. Further, Karvy-DP and Pratik-DP shall put in place systems and
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procedures to ensure that in future no non- genuine dematerialized accounts are

opened by them. Karvy-DP and Pratik-DP shall submit a detailed report to SEBI
narrating the actions taken by them in this regard and also give an undertaking that
the SEBI’s above directions have been fully complied with. I further direct that
Karvy-DP and Pratik-DP shall not open new dematerialized accounts till the
submission of above report and undertaking to SEBI and obtaining a no-objection
from SEBI for accepting fresh business as a DP.”
13.163. Further to the same, as sought by SEBI, Karvy-DP vide e- mail dated
January 30, 2006 furnished the details of accounts closed by Karvy-DP where 20 or
more dematerialized account-holders share common addresses. Upon perusal of the
information it is seen that Karvy-DP has closed 38,409 accounts held with CDSL and
30,221 accounts held with NSDL. Prior to these closures Karvy-DP had 43,327 BO
accounts with CDSL and 7,56,886 BO accounts with NSDL. Thus, it is seen that
about 90% of the CDSL accounts held with Karvy-DP have been closed in the course
of verification of genuineness of account-holders. Upon examining the details of the
dematerialized accounts closed by Karvy-DP (taking address 1 as the basis for
analysis), the following observations emerge:
Sr. Address No. of Name of Comments

No. dematerialized the
account-holders Depository
sharing the
address
1 C O SEIPL, 804 ABHIJEET I, 5793 NSDL This address is
MITHAKHALI CIRCLE, same as that of
AHMEDABAD - 380009 SEIPL
2 402 403 SHASWAT, 5492 NSDL This address is
OPP GUJARAT COLLEGE, same as that of
ELLISBRIDGE, the Panchals
AHMEDABAD - 380006
3 402 403 SHASHWAT, 3180 NSDL This address is
AHMEDABAD - 380006
4 402-403 SHASHWAT, 1710 NSDL This address is
AHMEDABAD - 380006
5 C/0 SEIPL, 1472 NSDL This address is
804 ABHIJEET I, same as that of
MITHAKHALI CIRCLE SEIPL
ELLISBRIDGE,
AHMEDABAD-380006
6 402 403 SHASHWAT, 1415 NSDL This address is
AHMEDABAD - 380006
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7 68 SAMSHTA B SOCIETY, 1293 NSDL This address is

OPP PINAKIN SOCIETY, same as that of
PALDI, Kelan Atulbhai
AHMEDABAD-380007 Doshi
8 C/O SEIPL, 1214 NSDL This address is
804 ABHIJEET I, same as that of
MITHAKHALI CIRCLE, SEIPL
ELLISBRIDGE
AHMEDABAD- 380006
9 803 ABHIJIT, 1099 NSDL This address is
MITHAKHALI CIRCLE, same as that of
ELLISBRIDGE, SEIPL
AHMEDABAD-380006
10 406, SHASHWAT, OPP. 4998 CDSL This address is
GUJARAT COLLEGE, same as that of
AHMEDABAD, 380006
11 307, SHASHWAT, OPP. 4975 CDSL This address is
GUJARAT COLLEGE, same as that of
AHMEDABAD, 380006
12 OFFICE NO.403, SHASHWAT 4961 CDSL This address is
BLDG., same as that of
NR. HOTEL KANAK, the Panchals
ELLISBRIDGE,
AHMEDABAD, 380006
13 HIMALAYA B-2, 3814 CDSL This address is
ASALFA,GHATKOPAR W, same as that of
MUMBAI - 400084 Budhwani
14 C/o. SEIPL, 2500 CDSL This address is
G-1, Devpath Complex, same as that of
B/h. Lal Bunglow, SEIPL
Navrangpura, Ahmedabad,
380009
15 NIKETAN MAHESHWAR 33, 1120 CDSL This address is
PEDDAR ROAD 5B, same as that of
MUMBAI - 400026 Seksaria
16 MAHESHWAR NIKETAN 822 CDSL This address is
33,PEDD, same as that of
MUMBAI, 400026 Seksaria
13.164. From the above table relating to demat accounts closed by Karvy DP,
it is seen that Karvy DP had opened numerous (running into many hundreds)
demat accounts with common addresses, the common addresses being that of
Karvy DP’s sub-brokers namely Grace Consultancy, C/o Dipak Panchal, who is
the husband of Devangi Panchal and the brother-in-law of Roopalben Panchal,
Arth Realty Pvt. Ltd.(related to SEIPL), Purshottam Budhwani and Manojdev
Seksaria.
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14.0. Verifications done at Ahmedabad
14.1. In connection with the on going investigations in the cases of Yes Bank Ltd. and
IDFC Ltd., SEBI visited Ahmedabad for conducting physical verification at the
various addresses indicated by the thousands of demat account holders who are
sharing common addresses.
14.2. It was found that 307, Shashwat Opp. Gujarat College Ellisbridge, Ahmedabad -
380006 is occupied by a company by name ‘Salesworth India Pvt. Ltd.’ The office
staff of Salesworth provided a copy of the Leave and License agreement dated April
30, 2004 between Deepakbhai J Panchal HUF (licensor), having its address as 402-
403, Shashwat, Opp. Gujarat College, Ellisbridge, Ahmedabad and Salesworth India
Pvt. Ltd. (licensee), 713, Syndicate bank road, Indira Nagar, First Stage, Bangalore-
560038. None of the 4946 entities who had made off market transfers of IDFC IPO
shares to Roopalben Panchal during the period prior to listing and who had indicated
307, Shashwat Opp. Gujarat College Ellisbridge, Ahmedabad -380006 as their
address in their respective demat account details, were found there. Flat no. 402-403,
Shashwat Opp. Gujarat College Ellisbridge, Ahmedabad-380006 was locked and it
was gathered that it was used by Deepak Panchal as an office. Physical verification
by SEBI at Abhijeet 1, Mithakali circle, Ahmedbad revealed that Flat No.804 is
occupied by SEIPL. None of the 10181 entities who had made off market transfers of
IDFC IPO shares to SEIPL during the pre listing period and who had in their
respective demat account details indicated various flats at Abhijeet 1, Mithakali
circle, Ahmedbad as their address were found. When Shri Jhaveri, Director of SEIPL
was queried regarding the above, he stated that the address of SEIPL was given in the
dematerialized account particulars of the above entities for administrative and control
purposes, which peter out to be a proforma compliance without a grain of truth.
14.3. During the course of the above verification by SEBI, the statements of the branch
managers of BhOB Ahmedabad branch and Vijaya bank, Ambawadi branch were
recorded. The Statement of the Branch Manager of Bharat Overseas Bank Ltd., CG
Road, Ahmedabad branch was recorded on February 2, 2006 and he interalia stated as
below:
14.4. The branch has about 2000 Savings bank accounts and about 450 current accounts
and also about 100 loan accounts. When querried about the IPO financing done by the
branch for its customers during the last one year he stated that they have financed 8
IPOs namely Jet Airways (90 applications}. Jaiprakash Hydro(145 applications) Yes
Bank(41 applications) SPL (820 applications), ILFS (7622 applications), Sasken
Communications (7200 applications), Prithvi Infosystem (12 applications} and
Pyramid Retail (16 applications). When asked about how the branch provided finance
for more than 7000 IPO applicants when it has only 2000 savings bank accounts, he
stated that for operative convenience, instead of opening individual savings bank
account, number of individual names were added to a single account. These additions
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were done to about 15 to 20 accounts. Specific letter of authority was obtained from
Smt. Roopal Panchal for debiting her account number 15.100.900 towards the margin
money for about 7620 applicants.
14.5. With regard to the 12257 demat account holders that were holding their respective
demat accounts with DP Karvy Stock Broking Ltd. (Karvy DP) and bank accounts
with BhOB Ahmedabad branch and who had made off market transfers of IDFC
shares to Roopalben Panchal prior to the date of listing, he stated that except for 4
or 5 accounts, none of the other bank accounts were held with the branch.
14.6. When asked to explain the methodology for IPO financing done by the branch he
stated that they have been doing IPO financing only through Karvy Consultants Ltd.
in terms of corporate tie up with them. The financing were carried out in terms of
guidelines issued by their head office. The branches were given individual target for
each IPO. The first IPO financing was done by BhOB for Maruti Udyog Ltd IPO and
all the accounts were introduced by Karvy Consultants. These accounts were opened
only for the purpose of Maruti IPO finance and were closed subsequently during the
period October 2003. He observed that the list of 12257 bank account details
mentioned above included the aforesaid closed account numbers also.
14.7. When asked to confirm whether in respect of IPOs where BhOB had provided
finance, lien was noted in favour of bank the bank and whether the bank advised the
Registrar to release bank's lien after recovering the amount due, he confirmed that
lien was noted in favor of the branch in all the IPOs, where the bank had provided
financing and the same has been confirmed in writing by Karvy. He further stated that
other than Maruti IPO, the branch has not issued any letter to the Registrar advising
lifting of lien. In view of the above statements of the branch manager of BhOB, it
appears that Karvy RTI has released the lien noted in favor of the bank without
obtaining any advice from the bank.
14.8. Copies of demat account opening application forms of Karvy Consultants Ltd. in
respect of Shreya Chandulal Patel(client id 14598929), Bashidhar Shroff(client id
13147630) Dhruv Mistri (client id 13140222), Jayesh J Shah (client id 14598874) and
Dimesh J Shah(client id 14598899) wherein BhOB, Ahmedabad branch had
purportedly issued letters in proof of identity and address were shown to him. He
denied that the branch had issued these letters and stated that there were glaring
discrepancies in terms of mismatch of bank’s letterhead, logo, manager’s signature
etc. The above statement of the branch manager of BhOB raises serious doubts as to
the genuineness of the bank letters received by Karvy DP towards proof of identity
and proof of address for the purpose of opeing demat accounts.
14.9.
14.10. He also provided a copy of the letter bearing the subject “IPO of IDFCL issue”
dated August 8. 2005 from BhOB Hyderabad branch addressed to BhOB Ahmedabad
wherein it is mentioned that “We have been advised by M/s Karvy Consultants Ltd.
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that they have funded the IPO application of the enclosed list of parties who are your
branch customers.
A consolidated refund order has been received at our end for the crediting the refund
amount to the parties account. We understand (that) the customers have given an
authority to debit their account with your branch and credit KCL for the loan granted for
the purpose of the subject IPO funding. To avoid delay we have refunded the amount
payable to KCL from our end out of the consolidated refund received.”
When asked to indicate the source of funds for the applications in the IDFC IPO, the
branch manager of BhOB, Ahmedabad branch stated that the major payment to the tune
of 14.28 crores came from the account of Smt Roopal N. Panchal for which credits were
received from the refund of ILFS public issue. The financing for ILFS IPO had been done
by the branc h for which the margin money had come from the refund of Yes Bank refund
from BhOB’s Worli branch.
The statement of the Branch Manager of Vijaya Bank, Ambawadi Branch, Ahmedabad
was recorded by SEBI on February 1, 2006 and he interalia stated as below:
Sugandh Estates & Investments P Ltd (SEIPL) has a current account with the branch
since August 02, 2004 and the directors of SEIPL have opened around 50 current
accounts.With regard to the 10181 demat account holders that were holding their
respective demat accounts with DP Karvy Stock Broking Ltd. (Karvy DP) and bank
accounts with Vijaya bank, Ahmedabad branch and who had made off market transfers of
IDFC shares to SEIPL prior to the date of listing, he stated that as the total number of
current accounts in the branch was not more than one thousand, the question of
having the said 10181 current accounts in the branch did not arise. He confirmed
that the branch did not have any of the account numbers indicated by the 10181
demat account holders as the current accounts at the branch were four digit
numbers where as the above 10181 demat account holders had indicated seven digit
numbers.
When asked to confirm whether any letter was issued by the branch to the above said
entities certifying their identity for the purpose of opening demat account with Karvy DP,
he stated that there were no records available at the branch indicating issuance of any
letter as above.
From the above statement of the Branch manager of Vijaya Bank, Ahmedabad it is seen
that none of the bank accounts of the Karvy DP clients, who had made off- market
transfer of IDFC shares to SEIPL, existed. From the earlier discussions, it is seen that
Karvy DP had opened demat accounts of the above clients accepting letters from Vijaya
Bank towards POI and POA. Since the bank accounts did not exist with the bank it
follows that the bank would not have issued the above letters.
During a subsequent visit to Ahmedabad branch, the officials of SEBI conducted further
verifications and the findings of the same are given below:
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1. Indian Overseas Bank (IOB):
In the Ahmedabad region, two branches of IOB had provided finance to Roopalben
Panchal group and Kelan Doshi group in IDFC IPO.
IOB, Stadium Road Branch:
a) Roopalben Panchal group: The branch had provided IPO finance of Rs. 23800/-
each to 12008 applicants aggregating Rs. 28.57 crores in the IDFC IPO.
b) Kelan Doshi group: The branch had provided IPO finance of Rs. 23800/- each to
2000 applicants aggregating Rs. 3.41 crores in the IDFC IPO.
c) It was seen that Roopalben Panchal group had opened savings accounts and in
each savings account, 50 additional names were added by enclosing a list with the
account opening form.
d) The refund was received directly from their Central Office, Chennai who had
received the same from Karvy Consultants Ltd.
e) The previous branch manager had surrendered the original loan documents to the
above persons who had availed IPO finance.
IOB, Thaltej Branch:
a) Roopalben Panchal group: The branch had provided IPO finance of Rs. 23800/-
each to 3118 applicants aggregating Rs. 7.42 crores in the IDFC IPO.
b) It was seen that Roopalben Panchal group had opened savings accounts and in the
each savings account, 50 additional names were added by enclosing a list with the
account opening form. These 50 names were introduced by Karvy Stock Broking
Ltd. by putting their seal on the list.
c) The refund was received directly from their Central Office, Chennai who had
received the same from Karvy Consultants Ltd.
d) It is seen that from the original loan documents that Karvy Consultants Ltd had
certified that the persons, who had applied for IPO finance to IOB, had demat
accounts with Karvy DP and the DP also certified their signature.
e) From the account opening forms, it is seen that Karvy Stock Broking Ltd had
introduced the some of the savings accounts.
2. Bharat Overseas Bank Ltd.
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During the visit to BhOB, Ahmedabad branch, the branch vide letter dated February
18, 2006, provided the following information
i. 6315 entities in the Yes bank IPO: In the case of Yes bank IPO, it was found
that 6315 entities, who had transferred 150 Yes Bank shares each to Roopalben
Panchal through off- market transactions, hade mentioned in the NSDL records
that they had bank account s with BhOB, Ahmedabad branch. On verification with
BhOB, Ahmedabad branch, it was found that the said entities do not hold bank
accounts with the bank. The details of some of these accounts taken on sample
basis are given below:
1 2 3 4 5 6
No. of Date of Present
persons account status of
Account number as who have opening the
mentioned in the quoted account
NSDL system. the said As per records of the
(New bank account account bank, (i.e. account
number as per the no. in the opening form), account is
Sr. computer system of NSDL held in the name of
No. the branch) system. following person.
Kalan (Doshi Kelan 3/8/2004 Live
1 15.100.8993 44 Atulbhai)
No account bearing such --- --
2 9 214 number in the system
Dipakbhai Devangi 4/12/2003 Closed
Panchal group (Devangi on April
3 54119 20 Dipakbhai Panchal group) 27, 2004
Kantilal J Shah (Kantilal J 18/3/2004 Live
4 15.100.8431 49 Shah)
No account bearing such --- --
Devangiben Dipakbhai 14/7/2003 Closed
(Devangi Dipakbhai on Dec
50874 Panchal and Dipak 12, 2004
6 (15.100.5264) 219 Jashvantlal Panchal )
Dipak Jashvantlal Panchal 14/7/2003 Closed
50886 and Devangi Dipakbhai on Dec
7 (15.100.5271) 231 Panchal 10, 2004
No account bearing such -- --
Dipakbhai Devangi 4/12/2003 Closed
Panchal group (Devangi on April
9 54119 2362 Dipakbhai Panchal group) 27, 2004
4/12/2003 Closed
Kantilal J Shah group on Jan
10 54120 1 (Kantilal J Shah group) 16, 2004
55045 5/2/2004 Closed
Arjav N. Panchal and
11 (15.100.8185) 2824 on Dec
Devangiben Dipakbhai
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1 2 3 4 5 6
No. of Date of Present
persons account status of
Account number as who have opening the
mentioned in the quoted account
NSDL system. the said As per records of the
(New bank account account bank, (i.e. account
number as per the no. in the opening form), account is
Sr. computer system of NSDL held in the name of
No. the branch) system. following person.
Panchal (Arjav N. 10, 2004
Panchal and Devangiben
D Panchal)
17/6/2003 Closed
on Oct
12 50795 205 Maruti SB 27, 2003
Series ranging --- ---
between 895820 to No account bearing such
13 967773 140 numbers in the system
The branch further informed as below:
• The above accounts were held in the name of the persons as indicated at
column no. 4 of the above table and not as per the number of afferent account
holders in column 3 wo cited the same bank account number.
• The branch provided a copy of the account opening form of the account
number 55045 (15.100.8185) held in the name of Arjav Panchal (shown under
sr. no. 11 of the above table), which contains a list of 50 names. However,
these 50 names are not appearing in the computer system of the branch.
• As regards, account number 50795 under sr. no. 12 above, the branch stated
that the account was exclusively opened for the purpose of financing of IPO
of Maruti Udyog Ltd in the year 2003. Though the account was opened in the
name of Maruti SB in the computer system, there were 153 number of Savings
bank (SB) applications attached to this account manually. Each SB application
carried one common name and 2 to 3 additional different names. All the
accounts were introduced by Karvy Investors Services Ltd. (Ahmedabad
Branch) and Karvy Securities Ltd. The branch also stated that even
though the said account was closed on October 27, 2003 after the said
issue, the same account numbers had been used for the subsequent issues
during the year 2004/2005 including Yes Bank issue.
• As per the records of NSDL, 140 entities were having their bank accounts
with BhOB, Ahmedabad branch in the series ranging between 895820 to
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967773. The branch informed that there were no such bank accounts held with
them.
14807 entities in IDFC IPO: In the case of IDFC IPO, it was found that 14807
entities, who had transferred IDFC shares to Roopalben Panchal through off-
market transactions, had mentioned in the CDSL records that they had bank
accounts with BhOB, Ahmedabad branch. On verification with BhOB,
Ahmedabad branch, it was found that the said bank accounts were not held
with the bank.
c. BhoB Ahmedabad branch confirmed that they had not funded the IDFC IPO.
However, it was seen that Roopal Panchal (through her bank account no. 15.100.9000
maintained with the branch) transferred an amount of around Rs. 14.28 crores on July
26, 2005 for the said issue. The refund for the same was received from Karvy
Consultants Ltd.(KCL) through BhoB, Hyderabad branch. KCL., vide letter dated
August 8, 2005 addressed to the Bhob, Hyderabad branch, enclosed a Bankers
Cheque no 103594 dated 5/8/2005 drawn on ICICI Bank Ltd. for Rs.28.17 crores
towards the refund of excess application money of IDFC issue and provided the list of
account holders to whom credit of this amount was to be done. As per the said letter,
KCL had funded these applications and had received a mandate letter from the
customers for collecting the refunds as well as adjusting the same against the loan.
KCL requested BhOB, Hyderabad Branch to debit Rs.26.08 crores to the customers’
account and pay the same in favor of Karvy Consultants Ltd. As per the list attached
by KCL, refund amount for account no. 9550 in the name of Devangi Panchal was
Rs.20.04 crores out of which Rs.18.56 crores was to be paid to KCL.
d. It was found that the following bank accounts of the Roopal Panchal group
maintained with BhOB, Ahmedabad branch were introduced by Karvy Securities Ltd.
and Karvy Investor Services Ltd.
Sr. No. Account No. Name of the account Introduced by

holder
1 50795/125 Devangi Dipakbhai Karvy Investor Services
Ltd.
2 50795/92 Panchal Devangi D Karvy Securities Ltd.
3 54119 Devangi Dipakbhai Panchal Karvy Securities Ltd.
3. Vijaya Bank
During the visit to Vijaya Bank, Ahmedabad branch, the branch vide letter dated
February 15, 2006, provided the following information
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a. As per the finding in the case of Yes Bank, Parag Jhaveri group entity viz.
Sugandh Estates and Investments Pvt. Ltd had received Yes Bank shares from
1315 entities through off- market transfers during the prelisting period. As per the
demat records, these 1315 entities were having their bank accounts with Vijaya
Bank, Ambawadi branch. On verification with the branch, it was informed that
these 1315 entities did not maintain accounts with the bank and 43 bank account
numbers as below in fact belonged to the directors of Sugandh Estates and
Investments Pvt. Ltd. maintained with Vijaya Bank, Ambawadi branch:
Sr. No. Primary bank Sr. No. Primary bank

account number account number
1. 2026 23. 2053
2. 2027 24. 2054
3. 2028 25. 2055
4. 2029 26. 2056
5. 2030 27. 2057
6. 2031 28. 2058
7. 2032 29. 2059
8. 2033 30. 2060
9. 2034 31. 2062
10. 2035 32. 2063
11. 2037 33. 2064
12. 2038 34. 2071
13. 2039 35. 2072
14. 2040 36. 2073
15. 2041 37. 2074
16. 2042 38. 2075
17. 2043 39. 2076
18. 2044 40. 2077
19. 2045 41. 2078
20. 2046 42. 2079
21. 2051 43. 2080
22. 2052
b. The branch informed that around 10 names were added as joint holders to each of
the above primary accounts.
c. It was found that in Yes Bank IPO, Parag Jhaveri had deposited refund instruments
in the name of 200 different persons into one account. There were many such
deposits into various accounts and the details are as given below:
Sl. No. Account Name of the No of Amount of Total

No. account holder persons each refund amount
Refund instrument deposited
instruments
deposited of
1. 2026 Parag P Jhaveri 200 43750 8750000
2. 2027 Parag P Jhaveri 200 43750 8750000
3. 2028 Parag P Jhaveri 200 43750 8750000
4. 2029 Parag P Jhaveri 200 43750 8750000
5. 2030 Parag P Jhaveri 200 43750 8750000
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6. 2031 Parag P Jhaveri 200 43750 8750000

7. 2032 Parag P Jhaveri 200 43750 8750000
8. 2033 Parag P Jhaveri 200 43750 8750000
9. 2034 Parag P Jhaveri 200 43750 8750000
10. 2035 Parag P Jhaveri 200 43750 8750000
The aforesaid 10 Over Draft accounts were introduced by Tushar Shah, director of Sugandh
Estates.
4. Data collected from Registrar of Companies, Ahmedabad:
SEBI officials visited the office of ROC, Gujarat and the details of
following companies were obtained from their filings to the ROC:
(I) Address of Registered office:
a. Sugandh Estates & Investment Pvt Ltd.: 1st Floor, Urja House,
Swastik Char Rasta, Navrangpura, Ahmedabad 380009.
b. Zenet Software Ltd.: 303, Anand Chambers, Near Old High Court,
Near Railway Crossing, Navrangpura, Ahmedabad, 380009.
c. Tauras Infosys Ltd: 3rd Floor, HN House, Near Old High Court
Railway Crossing, Navrangpura, Ahmedabad, 380009
d. Excel Mutitech Limited: 303, Anand Chambers, Near Old High
Court, Near Railway Crossing, Navrangpura, Ahmedabad, 380009
e. Arth Stock Broking Pvt. Ltd.:: 804, Abhijeet -1, Mithakali
Circle, Ahmedabad 380009
f. Sujal Leasing & Finance Ltd: H N House, Near Old High Court
Railway Crossing, Navrangpura, Ahmedabad, 380009.
g. Seer Finlease Pvt Ltd: H N House, Near Old High Court Railway
Crossing, Navrangpura, Ahmedabad, 380009
The names of directors and shareholders of the above companies are

given as below
a. Company Name: Sugandh Estates & Investment Pvt Ltd. The company has
mentioned following details in the Annual Return dated 30/9/2005 filed with
ROC:
Registered office: 1 st Floor, Urja House, Swastik Char Rasta, Navrangpura,

Ahmedabad 380009. Total issued number of shares: 10000 of Rs. 10/ each.
Name Address No of
shares held
Directors Jhaveri Parag Priyakant A/3 Embassy Apartment, Dr. V S 5
Road, Ambawadi, Ahmedabad-15
Rajhans Mukund M D-53 Premdan, Hudco, Ahmednagar- -
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414003
Jadhav Jayant E 63/3, Tambatkar Mala, opp. Mamta -
Gas, Gulmohar Road, Ahmednagar,
414003
Solanki Hitesh M B-9, Shubh Appartment, Nr. -
Avishkar Road House, Bopal,
Ahemedabad, 380015
Shah Tushar H 8, Nalkunj Society, Camp Road, -
Shahibaug, Ahmedabad, 380004
Shareholders Karia Ramniklal Suresh B/3 Embassy Apartment, Dr. V S 5
Road, Ambawadi, Ahmedabad-15
Iris Growell Pvt. Ltd. Bhavnav Apartment 1&2, Dr. 2500
Shirgaorkar Road, Panjim, Goa
Greenwood Agrofarm Bhavnav Apartment 1&2, Dr. 2500
Pvt. Ltd. Shirgaorkar Road, Panjim, Goa
Greensward Agrofarm 1st floor, Urja House, Navrangpura, 2490
Pvt. Ltd. Ahmedabad, 380009
b. Company Name: Zenet Software Ltd.. The company has mentioned

following details in the Annual Return dated 30/9/2005 filed with ROC:
Registered office: 303, Anand Chambers, Near Old High Court, Near Railway
Crossing, Navrangpura, Ahmedabad, 380009. Total issued Capital (number of
shares): 75,25,000 of Rs. 10/ each.
Name Address % of
shareholding
Directors Rajeshkumar 5, Shivam Satellite Society, B/h 38,80,100
Vithabhai Patel Kadamb Bunglow, Bodakdev,
Kirtiben Rajesh Patel 5, Shivam Satellite Society, B/h 19400
Kadamb Bunglow, Bodakdev,
Saryuben H. Vora 20, Basant Bahar Bunglow, Nr. -
Purshottam Nagar Bus Stop,
Bopal, Ahmedabad, 380058
Rakesh M-5, Room no.3, Bhadra Nagar, -
Sureshchandra Shah Malad (W), Mumbai, 400064
Bhupendra T Joshi Flat no-19, Shankar Krupa -
Building, Dindayal Road,
Dombivli (W), Thane,
Maharastra
Shareholders Vishal Subhash Patel 20, Avntika Park, Opp. Vaibhav 100
Buglows, B/h Sun N Step Club,
Memnagar, Ahmedabad, 380052
Kamalesh 6, Avantika Park, Khanpur, 100
Mahendrabhai Shah Ahmedabad, 380001
Dharmesh B Patel 22/b, Suryavan Appartment, Nr. 100
Judges Bunglow, Bdakdev,
Ahmedabad, 380015
Amar P Shah 26 D, Hari Park Society, Nr. 100
Ankur Bus Stop, Naranpura,
Ahmedabad, 380013
Mahendra K Sutaria Keshavpura, Nr, Rajur Tolnaka, 100
Gomtipur, Ahmedabad
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Dynacons Systems & 78, Ratnajyot Industrial Estate, 21,00,000

Solutions Ltd. Irla Lane, Ville Parle(W),
Mumbai, 400056
Babubhai R. Patel Darshak, 14/A, Swastik Society, 15,25,000
Punjabi Hall Lane, Navrangpura,
Ahmedabad, 380009
c. Company Name: Tauras Infosys Ltd. The company has mentioned following
details in the Annual Return dated 30/9/2005 filed with ROC: Registered office:
3rd Floor, HN House, Near Old High Court Railway Crossing, Navrangpura,
Ahmedabad, 380009. Total issued Capital (number of shares): 72,50,000 of Rs.
10/ each.
Name Address % of
shareholding
Nilesh Ramanlal 305-B, Kadamgiri, Ashok Road, -
Shah Kandivali (E), Mumbai, 400101
Shareholders Vishal Subhash Patel 20, Avntika Park, Opp. Vaibhav 100
Buglows, B/h Sun N Step Club,
Memnagar, Ahmedabad, 380052
Ramanlal Maganlal Dolly Chambers, Upper Ground 100
Patel Floor, Stadium Circle,
380009
Harshal Utpal Pandya A/1, Balaji Krupa Appt., Nr. 100
SBI, Memnagar, Ahmedabad,
380052
Mahendra Keshavpura, Nr, Rajur Tolnaka, 100
Khemchand Sutaria Gomtipur, Ahmedabad
Mumbai, 400056
Babubhai Ramanbhai Darshak, 14/A, Swastik Society, 12,50,000
Patel Punjabi Hall Lane, Navrangpura,
Ahmedabad, 380009
d. Company Name: Excel Mutitech Limited. The company has mentioned

Registered office: 303, Anand Chambers, Near Old High Court, Near Railway
Crossing, Navrangpura, Ahmedabad, 380009. Total issued Capital (number of
shares): 74,45,000 of Rs. 10/ each.
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Name Address % of
shareholding
Rakesh M-5, Room no-3, Bhadra Nagar, -
Sureshchandra Shah Malad (W), Mumbai, 400064
Shareholders Vishal Subhash Patel 20, Avantika Park, Opp. 100
Vaibhav Buglows, B/h Sun N
Step Club, Memnagar,
Ahmedabad, 380052
Paresh Rasiklal Patel Dolly Chambers, Upper Ground 100
Floor, Stadium Circle,
380009
Biren Mahendra 24, New Sharad Society, Nr, 100
Desai Vijaynagar Char Rasta,
Naranpura, Ahmedabad, 380013
Mahendra Keshavpura, Nr, Rajur Tolnaka, 100
Khemchand Sutaria Gomtipur, Ahmedabad
Mumbai, 400056
Babubhai Ramanbhai Darshak, 14/A, Swastik Society, 14,45,000
Patel Punjabi Hall Lane, Navrangpura,
Ahmedabad, 380009
e. Company Name: Arth Stock Broking Pvt. Ltd. The company has mentioned
Registered office: 804, Abhijeet -1, Mithakali Circle, Ahmedabad 380009. Total
issued Capital (number of shares): 4,00,000 of Rs. 10/ each.
Name Address % of
shareholding
Directors Shah Dineshchandra A/2, Labdhi Apt., 24- -
Nimesh Champaner Society, Usmanpura,
Ahmedabad, 380013
Shah Ajitbhai Ilesh 10, Shri Niketan Society, -
Shantinagar, Vadaj, Ahmedabad,
380013
Jhaveri Priyakant A/3, Embassy Apartment, Dr. V -
Kamal S Road, Ambawadi,
Ahemadabad, 380015
Panchal Jashwantlal 402, Shashwat, Opp. Gujarat 99600
Dipak College, Ellisbridge,
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Ahmedabad, 380006
Panchal Ranchodlal 15-Suryadeep Society, Nr.
Bhargav Takshashila Apartment,
Vastapur, Ahmedabad, 380015
Shareholders Arth Realty Pvt. Ltd. 803, Abhijeet-1, Mithakali 200000
Circle, Navrangpura,
Ahmedabad, 380009
Panchal Dipak 402, Shashwat, Opp. Gujarat 100000
Devangi College, Ellisbridge,
Ahmedabad, 380006
Bharti College, Ellisbridge,
Ahmedabad, 380006
Dina College, Ellisbridge,
Ahmedabad, 380006
Uma College, Ellisbridge,
Ahmedabad, 380006
Nila College, Ellisbridge,
Ahmedabad, 380006
(II) Physical verification of addresses of following entities was carried out by SEBI:
a. Sugandh Estates & Investment Pvt Ltd. at 1st Floor, Urja House,
Swastik Char Rasta, Navrangpura, Ahmedabad 380009: It was found that
the office at the said address was closed and was earlier occupied by
Videocon Appliances Ltd. and Videocon Industries Ltd.
b. Excel Mutitech Limited and Zenet Software Ltd located at 303,

Anand Chambers, Near Old High Court, Near Railway Crossing,
Navrangpura, Ahmedabad, 380009. It was found that the Anand Chambers was
located next to H N House. No office staff was found at the said office
no. 303. The security guard of the office, who was the only person
present at the office, stated that the office no. 303 belongs to H.
Nyalchand.
(III) It was also seen from Return of Allotment filed by Sujal Leasing &
Finance Ltd (Sujal) (one of the financiers identified in this order) with the ROC that the
company had allotted 50000 shares of Sujal to Shri Bahubali Shantilal Shah (Address:
Gujarat Samachar Bhavan, Khanpur, Ahmedabad-380 001) on March 20, 2005. In this
context it may be mentioned that during the course of preliminary scrutiny in the case of
IDFC it was found that Zenet Software, one of the financiers identified in this order had
made off- market transfer of 55,860 shares on August 10, 2005 to Bahubali Shantilal
Shah.
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(IV) Annual Return filed by Arth Stock Broking Ltd, having its address at 804, Abhijeet -
1, Mithakali Circle, Ahmedabad 380009, has following directors and shareholders:
Name Address % of
shareholding
Directors Shah Dineshchandra A/2, Labdhi Apt., 24- -
Nimesh Champaner Society, Usmanpura,
Ahmedabad, 380013
Shah Ajitbhai Ilesh 10, Shri Niketan Society, -
Shantinagar, Vadaj, Ahmedabad,
380013
Jhaveri Priyakant A/3, Embassy Apartment, Dr. V -
Kamal S Road, Ambawadi,
Ahemadabad, 380015
Dipak College, Ellisbridge,
Ahmedabad, 380006
Panchal Ranchodlal 15-Suryadeep Society, Nr.
Bhargav Takshashila Apartment,
Vastapur, Ahmedabad, 380015
Shareholders Arth Realty Pvt. Ltd. 803, Abhijeet-1, Mithakali 200000
Circle, Navrangpura,
Ahmedabad, 380009
Panchal Dipak 402, Shashwat, Opp. Gujarat 100000
Devangi College, Ellisbridge,
Ahmedabad, 380006
Bharti College, Ellisbridge,
Ahmedabad, 380006
Dina College, Ellisbridge,
Ahmedabad, 380006
Uma College, Ellisbridge,
Ahmedabad, 380006
Nila College, Ellisbridge,
Ahmedabad, 380006
It may be seen that Dipak Panchal and Kamal Priyakant Jhaveri (brother of Parag P.
Jhaveri) are directors.
15.0. Examination of Role of Depositories
In view of the inspection findings relating to DPs during the course of which significant
non-compliances with the regulatory requirements laid down by SEBI were noticed and
keeping in view the finding that Karvy DP had not only failed to exercise due diligence
while opening dematerialized accounts in fictitious/benami names and
providing/arranging finance for these fictitious/benami but also indulged in fabrication
of documents to cover its tracks besides seeking to place them beyond the pale of
scrutiny, SEBI examined in detail the role of Depositories in monitoring their DPs and
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their responsibilities in terms of compliances with the Depositories Act, 1996 and SEBI
(Depositories and Participants) Regulations, 1996. Before proceeding to the findings of
the examination, it may be pertinent to mention that the depositories have introduced in
the depository system separate fields for capturing permanent address and
correspondence address. Apparently, the permanent address field was not a mandatory
field. Vide circular ref:CDS/OPS/DP/588 dated October 20, 2005, CDSL stated that
“Since capturing Permanent Address is optional, sometimes the same is not captured in
the system…………
..….changes in the software to make the entry of Permanent Address mandatory while
opening a demat account, have been incorporated by CDSL in the on- line account set up
as well as in the BO setup through Upload procedure.” It may be mentioned that the
existence of the field of correspondence address in the depository system and the non-
mandatory nature of the permanent address field had assisted the key perpetrators and
their associates to perpetrate the mischief of opening demat accounts in fictitious/benami
names for cornering retail portion of the IPO. The periodical inspection of the DPs by the
depositories failed to reveal the irregularities in the opening of demat accounts by the
DPs. In terms of Section 4(1) of The Depositories Act, 1996, “A depository shall enter
into an agreement with one or more participants as its agent.” Thus, it is clear that the
depositories and DPs share a principal – agent relationship. In any principal – agent
relationship, the principal is liable for the acts of omission and commission of the agents.
Hence, it follows that the depositories are liable for the acts of the DPs. In the above
background, SEBI examined the role of depositories in relation to the opening of demat
accounts in fictitious/benami names and the consequent irregularities in various IPOs.
Background and functions of Depositories
The Depositories Act, 1996 provides for the establishment of depositories in securities
with the objective of ensuring free transferability of securities with speed, accuracy and
security. It does so by (a) making securities of public limited companies freely
transferable subject to certain exceptions; (b) dematerialising the securities in the
depository mode; and (c) providing for maintenance of ownership records in a book entry
form. In order to streamline both the stages of settlement process, the Act envisages
transfer of ownership of securities electronically by book entry without making the
securities move from person to person. The Act has made the securities of all public
limited companies freely transferable, restricting the company's right to use discretion in
effecting the transfer of securities, and the transfer deed and other procedural
requirements under the Companies Act have been dispensed with. Two depositories, viz.,
NSDL and CDSL, have come up to provide instantaneous electronic transfer of
securities.
The depositories are important intermediaries in the securities market. In India, the
Depositories Act defines a depository to mean "a company formed and registered under
the Companies Act, 1956 and which has been granted a certificate of registration under
sub-section (IA) of section 12 of the Securities and Exchange Board of India Act, 1992."
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The principal function of a depository is to dematerialize securities and enable their

transactio ns in book-entry form.
Dematerialisation of securities occurs when securities, issued in physical form, are

destroyed and an equivalent number of securities are credited into the beneficiary owner's
account. In a depository system, the investors stand to gain by way of lower costs and
lower risks of theft or forgery, etc. They also benefit in terms of efficiency of the process.
But the implementation of the system has to be secure and well governed. All the
participants have to be conversant with the rules and regulations as well as with the
technology for processing. The intermediaries in this system have to strictly abide by the
rules.
A depository established under the Depositories Act can provide any service connected
with recording of allotment of securities or transfer of ownership of securities in the
record of a depository. A depository cannot directly open accounts and provide services
to clients. Any person willing to avail of the services of the depository can do so by
entering into an agreement with the depository through any of its Depository Participants.
The services, functions, rights and obligations of depositories, are defined in The
Depositories Act, 1996. The principal function of a depository is to dematerialise
securities and enable their transactions in book-entry form. The securities are transferred
by debiting the transferor's depository account and crediting the transferee's depository
account.
Every depository must have adequate mechanisms for reviewing, monitoring and
evaluating the depository's controls, systems, procedures and safeguards. It should
conduct an annual inspection of these procedures and forward a copy of the
inspection report to SEBI. The depository is also required to ensure that the integrity of
the automatic data processing systems is maintained at all times and take all precautions
necessary to ensure that the records are not lost, destroyed or tampered with. In the event
of loss or destruction, sufficient back up of records should be available at a different
place. Adequate measures should be taken, including insurance, to protect the interests of
the beneficial owners against any risks.
Inspection, Accounting and Internal Audit by Depositories
NSDL obtains audited financial reports from all its DPs once every year. NSDL also
carries out periodic visits to the offices of its constituents - R&T agents, DPs and clearing
corporations – to review the operating procedures, systems maintenance and compliance
with the byelaws, business rules and SEBI Regulations. Additionally, DPs are required
to submit to NSDL internal audit reports every quarter. Internal audit has to be conducted
by a chartered accountant or a company secretary in practice.
The Board of Directors of NSDL appoints a Disciplinary Action Committee (DAC) to

deal with any matter relating to DPs clients, issuers and R&T agents. The DAC is
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empowered to suspend or expel a DP, declare a security as ineligible on the NSDL,

freeze a DP account and conduct inspection or call for records and issue notices.
If a DP is aggrieved by the action of the DAC, it has the right to appeal to the Executive
Committee (EC) against the action of the DAC. This has to be done within 30 days of the
action by DAC. The EC has to hear the appeal within two months from the date of filing
the appeal. The EC has the power to stay the operation of the orders passed by the DAC.
The information on all such actions has to be furnished to SEBI.
Settlement of Disputes in Depository System
All disputes, differences and claims arising out of any dealings on the NSDL, irrespective
of whether NSDL is a party to it or not, have to be settled under the Arbitration and
Conciliation Act 1996.
Termination by Depository – Besides these regulatory provisions, each depository may

have its own byelaws for termination or suspension of its DPs. NSDL's bye-laws provide
15 conditions under which it may terminate the operations of a DPs.
Examination of functioning of Depositories
In the light of the irregularities found in the IPOs of Yes Bank and IDFC wherein large
number of demat accounts (running into thousands) was opened by few people to corner
the retail portion of the IPO allotment, SEBI examined the role of depositories. SEBI also
looked into the inspections of the Depository Participants conducted by NSDL & CDSL.
Further SEBI verified whether the functioning of the depositories is in a manner which is
in the interest of the investors and the securities market.
For the purpose of the examination, SEBI obtained from NSDL and CDSL all the
inspection reports pertaining to seven DPs viz. Karvy Stock Broking, HDFC Bank, Pratik
Stock Vision Pvt. Ltd, IL& FS, Centurio n Bank, Wellworth Share & Stock Broking and
Dindayal Biyani Stock Brokers Ltd. These DPs were shortlisted on the basis of the
occurrence of large number of multiple accounts with same addresses with these DPs
found during the course of verifications done by CDSL. The follow up action regarding
action taken by disciplinary committee and penalties were also obtained from the
depositaries. Information was also called for regarding waiver of penalties if any. The
operation Inspection reports and the observation in sign-off reports were analysed to find
out the nature of inspection and the effectiveness of them in serving the purpose it was
actua lly intended for.
Procedure followed by NSDL with respect to inspection of DPs
Bye- laws of NSDL provides for inspection of DP wherein it is mentioned that where the
Executive Committee deems it necessary, it may appoint one or more persons as
inspecting authority to undertake the inspection of books of accounts, other records and
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documents of the Participant to the extent they pertain to Depository operations. The
inspecting authority appointed by Executive Committee under the bye law may be either
its own officials or outside professional.
On examination of the inspection report of seven DPs called for from NSDL it is seen
that the inspection of DPs is being carried out by NSDL on half yearly basis. Inspection
by NSDL covers the areas related to Operations and Systems of the DP. All the
inspections have been carried out by the officials of NSDL. It has been observed that
most of the inspections have been completed in a day’s time. It is seen that NSDL calls
these “inspections” as “visits”. Inspections are referred to by NSDL as “visits” in all
formal communications and not as “inspections” though byelaws use the tem
“inspections”. The use of term “visits” instead of “inspections” and not quoting of bye-
laws under which inspection is carried out in inspection notice may become a legal hurdle
if as a result of inspection, penal action is required to be taken. Further a visit has its own
ring of informality, besides lacking the seriousness of purpose.
Major observations are communicated to DP by way of ‘sign off’ report. Sign-off Report
is the list of violations observed and communicated to the DP in writing signed by
inspection team and DP officer on the conclusion of the inspection. It was also observed
that DPs subsequently file a compliance status with NSDL based on the sign-off report.
Thereafter, NSDL issues a formal letter to DP communicating uncomplied observations.
Further, from the inspection report it was observed that the sampling techniques used by
NSDL are not clear. for instance for the inspection of HDFC Bank carried out by NSDL
Officials in January 03, the number of sample checked for account opening - 20, Account
Transfer – 71; IDT- 14; Pledge – 12 and miscellaneous – 94 when the number of active
accounts were 73072 and 62 new accounts were opened in the last six months. It was
noticed that the sample size taken by the NSDL inspection team was not adequate and the
findings did not reflect the true picture on the ground. Hence, it is likely that the
violations brought out by the NSDL inspecting team are not indicative of the prevailing
ground reality as the sample size is very small.
Upon perusal of the inspection reports of the said seven DPs called for from NSDL and
CDSL the following were observed:
Inspection of HDFC Bank by NSDL
a. In the inspection report for the period January 2003 the sample size under the
head account opening was 20 where as the total errors observed are 39.
b. In the inspection report for the period July 2003, the number of active accounts
was indicated as 0, however later the figure was hand written and so was the
number of sample checked.
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c. In the inspection report of January 2004 the points covered under the head
"account opening" are only 10 as against 40 in other reports. The sample size was
also not indicated. Further, from the findings of the inspection team it is observed
that there were around 13 observations under the head account opening and 3
under the head account opening forms verified. However from the tabular report
for operational inspection it is observed that they have indicated only 3 cases
where address changed without obtaining any adequate proof. It is further seen
that no new accounts were opened in the last 6 months therefore it is not clear
which new account opening forms were verified by the inspection team and for
which period.
d. In the inspection report of July 2004, the number of active accounts increased
from 65,042 in January 2004 to 6,11,030 in July 2004 an increase of 5,45, 988
active accounts. Further, 1,83, 264 new accounts were opened in July 04 as
compared to no new accounts in July 2003 and January 04 however, as compared
to the increase in number of active accounts and number of new accounts the
sample size was very low at around 40. The inspection team did not observe any
error in the account opening procedure and have not commented on the increase
of new accounts from 0 to 183264.
e. In the inspection report of January 2005 it is observed that under the head
“miscellaneous ” at bullet no. 3 the list of errors mentioned therein continue to
exist even after the same were observed time and again by the inspecting team in
the last 4 inspections. Each time the team pointed out an error in a particular
account the DP merely rectified the same and sent a compliance report. There is a
possibility that in cases which did not form a part of the sample size the error
continued to exist till such time it was pointed out to them. This indicates lack of
due diligence on the part of the DP as well as depositories, as the Depositories
check for compliance of errors pointed out by the inspecting team in the last
inspection. The depositories also had not taken any action on the repetitive nature
of defaults by the DPs.
f. In the inspection report of July 2005 it is observed that the DPs continue to use
documents for proof of address even after being pointed out as not fit by the
inspection team in every visit. The same fact is not being brought out in the
inspection report and the DP is also not being penalized for continuing to use the
same documents for proof of address which have been pointed out by the
inspection team as not fit for being used as proof of address. In the same report it
has been observed that some of the errors pointed out in the previous inspection
continue to remain at the time of ne xt inspection and no action has been initiated
by the depository for continuance of such errors.
Inspection of Pratik Stock Vision Pvt. Ltd. by NSDL
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a. In the inspection report of January 2003 it was observed that the points covered
under the head "account opening" are 49 as against 40 points in the all other
reports.
b. In the inspection report of January 2004 the sample size taken for account
opening is 18 and the number of active account was 2985 as against 57 sample
size when the number of active account was 746. It may be seen that sample size
chosen by the officials of NSDL in their inspections is woefully inadequate and
have no correlation to the number of demat accounts held with a DP.
Inspection of IL& FS by NSDL
a. In case of inspection of IL&FS during May 2003, the deficiencies of the previous
visit were still found unrectified. The visit of November 2003 also shows the
deficiencies being repeated from previous visits without being corrected. In case
of November 2004 visit also, the non-compliances in previous report were
observed. The observations made in writing are not captured in the tabular format
used in the inspection report. Though there are 13 observations relating to account
opening in the written observations, the format shows only 10 errors involving 10
accounts.
b. In case of the inspection of May 2005 also similar observations were made. 16
written observations found on account opening, but the tabular form only shows
10 errors involving 8 accounts. Previous deficiencies relating to account opening
are also found in the inspection reports of May 2005 and November 2005.
4
Inspection of Karvy-DP Hyderabad by NSDL
a. In the Karvy Hyderabad inspection of May 2003, it is observed that NSDL

have stated “that dummy accounts were observed without having supporting
documents. This was observed during last visit also”. Though these dummy
accounts were found, no stringent action was taken. NSDL provides more stress
on getting NCFM certification and Hardware and software from vendors
approved by NSDL.
b. Karvy-DP replied to NSDL stating that all deficiencies have been complied with.
Subsequently, the same deficiencies relating account opening were observed in
the report of November 2003 also whe n about 5483 accounts were observed in
registered status where DP in practice was generating client ID entering only
client name and other details later which was observed in earlier visit too. No
action was taken or penalty imposed on the DP by NSDL.
c. In the inspection which is called “visit” by NSDL, of May 2004, the same errors
relating to account opening were found. It is seen that out of a sample of 48
accounts inspected for A/c opening, 21 accounts showed errors, which is about
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40% of the sample size, despite which NSDL did not take any action or impose
penalty.
d. In the inspection of November 2004 also, the errors relating to account opening
persisted. It is found that out of a sample of 53 accounts inspected for A/c
opening, 21 accounts showed errors, which is about 39% of the sample size,
despite which no action was taken or penalty imposed. On the observations of the
previous visit when checked for compliance, the report states that many of the
same deficiencies continue in present visit also despite reports from Karvy that
they have complied with the observations.
e. In the inspection of May 2005, the errors relating to account opening persisted. It
is seen that out of a sample of 60 accounts inspected for A/c opening, 30 accounts
i.e. 50% of the sample size showed errors, despite which no action was taken or
penalty imposed. On the observations of the previous visit when checked for
compliance, the report states that many of the same deficiencies continue in
present visit also despite reports from Karvy that they have complied with the
observations.
f. In the inspection of November 2005, the errors relating to account opening

persisted. It is seen that out of a sample of 96 accounts inspected for A/c opening.
22 accounts showed errors, which is about 22% of the sample size and no action
was taken or penalty imposed by NSDL. On the observations of the previous visit
when checked for compliance, the report states that many of the same deficiencies
continue in present visit also despite reports from Karvy that they have complied
with the observations.
Inspection of Karvy-DP Mumbai by NSDL
In case of Karvy Mumbai, during July 2003, there is a note about serious and recurring
errors but they do not appear in the tabular report. The tabular report shows 2
errors/deficiency, but the sample accounts showing errors show 17 accounts. It means
that these errors are not captured in the inspection report.
The following table shows the summary of inspection reports and findings relating to
account opening errors during 2003-2006.
Karvy Mumbai Jan-03 Jul-03 Mar-04 Sep-04 Mar-05 Sep-05

ACTIVE ACCOUNTS 10142 10030 15871 20546 22221 24222
OPENED LAST 6 MON 733 1000 5816 5245 3498 2914
A/C SAMPLE CHECKED 78 18 44 56 42 47
sampling % 0.769079 0.179462 0.277235 0.272559 0.18901 0.194038
TOTAL ERRORS 1 2 44 15 11 3
ACCOUNTS INVOLVING
ERRORS 17 31 14 9 3
% accounts having errors 94.44444 70.45455 25 21.42857 6.382979
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KARVY HYDERABAD May-03 Nov-03 May-04 Nov-04 May-05 Nov-05

ACTIVE ACCOUNTS 148682 184843 290383 360542 414118 450071
OPENED LAST 6 MON 20988 61002 116563 82777 9287 46498
sampling % 0.030266 0.030837 0.01653 0.0147 0.014972 0.02133
TOTAL ERRORS 6 5 21 21 30 22
ACCOUNTS INVOLVING
ERRORS 2 21 5 30 26
% accounts having errors 33.33333 0 100 23.80952 100 118.1818
IL&FS May-03 Nov-03 May-04 Nov-04 May-05 Nov-05

ACTIVE ACCOUNTS 64288 69961 82244 85929 88092 90780
OPENED LAST 6 MON 3146 8868 17162 8473 7945 7575
sampling % 0.040443 0.06718 0.053499 0.081463 0.089679 0.093633
ACCOUNTS INVOLVING
ERRORS 0 9 6 10 8 15
% accounts having errors 0 112.5 100 100 80 250
May- Nov-
Centurion Bank May-03 Nov-03 May-04 Nov-04 05 05
ACTIVE ACCOUNTS 15793 15585 17566 17765 17688 17615
OPENED LAST 6 MONTHS 361 1492 2823 1157 1699 826
sampling % 0.18996 0.07058 0.23341 0.202646 0.29964 0.3066
ACCOUNTS INVOLVING
ERRORS 0 0 1 2 15 5
% accounts having errors 0 0 0 100 214.286 250
Pratik Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05

ACTIVE ACCOUNTS 661 746 2985 3071 2307 2386
A/C SAMPLE CHECKED 57 18 44 42 37
sampling % 7.64075 0.60302 1.432758 1.82055 1.5507
TOTAL ERRORS * 0 9 12 4 7
ACCOUNTS INVOLVING not
ERRORS legible 0 6 9 8 7
% accounts having errors 66.6667 75 200 100
HDFC BANK Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05

ACTIVE ACCOUNTS 73072 64598 65042 611030 479706 733657
A/C SAMPLE CHECKED 20 26 *** 40 87 174
sampling % 0.02737 0.04025 * 0.006546 0.01814 0.0237
ACCOUNTS INVOLVING
ERRORS 6 6 26 0 11 10
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% accounts having errors 15.3846 866.667 64.7059 14.925
a. From the above table, it is observed that the sample used for observations are
pathetically low, always less than 1% and mostly less than 0.1% in these
inspections. Further it is interesting to note that though the numbers of accounts
have increased (doubled) during the year, the sample size remained the same.
b. It can be also observed that in case of new accounts opened, the errors are quite
high i.e. about 50% of the accounts inspected have errors. In some case it is 100
% i.e. all the accounts inspected have errors. The range of the errors is also very
wide from 6% to 100 %. It further shows that the reliability of these inspections is
very low over a period of time. In some inspections, the numbers of errors found
are large, while in the next one it drops drastically. The time allowed for these
inspections also casts doubts on the reliability of these inspections.
c. Further it is also observed that the table format which shows the errors and their
number do not correspond with the actual errors and their number found in the
annexure which details the number of the account and the deficiency found. As a
result some instances are found where the accounts involved in errors are more
than 100%. This has happened because the report shows fewer errors like in case
of Karvy Hyderabad inspection of November 2005, it is found that the table
shows 22 errors in total, but the annexure shows 26 accounts which have account
opening errors. This is not possible because one account should have at least one
error. Hence there are errors in the inspection report itself.
d. There is recurrence of same errors in account opening repeatedly in inspection

after inspection. NSDL makes comments of them in their reports. The DPs send
confirmation letter stating that they have rectified all deficiencies. In the next
inspection, the same error recurs, and the cycle goes on. Penalty is hardly levied
for these deficiencies, while penalties are levied for employees of DPs not having
NCFM certification. The DPs are aware that account opening errors are not
seriously taken by NSDL and hence do not take steps to prevent these errors
from recurring. This seems to have been a regular practice over the years which
have made non-compliance while account opening a regular feature. The
depositary turns a blind eye to these deficiencies which has led to its recurrence
again and again.
Penalties and waivers
An analysis of the penalties imposed by NSDL for various non-compliances in respect of

five DPs is tabulated below:
karvy
% to % to total
total penalty(in
Instances rupees
non-compliance Instances penalty terms)
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Qualified personnel not appointed as per NSDL

requirement 5 12.19512 92000 51.45414
Quarterly Internal Audit Report not submitted (by
stipulated time). 17 42.50 17500 9.787472
No/inadequate control over issuance and/or acceptance of
instruction slips. 5 12.50 9000 5.033557
Not taking back up daily and/or deviation in procedure of
taking backup 5 12.50 25000 13.9821
Account closure/ freezing/ unfreezing /transmission not
done as per NSDL requirements. 2 5.00 5000 2.796421
Account opened without obtaining adequate proof of
identity and/or proof of address and no adeaquate proof of
address collected for change of address. 2 5.00 1700 0.950783
address collected for change of address. (observed in two
consecutive inspections) 1 2.50 10000 5.592841
Client account debited without receiving proper
authorisation from clients. 1 2.50 5000 2.796421
Data entry errors/ommision which may cause
inconvenience and/or loss to the client / system / DP /
NSDL 1 2.50 4600 2.572707
Delay in processing of demat requests beyond 7 working
days after receipt 1 2.50 5000 2.796421
instruction slips. (observed in two consecutive inspections)
1 2.50 4000 2.237136
Total 41 178800
Centurion Bank Limited
taking backup 1 33.33 5000 29.41176
requirements 1 33.33 10000 58.82353
Total 3 17000
Infrastructure Leasing & Financial Services Limited

stipulated time). 1 12.5 1500 3.215434
taking backup 1 12.5 5000 10.71811
requirement 4 50 34850 74.70525
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Total 8 46650
HDFC Bank Limited
requirements 8 80 750250 99.46967
Statement of transactions not being sent to clients as
required by regulations. 2 20 4000 0.530328
Total 10 754250
Pratik Stock Vision Private Limited
taking backup 1 100 5000 5000
total 1
It can be seen that most of the penalties are for qualified personnel not appointed as per
NSDL requirements/NCFM certification. NSDL has charged Rs. 15,000 to 7,50,000 for
this non-compliance in case of HDFC bank. In case of IL &FS for account opening
deficiency only Rs. 300 has been charged in one instance, whereas for qualified
personnel not appointed as per NSDL requirements/NCFM certification there are 4
instances of fine ranging from Rs 3150 to Rs 10,850. In case of Karvy 40 instances of
penalty being imposed were observed. There were 17 instance where a penalty of Rs
500 to RS 2000 was imposed for Quarterly Internal Audit Report not submitted (by
stipulated time). In case of account opening errors there were two instances where
Rs. 600 and Rs.1100 was charged. When there was recurrence Rs.10,000 was
charged. In case of qualified personnel not appointed as per NSDL
requirements/NCFM certification there were five instances and penalties ranging
from Rs.10,000 to Rs.50,000 were levied.
The penalties levied do not correspond to the deficiencies found during the inspection of
DPs. It can be observed that though large numbers of deficiencies were noted with regard
to account opening and other operational matters no penalty is levied for repetitive
instances of account opening deficiencies. Instead the focus is on NCFM certification
which is provided by NSE. It can be observed that in case of all five DPs, the penalties
levied is more than Rs.10000 and in some cases upto Rs.7,50,000 for non –compliance
with NCFM certification, which is more an internal matter between the DPs and NSDL.
In case of deficiencies found for non-compliances with statutory requirements,
which were found in the inspection, they were not considered by NSDL to be fit for
levying penalty.
There are also instances of waiver of penalties by NSDL. In case of the said five DPs
there were 14 instances of waiver of penalty by NSDL. The following table shows the
summary of penalties levied and the percentage analysis.
karvy
% to % to total
total penalty(in
Instances rupees
non-compliance Instances penalty terms)
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requirement 5 12.19512 92000 51.45414
stipulated time). 17 42.50 17500 9.787472
taking backup 5 12.50 25000 13.9821
Account closure/ freezing/ unfreezing /transmission not
done as per NSDL requirements. 2 5.00 5000 2.796421
address collected for change of address. (observed in two
consecutive inspections) 1 2.50 10000 5.592841
Data entry errors/ommision which may cause
inconvenience and/or loss to the client / system / DP /
NSDL 1 2.50 4600 2.572707
Delay in processing of demat requests beyond 7 working
days after receipt 1 2.50 5000 2.796421
instruction slips. (observed in two consecutive inspections)
1 2.50 4000 2.237136
Total 41 178800
Centurion Bank Limited
taking backup 1 33.33 5000 29.41176
requirements 1 33.33 10000 58.82353
Total 3 17000
Infrastructure Leasing & Financial Services Limited

stipulated time). 1 12.5 1500 3.215434
taking backup 1 12.5 5000 10.71811
requirement 4 50 34850 74.70525
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Total 8 46650
HDFC Bank Limited
requirements 8 80 750250 99.46967
Statement of transactions not being sent to clients as
required by regulations. 2 20 4000 0.530328
Total 10 754250
Pratik Stock Vision Private Limited
taking backup 1 100 5000 5000
total 1
It is found that the in most of the cases the penalty imposed for failure to obtain NCFM
certification is more than 50% of all instances where penalty has been imposed. The
monetary penalty levied for not obtaining NCFM certification is also very high compared
to penalties for account opening deficiencies. The money levied as penalty for account
opening errors has been only 0-5% whereas for NCFM certification deficiencies the
money levied as penalty has been 51% to 99.46% of the total penalty levied from a DP.
It was found that NSDL waives off penalties if the DP concerned rectifies the
deficienc ies. The observations reported by DP as complied with in its first reply after
conclusion of inspection do not attract any penalty in any case. Thus NSDL does not
impose penalties for violations rectified immediately after inspection, does not impose
penalties harsher than monetary penalties for the remaining violations and also waives the
penalties imposed if the DP reports rectification of deficiencies. This system creates no
dis-incentive or deterrent for a DP to comply till NSDL inspects and finds the violation,
since rectification after inspection assures that no penalty of any kind is imposed on DP.
It was observed that regardless of the type of DP (broker, Bank etc.) and regardless of the
size of the operations of the DP concerned, NSDL devotes usua lly only one day for
inspection. Also, NSDL has allotted a fixed time for each area of DP’s operation and the
time allotted remains the same irrespective of the quantum of instructions processed by
the DP.
Failure to take Appropriate Penal Action for Repetitive Violations
It was observed that NSDL had not taken appropriate penal action against DPs for
repetitive violations by DPs observed by NSDL during inspections. NSDL’s action has
never gone beyond imposition of monetary penalties. Penalties are waived off even for
serious violations like inadequate control by DPs in DIS processing and client account
debit without proper authorization.
Disciplinary Action Committee
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The Disciplinary Action Committee of NSDL has such responsibilities and powers as are
delegated to it by the NSDL Board, from time to time, which includes the following
responsibilities and powers to be discharged in accordance with the provisions of these
Bye Laws:
i) suspension of a Participant;
ii) expulsion of a Participant;
iii) declaring a security as is ‘ineligible’ on the Depository;
iv) freezing the account of the Participant;
v) powers to conduct inspection;
vi) power to conduct an investigation/inquiry, call for records, to issue show cause
notice to Participants for suspension/expulsion.
Inspite of repeated violations by DPs (many of them serious) as brought out above, the
depository has not made any reference at all to its Disciplinary Action Committee. The
Disciplinary action committee (DAC) of the depository had not met since its inception.
Procedure followed by CDSL with respect to inspection of DPs
Inspection reports for the seven Depository Participants were also called for from CDSL.
On perusal of inspection report it was found that CDSL gets its inspection conducted by
outside professionals. The inspection reports are not indicative at all. From the inspection
report it is very difficult to draw a conclusion as it is in ‘Yes’ and ‘No’ format.
The inspection reports of CDSL are of poor quality and no effort is taken by CDSL to
work on the format of the inspection report. However, the special inspection conducted
by CDSL which too has been conducted by outside professionals has covered all the
points in detail unlike its earlier ‘Yes’ and ‘No’ format.
.
Summary of Findings Relating to the Role of Depositories
a. From the above it can be concluded that the depositories have carried out the
inspections of Depository Participants registered with them in a casual, cursory
and perfunctory manner.
b. Also there is recurrence of same errors relating to account opening as noticed in

inspection after inspection and NSDL has commented on them in their reports
year after year. However, the same error recurs and the cycle goes on. This has
made non-compliance while account opening a regular feature.
c. NSDL imposes penalty for non compliance with NCFM employee requirement
however, no penalty is levied on not meeting the statutory requirement.
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d. Regardless of the type of DP (broker, Bank etc.) and regardless of the size of the
operations of the DP concerned, NSDL devotes usually only one day for
inspection. Also, NSDL has allotted a fixed time for each area of DP’s operation
and the time allotted remains the same irrespective of the quantum of instructions
processed by the DP.
e. The sample size chosen by NSDL in their inspections is woefully inadequate.
f. NSDL had not taken appropriate penal action against DPs for repetitive violations
by DPs observed by them during inspections. NSDL’s action has never gone
beyond imposition of mo netary penalties.
g. Most instances of levying of penalty are for mostly non compliance with NCFM
employee requirement where penalties upto Rs.3,50,000 has been imposed. In
case of account opening deficiencies the penalty is only 500-1000 rupees and the
instances are few.
h. The reliability of the inspection reports is very low as there are grave errors like
the number of errors being shown lesser than the number of accounts involving
errors.
i. Thus it can be concluded that NSDL was aware of the irregularities in connection
with opening of accounts from the year 2003 which is evident from the inspection
report of HDFC Bank, Karvy Stock Broking etc. They failed to take prompt
action against the DPs and failed to inform SEBI of the same.
j. As for CDSL their inspection reports are not indicative at all. From the inspection
report it is very difficult to draw a conclusion as it is in ‘Yes’ and ‘No’ format.
k. From the above it can also be drawn that the Depositories were aware of the
possibility of existence of accounts being opened without proper KYC Process as
early as 2003 and has not put in place system to detect such accounts and take
appropriate action. Thus it is felt that the depositaries have turned a blind eye to
these deficiencies which has led to its recurrence of error in account opening
repeatedly, in a big way later.
l. It was also observed that the procedure for inspection, periodicity of inspection
and the entity chosen for inspection has not been in line with the responsibility
cast on the depositories. Further, from the format of inspection reports of the
Depositories it is observed that the inspection is system specific rather than entity
specific.
m. From the above it can be inferred that there is no culture of

supervision/compliance and the nature of compliance is merely paper work.
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n. There was no application of mind while conducting these inspections. The way in
which the penalty was imposed and then again waived when the DPs submit a
paper saying they have complied shows a callous attitude towards statutory
requirements by the depositaries especially when the account opening deficiencies
recur among the large percentage of the sample collected during all inspections
from 2003-2006.
o. The levying of penalties which runs into lakhs for non-compliance with NCFM
certification of employees of DPs by NSDL and only penalties in range of
hundreds and few thousands for account opening deficiencies shows that NSDL
does not use a fair and objective criteria while levying penalty.
p. The depositories are required to have adequate controls, systems and procedure
for monitoring and evaluating its compliances with statutory requirements and
prevent any conduct by DPs which is detrimental to the interest of investors or the
securities market. In this respect, the depositories have failed to perform and
supervise the operations of the DPs and also failed to inform SEBI of the same
deficiencies. Hence the depositories have failed to conduct themselves in a
manner which is in the interest of investors and the securities market.
System Audit of NSDL by iSec Services (P) Ltd.
SEBI investigations in the IPOs of Yes Bank and IDFC revealed significant irregularities
in opening of demat accounts by Karvy-DP in NSDL. These findings raised concerns as
to the systems and processes in place at NSDL for monitoring and preventing
irregularities relating to opening of and operations in demat accounts. Hence, SEBI
engaged a firm, namely iSec Services (P) Ltd. to conduct system audit of NSDL. The
salient findings of the system audit report are narrated in the succeeding paragraphs.
IPO Process
Demat accounts are mandatory for making IPO applications. Besides the demat account a
bank account is also needed. One way multiple applications could be made are with many
names (sometimes fake) sharing similar addresses. Similarly bank accounts needed to be
opened with these fake names and addresses.
NSDL’s systems allow accounts to be stored in the DM (Depository Module) databases

with no check on the addresses and other details at the DM. There is also a provision for
including correspondence address. This correspondence address has been used for
sending refund orders and also intimation regarding allotment of shares to the eventual
financiers.
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Account opening-Karvy Stock Broking Ltd as a DP
a. Agents of Karvy opened most depository accounts having same addresses. These
agents had no legal sanction. In fact SEBI (D&P) regulations as well as the
agreement, which NSDL signs with DPs (Depository Participant), prohibits such
work without prior permission.
b. This was never checked or reported either by the internal auditors (Haribhakti & Co)
of Karvy or by external inspection teams of NSDL.
c. These agents had ready- made stamps of addresses, which were affixed on the
application forms. This too has never been reflected either in the internal audit reports
or the Inspections by NSDL
d. These agents after collecting the papers had local data entry operators enter the data
on a magnetic media. This activity went unnoticed all along. In fact the entire process
of verification of addresses and identity was bypassed by this operation.
e. This data was given to the front office of local Karvy offices in India (428 offices)
along with paper work.
f. Local offices then sent the CD containing the data to Karvy in Hyderabad.
g. Karvy Hyderabad, uploaded this data for account opening with NSDL.
h. NSDL’s DM application never checks the data uploaded by DP.
i. Due to slack internal controls and supervision these accounts came to exist. Once the
accounts got opened they were ready to be used for any subsequent IPOs
The system audit report made significant observations detailing the modus operandi and
also possible complicity of entities involved in the process of IPO allocations i.e. NSDL
and Karvy:
Contributory Negligence of NSDL
a. NSDL never could capture the fact that there were agents being used for opening of
demat account by Karvy DP. This is in spite of the six monthly inspections conducted
by NSDL at various locations of Karvy. This leads to the impression that Inspectio ns
were perfunctory besides facilitating fictitious / benami / multiple accounts
b. If the DP work related to account opening is not being monitored by NSDL, then this
raises a question regarding the purpose of the activity of Inspection or ‘visits’ by
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depository. In fact the inspection forms include sub sections for checking account
opening.
c. NSDL never physically verifies the DP prior to recommending the registration of DP

with SEBI. This is quite serious as it may get a DP recommended without complete
knowledge of where it exists.
d. Inclusion of the field for correspondence address in the depository system was a
major step in helping the financiers achieve their collateral purposes. NSDL
additionally introduced correspondence address (viz, the address of Financier)
in the DP system, despite SEBI refusing to accede to their request. Similarly
CDSL went on its own to have correspondence address (address of Financier)
without due approval of SEBI and withdraw the same on October 20, 2005 in the
wake of SEBI pro be. This greatly facilitated the financiers to have real time
control over the transactions of afferent accounts in the DP system besides direct
control on payments, refunds, credit advice etc. without having to go through the
rigmarole of routing the transactions through individual afferent accounts which
are time consuming and laborious besides complicating the process of settlement
of financial refunds. This particular relaxation through the incorporation of
correspondence address in DPM for afferent account holders with a
preponderant size and variety with all the attendant complexities of control in
operation has made it facile and easy for the financiers to hoodwink the system
and perpetrate the mischief while virtually entering into direct dealings with DP
/ Registrar to the Issue without the necessity of having the façade of afferent
account holders.
e. Integrity of Account creation dates, which are essential for maintaining integrity of
any financial systems, has not been maintained in NSDL systems. All account
creation dates prior to 16/4/1999 are dummy dates in DM software. There are many
other fields where the junk data is entered in the DM database.
f. NSDL has never had the application code verified by any third party. While maker
and checker is an established process in financial industry, this has not been followed
till date by NSDL in its own systems as the DM software never verifies any data
except for the fact that it came from a valid DP id.
g. Physical verification has revealed that on the mainframe that hosts the DM and
database there is no evident control on creation of users and groups.
h. There is no evidence of monitoring any of the access logs on the mainframe.
i. There is no documentation to disclose the management intent to monitor or audit the

logs created on mainframe.
j. NSDL till date has made no byelaws for any internal monitoring review and control
of its processes as required under Section 26 (p) of Depositories Act, 1996 as well as
section 34 of SEBI (Depositories and Participants) regulations, 1996. Auditors have
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pointed this out for IS (Information System) audit at different times but have never
been implemented.
k. NSDLs internal auditors (Aneja & Associates) have been appointed since 1998 and
do not have any agreement signed between NSDL and the auditors. The reports are at
best perfunctory and some times do not maintain temporal integrity.
l. Besides email from prospective participant in Form A and Form B, NSDL as per its
process does not have any independent proof of the place where the DP is going to
keep the software supplied by NSDL
m. Checking for connectivity etc is carried out remotely as indicated in the statement of
Mr. Milind Mungale. The premises where the DPM software is to be stored is never
verified by NSDL as per their statements.
n. It is difficult to accept how adequacy of infrastructure is being affirmed if there was

no physical visit to the prospective participant site
o. In case of Karvy DP too as per the statement of Mr S Gopalan, Company Secretary,

NSDL, the recommendation to SEBI was made primarily on the Form A and B filled
by the participant. No physical verification was ever done.
p. In fact Karvy DP subsequently applied for more DP IDs. They currently have 4
DP ids. One each in Mumbai, Lucknow, Hyderabad and Bangalore. Existence
of these additional DP IDs besides Hyderabad has never been brought to the
notice of SEBI. This also is clear from the documents perused and admitted by
Mr S Gopalan in his statement.
q. Agreements entered into between the depository participant and NSDL does not
mention its compliance to SEBI Act 1992 and is not notarised.
Complicity of Karvy
a. Haribhakti & Company has been their internal auditor since beginning of 1997 when
Karvy became DP as well as Share transfer agent. They have never pointed out any
flaw in case of account openings with similar addresses.
b. Karvy Stock broking Ltd (DP) and Karvy Computer Share Pvt Ltd (STA) have the
same person, Mr. V Mahesh signing the sign off reports for inspections done by
NSDL. This implies that there was only one compliance officer for two different
entities. This violates the essence of regulations under section 58(b) of SEBI (D&P)
regulations, 1996. It is surprising that the Inspection teams of NSDL did not point this
out.
Inclusion of additional address in the DPM application
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i. NSDL had initially on August 3, 2004 through its letter

NSDL/PI/SEBI/2004/PP/0784 sought SEBI’s advice on the following “.
permission to capture the address of financier in the DPM system….all
correspondence including refund orders will be received by the financier”
ii. SEBI refused the permission vide its letter dated 30th August, 2004 No,
MRD/ARR/NSDL/19297/04
iii. NSDL again wrote back on October 18, 2004, letter no.
NSDL/PI/SEBI/2004/SU/1150 again seeking permission to add financiers address
iv. NSDL went ahead and added the address in the DPM software on 02/07/2005 as
per their version no. 3.9
v. As of now there exist two addresses for each client. One address is the local
address and the other address is correspondence address.
vi. Once the data is uploaded by the DP, DM software performs no checks and
accepts the data as it was uploaded by the DP.
vii. TCS in its statement confirmed that since inception the software designed for
NSDL was never required to check for similar addresses and similar na mes. They
stated that they developed this as per the requirements of NSDL.
Existence of Dummy Dates
i. Account creation dates for period prior to 16/4/1999 are dummy (0001-01-01).
These have been filled up after this field was added in 16/4/1999. No updating of
these fields have been done till date.
ii. Account activation dates got added in release 3.9 on 2nd July 2005 , all dates
prior to this date are filled with the dates of 9999-12-31
iii. In case of minor nominee the date of birth is entered in DM database as 0001-01-
01
iv. TCS has confirmed that this was done as desired by NSDL
Existence of agents for opening of client accounts
i. In case of Karvy client accounts were opened with the help of agents. These
agents also had this data entered on computer media through third party data entry
operators. This has been confirmed by Mr. V Mahesh of Karvy Stock Broking
Limited, Hyderabad in his statement.
ii. Client data in electronic form is sent to Hyderabad along with papers. At
Hyderabad they scan the signature and upload the data for opening of the client
id.
iii. These agents were not given any specific permission by NSDL and this fact was
never captured in any of the inspections carried out by NSDL.
Section 26 of Depository Act: Bye-Laws
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Internal reviews are essential for an organisation to measure effectiveness of its controls.
Depository Act, 1996 section 26 (2) (p) exhorts any depository to draft byelaws for its
internal operations. It states that
“…byelaws shall provide for …the internal control standards including procedure for
auditing, reviewing and monitoring”
However, in the case of NSDL there are no byelaws for internal controls standards
including procedures for auditing, reviewing and monitoring. This has been confirmed on
physical verification as well as the statement of Mr S Gopalan.
Regulation 37: Manner of keeping Records
Regulation 37 of SEBI (D&P) Regulations states that “Where records are kept
electronically by the depository, it shall ensure the integrity of the automatic data
processing systems is maintained at all times…….”
In this regard, the following observations emerge in respect of NSDL:
a. there are dummy dates entered in the DM database in respect of the client ids created
prior to 16/4/1999. These dates have numbers like 0001-01-01. This has been
confirmed in the statement of Mr Dharmesh Parekh
b. Similarly account activation dates prior to 2nd July 2005 are all dummies and exist in
format of 9999-12-31. This too has been confirmed in the statement of Dharmesh
Parekh
c. In case of no minor no minee his date of birth is entered in DM database as 0001-01-
01
Regulation 35 of SEBI (D&P) Regulations: External monitoring, review and

evaluation of systems and controls of the depository
Regulation 35 of SEBI (D&P) Regulations states that “ Every depository shall cause an
inspection of its controls, systems, procedures and safeguards to be carried out annually
and forward a copy of the report to the board”
In compliance with these provisions, in addition to the reports submitted by the internal
auditor of NSDL viz. Aneja and associates there were four external audits done since
1996. These audits are
a. KPMG IS Audit as per SEBI’s order dated May 24, 1999

b. Penetration testing by IIT Mumbai as per NSDL order dated August 1, 2000
c. IS audit by M/s Haribhakti & Co as per SEBI order dated August 22, 2002
d. IS audit by Moore Rowland Consulting Private Limited as per NSDL order dated
September 22, 2004
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Observations –Process Audit
a. There is no documented process for performing or reviewing the audits. This has
been admitted by Mr. C Tilak in his statement
b. Aneja & Associates have been appointed vide NSDL letter dated June 24, 1998 to
do operations reviews, which are done on a bi monthly basis. Their use for external
reviews as per Regulation 35 of the SEBI (Depository and Participants) Regulations
raises concerns of conflict of interest.
c. Period of audit has been changed without any appropriate reason. Initially it was
November to October and now it is January to December.
d. While audit reports raised serious concerns on account opening and procedures
for checking of address and Identity of clients, there is no evidence of any action plan
initiated by NSDL to address these observations
e. Audits have observed lacunae in variable access rights not being implement ed by
the DPs in almost all their reports.
f. Lack of proper backup procedures is also highlighted in almost all the reports
since 1999.
g. There is no evidence of the audit report being considered by the management of

the NSDL prior to submission to SEBI.
h. No action plan for any corrective measures as an outcome of the audit is evident.
i. Some of the Audit reports do not pertain to the period that they ought to have
covered in their audit, making the audit reports loose sanctity as per the mandate defined
in regulation 35 of the SEBI (Depository and Participant) Regulations.
Observations –IS Audits
a. All audits by external agencies have been done in an ad hoc manner. Out of the
four audits two were mandated by NSDL and two were ordered by SEBI
b. There is no periodicity or standard scope for any of these audits
c. In fact till date there is no specific policy for external audits, which exists at
NSDL.
d. Some of the issues raised as early as October 1999 by KPMG in their report have
not been formally addressed by NSDL in form of any management response. There is
no evidence of any follow up plan at least for KPMG report, which went into the
details of IT controls and Business Processes.
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Inspection Process -NSDL
NSDL carries out inspection of depository participants once every six months. There are
specific forms which get filled indicating the Operations and Systems in place at the
Participant.
Observations
a. Periodicity of Inspections is not as per any established document.

b. There are two sets of process documents which exist one is dated October 21st, 2002
and the other one is undated.
c. This inspection process is not defined in the bye laws. This fact is revealed in the
statement of Mr. Amit Sinha.
d. In case of the inspection of Karvy Stock Broking Ltd for its Mumbai Branch, it was
revealed that the inspection reports at no point captured the fact that there existed
agents of Karvy DP who went around getting the client opening forms filled and did
the POA (Proof of Address) and POI (Proof of Identity) checking. This fact has been
admitted by Mr. Amit Sinha in his statement as well as Mr. S Gopalan in his
statement.
e. Review of internal audit done at DP is an essential part of the inspection process as
per the manual of inspections which was shown to iSec. On physical verification of
the last Inspection Audit of Karvy’s Mumbai office the fact that there exists no
procedure or system for any fraud reporting and also the fact that maker and checker
facility is almost non existent, was never noticed in the Inspection Report.
f. Opening of client ids is a major activity for the DP, at no point of time does the
Inspection Team ever test verify the details by physically calling a person and looking
into his documents during inspection. This fact too has been admitted by Mr Amit
Sinha in his statement.
Visit to KarvyDP by System Audit team
The observations emerging from the visit by the System Audit team to the offices of
Karvy in And heri Industrial Estate, Mumbai are given below:
a. The back office existed in the same place where the DPM clients were located
b. The Maker and Checker concept was hardly evident, with as many as 25 users in the
application
c. No auditing was enabled on any of the DPM client machines
d. There were generic users on the DPM server
e. Policy for auditing system, application and security events was not uniform
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f. There was no evidence of any log monitoring or any process for the same at Karvy.
Logical Security
Logical security as it exists on the mainframe and also the LAN was checked. NSDL has
a datacenter which houses the mainframe as well as other servers. The observations
regarding the mainfram are given below :
a. NSDL does not have a policy for creation of groups in RACF. This has been
confirmed in the statement of Mr Nityanand Phatarphod
b. Logs which get generated are not monitored
c. Creation and deletion of users is not monitored in a routine manner
d. User with name « Dummy » exist in the RACF groups which indicates that there is
litlle control or monitoring of users and groups which exists in RACF
e. There is no time sychronisation mechanism between the DM software and the DPM
application. This has been confirmed as per the statement of Dharmesh Parekh.
f. There is also no SLA between TCS and NSDL besides the contract for time and
material services.
Integrity
The observations on the integrity of data maintained by NSDL is given below:
a. NSDL has filled the client creation date prior to 16/4/1999 with 0001-01-01 dates
b. The dates for client activation prior to 2nd July 2005 have been filled with 9999-12-31
c. Date of birth for minor has been filled with 0001-01-01
d. Closure date has been filled with 0001-01-01
e. RBI App. Date has been filled with 0001-01-01
f. PAN number field has no validation and has all kind of junk entries
From the above observations of the system audit report of the firm engaged by SEBI it is
clear that there are numerous failures and non-compliance by NSDL with regard the
systems and processes put in place by it, making the system unreliable for the integrity of
the data.
16.0. Conclusions (Prima facie)
16.1. At the outset, it is to be mentioned that the findings in this order against the
several entities are based upon an incisive examination and analysis which has
become prolix due to the sheer number of details, dauntingly massive and intricate,
collected from inspection reports, exchanges, depositories, banks etc., to reconstruct
the sequence of events in the entire gamut of IPO allotment from 2003 – 2005 in a
real time setting, so as to appraise them in the realtime continuum for getting the
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necessary insights into what really transpired under the veneer of copious
documentation and seeming compliance. The exercise involved wading through
enormous mass of details, identifying suspect transactions and entities, linking them
to fund flow with specific attribution to the real persons behind it, establishing
linkages amongst them for possible collusion as well as control and a host of other
related incidentals in a searing search that moves from one lead to another to grapple
with the issues in all its ramifications, unravel the decussating strands for getting at
the tell- tale. Given the magnitude of the exercise and the constraints attendant
thereon, this order seeks to capture the quintessence of the same with reference to
scattered findings in a welter of non-descriptness, besides building an internally
consistant logic into them to impart perspicacity and clarity. In that view the prima
facie conclusions which are only a summary of the details discussed in the various
headings and sub-headings of the order need to be read with them, in so far as they
are relevant and that alone would enable to size up the issue in all its enormity.
16.2. In the recent past while examining off- market transactions in the IPOs of Yes
Bank Ltd(‘YBL’) and Infrastructure Development Finance Company Limited
(‘IDFC’), it came to the notice of SEBI that certain entities had cornered IPO shares
reserved for retail applicants by making applications in the retail category through the
medium of thousands of beneficiary accounts in the name of fictitious/benami entities
with each of the application being of small value so as to be eligible for allotment
under retail category. After the allotment, these fictitious/ benami allottees transferred
these shares to their principals who in turn transferred the shares to their financiers.
Most of these shares were sold immediately on listing.
16.3. SEBI advised the depositories viz. NSDL and CDSL to examine the above 105
IPOs with respect to off- market transactions during the period from the date of close
of respective IPO to the first day of trading on listing (both days including) for
identifying master account holders that had received IPO shares from numerous
afferent demat accounts. Since the pay- in / pay-out for shares listed on the stock
exchanges commences two days after the date of listing on the stock exchanges, it
stands to reason that off- market trades done till one day after listing would
necessarily involve dealing in IPO shares..
16.4. NSDL and CDSL submitted data in respect of the IPOs during 2003-2005
regarding the above. From the data submitted by NSDL it is seen that there are a total
of 1579 dematerialized account-holders that have received IPO shares from 20 or
more dematerialized accounts and in the case of CDSL there were 700 such
dematerialized account-holders.
16.5. The floor level of 500 or more is adopted in this order for determining the suspect
multiple demat accounts in typical samples, as samples with lesser numbers may not
be truly representative of the “suspect” character, especially having regard to the
large incidence of multiple accounts in any IPO with genuine combinations at lower
levels. Further a sample of more than 500 multiple demat account would impart the
necessary focus and direction to the whole exercise of tracking down the real culprit
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accounts in cornering the IPO allotment and dealing with them effectively in a
demonstrative regulatory action. Also any group / cluster activity involving 500 or
more demat accounts in IPO allotment excites a genuine suspicion in the context of
off- market transfers from such accounts to one account which would normally be
possible, if only such afferent accounts were dummies with unity of control resting
with the master account holders. Definitely, synchronized off- market transfers in
large numbers to a common master account have something uncommon about them,
while suggesting control exercised by that master account holder in moving those
afferent accounts, which have no existence of their own.
16.6. It is seen that in the case of NSDL and CDSL there were 21 IPOs in which 24
dematerialized account- holders received off- market credit of shares from 500 or more
dematerialized account-holders having certain commonalities. The details in respect
of these IPOs are summarized.
1. Amar Remedies Ltd

2. Datamatics Technologies Ltd.
3. Dishman Pharma. & Chemicals Ltd.
4. FCS Software Solutions Ltd.
5. Gateway Dispriparks Lrd
6. Gokaldas Export
7. ILFS Investmart
8. Indraprasth Gas
9. Infrastructue Development Finance Co. Ltd.
10. Jet Airways (India) Ltd
11. Nandam Exim Ltd
12. National Thermal Power Corporation Ltd.
13. Nectar Lifesciences Ltd
14. Patni Computer Systems Ltd.
15. Sasken Communication Technologies Ltd.
16. Shoppers Stop Ltd
17. SPL Industries Ltd
18. Suzlon Energy Ltd.
19. T.V.Today Network Ltd.
20. Tata Consultancy Services Ltd.
21. Yes Bank Ltd
16.7. The details of the 24 key operators are given below. The figures in bracket
indicate the IPO in which each key operator had adopted this modus operandi in a
large scale and the number of credits received by the key operators in their demat
accounts:
1. Roopalben Nareshbhai Panchal (IDFC-12258)

2. Sugandh Estates And Investments Pvt Ltd (IDFC-10194)
3. Dhaval A. Mehta (Suzlon Energy-3863)
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4. Arjav Nareshbhai Panchal (Patni Computers-2541)

5. Parag P Jhaveri (IDFC-2083)
6. Kelan Atulbhai Doshi (IDFC-1970)
7. Ambuja Estate And Holdings Pvt Ltd. (TCS-1665)
8. Purshottam Budhwani (IDFC-1379)
9. Dharmesh Bhupendra M (IDFC-1206)
10. Jhaveri Securities Pvt. Ltd. (Suzlon Energy-1225)
11. Biren Kantilal Shah & Shah Biren Kantilal (Suzlon Energy-1303)
12. Kamal P Jhaveri (IDFC-883)
13. Devangi Dipakbhai Panchal(TV Today Network-862)
14. Chandrakant Amratlal Parekh (Suzlon Energy-803)
15. Dharmesh K Katakia (IDFC-749)
16. D B Mehta (NTPC-710)
17. Pratik Mafatlal Shah (Suzlon Energy-710)
18. Dhaval K Katakia (IDFC-700)
19. Deepakkumar Shantilal Jain (IDFC-686)
20. Himani N Patel (Suzlon Energy-635)
21. Deepak Madhukant Patel (Jet Airways-633)
22. Indiabulls Securities Ltd. (TCS-559)
23. Opee Stock - Link Ltd. (Jet Airways-553)
24. Manojdev Seksaria (IDFC – 1989)
16.8. In NSDL and CDSL taken together, a total of 58,938 accounts (37,240 in
NSDL and 21,698 in CDSL) had been used as afferent accounts for cornering the
retail portion of the IPO. Out of these 58,938 accounts 49,708 accounts
representing about 84% of the total afferent accounts were held with Karvy DP.
16.9. Upon examination of the details of afferent accounts that served as conduits for
the master account holders, it is seen that multiple demat accounts were opened in
large numbers since November 2003. More multiple demat accounts got opened in
2004 and the process continued till August 2005. Another common feature of the
above conduit accounts is that most of these dematerialized account-holders were
found to share common addresses which are the same as that of the master account
holders.
16.10. Upon examination of the demat details of the key operators, it was observed that
as many as 14 out of the 24 key operators had their respective demat accounts with
Karvy-DP. Thus, it appears that Karvy-DP was actively in league by opening demat
accounts for many of the key operators and also for most (about 84%) of the afferent
accounts that served as conduits for the key operators. Also the numbers are too
significant to be dismissed as the normal incidence of business while the stunning
percentage in terms of concentration of suspect accounts cannot but tar Karvy
DP with the same brush.
16.11. As per data obtained from NSDL and CDSL, it was seen that the 24 key operators
had in turn made off- market transfers to various entities during the prelisting period.
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It stands to reason that these entities who received shares through off- market transfers
from the 24 key operators would have provided finance to the key operators which
finance was used for cornering the retail portion of the IPO shares. Since the
financiers have received the shares from the key operators it would appear that these
financiers are the ultimate beneficiaries of the IPO abuse committed by the key
operators. As observed in the cases of Yes Bank and IDFC, it would be seen that
many of the financiers might have sold the shares immediately on listing and
commencement of trading on the stock exchanges thereby profiting from the higher
listing price as compared to the issue price. Even in a few cases where the financiers
may not have actually sold the shares in the market, still they have made notional
gains from the higher listing price. The gains made by the financiers were worked out
by comparing the closing price (on NSE) on the first day of listing in respect of each
of the above IPOs with the issue price of the respective IPOs.
16.12. From the calculations of the gains made by the financie rs of Roopalben Panchal,
SEIPL and other key operators, it is seen that the total gains of these financiers, in
both NSDL and CDSL, works out to roughly Rs. 72.38 crores.
16.13. Inter-Linkages amongst Financiers and Key Operators
16.14. The investigations revealed interlinkages amongst the above financiers.
16.15. Purshottam Budhwani and Manojdev Seksaria
16.16. It was seen that on October 20, 2005 Purshottam Budhwani transferred 16,304
shares of Suzlon Energy to Manojdev Seksaria and on the same day Manojdev
Seksaria transferred back 18,624 shares to Purshottam Budhwani. These off- market
transfers between Purshottam Budhwani and Manojdev Seksaria done prior to
commencement of pay in / pay out on the stock exchanges clearly bring out the
linkages between them.
16.17. Roopalben Panchal, SEIPL, Purshottam Budhwani and Vora Group
16.18. It is seen that Purshottam Budhwani has made off- market transfers of IPO shares
to various entities namely Puloma Dushyant Dalal & Dushyant Natwarlal Dalal,
Rasila Natwarlal & Natwarlal Thakordas, Natwarlal Thakordas & Dushyant
Natwarlal Dalal, Nimisha Kadakia, Rajkumar Jain, Balvinder Gurmukhsingh
Purswani, Jayprakash Girdharilal, Niranjan Girdharilal, Gurmukhdas Rameshkumar
Giyamalani, Mehta Bansilal and Magnum Equity Services Limited. It is also seen that
SEIPL had made off- market transfers of IDFC shares to Puloma Dushyant Dalal &
Dushyant Natwarlal Dalal in NSDL thus showing that SEIPL and Purshottam
Budhwani had made off- market transfers to common financiers. Further, Roopalben
Panchal and SEIPL have made off- market transfers to common sets of companies
belonging to the Vora group such as Zenet Software, Seer Finlease, Excel Multitech,
Tauras Infosys, etc.
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16.19. Roopalben Panchal, Dharmesh Mehta and Welvet Financial
16.20. It is seen that Dharmesh Bhupendra Mehta, a key operator and a major client of
BHOB Goregaon branch who had been introduced by Karvy to BHOB, had
transferred around 43,624 shares of IDFC to M/s. Welvet Financial Advisers Pvt Ltd.
(Welvet Financial) on August 11, 2005 i.e. just before listing of shares on stock
exchanges. It is seen that Roopal Panchal had also transferred 4,17,000 shares of
IDFC to Welvet Financial on August 9, 2005.
16.21. Upon examination of the bank transaction statement of Welvet Financial it was
observed that Welvet Financial had paid Rs 76,56,250 to Dharmesh Mehta and
apparently there is no receipt of Rs 64 lakhs by Welvet from Dharmesh Mehta. Upon
receipt of allotment, it is seen that Dharemesh Mehta has transferred the IPO shares to
Welvet Financial while retaining some of these shares as his commission for
executing the transactions.
16.22. Roopalben Panchal and Vora Group
16.23. Upon examination of Roopalben Panchal’s bank account statement with BHOB
Worli Branch, it is seen that Roopal Panchal had brought in margin money for IPO
finance to the tune of Rs 22.03 crores. Upon examination of the source of funds of
Roopalben Panchal for the margin money brought in by her, the following entities
appear to have provided her finance for making the above applications:
Name of the entity Amount transferred Date of Transfer Amount given as

margin money to
BHOB, Worli Branch
Seer Finlease Pvt. Ltd 9,50,00,000 20.06.05 Rs 22,03,50,375 (which
Tauraus Infosys Ltd 3,30,00,000 20.06.05 includes Rs
Excell Multitech Ltd 4,60,00,000 20.06.05 20,05,00,000)
Zenet Software Ltd 2,65,00,000 20.06.05
Total amount 20,05,00,000
16.24. It appears that the arrangement between Roopalben Panchal and the above entities
/ financiers were an arrangement for cornering retail portion of IPO which has been
sought to be given a color of pure financing transaction.
16.25. Panchal group and Jhaveri group
16.26. Linkages between the Panchal group (consisting of Roopalben Panchal and
others) and Jhaveri group (consisting of SEIPL and others) are also noticed. These
linkages include the following: Dipakbhai Panchal and Bhargav Ranchodlal Panchal
who belong to the Panchal group and Kamal Priyakant Jhaveri who belongs to the
Jhaveri group are common directors in Arth Stock Broking P Ltd., a broker of
Ahmedabad Stock Exchange. Also, Arth Realty P Ltd. (which has the same address
as that of SEIPL) and Devangi Dipakbhai Panchal are the two largest shareholders in
Arth Stockbroking P Ltd.
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16.27. Karvy and other Key Operators and Financiers
16.28. Roopalben Panchal, SEIPL, Purshottam Budhwani and Manojdev Seksaria have
transferred funds to Karvy Consultants. Karvy Consultants also has financial
transactions with Anagram Securities Ltd., Anagram Stock Broking, Balwinder
Purswani and Dushyant Natwarlal Dalal. Purshottam Budhwani and Manojdev
Seksaria have transferred funds among themselves. These financial transactions also
support the view that there are strong interlinkages amongst the key operators as well
as between Karvy group and the key operators.
16.29. Incidentally Grace Consultancy- C\O Dipak J Panchal, Arth Realty P Limited
(which has the address same as SEIPL), Purshottam Budhwani and Manoj Seksaria
are all sub-brokers of Karvy-DP and are amongst the top four sub-brokers in terms of
number of applications for demat accounts procured for Karvy-DP.
16.30. In view of the inter linkages amongst the master account holders and their
financiers, it appears that a few common sets of entities were indulging in
irregularities in a large scale in the various IPOs, indicating interlacing and
interlocking operations with a common control.
16.31. DP Verification
16.32. Since many of the afferent demat account holders were found to share common
addresses, SEBI advised NSDL and CDSL to verify the genuineness of demat
account holders where 20 or more account holders share common addresses. Based
on information furnished by CDSL and NSDL it is seen that six DPs of CDSL and 21
DPs of NSDL had 500 or more demat account holders sharing common addresses. All
the above DPs confirmed to NSDL and CDSL that the KYC documentation in respect
of the above demat accounts was complete in all respects.
16.33. However, SEBI decided to conduct further verification relating to the following
five DPs namely, HDFC Bank Ltd.(HDFC), Dindayal Biyani Stock Brokers
Ltd.(DBSBL), Centurion Bank of Punjab Ltd.(CBPL), Infrastructure Leasing &
financial Services Ltd. (ILFS) and Wellworth Shares and Stock Broking Ltd.
(WSSBL). Accordingly, SEBI engaged an independent CA firm to conduct inspection
/ audit. The inspection by SEBI appointed CA firm brought out numerous viola tions.
16.34. DBSBL
16.35. DBSBL the depository participant is exclusively serving the interest of the
director’s family members and has not quite associated with any public customers. In
the absence any public association it can as well use the services of any other
Depository participants. DBSBL presently has permitted opening of multiple
accounts within the family in permutation and combinations of names. This
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facilitated BO to make multiple applications for shares in IPOs under the retail
category by indicating separte Demat accounts in the respective application forms. It
is apparent that there is a conflict of interest between the activities DBSBL as a DP
and that of its directors as multiple applicants in the IPOs.
16.36. WSSBL
16.37. The activities of WSSBL DP are of a piece with the pattern as noticed in the case
of DBSBL. DBSBL has opened accounts in the names of Directors and their family
members. In the absence of dealings with public, the DP registration granted to
WSSBL and DBSBL does not serve any meaningful purpose as its directors can open
demat accounts with other DPs for their securities market activities.
16.38. ILFS
16.39. ILFS has been predominantly encouraging IPO financing in its operations for
catering to the BO/Demat accounts. It funds the publis issues by accepting very little
margin and providing finance for the remaining major portion. e.g. in the case of
IDFC, the issue was for Rs.36/- per share, while it financed Rs.34.50 and accepted
Rs.1.50 as margin. ILFS have accepted a mandate from every BO/loanee that on
receipt of the allotted shares, it would have to be transferred through off- market
transfers to any other demat account of their choice and DP. This sort of arrangement
is not in the interest of securities market as the same may result in creation of name
lenders and not genuine investors. Also the inspection of ILFS by SEBI appointed
auditor disclosed several irregularities in the matter of compliance with KYC norms.
16.40. CBPL DP
16.41. From the examinations and physical verifications relating to the demat account
operations and demat clients of CBPL DP, it emerged that CBPL had failed to
exercise even basic due diligence or adhere to the KYC norms prior to the opening of
demat accounts in the names of thousands of clients who upon verification ultimately
turned out to be men of straw.
16.42. Besides various glaring lapses in documentation that were noticed during the
course of random checks, it was also seen that CBPL did not care to ascertain the
genuineness of the persons in whose name it opened dematerialized accounts. The
physical verifications carried out by SEBI as well as by the CA firm revealed that
many of the dematerialized account-holders of CBPL simply did not exist. In some
cases where they did exist it was found that they were merely name- lenders who did
not have the wherewithal to open and operate demat accounts or deal in securities
market.
16.43. CBPL Ahmedabad branch has provided IPO finance to the tune of Rs.7 crores to
about 2200 applicants in the case of IDFC issue. In the light of the findings of the
physical verifications as narrated above, it appears that many of the customers to
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whom CBPL has provided IPO finance may be fictitious/benami. The glaring lapses
in the demat operations of CBPL is accentuated by the fact that it not only opened
demat accounts in the names of the non-existent/fictitious/benami entities but also
provided IPO finance to these entities without conducting basic customer due
diligence of its borrowers.
16.44. Physical verification at the addresses of the demat clients of CBPL DP by SEBI
officials as well as by the CA firm engaged by SEBI has revealed that many of the
demat clients were not residing at the addresses as per the records of CBPL. In some
cases, the addresses were located in chawls and the account holders were men of
straw whose voter ID and other identity documents were exploited by Mahesh Shah
and his associates/principals such as SEIPL for opening multiple demat accounts.
16.45. HDFC Bank DP
16.46. From the inspection of DP operations of HDFC Bank by the CA firm engaged by
SEBI as well as the firm engaged by CDSL, it emerged that HDFC bank had failed to
exercise due diligence and has opened demat accounts in the names of fictitious /
benami entities. Numerous irregularities and non-adherence to the prescribed KYC
norms were found. During the course of verification of genuineness of account
holders done by the depositories at the instance of SEBI, HDFC bank DP had
confirmed that it has complied with the KYC norms in respect of its demat account
clients. In the light of the findings of the inspections, the above confirmation by
HDFC Bank DP appears to be totally divorced from reality as established. 286 SB
accounts opened by the key operator (Purshottam Budhwani) with HDFC bank is
clearly proof enough for the plan of action to open multiple dematerialized accounts
and channelise the funds in a manner that would bury the audit trail.
16.47. With regard to the banking operations of HDFC bank it is seen that some of the
bank account transactions as examined by SEBI as well as the CA firm engaged by
SEBI appear to be of suspicious nature .In any case I note that inspection of HDFC
bank by RBI had revealed violation of KYC norms for IPO subscription and
cornering of retail portion of IPO through fictitious/benami demat accounts and RBI
has levied monetary penalty on HDFC bank. In that view, the role of HDFC Bank,
despite stated confirmation regarding compliance to KYC norms, raises serious
concerns on its compliance while suggesting it had truck with Purshottam Budhwani
in so far as it had actively lent its system to be misused by wily operators.
16.48. MOSL DP
16.49. In addition to the irregularities in the cases of the above five DPs, in the case of
DP Motilal Oswal Securities Ltd. the inspection conducted by a CA firm engaged by
CDSL brought out numerous violations such as not obtaining proof of identity of
second and third demat account holders, not obtaining proof of address in some cases,
non-verification of photocopies of POI / POA documents with the original, the
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agreement between the DP and the client being incomplete and not obtaining
signature of the BO holder across the photograph.
16.50. Inspection of DPs by SEBI
16.51. During the course of investigations in the cases of Yes Bank and IDFC, SEBI
found that two DPs namely Karvy DP and Pratik DP had large number of fictitious/
benami dematerialized account- holders. SEBI had conducted inspection of Karvy DP
and Pratik DP. The inspections by SEBI brought out numerous violations on the part
of Karvy DP and Pratik DP.
16.52. Pratik DP
16.53. Pratik has about 5,000 plus active BO accounts at both the depositories put
together. A significant number of accounts were opened exclusively for IPO purpose
under their “Investor IPO scheme”. Accounts opened under the scheme are at special
tariff.
16.54. Apparently, many IPO sub brokers brought in clients and opened accounts under
the “Investor IPO scheme”. During the month of June and July 2005, the time when
large IPOs hit the market, more than 600 accounts were opened. These accounts were
opened in most cases with the same correspondence address i.e. the address of the
IPO sub broker. The DP opened BO accounts in similar manner with 16 set of
addresses where the number of accounts were more than 20.
of names with the same set of photographs, proof of identity and address. In certain
cases proof of identity and address were not taken. The proof of address taken varied
from the address captured in the Depository Participant Module (DPM) system in
certain cases. There were various discrepancies in banker’s certificate obtained as
proof of identity and address such as it did not contain unique specimen signature,
code, while the certificate issued was not on bank’s stationery.
16.56. In certain cases mismatch of signature in the account opening form and Delivery
Instruction Slips was observed. There was large number of off market transfers
executed from various accounts opened under the IPO scheme to certain accounts
apparently of the IPO sub brokers immediately after the allotment of IPO. For the
clients connected to the Budhwani group, the charges were debited to the account of
Shri Budhwani and settled with him.
16.57. The findings of inspection of Pratik DP by SEBI as narrated above indicate that
the internal control procedures at Pratik DP with respect to the account opening
procedures are not adequate. The DP has not exercised proper care and due diligence
as stipulated under regulation 20A of SEBI (Depositories and Participant)
Regulations 1996 while opening beneficial owners account. The depository
participant has not exercised proper care and precautions as stipulated under
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regulation 42(2), 42(3) and regulation 20A of SEBI (depositories and Participant)
Regulations 1996, while processing of the Delivery Instruction Slip (DIS) for transfer
of securities.
16.58. Karvy DP
16.59. During the inspection of Karvy –DP it was found that their system does not check
the compliance of documentary requirements such as identity proof; address proof,
agreement date etc. Further, it was observed that the physical account opening forms
do not bear the signature of the official verifying and approving the opening of the
account.
16.60. Besides the groups identified by SEBI in the interim orders dated December 15,
2005 and January 12, 2006 in the cases of Yes Bank and IDFC respectively, during
the course of the inspection of Karvy DP, SEBI found that there were another 147
sets of addresses on NSDL and 37 sets of addresses on CDSL having more than 20
clients each. Apparently majority of these BO accounts were brought in by the IPO
sub-brokers of the Karvy’s IPO distribution arm. Further it was revealed that the
correspondence addresses in such accounts were those of these IPO sub-brokers. In
certain cases, it was found that Karvy-DP had accepted invalid documents towards
POI. The observations on the account opening procedures of Karvy DP revealed that
it had not exercised proper care and due diligence while opening of the BO accounts.
16.61. On verification of Delivery Instruction Slip (DIS) signature mismatch was

observed showing that the depository participant has not exercised proper care and
precautions while processing of the DIS for transfer of securities. The observations on
the area of issuance and the processing of the Delivery Instruction slip (DIS) shows
that Karvy DP had not exercised proper care and not acted diligently while execution
of the DIS undertaken by it on behalf of its BO’s.
16.62. The inspection of the Karvy DP operations had revealed that the DP had accepted
the payment of amount due on various BO accounts from third party cheques. In case
of 225 accounts a single cheque (Cheque Number 273329 issued by HDFC Bank
Navranpura, Ahmedabad) was deposited in the account of a key operator. Similarly in
case of 1276 accounts a single cheque (Cheque Number 699328 issued by HDFC
Bank, Navrangpura, Ahmedabad) was deposited in the account of a key operator. It
was further observed that the DP had issued a single receipt in case of the amount
paid on behalf of various accounts. Similarly in various accounts of Panchal
Family/group a single consolidated cheque have been deposited by a third person on
behalf of these account holders to settle the outstanding DP dues.
16.63. It was found that Karvy-DP was encouraging the investors to open more and more
BO accounts especially for the IPO purposes. The charges for these kind of the
accounts were very minimal and further the charges in respect of the BOaccounts
which were referred to Karvy DP by its IPO sub-brokers was very less as compared
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to the investors who came directly to open the BO account mainly under the IPO
scheme.
16.64. For Karvy DP, “Dematerialization” was not a mere regulation but an act of faith
that not only guided the way and gave free rein to opening several sets of multiple
demat accounts, without being beleaguered in the burr of needless regulatory qualms,
but also found its manifestation in dematerializing the inconvenient regulatory
bottlenecks in a free – wheeling exercise that made the process seamlessly simple,
besides giving an eclectic flavour to the tally of accounts with the shades of real and
seemingly real. Accordingly there were no perceived impediments in account opening
and issuance or processing of DIS. From the above it may be seen that while Karvy
DP seemingly complied with the guidelines pertaining to proof of address and
identity, exercise of caution while processing the forms would have alerted the DP to
the wrong doing on the part of the demat account holders. This has facilitated
Roopalben Panchal, Purshottam Budhwani, Manojdev Seksaria and others in opening
large number of DP accounts in various names for the purpose of cornering of shares
and misusing IPO allotment process. The realtime alerts with sheer preponderance of
numbers either in terms of accounts opened on a single day or off- market transfers in
a single day did not register with them, because the entire sequence was following a
pre-determined course with fewer surprises.
16.65. Karvy DP KYC document verification
16.66. In view of the fact that more than 95% of the fictitious/benami dematerialized
account-holders identified in the cases of Yes Bank and IDFC had their
dematerialized accounts with Karvy DP, SEBI conducted a detailed scrutiny of the
documents relating to demat accounts opened by Karvy DP. It was found that the
account opening forms of almost all the dematerialized accounts opened by Karvy DP
in fictitious/benami names had letters purportedly issued by BhOB and Vijaya Bank
towards POI and POA. During the course of verifications by SEBI with these banks,
it was found that the savings bank accounts indicated in the dematerialized accounts
held in ficticious/benami names did not exist. Also the branch mangers of the
concerned banks denied the bank having issued any such bank letters towards POI
and POA indicating the bank account number.
16.67. In view of the non-existence of the savings bank account with the bank’s branches
and the denial of the branch managers, it is evident that the bank letters based on
which Karvy DP had opened thousands of demat accounts is fraudulent and
fabricated.
16.68. It is seen that the contents of the fabricated bank letter like name of the applicant,
address, saving account, branch code etc exactly matches with the data available on
the depositories system including comma, full stop, spelling mistake, small letter /
capital letter, thereby giving rise to the possibility that the details for the fabricated
bank letters have been picked up from the depository system and then printed on the
bogus bank letterhead. The data entered in the depository system is available only to
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the depository or the concerned depository participant. Thus the fabrication of the
bank documents is possible only with the connivance of the depository.
16.69. Further, it is seen that the fabricated Bank letters where the branch details are
mentioned matches exactly with the MICR data as contained in the depository
system. MICR number enables identification of the name of bank and the bank
branch. The matching of the bank MICR details as contained in the depository system
with that mentioned in the fabricated bank letterheads also confirms the suspicion that
the information relating to bank branches as available in depository system were
downloaded and the bank letterheads were fabricated on that basis.
16.70. Considering that the data in the depository system matches exactly with the
forged bank document and since the data in the depository would be available only
after entry in the system and not before that, it appears that the documents i.e. the
Bank letters have been fabricated after the date of opening of the demat accounts. In
view of the above, it appears that at the time when Karvy-DP opened the demat
accounts, there were no documents evidencing proof of identity and proof of address
of the account holder.Perhaps karvy might have fabricated the bank letters as an after
thought to make the records complete in the wake of SEBI enquiry in October,2005
long after the opening of the demat accounts. Further, it is seen that the savings
accounts relating to IPO financing in various branches of BhOB were introduced by
Karvy and the documents for opening these bank accounts were also submitted by the
Karvy. Thus, Karvy was at the root of creating rootless wonders.Karvy DP had
complete knowledge of the details of bank accounts and the same was used by Karvy-
DP for the purpose of opening multiple demat accounts.
16.71. Further it was found that in the case of many of the dematerialized account-
holders the photographs affixed on the demat account opening documents did not
match with that of the bank documents. This leads to the conclusion that Karvy DP
had opened dematerialized accounts without obtaining proof of identity and at a later
stage, merely to make the demat account opening documents seemingly compliant
with the KYC norms prescribed by SEBI, Karvy DP had procured photographs and
affixed the same on the demat account opening documents. This also smacks of an
after thought.
16.72. Karvy-DP had, during 2003, tied up with BhOB for the purpose of financing their
demat account clients. Based on introduction of saving account by Karvy, BHOB
disbursed the loan amount to the clients of Karvy DP. However, with passage of time,
it appears that Bharat Overseas Bank officials chose to rely more on Karvy’s DP
account details and true comfort therefrom while dropping their guard in the matter of
opening bank accounts and verification thereof. Exploiting the blind trust and
complacency on the part of Bhob, Karvy gave short shrift to the KYC
procedures,while playing ducks and drakes with the trust of the bank officials. Thus
in the year 2005 when market for IPOs was booming, Karvy-DP did not comply with
the account opening formalities by opening multiple demat accounts in fictitious /
benami names. Thereafter, in order to make its account opening procedure seemingly
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compliant, Karvy-DP resorted to fabrication of bank documents towards POI and

POA and also arranged for photographs from other sources. Thus, it appears that
Karvy,being the progenitor of the entire scheme won over the trust of the allies in the
bank and made its pitch effectively in the market, besides making common cause
with the sub brokers and financiers who were part of the manipulative assemblage.
16.73. Involvement of Karvy RTI
16.74. During the course of investigations, it was found that Karvy-RTI has issued
consolidated refund orders favouring banks / financial institutions in respect of the
applications that were financed by the banks / financial institutions. Karvy –RTI has
issued a single refund order (RO No. 610003) payable to Bharat Overseas Bank in
respect of 6878 IPO applicants in the case of IDFC IPO. Similarly, Karvy-RTI has
issued consolidated refund orders favoring Centurion Bank Limited, IDBI Limited,
Indian Overseas Bank, Infrastructure Leasing & Financial Services Ltd, Kotak
Street.com and ICICI Web Trade Limited in respect of thousands of IPO applicants in
the cases of YES Bank and IDFC IPOs.
16.75. Arrangement between Karvy and BhOB
16.76. Karvy presented to BhOB an idea paper and a process flow. As per the process
flow, the IPO applications would be filled in by the investor and a cheque/DD in
favour of the Bank towards the margin amount shall be deposited. The investor would
need to open the D- mat account with Karvy who would place a lien on the shares
deposited into the investor's account until the investor clears the loan with the Bank.
The client would deposit the payment instrument and bid form with the Bank along
with the account opening document and documents for the loan. The Bank would
ensure that the Savings Bank (SB) account opened by the Bank is mentioned in the
relevant column in the bid form as the Bank account to which the refund is to be sent.
The Bank would issue Pay order for the amount of the application by debiting loan
account and margin money of the respective applicants. If the investor is not allotted
shares against the IPO application, refunds are made to investor by the registrar
through the Bank and the refund order credited to the account, after liquidating the
loan. In case of allotment, the investor is required to bring in the required amount if
there is shortfall and fulfill the obligation with the Bank along with the interest after
which the lien is released by the Bank and informed to the DP for release of Bank's
lien on the demat account. Thus it appears that the idea presented by Karvy to BhOB
started as a practicable business proposition but contained potential ingredients for
future mischief, as it turned out in the final denouement.
16.77. The said process flow presented by Karvy also contained a clause that there were
no chances for cases such as benami applications, multiple applications, fraudulent
investors etc. These aspects did give solace to the Bank to venture into this segment.
A beginning was made with the financing of IPO relating to Maruti Udyog Ltd. and
an allocation of amount was advised to various branches of BhOB.
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16.78. It was because of the presence of Karvy, the branches of BhOB took it for granted
that existence of a demat account with Karvy - DP pre-supposes compliance with the
Know Your Client (KYC) norms. This finding of the internal investigation done
by BhOB gives rise to the inference that the demat accounts were opened first
before the opening of bank accounts and providing of IPO finance by BhOB.
This gives lie to the possible claim of Karvy DP that it had obtained letters issued by
BhOB towards proof of identity and proof of address before opening demat accounts
because such purported letters from BhOB would not be forthcoming prior to the
opening of bank accounts which was done after the opening of demat account.
16.79. It was gathered during the course of internal investigation by BhOB that all the
branches viz., Worli, Goregaon and Ahmedabad had representatives of Karvy
Consultants coming in, which led to the Managers/Officers/staff members drawing
total comfort from them. In short, the presence of Karvy Consultants, their
representatives, their sourcing of applications, their stamps on the Bid-cum-
Application Forms, their demat accounts - all contributed to a blasé state of easy
acceptance without questioning, besides presupposing compliance with
Customer Due Diligence and KYC norms . This needless to say, proved to be quite
fatal. Also, having floated the Idea Paper, Karvy has made it work and was in
full control of its implementation in a conducive environment wherein the Bank
meekly came under the leading strings of Karvy and in due course, a part of the
manipulative assemblage and this continued so long as the Bank got its margins
and revenues without any risk, while the risk of exposure to scrutiny was lost
sight of in the burgeoning volume of business in several IPOs.
16.80. It is also observed that the key operators had opened multiple demat
accounts with Karvy DP showing their bank account details as Vijaya Bank.
Investigations reveal that the Vijaya bank, Ahmedabad branch accounts of the
demat clients of Karvy DP did not exist. The branch manager of Vijaya Bank,
Ahmedabad has also confirmed that the said bank accounts do not exist with the
bank. Hence, it logically follows that the bank could not have given any letter
towards POI and POA to be used for opening of demat accounts with Karvy DP.
The branch manager of Vijaya Bank also denied having issued any such letters.
Therefore this is an exercise in afterthought by Karvy DP to cover up the tracks
in the wake of SEBI enquiry.
16.81. Fabrication of Documents by Karvy DP
16.82. With a view to further exploring the arcane details in the esoterics of Karvy’s
elaborate design effectively camouflaged to pass muster, SEBI compared the
details as mentioned in the fabricated bank letter with the data as appearing in
the depository system. It is seen that all the details like name, address and bank
account number in the fabricated bank letter exactly matches with the data
available on the depository system, including minutiae like capital letter, space,
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comma, full stop etc. For instance the name of a client as appearing in depository
system is HARI JAISWAR. This exactly matches with the name appearing on the
bank letter. It is significant to note that even the full stop which is appearing after
Jaiswar also matches and name is also in capital letter just as entered in the depository
system. Further the address also matches including comma, space etc. For example
one “ROOM NO.10/5 WING-A,RAMNARAYAN” appearing in the depository
system has full stop after NO with no space; similarly there is no space between
WING-A,RAMNARAYAN. The address mentioned in the bank letter is also
exactly in the same format, with the same characteristics in terms of minutiae
making it appear like a carbon copy.
16.83. From the above it can safely be concluded that the bank letter has been generated
after the demat account has been opened because unless the data is entered in the
depository system, it would not have been possible to download the said details for
generating the fabricated documents containing details of account holders that
matches exactly with that of the depository system in a carbon copy fashion. The said
observation is corroborated by the fact that Karvy DP had downloaded the details of
the BO holders from the depository (which would have served as the basis for
generation of the fabricated documents) many times around the time when large
number of demat accounts were opened by Karvy DP.
16.84. As per the existing system in CDSL, the depository system automatically picks up
the address of the bank based on the MICR details entered in depository system by
the depository participant. Thus this information is not entered by the DP. It is seen
that in respect of various BO IDs, the address of the Bank as mentioned in the forged
letterhead matches exactly with that in the depository system. This confirms that the
data of bank address given in the forged letterhead has been picked up from the
depository system. Further, the perfect matching of the bank details including
minutiae between that in the depository system and as mentioned in the forged
bank letter shows that the bank letters could not have existed at the time of
opening of demat accounts as the details in the depository system including the
bank MICR details can be picked up only after the opening of demat account.
This further shows that the bank letters were an after thought for documenting
the DP account and make a false appearance of having complied with the KYC
norms prescribed by SEBI for opening of demat accounts.
16.85. Since there is exact matching of data mentioned in the fabricated letter including
comma and spelling mistake etc, with the data in the depository system including the
address of the bank, it can be concluded that the fabrication has happened at the end
of depository participant for the reason that the data entered in the depository system
is available only to the depository or the depository participant. Therefore it follows
that the depositories in the process have allowed themselves to be used in active
manipulation of data by the DP and none of their inspections on DPs have shed
any light on the same, thereby making them a party to the whole episode.
Further, the depositories and DPs share a principal– agent relationship and the
depositories cannot escape responsibility for the acts of the DPs.
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16.86. Misuse of DIS – Karvy DP
16.87. Delivery Instructions Slips booklet is issued to the client after the demat account
is opened. DIS is an important document issued to the clients for the purpose of
transferring the securities from one demat account to another account. Before issuing
a DIS booklet to the client, the DP normally makes an entry in their back office
system with the details of the starting serial number and the ending serial number of
the DIS booklet allotted to each clients so as to ensure that no DIS is misused by any
unauthorized person while unauthorized use can be easily traced when presented by
any client other than to whom the DIS has been allotted.
16.88. On sample verification, it was found that the DIS serial numbers issued by
Karvy DP to clients belonging to various groups were in continuous serial
numbers. This is possible only if loose DIS of one booklet had been issued to
various clients. Even in such a scenario it is highly unlikely that the DIS executed
by various persons making off-market transfers to one entity will have
continuous serial number. This is possible only if DIS slips had been issued by
the DP to one or few persons controlling the alleged group.
16.89. It is seen that hundreds of the DIS submitted by each of the groups (such as
Roopalben Panchal, Purshottam Budhwani, Manojdev Seksaria) are in
continuous serial numbers thereby showing that Karvy DP had issued the DIS
slips pertaining to hundreds of benami / fictitious dematerialize d account-
holders to a few purporting to represent the group.
16.90. In this context it is noted that in respect of the off- market transactions relating to
the above DIS, many demat accounts were debited and a single demat account was
credited. Since it is easier to obtain credit transaction number from the demat account
statement of Roopalben Panchal, it appears that the DP has conveniently used the
credit transaction number on the DIS used for debiting various demat accounts. This
is highly unusual. It passes one’s credence as to how Credit Instruction Number
(CIN) could figure in DIS which are used for debiting the demat account. The very
fact that it is so clearly indicates that the DP had no debit instruction from the
afferent account holders and the DIS had been generated post-facto to make up
the records by conveniently using the CIN available from one account thereby
dispensing with the rigmarole of wading through thousands of afferent account
statements which is cumbersome and laborious. Further it shows the
constructive knowledge and involvement of the DP in the modus operandi
employed by Roopalben Panchal and others and the same is consistent with the
DP’s lead role in the entire scheme.
16.91. Role of Depositories
16.92. Procedure followed by NSDL with respect to inspection of DPs
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16.93. In the light of the irregularities found in the IPOs of Yes Bank and IDFC wherein
large number of demat accounts (running into thousands) was opened by few people
to corner the retail portion of the IPO allotment, SEBI examined the role of
depositories. SEBI also looked into the inspections of the Depository Participants
conducted by NSDL & CDSL. Further SEBI verified whether the functioning of the
depositories is in a manner which is in the interest of the investors and the securities
market.
16.94. For the purpose of the examination, SEBI obtained from NSDL and CDSL all the
inspection reports pertaining to seven DPs viz. Karvy Stock Broking, HDFC Bank,
Pratik Stock Vision Pvt. Ltd, IL& FS, Centurion Bank, Wellworth Share & Stock
Broking and Dindayal Biyani Stock Brokers Ltd. These DPs were shortlisted on the
basis of the occurrence of large number of multiple accounts with same addresses
with these DPs found during the course of verifications done by CDSL. The follow
up action regarding action taken by disciplinary committee and penalties were also
obtained from the depositaries. Information was also called for regarding waiver of
penalties if any. The operation Inspection reports and the observation in sign-off
reports were analysed to find out the nature of inspection and the effectiveness of
them in serving the purpose it was actually intended for.
• It was observed that the sample used for observations are pathetically low,
always less than 1% and mostly less than 0.1% in these inspections. Further it
is interesting to note that though the numbers of accounts have increased
(doubled) during the year, the sample size remained the same.
• It is also observed that in case of new accounts opened, the errors are quite
high i.e. about 50% of the accounts inspected have errors. In some case it is
100 % i.e. all the accounts inspected have errors. The range of the errors is
also very wide from 6% to 100 %. It further shows that the reliability of these
inspections is very low over a period of time. In some inspections, the
numbers of errors found are large, while in the next one it drops drastically.
The time allowed for these inspections also casts doubts on the reliability of
these inspections.
• Further it is also observed that the table format which shows the errors and
their number do not correspond with the actual errors and their number found
in the annexure which details the number of the account and the deficiency
found. As a result some instances are found where the accounts involved in
errors are more than 100%. This has happened because the report shows fewer
errors. For example in case of Karvy Hyderabad inspection of November
2005, it was found that the table shows 22 errors in total, but the annexure
shows 26 accounts which have account opening errors. This is not possible
because one account should have at least one error. Hence there are errors in
the inspection report itself.
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• There is recurrence of same errors in account opening repeatedly in inspection

after inspection. NSDL has commented on these in their reports. The DPs sent
confirmation letter stating that they had rectified all deficiencies. In the next
inspection, the same error recurred, and the cycle goes on. Penalty is hardly
levied for these deficiencies, while penalties are levied for employees of DPs
not having NCFM certification. The DPs are aware that account opening
errors are not seriously taken by NSDL and hence do not take steps to prevent
these errors from recurring. This seems to have been a regular practice over
the years which have made non-compliance while account opening a regular
feature. The depositary turns a blind eye to these deficiencies which has led to
its recurrence again and again.
16.95. It was found that NSDL waives penalties if the DP concerned rectifies the
deficiencies. The observations reported by DP as complied with in its first reply after
conclusion of inspection do not attract any penalty in any case. Thus NSDL does not
impose penalties for violations rectified immediately after inspection, does not
impose penalties harsher than monetary penalties for the remaining violations and
also waives the penalties imposed if the DP reports rectification of deficiencies. This
system creates no dis- incentive or deterrent for a DP to comply till NSDL inspects
and finds the violation, since rectification after inspection assures that no penalty of
any kind is imposed on DP.
16.96. It was observed that NSDL had not taken appropriate penal action against DPs for
repetitive violations by DPs observed by NSDL during inspections. NSDL’s action
has never gone beyond imposition of monetary penalties. Penalties are waived off
even for serious violations like inadequate control by DPs in DIS processing and
client account debit without proper authorization.
16.97. It was observed that regardless of the type of DP (broker, Bank etc.) and
regardless of the size of the operations of the DP concerned, NSDL devotes usually
only one day for inspection. Also, NSDL has allotted a fixed time for each area of
DP’s operation and the time allotted remains the same irrespective of the quantum of
instructions processed by the DP.
16.98. Procedure followed by CDSL with respect to inspection of DPs
16.99. Inspection reports for the seven Depository Participants were also called for from
CDSL. On perusal of inspection report it was found that CDSL gets its inspection
conducted by outside professionals. The inspection reports are not indicative at all.
From the inspection report it is very difficult to draw a conclusion as it is in ‘Yes’ and
‘No’ format.
16.100. The inspection reports of CDSL are of poor quality and no effort is taken
by CDSL to work on the format of the inspection report. However, the special
inspection conducted by CDSL which too has been conducted by outside
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professionals has covered all the points in detail unlike its earlier ‘Yes’ and ‘No’
format.
16.101. System Audit of NSDL
16.102. SEBI investigations in the IPOs of Yes Bank revealed significant

irregularities in opening of demat accounts by Karvy-DP in NSDL. These findings
raised concerns as to the systems and processes in place at NSDL for monitoring and
preventing irregularities relating to opening of and operations in demat accounts.
Hence, SEBI engaged a firm, namely iSec Services (P) Ltd. to conduct system audit
of NSDL. The salient findings of the system audit report are narrated in the
succeeding paragraphs.
Account opening-Karvy Stock Broking Ltd as a DP
a. Agents of Karvy opened most depository accounts having same addresses. These
agents had no legal sanction. In fact SEBI (D&P) regulations as well as the
agreement, which NSDL signs with DPs (Depository Participant), prohibits such
work without prior permission.
b. This was never checked or reported either by the internal auditors (Haribhakti & Co)
of Karvy or by external inspection teams of NSDL.
c. These agents had ready- made stamps of addresses, which were affixed on the
application forms. This too has never been reflected either in the internal audit reports
or the Inspections by NSDL
d. These agents after collecting the papers had local data entry operators enter the data
on a magnetic media. This activity went unnoticed all along. In fact the entire process
of verification of addresses and identity was bypassed by this operation.
e. This data was given to the front office of local Karvy offices in India (428 offices)
along with paper work.
f. Local offices then sent the CD containing the data to Karvy in Hyderabad.
g. Karvy Hyderabad, uploaded this data for account opening with NSDL.
h. NSDL’s DM application never checks the data uploaded by DP.
i. Due to slack internal controls and supervision these accounts came to exist. Once the
accounts got opened they were ready to be used for any subsequent IPOs
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j. The system audit report made significant observations detailing the modus operandi
and also possible complicity of entities involved in the process of IPO allocations i.e.
NSDL and Karvy
Contributory Negligence of NSDL
k. NSDL never could capture the fact that there were agents being used for opening of
demat account by Karvy DP. This is in spite of the six monthly inspections conducted
by NSDL at various locations of Karvy. This leads to the impression that Inspections
were perfunctory besides facilitating fictitious / benami / multiple accounts
l. If the DP work related to account opening is not being monitored by NSDL, then this
raises a question regarding the purpose of the activity of Inspection or ‘visits’ by
depository. In fact the inspection forms include sub sections for checking account
opening.
m. NSDL never physically verifies the DP prior to recommending the registration of DP

with SEBI. This is quite serious as it may get a DP recommended without complete
knowledge of where it exists.
n. Integrity of Account creation dates, which are essential for maintaining integrity of
any financial systems, has not been maintained in NSDL systems. All account
creation dates prior to 16/4/1999 are dummy dates in DM software. There are many
other fields where the junk data is entered in the DM database.
o. NSDL has never had the application code verified by any third party. While maker
and checker is an established process in financial industry, this has not been followed
till date by NSDL in its own systems as the DM software never verifies any data
except for the fact that it came from a valid DP id.
p. Physical verification has revealed that on the mainframe that hosts the DM and
database there is no evident control on creation of users and groups.
q. There is no evidence of monitoring any of the access logs on the mainframe.
r. There is no documentation to disclose the management intent to monitor or audit the

logs created on mainframe.
s. NSDL till date has made no byelaws for any internal monitoring review and control
of its processes as required under Section 26 (p) of Depositories Act, 1996 as well as
section 34 of SEBI (Depositories and Participants) regulations, 1996. Auditors have
pointed this out for IS (Information System) audit at different times but have never
been implemented.
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t. NSDLs internal auditors (Aneja & Associates) have been appointed since 1998 and
do not have any agreement signed between NSDL and the auditors. The reports are at
best perfunctory and some times do not maintain temporal integrity.
u. Besides email from prospective participant in Form A and Form B, NSDL as per its
process does not have any independent proof of the place where the DP is going to
keep the software supplied by NSDL
v. Inclusion of the field for correspondence address in the depository system was a
major step in helping the financiers achieve their collateral purposes. NSDL
additionally introduced correspondence address (viz, the address of Financier)
in the DP system, despite SEBI refusing to accede to their request. Similarly
CDSL went on its own to have correspondence address (address of Financier)
without due approval of SEBI and withdraw the same on October 20, 2005 in the
wake of SEBI probe. This greatly facilitated the financiers to have real time
control over the transactions of afferent accounts in the DP system besides direct
control on payments, refunds, credit advice etc. wi thout having to go through the
rigmarole of routing the transactions through individual afferent accounts which
are time consuming and laborious besides complicating the process of settlement
of financial refunds. This particular relaxation through the incorporation of
correspondence address in DPM for afferent account holders with a
preponderant size and variety with all the attendant complexities of control in
operation has made it facile and easy for the financiers to hoodwink the system
and perpetrate the mischief while virtually entering into direct dealings with DP
/ Registrar to the Issue without the necessity of having the façade of afferent
account holders.
16.103. The findings of investigations so far, prima facie, reveal violations of

serious nature by the key operators, their financiers, concerned DPs, Karvy group and
the depositories including violation of Regulation 3 of SEBI (Prohibition of
Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations,
2003, Regulation 42 (2), 42 (3), 43, 46 and 52 of SEBI (Depositories and
Participants) Regulations, 1996 and clauses 3, 9, 12, 16, 19, 20 and 22 of Code of
Conduct specified in Regulation 20 (a) of SEBI (Depositories and Participants)
Regulations, 1996 and the provisions of Depositories Act, 1996 and Provisions of
SEBI Disclosure and Investor Protection Guidelines, 2000.
16.104. Investigations are being completed and quasi-judicial proceedings

including issue of showcause notice, commencing enquiry proceedings and
adjudication proceedings are being initiated. In the interim, pending completion of the
quasi- judicial proceedings, the following order is issued:
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17.0. Order
17.1. In view of the grave emergency arising out of the conduct of parties with the
added risk that such devious practices, if unchecked, would be continued with
impunity in future, there is a need for immediate regulatory intervention. .In the wake
of the interim orders in the case of Yes bank and IDFC IPOs there has been a spate of
public complaints alleging manipulation in IPO’s and urging immediate action from
SEBI for protecting the retail investors.Also there is a heightened investors’ concern
on the IPO’s as reflected in the tenor of demands made on SEBI.and the same calls
for a timely reponse from SEBI as regulator to restore the confidence of the retail
investor.Amidst such public expectations,coupled with due regard to the fact that a
number of IPO’s are in the wait for entry into the securities market,which need to be
insulated from the manipulations of the various entities as mentioned in this order by
suitably restraining them from participation in the ensuing IPO’s which has acquired
a sense of urgency and which cannot brook the normal delay of quasi judicial
proceedings for taking a decision, there is an imperative need to pass the present
interim order to protect the market particularly the IPO’s from being preyed on by
predatory manipulators. Further if the entities, as prima facie found to be instrumental
in tilting the IPO allotment process to their favour by the intricate modus operandi as
clearly seen in the findings of this order, are allowed to operate in the market any
more, the same is fraught with immense mischief and incalculable damage to IPO
allotment process besides undermining the confidence of the retail investors who are
urging for a fair deal in the market free of such manipulators. Also SEBI has to
reckon with the present booming market while formulating a course of action as
decided in this order.Therefore with a view to protect the interest of investors and
securities market from further such acts, in exercise of the powers delegated to me by
the SEBI Board in terms of Section 19 of the Securities and Exchange Board of India
Act, 1992 read with Section 11, 11B and 11(4)(b) thereof and Section 19 of
Depositories Act, 1996 , pending enquiry and passing of final order, I hereby issue
the following directions, by way of ad interim, ex-parte order:
17.2. The following entities who appear to be key operators in various IPOs during the
years 2003 to 2005, are directed not to buy, sell or deal in the securities market
including in IPOs, directly or indirectly, till further directions:
1. Roopalben Nareshbhai Panchal

2. Sugandh Estates And Investments Pvt Ltd
3. Dhaval A. Mehta
4. Arjav Nareshbhai Panchal
5. Parag P Jhaveri
6. Kelan Atulbhai Doshi
7. Ambuja Estate And Holdings Pvt Ltd.
8. Purshottam Budhwani
9. Dharmesh Bhupendra M
10. Jhaveri Securities Pvt. Ltd.
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11. Biren Kantilal Shah & Shah Biren Kantilal

12. Kamal P Jhaveri
13. Devangi Dipakbhai Panchal
14. Chandrakant Amratlal Parekh
15. Dharmesh K Katakia
16. D B Mehta
17. Pratik Mafatlal Shah
18. Dhaval K Katakia
19. Deepakkumar Shantilal Jain
20. Himani N Patel
21. Deepak Madhukant Patel
22. Indiabulls Securities Ltd.
23. Opee Stock - Link Ltd.
24. Manojdev Seksaria
17.3. NSDL and CDSL are directed to ensure that the dematerialized accounts which
served as conduits for the above entities are not utilized for manipula tion of IPO
allotment in future by taking such action as may be appropriate.
17.4. Many of the above 24 master account holders have in turn made further off
market transfers to other entities thereby indicating that they themselves must have
acted as intermediaries for their financiers who appear to be the ultimate
beneficiaries. The following financiers of the master account holders are hereby
directed not to buy, sell or deal in securities market including in IPOs, directly or
indirectly, till further directions:
1. Hasmukhlal N. Vora
2. Welvet Financial Advisers Pvt Ltd
3. Jayesh P Khandwala HUF
4. Gautam N Jhaveri
5. Excell Multitech Limited
6. Zenet Software Limited
7. Tauras Infosys Ltd
8. Seer Finlease Private Ltd.
9. Devangi Dipakbhai Panchal
10. Dipak Jashvantlal Panchal
11. Shilpa Rajan Dapki
12. Rajan Vasudev Dapki
13. Bhargav Ranchhodlal Panchal
14. Hina Bhargav Panchal
15. Jayantilal Jitmal
16. Bhanuprasad Dipakkumar Trivedi
17. Umang R Shah
18. Sujal Leasing And Finance Pvt Ltd.
19. Sarvani Choudhary
20. Anand Netanand Choudhary
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Interim Order - IPO
21. Netanand Surjaram Bhambu

22. Ramesh Chimanlal Shah
23. Netanand Bhambu
24. Saumil A Bhavnagari
25. Masat Texturising And Twisting Private Ltd
26. Chirag Desai
27. Bakul Desai
28. Hemlata Desai
29. Vinita A Choudhary
30. Welvet Financial Advisers Pvt Ltd
31. Vasudev Gordhandas Dapki
32. Sanjay Rameshchandra Shah
33. Himanshu Piyushkumar Choliya
34. Sanjay R. Shah
35. Dushyant Natwarlal Dalal
36. Monal Y. Thakkar
37. Vinod Modha
38. Amadhi Investments Ltd
39. Ritaben R. Thakkar
40. Jitendra Lalwani
41. Veenaben Y. Thakkar
42. Parag P Jhaveri
43. Puloma Dushyant Dalal
44. Rajesh Jhaveri Stock Brokers Pvt. Ltd.
45. Patel Rajeshkumar
46. Deep Stockbroking Private Limited
47. Arth Stockbroking Pvt.Ltd
48. Rasila Natwarlal
49. Natwarlal Thakordas
50. Nimisha Kadakia
51. Rajkumar Jain
52. Balvinder Gurmukhsingh Purswani
53. Jayprakash Girdharilal
54. Niranjan Girdharilal
55. Gurmukhdas Rameshkumar Giyamalani
56. Mehta Bansilal
57. Magnum Equity Services Limited
58. Meenakshi L Phulwani
59. Laxminarain L Phulwani
60. L L Phulwani
61. Anagram Securities Limited
62. Chirag Jayendrakumar Shah
63. Bagrecha Ashok K.
64. Kelan Atulbhai Doshi
65. Ajay Kumar Gupta
66. Ashmi Financial Consultancy Pvt Ltd
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Interim Order - IPO
67. Chimanlal Girdharlal Shah

68. Sheelu Lalwani
69. Pratik Pulp P Ltd
70. Sonal N Dadia
71. Kiran D Dadia
72. Jayesh N Dadia
73. Dadia Finvest Limited
74. Deepak N Dadia
75. Jasmina J Dadia
76. Natvarlal N Dadia
77. Jasmina J Dadia
78. Natvarlal N Dadia
79. Neha Narendra Dadia
80. Dhaval Narendra Dadia
81. Narendra Harilal Dadia
82. Kashmira Narendra Dadia
83. Rupesh Vipinchandra Shah
84. Karvy Stock Broking Limited
85. Shah Kantilal Jitmal
17.5. It is understood that Shri Dushyant Natwarlal Dalal is a Chartered Accountant and
findings of SEBI investigation in so far as it relates to him are being communicated to
Institute of Chartered Accountants of India (ICAI) for examining his conduct as
brought out in this order.
17.6. Direction against DPs:
17.7. SEBI vide ex-parte ad interim order dated January 12, 2006 in the case of IDFC
has already directed Karvy DP and Pratik DP not to open new dematerialized
accounts till the submission of verification report and obtaining a no-objection from
SEBI for accepting fresh business as a DP. In view of the detailed findings against
Karvy DP and Pratik DP in this order, Karvy DP and Pratik DP, in my view prima
facie do not appear to be fit to deal in securities market as SEBI registered
intermediaries. Appropriate quasi- judicial proceedings are being initiated against the
two DPs. In view of the substantial findings of a serious nature brought out in this
order against Karvy DP and Pratik DP, in addition to what has been noticed in the
earlier two interim orders in the cases of Yes Bank and IDFC, I direct that Karvy DP
and Pratik DP shall not carry on the activities as DP till the completion of enquiry and
passing of final order, excepting for effecting transfer of BO account to another SEBI
registered DP on request. Notwithstanding this direction, Karvy DP and Pratik DP
shall continue to be governed by the SEBI (Depositories and Participants)
Regulations, 1996 and other applicable legal provisions in other respects.
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Interim Order - IPO
17.8. Since the other business groups of Karvy have appeared to have acted in concert
in the gamut of the IPO manipulations, I further direct Karvy Stock Broking Ltd.,
Karvy Computershare Pvt. Ltd., Karvy Investor Services Ltd. and Karvy Consultants
Ltd. not to undertake fresh business as a Registrar to Issue and Share transfer agent,
excepting those businesses already contracted as on date.
17.9. The following other DPs which prima facie appear to have grossly failed in
adhering to the Know Your Client norms laid down by SEBI and thereby facilitated
opening of demat accounts in fictitious / benami names and cornering the retail
portion of IPO shares, are directed not to open fresh demat accounts till further
directions:
1. HDFC Bank Ltd.

2. Dindayal Biyani Stock Brokers Ltd.
3. Centurion Bank of Punjab Ltd.
4. Infrastructure Leasing & financial Services Ltd.
5. Wellworth Shares and Stock Broking Ltd.
6. Motilal Oswal Securities Ltd.
7. Khandwala Int.Fin.Services P Ltd.
8. IDBI Bank Limited
9. Jhaveri Securities P Ltd
10. ING Vysya Bank Limited
11. Pravin Ratilal Share & Stock Broking Ltd.
12. Infinite Fin Srv Pvt Ltd
17.10. The depositories viz. NSDL and CDSL are directed to conduct inspection of the
above DPs and submit a report within a period of one month from the date of this
order to verify whether all the demat account holders of these DPs are genuine and
KYC norms laid down by SEBI have been duly complied with and take appropriate
action against suspect accounts on verification.
17.11. The following DPs of NSDL had more than 500 demat account holders sharing
common addresses:
1. Kotak Securities Limited

2. ICICI Bank Limited
3. Standard Chartered Bank
4. UTI Bank Limited
5. Kotak Mahindra Bank Ltd
6. Indusind Bank Ltd.
7. Citibank N.A.
8. Integrated Ent. (I) Ltd
9. Action Fin Serv (I) Ltd.
10. Stock Hldg Corp Of I Ltd
11. BNP Paribas
Page 250 of 252

Interim Order - IPO
12. Pratik Stock Vision P Ltd

13. The Kalupur Com.Co.Bank
14. SSKI Investor Ser.Pvt.L
15. Uco Bank
17.12. NSDL is directed to conduct inspection of the above DPs and submit a report
within a period of one month from the date of this order to verify whether all the
demat account holders of these DPs are genuine and KYC norms laid down by SEBI
have been duly complied with and take appropriate action against suspect accounts on
verification.
17.13. Direction against Depositories
17.14. The depositories have failed to exercise oversight over their DPs. The periodical
inspection of DPs being done by the deposities appears to be merely a cosmetic
exercise. It is unbelievable that thousands of demat accounts in fictitious / benami
names got opened by Karvy DP, Pratik DP and other DPs in utter disregard of the
KYC norms laid down by SEBI, presumably the same could have taken place either
with the connivance of the depositories or depositories turning a Nelson’s eye to the
happenings in the depository system. The interim findings in this order demonstrate
the contributory negligence on the part of the depositories and the ir management. It
is clear that there have been grave management lapses leading to such a situation. It is
the responsibility of the promoters to ensure that the depositories are properly
managed in the interests of investors.To that end, the promoters of NSDL and CDSL,
without further loss of time are directed to take all appropriate actions including
revamping of management which clearly has allowed matters to come to such a sorry
pass.
17.15. It appears that some of the DPs named in this order are also acting as brokers.
The stock exchanges are advised to examine the role and involvement of brokers /
sub-brokers by way of participation in IPOs either directly or indirectly and their
dealings in the shares subsequent to listing and submit a report with in a month
together with actions if any.
17.16. With regard to the findings of SEBI investigation relating to provision of IPO
finance to fictitious/benami applicants, reference is being made to RBI in respect of
the concerned banks.
17.17. The major stock exc hanges viz. BSE and NSE and the depositories viz. NSDL
and CDSL are directed to ensure that all the above directions are strictly enforced.
17.18. This order shall be treated as showcause notice against the concerned entities
named herein. The entities/persons against whom this order is issued may file their
objections, if any, to this order within 15 days from the date of this order and, if they
so desire, avail themselves of an opportunity of personal hearing at the Securities and
Exchange Board of India, Head Office, First Floor, Mittal Court B Wing, Nariman
Page 251 of 252

Interim Order - IPO
Point, Mumbai - 400 021 on a mutually convenient date and time within 15 days from
the date of this order. They may inspect the relevant documents on any working day
prior to the he aring during office hours at the SEBI office at Mittal Court, ‘B’ Wing,
1st floor, 224 Nariman Point, Mumbai 400 021
This order shall come into force with immediate effect.
PLACE: MUMBAI G ANANTHARAMAN

DATE: 27-04-06 WHOLE-TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA
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SECURITIES AND EXCHANGE BOARD OF INDIA

UNDER SECTIONS 11, 11B AND 11(4) OF SECURITIES AND

3.0.Further Actions taken by SEBI consequent to the Orders Passed

3.2.In addition, the following actions have been taken:

d. SEBI is initiating prosecution proceedings against the concerned entities.

g. The depositories have been directed to form a co-ordination committee to

h. As an interim measure to check misuse through off- market transfer prior

4.0. Definition of Terms

Afferent A/c Key Operator Financier Market

5.0.Examination of IPOs during 2003-2005

Table 5.1 – IPOs during 2003 – 2005

4 UCO Bank IPO NSE 200,000,000 03/09/2003 12/09/2003 12 10/9/2003

Desig Issue size Issue Issue Issue

6 B.A.G. Films Ltd. IPO NSE 14,860,000 06/09/2003 17/09/2003 10 10/17/2003

14 Four Soft Ltd. IPO NSE 7,950,000 16/02/2004 23/02/2004 25 3/12/2004

22 Biocon Ltd. IPO NSE 10,000,000 11/03/2004 18/03/2004 315 4/7/2004

23 PTC India Ltd. IPO BSE 58,499,990 01/03/2004 08/03/2004 16 4/7/2004

Desig Issue size Issue Issue Issue

52 3I Infotech Ltd. IPO NSE 23,000,000 30/03/2005 04/04/2005 100 4/22/2005

54 Saksoft Limited IPO NSE 2,500,000 30-Mar-05 7-Apr-05 30 5/9/2005

59 India Infoline Ltd. IPO NSE 11,878,138 21-Apr-05 27/04/2005 76 5/17/2005

63 Nandan Exim Ltd. IPO BSE 6,000,000 12-May-05 20/05/2005 20 6/13/2005

69 Yes Bank Ltd. IPO BSE 70,000,000 15/06/2005 21/06/2005 45 7/12/2005

Desig Issue size Issue Issue Issue

80 HT Media Ltd. IPO BSE 6,995,000 4-Aug-05 10-Aug-05 530 9/1/2005

Desig Issue size Issue Issue Issue

Table 5.7 (a) - IPO – NSDL

Sl. Company Name Client Name Dp Name CLIENT ID CREDITS No. of

Dhaval A. Khandwala 10139886 660 175560

Sl. Company Name Client Name Dp Name CLIENT ID CREDITS No. of

Sl. Company Name Client Name Dp Name CLIENT ID CREDITS No. of

Sl. Company Name Client Name Dp Name CLIENT ID CREDITS No. of

Table 5.7 (b) - IPO – CDSL

6.0.Summary of the major IPOs

7.0.Examination Relating to Key Operators

Table 7.2 – 23 Key Operators in NSDL

1 ROOPALBEN KARVY STOCK 11920868 1 Infrastructue 12258 7204610

5 FCS Software 1624 162400

6 KELAN KARVY STOCK 12501284 1. Infrastructue 1970 524286

10 JHAVERI JHAVERI 10005806 1. Suzlon Energy Ltd. 1009 27667

13 DEVANGI KARVY STOCK 11933458 1. T.V.Today Network 862 86200

Table 7.3 – Three Key Operators in CDSL

7.5.From the above discussions relating to key operators (dematerialized account-

8.0.Examination of Demat Accounts acting as Conduits – demat accounts opened on

Table 8.2 – NSDL Demat accounts opened on same date

Table 8.3 – NSDL DPs of Afferent Accounts

Table 8.5 - CDSL DPs of Afferent Accounts

9.0. Verification of Genuineness of Demat Account Holders

9.10. Verification by NSDL

9.11. The verification by NSDL regarding genuineness of dematerialized account-

21. UCO BANK 510

10.0. Financiers of the Key Operators

10.2. Financiers of Roopalben Panchal

The details of financiers of Roopalben Panchal are given below:

Table 10.2 - Financiers of Roopalben Panchal

Table 10.4 - Profits made by the financiers of Roopalben Panchal

10.6. Financiers of Sugandh Estates & Investments P Ltd. (SEIPL)

The details of financiers of SEIPL are given below:

Table 10.6 – Financiers of SEIPL

Dp Client Company Name of No. Of Date Of

Dp Client Company Name of No. Of Date Of

Dp Client Company Name of No. Of Date Of

Dp Client Company Name of No. Of Date Of