Page 1 of 27

WTM/PS/34/MRD/DSA/SEPT/2014

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

ORDER
Und! S"#$%n 11&2'&(' %) #* S"+!$#$, -nd E."*-n/ B%-!d %) Ind$- A"#, 1002 !-d 1$#*
S"#$%n 12A %) #* S"+!$#$, C%n#!-"#, &R/+2-#$%n,' A"#, 1034

In #* 5-##! %) 6-$7+! S#%"8 E."*-n/ L$5$#d

In !,7"# %) #* 6-$7+! S#%"8 E."*-n/ L$5$#d, #* G%9!n$n/ B%-!d %) 6-$7+! S#%"8
E."*-n/, M!: R-(nd! P!-,*-d G+7#-, M,: ;n- G+7#-, M!: A5$# G+7#-, M!: R-(9
G+7#-, M!: P+n# 6-$n, M!: C: P: M$##-2, M!: An$2 G-d%d$-, M!: M-n$,* G-d%d$- -nd
M,: M-n(+2- 6-$n
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

1: Securities and Exchange Board of India (hereinafter referred to as SEBI) conducted an
inspection of the Jaipur Stock Exchange Limited (hereinafter referred to as 'JSE'), for the
period of ecem!er "#, $""% to &cto!er '#, $"##, for the purpose of rene(a) of recognition*
+ further 'specia) purpose inspection' of JSE (as he)d during Ju), $-, $"#$ to Ju), $., $"#$,
on receipt of /arious comp)aints0 representations from JSE Broker's 1orum, a))eging
un)a(fu) acti/ities and irregu)arities in the administration of the JSE* 2he inspections inter alia
re/ea)ed /arious )apses and irregu)arities in the functioning of the exchange, go/erning !oard
of directors, etc*

2: &n the !asis of the inspection report, SEBI issued t(o sho( cause notices (hereinafter
referred to as S34) !oth dated Septem!er "-, $"#$* 2he )$!,# of these S34s (as addressed
to 6SE -nd #* G%9!n$n/ B%-!d %) 6SE, the ,"%nd (as addressed to $#, d$!"#%!,
n-52= M!: R-(nd! P!-,*-d G+7#-, M,: ;n- G+7#-, M!: A5$# G+7#-, M!: R-(9
G+7#-, M!: P+n# 6-$n, C: P: M$##-2, M!: An$2 G-d%d$-, M!: M-n$,* G-d%d$- -nd
M,: M-n(+2- 6-$n (hereinafter a)) co))ecti/e), referred to as noticees' and indi/idua)), !,
their respecti/e names)* 2he S34 (ere issued under Section #$+ of the Securities 3ontracts
(5egu)ation) +ct, #67- read (ith Section ## of the Securities and Exchange Board of India
+ct, #66$ (hereinafter referred to as 'SEBI +ct')* 2he S34 inter alia a))eged that the
shareho)der directors of JSE had he)d the shares in excess of the )imit stipu)ated under
5egu)ation %(#) of the then app)ica!)e Securities 3ontracts (5egu)ation) (8anner of
Increasing and 8aintaining 9u!)ic Shareho)ding in recognised Stock Exchanges)
5egu)ations, $""- (hereinafter referred to as '8I89S 5egu)ations')* B, su!mitting incorrect
undertaking confirming the comp)iance of pro/isions of 5egu)ation ##(#), JSE has a))eged to
Brought to you by http://StockViz.biz
P-/ 2 %) 2>

ha/e /io)ated the pro/isions of 5egu)ation ##(') of 8I89S 5egu)ations* 2he S34s further
a))eged that JSE has fai)ed to appoint an Executi/e irector since Septem!er $"". and 8r*
9uneet Jain, 3hairman of JSE is acting as chief executi/e for a)) practica) purposes and
interfering in the da, to da, affairs of JSE* It has a)so !een a))eged that JSE amended the
'memorandum of association' and adopted ne( 'artic)es of association' (ithout appro/a)
from SEBI, neg)igent), hand)ed the !oard meeting minutes, fai)ed to maintain the Base
8inimum 3apita), etc*

2he S34 a)so a))eged that the acts of the noticees (ere in /io)ation of the pro/isions of
SEBI 3ircu)ar !earing no* S80SE0-6#606' dated +pri) $", #66', SEBI 3ircu)ar !earing
no* 3I50850S+0SE0:'0$"#" dated ecem!er '#, $"#", SEBI 3ircu)ar !earing no*
SEBI0S80SE+03ir;$60$""' dated Ju), "', $""', SEBI )etter no*
850S+03<07"":60"7 dated Septem!er $#, $""7, SEBI 3ircu)ar !earing no* 7$0$""#
dated ecem!er $", $""#, SEBI 3ircu)ar !earing no* S809o)ic,03ir;$"0$""$ dated
Septem!er "', $""$, SEBI 3ircu)ar !earing no* SEBI0S809&LI3=03I5;:0$""' dated
1e!ruar, ##, $""', SEBI 3ircu)ar !earing no* 850o90SE03ir;".0$""7 dated 1e!ruar,
$', $""7, SEBI 3ircu)ar !earing no* S809o)ic,03ir;'$06. dated ecem!er "', #66.,
Section .+($) of the Securities 3ontract (5egu)ation) +ct, #67-* 2he noticees (ere ad/ised to
rep), to the S34, (ithin a period of fifteen (#7) da,s from the date of receipt thereof* It (as
a)so informed that in case of fai)ure to rep),, it (ou)d !e presumed that the noticees ha/e no
exp)anation to offer and that SEBI sha)) proceed in the matter as deemed fit*

3: 2he noticees /ide separate )etters re>uested for a)) the documents0 materia)s re)ied upon !,
SEBI (hich ha/e not !een pro/ided to them* SEBI /ide its )etters dated &cto!er #$, $"#$,
rep)ied to the noticees enc)osing the document s that (ere not pro/ided ear)ier and ad/ising
them to rep), (ithin a period of fifteen (#7) da,s from the date of receipt thereof* 2he
noticees /ide separate )etters re>uested for extension of time for fi)ing of the rep),*
2hereafter, the noticees /ide their respecti/e )etters su!mitted the rep), to the S34 and
re>uested for an opportunit, of persona) hearing* +ccording),, an opportunit, of persona)
hearing (as granted to the noticees on 1e!ruar, $-, $"#'* 2he same (as reschedu)ed to
1e!ruar, $%, $"#' due to the change of 3ompetent +uthorit, and the same (as
communicated to the noticees /ide )etter dated 1e!ruar, #%, $"#'* 2he noticees name), JSE,
and its directors name), 8r* 9uneet Jain, 8r* +mit ?upta, 8r* 8s* @eena ?upta, 8r*
5aAendra 9rashad ?upta, 8r* +ni) ?adodia, 8s* 8anAu)a Jain, 8r* 8anish ?adodia, 8r* 3*9*
8itta) /ide respecti/e )etters expressed their ina!i)it, to attend the persona) hearing on the
Brought to you by http://StockViz.biz
Page 3 of 27

date fixed* 2he re>uest of the noticees (ere considered and the hearing (as postponed to
8arch "%, $"#'* 2he noticees name), JSE, 8r* 3*9* 8itta), 8r* 8anish ?adodia, 8r* +ni)
?adodia and 8s* 8anAu)a Jain again re>uested for adAournment* +ccording),, the hearing
(as reschedu)ed to +pri) "7, $"#'* &n the date fixed 8r* 4eeraA 8atta, +d/ocate and 8r*
Joe), +d/ocate appeared for JSE and the ?o/erning Board of JSE and made ora)
su!missions* 3ertain detai)s (ere asked from JSE during the persona) hearing, for (hich
three (eeks' time (as granted to it*

2he noticees 8r* +mit ?upta, 8r* 5aAee/ ?upta, 8r* 9uneet Jain, 8r* 3*9* 8itta), 8r* +ni)
?adodia, 8r* 8anish ?adodia, 8s* 8anAu)a Jain appeared through ad/ocates name), 8r*
+ttin Shankar 5astogi, 8r* Joe), 8r* 4eeraA 8atta and made su!missions* 2hree (eeks time
(as a)so granted to these noticees for su!mitting the (ritten su!missions*

2he noticee name), 8r* 5aAendra 9rashad ?upta appeared for himse)f and 8s* @eena ?upta
and made ora) su!missions* 2hese noticees (ere granted a period of fifteen (#7) da,s to
su!mit the detai)s as asked during the persona) hearing*

+)) noticees, except 8r* 5aAender 9rashad ?upta and 8s* @eena ?upta, fi)ed the (ritten
su!missions, (hich (ere taken on record*

4: 2he su!missions of the noticees, in !rief are as underB

-: 6SE 9$d $#, 2##! d-#d N%95?! 20, 2012 -nd 6+n 1@, 2013 ,+?5$##d -, +nd!:
A 2he, had comp)ied (ith the pro/isions of 5egu)ation % and 6 of the 8I89S 5egu)ations*
2here is not a sing)e shareho)der (ho he)d more than 7C shares as per 8I89S
5egu)ation in JSE (ithout seeking prior appro/a) of SEBI* 2he, had no means to
disco/er that the indi/idua) shareho)ders (ere acting in concert except the se)f certified
disc)osures made !, the indi/idua) shareho)ders* 2he agenc, (ith in/estigati/e po(ers
)ike SEBI can on), find out such facts*
A JSE has pro/ided a se>uence of e/ents demonstrating that the, had taken steps for the
appointment of Executi/e irector*
A In the past, 8r* 9uneet Jain (as the 3hairman of JSE on), for a )imited period from 8arch
#$, $"#" to &cto!er $%, $"#" (% months) and from ecem!er "-, $"## to 8arch #", $"#$
(' months)* uring the tenure of 8r* 9uneet Jain, the affairs of the exchange ha/e !een
carried out transparent), and in the !est interests of the exchange and its shareho)ders*
Brought to you by http://StockViz.biz
P-/ 4 %) 2>

A 2he appointment of 8r* 3*9* 8itta) as Dho)e 2ime irector (as done as a need (as fe)t to
strengthen the management* 2he introduction of 8r* 8itta) came from a re)ia!)e source
and his >ua)ifications0 experience a)so met (ith the re>uirements of the Exchange, hence,
his name (as considered !, the Board* 9rior to his appointment, a )ega) opinion (as a)so
sought on the issue of appointment and remuneration of Dho)e 2ime irector*
A &n this !onafide understanding of the SEBI circu)ar, the Board fe)t that there is no !ar on
the appointment of Dho)e 2ime irector and appointed 8r* 3*9* 8itta) as Dho)e 2ime
irector from the >uota of shareho)der directors for (hich there (as no procedure )aid
do(n !, SEBI* Eo(e/er, )ater, on !ecoming a(are that the appointment of 8r* 3*9*
8itta) re>uired prior appro/a) from SEBI, 8r* 3*9* 8itta) resigned from the post of
Dho)e 2ime irector of the exchange* uring his tenure he had exercised on),
administrati/e po(ers* Ee had no po(ers to sign the che>ues a!o/e an amount of
`$7,""" that too Aoint), (ith the ?enera) 8anager of JSE* Ee had no po(ers to sanction
an, financia)s, the on), po(er he had (as of appro/ing the proposa)s recei/ed from the
?enera) 8anager* 2he ac>uisition of shares of JSE !, 8r* 3*9* 8itta), (as his indi/idua)
decision*
A 2he appro/a) from SEBI and pu!)ishing in officia) gaFette is mandator, on), in the cases
(here amendments in 8emorandum of +ssociation and +rtic)es of +ssociation !, stock
exchanges pertains to an, of the items as set out in c)auses (a) to (d) of su!;section (#)* It
has a)so !een said that the amendments (ere for(arded to SEBI /ide )etter dated
4o/em!er "., $""% for appro/a)*
A 2he minutes for !oard meeting he)d from 1e!ruar, $""% to Januar, $"#" had remained
unsigned !, the then 3hairmen, 8r* 9urshoottam Bhaggeria and 8r* @iAa, 8ehta* SEBI
a)so had noted this in its inspection in the ,ear $""6 and asked 8r* @iAa, 8ehta for signing
the minutes in the minutes !ook, ho(e/er, the minutes remained unsigned* +fter the
annua) genera) meeting in 4o/em!er $"##, the issue of minutes not !eing signed from the
past period (as raised and in order to ensure the comp)iance it (as decided that 8r*
9uneet Jain in the capacit, of 3hairman (ou)d sign the minutes for the past period*
Before doing this, the Board decided to seek independent opinion* 9ost the opinion from
the practicing 3ompan, Secretar, and second opinion from +d/ocate Eigh 3ourt, e)hi,
the Board comprising a)) the 9u!)ic Interest irectors authorised 8r* 9uneet Jain to sign
the minutes to comp)ete the )ega) re>uirement* 2he minutes of the Board meetings (ere
certified as true and correct !, the t(o genera) managers of JSE, (ho (ere present in a))
those meetings (hose minutes remained unsigned* 2he minutes (ere signed in the
Brought to you by http://StockViz.biz
Page 5 of 27

presence of Justice (5etd*) 8r* 4*L* 2i!re(a), 9u!)ic Interest irector and (ith his fu))
participation*
A +)) the Board meetings (ere he)d regu)ar), and (ere attended !, the 9u!)ic Interest
irectors* 2he agenda of a)) $' !oard meetings (ere regu)ar), sent to 8r* Gumar prior to
the Board meetings a)ong (ith the minutes of the pre/ious !oard meetings for
confirmation* Ee had ne/er o!Aected to an, of the decisions taken in the Board meetings
or express his disagreement* It has a)so !een said that since 4o/em!er $"##, (hen the
ne( !oard (as constituted not e/en a sing)e meeting (as he)d outside Jaipur* 2he
exchange officers regu)ar), consu)ts 9u!)ic Interest irectors !efore fixing the time and
/enue of the Board meetings and a)) the meetings ha/e !een attended !, a)) the 9u!)ic
Interest irectors* 8r* S*9* Gumar's representation (as put up !efore the go/erning
!oard's meeting and the matter (as discussed, reso)/ed and communicated to SEBI*
A In the past, composition of statutor, committees (ere higher than $"C since the
committees comprised of three mem!ers each, out of (hich one (as a trading mem!er
director* Eo(e/er, as there is no trading acti/it, in JSE since the ,ear #66%, there (as no
meeting he)d of +r!itration0 iscip)inar,0 efau)ts committees during the period of
$""% to $"## except that of In/estor Ser/ice 3ommittee* 2he irregu)arities ha/e !een
rectified (ith the re;constitution of committees on June #', $"#$, composing 7 mem!ers
each in a)) the committees*
A 2he mem!ership se)ection committee cou)d not !e constituted ear)ier as there (as no
trading acti/it, in JSE* 2he mem!ership strength has reduced as mem!ers (ere
surrendering their trading rights* 1urther, JSE had no p)an for ne( mem!ership and
therefore, mem!ership se)ection committees (as not constituted* It has re;constituted
these committees on June #', $"#$*
A It (as of the !onafide /ie( that the inspection is to !e conducted of $"C of acti/e
su!;!rokers* Eo(e/er, it has initiated steps and is in the process of conducting inspection
as per the SEBI norms*
A It is maintaining a sma)) in/estors' ser/ice ce)) (ith re>uired faci)ities* +s ad/ised !, SEBI, it
is in the process of esta!)ishing a fu)) f)edged in/estor ser/ice ce))*
A 2he, ha/e taken /arious steps for appointing 3E& of the su!sidiar, of JSE*
A 2he S34 is /ague* It has not !een pro/ided (ith the inspection report (hich forms !asis
for the a))egations* It has not !een specified as to ho( and under (hich pro/ision of )a(,
the noticees are persons acting in concert* It has !een (rong), a))eged that he (as Aoint),
contro))ing the affairs of JSE as no instances ha/e !een sho(n*
Brought to you by http://StockViz.biz
P-/ 4 %) 2>


?: M!: R-(nd! P!-,*-d G+7#- -nd M,: ;n- G+7#- 9$d #*$! !,7"#$9 2##!, ?%#*
d-#d N%95?! 2>, 2012, ,+?5$##d -, +nd!
A 2he c)u!!ing of their shareho)ding (ith 8r* +mit ?upta, 8r* 5aAee/ ?upta and 8r*
9uneet Jain is erroneous and is (ithout an, !asis*
A 2he, !oth had ac>uired 6.,'7" shares each of JSE ((ho (ere acting in concert (ith each
other) in Septem!er $"". after seeking appro/a) from SEBI* 2he shares so purchased
(ere independent and (ere out of their o(n funds and their com!ined shareho)ding in
JSE constituted on), 'C of the tota) shareho)ding* Su!se>uent),, the shares he)d !, these
t(o (ere so)d to 8r* 3*9* 8itta) in the ordinar, course*
A 8r* 5aAender 9rashad ?upta (as one of the directors on the !oard of JSE for a short
period of % months i*e* from 8arch $"#" to &cto!er $"#" a)ong (ith #" other directors of
the !oard* 8s* @eena ?upta (as on), a shareho)der of JSE*
A 2he, had no common o!Aecti/e0 purpose (ith other persons to ac>uire shares0 /oting
rights0 contro) in JSE* 2here (as no meeting of minds* 2he fact such as +mit ?upta,
5aAee/ ?upta and 9uneet Jain (ere a)so directors on the !oard of Internationa) Securities
Limited (hereinafter referred to as 'ISL') cannot automatica)), resu)t in finding of their
!eing 'persons acting in concert' (ith him* 8r* 5aAender 9rashad ?upta (as a director of
ISL a)ong (ith 8r* +mit ?upta and 8* 5aAee/ ?upta for a /er, !rief period of Aust #7
da,s* Ee had ceased to !e a director of ISL since Septem!er "%, $""%*
A 8s* @eena ?upta (as not a director of ISL since 4o/em!er "#, #66.*
A 8r* 9uneet Jain (as not a shareho)der of JSE during the time he (as a director of ISL
together (ith 8r* 5aAender 9rashad ?upta*
A 8r* 5aAender 9rashad ?upta had no re)ation (ith 8r* 9uneet Jain, 8r* +mit ?upta and 8r*
5aAee/ ?upta sa/e and except !eing directors on the !oard of ISL*

": M!: A5$# G+7#- &9$d 2##!, d-#d N%95?! 20, 2012 -nd A7!$2 30, 2013' -nd R-(9
G+7#- &9$d 2##!, d-#d N%95?! 20, 2012 -nd A7!$2 30, 2013', ,+?5$##d -, +nd!:
A +mit ?upta and 5aAee/ ?upta, !oth had ac>uired 6.,'7" shares of JSE, each in Septem!er
$""., constituting a!out #*7C of the tota) shareho)ding of JSE from their o(n funds after
seeking appro/a) from SEBI*
A In addition to the a!o/e, 5aAee/ ?upta further ac>uired -',""" shares of JSE in 8a, $"##,
(hich increased his tota) shareho)ding in JSE to #,-",'7" shares (constituting $*:.C of
the tota) shareho)ding of JSE)* 2hese #,-",'7" shares (ere so)d !, him on Januar, "6,
$"#$ to one 8r* +ni) ?adodia, after this he does not ho)d an, shares in JSE*
Brought to you by http://StockViz.biz
Page 7 of 27

A +mit ?upta a)so so)d the shares ac>uired in 1e!ruar, $"#$, after this he does not ho)d an,
shares in JSE*
A Such ac>uisition of shares !, these t(o (ere not guided !, an, common o!Aecti/e or
meeting of minds (ith others, for the purpose of ac>uiring su!stantia) shares or contro)
o/er JSE* 8r* 5aAender 9arshad ?upta, 8s* @eena ?upta and 8r* 9uneet Jain had no ro)e
to p)a, in such ac>uisition*
A +t the time of ac>uisition of -',""" shares !, 5aAee/ ?upta, on), 5aAee/ ?upta, +mit
?upta and 9uneet Jain (ere the directors of ISL* +)) these persons had ne/er occupied
the post of director in ISL together at an, point of time* +mit ?upta and 5aAee/ ?upta
!ecame the director of ISL on +ugust $$, $""% and (ere directors together (ith 5aAender
9arshad ?upta on), for a period of #7 da,s* 1or the purposes of 5egu)ation $(e)($)(iii) of
the SEBI (Su!stantia) +c>uisition of Shares and 2akeo/ers) 5egu)ations, #66.
(hereinafter referred to as 'S+S2 5egu)ations'), the, had to !e directors of ISL at the same
point of time a)ong (ith the others* Becoming directors of a compan, much after the
ac>uisition of shares cannot !e a ground for retrospecti/e), in/oking the deeming
pro/ision of the definition of 'persons acting in concert'*
A 1urther, ISL (as ne/er a shareho)der of JSE* 2he common o!Aecti/e has not !een
high)ighted an,(here in the S34* +t the time of ac>uisition of shares he (as neither a
director of ISL nor (as he connected to other noticees under an, deeming categor, of
Section $(e)($) of the S+S2 5egu)ations* 2he ac>uisition of shares !, him has preceded
the date on (hich the 5egu)ation $(e)($)(iii) of the S+S2 5egu)ations !ecame app)ica!)e*
A 2he common directorship in 'an,' compan, is not the pre;re>uisite for attracting the
deeming pro/ision* 2he common directorship has to !e of a compan, (hich fu)fi))s the
re>uirements of 5egu)ation $(e)(#) of the S+S2 5egu)ations and is there!, co/ered !,
5egu)ation $(e)($)(i) of the S+S2 5egu)ations*
A 8r* +mit ?upta (as a director on the Board of JSE during the period of &cto!er $"#" to
Septem!er #%, $"#$*
A 2here (as no 'meeting of minds' at the time of ac>uisition of shares in JSE, as on), 8r*
5aAender 9arshad ?upta (as the director of ISL in Septem!er, $"". (hen the shares (ere
ac>uired !, 8r* +mit ?upta* E/en if it is assumed that there (as indeed a 'meeting of
minds' !, the reason of common directorship as has !een a))eged in the S34, there has
not !een an, ac>uisition of shares !, +mit ?upta after such 'meeting of minds'*

Brought to you by http://StockViz.biz
P-/ @ %) 2>

d: M!: An$2 G-d%d$- &9$d 2##!, d-#d N%95?! 30, 2012 -nd M-= 13, 2013' -nd M!:
M-n$,* G-d%d$- &9$d 2##!, d-#d N%95?! 20, 2012 -nd M-= 13, 2013', ,+?5$##d
-, +nd!:
A It has !een said that +ni) ?adodia and 8anish ?adodia are !rothers and resides at the same
address* +ni) ?adodia had purchased $,"",'7" shares of JSE constituting a!out '*"%C of
the tota) shareho)ding during &cto!er $"## to 8a, $"#$ from /arious unconnected
persons name), 8s* 8anAu)a Jain, 8r* 5aAee/ ?upta, 8r* 8ohan Gumar hanuka, 8r*
5*3* ?oenka, 8r* Sat,a 4arain Beri(a) in the ordinar, course at different times and rates*
2he S34 has not mentioned his entire purchases* &n the other hand, 8anish ?adodia
had purchased #",""" shares of JSE constituting a!out "*#7C of the tota) shareho)ding on
&cto!er #-, $"## in the ordinar, course from 8s* 8anAu)a Jain* 2he shares (ere
purchased in indi/idua)0 independent capacit, on the !asis of their o(n opinion and
funds* +ni) ?adodia and 8anish ?adodia (ere ne/er on the !oard of ISL*
A 2he, (ere not acting in concert (ith each other or the unre)ated entities name), 8r* 3*9*
8itta), 8r* 9uneet Jain, 8s* 8anAu)a Jain and 8r* 5aAee/ ?upta* &ne of their
ac>uaintance, 8r* +Aa, Jain had introduced them to 8s* 8anAu)a Jain*
A +ni) ?adodia (as e)ected as a director of JSE on 4o/em!er $6, $"##, in the +nnua)
?enera) 8eeting* Su!se>uent),, he (as e)ected as 3hairman of the !oard of JSE on and
from 8arch "#, $"#$* 2he period prior to 4o/em!er $6, $"##, cannot !e attri!uted to
him in an, manner* It has !een su!mitted !, him that as a mem!er of the !oard of
directors, he a)(a,s acted !onafide), and in the !est interest of JSE and as per the
discussions and consent of other Board 8em!ers (inc)uding pu!)ic interest directors) and
its shareho)ders in accordance (ith the app)ica!)e ru)es and regu)ations*
A It has !een su!mitted !, +ni) ?adodia that he (as not present during the meeting of !oard
of directors of JSE, in (hich, 8r* 3*9* 8itta) (as appointed as a Dho)e 2ime irector*
2he decision to appoint 8r* 3*9* 8itta) as a Dho)e 2ime irector (as taken unanimous),
!, the !oard of JSE inc)uding 9Is on the reference of one 8r* ** 4agpa), the auditor
of JSE* 2he said decision (as taken in good faith de hors sinister0 o!)i>ue moti/es and in
the o/era)) interest of JSE* 8r* 3*9* 8itta) had no po(ers to sign an, che>ue indi/idua)),
on !eha)f of JSE* Ee (as authorised to act as Aoint signator, on), to the extent of `$7,"""*
uring his tenure of eight months, 8r* 3*9* 8itta) had signed on), one che>ue for an
amount !e)o( `$7,"""* 8r* 3*9* 8itta) has resigned from the post of Dho)e 2ime
irector of the exchange after the Board of JSE had rea)iFed that prior appro/a) from
SEBI shou)d ha/e taken for such appointment*
Brought to you by http://StockViz.biz
Page 9 of 27

A Sa)e and purchase of shares does not imp), a re)ationship of persons acting in concert*
8eeting of minds prior to the ac>uisition is a sine qua non for the persons said to !e acting
in concert*

: M!: P+n# 6-$n 9$d 2##!, d-#d N%95?! 10, 2012 -nd M-= 13, 2013, ,+?5$##d -,
+nd!:
A Ee (as the 3hairman of JSE during 8arch $"#" to &cto!er $"#" and further during
4o/em!er $6, $"## to 1e!ruar, $6, $"#$* Ee had ac>uired $,7"" shares of JSE on
&cto!er #-, $"##, constituting "*"'C shares of JSE out of his o(n funds* 2he same (ere
)ater so)d*
A Ee (as not acting in concert (ith 8r* 5aAender 9rashad ?upta, 8s* @eena ?upta, 8r*
+mit ?upta and 8r* 5aAee/ ?upta* Ee is a)so not person acting in concert (ith 8r* 3*9*
8itta), +ni) ?adodia, 8anish ?adodia and 8s* 8anAu)a Jain* Ee had no commercia)0
!usiness transaction0 common economic interest0 fami), re)ations (ith the persons
named* It has a)so !een said that the association !et(een persons is one thing !ut their
acting in concert (ith a common o!Aecti/e to ac>uire su!stantia) num!er of shares in a
compan, in pursuance of an understanding or an agreement !et(een them is a)together
different*
A E/en if it is assumed that he and 8s* 8anAu)a Jain are 'persons acting in concert' then a)so,
the com!ined shareho)ding of these t(o persons ne/er crossed the thresho)d of 7C as
stipu)ated under 8I89S 5egu)ations*
A Ee (as a director on the !oard of ISL from 8a, "#, $""% to 4o/em!er "#, $"##* 2he S34
(rong), )a!e)s him as the Dho)e 2ime irector of ISL during the period of ecem!er $";
$$, $"##* Ee had proposed to resign from the directorship of ISL /ide his )etter dated
&cto!er "', $"##* 4SE /ide its )etter dated &cto!er $%, $"##, had communicated the
acceptance of the proposed resignation and the same (as recorded !, ISL on 4o/em!er
"#, $"##*
A It has not !een exp)ained as to ho( he interfered in the da, to da, affairs of JSE* uring his
tenure at JSE he ne/er /isited JSE or e/en Jaipur except on occasions (here there (as
Board meeting or ?enera) Bod, meeting*
A 2he S34 is /ague* Ee has not !een pro/ided (ith the inspection report (hich forms !asis
for the a))egations* It has not !een specified as to ho( and under (hich pro/ision of )a(,
the noticee is a person acting in concert*
A Ee (as not connected (ith +ni) ?adodia in an, manner*
Brought to you by http://StockViz.biz
P-/ 10 %) 2>

A Ee had ne/er met 8r* 3*9* 8itta) !efore his appointment to the Board of JSE* 8r* **
4agpa) had !rought the resume of 8r* 3*9* 8itta) to the Board of JSE for considering his
name for the post of the Dho)e 2ime irector* 2he proposa) to appoint him (as
unanimous), appro/ed !, the Board of JSE* uring his tenure he had exercised on),
administrati/e po(ers* Ee had no po(ers to sign the che>ue on !eha)f of JSE
indi/idua)),* Ee had no po(ers to sanction an, financia)s, on), po(er he had (as of
appro/ing the proposa)s recei/ed from the ?enera) 8anager* 2he prior appro/a) from
SEBI (as inad/ertent), and unintentiona)), missed due to officia) o/ersight* Immediate),
on !ecoming a(are, 3*9* 8itta) had resigned from the post of Dho)e 2ime irector of
JSE*
A 2he decision of 3*9* 8itta) to ac>uire shares of JSE (as his o(n*
A 2here (as no neg)igence in hand)ing the !oard meeting minutes* 2he minutes (ere signed
in the presence of Justice (5etd*) 8r* 4*L* 2i!re(a), 9I and (ith his fu)) participation*
2he act of signing of the minutes of !oard meeting of JSE on), ensured comp)iance (ith
the pro/ision of Section #6' of the 3ompanies +ct, #67-*
A +s regards the date of )ega) opinion it has !een said that it is nothing !ut further
corro!oration of opinion o!tained from the practicing 3ompan, Secretar,* 2herefore,
there (as no neg)igence in hand)ing the !oard minutes*
A 2he Board meetings (ere he)d regu)ar), and (ere attended !, the 9Is and the,
participated in the Board meeting of JSE* +dmitted), the agenda for the Board meetings
(as regu)ar), sent to 8r* S*9* Gumar prior to the !oard meetings a)ong (ith the minutes
of the pre/ious !oard meetings for confirmation* 2herefore, a)) a)ong, he (as a(are of the
e/ents transpiring in the Board meetings and had ne/er o!Aected to an, of the decisions
taken in the !oard meeting or express his disappro/a)*
A 2he shares (ere ac>uired !, him on &cto!er #-, $"##, (hen he had a)read, proposed to
resign from ISL pending appro/a) from 4SE*
A 2he reso)ution to appoint 8r* 3*9* 8itta) (as passed unanimous), !, the mem!ers of the
Board (hich consisted of peop)e from /arious (a)ks of )ife*

): T* )%22%1$n/ -! $n#! -2$- #* ,+?5$,,$%n, %) M,: M-n(+2- 6-$n 9$d !72= d-#d
N%95?! 13, 2012 -nd M-= 13, 2013:
A She (ith the prior appro/a) of SEBI had ac>uired the shares of JSE on Septem!er #$, $"".
out of her o(n funds* 2he manner of grouping her (ith others (i*e* 8r* 9uneet Jain, 8r*
Brought to you by http://StockViz.biz
Page 11 of 27

3*9* 8itta), 8r* +ni) ?adodia, 8r* 8anish ?adodia) and dra(ing ad/erse inference is
erroneous*
A She (as not a person acting in concert (ith the persons as a))eged* 2he inference that she
had acted in concert (ith 8r* 9uneet Jain, 8r* 3*9* 8itta), 8r* +ni) ?adodia and 8r*
8anish ?adodia is !ased on the fact that she had so)d the shares to them* 4o common
o!Aecti/e0purpose !ehind acting in concert to ac>uire the shares or /oting rights in JSE or
contro) o/er it has !een pro/ided in the S34* It has !een said that (hen she had ac>uired
the shares of JSE, 8r* 9uneet Jain, 8r* 3*9* 8itta), 8r* +ni) ?adodia and 8r* 8anish
?adodia (ere not the shareho)ders of JSE*
A 2he impugned transactions of sa)e of shares !, her to certain persons on), resu)ted in
di)ution of her shareho)ding in JSE from ',#$,'"" to $,%6,%"" shares* 2he act of her,
se))ing the shares to different indi/idua)s cannot !e termed as a concerted action to
ac>uire contro)*
A E/en if, it is presumed that she (as acting in concert (ith the !u,ers of her shares, the
transaction of sa)e of shares from her to those !u,ers did not resu)t in an, increase in the
num!er of shares co))ecti/e), he)d !, her and the su!se>uent !u,ers*

/: M!: C:P: M$##-2 9$d 2##!, d-#d N%95?! 30, 2012 -nd 6+n 1@, 2013, ,+?5$##d -,
+nd!:
A Before Aoining JSE, he (as (orking as Senior 8anager (ith a nationa)ised !ank, ti)) 8arch
'#, $"#", the da, (hen he retired* Sometime during 4o/em!er $"##, 8r* ** 4agpa),
partner, ** 4agpa) < 3o*, statutor, auditors of JSE informed him that JSE is )ooking
for a person to !e appointed for genera) administration* 2hen, he (as introduced to JSE
in its Board meeting* uring his tenure at JSE, the po(ers exercised !, him (ere in
ordinar, course* Ee had not signed an, che>ues indi/idua)), on !eha)f of JSE* Ee had
po(ers to issue che>ues upto an amount of `$7,""" Aoint), (ith the ?enera) 8anager of
JSE* Ee had no po(ers to sanction an, financia)s and (as on), appro/ing the proposa)s
recei/ed from the ?enera) 8anager*
A uring +ugust $"#$, he (as informed !, JSE that his appointment (as not in conformit,
(ith the app)ica!)e pro/ision of )a( and he su!mitted his resignation on +ugust ##, $"#$*
Being a rank outsider, he (as not a(are (hether JSE has appointed him in consonance
(ith the app)ica!)e pro/isions of )a(* 2herefore, for his appointment as a director, he
cannot !e fau)ted in an, manner* 2he sa)ar, paid !, JSE is compara!)e to the )ast sa)ar, he
dre( in the !ank*
Brought to you by http://StockViz.biz
P-/ 12 %) 2>

A 9rior to his appointment, he (as not a(are of other persons0 re)ationship (ith them as
a))eged in the S34* uring his tenure, he had acted !onafide, (ithin the confines of
po(er (ithout !eing under inf)uence or contro) of an,!od, inc)uding 8r* 9uneet Jain and
8r* +ni) ?adodia*
A Ee (as the director on the Board of JSE on), from ecem!er #7, $"## to +ugust #", $"#$*
9rior to !eing appointed as a director, he (as not in/o)/ed in its management0 affairs in
an, manner*
A Ee had ac>uired #,6:,."" shares of JSE (i*e* 6.,'7" shares from 8r* 5aAendra 9rashad
?upta and 6.,'7" shares from 8s* @eena ?upta) on 8a, ":, $"#$, constituting a!out
$*66C of the tota) shareho)ding in the norma) course (ithout acting in concert (ith an,
other person* Ee (as not acting in concert (ith 8r* +ni) ?adodia, 8r* 9uneet Jain, 8s*
8anAu)a Jain and 8r* 8anish ?adodia* Ee had no common o!Aecti/e0 purpose (ith
other persons*
A Ee has not !een pro/ided (ith the inspection report (hich forms !asis for the a))egations*
It has not !een specified as to ho( and under (hich pro/ision of )a(, he is a person acting
in concert*

3: I ha/e carefu)), considered the S34 issued to JSE and the other noticees and the respecti/e
rep)ies0su!missions inc)uding those made during the persona) hearing* 2he noticees ha/e
taken a common argument that the, ha/e not !een pro/ided (ith the copies of the /arious
documents inc)uding the copies of the inspection reports* In this regard, I note that the
re)e/ant extract of the inspection reports (ere part of the S34* 1urther, the document (hich
ha/e not !een pro/ided to the noticees, are not !eing re)ied upon in the present proceedings*

4: Dhi)e proceeding further (ith the matter, I note that certain charges are common in !oth the
S34s issued to the JSE, ?o/erning Board of JSE and that issued to its directors 8r*
5aAender 9rashad ?upta, 8s* @eena ?upta, 8r* +mit ?upta, 8r* 5aAee/ ?upta, 8r* 9uneet
Jain, 8r* 3* 9* 8itta), 8r* +ni) ?adodia, 8r* 8anish ?adodia and 8s* 8anAu)a Jain*
3onsidering the a!o/e, )$!,#2= #* "%55%n "*-!/, !-$,d $n ?%#* #* SCN, -! ?$n/
d-2# ?2%1 $n ,!$-#$5B

A: S*-!*%2d$n/ $n .",, %) 3B $n 9$%2-#$%n %) MIMPS R/+2-#$%n,

2he S34 has a))eged that the shareho)der directors of JSE had he)d the shares in excess of
the )imit stipu)ated under 5egu)ation %(#) of the then app)ica!)e Securities 3ontracts
Brought to you by http://StockViz.biz
Page 13 of 27

(5egu)ation) (8anner of Increasing and 8aintaining 9u!)ic Shareho)ding in recognised Stock
Exchanges) 5egu)ations, $""- (hereinafter referred to as '8I89S 5egu)ations')* 2he
5egu)ation %(#) of the 8I89S 5egu)ations read as underB
H8.(1) No person resident in India shall at anytime, directly or indirectly, either individually or together
with persons acting in concert, hold more than five percent of the equity share capital in a recognised stock
echange! ...H

8r* 5aAender 9rashad ?upta, 8s* @eena ?upta, 8r* +mit ?upta, 8r* 5aAee/ ?upta and 8r*
9uneet Jain (hereinafter co))ecti/e), referred to as 'group #') are the shareho)der directors
(ho are a))eged 'to !e persons acting in concert and Aoint), he)d more than 7C shares' in
/io)ation of the 5egu)ation %(#) of the 8I89S 5egu)ations* 3ertain connection has !een
a))eged among 8r* 5aAender 9rashad ?upta, 8s* @eena ?upta, 8r* +mit ?upta, 8r* 5aAee/
?upta and 8r* 9uneet Jain, !, /irtue of their directorship in ISL (Internationa) Securities
Limited)* ISL is one of the !roking entit, registered (ith 4SE*

+ further charge in the S34 is against 8r* +ni) ?adodia, 8r* 8anish ?adodia, 8r* 9uneet
Jain, 8s* 8anAu)a Jain and 8r* 3*9* 8itta) (hereinafter co))ecti/e), referred to as 'group $')
that the, (ere a)so persons acting in concert* 2he !asis of the charge as exp)ained in the S34
(as that a fe( of the persons !e)onging to group #, name),, 8r* 5aAendra 9rasad ?upta, 8s*
@eena ?upta and 8r* 5aAee/ ?upta had transferred their entire ho)dings in JSE to 8r* +ni)
?adodia and 8r* 3*9* 8itta) !e)onging to group $* 2he additiona) facts sho(n as crucia) for
this a))egation are thatB
A 8r* +ni) ?adodia and 8r* 8anish ?ododia are !rothersI
A 8r* +ni) ?adodia had purchased not on), from 8r* 5aAee/ ?upta !ut a)so from four other
persons inc)uding 8r* 8anAu)a JainI
A 8r* 3*9* 8itta) (as inducted in JSE !, 9uneet Jain and +ni) ?ododia*

In this regard, the charge is a)so )e/e)ed against JSE, stating that JSE and its ?o/erning Board
ha/e fai)ed to monitor the transfer of e>uit, shares of JSE and ensure comp)iance (ith
5egu)ation % of the 8I89S 5egu)ations in respect of the transfer0 issue of shares and su!mit
incorrect undertaking to SEBI confirming the comp)iance of pro/ision of 5egu)ation ##(#)
of the 8I89S 5egu)ations*

?roup # entities /ide their respecti/e rep)ies ha/e argued that the, are not 'persons acting in
concert' and the shares of JSE (ere ac>uired !, them independent),, out of their o(n funds*
2he noticees name), 5aAender 9rashad ?upta, 8s* @eena ?upta, +mit ?upta and 5aAee/
Brought to you by http://StockViz.biz
P-/ 14 %) 2>

?upta and 9uneet Jain ha/e argued that c)u!!ing of their shareho)ding is erroneous and is
(ithout an, !asis* 2he ac>uisition of shares !, them (as not guided !, an, common
o!Aecti/e or meeting of minds (ith others for the purpose of ac>uiring of su!stantia) shares
or contro) o/er JSE* 2he, had no common o!Aecti/e0 purpose to ac>uire the shares0 /oting
rights0 contro) in JSE*

?roup # entities ha/e their common directorship in ISL, (hereas the charge is that !, /irtue
of their !eing directors in ISL, the, !ecome persons acting in concert for the ac>uisition of
the shares of JSE* In order to decide upon the issue (hether group # persons (ere 'persons
acting in concert', I refer to the 5egu)ation $(e)($)(i) of the S+S2 5egu)ations* It is >uite c)ear
that the common directorship has to !e of #* "%57-n= co/ered under such pro/ision, in
order to consider them as persons acting in concert* Jnder this pro/ision of S+S2
5egu)ations, 'person acting in concert' is defined as underB
"(1) persons who, for a common o#$ective or purpose of su#stantial acquisition of shares or voting
rights or gaining control over the target company, pursuant to an agreement or understanding (formal
or informal), directly or indirectly co%operate #y acquiring or agreeing to acquire shares or voting rights
in the target company or control over the target company.
(&) without pre$udice to the generality of this definition, the following persons will #e deemed to #e
persons acting in concert with other persons in the same category, unless the contrary is esta#lished!
(i) a company, its holding company, or su#sidiary of such company or company under the same
management either individually or together with each other'
(ii) a company with any of its directors, or any person entrusted with the management of the funds
of the company'
(iii) directors of companies referred to in su#%clause(i) of clause (&) and their associates'
(iv) ... ...
... ..."

Eo(e/er, it is no!od,'s case that ISL is either a ho)ding compan, of JSE or its su!sidiar,* It
is a)so not sho(n that ISL and JSE are under the same management either indi/idua)), or
together (ith each other* 2herefore, I am inc)ined to gi/e a finding that group # entities0
persons are not 9+3s, as a))eged in the S34*

+s regards the charge against group $ entities is concerned, the exp)anations gi/en !, these
noticees !e)onging to group $ are that the shares (ere purchased !, these in their indi/idua)0
independent capacit, on the !asis of their o(n opinion and funds* 8r* +ni) ?adodia in
addition has su!mitted that he (as not present during the meeting of the !oard of directors
(hen the appointment of 8r* 3*9* 8itta) as Dho)e 2ime irector of JSE, (as discussed and
(as unanimous), decided !, the !oard of JSE* In this regard, I ha/e seen the minutes of the
meeting dated ecem!er #:, $"##, and from the same, I note that the decision to appoint
Brought to you by http://StockViz.biz
Page 15 of 27

8r* 3*9* 8itta) (as taken on this da, and that 8r* +ni) ?adodia (as granted )ea/e of a!sence
for this meeting*

4o other purpose0 o!Aecti/e has !een a))eged in the S34 to sho( that the group $ entities
(ere acting in concert* 2he group $ persons ha/e argued that the, (ere not acting in concert
and the, did not ha/e an, common o!Aecti/e0 purpose (ith others in the group to ac>uire
the shares or /oting rights in JSE* I note that mere sa)e and purchase does not imp), a
re)ationship of 'persons acting in concert'* 2here shou)d !e other supporting facts* 2herefore,
the charge of !eing persons acting in concert against ?roup $ a)so does not sur/i/e*

In /ie( of the a!o/e, the charge of /io)ation of 5egu)ation %(#) of 8I89S 5egu)ations a)so is
not made out as against the noticees name), 8r* 5aAender 9rashad ?upta, 8s* @eena ?upta,
8r* +mit ?upta, 8r* 5aAee/ ?upta, 8r* +ni) ?adodia, 8r* 8anish ?adodia, 8r* 9uneet
Jain, 8s* 8anAu)a Jain and 8r* 3*9* 8itta)*

JSE and its ?o/erning Board in their rep), has su!mitted that the, had comp)ied (ith the
pro/isions of 5egu)ation % and 6 of the 8I89S 5egu)ations and there is not a sing)e
shareho)der (ho he)d more than 7C shares as per the 8I89S 5egu)ation in JSE* It has a)so
!een said that !e,ond the se)f certified disc)osures made !, the indi/idua) shareho)ders the,
had no means to disco/er that the indi/idua) shareho)ders (ere acting in concert* 1urther,
the, had no occasion to suspect that the shareho)ders (ere acting in concert (ith each other*
2herefore, JSE had confirmed the comp)iance of the pro/isions of 8I89S 5egu)ations to
SEBI from time to time* 2he persons (ho are a))eged to !e on the !oard of ISL are actua)),
not on the Board of JSE* In /ie( of the discussion a!o/e and in the a!sence of materia) to
pro/e, the a))egation as )e/e)ed in the S34 is not esta!)ished as against the JSE and its
?o/erning Board*

B: I!!/+2-!$#$, $n #* "%57%,$#$%n %) #* /%9!n$n/ ?%-!d %) #* ."*-n/

5egarding the composition of the go/erning !oard of the exchange, the S34 has a))eged the
fo))o(ingB;
-: that JSE has fai)ed to appoint an Executi/e irector for the da, to da, administration of the
exchange since Septem!er $"". in terms of the SEBI 3ircu)ar no* S80SE0-6#606'
dated +pri) $", #66'* Such appointment of Executi/e irector has !een a))eged to !e
de)i!erate), de)a,ed despite SEBI ad/ise and fo))o( up*
Brought to you by http://StockViz.biz
P-/ 14 %) 2>

?: that in the a!sence of the Executi/e irector, 8r* 9uneet Jain, the then C*-$!5-n %) 6SE
is a))eged to !e acting as the chief executi/e and interfering in the da, to da, affairs of JSE*
It has !een a))eged that the go/erning !oard is /io)ating the 3ode of 3onduct and 3ode of
Ethics of directors as pro/ided in SEBI 3ircu)ar !earing no*
3I50850S+0SE0:'0$"#" dated ecem!er '#, $"#"*
": that 8r* 3*9* 8itta) (as appointed as Dho)e 2ime irector of JSE !, 8r* 9uneet Jain and
8r* +ni) ?adodia (ithout fo))o(ing the appropriate procedure i*e* appointment of search
committee, issue of ad/ertisement, documenting terms and conditions of appointment,
consideration of experience, >ua)ifications and technica)0 )ega) kno()edge re>uired for the
post, etc* It has !een a))eged that the terms and conditions of the said appointment
inc)uding the sa)ar, and perks (ere decided !, 8r* 9uneet Jain* It has a)so !een a))eged that
the entire exercise of appointing 8r* 3*9* 8itta) as Dho)e 2ime irector (as undertaken !,
8r* +mit ?upta, 8r* 5aAee/ ?upta and 8r* 9uneet Jain in order to ensure the da, to da,
contro) o/er the affairs of JSE* 2herefore, it has !een a))eged that the JSE and the
?o/erning Board has fai)ed to pre/ent procedura) irregu)arities in the appointment of 8r*
3*9* 8itta) as Dho)e 2ime irector in /io)ation of the 3ode of 3onduct and 3ode of
Ethics of irectors as pro/ided in SEBI 3ircu)ar !earing no*
3I50850S+0SE0:'0$"#" dated ecem!er '#, $"#"*

A In !,7%n, #% #* "*-!/ -# ,+? 7-!-/!-7* C-C -?%9, JSE has denied that the
appointment of Executi/e irector (as de)i!erate), de)a,ed as it had taken a)) the
reasona!)e efforts to appoint the Executi/e irector* JSE has pro/ided the se>uence of
e/ents to sho( that the, had taken the initiati/e to appoint the Executi/e irector* 2he,
had issued the ne(spaper ad/ertisement on +pri) "#, $""% and conducted the inter/ie(s
on Ju), #', $""%* Before for(arding the short )isted names of the candidates !, the
committee constituted !, the ?o/erning Board of JSE to SEBI, the short )isted
candidates had expressed their un(i))ingness for the appointment to the post* 2herefore,
the names (ere (ithhe)d and the process (as started afresh starting from the ne(spaper
ad/ertisement on ecem!er #$, $""6* 2he app)ications recei/ed in response to the
ad/ertisement (ere scrutiniFed and short)isted* In the meantime, the date of +nnua)
?enera) 8eeting (hereinafter referred to as '+?8') (as fixed for &cto!er $%, $"#" and as
7"C of the directors on the Board of JSE (ere a!out to retire, it (as decided to conduct
the inter/ie( for the post of Executi/e irector after the +?8* 9ursuant to the +?8,
the ne( ?o/erning Board in its meeting he)d on ecem!er $7, $"#", preferred to
Brought to you by http://StockViz.biz
Page 17 of 27

constitute the ne( committee for appointment of the Executi/e irector and a)so
authoriFed the committee to take ser/ices of outside agenc,, if re>uired* 2he meeting of
committee for appointment of Executi/e irector (as he)d on +pri) $#, $"##, in (hich
the 4o3 recei/ed from SEBI for the '4SE 2rading 9)atform' to the mem!ers of JSE, (as
a)so taken up for the discussion* 2he committee mem!ers discussed the matter of
appointment and the )etter of SEBI granting 4o3 for '4SE 2rading 9)atform' and /ie(ed
that due to the 4o3 of SEBI, the o!Aecti/e for appointment of Executi/e irector had
changed from the date (hen the app)ications (ere in/ited* Ear)ier the re>uirement (as
main), the administration of stock exchange, ho(e/er, after the 4o3, the person (ho is
appointed as Executi/e irector must a)so ha/e in;depth kno()edge of stock market
trading operations* +ccording),, it (as decided to in/ite fresh app)ication for the said
post* 2he minutes of the 3ommittee (ere put up !efore the ?o/erning Board on June '",
$"## and it (as decided to start the process afresh for the person (ho ha/e in depth
kno()edge of stock market trading operations* In such circumstances, JSE decided to
in/ite fresh app)ications* 2hereafter, another ad/ertisement (as gi/en on Januar, "6,
$"#$, for the appointment to the post of Executi/e irector !, JSE, the app)ications
recei/ed (ere scrutiniFed and inter/ie(s (ere conducted for short)isted candidates on
8arch #., $"#$, ho(e/er, the committee did not find an, candidate suita!)e for the post*
It has !een said that during the de)i!erations of the committee, the name of 8r* 9uneet
Jain, irector, ?o/erning Board cropped up and it (as gi/en to understand that he (as
a/ai)a!)e for the post of Executi/e irector* 2he committee then considered his name
and found him suita!)e for the post of Executi/e irector* Su!se>uent),, the ?o/erning
Board appro/ed the name of 8r* 9uneet Jain on 8arch $$, $"#$ for the post of Executi/e
irector* 2he ?o/erning Board's recommendation (as then for(arded to SEBI for
appro/a) and same is pending* It has a)so !een su!mitted !, JSE that the de)a, in the
appointment of Executi/e irector cannot !e !randed as fai)ure on its part*

I ha/e considered the chrono)og, of the attempts spread o/er a )ong period of four;fi/e
,ears, said to !e made !, JSE for the appointment at the post of the Executi/e irector*
2he ?o/erning Board of JSE and the se)ection committee, inspite of such attempts is
stated to ha/e !een una!)e to find an appropriate person for the appointment as
Executi/e irector* +)though the, ha/e stated that the proposed name of 9uneet Jain as
an Executi/e irector is pending (ith SEBI since 8arch $$, $"#$, I note that 9uneet Jain
Brought to you by http://StockViz.biz
P-/ 1@ %) 2>

(as a Shareho)der irector of the ?o/erning Board of JSE from 8arch #$, $"#"* 9uneet
Jain (as a)so a director of ISL, a !roking entit, from 8arch $""% ti)) 4o/em!er $"##*

2hese facts sho( that 9uneet Jain (as a)read, on the !oard of JSE and (as acting as the
3hairman of JSE (hen his name (as considered !, the Exchange for Executi/e irector*
2he same suggests pro!a!i)it, of his inf)uence on the process of appointment of
Executi/e irector* In /ie( of the a!o/e facts, JSE is found to ha/e de)a,ed the
proceedings of appointment of Executi/e irector (ithout an, sufficient Austification and
has fai)ed to act di)igent), there!, /io)ating the SEBI circu)ar !earing no*
S80SE0-6#606' dated +pri) $", #66'*

A In ,% )-! -, #* "*-!/ -# ,+? 7-!-/!-7* C?C a!o/e is concerned, JSE has rep)ied that
8r* 9uneet Jain (as the 3hairman of JSE on), for a )imited period from 8arch #$, $"#"
to &cto!er $%, $"#" (% months) and from ecem!er "-, $"## to 8arch #", $"#$ ('
months)* It has !een said that during his tenure, he rare), /isited the stock exchange
premises and had ne/er interacted (ith an, emp)o,ee or mem!er of JSE except the
?enera) 8anager for coordinating and communicating the Board's decisions* 2he affairs
of the exchange ha/e !een carried out !onafide),, transparent), and in the !est interests of
the exchange and its shareho)ders* 4o specific instance or nature and manner of
interference in the da, to da, affairs has !een spe)t out in the S34*

8r* 9uneet Jain a)so in his rep), has su!mitted that the S34 (rong), )a!e)s him as Dho)e
2ime irector of ISL during the period of ecem!er $"; $$, $"##* 1urther, the S34 has
not exp)ained as to ho( he interfered (ith the da, to da, affairs of JSE* uring his tenure
at JSE, he had ne/er /isited JSE or e/en Jaipur except on the occasions (hen there (as a
Board meeting or ?enera) Bod, meeting* It has a)so !een said that he had ne/er spoken or
met an, emp)o,ee of the stock exchange direct),, except the ?enera) 8anager for
communicating and imp)ementing the decisions of the Board* &n), once, a group of
emp)o,ees (near), $") representing the demands of emp)o,ees' union had met him in the
capacit, as 3hairman* 1urther, in the audit reports of JSE a)so, there is no indication of
an, kind of financia) irregu)arities on his part*

Ea/ing seen the S34, I note that there is no specific instance pointed out therein,
sho(ing signs of interference !, 9uneet Jain in the da, to da, affairs of JSE* In the
a!sence of such detai)s, I am inc)ined to gi/e !enefit of dou!t*
Brought to you by http://StockViz.biz
Page 19 of 27


A W$#* !/-!d #% #* "*-!/ -# ,+? 7-!-/!-7* C"C a!o/e, the S34 has a))eged that the
+rtic)es of +ssociation of JSE does not pro/ide for the appointment of Dho)e 2ime
irector* It has a)so !een a))eged that the functiona) and financia) po(ers of the 3hief
Executi/e such as che>ue signing authorit,, etc* (ere granted to the Dho)e 2ime irector
and no appro/a) from SEBI and shareho)ders (ere sought, as re>uired for the
appointment of 3hief Executi/e, as per the SEBI 3ircu)ar* JSE, 8r* 9uneet Jain, 8r* 3*9*
8itta), and 8r* +ni) ?adodia ha/e rep)ied separate), to the a))egations*

JSE in its rep), has su!mitted that the appointment of 8r* 3*9* 8itta) as Dho)e 2ime
irector (as not done at the !ehest of 8r* 9uneet Jain or 8r* +ni) ?adodia* It has !een
said that as JSE (as considering tie up (ith 4SE and had recei/ed the in;princip)e
appro/a) of SEBI, it (as fe)t that !, the exchange that 8s* Jsha Sharma, the ?enera)
8anager of JSE shou)d de/ote more time for setting up of s,stems0 infrastructure and
other faci)ities for the trading p)atform of 4SE* 2herefore, a need (as fe)t !, the
Exchange for strengthening the management* In the meantime, 8r* ** 4agpa), partner
of ** 4agpa) < 3o* (the auditors of JSE) had suggested the name of 8r* 3*9* 8itta) to
the Board for the post of Dho)e 2ime irector* +s the introduction of 8r* 8itta) (as
coming from a re)ia!)e source and a)so his >ua)ifications and experience satisfied (ith the
re>uirements of the Exchange, his name (as considered !, the Board* It has !een said
that prior to his appointment for the post of Dho)e 2ime irector, a )ega) opinion (as
a)so sought on the issue of appointment and remuneration of Dho)e 2ime irector*
2hereafter, the appointment (as unanimous), appro/ed !, the ?o/erning Board in its
meeting he)d on ecem!er #:, $"##, (hich (as attended !, 8r* 9uneet Jain (Shareho)der
irector), 8r* 5aAendra Gumar ha)) (Shareho)der irector), Justice (5etd*) 8r* 4*L*
2i!re(a) (9u!)ic Interest irector), 8r* B*L* Jaiman (9u!)ic Interest irector) and 8r*
S*9* Gumar (9u!)ic Interest irector)* It has !een a)so !een said that the SEBI 3ircu)ar
!earing no* 850S+03<07"":60"7 dated Septem!er $#, $""7, mentions a!out the
appointment of 803E&0E on), !ut does not mention a!out the appointment of
Dho)e 2ime irector* &n this !onafide understanding, the ?o/erning Board (ere of the
opinion that there is no !ar on the appointment of Dho)e 2ime irector and appointed
8r* 3*9* 8itta) as Dho)e 2ime irector from the >uota of Shareho)der irectors*
Eo(e/er, )ater on, it (as )earnt that the appointment of 8r* 3*9* 8itta) re>uired prior
appro/a) from SEBI* &n !ecoming a(are of the inad/ertent and unintentiona) )apse due
Brought to you by http://StockViz.biz
P-/ 20 %) 2>

to officia) o/ersight and in order to comp), (ith the SEBI 5egu)ations, 8r* 3*9* 8itta) has
resigned from the post of Dho)e 2ime irector of JSE* uring his tenure he had
exercised on), administrati/e po(ers and had not made an, appointments* Ee did not
ha/e financia) po(ers as he had no po(ers to sign the che>ues a!o/e an amount of
`$7,"""* Ee had no po(ers to sanction an, financia)s, on), po(er he had (as of
appro/ing the proposa)s recei/ed from the ?enera) 8anager*

Dith regard to the a))egation in the S34 pertaining to the appointment of 8r* 8itta), 8r*
9uneet Jain in his rep), has a)so su!mitted that he had ne/er met 8r* 3*9* 8itta) !efore his
appointment to the Board of JSE* Ee reiterated that 8r* ** 4agpa) had !rought the
resume of 8r* 3*9* 8itta) to the Board of JSE for considering his name for the post of the
Dho)e 2ime irector and the Board of JSE had unanimous), appro/ed the appointment
of 8r* 3*9* 8itta)* 9uneet Jain a)so said that the amount of `.*$7 )acs referred in the S34
(as the sa)ar, and perks paid to 8r* 8itta) !, JSE* Ee rep)ied in the )ines of rep), from
JSE*

8r* 3*9* 8itta), rep)ied to the S34 !, sa,ing that !efore Aoining JSE, he (as (orking as
Senior 8anager (ith a nationa)ised !ank* uring 4o/em!er $"##, 8r* ** 4agpa),
partner, ** 4agpa) < 3o* (statutor, auditors of JSE), (ho (as residing near his home
informed him that JSE is )ooking for a person to !e appointed for the genera)
administration* 2hen he (as introduced to JSE in its Board meeting* 9ursuant to the
inter/ie( and comp)etion of other forma)ities, he (as appointed as director !, the Board
of JSE* +s a director, he (as assigned (ith the duties of ?enera) +dministration, E5
functions, etc* Eo(e/er, during +ugust $"#$, he (as informed !, JSE that his
appointment (as not in conformit, (ith the app)ica!)e pro/ision of )a( and according),,
he su!mitted his resignation on +ugust ##, $"#$* It has !een su!mitted !, him that !eing
a rank outsider, he (as not a(are (hether JSE has appointed him in consonance (ith the
app)ica!)e pro/isions of )a( and for the same he cannot !e fau)ted in an, manner* +s
regards the sa)ar, paid !, JSE, it has !een said that the same is compara!)e to the )ast
sa)ar, he dre( in the !ank* uring his tenure as Dho)e 2ime irector, he had acted (ith
!onafide, (ithin the confines of po(er, (ithout !eing under the inf)uence or contro) of
an,!od, inc)uding 8r* 9uneet Jain and 8r* +ni) ?adodia* 2he po(ers exercised !, him
(ere in the ordinar, course* Ee had no po(ers to sign che>ues indi/idua)), on !eha)f of
JSE and on), issued che>ues upto an amount of `$7,""" Aoint), (ith the ?enera) 8anager
Brought to you by http://StockViz.biz
Page 21 of 27

of JSE* Ee had no po(ers to sanction an, financia)s and (as on), appro/ing the proposa)s
recei/ed from the ?enera) 8anager*

2he noticee name), 8r* +ni) ?adodia a)so in his su!missions has said that he (as not
present during the meeting of !oard of directors of JSE, in (hich, 8r* 3*9* 8itta) (as
appointed as Dho)e 2ime irector* Eo(e/er, on the decision to appoint 8r* 3*9* 8itta)
as Dho)e 2ime irector, his financia) po(ers etc, he a)so rep)ied in the )ines of the stand
taken !, JSE*

1rom the su!missions of the noticees, it is c)ear that JSE has not taken an, prior appro/a)
from SEBI for the appointment of 8r* 3*9* 8itta) as a Dho)e 2ime irector and thus (as
not in consonance (ith the procedure )aid do(n under SEBI 3ircu)ar !earing num!er
3I50850S+0SE0:'0$"#" dated ecem!er '#, $"#"* I note that !, asking 8r* 3*9*
8itta) for resigning from the post of Dho)e 2ime irector, JSE has taken correcti/e
steps, ho(e/er, the fact remains that he (as appointed (ithout prior appro/a)* It is a)so
seen that 8r* 3*9* 8itta) (as su!se>uent), appointed as a 3hief ?enera) 8anager !, JSE*

C: M$,5-n-/5n# -nd 7%%! "%!7%!-# /%9!n-n" ?= G%9!n$n/ B%-!d %) #* 6SE

-: 2he S34 has a)so a))eged that the ?o/erning Board of JSE has amended 8emorandum of
+ssociation and adopted ne( +rtic)es of +ssociation (ithout getting appro/a) from SEBI
and (ithout pu!)ishing the same in the officia) ?aFette of 3entra) ?o/ernment, as re>uired
!, the Securities 3ontract (5egu)ation) +ct, #67-*

JSE in its rep), has su!mitted that as per Section .+ of the Securities 3ontracts (5egu)ation)
+ct, #67-, the appro/a) from 3entra) ?o/ernment0 SEBI and pu!)ishing in officia) gaFette
is mandator, on), in cases (here amendments !, the stock exchanges pertain to an, of the
items as set out in c)auses (a) to (d) of the su!;section (#)* It has !een said that the
amendments made in the '8emorandum of +ssociation' did not pertain to an, of the items
as set out in the said c)auses, therefore, the issue of appro/a) and gaFette notification does
not arise* It has a)so !een said that the amendments (ere for(arded to SEBI /ide )etter
dated 4o/em!er "., $""%, for appro/a)* 2hereafter, SEBI has sought c)arifications from
time to time* JSE a)so fo))o(ed up the matter (ith SEBI*

1rom the a!o/e, I note that JSE had for(arded the amendments to SEBI, for appro/a)*
Such for(arding of amendments !, JSE is contrar, to its ear)ier su!mission that the
Brought to you by http://StockViz.biz
P-/ 22 %) 2>

appro/a) from SEBI is mandator, on), in cases (here the amendments !, the stock
exchanges pertains to the items as set out in Section .+(#)(a), (!), (c) and (d) of the
Securities 3ontracts (5egu)ation) +ct, #67-*

?: +nother a))egation in the S34 that JSE has kept the Board minutes from 1e!ruar, $%, $""%
to Januar, "-, $"#", unsigned ti)) SEBI !rought it to the notice of the management of the
exchange*

JSE in its rep), has su!mitted that the minutes for !oard meeting he)d from 1e!ruar, $""%
to Januar, $"#" had remained unsigned !, the then 3hairmen, 8r* 9urshoottam Bhaggeria
and 8r* @iAa, 8ehta* SEBI has a)so noted this in its inspection in the ,ear $""6 and asked
8r* @iAa, 8ehta for signing the minutes in the minutes Book* Eo(e/er, the minutes
remained unsigned due to the fai)ure on the part of 8r* @iAa, 8ehta* +fter the annua)
genera) meeting in 4o/em!er $"##, the matter of minutes not !eing signed from the past
period (as raised and in order to cure the )apse and to ensure the comp)iance it (as decided
that 8r* 9uneet Jain in the capacit, of 3hairman, (ou)d sign the minutes for the past
period, since ear)ier one had )eft (ithout signing* Before doing this, the Board decided to
seek independent opinion* 9ost the opinion from the practicing 3ompan, Secretar, and
second opinion from +d/ocate Eigh 3ourt, e)hi, the Board comprising a)) the 9u!)ic
Interest irectors authorised him to sign the minutes to comp)ete the )ega) re>uirement* It
has !een said that the )ega) opinion dated Januar, "$, $"#$ (as o!tained as a matter of
a!undant caution and corro!oration of opinion o!tained from the practicing compan,
Secretar,* JSE has a)so said that the minutes of the Board meetings (ere certified as true
and correct !, the t(o genera) managers of JSE, (ho (ere present in a)) those meetings and
(hose minutes remained unsigned* 2he minutes (ere signed in presence of Justice (5etd*)
8r* 4*L* 2i!re(a), 9u!)ic Interest irector and (ith his fu)) participation* 8r* 9uneet Jain
in his rep), a)so has reiterated the su!mission of JSE and su!mitted that the act of signing
of the minutes of !oard meeting of JSE on), ensured comp)iance (ith the pro/ision of
Section #6' of the 3ompanies +ct, #67-*

I note that the JSE and 8r* 9uneet Jain (hi)e re),ing on a )ega) opinion said to ha/e !een
taken on Januar, "$, $"#$, had signed the minutes of the meeting !, 8r* 9uneet Jain on
ecem!er #:, $"##* 2he argument taken !, JSE that the )ega) opinion (as o!tained as a
matter of a!undant caution finds no merit* JSE has stated that the )ega) opinion (as in
furtherance of the opinion o!tained from one 8r* eepak Bansa), the 9racticing 3ompan,
Brought to you by http://StockViz.biz
Page 23 of 27

Secretar, !, emai) ecem!er #:, $"## (fo))o(ed !, detai)ed (ritten opinion dated
ecem!er #:, $"##)* I note that JSE has neither su!mitted the cop, of this emai) nor a cop,
of the (ritten opinion gi/en !, the said 8r* eepak Bansa)* 2herefore, the fact remains that
the minutes of the !oard meeting (ere kept unsigned !, JSE ti)) SEBI !rought it to the
notice of the Exchange during the inspection*

": 2he S34 has further a))eged that the percentage of attendance of 8r* S*9* Gumar (5o3,
5aAasthan), 9u!)ic Interest irector is !e)o( the regu)ator, re>uirement of .7C (hich is in
/io)ation of SEBI 3ircu)ar !earing num!er SEBI0S80SE+03ir;$60$""' dated Ju),
"', $""'* I note that 8r* Gumar had attended on), six meetings out of a tota) of $' meetings
of the go/erning !oard during the first in/estigation period* I note that 8r* Gumar /ide his
)etter dated Septem!er $6, $"#", has informed that JSE has !een conducting its Board
8eeting at 4e( e)hi during (orking da,s (hich makes it impossi!)e for him to attend the
Board 8eetings* Inspite of his specific re>uest to ho)d the meeting at Jaipur on an, (orking
da, or at e)hi on an, other p)ace on Saturda, 0 Sunda,, JSE has continued to ho)d its
Board 8eeting in e)hi* It has !een a))eged that the Board 8eetings of JSE are intentiona)),
conducted at e)hi on (orking da,s in order to ensure that 9u!)ic Interest irector (ou)d
not !e a!)e to participate in the !oard meeting and decisions (ou)d !e taken !, shareho)der
directors free),*

JSE in its rep), has su!mitted that a)) the !oard meetings (ere he)d regu)ar), and (ere
attended !, the 9u!)ic Interest irectors* JSE has pro/ided the detai)s of a)) the $' !oard
meetings* It has !een said that the t(o other 9u!)ic Interest irectors had regu)ar),
attended and participated in the !oard meetings of JSE and the agenda of a)) $' !oard
meetings (ere regu)ar), sent to 8r* S*9* Gumar prior to the !oard meetings a)ong (ith the
minutes of the pre/ious !oard meetings for confirmation* 8r* Gumar had ne/er o!Aected
to an, of the decisions taken in the !oard meetings or expressed his disagreement* It has
a)so !een said that the !oard meetings are !eing he)d in the !oard room of JSE at Jaipur and
in the past one ,ear not e/en a sing)e meeting (as he)d outside Jaipur since the )ast +?8
he)d in 4o/em!er, $"##, (hen the ne( !oard (as constituted, further, the exchange
officers regu)ar), consu)t 9u!)ic Interest irectors !efore fixing the time and /enue of the
!oard meetings and a)) the meetings ha/e !een attended !, a)) the 9u!)ic Interest irectors*
It has a)so !een said that 8r* S*9* Gumar's representations (as put up !efore the go/erning
!oard's meeting and the matter (as discussed, reso)/ed and communicated to SEBI*

Brought to you by http://StockViz.biz
P-/ 24 %) 2>

I ha/e considered the rep), of JSE and 8r* 9uneet Jain (in his capacit, as 3hairman of JSE
during the period of 8arch $"#" ; &cto!er $"#") vis%a%vis the a))egations )e/e)ed and note
that the representation of 8r* Gumar (as put up !efore the go/erning !oard's meeting and
the matter has !een discussed, reso)/ed and communicated to SEBI* I note that JSE has not
denied the a))egation, ho(e/er it has !een said that the agenda for the !oard meetings a)ong
(ith the minutes of the pre/ious !oard meetings (ere sent to 8r* S*9* Gumar for
confirmation* I note that JSE has taken certain correcti/e steps !, ho)ding meetings at
Jaipur and consu)t the 9u!)ic Interest irectors !efore fixing the time and /enue of the
!oard meetings*

In -dd$#$%n #% #* -?%9 d$,"+,,d "%55%n "*-!/, $n ?%#* #* SCN,, #*! -! "!#-$n
%#*! "*-!/, 1*$"* -! ."2+,$9 #% 6SE, 1*$"* -! d$,"+,,d *!+nd!:

D: 2he S34 has a))eged that the composition of certain statutor, committees name),
iscip)inar, +ction 3ommittee, the efau)ts 3ommittee, the +r!itration 3ommittee and
In/estors Ser/ices 3ommittee are not in comp)iance as the trading mem!er representation in
these committees constitute ''C against the SEBI prescri!ed )imit of maximum $"C in
/io)ation of the SEBI 3ircu)ar !earing num!er 850S+03<07"":60"7 dated
Septem!er $#, $""7* 1urther, JSE does not ha/e audit committee and mem!ership se)ection
committee (hich is in /io)ation of SEBI 3ircu)ar num!er 7$0$""# dated ecem!er $",
$""#* JSE in its rep), has su!mitted that in the past, composition of statutor, committees are
higher than $"C as the committees comprised of three mem!ers each, out of (hich one (as
trading mem!er director* 2herefore, the percentage of trading mem!er directors (as more
than the prescri!ed norms* Eo(e/er, as there is no trading acti/it, in JSE since the ,ear #66%,
there (as no meeting he)d of +r!itration0 iscip)inar,0 efau)ts committees during the
period of $""% to $"## except that of In/estor Ser/ice 3ommittee* 2he irregu)arities ha/e
!een rectified (ith the re;constitution of committees on June #', $"#$ composing 7
mem!ers each in a)) the committees*

+s regards the mem!ership se)ection committee, JSE has su!mitted that it cou)d not !e
constituted ear)ier as there (as no trading acti/it, in JSE* 2he mem!ership strength has !een
reduced as mem!ers (ere surrendering their trading rights* 1urther, JSE had no p)an for ne(
mem!ership and therefore, mem!ership se)ection committees (as not constituted* It has
a)so !een said that JSE has re;constituted the committee on June #', $"#$*

Brought to you by http://StockViz.biz
Page 25 of 27

It is c)ear that the percentage of the trading mem!er directors (as more than the prescri!ed
norms as stated in the SEBI 3ircu)ar !earing num!er 850S+03<07"":60"7 dated
Septem!er $#, $""7* Eo(e/er, it has no( constituted the mem!ership se)ection committee
in comp)iance (ith the SEBI 3ircu)ar num!er 7$0$""# dated ecem!er $", $""#* I note that
JSE has a)read, taken correcti/e action in this regard*

E: 2he S34 has a))eged that the composition of SEBI inspection and comp)iance committee is
not in accordance (ith the SEBI 3ircu)ar !earing no* S809o)ic,03ir;$"0$""$ dated
Septem!er "', $""$* JSE in its rep), has su!mitted that the a))egation has not !een spe))ed out
and that the committee is in comp)iance (ith the SEBI 3ircu)ar* I ha/e considered the
su!mission of JSE and note that in the a!sence of an, further detai)s in the S34 a!out the
composition of said committees, one cannot decide on this specific charge*

F: 2he S34 has a)so a))eged that the percentage of inspection of su!;!rokers conducted !, the
exchange from $"".;$"## is !e)o( the regu)ator, re>uirement of $"C as stipu)ated /ide
SEBI 3ircu)ar !earing no* SEBI0S809&I3=03I5;:0$""' dated 1e!ruar, ##, $""'* JSE
in its rep), has su!mitted that it (as of the !onafide /ie( that the inspection is to !e
conducted of $"C of the acti/e su!;!rokers*

I ha/e perused the circu)ar and note that the circu)ar does not pro/ide that inspection is to !e
conducted on), on 'acti/e' su!;!rokers* +s per the detai)s su!mitted !, JSE, it has #'" su!
!rokers, out of (hich %' (ere acti/e and it has inspected on), #. su!;!rokers* 1rom the
same, it is c)ear that the percentage of inspection of su!;!roker conducted !, JSE i*e* #'C, is
!e)o( the regu)ator, re>uirement of $"C as stipu)ated /ide the a!o/e said circu)ar* +t this
stage, I a)so note the su!mission of JSE that it has initiated steps and is in the process of
conducting inspection as per SEBI norms*

G: It has a)so !een a))eged that ## mem!ers of the exchange ha/e not maintained the Base
8inimum 3apita) of `# Lakh in /io)ation of the SEBI 3ircu)ar
850&90SE03ir;".0$""7 dated 1e!ruar, $', $""7 dated 1e!ruar, $', $""7* JSE in its
rep), has su!mitted that out of e)e/en (##), t(o ($) mem!ers ha/e deposited the Base
8inimum 3apita) and the remaining nine (6) mem!ers ha/e !een suspended and (i)) !e
reinstated on), after recei/ing the re>uisite amount0 capita)* 2his sho(s that JSE has a)read,
taken certain correcti/e action in this regard*

Brought to you by http://StockViz.biz
P-/ 24 %) 2>

H: 2he S34 has a)so a))eged that JSE has not maintained a proper In/estor Ser/ice 3entre in
comp)iance (ith the SEBI 3ircu)ar !earing no* S809&LI3=03I5;'$06. dated
ecem!er "', #66.* JSE in its rep), has su!mitted that it maintains sma)) in/estor ser/ice ce))
(ith re>uired faci)ities* Eo(e/er, on the ad/ice of SEBI for !ig In/estor Ser/ice 3entre
ha/ing sitting capacit, of '"" in/estors (ith a)) the necessar, infrastructure, it is in the
process of esta!)ishing a fu));f)edged in/estors' ser/ice ce))* Ea/ing considered the a!o/e, I
am of the /ie( that the In/estors' Ser/ice 3entre of JSE (as not ha/ing the ade>uate
infrastructure in accordance (ith the SEBI 3ircu)ar !earing no* S809&LI3=03I5;'$06.
dated ecem!er "', #66. and it is in process of taking correcti/e steps to comp), (ith the
SEBI 3ircu)ar*

I: +s regards the a))egation that JSE has fai)ed to appoint a 3hief Executi/e &fficer of the
su!sidiar, of JSE in /io)ation of the SEBI circu)ar dated 1e!ruar, ##, $""'* JSE in its rep),
has su!mitted that it had ad/ertised for the post in the ne(spaper on 8arch #%, $""%* In
response to (hich it had recei/ed #$# app)ications out of (hich thirteen (#') (ere short)isted
and inter/ie(ed* &ut of these, three (') candidates (ere se)ected !ut as the terms of
appointment (ere not accepta!)e to them, the, had refused the same* 2hereafter, a common
ad/ertisement (as gi/en on ecem!er $$, $""6 for the post of 3hief Executi/e &fficer and
Executi/e irector and a tota) of $' app)ications (ere recei/ed inc)usi/e of Executi/e
irector's app)ication* +s per JSE, this time preference (as gi/en for the appointment of
Executi/e irector and therefore 3hief Executi/e &fficer (as not se)ected* JSE has a)so
su!mitted that it is in the process of appointing 3hief Executi/e &fficer in the su!sidiar,* I
ha/e considered the su!mission of JSE and find that it has sti)) not comp)ied (ith the SEBI
circu)ar !earing no* S809&LI3=03I5;:0$""' dated 1e!ruar, ##, $""'*

>: Ea/ing considered the facts and circumstances descri!ed in the a!o/e paragraphs, a)though I
note that JSE has taken certain correcti/e steps, the same are on), pursuant to the
inter/ention of SEBI* In m, opinion, a Stock Exchange is in charge of the trading p)atform
for a)) the market participants, has to function in an o!Aecti/e and Aust manner setting an
examp)e for the intermediaries re)ated to its !usiness and a)so promote hea)th, de/e)opment
of the securities market* 2hough the exchange ma, attri!ute its ina!i)it, to ensure time),
comp)iance (ith SEBI circu)ars0 directi/es, to its )imited resources, it on), sho(s the )ack of
its commitment to function as a stock exchange* Ea/ing considered the a!o/e, I am
con/inced that JSE (as neg)igent in the discharge of its functions and duties*
Brought to you by http://StockViz.biz
Page 27 of 27

+s regards, the noticees name), 8r* 5aAender 9rashad ?upta, 8s* @eena ?upta, 8r* +mit
?upta, 8r* 5aAee/ ?upta, 8r* 9uneet Jain, 8r* 3* 9* 8itta), 8r* +ni) ?adodia, 8r* 8anish
?adodia and 8s* 8anAu)a Jain, I note that no independent /io)ation of the circu)ar has !een
pro/ed against them*

@: Ea/ing regard to the a!o/e, I, in exercise of the po(ers conferred upon me in terms of
Section #6 of the Securities and Exchange Board of India +ct, #66$ and Sections ##($)(A)
thereof read (ith Section #$+ of Securities 3ontracts (5egu)ation) +ct, #67-, here!, (arn
the Jaipur Stock Exchange Limited and ad/ise them to comp), (ith the app)ica!)e securities
)a(s that go/ern their functions, in )etter and spirit in a time), manner*


DATE : S7#5?! 11
#*
, 2014 PRASHANT SARAN
PLACE: MUMBAI WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA

Brought to you by http://StockViz.biz