ADJUDICATION ORDER IN RESPECT OF MBL & COMPANY LTD, MEMBER OF DELHI STOCK EXCHANGE (SEBI REGN. NO. INB 051004738) UNDER SECTION 15 I OF THE SEBI ACT, 1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING INQUIRY BY ADJUDICATING OFFICER) RULES, 1995

Whereas Securities and Exchange Board of India (SEBI) had conducted inspection of the books of accounts and other documents of MBL & Company Ltd (hereinafter referred to as �Member�) and pursuant to irregularities found by Inspection Team,� appointed me as Adjudicating Officer vide Order dated December 05, 2003 under Rule 3 of SEBI (Procedure for holding inquiry by Adjudicating Officer) Rules, 1995 (hereinafter referred to as �said rules�) to inquire into and adjudge under section 15 B and 15F(a) of the SEBI Act, 1992 .

Accordingly I have examined these sections.

Section 15 B of SEBI Act, 1992 reads as under :

�if any person, who is registered as an intermediary and is required under this Act or any rules or regulations made thereunder to enter into an agreement with his client, fails to enter into such agreement, he shall be liable to (a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less)�

Section 15 F(a) of SEBI Act, 1992 reads as under :

�If any person, who is registered as a stock broker under this Act,� fails to issue contract notes in the form and manner specified by the stock exchange of which such broker is a member, he shall be liable to a penalty not exceeding five times the amount for which the contract note was required to be issued by that broker�.

CHARGES

Non-Maintenance� of Client Database
Contract Notes were not in the prescribed manner

1.0. �� SHOW CAUSE NOTICE AND REPLY

1.0.1�� Accordingly, Show Cause Notice dated July 12, 2004 under Rule 4 (1) of the said rules was issued to the Member communicating the alleged charges levelled against Member. The inspection against the Member was conducted and the Inspection Report was sent along with the said Notice.

1.0.2�� REPLY

1.0.3.� Accordingly, the Member has sent a detailed reply vide letter dated August 2, 2004.

1.0.4.� PERSONAL HEARING

1.0.5.� The personal hearing in the matter was fixed on November 9, 2004 vide Notice dated November 1, 2004 and� Shri Prakash Shah, Authorised Representative of the Member appeared before me and made submissions on behalf of the Member.

1.0.6.� In view of the above, I now deal with the submissions made by the Member before me for the purpose of this adjudication.

2.0.�� THE REPLY OF THE MEMBER VIS-A-VIS THE CHARGES AND THE FINDINGS.

2.0.1.� CHARGE�

2.0.2.� Non-Maintenance� of Client Database

2.0.3.� It was observed by the inspection team that the member has been maintaining Know Your Client Forms and Client Registration Agreements.� However, certain deficiencies were observed in the maintenance of the registration forms, which are listed below :

� Photo of clients not there in registration forms.

� Introduction column was not filled in the registration forms

� Proof of identification like PAN Number etc. not mentioned.

2.0.4.� REPLY

2.0.5.� During the course of personal hearing the Member has submitted that he has already given a detailed reply vide letter dated 2/8/2004,� which inter-alia, states that �short comings as indicated in the inspection report have already been rectified and client registration forms as well as client registration agreements are now complete in all respect.� Further, we have invariably executed member client agreement before registering any client with us.� We have rectified all the irregularities as soon as it was brought to our notice�.

2.0.6.� In view of the above, we respectfully submit that all our clients are genuine and always contributed to the healthy working of the secondary capital market, we had followed the Know Your Client regime and philosophy. Further, we are always taking proper precautions of knowing our through a proper introductory procedure.� In view of this, we request you to drop the present proceedings against us.

2.0.7.� APPRECIATION OF EVIDENCE AND FINDINGS

2.0.8. During the course of personal hearing the member submitted that there were only few instances where the registration forms maintained by them did not have all the requisite details but these details have been duly� incorporated and these forms are �complete in all manners.

In this regard, I asked them to produce the� forms in which irregularities were observed. Accordingly, the member has submitted the following �

� Client registration form in case of Smt Shanti Devi

� Client registration form in case of Shri D.K Saxena.

2.0.9.� I have examined the submitted forms and found that the requisite columns with details of the clients were duly filled.� Further, I have also examined the agreements entered by the member with the clients.� It has been observed that these agreements were duly signed, dated by the member as well as clients. �I have also observed the photograph of Mrs. Shanti Devi was duly pasted and the form as well as the agreement was complete in all respect. Further, in case of Shri D.K. Saxena, the PAN Number was duly filled.

2.0.10.In view of the above, I am of the opinion that the irregularities found by the inspection team have been duly rectified by the member.

3.0.�� CHARGE II

3.0.1. Contract Notes were not in the prescribed manner

3.0.2.� The inspection team has found out the following irregularities with respect to the contract notes :

Wrong SEBI Registration Number was printed on the Contract Note
Duplicate copy of Contract Note does not provide for the time.
Not been signed by the duly authorized representative

3.0.3.� REPLY OF THE MEMBER

3.0.4.� The member has submitted vide letter dated 2/8/2004, inter-alia, that �The SEBI Registration number printed on the contract note was INB050089519, the number that was allotted to erstwhile MBL & CO. (a proprietory firm of Mr. M.B. LAL).� The said firm was converted into a limited company on 9^th December, 1997 and was permitted to trade w.e.f. 30^th March, 1998 in the name of M/s MBL & COMPANY LIMITED.� We reiterate that it was printing mistake and there was no malafide intention.� Other details of the company like name, address, authorized signatory etc were correctly printed on the contract notes.� In fact, on all other documents like Client Registration Application Forms, Bills and Statement of Account the SEBI Registration No.INB051004738 of MBL & Co. Ltd was correctly printed.��

3.0.5.� The printer who used to print contract notes for other brokers of Delhi Stock� Exchange did printing of our contract notes.� Hence, we presumed that the format available with the printer must be the same as uniformly used by the other brokers of the Delhi Stock Exchange.� We further state that all the terminals were located in our office premises.� All our clients used to be personally present at the time of placement of order.� There was complete transparency at the time of punching the order in the terminal and also with regard to the orders executed on the terminals.� We have properly charged the brokerage on the market rates through the computerized system in the back office software.� There was no grievance of any of our client in this regard.� We further state that none of our clients has nay grievance regarding non-receipt of contract notes or any inadequacy of data or information regarding their trading with us.

3.0.6.� Mr. Vineet Sharma used to sign the contract notes on behalf of the company.� We had authorized Mr. Vineet Sharma to sign the contract notes in the meeting of the board of directors held on 15/03/2000.� We enclose the� photocopies�.

3.0.7.� APPRECIATION OF EVIDENCE AND FINDINGS

3.0.8.� Regarding the said issues, I have observed that client registration application forms, member client agreements and proper SEBI registration number i.e. INB 051004738.� Further, proper name and correct address also has been printed on these documents.� It has been observed that due to change in the name of the entity i.e. from MBL & COMPANY which was a proprietary firm of Mr MB Lal to M/s MBL & COMPANY LTD the contract notes were carrying earlier SEBI registration code no. i.e. INB 050089519.� However, it appears to be a printing mistake since the documents mentioned herein above were carrying the new registration number i.e. after conversion from proprietary firm into the current status of the entity, I am inclined to accept the submissions made by the member.

3.0.9.� With regard to the non-mentioning of the time on the contract notes, I observe that there are no client grievances against the member in connection with in non-receipt of the contract note or inadequacy of any data or any information regarding their trading with the member.� Therefore, I accept the submissions made by the member.

3.0.10.With regard to the signature of duly authorized representative is concerned, I have examined the minutes of the meetings of the Board of Directors of the Member dated 15/3/2000, certified copy of the resolution and a letter dated 16/3/2000 addressed to the DSE by the member conveying that Shri Vineet Sharma is nominated as an authorized representative.

3.0.11.� In view of the above, I am of the opinion that the member has authorized Shri Vineet Sharma to sign the contract notes and accordingly the same intimation has been duly intimated to the DSE vide letter dated 16/3/2000.� In view of this, I am inclined to accept the submissions made by the member.

4.0.�� CONCLUSION

4.0.1.� In view of the above documentary proof given by the member, I am of the opinion that the irregularities have been duly rectified by the member.�

4.0.2.� Further, the member has submitted that they will be cautious in future while trading in securities market as sub broker and ensure to see that all compliance will be made all times as per rules, regulations, guidelines and bye-laws of SEBI and stock exchanges respectively.

4.0.3. Besides the oral submissions and documentary evidence produced by the member, I have also considered the following issues :

� The alleged act of omission and commission or trivial at technical in nature and no harm, injury or loss has been caused or suffered by any one on account of such lapses.

� The member has not derived any gain disproportionate or otherwise from the lapses.

� The lapses are non repetitive and administrative in character

� There is no investor complaint against the member.

4.0.4.In view of the above, I consider that that it will be not just, fair and proper to impose any penalty on the member for the aforesaid reasons.� In this connection, it would be relevant to refer to the judgement of the Division Bench of the Hon�ble High Court of Mumbai in SEBI vs. Cabot International Corporation, (2004) 51 SCL 307(BOM).

4.0.5.� The following is extracted from the said judgement :

�Though looking to the provisions of the statute, the delinquency of the defaulter may itself expose him to the penalty provision yet, despite, that in the statute minimum penalty is prescribed, the authority may refuse to impose penalty for justifiable reasons like the default occurred due to bonafide belief that he was liable to act in the manner prescribed by the statute or it was too technical or venial breach etc�.

5.0.�� ORDER

5.0.1.� Having regard to the facts and circumstances of the case, the submissions made and the evidence produced by the member, it would not be just, fair and proper to impose any �penalty on MBL & COMPANY LIMITED, MEMBER � DSE� (SEBI Regn. No. INB 051004738) under sections 15B and 15F(a) of Chapter VIA� of the SEBI Act, 1992.

Date : November 30,� 2004.

Place : Mumbai

SANDEEP P. DEORE

ADJUDICATING OFFICER

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ADJUDICATION ORDER IN RESPECT OF MBL & COMPANY LTD, MEMBER OF DELHI STOCK EXCHANGE (SEBI REGN. NO. INB 051004738) UNDER SECTION 15 I OF THE SEBI ACT, 1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING INQUIRY BY ADJUDICATING OFFICER) RULES, 1995 Whereas Securities and Exchange Board of India (SEBI) had conducted inspection of the books of accounts and other documents of MBL & Company Ltd (hereinafter referred to as �Member�) and pursuant to irregularities found by Inspection Team,� appointed me as Adjudicating Officer vide Order dated December 05, 2003 under Rule 3 of SEBI (Procedure for holding inquiry by Adjudicating Officer) Rules, 1995 (hereinafter referred to as �said rules�) to inquire into and adjudge under section 15 B and 15F(a) of the SEBI Act, 1992 . Accordingly I have examined these sections. Section 15 B of SEBI Act, 1992 reads as under : �if any person, who is registered as an intermediary and is required under this Act or any rules or regulations made thereunder to enter into an agreement with his client, fails to enter into such agreement, he shall be liable to (a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less)� Section 15 F(a) of SEBI Act, 1992 reads as under : �If any person, who is registered as a stock broker under this Act,� fails to issue contract notes in the form and manner specified by the stock exchange of which such broker is a member, he shall be liable to a penalty not exceeding five times the amount for which the contract note was required to be issued by that broker�. CHARGES Non-Maintenance� of Client Database Contract Notes were not in the prescribed manner 1.0. �� SHOW CAUSE NOTICE AND REPLY 1.0.1�� Accordingly, Show Cause Notice dated July 12, 2004 under Rule 4 (1) of the said rules was issued to the Member communicating the alleged charges levelled against Member. The inspection against the Member was conducted and the Inspection Report was sent along with the said Notice. 1.0.2�� REPLY 1.0.3.� Accordingly, the Member has sent a detailed reply vide letter dated August 2, 2004. 1.0.4.� PERSONAL HEARING 1.0.5.� The personal hearing in the matter was fixed on November 9, 2004 vide Notice dated November 1, 2004 and� Shri Prakash Shah, Authorised Representative of the Member appeared before me and made submissions on behalf of the Member. 1.0.6.� In view of the above, I now deal with the submissions made by the Member before me for the purpose of this adjudication. 2.0.�� THE REPLY OF THE MEMBER VIS-A-VIS THE CHARGES AND THE FINDINGS. 2.0.1.� CHARGE� 2.0.2.� Non-Maintenance� of Client Database 2.0.3.� It was observed by the inspection team that the member has been maintaining Know Your Client Forms and Client Registration Agreements.� However, certain deficiencies were observed in the maintenance of the registration forms, which are listed below : � Photo of clients not there in registration forms. � Introduction column was not filled in the registration forms � Proof of identification like PAN Number etc. not mentioned. 2.0.4.� REPLY 2.0.5.� During the course of personal hearing the Member has submitted that he has already given a detailed reply vide letter dated 2/8/2004,� which inter-alia, states that �short comings as indicated in the inspection report have already been rectified and client registration forms as well as client registration agreements are now complete in all respect.� Further, we have invariably executed member client agreement before registering any client with us.� We have rectified all the irregularities as soon as it was brought to our notice�. 2.0.6.� In view of the above, we respectfully submit that all our clients are genuine and always contributed to the healthy working of the secondary capital market, we had followed the Know Your Client regime and philosophy. Further, we are always taking proper precautions of knowing our through a proper introductory procedure.� In view of this, we request you to drop the present proceedings against us. 2.0.7.� APPRECIATION OF EVIDENCE AND FINDINGS 2.0.8. During the course of personal hearing the member submitted that there were only few instances where the registration forms maintained by them did not have all the requisite details but these details have been duly� incorporated and these forms are �complete in all manners. In this regard, I asked them to produce the� forms in which irregularities were observed. Accordingly, the member has submitted the following � � Client registration form in case of Smt Shanti Devi � Client registration form in case of Shri D.K Saxena. 2.0.9.� I have examined the submitted forms and found that the requisite columns with details of the clients were duly filled.� Further, I have also examined the agreements entered by the member with the clients.� It has been observed that these agreements were duly signed, dated by the member as well as clients. �I have also observed the photograph of Mrs. Shanti Devi was duly pasted and the form as well as the agreement was complete in all respect. Further, in case of Shri D.K. Saxena, the PAN Number was duly filled. 2.0.10.In view of the above, I am of the opinion that the irregularities found by the inspection team have been duly rectified by the member. 3.0.�� CHARGE II 3.0.1. Contract Notes were not in the prescribed manner 3.0.2.� The inspection team has found out the following irregularities with respect to the contract notes : Wrong SEBI Registration Number was printed on the Contract Note Duplicate copy of Contract Note does not provide for the time. Not been signed by the duly authorized representative 3.0.3.� REPLY OF THE MEMBER 3.0.4.� The member has submitted vide letter dated 2/8/2004, inter-alia, that �The SEBI Registration number printed on the contract note was INB050089519, the number that was allotted to erstwhile MBL & CO. (a proprietory firm of Mr. M.B. LAL).� The said firm was converted into a limited company on 9^th December, 1997 and was permitted to trade w.e.f. 30^th March, 1998 in the name of M/s MBL & COMPANY LIMITED.� We reiterate that it was printing mistake and there was no malafide intention.� Other details of the company like name, address, authorized signatory etc were correctly printed on the contract notes.� In fact, on all other documents like Client Registration Application Forms, Bills and Statement of Account the SEBI Registration No.INB051004738 of MBL & Co. Ltd was correctly printed.�� 3.0.5.� The printer who used to print contract notes for other brokers of Delhi Stock� Exchange did printing of our contract notes.� Hence, we presumed that the format available with the printer must be the same as uniformly used by the other brokers of the Delhi Stock Exchange.� We further state that all the terminals were located in our office premises.� All our clients used to be personally present at the time of placement of order.� There was complete transparency at the time of punching the order in the terminal and also with regard to the orders executed on the terminals.� We have properly charged the brokerage on the market rates through the computerized system in the back office software.� There was no grievance of any of our client in this regard.� We further state that none of our clients has nay grievance regarding non-receipt of contract notes or any inadequacy of data or information regarding their trading with us. 3.0.6.� Mr. Vineet Sharma used to sign the contract notes on behalf of the company.� We had authorized Mr. Vineet Sharma to sign the contract notes in the meeting of the board of directors held on 15/03/2000.� We enclose the� photocopies�. 3.0.7.� APPRECIATION OF EVIDENCE AND FINDINGS 3.0.8.� Regarding the said issues, I have observed that client registration application forms, member client agreements and proper SEBI registration number i.e. INB 051004738.� Further, proper name and correct address also has been printed on these documents.� It has been observed that due to change in the name of the entity i.e. from MBL & COMPANY which was a proprietary firm of Mr MB Lal to M/s MBL & COMPANY LTD the contract notes were carrying earlier SEBI registration code no. i.e. INB 050089519.� However, it appears to be a printing mistake since the documents mentioned herein above were carrying the new registration number i.e. after conversion from proprietary firm into the current status of the entity, I am inclined to accept the submissions made by the member. 3.0.9.� With regard to the non-mentioning of the time on the contract notes, I observe that there are no client grievances against the member in connection with in non-receipt of the contract note or inadequacy of any data or any information regarding their trading with the member.� Therefore, I accept the submissions made by the member. 3.0.10.With regard to the signature of duly authorized representative is concerned, I have examined the minutes of the meetings of the Board of Directors of the Member dated 15/3/2000, certified copy of the resolution and a letter dated 16/3/2000 addressed to the DSE by the member conveying that Shri Vineet Sharma is nominated as an authorized representative. 3.0.11.� In view of the above, I am of the opinion that the member has authorized Shri Vineet Sharma to sign the contract notes and accordingly the same intimation has been duly intimated to the DSE vide letter dated 16/3/2000.� In view of this, I am inclined to accept the submissions made by the member. 4.0.�� CONCLUSION 4.0.1.� In view of the above documentary proof given by the member, I am of the opinion that the irregularities have been duly rectified by the member.� 4.0.2.� Further, the member has submitted that they will be cautious in future while trading in securities market as sub broker and ensure to see that all compliance will be made all times as per rules, regulations, guidelines and bye-laws of SEBI and stock exchanges respectively. 4.0.3. Besides the oral submissions and documentary evidence produced by the member, I have also considered the following issues : � The alleged act of omission and commission or trivial at technical in nature and no harm, injury or loss has been caused or suffered by any one on account of such lapses. � The member has not derived any gain disproportionate or otherwise from the lapses. � The lapses are non repetitive and administrative in character � There is no investor complaint against the member. 4.0.4.In view of the above, I consider that that it will be not just, fair and proper to impose any penalty on the member for the aforesaid reasons.� In this connection, it would be relevant to refer to the judgement of the Division Bench of the Hon�ble High Court of Mumbai in SEBI vs. Cabot International Corporation, (2004) 51 SCL 307(BOM). 4.0.5.� The following is extracted from the said judgement : �Though looking to the provisions of the statute, the delinquency of the defaulter may itself expose him to the penalty provision yet, despite, that in the statute minimum penalty is prescribed, the authority may refuse to impose penalty for justifiable reasons like the default occurred due to bonafide belief that he was liable to act in the manner prescribed by the statute or it was too technical or venial breach etc�. 5.0.�� ORDER 5.0.1.� Having regard to the facts and circumstances of the case, the submissions made and the evidence produced by the member, it would not be just, fair and proper to impose any �penalty on MBL & COMPANY LIMITED, MEMBER � DSE� (SEBI Regn. No. INB 051004738) under sections 15B and 15F(a) of Chapter VIA� of the SEBI Act, 1992. Date : November 30,� 2004. Place : Mumbai SANDEEP P. DEORE ADJUDICATING OFFICER