Citation Codes

Equivalent Citations

citation codes

Case Number

WTM/SKM/ISD/10/2018-19

Judges

S.K. Mohanty, Whole Time Member

Acts

section 12A of the SEBI Act, 1992 read with regulation 3, 4(1) and 4(2)(a) of the PFUTP Regulations.27.
COMPANIES ACT 2013
section 11(1), 11(4)

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Smart Summary

Concise Analytical Summary of the SEBI Opinion (Whole Time Member S.K. Mohanty)

Factual and Procedural Background

The exchange (MCX) informed SEBI by email dated 19 July 2018 that three entities (Abhishek Agarwal, Neetu Gupta and Yash Gupta — "Group A") together held more than 75% of the deliverable exchange stock of Mentha Oil as of 22 June 2018. MCX had clubbed the positions of these and other connected entities (collectively "Group B") in accordance with exchange circulars on monitoring position limits. MCX reported that Group A obtained large quantities of Mentha Oil stock via futures deliveries and off-market transfers from Group B entities. SEBI initiated an examination based on the information provided by MCX.

SEBI's examination traced extensive fund flows from a funding entity named North End Foods Marketing Pvt. Ltd. ("NEFM") — including through proxy entities (Gaurav Gupta, Saurabh Kumar Vaish, Vimuk Enterprises, Rapid Credit & Holdings Pvt. Ltd.) — to Group A and Group B. The investigation identified close linkages among NEFM, Group A, Group B, the proxy entities and a commodity trading member R.K. Commodities Services Pvt. Ltd. ("RCS"), and found patterns of off-market transfers, concentration of deliverable stock, apparent misrepresentation/fabrication in KYC for some entities, and position limit violations on Mentha Oil.

Based on prima facie findings and invoking SEBI's regulatory powers, the Whole Time Member issued an ad-interim ex-parte order restraining NEFM, certain individual directors and the listed Group A/B/proxy entities and RCS from dealing in the securities market (with limited transitional directions for squaring off positions). The order also froze existing holdings of securities (including mutual fund units) and invited replies/hearing requests within specified timelines.

Legal Issues Presented

Whether, on the basis of the examination of trading, off-market transfers and fund flows, NEFM and associated entities (Group A, Group B and proxy entities) prima facie acquired the beneficial ownership of substantial exchange-deliverable Mentha Oil stock by funding front entities and thereby engaged in fraudulent or deceptive practices within the meaning of PFUTP Regulations and section 12A of the SEBI Act.
Whether the trading member R.K. Commodities Services Pvt. Ltd. (RCS) prima facie aided or abetted the scheme by facilitating trading, failing to raise alerts, and not complying with KYC and margin reporting obligations, thereby violating the Code of Conduct for brokers (Schedule II under regulation 7 of Stock Brokers Regulations).
Whether the consolidated positions of the connected entities exceeded SEBI-prescribed position limits for Mentha Oil (near-month and commodity-level) and thereby violated SEBI circulars on position limits for agricultural commodity derivatives.
Whether immediate preventive (ad-interim) directions restraining the identified entities and certain individual directors from dealing in the securities market are warranted pending further investigation to protect market integrity and investors.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Whole Time Member's analysis proceeds in a structured factual and legal manner. The following summarizes the main steps of that reasoning as presented in the opinion:

Identification of concentration and clubbing by the exchange: SEBI relied on MCX's reporting that Group A held a dominant share of deliverable Mentha Oil stock and that the exchange had clubbed Group A and Group B positions under its circulars for monitoring position limits. The clubbing chronology showed that once some clients were identified and clubbed, other connected clients were used subsequently to take positions.
Transactional and delivery analysis: SEBI examined trade-level data and delivery records. It identified that Group A and Group B together had taken large deliveries from the exchange across multiple months (tables and annexures in the opinion provide month-wise and day-wise quantities and values). Group B had transferred significant quantities (490.74 MT) off-market to Group A during March–September 2018.
Fund-flow tracing: SEBI traced funds and found that NEFM was the primary source of funding to both Group A and Group B, either directly or via proxy entities (Gaurav Gupta, Saurabh Kumar Vaish, Vimuk, Rapid). The opinion highlights specific transfers, amounts and temporal proximity of funds to deliveries, and instances where NEFM's funding corresponded to payment of warehousing charges (indicating beneficial control over the stored stock).
Connections among entities: The examination documented inter-linkages — common addresses, common directorships, off-market equity transfers, common contact details, and shareholding/directorship overlaps — among NEFM, proxy entities, Group A/B entities and RCS. A tabulated list of constituents and a detailed connectivity table set these out.
Anomalous indicators and KYC issues: SEBI observed anomalous features: a number of Group B entities newly traded in Mentha Oil during the period; several opened trading accounts in the same timeframe; in at least two entities (Fancos and Shivrudra) KYC documents appeared fabricated (identical photographs and addresses on identity documents), and the reported net worth/income in KYC was grossly inadequate compared with the value of deliveries taken. SEBI treats these as indicia that many entities were fronts.
Role of trading member (RCS): The opinion details RCS's connections to multiple Group B entities (promoters/shareholders overlaps, common contact details, off-market share transfers), notes that 11 of 13 Group B entities traded through RCS, and records exchange inspection findings of RCS's non-compliances (incorrect margin reporting, KYC lapses). SEBI reasons that these facts show RCS facilitated the scheme and failed in its obligation to apply due skill and diligence.
Position-limit analysis: SEBI applies its circulars on position limits (SEBI circulars dated 27 September 2016 and 25 July 2017). Mentha Oil is categorized a "narrow commodity." After combining positions of the 16 group entities, SEBI found excesses of near-month client-level and commodity-level limits for 129 and 70 trading days respectively (out of 201 trading days in the stated period). SEBI quantifies combined long positions and shows specific peak instances where the group position constituted a substantial share of market wide open interest.
Legal characterization: Based on the pattern of concealed beneficial ownership, layering of funds and use of front entities to take delivery and accumulate exchange-specification stock, SEBI finds a prima facie case of fraudulent conduct within regulation 2(1)(c) of the PFUTP Regulations and violations of section 12A of the SEBI Act read with regulations 3, 4(1) and 4(2)(a) of the PFUTP Regulations. Further, RCS is prima facie found to have violated clauses of the Code of Conduct under the Stock Brokers Regulations (clauses A(1), A(2), A(4) of Schedule II).
Rationale for urgent preventive action: The opinion explains the regulatory rationale for immediate preventive measures: Mentha Oil being a narrow commodity with seasonal lean periods increases the risk that a dominant holder of exchange-deliverable stock could manipulate price discovery; accumulation of deliverable quality stock (which commands a premium) could be used to distort futures pricing; and continued addition of front entities could allow the group to perpetuate violations and harm market integrity. Accordingly, SEBI concludes preventive directions are necessary pending investigation.

Holding and Implications

Holding:

The Whole Time Member, in exercise of powers under section 11(1), 11(4) and 11B read with section 19 of the SEBI Act, issued an ad-interim ex-parte order which, pending investigation, restrains the named entities and individuals from buying, selling or dealing in the securities market either directly or indirectly or being associated with the securities market in any manner whatsoever till further directions. The order lists the restrained entities/noticees by name and PAN (26 entries including NEFM, MD of NEFM, Group A and Group B entities, proxy entities, RCS and executive directors of RCS).

Direct consequences and interim procedural directions (as given in the opinion):

Existing holdings of securities (including mutual fund units) of the noticees are frozen during the period of restraint.
Open positions, if any, of the restrained entities in derivatives may be squared off within a day of the order. RCS, as a commodity broker, is permitted to square off its existing client open positions in commodity derivatives within 15 days from the order.
The restrained entities may file a reply within 21 days of receipt of the order and may request personal hearing; the order remains ad-interim pending investigation.
A copy of the order is to be served on the noticees, recognized stock exchanges, depositories and RTA/registrars to ensure compliance.

Implications:

The order is preventive and provisional — it records prima facie findings and imposes immediate restraints to protect market integrity and investors pending further investigation. The opinion does not adjudicate final guilt; it frames grounds for further inquiry and potential enforcement action.
No judicial or regulatory precedent (case law) is cited in the opinion to support disposition; the order relies on statutory provisions and SEBI circulars (position limit framework) and the PFUTP/Stock Brokers regulatory provisions reproduced in the opinion to explain the legal basis for the restraint.
Immediate market consequences for the listed entities include inability to trade or be associated with markets, frozen securities holdings, and constrained ability to carry and transfer positions pending resolution.

This summary is prepared exclusively from the information contained in the provided opinion and does not add or infer facts or outcomes beyond that text.

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North End Foods Marketing Pvt. Ltd., In Re

S.K. Mohanty, Whole Time Member:—

Background:

1. Securities and Exchange Board of India (“SEBI”) received an email dated July 19, 2018 from Multi Commodity Exchange of India Ltd. (hereinafter referred to as “MCX/the exchange”), informing that as on June 22, 2018, three entities namely Abhishek Agarwal, Neetu Gupta and Yash Gupta (hereinafter collectively referred to as “Group A entities”) were holding more than 75% of the total exchange deliverable stock (i.e. valid stock lying at the exchange accredited warehouses and meeting the Exchange specifications) of Mentha Oil.

2. MCX further informed that the positions of these three Group A entities were clubbed in accordance with the Exchange Circular No. MCX/S&I/300/2017 dated August 23, 2017 with regard to monitoring of position limits. These entities were clubbed as they were found to be receiving funds from a common entity viz. NEFM, a wholly owned subsidiary of Sohan Lal Commodity Management Pvt. Ltd. (“SLCM”), erstwhile accredited warehouse service provider (“WSP”) for Mentha Oil at MCX.

3. On perusal of the details submitted by the exchange, it was observed that “Group A” entities acquired Mentha Oil through transactions in Mentha Oil futures contracts on exchange platform as well as by way of “off-market” transfers. Further, around 72% of the total holding of Group A entities was acquired through off-market transfers from 10 connected entities namely Abhishek Mishra, APMV Stocks & Commodities Pvt. Ltd., AG Agri Mart Pvt. Ltd., Fancos Trademart Pvt. Ltd., Invictus Stock Research Pvt. Ltd., Shamugpriya International Pvt. Ltd, Sita Ram (HUF), Reindus Tradeway Private Ltd., Virendra Kumar Jain and Alok Kumar Singh. The exchange informed that these off-market transferors were found to be connected with each other and their trading in Mentha Oil futures on the exchange platform had been clubbed together for monitoring of position limits. Further, 3 more entities namely Neeru Gupta, Vikram Gupta and Shivrudra Infotech Solutions Private Ltd. were found to be connected with aforesaid 10 entities. The exchange had clubbed positions of these 13 entities (hereinafter collectively referred to as “Group B” entities) with Group A entities in accordance with the relevant circulars on clubbing of position limits.

4. An analysis of the stock movement revealed that Group Bentities had consistently taken large deliveries of Mentha Oil through the exchange platform and have subsequently transferred a large quantity of the stock to Group A entities via off-market transactions.

EXAMINATION AND FINDINGS:

5. In view of the receipt of aforesaid information from the exchange, SEBI initiated an examination in the matter. The trades and resultant beneficiary holdings of the Group A and Group Bentities were examined in detail.

6. I note that Group A and Group Bentities have taken large delivery of Mentha Oil, details of which are given as below:

Delivery Month Quantity in MT % Share of Delivery Taken by Suspected Clients Total Delivery at Exchange Delivery Taken by Group A Delivery Taken by Group B Delivery Taken by Group A & Group B Dec-17 90.72 0.00 71.28 71.28 78.57 Jan-18 259.20 0.00 174.96 174.96 67.50 Feb-18 170.64 0.00 82.08 82.08 48.10 Mar-18 162.00 32.40 105.84 138.24 85.33 Apr-18 120.96 10.80 110.16 120.96 100.00 May-18 220.32 38.88 125.28 164.16 74.51 Jun-18 90.72 34.56 56.16 90.72 100.00 Jul-18 73.44 21.60 6.48 28.08 38.24 Aug-18 151.20 38.88 90.72 129.60 85.71 Total 1339.2 177.12 822.96 1000.08 74.68

(Source: MCX)

7. I further note that Group Bentities made off market transfers of 490.74 MT Mentha Oil to Group A entities during the period March 2018 to September 2018. The details of the same are placed below:

Transferor Client Name (Group B) Transferee Client Name (Group A) Quantity (In MT) Fancos Abhishek Aggarwal 51.86 Neetu Gupta 8.65 Yash Gupta 36.77 Invictus Abhishek Aggarwal 56.19 Neetu Gupta 79.97 Yash Gupta 34.61 Reindus Yash Gupta 38.92 Shamugpriya Abhishek Aggarwal 23.79 Neetu Gupta 21.61 Yash Gupta 21.62 Sita Ram Neetu Gupta 8.65 AG Agri Neetu Gupta 4.32 Yash Gupta 10.8 Alok Kumar Singh Abhishek Agarwal 32.41 APMV Neetu Gupta 15.17 Abhishek Aggarwal 10.82 Abhishek Mishra Neetu Gupta 4.33 Yash Gupta 21.61 Abhishek Agarwal 8.64 Total 490.74

(Source: MCX)

8. Examination prima facie revealed that both Group A and Group B entities received funds from one common entity, viz. NEFM. NEFM was found to have either directly transferred funds to various Group A and B entities or through the accounts of four entities viz. Gaurav Gupta, Saurabh Kumar Vaish, Vimuk Enterprises and Rapid Credit & Holdings Pvt. Ltd. These four entities are referred to as proxy entities since these entities did not trade in Mentha Oil on the exchange platform but facilitated fund transfers between NEFM and Group A and Group B entities.

9. Examination also revealed that 11 out of 13 Group B entities traded in Mentha Oil contracts through a common Commodity Trading Member-RK Commodities Pvt. Ltd. (RCS) Apart from being the commodity trading member of these 11 Group B entities, RCS was also found to be connected with some of these entities on account of common address, common directorship, off-market shares transfers, etc.

10. Considering the nature of the inter-linkages amongst NEFM, Group A, Group B, proxy entities and RCS, which are dealt with in detail in subsequent paragraphs and for the sake of convenience, all these entities are hereinafter collectively referred to as “NEFM Group”. A list of constituents of NEFM Groupis tabulated below:

Sl. Group Name of the Entity 1 Group A Neetu Gupta 2 Yash Gupta 3 Abhishek Agarwal 4 Group B Vikram Gupta 5 Abhishek Mishra 6 Shamugpriya International Pvt. Ltd. (“Shamugpriya”) 7 Sita Ram (HUF) (“Sita Ram”) 8 ReindusTradeway Private Ltd. (“Reindus”) 9 Alok Kumar Singh 10 Fancos Trademart Private Ltd. (“Fancos”), 11 Invictus Stock Research Private Ltd. (“Invictus”) 12 Virendra Kumar Jain 13 APMV Stocks & Commodities Private Ltd. (“APMV”) 14 Neeru Gupta 15 Shivrudra Infotech Solutions Private Ltd. (“Shivrudra”) 16 AG Agri Mart Private Ltd. (“AG Agri”) 17 Proxy Entities Gaurav Gupta 18 Saurabh Kumar Vaish 19 Vimuk Enterprises 20 Rapid Credit & Holdings Pvt. Ltd. (“Rapid”) 21 Funding entity North End Foods Marketing Pvt. Ltd. (“NEFM”) 22 Commodity Trading Member R.K. Commodities Services Pvt. Ltd. (“RCS”)

11. Based on the examination conducted so far, linkages/connections amongst Group A, Group B, Proxy entities and NEFM are tabulated below:

Sl. Entity Connections Revealed by SEBI's Examination 1 Neetu Gupta (Group A) • Connected with Invictus, Shamugpriya, Sita Ram, AG Agri, Fancos, APMV and Abhishek Mishra through off-market Mentha Oil transfer • Connected with NEFM based on fund transfers 2 Yash Gupta (Group A) • Connected with Vikram Gupta through common address • Connected with Fancos, Invictus, Reindus, Shamugpriya, AG Agri and Abhishek Mishra through off-market Mentha Oil transfers • Connected with NEFM based on fund transfers 3 Abhishek Agarwal (Group A) • Connected with Fancos, Invictus, Shamugpriya, Alok Kumar Singh, APMV and Abhishek Mishra through Off-market Mentha Oil transfers • Connected with NEFM based on fund transfers 4 Vikram Gupta (Group B) • Connected with Yash Gupta through common address • Connected with NEFM based on fund transfers 5 Abhishek Mishra (Group B) • Connected with Invictusand NEFM based on fund transfers • Connected with Yash Gupta, Neetu Gupta and Abhishek Agarwal through off-market Mentha Oil transfer • Connected with Rapid and RCS through off-market transfer of equity shares 6 Shamugpriya (Group B) • Connected with Reindus through common directorship of Vinay Kumar, Alok Kumar Rai and Narayan Kumar Singh • Connected with Shivrudra through common directorship of Alok Ray • Connected with Abhishek Agarwal, Neetu Gupta and Yash Gupta through off-market Mentha Oil transfers • Connected with Rapid and RCS through off-market transfers of equity shares • Connected with Fancos based on commonalities of funds received from one SBC Export 7 Sita Ram (Group B) • Connected with Rapid through joint bank account with Axis bank and through off-market equity share transfer • Connected with RCS and Invictus through off-market equity share transfer • Connected with NEFM based on fund transfer through proxy entity • Connected with Neetu Gupta through off-market Mentha Oil transfer 8 Reindus (Group B) • Connected with Shamugpriya through common directorship of Vinay Kumar, Narayan Kumar Singh and Alok Kumar Rai • Connected with Rapid and RCS through off-market equity share transfer • Connected with Yash Gupta through off-market Mentha Oil transfer • Connected with NEFM based on fund transfer through proxy entity 9 Alok Kumar Singh (Group B) • Connected with Abhishek Agarwal through Off-market Mentha Oil transfer • Connected with NEFM based on fund transfer through proxy entity 10 Fancos (Group B) • Connected with Shivrudra through common address & common directorship of Mr. Akash • Connected with Rapid and RCS through off-market equity share transfer • Connected with Abhishek, Agarwal, Neetu Gupta and Yash Gupta through off-market Mentha Oil transfer • Connected with Shamugpriya based on commonalities of funds received from SBC Export 11 Invictus (Group B) • Shareholders of RCS viz • Rajendra Kumar Gupta, Neeru Gupta, Navdeep Varshney and Divya Varshney, holding controlling stake of 86% are also the promoters of Invictus. • Connected with RCSthrough common mobile number, E-mail, address and common directorship and through off-market equity share transfer. • Connected with Rapid through common mobile number, E-mail, similar address and common directorship of Sundeep Chadha and Divya Varshney and through fund transfer and off-market equity share. Divya Varshney is the daughter-in-law of Rajendra Kumar Gupta and Neeru Gupta and the spouse of Navdeep Varshney • Connected with APMV and Sita Ram through off-market equity share transfer • Connected with Abhishek Mishra, APMV and AG Agri based on fund transfer • Connected with Yash Gupta, Neetu Gupta, Abhishek Agarwal & APMV through off-market Mentha Oil transfer • Connected with NEFM based on fund transfer 12 Virendra Kumar Jain (Group B) • Connected with Rapid and RCS through off-market equity share transfer • Connected with AG Agri through Off-market Mentha Oil transfer and fund transfer 13 APMV (Group B) • Connected with AG Agri through common mobile number, address & common directorship of Mr. Arun Gopal Bansal • Connected with Invictus, RCS and Rapid through off-market equity share transfer • Connected with Invictus, Neetu Gupta &Abhishek Agarwal through off-market Mentha Oil transfer • Connected with Invictus, Shivrudra and Shamugpriya based on fund transfer 14 Neeru Gupta (Group B) • Connected with NEFM based on fund transfer • Connected to Invictus and RCS by virtue of being a promoter-shareholder, director/past director • Connected to Rapid and RCS through off-market equity share transfer 15 Shivrudra (Group B) • Connected with Fancos through common address, common directorship of Mr. • ConnectedAkash and fund transfer. • Connected with APMV through fund transfer. • Connected with Shamugpriya through common directorship of Alok Ray. 16 AG Agri (Group B) • Connected with APMV through common address, mobile number & common directorship of Mr. Arun Gopal Bansal. • Connected with Virendra Kumar Jain through Off-market Mentha Oil transfer and fund transfer. • Connected with Neetu Gupta and Yash Gupta through Off-market Mentha Oil transfer. • Connected with RCS and Rapid through off-market equity share transfer. • Connected with Invictus based on fund transfer. 17 Gaurav Gupta (Proxy Entity) • Connected with NEFM based on fund transfer. • Connected with Alok Kumar Singh, Vikram Gupta, Neetu Gupta and Abhishek Agarwal based on fund transfer. 18 Saurabh Kumar Vaish (Proxy Entity) • Connected with NEFM based on fund transfer. • Connected with Vikram Gupta &Neetu Gupta entities based on fund transfer. • Connected with Proxy entity Gaurav Gupta based on fund transfer. 19 Vimuk (Proxy Entity) • Connected with NEFM based on fund transfer. • Connected with Reindus and Invictus based on fund transfer. 20 Rapid (Proxy Entity) • Connected with Invictus, Shamugpriya, APMV, Abhishek Mishra and Neeru Gupta based on fund transfer. • Connected with AG Agri, Virendra Kumar Jain, Reindus, Abhishek Mishra, APMV, Fancos, Invictus, Shamugpriya, Sita Ram, and Neeru Gupta based on off-market equity share transfer. • Connected with Invictus through common mobile number, E-mail, similar address and common directorship of Sundeep Chadha and DivyaVarshney. • Connected with RCS through common mobile number, E-mail, similar address and common directorship of Sundeep Chadha. 21 NEFM • Funding Group A&Group B entities directly as well indirectly through proxy entities and through Group B entities. 22 RCS • Shareholders of RCS viz. Rajendra Kumar Gupta, Neeru Gupta, Navdeep Varshney and Divya Varshney, holding controlling stake of 86% are also the promoters of Invictus. • Connected with Invictus through common mobile number, E-mail, address and common directorship and through off-market equity share transfer. • Connected with Abhishek Mishra, APMV, Fancos, Invictus, Shamugpriya, Sita Ram, Reindus, Virendra Kumar Jain, Neeru Gupta and AG Agri based on off-market equity share transfer. • Connected with Invictus through common mobile number, E-mail, address and common directorship of Sundeep Chadha. • Connected with Rapid through common mobile number, E-mail, similar address and common directorship of Sundeep Chadha. • Connected with Neeru Gupta based on shareholding and past directorship.• 11 out of 13 Group B entities have traded in Mentha Oil contracts through RCS.

Anomalous Trading Behavior and Trading not Commensurate to Net Worth

12. Specific observations with regard to entities mentioned in aforesaid table are as below:

i. 8 Entities of Group B mentioned at sl. no. 5 to 12 in the Table above at para 10 were found to be trading for the first time in Mentha Oil futures during the examination period.

ii. Out of aforesaid 8 entities, 5 entities mentioned at sl. no. 5 to 9 opened their trading accounts during the said period.

iii. It was noticed that in case of Fancos at sl. no. 10 and Shivrudra at sl. No. 15, the KYC documents of one of the director/authorized signatory have been fabricated. It was observed that the photograph and address of Vinay Kumar Gupta of Fancos and Alok Ray of Shivrudra on the copies of their respective Elector Photo Identity Card and PAN cards were identical. Thus, prima facie, there appears to be an element of fraud in submission of KYC to trading member viz. RCS, which also lends credence to a bonafide suspicion that many of the group entities may be merely used as ‘fronts’ for participating in Mentha Oil futures trading.

iv. Net worth/Income as reflected in KYC documents of both Group A&Group B entities is not commensurate with their trading activity. In fact, it appears to be grossly inadequate in comparison with their trading activity/delivery taken on the Exchange platform in Mentha Oil. The details of net worth of entities vis-á-vis delivery taken are summarized in table below:

Client Full Name Date of Networth certificate Income (In Rs. Cr.) (As per KYC) Net worth as Provided (In Rs. Cr.) Total Value of Delivery taken (In Rs. Cr.) Dec 17- Aug 18 % of Delivery value to Net worth Abhishek Mishra (Noticee 7) 17-Jul-17 0.10-0.25 0.32 14.71 4597% APMV Stocks & Commodities Private Ltd. (Noticee 15) 05-Dec-17 0.25-1.00 2.33 24.79 1064% Fancos Trademart Pvt. Ltd. (Noticee 12) 23-May-18 0.10-0.25 0.22 23.74 10791% Invictus Stock Research Pvt. Ltd. (Noticee 13) 02-May-18 0.05-0.10 0.15 34.94 23293% Shamugpriya International Pvt. Ltd. (Noticee 8) * 0.10 * 9.20 - Sita Ram (HUF) (Noticee 9) * 0.10-0.25 * 1.13 - Reindus Tradeway Pvt. Ltd. (Noticee 10) 25-Jun-18 0.05-0.10 0.10 8.00 8000% Virendra Kumar Jain (Noticee 14) * More than 0.25 * 4.00 - Vikram Gupta (Noticee 6) * 0.040 * 5.71 - Alok Kumar Singh (Noticee 11) * 0.05-0.10 * * 6.67 - Neetu Gupta (Noticee 3) * 0.026 * * 6.67 - Yash Gupta (Noticee 4) * 0.028 * * 5.08 - Abhishek Aggarwal (Noticee 5) 02-Sepr-17 0.05-0.10 * 1.86 16.29 876%

*Income data of clients Shamugpriya, Sita Ram, Virendra Kumar Jain, Vikram Gupta, Alok Kumar Singh, Neetu Gupta and Yash Gupta is as per KYC provided by their respective members. Net worth certificates of these entities have not been provided by the trading members.

Fund Flow Analysis:

13. On perusal of the bank statements of Group A and Group B entities, the following are observed:

Analysis of Group A:

i. It is observed that NEFM transferred funds to the tune of Rs. 86.29 crore to Group A entities, directly or indirectly, through certain entities namely Gaurav Gupta and Saurabh Kumar Vaish for trading. The funds so received were partially utilized by these entities for taking positions in Mentha Oil Future contracts and for taking subsequent delivery of 177.12 MT Mentha Oil worth Rs. 28.04 Cr. on MCX platform.

ii. On further analysis, it was observed that Gaurav Gupta and Saurabh Kumar Vaish were mere conduits through whom NEFM transferred funds to Group A entities. It was also observed that NEFM was the only source of funding to Group A entities.

iii. NEFM had been regularly transferring amounts to the bank accounts of the following 3 Group A entities viz. Abhishek Aggarwal, Neetu Gupta and Yash Gupta and proxy entities viz. Gaurav Gupta and Saurabh Kumar Vaish. For instance, Rs. 18,000 per month was being transferred by NEFM to the accounts of Yash Gupta, Abhishek Agarwal, Gaurav Gupta and Saurabh Kumar Vaish which indicates that Group A entities along with proxy entities viz. Gaurav Gupta and Saurabh Kumar Vaish were acting on behalf of NEFM on a regular basis, apparently for which they are being remunerated on a monthly basis. Varying sums of money were also paid to Neetu Gupta. Some instances of payments as ascertained from the available records are as under:

Date of transaction Name of the Entity Amount paid by NEFM (in Rs.) 19/12/2017 Abhishek Aggarwal 18,000 20/01/2018 18,000 22/02/2018 18,000 22/03/2018 18,000 18/04/2018 18,000 19/12/2017 Neetu Gupta 22,500 19/01/2018 22,500 19/02/2018 27,000 19/03/2018 37,806 17/04/2018 27,000 07/05/2018 11,770 27/12/2017 Yash Gupta 18,000 19/01/2018 18,000 19/02/2018 18,000 17/03/2018 18,000 17/04/2018 18,000 16/12/2017 Gaurav Gupta 18,000 16/01/2018 18,000 20/02/2018 18,000 15/03/2018 18,000 12/04/2018 18,000 27/12/2017 Saurabh Kumar Vaish 18,000 23/01/2018 18,000 19/02/2018 18,000 17/03/2018 18,000 17/04/2018 18,000

iv. It is further observed that during the period under examination NEFM also funded the Group A entities for the purpose of payment of warehousing charges to Yamada Logistics (WSP of Mentha Oil in MCX platform) for storage of the Mentha Oil stock. It was also observed that amount of funding by NEFM matched with the invoice raised by Yamada Logistics. Certain instances extracted from the bank statements are tabulate below:

Entities' Name Date of Invoice Amount (in Rs.) Dt. of receipt from NEFM Dt. of payment to WSP Neetu Gupta 31.07.2018 2,41,720 17.08.2018 23.08.2018 30.06.2018 1,88,668 27.07.2018 31.07.2018 30.06.2018 56,891 31.05.2018 1,60,508 04.07.2018 06.07.2018 Yash Gupta 05.09.2018 2,70,962 18.09.2018 25.09.2018 31.07.2018 2,81,674 17.08.2018 23.08.2018 30.06.2018 1,93,798 27.07.2018 31.07.2018 31.05.2018 1,17,229 04.07.2018 06.07.2018 Abhishek Agarwal 05.09.2018 2,10,411 19.09.2018 25.09.2018 31.07.2018 2,19,827 17.08.2018 23.08.2018 30.06.2018 1,82,838 27.07.2018 31.07.2018 31.05.2018 1,02,310 12.07.2018 16.07.2018 Total 22,26,836

v. These transactions indicate that NEFM is the beneficial owner of the Mentha Oil stock. Group A entities appear to be acting as front entities for NEFM to hold the stock in their names and the proxy entities are assisting in the entire process.

Analysis of Group B:

vi. Invictus, having common address and directorship with RCS, received funds amounting to Rs. 124.95 crore from NEFM and transferred the same directly to certain entities namely Abhishek Mishra, APMV and AG Agri and to certain other entities of Group B indirectly through a proxy entity named Rapid.

vii. Rapid transferred funds to the entities viz. Shamugpriya, Abhishek Mishra, Sita Ram HUF, APMV and Neeru Gupta and same were also circulated among Group B entities by way of multiple inter-client fund transfer transactions.

viii. From bank statement (account no XXXXXXXXXX8762 in HDFC Bank) of Sita Ram HUF it is observed that proxy entity Rapid is a joint holder of the said bank account.

ix. Vikram Gupta and Alok Kumar Singh received funds amounting to Rs. 18.10 crore and Rs. 7.15 crore, respectively from NEFM indirectly through proxy entities namely, Gaurav Gupta and Saurabh Kumar Vaish.

x. Reindus received funds amounting to Rs. 8.14 crore from NEFM indirectly through a proxy entity named Vimuk Enterprises.

xi. The above mentioned funds as received from NEFM were used by Invictus, Shamugpriya, Reindus, Virendra Kumar Jain, Abhishek Mishra, Sita Ram HUF, Vikram Gupta, APMV, Fancos and Alok Kumar Singh for taking delivery of Mentha Oil through various Mentha Oil futures contracts during the examination period because the amount transferred from NEFM (i.e. Rs. 158.34 crore) was circulated inter-se within the Group B entities and delivery of Mentha Oil worth Rs. 132.90 crore was taken by entities of Group B. Thus, prima facie, it appears that entire delivery of Mentha Oil taken by Group B entities on the exchange platform during the examination period was in effect funded by NEFM.

xii. On comparing month wise delivery taken by Group B entities with the funds received by these entities from NEFM in close proximity to the delivery date, it was observed that in certain instances funds received by the entities was nearly enough to cover the value of the delivery taken, establishing further a direct nexus between funds received and delivery taken from the exchange by the Group B entities. Some of such instances are illustrated in table below:

Entities Name Delivery Taken Month Value of Delivery taken (in Rs. Cr.) Fund received from NEFM (in Rs. Cr.) Period of receipt of funds Alok Kumar Singh Aug-18 6.67 7.15 27/08/2018 to 03/09/2018 Sita Ram HUF May-18 1.13 1.15 04/06/2018 Virendra Kumar Jain Aug-18 4.00 3.38 30/08/2018 to 12/09/2018 ReindusTra deway Pvt. Ltd. Aug-18 8.00 8.14 28/08/2018 to 04/09/2018

xiii. Thus, a picture emerges that NEFM provided funds to Group B entities directly or through some proxy entities and same was used for taking delivery of Mentha Oil.

xiv. Regarding off-market transfer of Mentha Oil from Group B to Group A as mentioned above, no fund transfer as a consideration for the off-market commodity transfer from Group A to Group B was observed, indicating that both Group “A” & “B” entities effectively belonged to the larger group, i.e. NEFM group.

14. The entire trail of transactions clearly indicates that NEFM is the beneficial owner of the Mentha Oil stock which was transferred by Group B entities to Group A entities. A tabular presentation of entity-wise summary of fund flow among NEFM, Group A, Group B and respective trading member(s) of Group A and Group B including RCS and proxy entities along with value of delivery taken by Group A and Group B is placed in Annexure - A.

Clubbing of entities by MCX and holding of positions by new sets of clients.

15. It is observed that MCX had clubbed the position of all the 16 clients (i.e. Group A and Group B entities) based on common source of fund, common contact details, common directorship and off market transfers of Mentha Oil during the period from February 27, 2018 to October 08, 2018. The summary of date-wise clubbing done by the Exchange is placed below:

Date of clubbing Clubbed Entities 05/07/2017 AG Agri, APMV 28/07/2017 Fancos, Shivrudra 27/02/2018 Abhishek Agarwal, Neetu Gupta, Yash Gupta, Vikram Gupta 02/05/2018 Abhishek Mishra, Invictus, Neeru Gupta 11/07/2018 Shamugpriya 16/07/2018 Sita Ram 11/09/2018 Reindus 24/09/2018 Virendra Kumar Jain 08/10/2018 Alok Kumar Singh

16. From the above table, it is interesting to note that once a particular set of clients were identified and clubbed by the exchange, another set of connected clients were used for taking positions in the market. This indicates a continuous and deliberate attempt on the part of NEFM to keep on taking positions through new front entities in blatant disregard of the rules on position limits.

Role of RCS:

17. The role of RCS revealed during the examination is as under:

i) As stated earlier, the trading member, viz. RCS was connected with the various Group B entities in the following manner:

a) Shareholders of RCS viz. Rajendra Kumar Gupta, Neeru Gupta, Navdeep Varshney and Divya Varshney, holding controlling stake of 86% are also the promoters of Invictus.

b) Connected with Invictus through common mobile number, e-mail, address and common directorship and through off-market equity share transfer

c) Neeru Gupta was a director of RCS and there were off-market transfer of shares between Neeru Gupta and RCS

d) There were off-market transfer of shares between RCS and Abhishek Mishra, APMV, Fancos, Invictus, Shamugpriya, Sita Ram, Reindus, Virendra Kumar Jain, Neeru Gupta and AG Agri e) 11 out of 13 Group B entities have traded in Mentha Oil contracts through RCS.

ii) Also, it is observed that proxy entity Rapid through whom funding to multiple Group B entities was done, is connected with member RCS through common directorship of Sundeep Chadha.

iii) As indicated above, Neeru Gupta and her family consisting of her husband-Rajendra Kumar Gupta, son-Navdeep Varshney and daughter in law-Divya Vershney, holding controlling stake in RCS were also the promoters and signatory of the Articles of Association (AoA) of Invictus through whom the majority of the funding to certain Group B entities was made by NEFM.

iv) Therefore, a picture emerges from the above facts that Invictus, which in fact was the alter ego of RCS through the strong connections mentioned above, was utilized by RCS to carry out the entire scheme on behalf of NEFM by means of the funds provided by NEFM.

v) It was noticed that in case of Fancos and Shivrudra, the KYC documents of one of the director/authorized signatory have been fabricated. It was observed that the photograph and address of Mr. Vinay Kumar Gupta of Fancos and Mr. Alok Ray of Shivrudra were identical. Thus, there appears to be an element of fraud in submission of KYC to trading member namely RCS. Prima facie, it appears that RCS is also complicit in the entire scheme.

vi) In course of further enquiry by the Exchange in respect of trading pattern of Group B entities, RCS submitted that no suspicious trading pattern was observed by it.

vii) Further, during an inspection of RCS conducted by the Exchange, the exchange has observed various non-compliances/violations with regard to functioning of RCS including incorrect reporting of margin collection, not following the KYC norms, etc. in respect of NEFM group entities.

18. Based on above, it prima facie appears that RCS, has actively aided and abetted the scheme and the artifice utilized by NEFM group for trading in Mentha Oil contracts first by facilitating trading in Mentha Oil contracts as a Commodity Trading Member and also by channelizing funding to Group B entities through its connected entities Rapid and Invictus.

Violation of Position Limits:

19. SEBI vide its circulars no. CDMRD/DMP/CIR/P/2016/96 dated September 27, 2016 and SEBI/HO/CDMRD/DMP/CIR/P/2017/84 dated July 25, 2017 has prescribed framework for determination of numerical value of overall client level position limits for agricultural commodities. In accordance with the aforesaid circulars, Mentha Oil is categorized as a ‘Narrow commodity’. Position limits for commodity futures on agricultural commodities are fixed on the basis of the deliverable supply of a particular commodity. Accordingly, the position limits for Mentha Oil near month contract were revised to 40 MT at client level and 400 MT at member level from October 03, 2017. Further, the position limits at commodity level was also revised to 160 MT at client level and 1600 MT at member level.

20. An analysis of open position for near month level as well as commodity level after combining open position of all 16 entities under Group A and Group B revealed that open position of aforesaid 16 entities (Group A and B) combined together exceeded client level near month as well as commodity level position limits prescribed by SEBI for 129 and 70 days respectively out of total 201 trading days during December 01, 2017 to September 24, 2018.

21. Further, out of 129 days of excessive near month position in violation of the prescribed limits, in most of the days NEFM Group had taken combined long position ranging from 41.40 MT to 204.48 MT, whereas client level near month position limit in Mentha Oil is 40 MT. On April 20, 2018 combined long position of NEFM group i.e. 204.48 MT, was the highest and was 62.83% of the market wide open interest i.e. 325.44 MT. During the 70 days of commodity level position limit violation, NEFM Group had taken continuous combined long position ranging from 164.16 MT to 417.96 MT, whereas client level commodity level position limit in Mentha Oil is 160 MT. On March 28, 2018 combined commodity level long position of NEFM group i.e. 417.96 MT, was the highest and was 45.39% of the market wide open interest i.e. 920.88 MT. Details of day-wise position limit violations for near month and commodity level are placed in Annexure-B.

22. As can be observed from the above, if entities identified above had disclosed their inter se connection amongst them, while they were trading on Mentha Oil futures on the Exchange, they would have been considered as a single entity for the purpose of calculation of position limits as prescribed by SEBI vide its circulars no. CDMRD/DMP/CIR/P/2016/96 dated September 27, 2016 and SEBI/HO/CDMRD/DMP/CIR/P/2017/84 dated July 25, 2017. It is noticed that trading entities from the NEFM group had prima facie avoided a penalty of Rs. 47.14 crore (Near month + Commodity Level) by not disclosing the collective beneficial position. This avoidance was made possible through active concealment of the actual beneficial positions through multiple holdings of seemingly non-connected entities while using the device of layering of funds to assume the positions.

MODUS OPERANDI ADOPTED BY THE NEFM GROUP

23. A pictorial representation of the modus operandi adopted by the NEFM Group is provided as under:

24. To elucidate further, the modus operandi adopted by the NEFM Group is explained as under:

a. NEFM, directly or indirectly through its proxy entities (Gaurav Gupta & Saurabh Kumar Vaish), transferred Rs. 86.29 crore to Group A entities during December 01, 2017 to September 18, 2018 for trading. The funds so received were also partially utilized by these entities for taking delivery of Mentha Oil worth Rs. 28.04 crore (177.12 MT) from exchange platform. From the bank statements of Group A entities for the examination period, it was observed that the sole source of funds for them was NEFM. Thus, prima facie, it appears that NEFM funded these entities for the purpose of trading in commodities.

b. NEFM, directly or indirectly through its proxy entities (Rapid, Gaurav Gupta, Saurabh Kumar Vaish and Vimuk Enterprises) transferred Rs. 158.34 crore to Group B entities who subsequently took delivery of Mentha Oil to the tune of Rs. 132.90 crore (822.96 MT) from the Exchange during the examination period. Thus, it prima facie appears that entire delivery of Mentha Oil taken by Group B entities on the exchange platform during the examination period was in effect funded by NEFM.

c. Group B entities made off market transfers of 490.74 MT Mentha Oil to Group A entities during March 2018 to September 2018.

d. As on February 26, 2019, Group A entities are holding 203.18 MT of Mentha Oil which is 81.75% of deliverable stock (248.54 MT) at exchange platform.

e. Therefore, it is observed that NEFM indirectly traded and took delivery of significant amount of Mentha Oil from exchange platform by way of transfer of funds to Group A and Group B entities. In other words, NEFM appears to be the ultimate beneficiary of positions undertaken and stocks held by its connected entities.

f. The influential stock positions in Mentha Oil was accumulated/cornered by NEFM through its connected entities (Group A and Group B entities assisted by the proxy entities and RCS) during the examination period in a planned manner. The same is underlined by the fact that once a particular set of entities were identified and clubbed by the exchange, another set of connected entities were used by NEFM for undertaking positions in the market. The same was repeatedly observed during the course of examination period.

g. These positions have been accumulated with an intent to mask beneficial ownership, as indicated above through layering of funds and positions undertaken through connected entities.

Prima Facie Violations:

25. In light of what has been discussed hereinabove, I prima facie find that NEFM along with RCS (trading member), Group A entities, Group B entities and the proxy entities has devised a plan, artifice or design through which NEFM has acquired the ultimate beneficial ownership of a substantial percentage of exchange specified stock of Mentha Oil, which are tradable at the exchange, by funding Group A and Group B entities directly or indirectly through proxy entities. Although officially the trades were executed and the stock of Mentha Oil was held in the name of group A and Group B entities, the fund flow analysis showed that NEFM had either directly funded these entities or had indirectly funded them through proxy entities to buy Mentha Oil futures contracts and take delivery of the underlying stock of such huge quantities. In most of these transactions, RCS acted as the trading member of the clients, who are found to be front entities, and played its part in the whole plan by not raising any alerts regarding trading of these clients, highly disproportionate to their respective net worth.

26. The entities identified as Group A and Group B, who were all funded by NEFM (directly or indirectly), traded in Mentha Oil contracts and carried out off-market transfers of Mentha Oil stock prima facie with the end objective of conferring the beneficial ownership in the hands of NEFM. The proxy entities did not trade or hold any position in Mentha Oil for themselves, but acted as conduits for transfer of funds from NEFM to Group A and Group B entities. By actively concealing its ultimate beneficial ownership of Mentha Oil stock so acquired, NEFM intentionally created false and misleading appearance of trades wherein it was the de-facto beneficial owner/trader but the trades were done by its connected entities without disclosing their connection with NEFM. The act of concealment appears to be devised in order to deliberately mislead the market and get hold of a dominant stock position in Exchange specified quality of Mentha Oil. In view of the above, I prima facie find that the plan, artifice or design devised by the NEFM Group is fraudulent within the meaning of the term under regulation 2(1)(c) of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (“PFUTP Regulations”) and is in violation of section 12A of the SEBI Act, 1992 read with regulation 3, 4(1) and 4(2)(a) of the PFUTP Regulations.

27. Group A and Group B entities who traded in Mentha Oil contracts backed by the funding provided by a common entity - NEFM also prima face violated SEBI circulars No. CDMRD/DMP/CIR/P/2016/96 dated September 27, 2016 and SEBI/HO/CDMRD/DMP/CIR/P/2017/84 dated July 25, 2017 prescribing norms for position limits for Commodity Derivatives.

28. Commodities Trading Members, being registered intermediaries with SEBI, are expected to act with diligence and to use required skill and care while acting as a trading members and have an obligation to put a check on the risk arising due to malafide manner of trading by their clients. However, in this present case, no alert was raised by RCS with respect to the positions in Mentha futures taken by its clients despite observing significant dissonance with the net worth of the respective entities. Instead, RCS, as a commodity trading member, is prima-facie found to have played an active role by enabling NEFM in garnering huge positions in Mentha Oil and also found to have channelized funds to Group B entities through its connected entities Rapid and Invictus. Further, RCS is prima-facie found to have made incorrect reporting to the Exchange regarding margin collection and found to have not followed the KYC norms in respect of NEFM group entities. In view of the above, I find that RCS has prima facie failed to act with due skill, care and diligence in the conduct of its business and thereby also violated clauses A(1), A(2) and A(4) of Code of Conduct for Brokers as specified in Schedule II under regulation 7 of SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 (hereinafter referred to as “Stock Brokers Regulations”). Further, the facts of the case as narrated above indicate that, RCS has actively aided and abetted the scheme and artifice utilized by NEFM group for trading in Mentha Oil contracts in a fraudulent manner though a number of front entities who traded in the Mentha Oil futures as clients of RCS.

29. The relevant legal provisions, the contravention of which have been prima-facie alleged in this case are reproduced hereunder:

Regulation 2(1)(c) of Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices:

“fraud” includes any act, expression, omission or concealment committed whether in a deceitful manner or not by a person or by any other person with his connivance or by his agent while dealing in securities in order to induce another person or his agent to deal insecurities, whether or not there is any wrongful gain or avoidance of any loss, and shall also include-

(1) a knowing misrepresentation of the truth or concealment of material fact in order that another person may act to his detriment;

(2) a suggestion as to a fact which is not true by one who does not believe it to be true;

(3) an active concealment of a fact by a person having knowledge or belief of the fact;

(4) a promise made without any intention of performing it;

(5) a representation made in a reckless and careless manner whether it be true or false;

(6) any such act or omission as any other law specifically declares to be fraudulent,

(7) deceptive behaviour by a person depriving another of informed consent or full participation,

(8) a false statement made without reasonable ground for believing it to be true.

(9) The act of an issuer of securities giving out misinformation that affects the market price of the security, resulting in investors being effectively misled even though they did not rely on the statement itself or anything derived from it other than the market price.

And “fraudulent” shall be construed accordingly;

Section 12A of the SEBI Act-

“Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control.

12A. No person shall directly or indirectly-

(a) use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of this Act or the rules or the regulations made there under;

(b) employ any device, scheme or artifice to defraud in connection with issue or dealing in securities which are listed or proposed to be listed on a recognized stock exchange;

(c) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognized stock exchange, in contravention of the provisions of this Act or the rules or the regulations made thereunder;”

PFUTP Regulations -

“Prohibition of certain dealings in securities. 3. No person shall directly or indirectly—

(a) buy, sell or otherwise deal in securities in a fraudulent manner;

(b) use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of the Act or the rules or the regulations made there under;

(c) employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange;

(d) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made there under.

Prohibition of manipulative, fraudulent and unfair trade practices.

4.(1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities.

(2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely:—

a) indulging in an act which creates false or misleading appearance of trading in the securities market;

Regulation 7 of the Stock Brokers Regulations:

Stock-Brokers to abide by Code of Conduct.

The stock-broker holding a certificate shall at all times abide by the Code of Conduct as specified at Schedule II.

Code of Conduct-Schedule II

A. General

Clause (1) Integrity: A stock-broker, shall maintain high standards of integrity, promptitude and fairness in the conduct of all his business.

Clause (2) Exercise of Due Skill and Care: A stock-broker, shall act with due skill, care and diligence in the conduct of all his business.

… Clause (4) Malpractices: A stock-broker shall not create false market either singly or in concert with others or indulge in any act detrimental to the investors' interest or which leads to interference with the fair and smooth functioning of the market. A stock broker shall not involve himself in excessive speculative business in the market beyond reasonable levels not commensurate with his financial soundness.

Rationale for Taking Urgent Preventive Actions:

30. The NEFM group, through a premeditated arrangement and artifice for active concealment of actual beneficiary positions and in violation of position limits as prescribed by SEBI, has deliberately accumulated/cornered stock of Mentha Oil through connected entities. NEFM group has taken an influential beneficiary position in Mentha Oil contracts through unfair means and misuse of the exchange mechanism.

31. Furthermore, through the artifice of accumulation of open interest beyond position limits specified by SEBI, the NEFM group has also interfered with the normal operation of the forces of demand and supply in the market which was detrimental to market integrity thereby defeating the free and fair price discovery process of the commodity.

32. As observed earlier, NEFM continued to add new front entities in the aforesaid groups of suspicious entities and once a particular set of entities were identified as related to each other and their positions were clubbed by the exchange, another set of connected entities were used for undertaking positions in the market. Thus, its intention of acquiring a dominant position in the Mentha Oil stock has been carried out in a deliberate and brazen manner. It is possible that the NEFM group may keep on adding new connected entities, only to avoid position limits prescribed by SEBI and through more and more front entities it is likely to enhance its already dominant position in the market so as to be in a position to manipulate the future price of Mentha Oil on the Exchange platform, on the strength of the physical stock of Mentha Oil it holds through the front entities.

33. Mentha Oil has been categorized as a narrow commodity on account of its low size of supply. Mentha Oil as a commodity has its peak season in June to November wherein historically most of the arrivals take place. It has entered into lean season from December 2018 which will last till April-May. Being a narrow and localized commodity, any concentration of large stocks with a single entity can be detrimental to price discovery. Any entity holding a sizeable stock conforming to the exchange specifications is in a position to dictate prices of futures contracts on Exchange during the lean season.

34. Furthermore, the accumulated stock position is that of exchange deliverable stock. This stock, which conform to quality specifications by the Exchange, is considered superior to the Mentha Oil stock ordinarily available in the physical market at large, hence generally commands a premium over the regular stock. It is only stock of this quality that is deliverable on the exchange platform and thus which can serve as an underlying for deliverable trades and price discovery thereof.

35. Under the circumstances the conduct of this group in the last several months as discussed above has raised a bona fide apprehension that the group would take advantage of its dominant position of the Exchange deliverable stock to manipulate the prices of Mentha Oil on the exchange platform to its advantage, which would be aided by the narrow nature of the commodity especially during the ongoing lean season of the commodity.

36. Therefore, in light of the prima facie violations observed above, in the fitness of things, it is imperative to take immediate preventive measures so that the NEFM group does not abuse their advantageous position on account of the substantial Mentha Oil stock that it holds directly and indirectly through its connected entities, to affect the price of Mentha Oil on the exchange platform. The entities identified as Group A and Group B entities, proxy entities and the trading member - RCS who have facilitated the accumulation of the Mentha Oil stock at the disposal of NEFM, also need to be prevented from indulging in acts of a like nature going forward. The application of such scheme or artifice by such entities to the detriment of the operation of the free forces of demand and supply in the securities market needs to be stopped. Therefore, urgent measure are required to prevent these persons/entities from indulging in such activities by taking positions in Mentha contracts or for that matter in any other commodity derivatives, in violation of the prescribed position limits and with an intention to dominate the future trading in commodities by engaging front entities.

37. I find that Sandeep Sabharwal (PAN-AABPS4647J) is the Managing Director (MD) of NEFM and also a shareholder of NEFM and SLCM (holding company of NEFM). Other directors of NEFM are prima-facie, found to be non-executive nominee directors. With regard to RCS, I find that Rajendra Kumar Gupta (PAN: ADTPG0459K), Navdeep Varshneya (son of Rajendra Kumar Gupta) (PAN: ADFPV9839A) and Sundeep Chadha (PAN: AAHPC9809N) are designated as executive directors of RCS. Rajendra Kumar Gupta is the Chairman and Chief Executive Officer of RCS and has a controlling stake in RCS along with his family members.

38. By virtue of the various provisions of the Companies Act, 2013, Managing Director/Chief Executive Officer/Executive Directors are considered as key managerial personnel and can be held responsible for the overall conduct of the business and day to day affairs of the company.

39. Therefore, pending investigation into the specific role of each entity and the directors of all the entities discussed above, at present, in the interest of securities market, preventive directions also needs to be issued against MD of NEFM and the Executive Directors of RCS, who have apparently played a major role in the scheme/artifice detailed above on behalf of NEFM.

40. SEBI has a statutory duty to protect the interests of investors in securities and promote the development of, and to regulate, the securities market. Section 11 of the SEBI Act has empowered it to take such measures as it thinks fit for fulfilling its legislative mandate. I find it necessary that SEBI as a Regulator should immediately intervene to restore the confidence of the investors and to stop further harm to investors from being committed by the persons, who prima facie have indulged in such activities. It is SEBI's sacrosanct duty to make the securities market more credible and efficient by establishing and enforcing principles which ensure fairness, and which prevent activities which damage investor confidence. Therefore, it is necessary to issue preventive directions to the aforesaid entities and individuals, not only with respect to their dealings in commodity derivatives but also in other securities, by restraining them from dealing in securities market to protect the interests of the investors.

41. Therefore, in order to protect the interest of investors and the integrity of the securities market, I, in exercise of the powers conferred upon me section 11(1), 11(4) and 11B read with under Sections 19 of the SEBI Act, pending Investigation, by way of this ad-interim ex-parte order, restrain the following entities/Noticees from buying, selling or dealing in the securities market, either directly or indirectly, or being associated with securities market, in any manner whatsoever, till further directions:

Sl. Name of the Entity/Noticee PAN 1. North End Foods Marketing Pvt. Ltd. (“NEFM) AABCN9927F 2. Sandeep Sabharwal AABPS4647J 3. Neetu Gupta AJOPG5806B 4. Yash Gupta BTKPG6004J 5. Abhishek Agarwal AIDPA1545K 6. Vikram Gupta AAOPG1467H 7. Abhishek Mishra APHPM6773J 8. Shamugpriya International Pvt. Ltd. (“Shamugpriya”) AAYCS6149K 9. Sita Ram (HUF) (“Sita Ram”) ABCHS8882F 10. ReindusTradeway Private Ltd. (“Reindus”) AAICR9376D 11. Alok Kumar Singh ACQPS1889K 12. FancosTrademart Private Ltd. (“Fancos”), AACCF8546P 13. Invictus Stock Research Private Ltd. (“Invictus”) AACCI4638M 14. Virendra Kumar Jain ABPPJ9524Q 15. APMV Stocks & Commodities Private Ltd. (“APMV”) AAICA9644F 16. Neeru Gupta ADTPG9314M 17. Shivrudra Infotech Solutions Private Ltd. (“Shivrudra”) AAXCS5373G 18. AG Agri Mart Private Ltd. (“AG Agri”) AAJCA9398M 19. Gaurav Gupta ARLPG4012E 20. Saurabh Kumar Vaish AEHPV0866L 21. Vimuk Enterprises (“Vimuk”) AANFV4919L 22. Rapid Credit & Holdings Pvt. Ltd. (“Rapid”) AAACR0021K 23. R. K. Commodities Services Pvt. Ltd. (“RCS”) AADCR3305H 24. Rajendra Kumar Gupta ADTPG0459K 25. Navdeep Varshneya ADFPV9839A 26. Sundeep Chadha AAHPC9809N

42. It is further clarified that the existing holding of securities of the Noticees, including the units of mutual funds, shall remain frozen during the period of restraint.

43. The Order shall come into force with the immediate effect. The open positions, if any, of the above entities in derivatives shall be permitted to be squared off within a day of this order. Further, RCS, being a commodity broker, is permitted to square off its existing client open positions in commodity derivatives within a period of 15 days from this order.

44. The entities against whom this Order is passed, may, file their reply, if any, within twenty one (21) days from the date of receipt of this Order and may also indicate whether they desire to avail an opportunity of personal hearing on a date and time to be fixed on a specific request to be made in this regard.

45. A copy of this order shall be served on all the Noticees, Recognized Stock Exchanges, Depositories and Registrar and Transfer Agents to ensure that the directions given above are strictly complied with.

Annexure A: Details of the funding by NEFM to Group A, Group B & Proxy entities

Client Sender Amount (in Rs. Cr.) Receiver Value of Delivery Taken (in Rs. Cr.) Client 1: Invictus Stock Research Private Limited (“Invictus”) NEFM (DIRECT TRANSFER) 124.95 INVICTUS RAPID 100.76 INVICTUS APMV 1.05 INVICTUS A G AGRI 0.80 INVICTUS TOTAL 227.56 INVICTUS 67.04 R K COMMODITIES SERVICES PVT. LTD. (commodity trading member) 34.94 INVICTUS 114.88 RAPID INVICTUS 38.84 APMV INVICTUS 14.13 ABHISHEK MISHRA INVICTUS 10.80 A G AGRI R K COMMODITIES SERVICES PVT. LTD. (commodity trading member) 20.82 INVICTUS Client 2: Samugpriya International Pvt. Ltd. (“Shamugpriya”) APMV 4.52 SHAMUGPRIYA RAPID 5.65 SHAMUGPRIYA TOTAL 10.17 SHAMUGPRIYA 9.20 R K COMMODITIES SERVICES PVT. LTD. (commodity trading member) 9.20 R K COMMODITIES SERVICES PVT. LTD. (commodity trading member) 1.40 SHAMUGPRIYA SHAMUGPRIYA 1.10 RAPID Client 3: Reindus Tradeway Pvt. Ltd. (“REINDUS”) NEFM (Through proxy entity VIMUK ENTERPRISES) 8.14 REINDUS TOTAL 8.14 REINDUS 8.17 R.K. COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 8.00 R.K. COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 0.50 REINDUS REINDUS 0.50 NEFM (Through proxy entity VIMUK ENTERPRISES) Client 4: Virendra Kumar Jain AG AGRI 3.38 VIRENDRA KUMAR JAIN TOTAL 3.38 VIRENDRA KUMAR JAIN 3.38 R K COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 4.00 Client 5: Yash Gupta NEFM (direct transfer) 51.09 YASH GUPTA 5.08 TOTAL 51.09 YASH GUPTA (direct transfer) 83.25 NEFM YASH GUPTA 0.09 YAMADA LOGISTIS (Warehouse Rent-Transaction) Client 6: Abhishek Mishra INVICTUS 14.13 ABHISHEK MISHRA RAPID 0.94 ABHISHEK MISHRA TOTAL 15.07 ABHISHEK MISHRA 14.56 RK COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 14.71 R K COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 0.44 Abhishek Mishra Abhishek Mishra 0.94 RAPID Client 7: Sita Ram HUF (“Sita Ram”) RAPID 1.15 SITA RAM TOTAL 1.15 SITA RAM 1.15 R K COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 1.13 Client 8: Vikram Gupta (“VIKRAM GUPTA”) NEFM (Through proxy entities GAURAV GUPTA, SAURABH KUMAR VAISH) 18.10 VIKRAM GUPTA TOTAL 18.10 5.71 VIKRAM GUPTA 21.80 ANAND RATHI COMMODITIES LTD. (Commodity Trading Member) ANAND RATHI COMMODITIES LTD. (Commodity Trading Member) 24.76 VIKRAM GUPTA VIKRAM GUPTA 21.06 NEFM (Through Proxy Entities GAURAV GUPTA, SAURABH KUMAR VAISH) Client 9: Abhishek Agarwal (“ABHISHEK AGARWAL”) NEFM (Through proxy entity GAURAV GUPTA) 16.05 ABHISHEK AGARWAL TOTAL 16.05 ABHISHEK AGARWAL 16.15 ADROIT COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 16.29 ADROIT COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 10.60 ABHISHEK AGARWAL ABHISHEK AGARWAL 10.20 NEFM (Through proxy entity GAURAV GUPTA) NEFM (direct transfer) 0.07 ABHISHEK AGARWAL ABHISHEK AGARWAL 0.07 YAMADA LOGISTIS (Warehouse Rent-Transaction) Client 10: Neetu Gupta (“NG”) NEFM (Through proxy entities GAURAV GUPTA, SAURABH KUMAR VAISH) 19.15 NEETU GUPTA TOTAL 19.15 NEETU GUPTA 18.85 SMC Comtrade (Commodity Trading Member) 6.67 SMC Comtrade (Commodity Trading Member) 25.50 Neetu Gupta NEETU GUPTA 25.42 NEFM (Through proxy entities GAURAV GUPTA, SAURABH KUMAR VAISH) NEFM (direct transfer) 0.06 Neetu Gupta NEETU GUPTA 0.06 YAMADA LOGISTIS (Warehouse Rent-Transaction) Client 11: APMV Commodities Private Limited (“APMV”) INVICTUS 40.49 APMV RAPID 3.00 APMV SHIVRUDRA 0.94 APMV TOTAL 44.43 APMV 42.24 R K COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 24.79 R K COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 3.87 APMV APMV 2.03 INVICTUS APMV 4.85 SHAMUGPRIYA Client 12: • AG AGRI Private Limited (A G AGRI) INVICTUS 10.80 A G AGRI TOTAL 10.80 A G AGRI 5.72 R K COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) R K COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 0.48 A G AGRI A G AGRI 1.80 INVICTUS A G AGRI 3.23 VIRENDRA KUMAR JAIN Client 13: Neeru Gupta (NEERU GUPTA) RAPID 5.18 NEERU GUPTA TOTAL 5.18 NEERU GUPTA 1.08 R K COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) R K COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 0.41 NEERU GUPTA NEERU GUPTA 1.67 RAPID Client 14: Shivrudra Infotech Solutions Private Limited (SHIVRUDRA) FANCOS 2.02 SHIVRUDRA TOTAL 2.02 SHIVRUDRA 3.69 R K COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) R K COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 2.35 SHIVRUDRA SHIVRUDRA 5.44 FANCOS Client 15: Fancos Trademart Private Limited (FANCOS) SHIVRUDRA 5.78 FANCOS Total 5.78 FANCOS 28.97 R K COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 23.75 R K COMMODITIES SERVICES PVT. LTD. (Commodity Trading Member) 1.22 FANCOS FANCOS 2.02 SHIVRUDRA Client 16: Alok Kumar Singh NEFM (Through Proxy Entity GAURAV GUPTA) 7.15 ALOK KUMAR SINGH Total 7.15 Client Sender Amount (in Rs. Cr.) Receiver Value of Delivery Taken (in Rs. Cr.) ALOK KUMAR SINGH 7.15 MOTILAL OSWAL SECURITIES LTD. (Commodity Trading Member) 6.67 Proxy Entity 1: Shaurav Kumar Vaish NEFM 26.95 SAURABH KUMAR VAISH VIKRAM GUPTA 15.46 SAURABH KUMAR VAISH Neetu Gupta 14.60 SAURABH KUMAR VAISH Total 57.01 SAURABH KUMAR VAISH 30.10 NEFM SAURABH KUMAR VAISH 17.50 VIKRAM GUPTA SAURABH KUMAR VAISH 9.45 NEETU GUPTA SAURABH KUMAR VAISH 0.70 GAURAV GUPTA Proxy Entity 2: Vimuk Enterprise NEFM 8.20 VIMUK ENTERPRISES REINDUS 0.50 VIMUK ENTERPRISES Total 8.70 VIMUK ENTERPRISES 8.14 REINDUS VIMUK ENTERPRISES 0.50 INVICTUS Proxy Entity 3: Gaurav Gupta NEFM 37.95 GAURAV GUPTA ABHISHEK AGARWAL 10.20 GAURAV GUPTA NEETU GUPTA 10.90 GAURAV GUPTA VIKRAM GUPTA 9.55 GAURAV GUPTA ALOK KUMAR SINGH 0.60 GAURAV GUPTA TOTAL 69.20 GAURAV GUPTA 31.90 NEFM GAURAV GUPTA 16.05 ABHISHEK AGARWAL GAURAV GUPTA 10.20 NEETU GUPTA GAURAV GUPTA 3.90 VIKRAM GUPTA GAURAV GUPTA 7.15 ALOK KUMAR SINGH Proxy Entity 4: Rapid Credit & Holdings Pvt. Ltd. (“RAPID”) INVICTUS 115.01 RAPID NEERU GUPTA 1.67 RAPID SHAMUGPRIYA 1.23 RAPID APMV 1.00 RAPID ABHISHEK MISHRA 0.94 RAPID GAURAV GUPTA 0.60 RAPID TOTAL 120.45 RAPID 103.62 INVICTUS RAPID 5.65 SHAMUGPRIYA RAPID 2.30 APMV RAPID 0.94 ABHISHEK MISHRA RAPID 0.24 NEERU GUPTA RAPID 0.25 GAURAV GUPTA RAPID 0.05 ALOK KUMAR SINGH

Annexure-B: Day-wise position limit violations by NEFM group entities at Near Month level (in Lots)

S. No. Trade Date AG AGRI MART PRIVATE LIMITED ABHI SHEK AGG ARW AL ABHISHE K MISHRA ALOK KUMA R SINGH APMV STOCKS & COMMODITI ES PRIVATE LIMITED FANCOS TRADEMAR T PRIVATE LIMITED INVICTUS STOCK RESEARC H PRIVATE LIMITED NEER U GUPT A NEET U GUPT A REINDUS TRADEWA Y PRIVATE LIMITED SHAMUGPRIYA INTERNATION AL PVT. LTD. SHIVRUDR A INFOTECH SOLUTION S PRIVATE LIMITED SITA RA M HUF VIKRA M GUPTA VIRENDR A KUMAR JAIN YASH GUPT A Gros s Long (In Lots) Gros s Shor t (In lots) MAX Position(I n Lots) (Long/Short) Group Positio n Side Near Month OI Limit (in Lots) MAX (Weights) (Long/Sh ort) Near Month OI Limit (in Kg) 1 14 Dec 2017 7 48 50 15 49 169 0 169 Long 111 60,840 40,000 2 19 Dec 2017 2 48 2 50 3 34 139 0 139 Long 111 50,040 40,000 3 20 Dec 2017 2 78 32 50 1 75 238 0 238 Long 111 85,680 40,000 4 21 Dec 2017 80 41 50 2 45 218 0 218 Long 111 78,480 40,000 5 22 Dec 2017 88 83 50 45 266 0 266 Long 111 95,760 40,000 6 26 Dec 2017 47 83 74 −6 204 6 204 Long 111 73,440 40,000 7 27 Dec 2017 26 83 74 −2 183 2 183 Long 111 65,880 40,000 8 28 Dec 2017 83 42 74 199 0 199 Long 111 71,640 40,000 9 29 Dec 2017 78 42 78 198 0 198 Long 111 71,280 40,000 10 01 Jan 2018 7 57 18 −1 29 102 213 1 213 Long 111 76,680 40,000 11 02 Jan 2018 6 67 18 19 28 73 211 0 211 Long 111 75,960 40,000 12 03 Jan 2018 6 31 18 37 24 46 162 0 162 Long 111 58,320 40,000 13 04 Jan 2018 6 31 74 18 97 29 31 286 0 286 Long 111 102,960 40,000 14 05 Jan 2018 5 31 74 18 97 22 27 274 0 274 Long 111 98,640 40,000 15 08 Jan 2018 5 31 74 30 97 19 27 283 0 283 Long 111 101,880 40,000 16 09 Jan 2018 3 31 74 36 97 17 27 285 0 285 Long 111 102,600 40,000 17 10 Jan 2018 5 31 74 −23 97 17 27 251 23 251 Long 111 90,360 40,000 18 11 Jan 2018 2 15 74 −15 97 19 23 230 15 230 Long 111 82,800 40,000 19 12 Jan 2018 −1 105 74 −15 97 13 9 298 16 298 Long 111 107,280 40,000 20 15 Jan 2018 2 99 74 −15 97 13 9 294 15 294 Long 111 105,840 40,000 21 16 Jan 2018 2 95 74 37 97 12 9 326 0 326 Long 111 117,360 40,000 22 17 Jan 2018 95 74 61 97 15 3 345 0 345 Long 111 124,200 40,000 23 18 Jan 2018 2 95 74 82 97 16 44 410 0 410 Long 111 147,600 40,000 24 19 Jan 2018 2 95 1 82 97 4 27 308 0 308 Long 111 110,880 40,000 25 22 Jan 2018 2 92 1 82 55 45 277 0 277 Long 111 99,720 40,000 26 23 Jan 2018 75 82 55 79 291 0 291 Long 111 104,760 40,000 27 24 Jan 2018 1 81 75 82 86 99 424 0 424 Long 111 152,640 40,000 28 25 Jan 2018 1 89 102 102 102 99 495 0 495 Long 111 178,200 40,000 29 29 Jan 2018 1 89 102 102 102 96 492 0 492 Long 111 177,120 40,000 30 30 Jan 2018 90 102 102 102 90 486 0 486 Long 111 174,960 40,000 31 31 Jan 2018 90 102 102 102 90 486 0 486 Long 111 174,960 40,000 32 06 Feb 2018 1 2 85 20 14 87 209 0 209 Long 111 75,240 40,000 33 07 Feb 2018 2 85 33 29 19 78 246 0 246 Long 111 88,560 40,000 34 08 Feb 2018 2 85 33 50 13 78 261 0 261 Long 111 93,960 40,000 35 09 Feb 2018 2 85 33 4 11 78 213 0 213 Long 111 76,680 40,000 36 12 Feb 2018 2 85 33 −51 8 28 156 51 156 Long 111 56,160 40,000 37 14 Feb 2018 2 85 33 −49 8 10 138 49 138 Long 111 49,680 40,000 38 15 Feb 2018 −1 2 85 33 −4 8 −68 128 73 128 Long 111 46,080 40,000 39 22 Feb 2018 −4 13 64 51 −3 128 7 128 Long 111 46,080 40,000 40 23 Feb 2018 9 26 64 61 79 239 0 239 Long 111 86,040 40,000 41 26 Feb 2018 9 26 64 11 61 79 250 0 250 Long 111 90,000 40,000 42 27 Feb 2018 6 75 72 12 60 225 0 225 Long 111 81,000 40,000 43 28 Feb 2018 72 72 12 72 228 0 228 Long 111 82,080 40,000 44 01 Mar 2018 −1 −16 −7 −100 −105 −64 9 −57 9 350 350 Short 111 126,000 40,000 45 05 Mar 2018 −1 −16 −7 −78 −31 −64 22 −57 22 254 254 Short 111 91,440 40,000 46 06 Mar 2018 −2 −16 −7 −78 −14 −64 15 −25 15 206 206 Short 111 74,160 40,000 47 07 Mar 2018 1 −16 −7 −78 −21 −64 10 −7 11 193 193 Short 111 69,480 40,000 48 08 Mar 2018 1 −16 −7 8 −21 −64 10 −7 19 115 115 Short 111 41,400 40,000 49 19 Mar 2018 3 −16 −7 99 77 75 7 −1 261 24 261 Long 111 93,960 40,000 50 20 Mar 2018 3 76 99 77 75 7 −1 337 1 337 Long 111 121,320 40,000 51 21 Mar 2018 2 76 99 77 75 7 −7 336 7 336 Long 111 120,960 40,000 52 22 Mar 2018 76 99 77 92 7 5 356 0 356 Long 111 128,160 40,000 53 23 Mar 2018 95 99 77 92 5 368 0 368 Long 111 132,480 40,000 54 26 Mar 2018 95 99 77 92 −7 363 7 363 Long 111 130,680 40,000 55 27 Mar 2018 90 96 72 78 90 −90 426 90 426 Long 111 153,360 40,000 56 28 Mar 2018 90 96 72 60 78 −90 396 90 396 Long 111 142,560 40,000 57 02 Apr 2018 −4 55 101 78 85 108 53 480 4 480 Long 111 172,800 40,000 58 03 Apr 2018 −4 55 101 87 81 108 53 485 4 485 Long 111 174,600 40,000 59 04 Apr 2018 −1 55 101 87 95 108 53 499 1 499 Long 111 179,640 40,000 60 05 Apr 2018 −1 55 101 75 95 108 53 487 1 487 Long 111 175,320 40,000 61 06 Apr 2018 −4 55 101 75 95 108 53 487 4 487 Long 111 175,320 40,000 62 09 Apr 2018 −2 55 101 75 95 108 53 487 2 487 Long 111 175,320 40,000 63 10 Apr 2018 −7 55 101 75 95 108 53 487 7 487 Long 111 175,320 40,000 64 11 Apr 2018 −7 55 101 75 95 108 53 487 7 487 Long 111 175,320 40,000 65 12 Apr 2018 −2 55 101 96 95 108 53 508 2 508 Long 111 182,880 40,000 66 13 Apr 2018 −1 55 101 96 95 108 53 508 1 508 Long 111 182,880 40,000 67 16 Apr 2018 −3 55 101 96 88 108 53 501 3 501 Long 111 180,360 40,000 68 17 Apr 2018 −2 42 101 96 103 108 53 503 2 503 Long 111 181,080 40,000 69 18 Apr 2018 −3 42 101 96 103 108 11 53 514 3 514 Long 111 185,040 40,000 70 19 Apr 2018 −4 42 101 96 103 108 25 53 528 4 528 Long 111 190,080 40,000 71 20 Apr 2018 −3 42 101 96 103 108 65 53 568 3 568 Long 111 204,480 40,000 72 23 Apr 2018 −1 42 101 96 103 108 48 53 551 1 551 Long 111 198,360 40,000 73 24 Apr 2018 −1 42 101 96 103 108 1 52 503 1 503 Long 111 181,080 40,000 74 25 Apr 2018 42 101 96 103 108 −16 52 502 16 502 Long 111 180,720 40,000 75 26 Apr 2018 42 101 96 103 108 −15 3 453 15 453 Long 111 163,080 40,000 76 27 Apr 2018 91 96 103 108 −13 398 13 398 Long 111 143,280 40,000 77 30 Apr 2018 30 96 102 108 336 0 336 Long 111 120,960 40,000 78 02 May 2018 −11 88 92 100 106 386 11 386 Long 111 138,960 40,000 79 03 May 2018 −13 −20 88 92 100 106 386 33 386 Long 111 138,960 40,000 80 04 May 2018 −14 −20 88 92 100 106 386 34 386 Long 111 138,960 40,000 81 07 May 2018 −12 −8 88 92 100 106 386 20 386 Long 111 138,960 40,000 82 08 May 2018 −9 −16 88 92 100 106 386 25 386 Long 111 138,960 40,000 83 09 May 2018 −9 −33 88 92 100 106 386 42 386 Long 111 138,960 40,000 84 10 May 2018 −3 −34 108 104 100 106 418 37 418 Long 111 150,480 40,000 85 11 May 2018 −4 −34 108 104 100 78 390 38 390 Long 111 140,400 40,000 86 14 May 2018 −3 −3 108 104 105 100 417 6 417 Long 111 150,120 40,000 87 15 May 2018 −4 −3 108 104 66 92 370 7 370 Long 111 133,200 40,000 88 16 May 2018 −4 −32 108 104 78 92 382 36 382 Long 111 137,520 40,000 89 17 May 2018 −4 −32 108 104 6 99 98 415 36 415 Long 111 149,400 40,000 90 18 May 2018 −4 −27 108 104 99 86 12 409 31 409 Long 111 147,240 40,000 91 21 May 2018 −5 −27 108 104 5 78 84 20 399 32 399 Long 111 143,640 40,000 92 22 May 2018 −4 108 104 7 108 84 30 441 4 441 Long 111 158,760 40,000 93 23 May 2018 −4 108 104 7 108 48 62 437 4 437 Long 111 157,320 40,000 94 24 May 2018 −2 108 104 6 108 32 78 436 2 436 Long 111 156,960 40,000 95 25 May 2018 108 92 5 108 26 84 423 0 423 Long 111 152,280 40,000 96 28 May 2018 108 92 5 108 2 108 423 0 423 Long 111 152,280 40,000 97 29 May 2018 108 92 1 108 2 108 419 0 419 Long 111 150,840 40,000 98 30 May 2018 108 108 108 108 432 0 432 Long 111 155,520 40,000 99 31 May 2018 108 108 108 24 108 456 0 456 Long 111 164,160 40,000 100 06 Jun 2018 5 −93 −38 −1 7 12 132 132 Short 111 47,520 40,000 101 12 Jun 2018 −17 −46 −35 −1 −22 0 121 121 Short 111 43,560 40,000 102 13 Jun 2018 −24 −46 −35 −1 −28 0 134 134 Short 111 48,240 40,000 103 14 Jun 2018 −24 −46 −35 −1 −58 0 164 164 Short 111 59,040 40,000 104 15 Jun 2018 −24 −46 −35 −1 −58 0 164 164 Short 111 59,040 40,000 105 18 Jun 2018 −26 −46 −102 −1 −50 0 225 225 Short 111 81,000 40,000 106 19 Jun 2018 −22 −46 −102 −1 −79 0 250 250 Short 111 90,000 40,000 107 20 Jun 2018 −20 28 −102 −1 −83 28 206 206 Short 111 74,160 40,000 108 27 Jun 2018 100 23 19 −1 142 1 142 Long 111 51,120 40,000 109 28 Jun 2018 108 92 62 −1 262 1 262 Long 111 94,320 40,000 110 29 Jun 2018 96 96 60 252 0 252 Long 111 90,720 40,000 111 01 Aug 2018 −73 −22 −3 −84 0 182 182 Short 111 65,520 40,000 112 02 Aug 2018 −73 −1 −3 −91 0 168 168 Short 111 60,480 40,000 113 03 Aug 2018 −73 −1 −3 −91 0 168 168 Short 111 60,480 40,000 114 06 Aug 2018 −73 −1 −3 −104 0 181 181 Short 111 65,160 40,000 115 07 Aug 2018 −73 −1 −3 −104 0 181 181 Short 111 65,160 40,000 116 08 Aug 2018 −73 −1 −104 0 178 178 Short 111 64,080 40,000 117 09 Aug 2018 −73 −1 −104 0 178 178 Short 111 64,080 40,000 118 10 Aug 2018 −73 −1 −104 0 178 178 Short 111 64,080 40,000 119 13 Aug 2018 −55 −1 −104 0 160 160 Short 111 57,600 40,000 120 24 Aug 2018 6 8 71 59 144 0 144 Long 111 51,840 40,000 121 27 Aug 2018 18 18 77 71 55 239 0 239 Long 111 86,040 40,000 122 28 Aug 2018 18 47 60 108 29 55 317 0 317 Long 111 114,120 40,000 123 29 Aug 2018 18 65 84 108 6 54 335 0 335 Long 111 120,600 40,000 124 30 Aug 2018 18 65 90 108 54 335 0 335 Long 111 120,600 40,000 125 31 Aug 2018 18 90 90 108 54 360 0 360 Long 111 129,600 40,000 126 03 Sep 2018 6 −12 −33 11 −3 −69 −58 −72 17 247 247 Short 111 88,920 40,000 127 04 Sep 2018 6 −12 −33 11 −3 −69 −52 −72 17 241 241 Short 111 86,760 40,000 128 05 Sep 2018 1 −12 −33 11 −3 −69 6 3 −62 21 179 179 Short 111 64,440 40,000 129 06 Sep 2018 −3 −12 −33 11 −3 −69 6 3 −20 20 140 140 Short 111 50,400 40,000

Annexure-B: Day-wise position limit violations by NEFM group entities at Commodity level (in Lots)

S. No. Date A G AGRI MART PRIVATE LIMITED ABHISHEK AGGARWAL ABHISHEK MISHRA ALOK KUMA R SINGH APMV STOCKS & COMMODITIE S PRIVATE LIMITED FANCOS TRADEMART PRIVATELIMITED INVICTUS STOCK RESEARCH PRIVATE LIMITED NEERU GUPTA NEETU GUPTA REINDUS TRADEWAY PRIVATE LIMITED SHAMUGPRIYA INTERNATIONAL PVT. LTD. SHIVRUDRA INFOTECH SOLUTIONS PRIVATE LIMITED SITARAM HUF VIKRAM GUPTA VIRENDRA KUMAR JAIN YASH GUPTA Gross Long (In Lots) Gro ss Short (In Lots) MAX Position (In Lots) (Long/Short) Group Position Side Commodity OI Limit (in Lots) OI Limit (in Kg) Long Short Long Short Long Short Long Short Long Short Long Short Long Short Long Long Short Long Short Long Short Long Short Long Short Long Short Long Short Long 1 08 Jan 2018 6 60 74 54 8 100 20 142 456 8 456 Long 444 160,000 2 09 Jan 2018 3 60 74 60 8 100 19 142 458 8 458 Long 444 160,000 3 10 Jan 2018 5 63 74 76 23 100 19 142 479 23 479 Long 444 160,000 4 11 Jan 2018 2 45 74 112 15 100 21 128 482 15 482 Long 444 160,000 5 12 Jan 2018 1 135 74 126 15 100 15 5 136 586 21 586 Long 444 160,000 6 15 Jan 2018 2 129 74 126 15 100 15 5 136 582 20 582 Long 444 160,000 7 16 Jan 2018 2 125 74 163 100 15 5 136 615 5 615 Long 444 160,000 8 17 Jan 2018 125 74 167 100 15 5 130 611 5 611 Long 444 160,000 9 18 Jan 2018 3 125 78 166 100 16 7 192 680 7 680 Long 444 160,000 10 19 Jan 2018 3 125 92 166 100 4 9 180 670 9 670 Long 444 160,000 11 22 Jan 2018 3 122 92 166 104 7 213 700 7 700 Long 444 160,000 12 23 Jan 2018 2 51 149 47 166 104 7 209 681 54 681 Long 444 160,000 13 24 Jan 2018 1 51 81 48 149 47 166 131 27 2 5 209 790 127 790 Long 444 160,000 14 25 Jan 2018 4 51 89 48 176 47 186 147 27 2 5 209 860 131 860 Long 444 160,000 15 29 Jan 2018 4 51 89 48 110 68 186 147 27 5 5 206 794 152 794 Long 444 160,000 16 30 Jan 2018 4 50 90 48 110 68 186 147 5 5 190 778 125 778 Long 444 160,000 17 31 Jan 2018 4 50 90 34 110 68 179 130 7 5 190 756 111 756 Long 444 160,000 18 23 Feb 2018 1 1 12 13 111 83 140 37 8 151 9 15 5 121 37 531 213 531 Long 444 160,000 19 26 Feb 2018 1 2 12 13 85 2 83 136 72 105 151 9 11 6 120 37 535 310 535 Long 444 160,000 20 27 Feb 2018 1 1 9 16 134 7 93 115 73 105 150 9 11 6 41 57 512 316 512 Long 444 160,000 21 28 Feb 2018 1 1 3 16 131 7 93 115 73 105 202 72 11 6 40 57 554 379 554 Long 444 160,000 22 08 Mar 2018 2 3 16 71 7 29 15 156 39 130 72 10 6 62 28 463 183 463 Long 444 160,000 23 09 Mar 2018 1 3 16 71 7 40 17 156 39 130 43 11 9 94 34 506 165 506 Long 444 160,000 24 12 Mar 2018 1 3 16 71 7 40 17 156 39 119 19 7 9 67 38 464 145 464 Long 444 160,000 25 13 Mar 2018 2 3 3 16 71 7 40 17 151 29 119 12 7 9 68 28 461 121 461 Long 444 160,000 26 14 Mar 2018 2 3 3 16 71 7 43 20 151 29 119 12 7 9 116 76 512 172 512 Long 444 160,000 27 15 Mar 2018 3 2 3 16 71 7 43 20 151 29 122 17 7 9 116 76 516 176 516 Long 444 160,000 28 16 Mar 2018 3 1 3 16 71 7 43 20 151 29 189 17 7 9 116 51 583 150 583 Long 444 160,000 29 19 Mar 2018 3 1 3 16 71 7 134 22 197 18 189 17 7 9 116 6 720 96 720 Long 444 160,000 30 20 Mar 2018 3 1 3 123 134 22 197 18 189 17 7 9 116 6 772 73 772 Long 444 160,000 31 21 Mar 2018 2 1 3 169 134 22 197 18 189 17 7 9 116 12 817 79 817 Long 444 160,000 32 22 Mar 2018 3 169 134 22 197 18 230 17 7 9 144 5 884 71 884 Long 444 160,000 33 23 Mar 2018 2 3 235 134 7 197 18 230 17 9 144 5 943 58 943 Long 444 160,000 34 26 Mar 2018 3 3 235 222 7 197 18 230 17 5 133 12 1020 62 1020 Long 444 160,000 35 27 Mar 2018 4 148 217 195 7 218 18 228 17 5 141 90 1147 141 1147 Long 444 160,000 36 28 Mar 2018 5 148 217 195 7 236 10 224 17 5 141 90 1161 134 1161 Long 444 160,000 37 02 Apr 2018 4 58 121 113 7 176 10 199 17 5 129 796 43 796 Long 444 160,000 38 03 Apr 2018 4 58 121 122 7 159 8 199 17 5 129 788 41 788 Long 444 160,000 39 04 Apr 2018 1 1 58 121 122 7 173 8 199 17 5 129 803 38 803 Long 444 160,000 40 05 Apr 2018 1 58 121 120 173 8 199 17 5 129 800 31 800 Long 444 160,000 41 06 Apr 2018 4 58 121 176 173 8 199 17 5 129 856 34 856 Long 444 160,000 42 09 Apr 2018 1 2 58 121 176 173 8 199 17 129 857 27 857 Long 444 160,000 43 10 Apr 2018 7 58 121 176 173 8 199 17 129 856 32 856 Long 444 160,000 44 11 Apr 2018 8 58 121 176 173 8 199 17 133 860 33 860 Long 444 160,000 45 12 Apr 2018 2 58 143 201 173 8 199 17 133 907 27 907 Long 444 160,000 46 13 Apr 2018 1 58 191 201 173 8 199 17 133 955 26 955 Long 444 160,000 47 16 Apr 2018 3 58 191 201 166 13 199 17 133 948 33 948 Long 444 160,000 48 17 Apr 2018 1 2 45 191 201 191 199 17 138 966 19 966 Long 444 160,000 49 18 Apr 2018 3 42 10 191 201 191 199 17 11 138 973 30 973 Long 444 160,000 50 19 Apr 2018 10 42 11 191 201 191 199 17 38 138 1000 38 1000 Long 444 160,000 51 20 Apr 2018 4 42 11 191 201 191 199 17 100 138 1062 32 1062 Long 444 160,000 52 23 Apr 2018 7 42 11 191 201 191 199 17 85 138 1047 35 1047 Long 444 160,000 53 24 Apr 2018 6 42 11 191 201 191 199 17 74 167 1065 34 1065 Long 444 160,000 54 25 Apr 2018 7 42 11 191 201 191 199 17 63 16 167 1054 51 1054 Long 444 160,000 55 26 Apr 2018 14 42 11 191 201 191 199 17 63 15 158 1045 57 1045 Long 444 160,000 56 27 Apr 2018 14 91 201 191 199 17 147 13 112 941 44 941 Long 444 160,000 57 30 Apr 2018 12 30 171 190 200 17 141 112 844 29 844 Long 444 160,000 58 10 May 2018 3 45 108 106 28 139 19 112 465 95 465 Long 444 160,000 59 14 May 2018 4 3 108 131 150 19 100 17 489 43 489 Long 444 160,000 60 17 May 2018 5 32 108 131 6 140 18 98 20 483 75 483 Long 444 160,000 61 18 May 2018 4 27 108 131 138 86 8 12 475 39 475 Long 444 160,000 62 21 May 2018 5 27 108 131 5 131 86 20 481 32 481 Long 444 160,000 63 22 May 2018 5 108 131 7 161 86 30 523 5 523 Long 444 160,000 64 23 May 2018 5 108 131 7 161 76 62 545 5 545 Long 444 160,000 65 24 May 2018 3 108 131 6 161 70 78 554 3 554 Long 444 160,000 66 25 May 2018 1 108 119 5 161 76 84 553 1 553 Long 444 160,000 67 28 May 2018 4 108 119 5 161 40 108 541 4 541 Long 444 160,000 68 29 May 2018 4 108 119 1 161 40 108 537 4 537 Long 444 160,000 69 30 May 2018 4 108 135 161 38 108 550 4 550 Long 444 160,000 70 31 May 2018 8 108 135 120 24 1 6 108 501 9 501 Long 444 160,000

North End Foods Marketing Pvt. Ltd., In Re

Concise Analytical Summary of the SEBI Opinion (Whole Time Member S.K. Mohanty)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

North End Foods Marketing Pvt. Ltd., In Re

Comments