BEFORE THE ADJUDICATING OFFICER
SECURITIES AND EXCHANGE BOARD OF INDIA

Under Rule 4 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by
Adjudicating Officer) Rules, 1995 and Rule 4 of the Securities Contracts (Regulations)
(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules,
2005

In respect of
Mr. Suprabhat Lala
Noticee No.5
In the matter of
Corporate Governance at the National Stock Exchange of India Limited

We address you on behalf of and at the instructions of Respondent, Mr. Suprabhat Lala, Noticee
No.5 as under: –
FACTS OF THE CASE
1. Respondent refers to Show Cause Notice dated September 14, 2018 (“the said Notice”)
and to Notices dated January 8, 2020 and February 7, 2020 providing Respondent with an
opportunity of personal hearing and to make further submissions.
2. This response is in addition to all other responses previously filed by Respondent in this
case.
Brief statement of pertinent facts
3. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) conducted
examinations between 2009 and 2016 into the National Stock Exchange of India Limited
(hereinafter referred to as “NSE”). The examinations were based on alleged irregularities
in the matter of co-location and corporate governance at NSE, and were made to ascertain
whether there was a misuse of market-related data of NSE by the Noticees.
4. The allegations were made pursuant to Complaints sent to SEB on diverse dates. The
Complaints largely involved alleged dealings between the Board of Directors and Senior
Management of NSE, and Mr. Ajay Shah and lnfotech Financials Pvt Ltd (hereinafter
referred to as "IFPL”. Mr Ajay Shah is in charge of the algorithm for OPG Securities. It
is further alleged that software services to OPG Securities were done by a company
promoted by Respondent, who was the Administration Head at NSE. The Notice also
observes that Respondent’s wife, Ms. Sunita Thomas (“Third Noticee”), who is also one
of the Directors of lnfotech Financials Pvt Ltd (“IFPL” or “Second Noticee”), is the sister
of Susan Thomas who is wife of Mr Ajay Shah.
5. It is alleged that that Susan Thomas and Ajay Shah earn are given a percentage of trading
and earnings on NSE as royalty.
6. It is also alleged that there was an exchange of confidential information between
Respondent and Ms. Sunita Thomas regarding the NSE.
Summary of allegations
7. Respondent submits that the allegations made against him are as follows: –
(a) That there was an alleged conflict of interest regarding the engaging of the
Second Noticee (IFPL) for carrying out various projects by NSE to wit, LIX &
ZCYC
(b) That there is an alleged sharing of potential misuse of market related data
originating from the NSE by Respondent to his wife through various emails to wit

4 emails dates November 05, 2009, December 3, 2012, January 30, 2013 &
December 04, 2014.
(c) That there is an alleged collusion of Respondent with other Noticees 1, 3 and 4
based on an email invitation for a discussion by Noticee 1 on NSE-HFT.
Summary of arguments
8. Respondent makes the following arguments in this response:
(a) There was no conflict of interest between Respondent and the Second Noticee.
(b) There is no prima facie case against Respondent that he shared potential confidential
information originating from NSE.
(c) Respondent did not collude with any of the alleged Noticees.
(d) Respondent did not violate any law and/or regulation.
(e) This case should be held in abeyance until Respondent’s appeal at the the Securities
Appellate Tribunal (“SAT”) is concluded.
Arguments
(a) There was no conflict of interest between Respondent and the Second Noticee.
9. The Securities and Exchange Board of India in Order in the matter of NSE-Corporate
Governance in respect of NSE and others, WTM/SKM/EFD1-DRA-III/ 18/2019-20, held
that the only precaution required to be taken in order to avoid a conflict of interest, is that
a director or a functionary or shareholder must not participate in any discussion
or decision in respect of any matter in which he or she is in any way, directly
or indirectly, concerned or interested.
10. In the instant action, SEBI alleges that there was an inherent conflict of interest with
respect of an award of the contract to Noticee No 2 rather than to IISL (a subsidiary
company of NSE). On the contrary, Respondent argues that he played no role in awarding
of the said contract to Notice No 2.
11. First, Respondent avers that his work was associated with the trade operations department
of the NSE. Accordingly, awarding of contract for the LIX project was not in his scope of
work. Instead, the LIX project was handled by Mr. R Sundararaman who was at that time
working in NSE as Senior Vice President. A copy of the Contract commitment and
Advance payment approval note dated January 13, 2009 shows how Mr. R Sundaraman
was authorized to sign the agreement with Noticee No 2 and work order on behalf of
NSEIL. Besides, the Professional Services Agreement with Noticee No 2 was executed
by Mr. R Sundararaman on behalf of NSE. It is worth noting that Respondent never
reported to Mr. R Sundararaman, whether directly or indirectly.
12. Further, NSE Ltd’s response dated February 20, 2019 shows that Respondent had no role
in awarding the contract to Noticee No 2. The relevant portion is reproduced below:
a. “…The Noticee (NSE) followed all regular internal process to enter into
Infotech Agreement. At the outset states …………. nor for that matter Mr.
Suprabhat Lala were involved in the process for entering into the Infotech
Agreement …” (pg.10 para 33).

Role of independent committee of NSE in awarding the contract to Noticee NO 2
13. Next, Respondent submits that an independent committee was responsible for the
approval of the contract. NSE in its reply dated February 20, 2019 stated that an
independent committee (“the Standing Committee 1”) was set up consisting of Mr. R

Sundararaman and Mr. Yatrik Vin and the said committee was the relevant authority for
the approval of the contract as per Delegation of authority by Board dated 27 April 2007.
The relevant portions are extracted below: –
a. “….. On April 27, 2007, the Board of the Noticee had constituted the
‘Standing Committee I” for the purpose of approval of various capital and
revenue expenditure in respect of systems and telecom related items. The.
Standing Committee I being the relevant authority for the above purpose by
way of Contract Commitment/Advance Payment Approval Note dated January
13, 2009, approved the Infotech Agreement for developing the LIX software.
.” (Pg.10/11, para 34).
b. “……..The standing Committee I comprised of Mr Yatrik Vin and R
Sundaraman at the time of awarding the Infotech Agreement. A copy of the
Infotech approval note is annexed hereto as Annexure 8 …’(pg.11 para 34)

c. “… Similarly, Mr. Suprabhat Lala who was the Vice President, Trading
Operations of NSEIL at the time of award of the contract to Infotech was not a
member of the Standing Committee 1. Therefore, the above persons did not
have any connection with the decision of the Standing Committee to award the
contract to Infotech. Further, no evidence whatsoever has been adduced to
demonstrate how ………. Mr Suprabhat Lala could have possibly influenced
the award of the Infotech Agreement in any manner.” (pg.12 para 38)

14. Respondent further avers that in addition to averments made by NSE, Mr. Ravi Narian,
the then Managing Director of NSE and Ms. Chitra Ramakrishna, the then Deputy
Managing Director of NSE made pertinent statements in their replies to SEBI. Mr. Ravi
Narain, who was the MD & CEO of NSE from 2000 to 2013, in para 8 & 16 of his reply
dated February 16, 2019 explicitly stated that Respondent had no role to play in the
awarding of the contract The relevant portions are extracted below .
a. “….as far as he was aware, during his tenure, neither Mr. Suprabhat Lala nor
……… had any role at all to play in the NSEIL awarding of any of the
contracts which are referred to in the SCN. Therefore, in any event, there can
be no question of any conflict of interest in awarding either of the contracts in
2009 or 2013 {pg.7, para 8(d)}.
b. “… neither Mr. Suprabhat Lala nor Mr. Ajay Shah nor their respective wives
had any role whatsoever in the decision of NSEIL to award the said contracts;
none of them were in any of the Committees of the NSEIL which considered or
approved the execution of the said contract. (pg.23 para 16) b)).

15. Further, Ms. Chitra Ramakrishna in her reply dated February 20, 2019 had stated that
Respondent had no role to play in the awarding of the contract to Noticee No 2. The
relevant extract of the said para is reproduced below.
a. “… There is no material on record to show that Mr. Lala was connected with
the decision-making process by Respondent No.1 for awarding the contract to
IFPL, or that he influenced the decision making process in any manner. In
fact, there is no material to demonstrate that the agreement with IFPL was a
sham agreement or that IFPL otherwise was not competent to receive the
contract from Respondent No.1 …” (pg.13/14 para 27.5)

16. Respondent asserts that the above averments of NSE, Mr. Ravi Narain and Ms. Chitra
Ramakrishna confirm and support his submission that Respondent had no role to play in
the awarding of the LIX contract or the to Noticee No. 2. In view of the above, it is clear
that Respondent had no role whatsoever in the awarding of the LIX contract or the ZCYC
Contract by NSE to Noticee No.2 as falsely alleged or otherwise.

IISL was not into software development
17. Respondent submits that to the best of his knowledge and understanding, IISL is in the
business of creating, owning and managing indices; it does/did not have any software
development capability. This is confirmed in the reply filed by NSE, whose relevant
portion is extracted below: –
a. “…LIX was conceived as a real time measure of market liquidity. The
development of LIX and the writing of the LIX code required extensive
research and analysis of the market related historical data flowing from the
Noticee .In fact the development of index which measured liquidity was
unprecedented globally at that time and neither Noticee nor its subsidiary
IISL was equipped with in-house expertise to develop the proposed software
for computation of LIX at that stage. In fact the work order issued for the LIX
project states that “LIX is a new frontier. As with Nifty, special efforts will
need to be put in to communicate this work and its implication to the markets”
(pg.10 para 31).

18. It is clear from the above, and contrary to the assertions against Respondent, IISL, which
is a subsidiary company of NSE, lacked the capacity to offer software development
services. Therefore, the LIX contract was awarded by NSE to Noticee No.2 after
considering all the relevant aspects and its own capabilities as well as that of its
subsidiary IISL. The attempt to second guess the decision of the NSE after several years
and based on pseudonymous and malafide complaints, without appreciating the
capabilities of IISL amounts to a witch hunt against Respondent; the same is illegal and
unsustainable.
Marital Relationship of Respondent with Noticee No.3
19. SEBI also alleges that there was a conflict of interest in NSE awarding the LIX contract
to the Second Noticee because the Third Noticee, who was once one of the Directors of
the Second Noticee, is the spouse of Respondent who was at that time, the Assistant Vice
President Trading Operation of NSE. In this regard Respondent repeats, reiterates and
submits that he had no role to play in the award of development of new indices such as
LIX or in awarding contracts for the same.
20. Furthermore, Respondent avers was not a member of the committee that decided to award
the LIX contract to Noticee No.2.
21. It is further submitted that in the case of awarding of a contract to Noticee No 2 for
ZCYC as referred to same para 7 of the show cause, Respondent had no role whatsoever
in the awarding of the project to Noticee No 2. In this regard Respondent places a strong
reliance on the response of NSE Ltd in its reply wherein in para 39 on page 12 NSEIL
has stated
a. “The procedure by way of appropriate approvals as mentioned above was
also followed while entering into other contracts such as the contract with
Infotech for the development of Zero Coupon Yield Curve (ZCYZ) software
in 2003.

22. It’s further submitted that the Commitment and Advance payment approval note dated
April 08, 2003 which is annexed to NSE’s reply clearly shows prior concurrence of UIC
meeting February 25, 2003 and PEC Meeting dated April 8, 2003. Further, the note has
been signed by Mr. Nayan Mehta, Yatrik Vin and G. M Shenoy with whom Respondent
had never had no reporting relationship.
23. It would suffice noting that at the time when ZCYC was awarded to Noticee No 2 i.e. on
April 8, 2003, Respondent was not married to Noticee No.3 the director of Noticee No.2.
Respondent married Noticee No 3 on December 9, 2003. Even as per Annexure 8 to the
said Notice, the first purchase order under the ZCYC Contract was issued to Noticee No

2 on May 12, 2003 i.e. prior to Respondent’s marriage to Noticee No.2. Further the
purchase order was signed by one Mr. Uday Nadkarni with whom Respondent never ever
directly or indirectly has a reporting relationship.
24. In view of the above averments, the entire edifice for holding Respondent responsible for
having a conflict of interest is rendered unsubstantiated since Respondent had no role in
the decision to award the contract and the contract was awarded by an independent
committee and his mere employment or marital relationship with the director of the
Noticee cannot be a ground for alleging a conflict of interest.
25. Finally to have any conflicts of interest or any appearance of favoritism, Respondent
should do work directly for, supervise or make employment decisions about the family
member, in this case, his wife. This includes positions or assignments within the same
department or the employment of such individuals in positions that have a financial or
other dependence or influence. Hence it can be conclusively concluded that there is no
conflict of interest or any appearance of favoritism for either of the projects viz ZCYC &
LIX as per definition.
26. It is evident from the above that the present proceedings are based on an incomplete
investigation that has missed important and crucial facts and the allegations in the said
Notice amount to nothing more that conjectures and surmises. The present proceedings
ought to be terminated qua Respondent on this ground alone.
(b) There is no prima facie case against Respondent that he shared potential confidential
information originating from NSE.
27. Respondent would like to invite the Adjudicator’s attention to the order passed on August
30, 2016 by Hon’ble SAT in Appeal No. 144 of 2014 wherein inter-alia it was observed
that "The charge relating to violation of PFUTP Regulations is a serious charge and
hence a higher degree of proof is required to sustain it.
28. It is alleged that potential confidential information originating from NSE was shared by
Respondent to his wife through the following 4 emails:
a. Email dated November 5, 2009, sent by Ms. Sunita Thomas to Suprabhat Lala
(“Email 1”)
b. Email dated December 3, 2012 sent by Suprabhat Lala to Ms Sunita Thomas
(“Email 2”)
c. Email dated January 30, 2013 sent by Suprabhat Lala to Ms Sunita Thomas
(“Email 3”)
d. Email dated December 04, 2014 sent by Suprabhat Lala to Ms Sunita Thomas
(“Email 4”)

29. Respondent submits as under: –
Email 1 dated November 5, 2009, sent by Ms. Sunita Thomas to Suprabhat Lala:
30. The body of the aforesaid email contained the draft text of the response that Respondent
intended to send to Mr. Ravi Apte, [Chief technology Officer], in reply to his email dated
November 4, 2009. Respondent had prepared the said draft text on his computer at home
and had forgotten to prepare an email based on the same. At Respondent’s request, his
wife, Noticee No.3 copied the same into the aforesaid email and sent the same to him.
31. The subject line of the email contained the word “check” so that Respondent would
verify whether the text copied and sent by Noticee No.3 was in fact, the text that
Respondent had prepared to indicate to with the intention to if that is the content which
my client wanted her to forward.
32. The email was required to be sent the same day since Mr. R Sundaraman had already
responded to Mr. Ravi Apte the previous day itself. The context of this email clearly

brings out the contextual setting under which this email came to be sent by Respondent’s
wife to him.
33. It is to be noticed that the attachment PreOpen-1104.xls which was part of the original
email sent by Ravi Apte annexed as Email No 1 of Annexure VI (b) was not shared as
can be seen by the copy of impugned email attached with the show cause. It is further
submitted that is content of this email was drawn by my client himself being a subject
expert and from publicly available resources namely the internet and Respondent has
drafted his views in the matter. The show cause in para 7(a) also agrees with my clients
view by stating “…containing a narrative on Suprabhat Lala’s views on the Pre-Open
session …” Hence we reiterate as supported by the records submitted by SEBI itself that
Respondent has not disclosed anything confidential through this email.
34. Further ‘Sirji’ was a common usage by Respondent while refereeing to seniors apart from
ones called by name. For example Mr. Nanda Kumar reporting manager of Respondent
used to refer to Respondent as lalaji”. It is further submitted that Respondent has
referred to several of his colleagues as “Sirji” in his email correspondence. In this instant
case it is referred to Ravi Apte.
35. As is evident from the content of the email and the aforesaid circumstance in which the
email was sent nearly 10 years ago, no confidential information relating to NSE; in any
event, the said Notice does not show how and in what manner the contents of the
aforesaid email were confidential information, the sharing of which would prejudice and
harm the securities market and/or the interest of NSE.
36. Furthermore, the email originated from Respondent No.3 and not from Respondent;
therefore, the allegation that Respondent shared confidential information with his wife
through Email 1 is baseless, erroneous, false and unsustainable.
Email 2 dated December 3, 2012 sent by Suprabhat Lala to Ms. Sunita Thomas:
37. Respondent repeats, reiterates and submits that the said email was only intended to obtain
his wife’s suggestions regarding the language of a reply that he intended to send to the
email from Mr. R Nandakumar (which is quoted below the said email).
38. Respondent submits that at the relevant time, he reported to Mr. R Nandakumar;
however, his relationship with Mr. Nandakumar was strained. In the morning of
December 3, 2012, at 8.51 AM Mr. Nanda Kumar sent an email to all Departments
seeking feedback on a document. Respondent forwarded the document to his reportees
with his comments in red vide his email at 9.32 AM and requested their feedback and
views. After receiving the replies of his reportees, Respondent forwarded the feedback on
the document to Mr. R Nanda Kumar at 10.22 AM. Within few minutes, Mr. R Nanda
Kumar responded vide email quoted below the said email saying “lalaji I am not sure if
you have read the document entirely”. This return email was not marked to other
reportees but was marked only to my client.
39. Given the strained relationship with Mr. Nandakumar, Respondent did not want to
escalate this into a confrontation and therefore, sought his wife’s suggestions on the
language to be used in his reply by email under consideration. In her reply , Respondent’s
wife changed the subject to “ Perhaps Simplistic” and modified the text Respondent
repeats, reiterates and submits that the attachment to the earlier email of Mr. Nandakumar
got forwarded to his wife inadvertently and as part of the trailing email chain.
40. Assuming though not admitting even if the documents were to be considered as being
confidential, Respondents conduct is not indicative of any intention to share confidential
information. The document was received by Respondent at 8.51 and if Respondent had
any mala fide intention to disclose this document, he need not have waited till 10:58 AM
i.e. almost 2 hours to share the document and he could have done it much before that. On

the contrary the conduct of client was totally focused on officially dealing with the
document in his official duties on urgent basis and there never any intention to share it
with his wife at all.
41. Respondent submits that the document refers to the action points of a Technical Advisory
Committee meeting and referred to the status of the discussions in a vague manner
without anything specific being stated in great detail. The document by its very contents
did not contain anything confidential or which was of any relevance to the general public
or which would have been beneficial to either Noticee No 2 or to Respondent’s wife. To
any reader, the contents of the minutes would be of no relevance in forming any opinion
about the contents thereof. For example, it is stated that two exchanges had telephonic
discussions but does not state in details what was discussed. It is also pertinent to note
that the document was still a draft one and not the final version.
42. In view of the above, Respondent repeats, reiterates and denies that he shared any
confidential information with his wife as falsely alleged or otherwise.
Email 3 dated January 30, 2013 sent by Suprabhat Lala to Ms Sunita Thomas.
43. Respondent repeats, reiterates and submits that the said email was only intended to obtain
his wife’s suggestions regarding the language of a reply that he intended to send to an
email from Mr. R Nandakumar, with whom, as stated supra, Respondent had a strained
relationship.
44. The email from Mr. Nandakumar dated January 30, 2013 related to removing some core
responsibilities from Respondent’s profile and in this regard, emails had been exchanged
between Respondent and Mr. Nandakumar, wherein he had indicated that he should be
included in such decision making. Mr. Nandakumar had insinuated in his email that
Respondent was resisting parting with some of his core responsibilities on account of
personal issues. Since this was not the case, but considering the strained relationship that
Respondent had with Mr. Nandakumar and considering that he reported to Mr.
Nandakumar, Respondent wanted to temper his language to avoid an escalation and
therefore, sought his wife’s assistance regarding language and syntax by the said email
dated January 30, 2013.
45. Respondent denies that Email No.3 contained any confidential information and in any
event, the said Notice does not show how and in what manner the contents of the
aforesaid email were confidential information, the sharing of which would prejudice and
harm the securities market and/or the interest of NSE.
46. Respondent submits that the contents of the email were not at all confidential and nothing
contained in the email secured any advantage to either Noticee No 2 or to Noticee No.3,
his wife in the course of their business and no advantage is shown to have accrued to
Noticees 2 or 3. It’s to be noticed that other emails in the chain mails (Email No 8, 10,13
&14) had information which is not shared.
47. In view of the above, Respondent repeats, reiterates and denies that he shared any
confidential information with his wife as falsely alleged or otherwise.
Email 4 dated December 04, 2014 sent by Suprabhat Lala to Ms. Sunita Thomas
48. Respondent repeats, reiterates and submits that the said email was only intended to obtain
his wife’s suggestions regarding the language of an email that he intended to send to Ms.
Chitra Ramakrishna, the CEO of NSE.
49. Respondent denies that Email No.4 contained any confidential information and in any
event, the said Notice does not show how and in what manner the contents of the

aforesaid email were confidential information, the sharing of which would prejudice and
harm the securities market and/or the interest of NSE.
50. Respondent further submits that the final email was sent on December 8, 2014 by Mr.
Huzefa and the contents of this email were not shared by Respondent with Noticee No.3.
Respondent will seek leave to refer and rely upon the chain of emails on this subject of
email number 4 at the time of hearing.
51. We submit that there was no confidential data which was contained in the email/trailing
emails forwarded by Respondent to his wife. The data which is contained in the trail
emails contained inter alia marketing data, distance between different locations etc.
Respondent submits that the contents of the email were not at all confidential and nothing
contained in the email secured any advantage to either Noticee No 2 or to Noticee No.3,
his wife in the course of their business and no advantage is shown to have accrued to
Noticees 2 or 3.
52. In view of the above, Respondent repeats, reiterates and denies that he shared any
confidential information with his wife as falsely alleged or otherwise.
Data was not confidential /sensitive as per NSE’s policy

53. Respondent also submits that NSE has a Data Leakage Prevention Policy (“DLPP”)
(Annexure H) and a Data leakage Prevention Tool (“DLPT”) in place to prevent/monitor
sensitive data flowing outside the organization through various means such as end point
(USB), web and email. Alerts are generated if confidential/secret information is mailed or
printed or copied on USB. It is pertinent to note that there has never been an instance in
Respondent’s history of employment where any email sent by him generated an alert for
leakage of secret or confidential or internal information.
54. Respondent further avers that a cumulative reading of all the four emails would indicate
the following:
(a) Each of these emails forms a part of a thread or series of emails exchanged on a
single subject as may be observed from the list of trail emails. The trail emails to
each of these Emails contained more sensitive information and these have not
been shared by Respondent to anyone. Each of the emails when considered in
isolation does not reflect the correct picture about the conduct of Respondent and
the conduct of Respondent ought to be considered in the backdrop of all the
emails trails. For the sake of convenience, the facts of the emails are summarized
and provided for convenience.

Details 3 rd
Feb
2012
30 th
Jan
2013
4 th
Dec
2014
5
Nov
2009

Number of emails preceding and
trailing the impugned email

7 1 6 2

Number of preceding/trailing emails (to
the impugned ones) shared by
Respondent with Ms. Sunita Thomas

0 0 0 0

Number of emails sent to Sunita
Thomas which were not created by the
Respondent

0 0 0 0

Number of alerts generated by the
NSE’s Data Leakage Prevention Policy
in respect of the emails written to Sunita
Thomas

0 0 0 0

Number of emails written by
Respondent to Ms. Sunita which had
Information useful to her or to Infotech

0 0 0 0

(b) In addition to the submission that that the contents of the emails sent by him to
Noticee No.3 were not confidential and nothing contained in the email secured
any advantage to either Noticee No 2 or to Noticee No.3, Respondent submits that
being his spouse, Noticee No.3 ought to be expected to have some degree of
knowledge regarding his professional actions especially when these involved
emotional matters such as a strained relation with his superiors. Respondent
submits that it is not SEBI’s case that he shares confidential information with a
third party or that his wife, Noticee No.3 used the information to her advantage.
(c) Respondent repeats, reiterates and submits that he never shared any confidential
information and his sharing was limited to getting the views of his wife regarding
the language, syntax and readability of the drafts.
(a) Respondent further submits that the four emails which were relied upon in the
show cause are dated November 5, 2009, December 3, 2012, January 30, 2013
and December 4, 2014 i.e. the emails are interspersed with huge gap of time in
between each of them. All the emails sent or received by Respondent during the
examination period of 2009 to 2016 i.e. 7 years were considered out of which
only 4 emails which were sent to his wife have been identified as having potential
confidential information Respondent submits that the sharing of 1 email in a year
by itself cannot be considered as sharing of confidential information to satisfy the
essential elements for being a fraudulent device /scheme /artifice as erroneously
alleged in the said Notice.
(b) The elements of fraud under FUTP Regulations are not satisfied by the contents
of the four emails since none of the emails had confidential information which
could be considered as resulting in lapse in confidentiality and compromise of the
integrity of the securities market. Furthermore, the exchange of these emails could
not have posed as establishing the elements essential for employment of a
device/scheme/artifice and defrauding NSE by sharing confidential information of
the exchange in a fraudulent manner. A combined reading of the four emails
interspersed with gap of many months cannot establish or indicate the presence of
a desire to defraud NSE.
(c) Respondent did not collude with any of the alleged Noticees.
55. The Hon’ble Securities Appellate Tribunal (SAT) in Ketan Parekh Vs. Securities &
Exchange Board of India (Appeal No. 2 of 2004) held that in order to find out whether a
transaction has been executed with the intention to manipulate the market or defeat its

mechanism will depend upon the intention of the parties which could be inferred
from the attending circumstances because direct evidence in such cases may not be
available.
56. Further, the decision of the Supreme Court in Union of India vs. Chaturbhai M. Patel
(AIR 1976 SC 712) holds that fraud, even in civil proceedings, must be established
beyond reasonable doubt. Further, the Securities Appellate Tribunal in Parsoli
Corporation vs. SEBI (Appeal No 146/2011 order dated 12th August 2011) observed that
a serious charge like fraud has to be established on preponderance of probabilities and
since this charge is serious, higher has to be the degree of probability to establish the
same. The SAT also held in Sterlite Industries vs. SEBI (Appeal No. 20/2001 dated 22nd
October 2001) that in the absence of reasonably strong evidence, even in a civil
proceeding, a person cannot be held guilty and awarded punishment.
57. In the instant action, Respondent denies that there was any collusion between him and
Noticee 1, 3 and 4 as falsely alleged or otherwise. The said allegation of collusion is
based on the contents of an email invitation dated April 27, 2014 sent by Noticee 1 to
Respondent and Noticee 3 and 4 inviting them for a meeting at Gokuldham CCD at 10.30
pm.
58. Respondent repeats, reiterates and submits that he did not accept the invitation to attend
the meeting nor did he attend any such meeting. In fact, the said meeting at Gokuldham
CCD did not take place. The said email dated April 27 2014 is annexed to the show cause
as Annexure A-13. The second email set out in the said Annexure clearly states that the
invitation was updated as follows:
– The venue was changed from Gokuldham CCD to Nine to Nine, Near
Film City Road and confirmed that the meeting venue is not at Gokuldham
CCD
– The time of meeting was changed from 10.30 pm to 9 pm.
– The invitation was sent to 10 people (as against 3 persons invited through
Dr. Ajay Shah’s email.

59. Thus, the meeting in respect of which the email invite was sent by Noticee No. 1 was
cancelled and instead Dr. Susan Thomas invited 10 persons including Respondent for a
meeting to be held at 9 pm at a different venue.
60. Since the meeting in respect of which the email invite was sent by Noticee No.1 did not
happen, the basis for the allegation that Noticees 1 ,3 & 4 and Respondent colluded with
each other did not exist. Furthermore, it is not SEBI’s case that all the 10 persons invited
for the meeting colluded with the Noticees. Clearly, the said allegation is without any
basis and erroneous.
61. Respondent further submits that the subject of the email invitation of April 27 2014 is
HFT- discussion and the content of the email clearly states “…the objective is to look at
the first results of describing what is happening in NSE HFT and make plans where to go
next”. Admittedly, there was nothing confidential about High Frequency Trading
(“HFT”) at NSE and there was no prohibition on Respondent from participating in
discussions relating to the same.
62. Furthermore,. as apparent from the statement made by Noticee No 1 in response to
Question No 7 in Annexure 6 of the said Notice, the discussion was to be about a
research paper being done by some students of the Indira Gandhi Institute of
Development Research (“IGIDR”),. To the best of Respondent’s knowledge, the
research paper is available in the public domain.
63. Respondent submits that the invitation for the HFT discussion was an invitation to
discuss the research paper being worked upon by the research students and not an

instance or evidence of collusion between the Noticees. In any event, Respondent repeats,
reiterates and submits that he did not accept the invitation or participate in the said
meeting.
64. Respondent submits that the said Notice merely enumerates and reproduces certain
provisions of the Securities and Exchange Board of India (Prohibition of Fraudulent and
Unfair Trade Practices relating to the Securities Market) Regulations, 2003 (“the FUTP
Regulations”) without demonstrating how he has violated those particular provisions.
Respondent denies that the actions attributed to him in the said Notice constitute fraud as
defined in Regulation 2 (1) (c) of the FUTP Regulations or that they violated the
prohibitions in Regulations 3 and 4 of the FUTP Regulations; in this regard, Respondent
submits as under: –
(a) It is pertinent to note that the actions attributed to Respondent are not in respect of
dealing in securities; therefore, they do not meet the fundamental requirement of
Regulation 2 (1) (c).
(b) The said Notice does not set out how and in what manner the award of LIX
contract to Noticee No.2 amounted to a fraud on the part of Respondent. The said
Notice has failed to establish that Respondent was in a position to influence or
even that he was concerned with the awarding of the LIX contract and therefore,
the said Notice has failed to show the conflict interest which prohibited NSE from
awarding the LIX contract to Noticee No. 2. Without prejudice to the above
submission and without admitting to the said allegation, Respondent submits that
even if there was a conflict of interest, the same cannot be considered as an
instance of fraud.
(c) SEBI has failed to show that the 4 emails relied upon by them to allege that
Respondent passed on confidential information relating to NSE to Noticee No.3
did in fact contain information classified and considered as confidential by NSE
and more importantly failed to show that the emails related to dealing in or issue
or purchase or sale of a security listed on a stock exchange. Furthermore,
admittedly, the said 4 emails did not violate the Data Leakage Prevention Policy
of NSE, thereby indicating that there was no leakage/transmission of confidential
information by Respondent.
(d) In respect of the purported email invite to a meeting regarding HFT by a
renowned subject expert, SEBI has failed to show that such a meeting was illegal
or fraudulent; therefore, the said Notice has erred in alleging that by receiving
(and not accepting) an email invite for such a meeting, Respondent had colluded
with other Noticees or that Respondent has indulged in a fraudulent activity.
(d) Respondent did not violate any law and/or regulation
65. The Notice of Claim cites several laws and/or regulations that our client allegedly
violated. These regulations include:
a. Section 12 A (b) and (c) of the SEBI Act.
The said Section states in pertinent part thus:
12A. No person shall directly or indirectly­
(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 recognised
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;
b. Section 3(2) of SCRA

The said Section states in pertinent part thus:
(2) Every application under sub-section (1) shall contain such particulars as may
be prescribed, and shall be accompanied by a copy of the bye­ laws of the stock
exchange for the regulation and control of contracts and a/so a copy of the rules
relating in general to the constitution of the stock exchange and in particular, to-
(b) the powers and duties of the office bearers of the stock exchange;
c. Section 3(c) and (d) of PFUTP Regulations
The said Section states in pertinent part thus:
3. Prohibition of certain dealings in securities
No person shall directly or indirectly-
(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 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;
4. Prohibition of manipulative, fraudulent and unfair trade practice
This provision states in pertinent part thus: (1) Without prejudice to the provisions
of regulation , no person shall indulge in a fraudulent or an unfair trade practice in
securities.
d. SEBI Act
Penalty for fraudulent and unfair trade practices 15HA. If any person indulges in
fraudulent and unfair trade practices relating to securities, he shall be liable to a
penalty twenty-five crore rupees or three times the amount of profits made out of
such failure, whichever is higher.
Penalty for contravention where no separate penalty has been provided.Securities
Contracts (Regulation) Act, 1956
Penalty for contravention where no separate penalty has been provided.
23H. Whoever fails to comply with any provision of this Act, the rules or articles
or bye-laws or the regulations of the recognized stock exchange or directions
issued by the Securities and Exchange Board of India for which no separate
penalty has been provided, shall be liable to a penalty which may extend to one
crore rupees.

66. Respondent maintains that Respondent did not violate any of the aforementioned
regulations. There is also no evidence showing that our client gained in any way from the
allegations. We refer to the provisions of Section 15J of the SEBI Act and Rule 5 of the
Rules, which require that while adjudging the quantum of penalty, the adjudicating
officer shall have due regard to the following factors namely; a. the amount of
disproportionate gain or unfair advantage wherever quantifiable, made as a result of the
default; the amount of loss caused to an investor or group of investors as a result of the
default; and the repetitive nature of the default.
67. Accordingly, the Securities and Exchange Board has not quantified any gain or unfair
advantage accrued to our client as a result of the allegations charged against our client.
Further, there is no material available on record to assess the disproportionate gain or
unfair advantage and amount of loss caused to an investor or group of investors as a
result of the alleged violation.
68. Respondent refers to the Honorable Securities Appellate Tribunal, in the case of Samir
Arora Vs. SEBI(2005) 59 SCL 96 (SAT) , which held that where activities like

insider trading and fraudulent trade practices are concerned, "charges must be proved
based on cogent materials and in accordance with law." (Emphasis added).
69. Further, the Honorable Securities Appellate Tribunal in its order dated 30.09.2003
(Appeal No. 9/2003) in the case of KSL & Industries Ltd Vs. SEBI held that "I do not
find any material on record in support of the said charge. A wild allegation of
market manipulation, in particular the charge of fraudulent action
unsupported with convincing evidence is not to be sustained…. Fraud cannot
survive on mere conjecture and surmises." (Emphasis added).
70. Respondent therefore submits that Respondent has been a law abiding citizen and a
regular and honest tax payer. Respondent further submits that he has always followed all
the procedures, as stipulated by any rules/ regulations/ instructions etc. Respondent has
also not been penalized by any regulatory authority and has got a clean track record
till date. Respondent furthers undertakes that in future he shall keep complying with all
Acts, rules, regulations etc., in letter and in spirit, and would not violate any of the
provision of any Act, rules, and regulations etc. of any regulatory authority
(e) This case should be placed in abeyance until the Respondent’s Appeal at the
SAT is heard

71. Respondent submits that SEBI issued a Show Cause Notice dated July 3, 2018 under
Sections 11 and 11B of the Securities and Exchange Board of India Act, 1992;
Respondent filed a reply to the same vide his letter dated February 11, 2019, appeared
before a Whole Time Member of SEBI on February 20, 2019 and thereafter, filed written
submissions on April 3, 2019. Thereafter, the Whole Time Member of SEBI passed an
order in the matter on April 30, 2019. Aggrieved by the said order, Respondent preferred
an appeal before the Securities Appellate Tribunal (“The SAT”) on May 6, 2019 being
Appeal No. 232 of 2019. The SAT was pleased to admit the said appeal and to grant a
stay on operation of the said order dated April 30, 2019 passed by the Whole Time
Member of SEBI vide its order dated May 7, 2019. The aforesaid appeal is now posted
for hearing on February 25, 2020. Respondent further submits that the allegations and
charges made in the Show Cause Notice dated July 3, 2018 and the findings in the Order
dated April 30, 2019 are substantially the same as in the said Notice and therefore, the
decision of the SAT in respect of the Order dated April 30, 2019 will be relevant in
respect of and will substantially affect the outcome of the present proceedings. Therefore,
in order to avoid multiple legal proceedings and the consequent costs to him and to SEBI,
Respondent once again requests that pendente lite the present proceedings may be kept in
abeyance awaiting the decision of the SAT in respect of the order dated April 30, 2019.
72. In view of the above submissions, Respondent once again prays that he may be
discharged from the said Notice and from the present proceedings and an order may be
passed accordingly.

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