WTM/RKA/IVD/NRO/146 - 147/2015

BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA

ORDER
UNDER SECTION 11(1), 11(4) (b) AND 11B OF THE SEBI ACT IN THE MATTER
OF EONOUR TECHNOLOGIES LIMITED
In respect of:
Sr. No.
1.

Name of the Noticee

Mr. Karthik Ramakrishnan

2.

Mr. Sajjankumar H. Nanwal

3.
4.
5.
6.

Mr. Vishwanath H. Verma

Ms. Sunita S. Nanwal
Mr. Amritlal N. Prajapati
Mr. Shalvi Rashmin Vakta

7.

Mr. Murarilal Bholuram Prajapati

8.

Mr. Govind Kumar Varma

9.
10.

Sanghvi Fincap Limited

Dwarkesh Restaurants Private Limited

Order Number
146/2015
147/2015

______________________________________________________________________________
1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") conducted
investigation in the dealings in the scrips of Eonour Technologies Limited (hereinafter referred
to as 'Eonour / the company' during the period April 01, 2003 to January 31, 2004 (investigation
period). The investigation inter alia revealed that
a) The promoters of the company had sold substantial stake in the company during the
financial year 2003-04. During this period their shareholding had decreased from 41.36%
(3,36,89,410 shares) to mere 2.60% (21,16,510 shares). During the same period public
shareholding in the company had increased from 56.70% (4,61,80,295 shares) to 91.76%
(7,47,40,180 shares). Thus, the promoters of the company had sold almost their entire stake
in the company to public. During the relevant period, Mr. Karthik Ramakrishnan was one of
the promoters and also the Managing Director of the company.
b) Several corporate announcements were made by Eonour during the investigation period.
While the company had made these corporate announcements the promoters had offloaded
their entire shareholding during the said period. If the promoters had interest in the
company for implementation of corporate announcements they would not have sold their
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substantial stake in the company. It was suspected that these announcements were made to
induce investing public to buy shares of the company.
c) The price of Eonour opened at 4.40 on April 01, 2003 and closed at 4.37 on January 30,
2004. During the investigation period, price of the scrip had reached its highest of 7.70 on
December 30, 2003. Though such price rise was not significant, substantial trading volume
of 10.06 crore shares took place during the investigation period. Trading in the scrip of the
company was suspended by BSE since December 2007 and the last traded price of the scrip
of the company was 1.59 on December 28, 2007 with a traded quantity of 1,12,247 shares.
d) The company had earned net profit of 21.24 crore during the financial year 2002-03 and it
had earned good amount of net profit from quarter to quarter. Despite the fact that the
company was in earning position during the financial year 2003-04, the promoters reduced
their stake from 41.36% to 2.60%.
e) It was observed that SEBI had earlier conducted investigation in the matter of Eonour for
the period June 2000 to December 2000 and vide order dated February 10, 2003 inter-alia,
restrained Mr. Karthik Ramakrishnan, promoter and Managing Director of the company
from dealing in securities in any manner for a period of 3 years. Mr. Karthik Ramakrishnan
obtained interim stay on operation of said order from Honble Madras High Court and
reduced his holding from 3.34 crore shares (41.36% of the paid up capital) in March 2003 to
21 lakh shares (2.54%) in March 2004. During the same period, public shareholding in the
company increased from 56.70% (4,61,80,295 shares) to 91.76% (7,47,40,180 shares). His
shareholding in the company reduced to 3,000 shares in December 2005.
f) Mr. Karthik Ramakrishnan had transferred total 2,17,47,900 shares (26.70% of total equity
capital) through off market to various entities. Details of the same are given as below:
Table 1 (Details of off- market transfer of shares by Mr. Karthik Ramakrishnan)
Name of the promoter
Transferee entities
Date of
Quantity
transfers
Karthik Ramakrishnan
Vishwanath H. Varma
20-05-2003
600,000
Karthik Ramakrishnan
Sunita S. Nanwal
20-05-2003
600,000
Karthik Ramakrishnan
Karthik Ramakrishnan

Amritlal N. Prajapati
Sajjankumar H. Nanwal

20-05-2003
20-05-2003

640,000
600,000

Karthik Ramakrishnan
Karthik Ramakrishnan

Thakkar Kaushik Dhirajlal

Babubhai Mohanbhai Rabari

09-06-2003
09-06-2003

660,000
650,400

Karthik Ramakrishnan

Shalvi Rashmin Vakta

09-06-2003

680,500

Karthik Ramakrishnan

Murarilal Bholuram Prajapati

09-06-2003

719,500

Karthik Ramakrishnan

S Natesan

09-06-2003

3,200,000

Karthik Ramakrishnan

P Alagar

09-06-2003

3,200,000

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Karthik Ramakrishnan

S Natesan

23-06-2003

300,000

Karthik Ramakrishnan
Karthik Ramakrishnan
Karthik Ramakrishnan

P Alagar
S Natesan
Kiran Parasrampuria

23-06-2003
23-06-2003
07-01-2004

730,000
430,000
3,750,000

Karthik Ramakrishnan
Karthik Ramakrishnan

Bimal Kumar Parasrampuria.

Sanghvi Fincap Limited

07-01-2004
10-06-2003

3,750,000
1,237,500

Total 21,747,900
g) During investigation, Mr. Karthik Ramakrishnan had claimed that he availed loan against
these shares from Mr. Nazir Hakim and deployed into Eonour for operational purposes.
The off-market transfer data obtained from NSDL did not support the claim of Mr. Karthik
Ramakrishnan that he had transferred the shares of the company to Mr. Nazir Hakim and
Mr. Karthik Ramakrishnan could not produce bank statement to substantiate his claim. He
also could not substantiate the claim of utilization of loan proceeds.
h) Demat account statement of Mr. Karthik Ramakrishnan revealed that during the
investigation period, the shares were transferred to transferees as sated above in Table 1.
i) Details of transactions executed by other 9 noticees to whom Mr. Karthik Ramakrishnan
had transferred shares as mentioned in Table - 1 revealed that those 9 noticees received and
gave shares in off market and some of them sold the shares of Eonour in the market. The
details of off market transfers executed by the said 9 noticees are described in the SCNs as
per following table:
Table: 2 (Details of off- market transfers of shares by other noticees)
Transferor

Transferee

R Karthik

Sanghvi Fincap Ltd

Execution
Date
10-06-2003

Quantity

S Natesan
Govindkumar H. Varma
Govindkumar H. Varma

Sanghvi Fincap Ltd

Sanghvi Fincap Ltd
Sanghvi Fincap Ltd

21-07-2003
30-07-2003
13-08-2003

500,000
300,000
198,200

T. Ganapathi Raja
S Natesan

Sanghvi Fincap Ltd

Sanghvi Fincap Ltd

21-08-2003
22-08-2003

250,000
1,000,000

Dwarkesh Restaurants Pvt

Ltd
Dwarkesh Restaurants Pvt
Ltd

Aishwarya Housing Finance Pvt.

Ltd.
Aishwarya Housing Finance Pvt.
Ltd.

20-08-2003

32,242

21-08-2003

65,000

Dwarkesh Restaurants Pvt

Ltd

Aishwarya Housing Finance Pvt.

Ltd.

26-08-2003

600,000

1,237,500

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Dwarkesh Restaurants Pvt

Ltd

Aishwarya Housing Finance Pvt.

Ltd.

30-08-2003

57,553

Dwarkesh Restaurants Pvt

Ltd

Aishwarya Housing Finance Pvt.

Ltd.

13-11-2003

148,450

Amritlal N. Prajapati
Sajjankumar H. Nanwal
K Balaraman

Govind Kumar Varma

Govindkumar H. Varma
Govindkumar H. Varma

28-05-2003
15-04-2003
30-04-2003

640,000
2,001
100,000

S Natesan
P Alagar

Govindkumar H. Varma
Govindkumar H. Varma

21-07-2003
02-09-2003

500,000
500,000

P Alagar

Govindkumar H. Varma

05-09-2003

410,000

j) Mr. Karthik Ramakrishnan had submitted during investigation that he sold his shares and
pumped money into the company as it was failing to meet the huge orders due to cash
shortage. According to him the sale of shares was not with intent to exit at the cost of
someone but was to solve the company's problem.
k) The corporate announcement made by the company and failure of Mr. Karthik
Ramakrishnan to produce any documentary evidence that whatever funds he raised either
through loan or by selling shares for revival of company indicate that he was interested in off
loading shares of the company to public. These facts further indicate that he induced
innocent investing public to buy shares of the company on the other hand he off loaded
shares held by him which caused loss to uninformed, innocent investors.
l) Mr. Sajjankumar H Nanwal acquired the shares of Eonour in off market from Mr. Karthik
Ramakrishnan and sold the same in the market. He had also facilitated the transactions of
Mr. Karthik Ramakrishnan with the help of other entities and aided and abetted Mr. Karthik
Ramakrishnan in offloading the shares of Eonour. The transactions arranged by Mr.
Sajjankumar H Nanwal alongwith other entities acted as a deceit upon the public.
2. Pursuant to above observations, SEBI issued two separate show cause notices (SCNs) both
dated October 14, 2011, one to Mr. Karthik Ramakrishnan and another to Mr. Sajjankumar H
Nanwal, Mr. Vishwanath H Varma, Ms. Sunita S Nanwal, Mr. Amritlal N Prajapati, Mr. Shalvi
Rashmin Vakta, Mr. Murarilal Bholuram Prajapati, Mr. Govind Kumar Varma, Sanghvi Fincap
Limited and M/s. Dwarkesh Restaurants Private Limited, calling upon them to show cause as to
why suitable directions under section 11 and 11B of the SEBI Act, 1992 read with regulation 11
of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market)
Regulations, 2003 (PFUTP Regulations) including a direction to restrain from accessing the
securities market and prohibition from buying, selling or dealing in securities for a particular

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period should not be passed against them. The particulars of the SCNs are described in the
following TableTable-3-Details of the SCNs
Sr.
Name
Alleged violations
No.
1

Mr. Karthik Ramakrishnan

Regulations 3 (a) (b) (c) (d) and 4 (1) (2) (e) (f)
and (r) of PFUTP Regulations, 2003.

2
3

Mr. Sajjankumar H Nanwal,

Mr. Vishwanath H Varma

Regulations 3 (a), (d) and 4 (1), (2) (e) of PFUTP

Regulations, 2003,

4
5

Ms. Sunita S Nanwal

Amritlal N Prajapati

Shalvi Rashmin Vakta

Mr.
Murarilal
Prajapati,

8
9
10

Mr. Govind Kumar Varma,

M/s. Sanghvi Fincap Limited
M/s. Dwarkesh Restaurants
Private Limited

Bholuram

3. Mr. Karthik Ramakrishnan vide its reply dated November 5, 2011 submitted the following:
a) There has been complete misunderstanding of the facts as the transactions associated with
Mr. Nazir Hakim and the transactions relating to the present investigation are completely
different. While the allegations relating to Mr. Nazir Hakim relate to the period around 2000
which was the subject matter of prior investigation by SEBI, present investigation is in
relation to the period around 2003-04. Obviously the off market transfer data from NSDL in
relation to the period between 2003-04 will not have any reference to any transfer of shares
to Mr. Nazir Hakim. The reference to Mr. Nazir Hakim confuses certain earlier transactions
that took place in the year 2000 with the allegation in SCN relating to dilution of
shareholding in 2003-04 are completely unrelated.
b) The averment that he could not substantiate the utilization of the loan proceeds also is
baseless as there is no question of any loan during the period of investigation. CBI had
concluded investigation in relation to price manipulation and deriving undue benefit from
sale of shares for the period 1999-2000 in which clean chit was given to him and onus was
fixed on Mr. Nazir Hakim.
c) There is no evidence to suggest that off-loading of shares by him caused any loss to the
investors. The said allegations are not supported by any evidence and there is no ground
made out with any fraudulent conduct.
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d) Though the company had a good order book position yet the company was facing cash-flow
constraints. Though the company reported profits for subsequent quarters, it was faced with
severe credit crunch as the companys bankers wanted more collateral to fund even against
government orders. In such situation all he ever could do was to sell substantial shares in the
company in off-market transactions only with the intention of infusing funds into the
company. That there has been a substantial trading volume during the period of investigation
by itself cannot lend inference to any wrong doing on his part.
e) As the time was running out to secure funds for the company and also he had incurred huge
personal losses, he was constrained to raise monies through the dilution of his shareholding.
The allegation that Mr. Nanwal facilitated his off-loading the shares of the company is totally
false and without any substance and in any event there is no wrong doing associated in his
sale of shares.
f) He infused monies into the company from the sale proceeds of his shareholding and the
same can be proved from the letter dated February 23, 2011 containing confirmations from
the company with respect to infusion of monies into the company through share application
money and through his personal bank statements. Even after resignation from the company
in the year 2008, he had brought in over 1 crore into the company to help solve the
companys financial woes and bank letters from SBI and source of funds from his mothers
company account statement and copies of Demand Draft are evidencing the same.
g) The company is under obligation to disclose information relating to its business deals and
orders and which the company has duly complied with and this cannot be held against it.
SEBI have not shown any evidence to prove that his act of off-loading of shares has resulted
in loss to public / investors. There is no case made out on the ground of fraudulent conduct
or fraud played by him as determined by regulation 3(a) in the entire SCN.
h) He denied the allegation that he had not produced any documentary evidence with respect to
funds raised by him by sale of shares to be used for the revival of the company. He had
provided copies of bank statements and proof of major portion of funds infused into the
company vide letter dated February 23, 2011. There is not a slightest hint at him having used
any manipulative or deceptive devise or contrivance in connection with his off-loading of
shares and there is also no allegation that the various corporate announcements made were
factually ineffective and evidence of the same had been submitted with BSE of the various
orders obtained by the company during the relevant period.
i) Allegations against him that he has violated regulations 3(a), (b), (c), (d) and 4(1), (2), (e), (f)
and (r) of PFUTP Regulation, 2003 are factually incorrect and without any substance. He has
made no illegal profits or aided or colluded with any person for the purpose of committing
any of the offences alleged against him. There is no allegation that he did not make the
necessary disclosures relating to the shares sold by him. In the absence of the same, he had
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sold his shares in accordance with the applicable regulations and therefore, he has not
committed the wrong alleged.
4. Mr. Sajjankumar H Nanwal, Mr. Vishwanath H Varma, Ms. Sunita S Nanwal, Amritlal N
Prajapati, Shalvi Rashmin Vakta, Mr. Murarilal Bholuram Prajapati, Mr. Govind Kumar Varma,
M/s. Sanghvi Fincap Limited and M/s. Dwarkesh Restaurants Private Limited did not file their
reply to the SCNs issued to them. Vide respective letters dated June 24, 2012 they submitted that
they do not wish to avail any opportunity of personal hearing in the matter as they do not have
any further submissions to make.
5. An opportunity of personal hearing was granted to Mr. Karthik Ramakrishnan on October 19,
2012, November 23, 2012, December 27, 2013, January 30, 2014, March 05, 2014, June 20, 2014,
November 17, 2014 and January 30, 2015. On January 30, 2015 Mr. T. Srinivasa Murthy,
Advocate appeared on behalf of Mr. Karthik Ramakrishnan and made oral and written
submissions. Vide letter dated February 25, 2015 Mr. Karthik Ramakrishnan made additional
written submissions in the matter. These replies/submissions of Mr. Karthik Ramakrishnan are
summarised hereunder:
a) He acquired shares in the company in 1999-2000 from its erstwhile promoters and from
2000 till April 2008, Mr. Karthik Ramakrishnan was the Managing Director of the company.
He had resigned as Managing Director of the company on April 16, 2008 and since then, he
had no dealing whatsoever with the company except to settle some of the liabilities of the
company on account of having furnished personal guarantees.
b) On March 26, 2010 the Hon'ble High Court of Madras passed a winding up order in respect
of the company. Pursuant thereto, the official liquidator attached to the High Court of
Madras took over the affairs of the company as well as custody of all the assets and records
of the company. Thus, records of the case relevant to the period under investigation are not
in the custody of Mr. Karthik Ramakrishnan but are with the company which itself is now in
liquidation and under the control of the official liquidator. With great difficulty Mr. Karthik
Ramakrishnan was able to obtain the bank statements and certain other documents, even
these documents brought on record have not been considered and the SCN has been issued
to him in a mechanical manner.
c) The sale of shares in off-market transactions during the period under investigation is
admitted. The list of buyers has been disclosed and there is no discrepancy found or alleged
in that regard.
d) During the investigation period in question, there was no transaction whatsoever with Mr.
Nazir Hakim in respect of Eonour. The reference to Mr. Mr. Nazir Hakim was made
inadvertently and has been clarified by Mr. Karthik Ramakrishnan as being entirely
unconnected with the proceedings in the present case. Undoubtedly, Mr. Karthik
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e)

f)

g)

h)

i)

j)
k)

Ramakrishnan had dealings with Mr. Nazir Hakim in the year 2000 in relation to the
company and this transaction was the subject matter of earlier investigations by SEBI and
CBI. While CBI gave clean chit to Mr. Karthik Ramakrishnan, SEBI passed an order on
February 10, 2003 restraining him from participating in the stock markets for a period of 3
years. By order dated 27/02/2003 and 06/09/2003 Hon'ble High Court of Madras stayed
the order passed by SEBI. During the pendency of the proceedings before the Hon'ble High
Court of Madras, while there was a stay operational, the impugned share sale transactions
took place. In view of the order passed by the Hon'ble High Court of Madras, no illegality or
mala fide motive can be imputed to him.
Since there has been no transaction with Mr. Nazir Hakim in relation to the company during
the period under investigation, clearly there will be no record on that behalf and therefore
for the SCN to proceed on the basis that off market transfer data obtained from NSDL does not
support noticees contention that he had transferred the shares of the company to Mr. Nazir Hakim and the
notice also could not produce bank statement to substantiate his claim is entirely perverse.
During the investigation period the company had obtained orders for software development
from several companies, and had been generating good revenues, there was a shortfall of
working capital. On account of the pendency of proceeding initiated by SEBI, there was
difficulty in obtaining adequate financing from banks and other investors / lenders. Mr.
Karthik Ramakrishnan also stood personal guarantee for working capital loans from Canara
Bank obtained in 2002-2003 and was therefore vitally interested in ensuring that the
company did not default on its obligations.
The particulars of the sale were duly intimated to the company and the company in turn
intimated the stock exchanges. The intimation of the sales to the stock exchanges is
undisputed.
Mr. Karthik Ramakrishnan and his family discharged several of these outstanding to the
banks and even as on date, Mr. Karthik Ramakrishnan and his mother are shown as
unsecured lenders to the company which is in liquidation.
Mr. Karthik Ramakrishnan has placed on record vide letter dated 25/01/2011 and
5/11/2011 details of bank account statements which demonstrate infusion of funds by Mr.
Karthik Ramakrishnan into the company. These have not been considered by the board at
all.
No material has come on record to show that announcements made by the company in the
period under investigation about obtaining contracts are factually incorrect.
He had provided copies of various orders received during the investigation period to
establish that the company was a going concern and required funds to execute the order and
the same was done by selling the shares in the market.

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l) He had also filed detailed bank statement. The funds were principally used to invest in
various companies owned by him. He had also filed consolidated statement along with the
mapping of funds to show that a substantial portion of funds were reinvested directly or
through M/s. Justice Holdings into company or its subsidiaries.
m) He had further engaged in discussion with bankers namely ICICI during his tenure as
director and State Bank of India even after his resignation from the Board of Directors of
the company on 16.04.2008 and discharged the liability towards such banks.
n) The present case is a delivery based trading and the delivery of shares has been admitted and
the actual transfer on interest in the share has been established. Therefore, there is no
artificiality involved and the trading took place for the reasons stated earlier. The funds have
been infused into the company and there is no evidence to show that inducements to buy
and sell shares.
o) In the present case there is no such false or misleading statements. Therefore, regulation 4 of
PFUTP Regulation has no application.
6. I have carefully considered the SCNs, submissions of the noticees and other material on record.
I note that the SCNs have been issued to the noticees on the basis of the same set of facts and
allegations. I, therefore, deem it appropriate to deal with the SCNs issued to Mr. Karthik
Ramakrishnan and other 9 noticees by way of this common order.
7. It is noted that the noticees have not disputed the facts about the corporate announcements
issued by Eonour, the off-market sale of shares by Mr. Karthik Ramakrishnan as mentioned in
Table 1 and subsequent off-market transfer of shares by other entities as mentioned in Table 2.
However, they have contested the charges and the basis thereof as leveled in the SCNs. I note
that there is no allegation that the corporate announcements mentioned in the SCNs were false,
misleading or were made by Eonour with intent to manipulate the price or volume in the scrip
during the relevant period. There is no material on record or allegation in the SCNs that the
corporate announcements were not implemented or they were made without intention to
perform. Though the SCNs suspect that the corporate announcements were made to induce the
investing public to buy the shares of the company, there is no material on record or allegation in
the SCNs that the corporate announcements were issued as a fraudulent device or artifice to
manipulate the price or volume of the scrip during the investigation period. There is no data or
material to suggest that the corporate announcements had induced buying and selling of the
scrip. The SCNs have recognised that the company was earning profits during the relevant
period and the price rise was not significant. The SCNs have not found fault with the increase in
trading volume and are silent as to how these corporate announcements had induced public
shareholders to buy shares of the company particularly when majority of transactions, relied
upon in the SCNs were off- market transfers.
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8. It is noted that the only basis of such suspicion in the SCNs is the sale of total 2,17,47,900
shares (26.70% of total equity capital) by Mr. Karthik Ramakrishnan, during the period when
corporate announcements were made, to transferees mentioned in Table 1 and subsequent offmarket transfers of shares by several entities mentioned in Table 2 and on-market transfers by
some of them. It has been alleged that Mr. Karthik Ramakrishnan, on one hand, induced the
innocent investing public to buy shares of the company, on other hand, he offloaded shares held
by him, which caused loss to uninformed innocent investors. With regard to other 9 noticees it
has been alleged that Mr. Sajjankumar H Nanwal acquired the shares of Eonour in off-market
from Mr. Karthik Ramakrishnan and sold the same in the market. He had also facilitated the
transactions of Mr. Karthik Ramakrishnan with the help of other noticees and thereby he along
with other noticees aided and abetted Mr. Karthik Ramakrishnan in offloading the shares of
Eonour. The transactions arranged by Mr. Sajjankumar H Nanwal alongwith other noticees
acted as a deceit upon the public. Such allegations have been made on the following basisa) Mr. Karthik Ramakrishnan had failed to substantiate his claim that he had transferred the
shares of the company to Mr. Nazir Hakim in respect of loan obtained by him.
b) On one side the company made several corporate announcements and on the other side
Mr. Karthik Ramakrishnan off- loaded majority of the shareholding. He had submitted that
he off -loaded his shareholding to infuse money in the company to solve its cash shortage
problem.
9. With regard to the first basis, it is noted from the material available on record that with regard to
the investigation for the period 1999-2000, CBI had investigated the loan availed by Mr. Karthik
Ramakrishnan from Mr. Nazir Hakim but had not charge-sheeted Mr. Karthik Ramakrishnan.
Further, in the earlier investigation in the matter of Eonour for the period June 2000 to
December 2000, SEBI had also taken note of the fact of loan availed by Mr. Karthik
Ramakrishnan from Mr. Nazir Hakim in the year 2000. The said transfer of shares of the
company by Mr. Karthik Ramakrishnan was in the year 2000 and subject matter of earlier
investigation. In view of the same, I find merit in submissions of Mr. Karthik Ramakrishnan that
reference to transfer of shares to Mr. Nazir Hakim during investigation in instant case was
inadvertent. Accordingly, those transfers that relate to different period and part of different
investigation cannot be made basis for the charge in respect of transfers that are subject matter
of investigation which is basis of the instant SCNs.
10. With regard to the second basis, it is noted that it relates to the crux of charges that Mr. Karthik
Ramakrishnan transferred his shares to other 9 noticees in off-market and those 9 noticees
offloaded such shares through off-market/ market transactions. It has been alleged in the SCNs
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that -"Mr. Vishwanath H. Verma, Ms. Sunita S. Nanwal, Mr. Amritlal N. Prajapati, Mr. Sajjankumar
H. Nanwal, Mr. Shalvi Rashmin Vakta, Mr. Murarilal Bholuram Prajapati, Mr. Govind Kumar Varna,
Sanghvi Fincap Limited and Dwarkesh Restaurants Private Limited received and gave shares in off-market and
some of them transacted and sold the shares of the company in the market." It is noted that this charge is
leveled predominantly on the basis of off- market transfers mentioned in Tables 1 and Table 2.
11. With regard to the allegation of the subsequent off-market transfer after receipt of the same
from Mr. Karthik Ramakrishnan, it is noted that the SCNs are vague as the basis of the said
charge is unsubstantiated and unclear in following respects:(a) Not all the subsequent transferors mentioned in Table-2 were recipients of shares from
Mr. Karthik Ramakrishnan as mentioned Table-1. For example, Mr. R. Karthik, Mr.
Govindkumar H. Varma, Mr. T. Ganpathi Raja, Dwarkesh Restaurant Pvt. Ltd. and Mr.
K. Balaraman who were mentioned in the list of subsequent off-market transferors in
Table - 2 were not recipient of shares from Mr. Karthik Ramakrishnan as described in
Table 1;
(b) Shri Vishwanath S Varma was one of the recipients of shares from Mr. Karthik
Ramakrishnan as mentioned in Table -1 but his name has not been mentioned in Table 2
amongst the subsequent off-market transferors;
(c) The basis of making Mr. Govindkumar H. Varma and Dwarkesh Restaurant Pvt. Ltd.
noticees is unclear, since they had not received shares from Mr. Karthik Ramakrishnan.
Further, no SCNs have been issued to Mr. R. Karthik , Mr. T. Ganpathi Raja and Mr.
K. Balaraman who were in same position as of Mr. Govindkumar H. Varma and
Dwarkesh Restaurant Pvt. Ltd.;
(d) Although Mr. S. Natesan and Mr. P Alagar who were the recipients of shares from Mr.
Karthik Ramakrishnan as mentioned in Table-1 and were also subsequent off-market
transferors as mentioned in Table-2, there are not noticees in the SCNs.
12. The SCNs further vaguely state that some of the transferees, who had received shares from Mr.
Karthik Ramakrishnan through off- market and some of them had sold shares in the market.
However, there is no data or information at all in the SCNs, as who all transferred shares in the
market to public and what quantity was so transferred. Thus, this allegation is not substantiated
in the SCNs on the basis of any off loading of shares in the market.
13. It is settled position that for holding a person guilty of having been indulged in fraudulent and
unfair trade practices as alleged in this case, the finding must be sustained by a higher degree of
proof than that required in any other civil default. There must be convincing preponderance of
probability to support the allegation of fraudulent and unfair trade practices. I am of the view
that the SCNs do not suggest fraudulent and unfair dealings by the noticees on the basis of
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In the matter of Eonour Technologies Limited
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preponderance of probability. In the facts and circumstances as observed hereinabove, I find

that the charges in the SCNs that Mr. Karthik Ramakrishnan off loaded his 2,17,47,900 shares
through the transferees in the Table -1 and induced public to buy shares of the company and
other 9 noticees aided and abetted him in off loading his shares are not substantiated. There is
no material record to indicate that the off-loading of shares by Mr. Karthik Ramakrishnan to
entities as mentioned in Table -1 has resulted in manipulation in the scrip. It is further noted that
the SCNs neither contain any material to suggest inducement of trading by public investors on
account of any fraudulent device of the noticees nor do they indicate any loss to any investor on
account of off-market transfers of shares by Mr. Karthik Ramakrishnan.
14. Admittedly, all the alleged transactions of Mr. Karthik Ramakrishnan were disclosed to the stock
exchanges. It is further noted that Mr. Karthik Ramakrishnan has submitted supporting
documents showing execution of work orders by the company with several other companies
during the investigation period. He has also filed copies of bank statements and consolidated
statement to substantiate that substantial portion of funds realised on account of sale of his
shareholdings in the company were reinvested directly or through M/s. Justice Holdings into the
company or its subsidiaries. The material available on record substantiates his claim that he sold
his shareholdings to utilise the sale proceeds in order to solve the company's fund shortage
problem and not to cause any loss to uninformed innocent investors as alleged in the SCNs.
15. Considering the above facts and circumstances of the case, I am of the view that there is no
need to pass any direction under section 11B of the SEBI Act, 1992 in respect of the Mr.
Karthik Ramakrishnan, Mr. Sajjankumar H. Nanwal, Mr. Vishwanath H. Verma, Ms. Sunita S.
Nanwal, Mr. Amritlal N Prajapati, Mr. Shalvi Rashmin Vakta, Mr. Murarilal Bholuram Prajapati,
Mr. Govind Kumar Varma, Sanghvi Fincap Limited and M/s. Dwarkesh Restaurant Private
Limited, as contemplated in the SCNs issued to them. The SCNs are accordingly disposed of.

Sd/DATE: November 09th , 2015

PLACE: MUMBAI

RAJEEV KUMAR AGARWAL

WHOLE TIME MEMBER
SECURITIES AND EXCHANGE BOARD OF INDIA

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