( 1 ) THE petitioners being aggrieved of order dated 27th April 2006 (Annexure a ) are before this Court.

( 2 ) IN Special Civil Application No. 10523 of 2006, petitioner no. 2 is a member of the Ahmedabad Stock Exchange and a Sub-broker of ASE Capital Markets Limited. Petitioner no. 2 is carrying on his activities as a proprietary firm. Petitioner no. 1 is the son of petitioner no. 2. Petitioner no. 3 is the daughter in law of petitioner no. 2. It is claimed in the petition that petitioners no. 1 and 3 are investing in the securities market and they are neither broker, sub-broker nor intermediary as defined under section 12 of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as "sebi Act ).

( 3 ) THE Securities and Exchange Board of India (hereinafter referred to as "sebi") passed an order on 27th April 2006. The order runs into 252 pages. Para 1 of the order sets out the background in which the order is required to be passed. Para 2 sets out the modus operandi and in para 2 itself, in para 2. 2, it is stated that,"it was found that almost all the dematerialised accounts that were in the names of factitious/ benami entities were held through the depository participant Karvy Stock Broking Ltd. (Karvy-DP ). Inspection of Karvy-DP by NSDL and CDSL has revealed that the DP has obtained letters from the concerned banks towards proof of identity (POI) and proof of address (POA) for the purpose of opening dematerialised accounts. In terms of SEBI circular ref: MRD/ Dop/ Dep/ Cir-29/ 2004 dated August 24, 2004, an identity card/ document issued by Scheduled Commercial Banks containing the applicant s photo/ address may be accepted as POI and POA. The circular further clarified that "the aforesaid documents are the minimum requirement for opening a BO Account. The Depository Participants (DPs) must verify the copy of the document with the original before accepting the same as valid. While opening a BO Account, the DPs are required to exercise due diligence while establishing the identity of the person to ensure the safety and integrity of the depository system. " Thus, it appears that first the bank accounts were opened in the names of fictitious/ benami entities and this facilitated the fictitious/ benami bank holders to open dematerialised accounts. "para 2. 4 of the order sets out the further modus operandi. It reads as under:"the findings of RBI also confirm the preliminary findings of SEBI that these thousands of name-lenders are fictitious. Even the key persons (master account-holders) who had executed the game plan were merely intermediaries acting on behalf of financiers. These key persons and their financiers are not investors but mere rank opportunists who seek to make a killing by disposing the IPO shares cornered by them on the date of listing. The banks have also played their part by opening bank accounts and providing loan to these fictitious entities with the objective of earning interest and other charges. "

( 4 ) THE order in para 4 defines various terms which are used in the order. Some of them are reproduced herein for ready perusal. (a) Financier -- is a person who either on his own or along with others provided the finance for IPO subscription and are the ultimate beneficiaries in the scheme of cornering retail allotment and forking out a big gain on sale immediately after listing. " (b) Master Account-holders/ Key Operators are the 24 entities identified in the sweep of this order who allowed their demat accounts for temporarily parking credits received from a multitude of afferent accounts before transfer to financiers. "" (c) afferent Accounts (benami/ fictitious accounts) would refer to countless demat accounts in benami and fictitious names, the credits from where found its confluence in the master accounts. "the petitioners in SCA No. 10523 of 2006 appear in a list of Master Account Holders contained in para 17. 4 of the order. Their names are at serial nos. 11, 12 and 31.

( 5 )

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