From:

Wishworth Financial Services

Shri Pankaj Khanchandani
Shri Dheeraj Kapoor
Address:
Wishworth Financial Services
Racecourse Road, Old Plasia,
Indore – 452001, MP.

Date: 28 August 2021

To,
Mr. Rishi Buria
Chief General Manager & Adjudicating Officer
Securities and Exchange Board of India
SEBI Bhavan, Western Regional Office
Panchvati 1st Lane, Gulbai Tekra Road,
Ahmedabad – 380006, Gujarat.

Respected Madam / Sir,

Sub: (i) Written Submissions based on the Show Cause

Notice and documents provided therein.

Ref: (i) Show Cause Notice dated 17.08.2021 issued in the

matter of Wishworth Financial Services.

(ii) Our preliminary submissions and objections dated

20.08.2021.

(iii) SEBI’s letter dated 24.08.2021.

1. This is in reference to the captioned Show Cause Notice dated
17.08.2021 (“SCN”) wherein inter-alia it has been alleged that we
have engaged in the activities of an ‘investment adviser’ as
defined under Regulation 2 (m) of the SEBI (Investment Adviser)
Regulations, 2013 (“IA Regulations, 2013”) without any
certificate of registration from SEBI and thereby violated Section
12 (1) of the SEBI Act read with Regulation 3 (1) of the IA
Regulations, 2013. In this regard, we would like to put on record
our submissions in the subsequent paragraphs for your kind
and sympathetic consideration as under.

2. At the outset, we would like to record our objections on

refusal to grant us inspection of documents:

(i) Pursuant to SCN dated 17.08.2021, we had by our letter

dated 20.08.2021, requested SEBI to grant us inspection of
documents as mentioned in our aforesaid letter.
Specifically, we requested SEBI to grant us access to the
Call Detail Record with Shri Naresh Maini
(“Complainant”), the documents relied upon by the
Complainant in the Complaint and SEBI in the SCN, the
rest of the archived pages of the website downloaded from
web.archive.org, apart from the content mentioned in
Annexure-B of the SCN and the rest of the documents in
SEBI’s possession.

(ii) However, SEBI vide letter dated 24.08.2021, has rejected

our request for inspection of documents.

(iii) In this regard, we humbly submit that SEBI as a statutory

authority is under an obligation to disclose all relevant
information relevant to the captioned matter to the other
party. Such a duty forms a crucial part of the rules of
natural justice and its violation may give rise to grave
injustice to the other party. This position has also been
substantiated by the Hon’ble Supreme Court and the
Hon’ble Tribunal in the following cases:

a. The Hon’ble Supreme Court in the matter of

Securities and Exchange Board of India v. Price
Waterhouse (Civil Appeal No. 6003-6004/12) vide
Order dated 10.01.2017 has held that a party before
SEBI is entitled to get all the material available with
SEBI. The Court categorically noted that SEBI, being
a statutory authority, cannot withhold information
based on which it has prepared the Notice or
otherwise. The directions rendered by the Hon’ble
Supreme Court is as follows:

(Ref: Para – 2 on page No. 1 of order dated

10.01.2017)

"We direct, that all statements recorded during the

course of investigation shall be provided to the
respondents. We further direct, that all
documents collected during investigation shall
be permitted to be inspected by the respondents.
The authors of such statements (recorded during
investigation), which are to be relied upon (against
the respondents), shall be offered for cross-
examination to the respondents. Only thereupon, it
will be permissible to rely upon the same. (emphasis
supplied)"
 b. Subsequently, the Hon’ble Tribunal reiterated the
observations made in the aforementioned case in the
matter of Shri B. Ramalinga Raju v. SEBI (Appeal
No. 286 of 2014) vide order dated 12.06.2017
wherein it observed:

(Ref: Para 13 on Page No. 35 of order dated

12.05.2017)

"There can be no dispute that while determining the

rights and obligations of the parties the quasi judicial
authority must adhere to the principles of natural
justice which inter alia, includes the obligation to
furnish requisite documents on the basis of
which charges are framed and permit cross-
examination of the persons whose statements
are relied upon and further provide reasonable
opportunity of personal hearing. (emphasis
supplied)"

c. Furthermore, the Hon’ble Tribunal has clarified in

the matter of Ms. Smitaben N. Shah v. SEBI
(Appeal No. 37 of 2010) vide Order dated
30.07.2010 that the obligation to furnish documents
is not limited to the documents relied upon in the
preparation of the SCN but also include all such
documents in its possession that are relevant to the
case in the interest of justice. The relevant extract is
as follows:

(Ref: Para 7 on page No. 8 of Order dated

30.07.2010)
 "… If the documents asked for are relevant and may
help the delinquent to prepare his/her defence they
have to be furnished and it is not correct to say that
only the documents relied upon in the show cause
notice alone are to be supplied to meet the ends of the
justice…"

(iv) In light of the aforesaid judgments of the Hon’ble Supreme

Court and the Hon’ble Tribunal, it can be concluded that
as per the rules of natural justice, when the actions taken
by the authority gravely compromise any individual’s right
and the adjudication of the reasonableness of such actions
is dependent on fact findings, the evidence collected to
establish the case must not be withheld from such
individual, so as to provide an opportunity to the individual
to disprove its veracity.

(v) Since the law laid down by the Hon’ble Supreme Court as
well as the Hon’ble Tribunal is binding on SEBI, we submit
that it is imperative on SEBI’s part to provide full
disclosure of the documents, materials, report, data, etc.
(“material”) available with them and allow full inspection
of such material.

(vi) As the material sought by us is vital and relevant to the

facts of the case and establishing the ingredients of the
offence, it is essential for us to peruse the sought material.
Therefore, it is critical to note that by denying access to the
aforementioned material, grave prejudice is caused to us as
we are incapacitated to submit an effective reply in the
captioned matter.
 (vii) As the access to the material sought by us has been denied
by SEBI, we have prepared the reply based on the limited
self-compiled documents from various sources.

(viii) Having said that, we reiterate our request for proper

inspection of the aforementioned material to prepare a
proper and complete reply on merit on the subject matter
of the caption proceedings and reserve our right to file an
addendum, subject to such request being granted by SEBI
or favourable directions from the Adjudicating Authority.

3. At the outset and without prejudice to anything stated herein,

we categorically deny all the allegations and findings made
against us in the said notice, subject to the extent specifically
admitted by us. Furthermore, we submit that nothing contained
in the SCN may be deemed to be admitted by us by reason of
non-traverse or otherwise, save and expect what is expressly
admitted herein. Additionally, we deny all the allegations and
averments contained in the SCN that are contrary to and/or
inconsistent with what is stated herein below.

4. Inordinate delay in the Issuance of the SCN

SEBI received the complaint from the Complainant on 24

October 2017. However, the SCN was only issued on 1 August
2021, after a gap of more than 3 (three) years from the date of
complaint. The investigation details shared by the SEBI is
limited to the information shared by the Complainant,
examination of bank accounts and archived pages of the website,
none of which provide justifiable grounds for the delay in
initiating the present proceedings. Given the inexplicable delay of
more than 3 (three) years, we submit that the SCN should be
disposed of at the threshold itself. To this extent, we would like
to draw your kind attention to the following Orders passed by
this Hon’ble Tribunal:

(i) The Hon’ble Supreme Court in Government of India v.

Citedal Fine Pharmaceuticals, Madras and Others (AIR
1989 SC 1771) has held that in the absence of any period
of limitation, the relevant authority is required to exercise
its powers within a reasonable period. This has been
upheld by the Hon’ble Supreme Court in a plethora of
cases such as Bhavnagar University v. Palitana Sugar
Mill [(2004) 12 SCC 670], State of Punjab vs. Bhatinda
District Coop. Milk P. Union Ltd [(2007) 11 SCC 363]
and Joint Collector Ranga Reddy Dist. & Anr. vs. D.
Narsing Rao & Ors. [(2015) 3 SCC 695] and most
recently affirmed in Adjudicating Officer, SEBI v.
Bhavesh Pabari [(2019) SCC OnLine SC 294] wherein it
observed:
“36. … There are judgments which hold that when the
period of limitation is not prescribed, such power
must be exercised within a reasonable time. What
would be reasonable time, would depend upon the facts and
circumstances of the case, nature of the default/statute,
prejudice caused, whether the third-party rights had been
created etc. (emphasis supplied)”
(ii) The aforementioned judgments were cited in support of the
proposition by the Hon’ble Tribunal in the matter of Mr.
Rakesh Kathotia v. SEBI (Appeal No. 07 of 2016) vide
order dated 27.05.2019 wherein the court quashed
proceedings on the grounds of inordinate delay.
(iii) Similarly, this Tribunal in the matter of Ashok Shivlal
Rupani & Another v. SEBI (Appeal No. 417 of 2018)
wherein the court noted the inordinate delay on the part of
the authority in initiating proceedings and quashed
proceedings on this basis without delving into the merits of
the case. The relevant extracts are as follows:
(Ref: Para 6 and 9 on page No. 4-7 of Order dated 22
August 2019)

“6. Having considering the matter, we are of the view

that there has been an inordinate delay on the part of
the respondent in initiating proceedings against the
appellants for alleged violations. Much water has flown
since the alleged violations and at this belated stage the
appellants cannot be penalized…

9. As a result, without going into the merits of the

case, we are of the opinion that on account of
inordinate delay the initiation of proceedings by
issuance of the show cause notice which
culminated into a penalty order cannot be
sustained. The show cause notice and the impugned
orders passed by the AO are quashed. Both the appeals
are allowed. (emphasis supplied)"

(iv) The rationale behind this approach was substantiated by

the Hon’ble Tribunal in the matter of H B Stockholdings
(SAT Appeal No. 114 of 2012) wherein it observed:
(Ref: Para 20 on page No. 15-16 of Order dated 27 August
2013)
“20. … we find it pertinent to note that the human
memory has a short shelf life. Allowing matters to go
 on and on for years together by the Respondent serves
no purpose, rather it risks loss of evidence such as
important documents which may get destroyed
while the issue gathers dust. Such systematic failures
occur to the disadvantage of all parties concerned and
lead to consequences such as genuine violators being
allowed to function the capital market for years
together, whereas in some situations the reputation
of innocent entities gets tarnished as they wait
for the wheels of justice to turn a bit faster than
the pace at which they seem to be going. (emphasis
supplied)”
(v) Furthermore, the Hon’ble Tribunal observed the impact of
inordinate delay in the matter of Subhkam Securities
Private Limited v. SEBI (Appeal No. 73 of 2012) vide
order dated 25 July 2012 wherein the Hon’ble Tribunal
noted:
(Ref: Para 5 on page No. 6 of Order dated 25 July 2012)
“5. … Inordinate delay in conducting inquiries and in
punishing the delinquent not only permits market
manipulator to operate in the market, it also has
demoralizing effect on the market players who are
ultimately ‘not found guilty’ but Damocoles’ sword of
inquiry keeps hanging on them for years together from
the date of starting investigation by the Board to the
date of completion of inquiry proceedings…”

5. Factual Background of the Noticee

(i) A brief background of both the proprietors of Wishworth

Financial Services (“WFS”), namely, Mr. Pankaj
 Khanchandani and Mr. Dheeraj Kapoor (collectively
“Noticee”), is inextricable in understanding the misplaced
allegations against the Noticee.

(ii) Mr. Pankaj Khanchandani is a qualified Chartered

Accountant since 1991 and has been a member of the
Institute of Chartered Accountants of India (“ICAI”) since
the past 30 (thirty) years. He has also been a member of
the Central Council of ICAI from 2005-2006. Moreover, He
has a distinguished line of clientele including Eicher
Motors and Tesla, India. He has also been an Honorary
Member of several distinguished accounting firms such as
Kumar and Associates, Delhi and Modi and Co.,
Ahmedabad.

(iii) Mr. Dheeraj Kapoor is a qualified Chartered Accountant

since 2008 and has been a member of the ICAI since 2009
[past 12 (twelve) years]. Mr. Kapoor was working with the
auditing firm, Ernst & Young [“EY”], Delhi from 2010-
2015 and started independent practice since then. Mr.
Kapoor also ran a YouTube Channel, namely, “CA with
Kapoor”, wherein he uploaded educational videos related
to chartered accountancy, capital markets and investment
advisory. This YouTube Channel had more than 7,00,000
(seven lakh) subscribers.

6. Inception and Suspension of Wishworth Financial Services

(i) In October 2016, Mr. Dheeraj Kapoor approached Mr.

Pankaj Khanchandani with the idea of establishing a fee-
based educational site with specialized courses on equity,
future & options, other forms of derivative markets, etc.
 Subsequently, certain services were advertised under the
name “Wishworth EduFin Ltd.”, a proprietorship concern
of the Noticee. Given the limited success of this venture
and the customer feedback that praised the specific
investment advisory, the Noticee discussed to modify the
idea towards establishing an investment advisory.

(ii) In March 2017, the Noticee decided to discontinue the

educational proprietorship and started modifying the
website (www.wishworth.in) towards establishing an
investment advisory. However, in accordance to
Regulation (8) of the IA Regulations, 2013, the Noticee
intended to raise a net worth of INR 25,00,000 (Rupees
Twenty-Five Lakhs Only). This was especially cumbersome
given the losses incurred due to the educational advisory
venture.

(iii) The Noticee intended to apply for the grant of Certificate

as per Regulation (3) of the IA Regulations, 2013 after
qualifying the required capital threshold. In the
meanwhile, the Noticee updated the website
(www.wishworth.in) and informed their clients about the
change. However, the clients were communicated about
the process being followed and the reasons behind delay
in commencement of operations.

(iv) The Noticee having tried their best to raise the required
capital for 4 (four) months and failed, they decided to
suspend their plans of establishing the entity as a body
corporate. Subsequently, the Noticee refunded all the
individual deposits made through the account that were
deposited under mistaken belief of our operations and a
 copy of the transactions is placed at Annexure – A. Such
accounts cumulatively amounted to INR 32,47,440
(Rupees Thirty-two Lakhs Forty-Seven Thousand Four
Hundred and Forty only).

(v) The Noticee also responsibly took down the website and
informed all their clients about the news. The e-mail sent
also included the Complainant, the copy of which is
placed at Annexure - B.

7. The Authority has failed to establish the nexus paid between

the consideration paid and the advisery rendered.

(i) We submit that SEBI has failed to establish the nexus

paid between the consideration paid and the advisory
rendered. SEBI has merely provided the total credit
received in the accounts of the Noticee (Annexure - C of
the SCN). However, despite examination of the bank
accounts, SEBI has not segregated the credits paid as
consideration for investment advisery and the credit due
as professional income for the Noticee.

(ii) It is to be noted that the Noticee i.e. Mr. Pankaj

Khanchandani and Mr. Dheeraj Kapoor are distinguished
Chartered Accountants with a flourishing practice. This is
reflected in their respective bank accounts. There were no
separate bank accounts in the name of WFS and hence, it
is important to distinguish between the professional
income of the Noticee and the consideration paid for
investment advisery. Hence, SEBI has issued the SCN
merely on the basis of a prima facie observation not
substantiated by evidence. Therefore, SEBI has failed to
 establish the nexus between the consideration paid and
the advisery rendered.

8. The examination of bank accounts is inconsistent,

misleading and highly exaggerated.

(i) We submit that the examination of bank accounts and the

description provided in SCN is highly misleading and
exaggerated. As stated already, the Noticee i.e. Mr. Pankaj
Khanchandani and Mr. Dheeraj Kapoor are distinguished
Chartered Accountants and the primary source of income
is through their profession.

(ii) The total amount in the personal accounts of Mr. Pankaj

Khanchandani i.e. INR 9,03,01,619 (Rupees Nine Crores
Three Lakhs One Thousand Six Hundred Nineteen Only)
depicts the net worth of the individual and does not
remotely depict the value ascribed to WFS. It reflects the
thirty years of professional efforts as well as the savings in
bank accounts for Mr. Pankaj Khanchandani.

(iii) Similarly, the total amount in the personal accounts of

Mr. Dheeraj Kapoor i.e. INR 97,52,332 (Rupees Ninety-
Seven Lakhs Fifty-Two Thousand Three Hundred Thirty-
two Only) is also distinct from the value ascribed to WFS.
Therefore, the depiction of the bank account details i.e.
personal accounts of the Noticee is misleading as it does
not correspond to the credit deposited by individual
investors.

(iv) The relevant credit deposited by the individual investors is

separately recorded and duly refunded by the Noticee.
Such accounts cumulatively amounted to INR 32,47,440
 (Rupees Thirty-two Lakhs Forty-Seven Thousand Four
Hundred and Forty only). A copy of the transactions is
placed at Annexure – A. Therefore, SEBI has failed to
account for such transactions that were refunded.

(v) Furthermore, the transactions transferred by the

Complainant as mentioned in Sl. No. 5 (b) of the SCN
amounts to INR 34,999 (Rupees Thirty-Four Thousand
Nine Hundred Ninety-Nine Only) (Ref: Sl. 5(b) of the
SCN). However, the Complainant has alleged that they
deposited INR 41,499 (Rupees Forty-One Thousand Four
Hundred Ninety-Nine Only). The claim itself is
inconsistent with SEBI’s findings.

9. The Noticee acted in good faith and duly communicated all

relevant details to all potential investors.

(i) We submit that the Noticee acted in good faith and kept
the potential investors throughout the process. When the
Noticee realised the difficulty in raising the required
capital and decided to suspend operations, they duly
informed all relevant stakeholders. The Noticee also swiftly
and responsibly took down the content of the website at
the earliest to ensure that potential investors are not
misled.

(ii) We submit that all the potential investors who had

deposited money via the website were duly noted and
communicated about the timeline of events. Most
payments had taken place through the payment gateway
available in the website itself. Moreover, such investors
who transferred money directly to bank accounts outside
 the website payment gateway were also identified and also
included in the list of refunds. The copy of the
transactions can be found in Annexure – A.

(iii) Therefore, we submit that the course of action undertaken

by the Noticee during the planning of WFS and
subsequent to its suspension further evinces that the
Noticee acted in good faith and took all required
precaution to ensure that no undue harm is caused to any
potential investors in the process.

10. The Complainant’s allegation that the Noticee stopped

receiving calls is misleading and mala fide.

(i) We strongly assert that the Complainant’s allegation that

the Noticee stopped taking calls is misleading and
misplaced. The copy of the Complaint (Annexure-A of the
SCN) does not substantiate the call details.

(ii) Furthermore, SEBI has also failed to investigate into the

veracity of the allegations as it either did not procure the
Call Detail Record from the relevant authorities or did not
share the relevant records in the SCN.

(iii) We submit that such an allegation is misleading as it

presents a skewed image of the nature of communication
undertaken by the Noticee. As per the records available
with the Noticee, the Complainant had called during the
late hours twice on 18 August 2017 and 24 August 2017.
This was followed by e-mail communication by the Noticee
the subsequent days i.e. 19 August 2017 and 25 August
2017 respectively seeking appointment to call. Copy of the
e-mails sent attached as Annexure – C. Subsequently, we
 called the Complainant at a later date, but failed to reach
them.

(iv) Since the precise call details are not available with the
Noticee, the accurate dates of the call records are not
mentioned. We also humbly request the Authority to
procure the same to better substantiate our case.

(v) The Complainant did not call within the working hours of
10am to 6pm as provided in the e-mail sent to all potential
investors but called at late hours. As the communication
number was an Office Landline, the Noticee could not be
reached at that time.

(vi) Moreover, in the communication sent to all potential

investors, the personal numbers of both the individual
Noticee were also sent. However, the Complainant did not
attempt to call either numbers. Subsequently, the
Complainant did not raise any grievances with the Noticee
but directly approached SEBI and filed the aforementioned
Complaint. This indicates the mala fide intention of the
Complainant of not communicating in good faith with the
Noticee and subsequently filing a complaint.

(vii) It is also pertinent to note that none of the other investors

had any such issues in communication or failed to get
their refunds in due time. This allegation was brought
forth despite receiving the refund on 25 September 2017.
Copy of the transaction can be found in Annexure – D.

(viii) Therefore, the allegation that the Noticee stopped receiving

calls is misleading and given the approach adopted by the
Complainant can be said to be mala fide as well.
Legal Submissions

11. Regulation 3(1) of the IA Regulations, 2013 does not apply

to the Noticee.

(i) Regulation 2(m) of the IA Regulations, 2013 defines an

“Investment Adviser” as any person, who for
consideration, is engaged in the business of providing
investment advice to clients. In pursuance of this,
Regulation 3(1) prohibits any person from acting as an
investment adviser or holding themselves as investment
advisers.

(ii) The essential ingredients for a violation to be constituted

under Regulation 3(1) are firstly, consideration is paid,
second, investment advisory is rendered or the person
holds themselves out as investment advisors.

(iii) While consideration is paid in the form of advanced

deposits, the second condition is not satisfied as no
investment advisory was rendered in pursuance of the
consideration paid since the operations never took off for
WFS. The amounts were duly refunded without any
investment advisory being rendered.

(iv) Furthermore, the Noticee never held themselves out to be

investment advisers as they constantly kept the potential
investors in loop about their plans and responsibly
informed them when they suspended their plans. The
website should be not be viewed in isolation as it was
under development and was swiftly taken down when the
operations were suspended. Therefore, Regulation 3(1) of
the IA Regulations, 2013 are not applicable to the Noticee.
12. The Noticee are exempted from registration in the advisory
rendered under Regulation 4(f) of the IA Regulations, 2013
as such advisory rendered was incidental to the professional
service rendered by them.

(i) Regulation 4 of the IA Regulations, 2013 entail the list of

exemptions from seeking registration. Under Regulation
4(f), this includes any member of Institute of Chartered
Accountants of India, Institute of Company Secretaries of
India, Institute of Cost and Works Accountants of India,
Actuarial Society of India or any other professional body,
such that they provide investment advise incidental to
their professional service.

(ii) As WFS never invested in its official capacity, and any

advisory work rendered in the individual capacity of the
individual noticee, they are exempted under Regulation
4(f) of the IA Regulations, 2013.

(iii) As already stated, Mr. Pankaj Khanchandani and Mr.

Dheeraj Kapoor are distinguished Chartered Accountants
with a flourishing practice. In the practice of Chartered
Accountancy, the practitioners often offer investment
advisory as well. This results in a relationship of trust
between the client and the CA vis-à-vis investment
advisory as well. However, such advisory is only incidental
to the primary practice of accountancy. This can be
evinced from the illustrative profiles of both the individual
Noticees.

(iv) The nature of the incidental practice of investment

advisory can be also seen as proportion of income via
 consideration paid to total income of the individual
notices. While cumulatively INR 32,47,440 (Rupees Thirty-
two Lakhs Forty-Seven Thousand Four Hundred and Forty
Only) was paid as consideration, the total bank account
was worth cumulatively INR 10,00,53,951 (Rupees Ten
Crores Fifty-Three Thousand Nine Hundred and Fifty-One
Only).

(v) For a more accurate representation, we also provide the

Income-Tax Returns of both individual Noticees. The
annual professional income for Mr. Pankaj Khanchandani
is INR 3,50,00,500 (Rupees Three Crores Fifty Lakhs and
Five Hundred only) whereas for and Mr. Dheeraj Kapoor, it
is INR 1,20,42,193 (Rupees One Crore Twenty Lakhs
Forty-Two Thousand One Hundred and Ninty-Three only).
As is evident, the consideration paid was nominal
compared to the professional income of the individual
Noticees. Copy of the Income-Tax Returns of both
individual Noticees from 2011-2021 have been attached at
Annexure – E. Therefore, the Noticee are exempted from
registration in the advisory rendered under Regulation 4(f)
of the IA Regulations, 2013 as such advisory rendered was
incidental to the professional service rendered by them.

(vi) Since the Regulation 3(1) of the IA Regulations, 2013 are

inapplicable to the Noticee, any grievance or dispute
raised by the Complainant should be raised before an
appropriate court of law exercising civil jurisdiction, as
opposed to a regulator such as SEBI.

13. Argument on the Directives to be issued/ Punishments

 (i) Assuming, without admitting, that the Noticee is in
violation of Section 12(1) of the SEBI Act and Regulation
3(1) of IA Regulations, 2013, we humbly submit that the
totality of factors, inter alia, the inordinate delay on the
part of SEBI, the technical nature of the violation and the
mitigating factors, no penalty or at the very maximum, a
nominal penalty should be levied on the Noticee.

(ii) Regulation 28 of the IA Regulations, 2013 provides that

liabilities for action in case of any default is dealt with in
the manner provided under SEBI (Intermediaries)
Regulations, 2008. Under Regulation 26(1)(i) of the SEBI
(Intermediaries) Regulations, 2008, the designation
authority is empowered to dispose of proceedings without
any adverse reaction after considering the material on
record and the reply by the Noticee. We submit that this
power must be exercised to discharge the Noticee and
dispose of the captioned proceedings.

(iii) Furthermore, Section 15-J of the SEBI Act, 1992 entail

the following factors to be considered in deciding the
quantum of penalty:

i. The amount of disproportionate gain or unfair

advantage, wherever quantifiable;

ii. The amount of loss suffered to an investor as a result

of such default;

iii. The repetitive nature of such default.

(iv) In the matter of Integrated Master Securities Pvt. Ltd.,

the Adjudicating Officer vide order dated 14 July 2010,
 the Order noted that the irregularity had not harmed the
interests of the investors or resulted in any unfair gain to
the Noticee. Since it observed that the violations are
technical, unintentional and clerical, it decided to dispose
of the matter without disposing any penalty.

(v) Similarly, in Cabot International Capital Corporation

v. Adjudicating Officer, (Appeal No. 24 of 2000), the
court noted that the Act does not provide for penalty for
failure per se. It noted:

“…An Order imposing penalty for failure to carry out a

statutory obligation is the result of a quasi-criminal
proceeding, and penalty will not ordinarily be imposed
unless the party obliged either acted deliberately in defiance
of law or was guilty of conduct contumacious or dishonest,
or acted in conscious disregard of its obligation. Penalty will
not also be imposed merely because it is lawful to do so.
Whether penalty should be imposed for failure to perform a
statutory obligation is a matter of discretion of the authority
to be exercised judicially and on a consideration of all the
relevant circumstances. Even if a minimum penalty is
prescribed the authority competent to impose the
penalty will be justified in refusing to impose penalty,
when there is a technical or venial breach of the
provisions of the Act or where the breach flows from a
bonafide belief that the offender is not liable to act in
the manner prescribed by the statute. (emphasis
supplied)”

(vi) The rationale of the aforementioned justification was

drawn from the Hon’ble Supreme Court’s judgment in
 Hindustan Steel Ltd. v. State of Orissa (AIR 1970 SC
253) and was followed by the Hon’ble Tribunal in Escorts
Mutual Fund v. P Sri Sai Ram, AO (Appeal No. 38 of
2001).

(vii) Since the amounts deposited for investment advisery has

already been refunded, the amount of disproportionate
gain accrued to the Noticee is non-existent. As a
consequence, no loss was suffered by investors as the
result of such default. Furthermore, the default, if any,
has no prior history or subsequent recurrence and was
limited to one such incident.

(viii) Moreover, the Noticee took swift response once it decided

to suspend operations and accordingly, the money
deposited was also refunded. The conduct of the Noticee
puts the intentions and good faith of the Noticee beyond
doubt. Therefore, considering the aforementioned factors,
the penalty should be minimal.

(ix) In light of aforesaid judgments by the Hon’ble Supreme

Court and the Hon’ble Tribunal, we humbly submit that
the mitigating factors ought to be considered in favour of
the Noticee and the SCN should be discharged at this
stage.

14. Summary

In summary, with regard to our submissions, we would like to

clarify, submit and reiterate that:
 (i) We are distinguished Chartered Accountants with
respectable careers in the professions and have acted in
compliance of all applicable laws in India;

(ii) We submit that Wishworth Financial Services was

envisaged by the individual Noticees as an Investment
Advisory, however, having failed to secure the required
capital, the idea never materialized and thereby, no
operations were undertaken by the entity.

(iii) We submit that any advisory work undertaken prior to its

establishment have taken place in the individual capacity
of the Noticee and are exempted under Regulation 4(f) of
the IA Advisory, 2013.

(iv) We submit that the authority has failed to establish the

nexus between the consideration paid and the advisory
rendered.

(v) We clarify that there exists inconsistency in the allegations

of the Complainant and the findings of SEBI, none of
which have been substantiated in the SCN.

(vi) We strongly assert that the allegation of the Complainant

is misleading and mala fide vis-à-vis the allegations that
the Noticee stopped receiving calls. To the contrary,
Noticee acted in good faith and proactively responded to
all investors throughout the process.

(vii) We believe there has been no grievance by any other

investor or intermediary with respect to the conduct of the
Noticee.

15. Denials of alleged violations of law

 In view of aforesaid, we deny alleged violation of provisions of
Section 12(1) of the SEBI Act and Regulation 3(1) of IA
Regulations, 2013 and submit as under:

(i) We have not bought, sold or otherwise dealt in stock

options in violations of the conditions of a certificate of
registration obtained from the Board (Ref Section 12(1) of
SEBI Act).

(ii) We have not acted as an investment adviser or held

ourselves out as investment advisers (Ref Regulation 3(1)
of IA Regulations, 2013).

16. Conclusion

We humbly submit that the Noticee are law-abiding citizens and

have always complied with the rules and regulations governing
securities market and complied with all applicable law in the
territories of India. In case penalty is imposed by a reputed and
credible organization like SEBI, it would inevitably result in loss
of goodwill, credibility and reputation which has been built over
past many years. We submit that the conduct of the Noticee were
in good faith and even if any such actions have resulted in
violation of any regulations, such wrong-doing is an honest
mistake and has not resulted in any adverse harm towards the
investors or the securities market. Accordingly, we humbly
request that we may be discharged from the present proceedings
at the earliest.

17. Prayer

Taking totality view of the peculiar facts and circumstances of

our case and particulars of our submissions and denials as
 aforesaid, we submit that the present SCN is inordinately
delayed, harsh and we have been wrongly roped into present
penal proceedings. Hence, we humbly request that:

(i) The present proceedings initiated vide Show Cause Notice

dated 17.08.2021 issued against us be dropped without
imposing any penalty on us.

(ii) The allegation/charges qua us be withdrawn and we may

be discharged at the earliest.

18. We reserve our right to file further and additional submissions,

as and when required, during course of present proceedings.

Thanking you,
Yours faithfully,

Shri Pankaj Khanchandani

(On behalf of all Noticee)
Wishworth Financial Services
Shri Pankaj Khanchandani
Shri Dheeraj Kapoor

Enclosed:
Annexure Particulars
Annexure - A Copy of all transactions vis-à-vis deposits
and refunds from individual investors for
investment advisory.
Annexure – B Copy of compilation of e-mails sent to all
investors regarding the suspension of
 operations and subsequent follow-up.
Annexure – C Copy of e-mails sent to Shri Naresh Maini
(Complainant) seeking appointment dated
19 August 2017 and 25 August 2017.
Annexure – D Copy of refund receipt dated 25 September
2017 towards Shri Naresh Maini
(Complainant) for the amount of INR 34,999
(Rupees Thirty-Four Thousand Nine
Hundred Ninety-Nine Only).
Annexure - E Copy of the Income-Tax Returns of both
individual Noticees Shri Pankaj
Khanchandani and Shri Dheeraj Kapoor
from 2011-2021