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8/20/2019 Adjudication Order in respect of M/s. Tulive Developers Ltd., Mr. Atul Gupta and Mr. K V Ramana in the matter of …
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Adjudication Order in the matter of M/s. Tulive Developers Ltd. Page 1 of 25
BEFORE THE ADJUDICATING OFFICER
SECURITIES AND EXCHANGE BOARD OF INDIA
[ADJUDICATION ORDER NO. AK/AO‐ 70‐72 /2015]
___________________________________________________________________________
UNDER SECTION 23‐I OF SECURITIES CONTRACT (REGULATION) ACT, 1956 READ WITH RULE 5 OF SEBI
(PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES,
1995
In respect of
M/s. Tulive Developers Ltd. (PAN: AAACK4787D), Mr. Atul Gupta (PAN: AFZPG6089H)
and Mr. K V Ramana (PAN: ATZPS3443D)
In the matter of
M/s.
Tulive
Developers
Ltd.
______________________________________________________________________________
BACKGROUND
1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') passed an interim order dated
June 04, 2013 (hereinafter referred to as 'the interim order') with respect to 105 listed companies who
did not comply with the Minimum Public Shareholding (hereinafter referred to as ‘MPS’) norms as
stipulated under
rules
19(2)(b)
and
19A
of
the
Securities
Contracts
(Regulation)
Rules,
1957
(hereinafter
referred to as 'SCRR') within the due date i.e. June 03, 2013. M/s. Tulive Developers Limited (hereinafter
referred to as ‘Tulive’/ 'the Company') was one such company against whom the interim order was
passed. The shares of the Company are listed on the Bombay Stock Exchange Limited (hereinafter
referred to as 'BSE').
2. Thereafter, vide Order dated October 22, 2014 (hereinafter referred to as the ‘final order’), the learned
Whole Time Member, SEBI while revoking the directions issued vide interim order dated June 04, 2013
against the company, its directors, promoters and promoter group with immediate effect had inter alia
stated that he was not convinced with the reasons submitted by the company for not adopting methods
in the circulars for bringing the shareholding of the public shareholders in the company at the stipulated
minimum level of 25%. Vide the said Order, the learned Whole Time Member, SEBI had inter alia further
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recorded that in view of the deviation from the methods mentioned in the circulars for bringing the
shareholding of the shareholders in the company at the stipulated minimum level of 25% noted, the
case may be referred for adjudication proceedings under Section 23E and 23H of the Securities
Contracts (Regulation) Act, 1956 (hereinafter referred to as ‘SCRA’) read with the Securities Contracts
(Regulation) (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 2005
(hereinafter referred to as ‘the Rules’).
APPOINTMENT OF ADJUDICATING OFFICER
3. The undersigned was appointed as the Adjudicating Officer on November 11, 2014 under section 19 of
SEBI Act read with Section 23‐I of the SCRA and Rule 3 of the Rules to inquire into and adjudge under
section
23E
and
23H
of
the
SCRA,
the
alleged
violations
by
the
company
and
its
promoters
viz.
Mr.
Atul
Gupta and Mr. K.V. Ramana (collectively hereinafter referred to as ‘the Noticees’) for complying with
the minimum public shareholding requirement without adopting the methods as stipulated in SEBI
circulars CIR/CFD/DIL/10/2010 dated December 16, 2010, CIR/CFD/DIL/1/2012 dated February 08, 2012
and CIR/CFD/DIL/11/2012 dated August 29, 2012 read with proviso to Rule 19A(1) of the SCRR, thereby
not complying with Clause 40A of the Equity Listing Agreement and directions issued by SEBI by the
aforementioned circulars, thus, violating provisions of Section 21 of SCRA and proviso to Rule 19A (1) of
the SCRR.
SHOW CAUSE NOTICE, HEARING AND REPLY
4. SEBI observed that the method adopted by the Noticees to increase the public shareholding in the
company to comply the MPS norms as stipulated under the amended rules 19(2)(b) and newly
introduced Rule 19(A) of SCRR, was not the prescribed mode of compliance in terms of the above
referred circulars. Further, it was observed that though SEBI had vide circular dated August 29, 2012
specified that listed companies desirous of achieving the minimum public shareholding requirement
through other means could approach SEBI with appropriate details for considering the same on merit,
the Noticees did not seek SEBI’s permission for the open market sale to achieve compliance of MPS
requirements. It was, therefore, alleged that the company and its promoters, viz. Mr. Atul Gupta and
Mr. KV Ramana did not adopt the prescribed methods of compliance stipulated under SEBI circulars
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CIR/CFD/DIL/10/2010 dated December 16, 2010, CIR/CFD/DIL/1/2012 dated February 08, 2012 and
CIR/CFD/DIL/11/2012 dated August 29, 2012 read with proviso to Rule 19A(1) of the Rules, thereby,
failing to comply with Clause 40A of the Listing Agreement and directions issued by SEBI by the
aforementioned circulars, and have, thus, violated the provisions of Section 21 of the SCRA and proviso
to Rule 19A (1) of the Rules.
5. Accordingly, Show Cause Notice (hereinafter referred to as “SCN”) Ref. No. EAD‐6/AK/VG/8886/2015/1,
EAD‐6/AK/VG/8886/2015/2 and EAD‐6/AK/VG/8886/2015/3 dated January 30, 2015 were issued to the
Noticees calling upon the Noticees to show cause as to why an inquiry should not be held against them
in terms of Rule 4 of Securities Contracts (Procedure for Holding Inquiry and Imposing of Penalties by
Adjudicating Officer) Rules, 2005 read with sub‐section (2) of Section 23‐1 of the SCRA and why penalty
should
not
be
imposed
on
the
Noticees
under
provision
of
section
23E
and
23H
of
the
SCRA.
6. Mr. K V Ramana Shetty and Mr. Atul Gupta replied to the above show cause notice vide their individual
replies each dated February 19, 2015, inter alia stating that:
a.
The public shareholding in the company as on June 03, 2013 was 25.01% and promoter shareholding
as on that date was 74.99%;
b.
That the Noticees believed that the minimum threshold for Offer for Sale (hereinafter referred to as
‘OFS’ ) is Rs.25 crore and such threshold should be achieved either at 1% or 10% or such lesser
percentage so
as
to
achieve
minimum
public
shareholding
(i.e.
2.97%).
And
that
they
were
not
achieving Rs. 25 crore threshold either at 1% or 2.97% shares of the noticee company;
c. That the Noticees believed that the OFS was facilitating window made available to divest the excess
shareholding through secondary route over and above the piecemeal sale in the secondary market.
The OFS process would ensure fair price and avoid sudden supply of stock, which would be in the
interest of the promoters;
d. That they believed that since they do not qualify the minimum offer size as per the OFS guidelines,
they had no choice but to divest in the open market on the stock exchange through secondary sale;
e. That they would have obtained prior approval from SEBI to divest the excess shareholding through
open market secondary sale on the stock exchange, instead of OFS, if in their understanding such
approval was necessary for cases not doing OFS. They understood that SEBI had granted approvals
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for secondary sale in many cases on case to case basis and their facts would have justified such
approval;
f. That, hence, since they believed that the OFS facility provided by SEBI could not be availed by
promoters of their company and they would have to sell the equity shares in the secondary market,
therefore, the promoters sold 2.97% shares in open market through secondary route on the floor of
the exchange;
g.
That the promoters have been at a loss by not being entitled to avail the OFS process for sale / divest
of the excess shareholding. Correspondingly, the investors / public shareholders have been benefited
by the sale in the open market through stock exchange;
h. That the sale of shares by the promoters on the floor of the exchange in belief of a bonafide
interpretation of the SEBI circular cannot be considered as a default.
7. In order to proceed in the matter, a notice of hearing dated March 13, 2015, was sent to the company
and the promoters viz. Mr. Atul Gupta and Mr. K. B. Ramana, granting them an opportunity for personal
hearing on April 24, 2015. The Noticees vide letter dated April 22, 2015, authorized Mr. S Eshwar and
Mr. Narendra Joshi to represent them in the matter. Accordingly, on the scheduled date, the Authorized
Representatives (AR) appeared along with Mr. Atul Gupta. The ARs reiterated the submissions made by
Mr. K V Raman Shetty and Mr. Atul Gupta in their replies dated February 19, 2005 and submitted copies
thereof. The ARs undertook to file written submissions on behalf of the company by May 5, 2015.
8. Subsequently, the company submitted its reply dated May 04, 2015 stating that these submissions were
in addition to their submissions made vide letters dated February 21, 2014, June 2, 2014 and July 31,
2014 before the Whole Time Member, SEBI. However, it was observed that the company had not
provided a copy of the aforementioned letters submitted before the Whole Time Member, SEBI. Vide
email dated May 19, 2015, the company was advised to forward a scanned copy of the said letters.
Further, it was noted that the company vide the said letter dated May 04, 2015 had inter alia also
requested for an opportunity for hearing and further submissions. Vide email of the same date, the
company was informed that the company had already been heard on April 24, 2015, and, in case it had
had any further submissions to make, the company was advised to do so latest by May 25, 2015. The
company vide email dated May 20, 2015 provided copies of letters dated July 31, 2014 and February 24,
2014 that were sent to the Learned Whole Time Member, prior to the passing of the final order.
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9. Accordingly, the submissions of the company are inter alia summarized hereunder:
a. That the company believed that the minimum threshold for Offer for Sale is Rs.25 crores and such
threshold should be achieved either at 1% or 10% or such lesser percentage so as to achieve
minimum public shareholding (i.e. 2.97%);
b. That they were not achieving Rs. 25 crores threshold either at 1% or 2.97% shares;
c. That the promoters had undertaken to achieve the minimum public shareholding of 25% on or before
June 03, 2013. Accordingly, the company did not take any of the other methods available with the
company for increasing the public shareholding to 25%;
d.
That
the
company
had
received
disclosures
under
SEBI
(Substantial
Acquisition
of
Shares
and
Takeover) Regulations, 2011 and SEBI (Prohibition of Insider Trading) Regulations, 1992 from Mr.
Atul Gupta, Promoter and Director, intimating sale of 1,03,500 shares i.e. 2.97% of the paid ‐up
capital of the company on June 03, 2013. Hence, as on June 03, 2013, the public shareholding of the
company was 25.01% and promoter shareholding as on that date was 74.99% [Number of shares
and percentage as on June 02, 2013 was 27,16,265 shares (77.96%) and Number of shares and
percentage as on June 03, 2013 was 26,12,765 shares (74.99%) ;
e. That the company was, thus, in compliance with SEBI requirement of minimum public shareholding
and that
the
company
had
vide
its
dated
June
04,
2013
intimated
BSE
of
the
aforesaid
sale
of
shares and consequent increase in the public shareholding in the company to 25.01%.
10. Vide email dated May 26, 2015 clarification was inter alia sought from the Noticees whether Ms.
Rajshree Choudhary, to whom the shares were sold by the promoter Mr. Atul Gupta, was in any way
related/connected/associated with the company or with any of the promoter/ directors of the company.
Also, whether agreement, if any, was entered between Mr. Atul Gupta and Ms. Rajshree Choudhary for
the bulk sale of 1,03,500 shares by Mr. Atul Gupta to Ms. Rajshree Choudhary. Clarification was also
sought on how the price of Rs. 94.75 for sale of 1,03,500 shares was arrived at, when last traded price
on April 16, 2013 for a trade of 2 shares was Rs. 92.90 and there was no trading in the shares of the
company for more than a month.
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11. Vide email dated May 28, 2015, it was informed by Mr. Atul Gupta that Ms. Rajshree Choudhary was
neither related nor associated or connected to Tulive or its promoters and that there was no agreement
entered into between Mr. Atul Gupta and Ms. Rajshree Choudhary. The said email further stated that
the trade was at the market determined price within limits permitted by BSE.
12. The details of the trade log and order log of the open market transaction between Mr. Atul Gupta and
Ms. Rajshree Choudhary were sought from BSE. From the details received from BSE, it came to notice
that a synchronized deal in the scrip of Tulive was executed between Ms. Rajshree Chowdhary and Mr.
Atul Gupta for 1,03,500 shares on June 03, 2013 at Rs. 94.75, i.e. at an increment of Rs.1.85 to the last
traded price of Rs. 92.90 on April 16, 2013. From a perusal of the order log of the trade executed, it was
observed that the buy and the sell orders were placed within a time gap of 5 seconds and the quantity
1,03,500 shares as well as the price of Rs. 94.75 matched. In view of the same, comments of the
Noticees were sought on the synchronized deal executed as aforesaid to increase the minimum public
shareholding in the company, defeating in spirit the ultimate objective behind the exercise of achieving
the MPS norms. Also, clarification was inter alia sought from the Noticees as to whether the said Ms.
Rajshree Choudhary was still holding the shares or whether the shares have been further transferred.
13. Vide reply dated June 15, 2015, the Noticees informed that the company had come out with a Rights
Issue in April 2010. The promoter shareholding in the company prior to the Rights Issue was 74.96%.
Some of
the
public
shareholders
neither
exercised
their
rights
nor
renounced
in
favour
of
the
others.
Some of the shareholders including the promoters of the company had subscribed to the shares in
addition to their entitlement in the Rights Issue. The unsubscribed and unrenounced shares in the Rights
Issue resulted in allotment of additional shares to such public and promoter shareholders in proportion
to their shareholding pre Rights Issue. The Noticees stated that the increase in shareholding of the
promoters was only after the refusal of the public shareholders to subscribe or renounce their
entitlement in the Rights Issue. The Noticees further inter alia made the following additional
submissions:
a.
That the
dilution
in
promoter
shareholding
has
been
over
a period
of
37
months.
The
number
of
public shareholders immediately prior to disinvestment was 177, which increased to 285 immediately
post disinvestment;
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b. That the WTM of SEBI had mentioned in para 5 of having dealt with sale to Ms. Rajshree Choudhary
on the floor of the Exchange including inquiring with BSE;
c. That the WTM of SEBI after analyzing the facts and information has passed the Order in favour of the
promoters of the company by revoking the restrictions passed in the directions issued vide interim
order dated June 04, 2013;
d. That the WTM of SEBI after being convinced with the dilution to the public had appointed
Adjudicating Officer (AO) only for the limited purpose of imposing penalties due to not adopting the
prescribed methods for dilution of shareholding to the public;
e. That the AO appointment also confirms that “Whereas it prima facie appeared to the WTM that
Tulive had complied with the minimum public shareholding requirement without adopting the
methods as stipulated in SEBI circulars”;
f.
That
if
the
trade
of
Ms.
Rajshree
Choudhary
was
to
be
considered
by
the
WTM
to
be
invalid
trade
and not in accordance with the law, there was no likelihood for him to revoke the June 03, 2013
directions;
g. That hence all assumptions are incorrect as regards the trade of Ms. Rajshree Choudhary;
h. That as per the latest available data from the Registrar, Ms. Rajshree Choudhary does not hold
1,03,500 shares in the company and it is not within the knowledge of the company to whom it has
been sold;
i.
That they believed that OFS was facilitating window made available to divest the excess
shareholding through
the
secondary
route,
over
and
above
the
piecemeal
sale
in
the
secondary
market;
j. That the promoters have been at loss by not availing the OFS process for sale/divesting the excess
shareholding, whereas the investors/ public shareholders have benefited by sale in open market
through the stock exchange;
k.
That the sale of shares by promoters on the floor of the Exchange in belief of a bonafide
interpretation of SEBI circular cannot be considered as a default.
14. Vide the said letter the Noticees had sought another opportunity of hearing before arriving at a
conclusion. Accordingly vide email dated July 08, 2015, another opportunity of hearing was granted to
the Noticees on July 16, 2015. Mr. Atul Gupta along with Mr. Narendra Joshi (AR) appeared on behalf of
the Noticees. The ARs reiterated the submissions made in reply dated June 15, 2015.
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CONSIDERATION OF ISSUES AND FINDINGS
15. I have examined the SCN, the submissions made by the Noticees in their replies and during the personal
hearing and the documents available on record. The issues that arise for consideration in the present
case are:
a. Whether the company and its promoters viz. Mr. Atul Gupta & Mr. K.V. Ramana did not adopt the
prescribed methods of compliance stipulated under SEBI circulars CIR/CFD/DIL/10/2010 dated
December 16, 2010, CIR/CFD/DIL/1/2012 dated February 08, 2012 and CIR/CFD/DIL/11/2012 dated
August 29, 2012 to increase the public shareholding in the company to comply with the MPS norms,
as stipulated under the amended rules 19(2)(b) and newly introduced Rule 19(A) of SCRR, thereby
failing
to
comply
with
Clause
40A
of
the
Equity
Listing
Agreement
and
directions
issued
by
SEBI
by
the aforementioned circulars, thus, violating provisions of Section 21 of SCRA and proviso to Rule
19A (1) of the SCRR?
b. Whether the aforesaid failure on the part of the Noticees to comply with the aforesaid SEBI
Circulars, SCRR and SCRA attracts monetary penalty under section 23E and 23H of the SCRA, and, if
so, what would be the monetary penalty that can be imposed on the Noticees?
16.
I note
that
the
SCRA
was
enacted
to
prevent
undesirable
transactions
in
securities
by
regulating
the
business of dealings therein, and by providing for certain other matters connected therewith. Further
for carrying out the mandate of the SCRA, the SCRR were framed by the Central Government. Section 21
of the SCRA mandates the compliance, by all listed companies, of the conditions of the listing agreement
with the stock exchange. The SCRR inter ‐alia, prescribes the requirements which have to be satisfied by
companies for the purpose of getting their securities listed on any stock exchange in India. Section 21 of
the SCRA reads as under:
Conditions for listing.
21. Where securities are listed on the application of any person in any recognised stock exchange, such
person shall comply with the conditions of the listing agreement with that stock exchange.
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17. The SCRR was amended vide notification of the Securities Contracts (Regulation) (Amendment) Rules,
2010 (hereinafter referred to as 'First amendment') by the Central Government dated June 04, 2010 and
amended once again vide Securities Contracts (Regulation) (Second Amendment) Rules, 2010
(hereinafter referred to as 'Second amendment'), in terms whereof Rule 19(2)(b) was amended and a
new rule; Rule 19(A) was introduced to the SCRR respectively.
18. The amended Rule 19(2)(b) and newly introduced Rule 19(A) of SCRR read as under:
Requirements with respect to the listing of securities on a recognised stock exchange.
19 (2) …………
(b) (i) At least twenty five per cent of each class or kind of equity shares or debentures convertible into
equity shares issued by the company was offered and allotted to public in terms of an offer document; or
(ii) At
least
ten
per
cent
of
each
class
or
kind
of
equity
shares
or
debentures
convertible
into
equity
shares issued by the company was offered and allotted to public in terms of an offer document if the post
issue capital of the company calculated at offer price is more than four thousand crore rupees:
Provided that the requirement of post issue capital being more than four thousand crore rupees shall not
apply to a company whose draft offer document is pending with the Securities and Exchange Board of
India on or before the commencement of the Securities Contracts (Regulation) (Amendment) Rules, 2010,
if it satisfies the conditions prescribed in clause (b) of sub‐rule 2 of rule 19 of the Securities Contracts
(Regulation) Rules,
1956
as
existed
prior
to
the
date
of
such
commencement:
Provided further that the company, referred to in sub clause (ii), shall increase its public shareholding to
at least twenty five per cent, within a period of three years from the date of listing of the securities, in
the manner specified by the Securities and Exchange Board of India.
Continuous Listing Requirement
19A. (1) Every listed company other than public sector company shall maintain public shareholding of at
least twenty five per cent.:
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Provided that any listed company which has public shareholding below twenty five percent, on the
commencement of the Securities Contracts (Regulation) (Amendment) Rules, 2010, shall increase its
public shareholding to at least twenty five per cent, within a period of three years from the date of such
commencement, in the manner specified by the Securities and Exchange Board of India.
Explanation: For the purposes of this sub‐rule, a company whose securities has been listed pursuant to an
offer and allotment made to public in terms of sub‐clause (ii) of clause (b) of sub‐rule (2) of rule 19, shall
maintain minimum twenty five per cent public shareholding from the date on which the public
shareholding in the company reaches the level of twenty five percent in terms of said sub‐clause.
(2) Where the public shareholding in a listed company falls below twenty five per cent at any time, such
company
shall
bring
the
public
shareholding
to
twenty
five
per
cent
within
a
maximum
period
of
twelve
months from the date of such fall in the manner specified by the Securities and Exchange Board of India.
(3) Notwithstanding anything contained in this rule, every listed public sector company shall maintain
public shareholding of at least ten per cent.:
Provided that a listed public sector company ‐
(a) which
has
public
shareholding
below
ten
per
cent,
on
the
date
of
commencement
of
the
Securities
Contracts (Regulation) (Second Amendment) Rules, 2010 shall increase its public shareholding to at least
ten per cent, in the manner specified by the Securities and Exchange Board of India, within a period of
three years from the date of such commencement;
(b) whose public shareholding reduces below ten per cent, after the date of commencement of the
Securities Contracts (Regulation) (Second Amendment) Rules, 2010 shall increase its public shareholding
to at least ten per cent, in the manner specified by the Securities and Exchange Board of India, within a
period of twelve months from the date of such reduction.
19. Thus the provisions quoted above required all listed companies (other than public sector companies) to
achieve and maintain the MPS of 25% of each class or kind of equity shares or debentures convertible
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into equity shares issued by such companies. Those companies with public shareholding of less than
25% were required to achieve the same, within a period of three years from the date of commencement
of the first amendment i.e. by June 03, 2013 in the manner specified by the Securities and Exchange
Board of India (SEBI). Further, clause 40A of the listing agreement entered into between a listed
company and the concerned stock exchange vests a legal obligation on the listed companies to
compulsorily comply with initial as well as continuous listing requirements with respect to public
shareholding as provided for in the SCRR. Also, it is prescribed that where the company is required to
achieve the minimum level of public shareholding specified in Rule 19(2)(b) and/or Rule 19A of the
Securities Contracts (Regulation) Rules, 1957, it shall adopt any of the following methods to raise the
public shareholding to the required level:
(a) issuance of shares to public through prospectus; or
(b)
offer
for
sale
of
shares
held
by
promoters
to
public
through
prospectus;
or
(c) sale of shares held by promoters through the secondary market in terms of SEBI circular
CIR/MRD/DP/05/2012 dated February 1, 2012; or
(d) Institutional Placement Programme (IPP) in terms of Chapter VIIIA of SEBI (Issue of Capital and
Disclosure Requirements) Regulations, 2009, as amended; or
(e) Rights Issues to public shareholders, with promoter/promoter group shareholders forgoing their
entitlement to equity shares, whether present or future, that may arise from such issue; or
(f) Bonus Issues to public shareholders, with promoter/promoter group shareholders forgoing their
entitlement to
equity
shares,
whether
present
or
future,
that
may
arise
from
such
issue;
or
(g) any other method as may be approved by SEBI on a case to case basis
20. In order to align the requirements in the Listing Agreement with the requirements specified in Rule
19(2)(b) and Rule 19A of SCRR and to specify the manner in which public shareholding may be raised to
the prescribed minimum level, SEBI issued a Circular No CIR/CFD/DIL/10/2010 dated December 16, 2010
to suitably amend Clause 40A of the Listing Agreement. This circular inter ‐alia provided the following
methods for complying with the MPS requirement:
Issuance of shares to the public through prospectus;
Offer for sale (OFS) of shares held by promoters to public through prospectus;
Sale of shares held by promoters through the secondary market i.e. OFS through Stock Exchange;
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21. Subsequently, SEBI issued another circular dated February 08, 2012 which inter ‐alia provided that listed
companies may achieve the MPS requirement also through:
Institutional Placement Programme (IPP)
22. With a view to further facilitate listed companies to comply with the minimum public shareholding
requirements within the time specified in the SCRR, SEBI issued circular dated August 29, 2012, which
further specified the following additional methods to comply with the MPS requirements:
Rights Issues to public shareholders, with promoters/promoter group shareholders forgoing their
rights entitlement;
Bonus Issues to public shareholders, with promoters/promoter group shareholders forgoing their
bonus entitlement;
Any other
method
as
may
be
approved
by
SEBI,
on
a case
to
case
basis.
23. Thus, I note that vide circular dated August 29, 2012, SEBI had also specified that listed entities desirous
of achieving the MPS requirement through other means may approach it (SEBI) with appropriate details
that would be considered by SEBI based on merit.
24. SEBI also initiated a consultative process with these companies and market participants to elicit a
concrete plan of action as regards ensuring compliance with the MPS requirement and held a series of
meetings with active companies to enable the process of complying with the MPS requirement. All
these measures and methods were taken/ initiated to ensure that listed companies comply with the
minimum public shareholding norms before the due date and comply strictly in accordance with the
prescribed methods.
25. I note that Tulive was one of the 105 listed companies against whom interim order dated June 04, 2013
was passed for not complying with the MPS norms as stipulated under the amended rules 19(2)(b) and
newly
introduced
Rule
19(A)
of
SCRR
within
the
due
date
i.e.,
June
03,
2013.
The
said
Order
dated
June
04, 2013 inter alia directed as follows:
freezing of voting rights and corporate benefits like dividend, rights, bonus shares, split, etc. with
respect to the excess of proportionate promoter/promoter group shareholding in the non‐compliant
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companies, till such time these companies complied with the minimum public shareholding
requirement;
prohibited the promoters/promoter group and directors of the non‐compliant companies from
buying, selling or otherwise dealing in securities of their respective companies, either directly or
indirectly, in any manner whatsoever, except for the purpose of complying with minimum public
shareholding requirement till such time these companies comply with the minimum public
shareholding requirement;
restrained the shareholders forming part of the promoter/promoter group in the non‐compliant
companies from holding any new position as a director in any listed company, till such time these
companies comply with the minimum public shareholding requirement;
restrain the directors of non‐compliant companies from holding any new position as a director in any
listed
company,
till
such
time
these
companies
comply
with
the
minimum
public
shareholding
requirement.
The interim order was passed without prejudice to the right of SEBI to take any other action, against
the non‐compliant companies, their promoters and/ or directors or issuing such directions in
accordance with law.
26. I further note that the interim directions against Tulive, its directors, promoters and promoter group as
above, were revoked by the learned Whole Time Member (WTM), SEBI, vide Order dated October 22,
2013 based
on
the
submissions
made
by
the
company
in
reply
to
the
interim
order.
I find
that
the
company had inter alia submitted as follows before the WTM of SEBI:
a. That the Company had received disclosures under the SEBI (Substantial Acquisition of Shares and
Takeover) Regulations, 2011 and SEBI (Prohibition of Insider Trading) Regulations, 1992 from one of
its Promoter and Director, Mr. Atul Gupta, intimating therein the sale of 1,03,500 shares
representing 2.97% of the paid up share capital of the Company on June 03, 2013 in open market;
b. That the above sale had resulted in the increase of the public shareholding in the Company to 25.01%
as on June 03, 2013;
c. That the Company believed that the minimum threshold for the Offer for Sale (OFS) is Rs.25 Crore
and that such threshold should be achieved either at 1% or 10% or such lesser percentage so as to
achieve MPS. As it was not achieving the Rs.25 Crore threshold, it bonafidely thought that it could
not avail the OFS mode and had sold the equity shares in the secondary market;
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d. That the Company also requested SEBI to consider its case for post facto approval;
e. That prior to the disinvestment, the Company had 177 shareholders;
f. That the shares were sold to one Mr. Rajshree Choudhary who was neither a promoter nor a director
of the Company and pursuant to the same, the promoters' holding was reduced to 74.99%.
27. Based on the submissions made as above, the Learned WTM of SEBI revoked the directions issued vide
the interim order dated June 04, 2013 against the company, its directors, promoters and promoter
group. However, while revoking the interim directions, the Learned WTM noted that the sale of 2.97%
of the paid up share capital in the open market by the promoter was not a prescribed mode of
compliance by the Company, in terms of the above referred circulars. Nor had the Company sought
specific prior permissions from SEBI for the sale of 1,03,500 shares representing 2.97% by its promoter
in
the
open
market.
In
this
context,
the
Order
noted
that
several
companies
had
approached
SEBI
at
an
early stage, with a request to permit them for open market sale so as to achieve compliance of MPS
requirements and SEBI had granted permissions to many such companies.
28. It was recorded in the said Order that the Learned WTM of SEBI was not convinced with the reasons
submitted by the Company for not adopting methods mentioned in the circulars for bringing the
shareholding of the public shareholders in the Company at the stipulated minimum level of 25%. The
Order further also recorded that the Company had the primary responsibility to comply with the MPS
requirement by
adopting
the
methods
available
as
per
the
circulars
issued
by
SEBI,
and
in
case
the
Company was experiencing any difficulty, it should have approached SEBI with its proposed method for
approval, which the Company has clearly failed to do.
29. Thus, while revoking the interim directions against the company, its directors, promoters and promoter
group with immediate effect vide Order dated October 22, 2013, the Learned WTM inter alia noted that
there was a deviation from the methods mentioned in the circulars for bringing the shareholding of the
public shareholders in the company at the stipulated minimum level of 25%. Hence, vide the said Order,
the matter was referred for adjudication proceedings under Sections 23E and 23H of SCRA read with the
Rules, based on which the extant adjudication have been initiated.
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30. I, thus, note from the said Order dated October 22, 2014 that the promoter of Tulive had sold 1,03,500
equity shares representing 2.97% of the paid up share capital of the Company on June 03, 2013 in open
market on the floor of the Exchange to one Ms. Rajshree Choudhary, who was neither a promoter nor a
director of the company, pursuant to which the promoters holding was reduced to 74.99%. As per the
shareholding pattern for the quarter ended September 2013 available on BSE website, the name of Ms.
Rajshree Choudhary was mentioned as one of the public shareholder holding 2.97% of the paid up share
capital of the Company.
31. However, I note that the sale of 2.97% of the paid‐up share capital of Tulive in the open market by the
promoters of Tulive was not a prescribed mode of compliance by the company in terms of the above
referred circulars. Nor had the company sought specific prior permissions from SEBI for this sale of
shares in
open
market.
32. I note here that the Noticees have stated that they misinterpreted the provision regarding OFS, due to
which the promoters of Tulive had sold 1,03,500 equity shares representing 2.97% of the paid up share
capital of the Company on June 03, 2013 in open market on the floor of the Exchange to one Ms.
Rajshree Choudhary. In the matter, I find that SEBI had specifically vide circular dated August 29, 2012,
i.e. much before the impugned sale, specified that listed companies desirous of achieving the minimum
public shareholding requirement through other means could approach SEBI with appropriate details for
considering the same on merit, however, the Noticees did not seek SEBI’s permission for their open
market sale so as to achieve compliance of MPS requirements. If the company and/or its
promoters/directors had any doubt about the method that they should adopt to comply with the MPS
requirement, they could have approached SEBI. The submission of the Noticees cannot be accepted
especially in light of the fact that vide circular dated August 29, 2012, SEBI had offered to consider any
method, other than the ones specifically provided for in various preceding circulars and through the said
circular, so that a company could come up with an acceptable way to fulfill the required criterion of
minimum public shareholding.
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33. It becomes pertinent to mention here that to understand the rationale behind inclusion of Rule 19A in
the SCRR, a Press Release dated June 04, 2010 issued by the Ministry of Finance, Government of India ,
following the introduction of Rule 19A, is relevant and reproduced herein below:
“A dispersed shareholding structure is essential for the sustenance of a continuous market for listed
securities to provide liquidity to the investors and to discover fair prices. Further, the larger the number
of shareholders, the less is the scope for price manipulation.”
34. Thus, I note that the underlying philosophy behind the requirement of minimum public holding of 25% is
to ensure a larger public float, to stave off any attempts of manipulation. I note here that the in the
matter of M/s. Gillette India Ltd. Vs. SEBI , the Hon’ble Securities Appellate Tribunal (SAT) vide Order
dated July 03, 2013 has also observed as follows:
“In our opinion, the Appellant seems to have overlooked, whether deliberately or inadvertently, the fact
that the underlying philosophy behind the requirement of a minimum public holding of 25% is prevention
of concentration of shares in the hands of a few market players by ensuring a sound and healthy public
float to stave off any manipulation or perpetration of other unethical activities in the securities market
which would unfortunately be the irrefragable consequence of the reins of the market being in the hands
of a few.”
35.
In the extant case, I note from the price volume data available on the BSE website that there was no
trading in the shares of the company since April 17, 2013 till June 03, 2013, when 1,03,500 shares were
sold by the promoter Mr. Atul Gupta to one Ms. Rajshree Choudhary at the rate of Rs. 94.75. The last
trade had happened only on April 16, 2013, which was a single trade for that day for 2 shares at Rs.
92.90. The trade previous to the same was on March 18, 2013, again a single trade on that day for 4
shares at Rs. 92.95. It is observed from the price volume data available on the BSE website that the scrip
was very thinly traded during the relevant point of time, with no trading taking place for periods ranging
for more than a month.
36. It was, hence, important in the interest of the investing public and considering the prime objective of
the SCRA of preventing undesirable transactions in securities that the company and promoters adopt
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from one of the methods laid down by SEBI to comply with the MPS norms. However, I find that the sale
of 1,03,500 shares by Mr. Atul Gupta to Ms. Rajshree Choudhary in the open market to comply with
MPS norm was actually a synchronized negotiated deal, executed on the market though the call auction
mechanism, so as to merely technically comply with the minimum public shareholding norms in letter,
but, not in its true spirit.
37. To better understand the same, an extract from the Order log of BSE on June 03, 2013 is placed below:
ORDER_ID ORDER TIME
RATE
(Rs.) QTY
BUY
/
SELL
MEMBER
NAME
CLIENT
NAME
CLIENT
PHONE TEXT
16000028004289 10:38:24.022002 91.05 100 B
B.LODHA
SEC. LTD.
RAJSHREE
CHOWDHARY 28444555
ORDER ADDED
SUCCESSFULLY
16000028004289 10:38:29.456538 91.05 100 B B.LODHA
SEC. LTD. RAJSHREE
CHOWDHARY 28444555 ORDER
DELETED
SUCCESSFULLY
16000028004289 10:38:29.459436 91.05 100 B
B.LODHA
SEC. LTD.
RAJSHREE
CHOWDHARY 28444555
ORDER DELETED
SUCCESSFULLY
16000028004715 11:12:56.130331 94.75 103500 B
B.LODHA
SEC. LTD.
RAJSHREE
CHOWDHARY 28444555
ORDER ADDED
SUCCESSFULLY
11000021004548 11:13:01.064241 94.75 103500 S
B.LODHA
SEC. LTD. ATUL GUPTA 43039224
ORDER ADDED
SUCCESSFULLY
38. I note here that BSE vide Notice No. 20130402‐7 dated April 02, 2013, in continuation to the SEBI
circular dated February 14, 2013, circular no. CIR/MRD/DP/6/2013 and Exchange circular nos.
20130219‐7 dated
February
19,
2013
&
20130328
‐12
dated
March
28,
2013,
had
introduced
Periodic
Call Auction sessions for illiquid scrips with effect from April 8, 2013. BSE vide the said notice had
intimated that the periodic call auction sessions of one hour each shall be conducted daily throughout
the trading hours with the first session starting at 9:30 am and last session ending at 3.30 pm as follows:
9:30am to 10:30 am, 10:30 am to 11:30 am, 11:30 am to 12:30 pm, 12:30 pm to 1:30 pm, 1:30 pm to
2:30 pm and 2:30 pm to 3:30 pm. It was further made clear in the said notice that each periodic call
auction session shall consist of two periods as follows:
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Order Entry Period 45
minutes
Order Entry/ Modification/ Cancellation Allowed
Random stoppage between 44th and 45th minute (system driven)
Dissemination of Indicative Price, Cummulative Buy and Sell
Quantity
Order matching and Trade
Confirmation Period including
Buffer Period (upto 7 minutes)
15
minutes
Order Matching/ Trade Confirmation
Order Entry/ Modification/ Cancellation Not Allowed
Buffer Period – To facilitate transition between two call
auctions
39. The aforesaid BSE Notice inter alia also stated that a maximum price band of 20% shall be applicable on
the scrips through the day and that all unmatched orders at the end of every periodic call auction
session shall
be
purged.
Also
that
the
following
information
shall
be
disseminated
to
the
market
at
regular intervals during the order entry period of each periodic call auction session as part of the market
picture broadcast –
The indicative equilibrium price + next best 4 bids and offers.
If the indicative equilibrium price does not get determined, then the best bids and offers shall be
displayed.
40. The scrip of Tulive by virtue of being illiquid was covered under such periodic call auction mechanism.
Thus, for the call auction session starting at 10:30 am, orders could be entered upto 11:13 before the
system driven random stoppage would get activated. In the context of the extant case, firstly sale
through open market was not one of the methods that could be adopted for complying with MPS norms
without the approval of SEBI. Even presuming for a moment that such approval was not required, in that
case too, if promoter Mr. Atul Gupta intended to increase the public shareholding in its true spirit in the
company by off ‐loading 1,03,500 shares in the open market through the call auction mechanism, then
under normal circumstances, Mr. Atul Gupta could have entered his order at the start of the session so
that
the
information
could
have
got
disseminated
to
the
market
during
the
periodic
call
auction
session
for investors to put their counter bids. However, the manner in which the purchase order by Ms.
Rajshree Choudhary and sell order by Mr. Atul Gupta were entered in very close proximity to one
another by matching the price and quantity, just seconds before the system driven random stoppage
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could get activated, clearly brings out that the intent of the Noticees was to circumvent the market
mechanism in order to carry out a synchronized trade.
41. I note that the trade was a cross deal executed through the stock broker M/s. B. Lodha Securities Ltd. In
the case
of
GIR
Marketing
&
Trading
Co.
Pvt.
Ltd.
vs.
SEBI
(Appeal
no.
113
of
2011
decided
on
August
5, 2011), it has been held by the Hon’ble Securities Appellate Tribunal (SAT) that “cross deals per se are
not illegal but the common broker executing the buy and sell orders is not expected to match those
orders by putting in orders for the same quantity, at the same price and at the same time”.
42.
Further as per the details available on the website of M/s. ASL Capital Holdings Pvt. Ltd. (hereinafter
referred to as ASL), a stock broker/ trading member of National Stock Exchange of India Ltd. (hereinafter
referred to as ‘NSE’), the client phone ‘28444555’ as per the BSE Order log appears to be of ASL. Further,
as per the information available in public domain Mr. Ravikant Choudhary is the Managing Director and
Ms. Rajshree Choudhary is/was one of the Directors of ASL. I note further from the BSE website that
1,03,480 shares out of the total of 1,03,500 shares that were transferred to Ms. Rajshree Choudhary,
have been subsequently in the quarter ended June 2014, further transferred to ASL on Exchange by
matching the price and quantity through three tranches executed on three trade days viz. May 21, 2014
(30,000 shares at Rs. 109.75), May 22, 2014 (35,000 shares at Rs. 110) and May 27, 2014 (38,480 shares
at Rs. 110.10). As per BSE’s website, 1,03,480 shares are being held by ASL as at quarter ended March
2015.
43. Thus, from all of the above, it appears that the Noticees under the garb of ‘misinterpretation of SEBI
circulars in the matter by them’, only tried to circumvent all preferably executable methods suggested
by SEBI in various circulars for raising the public shareholding up to the requisite benchmark, to execute
an synchronized off ‐market deal on‐market. It appears from the manner in which the trade was
executed that it was a part of an arrangement between the Noticees and ASL/ its directors to park the
shares with ASL/ its directors to technically comply with the MPS norms, but, by circumventing the true
spirit of such requirement. The ultimate objective behind the requirement of minimum public
shareholding is to distribute the shares amongst a large number of shareholders and prevent
concentration of shareholding in the hands of select few, which could make the security susceptible to
price manipulation to the prejudice of the interests of the investing public and defeat the prime
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objective of the SCRA of preventing undesirable transactions in securities. I, however, find from the
manner in which the shares have been transferred, the object behind the exercise did not get addressed
due to the ulterior motive of the Noticees.
44.
Since it is exceedingly difficult to prove facts which are especially within the knowledge of parties
concerned, the legal proof in such circumstances partakes the character of a prudent man's estimate as
to the probabilities of the case. I note that the Hon’ble Securities Appellate Tribunal (SAT )in the matter
of Ketan Parekh vs. SEBI has observed as follows:
“.... Any transaction executed with the intention to defeat the market mechanism whether negotiated or
not would be illegal. 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....
This
list
of factors, in the very nature of things, cannot be exhaustive. Any one factor may or may not be decisive
and it is from the cumulative effect of these that an inference will have to be drawn.”
45. In the normal trading/ normal periodic call auction session, sellers and buyers transact without knowing
each other by inputting their orders in the computerized trading system of the Exchanges. This
information is disseminated to the market. Based on their perception of the market and the scrip,
buyers and sellers enter their buy and sell orders. The Exchange mechanism ensures that the trades are
executed at
the
best
price.
However,
this
purpose
gets
defeated
when
trades
are
put
with
the
prior
understanding. It is pertinent to note that synchronized deal with exact matching of price and quantity,
is only possible if the orders are put in the system with prior understanding. In such situations, prices
and quantities are negotiated outside the system and orders are executed simultaneously. I find from
the manner in which orders in respect of the aforementioned trade between the promoter Mr. Atul
Gupta and Ms. Rajshree Choudhary at the rate of Rs. 94.75 for 1,03,500 shares were placed just a few
seconds apart, that the orders were synchronized. Otherwise such perfect matching of quantity and
price would not have been possible. Either the buy order and the sell order for 1,03,500 shares were
arranged by the parties to the trade themselves or through their common broker M/s. B. Lodha
Securities Ltd. to match specifically between themselves. The intention of the parties to execute such
synchronized transactions could be inferred from the attending circumstances, to increase the public
shareholding. However executing such synchronized transactions through the stock exchange
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mechanism tampers with price discovery mechanism of the stock exchange and is against the concept of
transparency. Besides, it defeated the very objective behind such exercise to provide liquidity to the
investors and to discover fair prices.
46.
The Noticees, I note, have inter alia stated that the WTM of SEBI had appointed Adjudicating Officer
(AO) only for the limited purpose of imposing penalties due to not adopting the prescribed methods for
dilution of shareholding to the public. Though I concur with the said argument of the Noticees, I note
that the Learned WTM of SEBI vide Order dated October 22, 2013 had observed that there was a
deviation from the methods available to the Noticees for bringing the shareholding of the public
shareholders in the company at the stipulated level of 25%. Hence, an adjudicating officer was
specifically appointed to adjudge the non‐adoption of the prescribed method for achieving MPS by the
Noticees
by
following
due
processes
under
law.
It
was
during
this
process
of
ascertaining
the
same
that
it came to knowledge that Mr. Atul Gupta had sold 1,03,500 equity shares representing 2.97% of the
paid up share capital of the Company to Ms. Rajshree Choudhary, through a synchronized deal executed
between Mr. Atul Gupta and Ms. Rajshree Choudhary on the floor of the Exchange. It was further
realized that Ms. Rajshree Choudhary is/ was one of the directors of stock broker ASL and that these
shares have been further transferred subsequently to stock broker ASL. Thereby during the adjudication
proceedings it came within knowledge that the Noticees had apparently parked the shares with stock
broker ASL/ its directors and technically complied with the MPS norms, but, not in its true spirit. This
discovery of
facts
during
the
adjudicating
proceedings
can
by
no
means
be
considered
to
be
outside
the
jurisdiction of the Adjudicating Officer. An inquiry into whether prescribed methods for complying with
the MPS norms were adopted will be incomplete without looking at the way in which the norms were
actually achieved. It is necessary to do so to judge the intention of the Noticees and to see whether they
for some genuine reason did not adhere to the prescribed methods, or if the methods were bypassed to
circumvent the true spirit of the norms. Only after such an examination can the gravity of the offence be
determined. It is obvious that even the Noticees themselves understand this, as they have repeatedly
tried to emphasize their claim that the contravention was due to a genuine misreading of the provision.
The Noticees have also claimed that considering their bonafide, they believe that no penalty should be
imposed on them, however it appears that they parked their shares with stock broker ASL/ its directors
in order to circumvent the true spirit behind the MPS norms. Hence, by the same logic, the non adoption
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of the prescribed methods for complying with MPS norms for apparently circumventing the true spirit of
the MPS norms, while technically complying with the letter of the law, has to be viewed more seriously.
47. I, therefore, from all of the above find that Tulive and its promoters, viz. (a) Mr. Atul Gupta and (b) Mr.
KV Ramana, by not adopting the prescribed methods of compliance stipulated under SEBI circulars
CIR/CFD/DIL/10/2010 dated December 16, 2010, CIR/CFD/DIL/1/2012 dated February 08, 2012 and
CIR/CFD/DIL/11/2012 dated August 29, 2012 read with proviso to Rule 19A(1) of the Rules, have failed
to comply with Clause 40A of the Listing Agreement and directions issued by SEBI by the
aforementioned circulars, and have, thus, violated provisions of Section 21 of the SCRA and proviso to
Rule 19A (1) of the Rules. The Noticees are therefore liable to penalty under provisions of Section 23E
and 23H of the Act, which read as under:
Penalty for failure to comply with provision of listing conditions or delisting conditions or grounds.
23E. If a company or any person managing collective investment scheme or mutual fund, fails to comply
with the listing conditions or delisting conditions or grounds or commits a breach thereof, it or he shall be
liable to a penalty not exceeding twenty ‐ five crore rupees.
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 byelaws or the
regulations of the recognised 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.
48. While determining the quantum of monetary penalty under Section 23E and 23H of the SCRA, I have
considered the factors stipulated in Section 23‐J of SCRA, which reads as under:‐
“23J ‐ Factors to be taken into account by the adjudicating officer
While adjudging quantum of penalty under Section 23‐I, 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;
(b) the amount of loss caused to an investor or group of investors as a result of the default;
(c) the repetitive nature of the default.”
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49. In view of the charges as established, the facts and circumstances of the, the quantum of penalty would
depend on the factors referred in Section 23‐J of SCRA and stated as above. It is noted that no
quantifiable figures are available to assess the disproportionate gain or unfair advantage made as a
result of such default by the Noticees. Further from the material available on record, it may not be
possible to ascertain the exact monetary loss to the investors on account of default by the Noticees.
However, the availability of a minimum portion/ number of shares (floating stock) of a listed company
with the public ensures that there is a reasonable depth in the market and the prices of the securities
are less susceptible to manipulation. Therefore, in the interest of all investors and also for the
development of the securities market, the Noticees ought to have complied with the MPS requirement
in its true spirit, rather than merely technically complying with the letter of law. I also note that in a
separate
proceeding
vide
Order
dated
February
4,
2015,
a
penalty
of
Rs.4,65,000/‐
has
been
imposed
on
Mr. Atul Gupta for his failure to make disclosure under Regulation 13(4) read with 13(5) of the SEBI
(Prohibition of Insider Trading) Regulations, 1992 on two occasions viz. August 26, 2010 and on October
6, 2010, when he sold shares of Tulive worth more than Rs. 5 Lakh.
50. As per Section 23E and 23H of SCRA, the Noticees are liable to a penalty of up to Rupees Twenty Five
crore and Rupees One Crore respectively for the contravention/ non compliance. Further, under Section
23‐J of SCRA, the adjudicating officer has to give due regard to certain factors which have been stated as
above while
adjudging
the
quantum
of
penalty.
It
is
noted
that
no
quantifiable
figures
are
available
to
assess the disproportionate gain or unfair advantage made as a result of such non‐compliance by the
Noticee. Further from the material available on record, it is not possible to ascertain the exact monetary
loss to the investors on account of non‐compliance by the Noticee.
51. I note here that the Noticees have inter alia further stated that promoters have been at loss by not
availing the OFS process for sale/divesting the excess shareholding and the investors/ public
shareholders have benefited by sale in open market through the stock exchange. However, from the
facts as brought out above, it appears that the Noticees had an arrangement with a stock broker ASL/ its
directors to the prejudice of the interests of the investing public, defeating the prime objective of the
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SCRA of preventing undesirable transactions in securities and for cornering the benefits flowing from the
policies of the Government.
52. In the extant case, I, thus, note that as a listed company, and as Promoters of a listed company, the
Noticees had
a responsibility
to
comply
with
the
MPS
requirements
in
accordance
with
their
spirit,
intention and purpose. However, all that the Noticees actually did was carried out a synchronized
negotiated deal between the promoter Mr. Atul Gupta and stock broker ASL/ its directors on‐market, to
defeat the very purpose of larger public float to enable the general public to have a share in the wealth
of the company. The minimum public holding as a continuous listing requirement is with the aim of
promoting a liquid and transparent market with a better price discovery mechanism. In view of the
Noticees conduct of non adherence with the prescribed methods, and apparently parking the shares
with stock broker ASL/ its directors, presumably to circumvent the true spirit of the MPS norms by
executing a synchronized negotiated deal on‐market, I am of the opinion that the matter needs to be
viewed seriously.
ORDER
53. After taking into consideration all the facts and circumstances of the case, I impose a penalty of Rupees
25,00,000/‐ (Rupees Twenty Five Lakh only) under Section 23E SCRA and a penalty of Rupees
25,00,000/‐(Rupees
Twenty
Five
Lakh
only)
under
Section
23H
of
SCRA
i.e.
a total
penalty
of
Rs.50,00,000/‐ (Rupees Fifty Lakh Only) on the Noticees viz. M/s. Tulive Developers Ltd. and its
promoters, viz. (a) Mr. Atul Gupta and (b) Mr. KV Ramana, to be paid jointly and severally, for the
violation of SEBI circulars CIR/CFD/DIL/10/2010 dated December 16, 2010, CIR/CFD/DIL/1/2012 dated
February 08, 2012 and CIR/CFD/DIL/11/2012 dated August 29, 2012 read with proviso to Rule 19A(1) of
the Rules, thereby, failing to comply with Clause 40A of the Listing Agreement and directions issued by
SEBI by the aforementioned circulars and thus violating provisions of Section 21 of the SCRA and proviso
to Rule 19A (1) of the Rules.
54. The Noticees shall pay the said amount of penalty by way of demand draft in favour of “SEBI ‐ Penalties
Remittable to Government of India”, payable at Mumbai, within 45 days of receipt of this order. The
said demand draft should be forwarded to Mr. Jayanta Jash, Chief General Manager, Corporation
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Finance Department, SEBI Bhavan, Plot No. C – 4 A, “G” Block, Bandra Kurla Complex, Bandra (E),
Mumbai – 400 051.
55. In terms of rule 6 of the Rules, copies of this order are sent to the Noticee and also to the Securities and
Exchange Board of India.
Date: August 31, 2015 Anita Kenkare
Place: Mumbai Adjudicating Officer