Adjudication Order in respect of M/s. Tulive Developers Ltd., Mr. Atul Gupta and Mr. K V Ramana in the matter of M/s. Tulive Developers Ltd

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

email

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;


12/25


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.


16/25


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


19/25


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


20/25


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


21/25


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


22/25


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.”


23/25


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


24/25


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

Documents

Adjudication Order in respect of M/s. Tulive Developers Ltd., Mr. Atul Gupta and Mr. K V Ramana in the matter of M/s. Tulive Developers Ltd