BEFORETHEADJUDICATINGOFFICER

SECURITIESANDEXCHANGEBOARDOFINDIA
[ADJUDICATIONORDERNO.AK/AO7072/2015]
___________________________________________________________________________
UNDERSECTION23IOFSECURITIESCONTRACT(REGULATION)ACT,1956READWITHRULE5OFSEBI
(PROCEDUREFORHOLDINGINQUIRYANDIMPOSINGPENALTIESBYADJUDICATINGOFFICER)RULES,
1995
Inrespectof
M/s.TuliveDevelopersLtd.(PAN:AAACK4787D),Mr.AtulGupta(PAN:AFZPG6089H)
andMr.KVRamana(PAN:ATZPS3443D)
Inthematterof
M/s.TuliveDevelopersLtd.
______________________________________________________________________________

BACKGROUND

1. SecuritiesandExchangeBoardofIndia(hereinafterreferredtoas'SEBI')passedaninterimorderdated
June04,2013(hereinafterreferredtoas'theinterimorder')withrespectto105listedcompanieswho
did not comply with the Minimum Public Shareholding (hereinafter referred to as MPS) norms as
stipulatedunderrules19(2)(b)and19AoftheSecuritiesContracts(Regulation)Rules,1957(hereinafter
referredtoas'SCRR')withintheduedatei.e.June03,2013.M/s.TuliveDevelopersLimited(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
referredtoas'BSE').

2. Thereafter,videOrderdatedOctober22,2014(hereinafterreferredtoasthefinalorder),thelearned
WholeTimeMember,SEBIwhilerevokingthedirectionsissuedvideinterimorderdatedJune04,2013
againstthecompany,itsdirectors,promotersandpromotergroupwithimmediateeffecthadinteralia
statedthathewasnotconvincedwiththereasonssubmittedbythecompanyfornotadoptingmethods
inthecircularsforbringingtheshareholdingofthepublicshareholdersinthecompanyatthestipulated
minimumlevelof25%.VidethesaidOrder,thelearnedWholeTimeMember,SEBIhadinteraliafurther

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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)(ProcedureforHoldingInquiryandImposingPenaltiesbyAdjudicatingOfficer)Rules,2005
(hereinafterreferredtoastheRules).

APPOINTMENTOFADJUDICATINGOFFICER

3. TheundersignedwasappointedastheAdjudicatingOfficeronNovember11,2014undersection19of
SEBIActreadwithSection23IoftheSCRAandRule3oftheRulestoinquireintoandadjudgeunder
section23Eand23HoftheSCRA,theallegedviolationsbythecompanyanditspromotersviz.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
circularsCIR/CFD/DIL/10/2010datedDecember16,2010,CIR/CFD/DIL/1/2012datedFebruary08,2012
andCIR/CFD/DIL/11/2012datedAugust29,2012readwithprovisotoRule19A(1)oftheSCRR,thereby
not complying with Clause 40A of the Equity Listing Agreement and directions issued by SEBI by the
aforementionedcirculars,thus,violatingprovisionsofSection21ofSCRAandprovisotoRule19A(1)of
theSCRR.

SHOWCAUSENOTICE,HEARINGANDREPLY

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
throughothermeanscouldapproachSEBIwithappropriatedetailsforconsideringthesameonmerit,
the Noticees did not seek SEBIs 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
aforementionedcirculars,andhave,thus,violatedtheprovisionsofSection21oftheSCRAandproviso
toRule19A(1)oftheRules.

5. Accordingly,ShowCauseNotice(hereinafterreferredtoasSCN)Ref.No.EAD6/AK/VG/8886/2015/1,
EAD6/AK/VG/8886/2015/2andEAD6/AK/VG/8886/2015/3datedJanuary30,2015wereissuedtothe
NoticeescallingupontheNoticeestoshowcauseastowhyaninquiryshouldnotbeheldagainstthem
intermsofRule4ofSecuritiesContracts(ProcedureforHoldingInquiryandImposingofPenaltiesby
AdjudicatingOfficer)Rules,2005readwithsubsection(2)ofSection231oftheSCRAandwhypenalty
shouldnotbeimposedontheNoticeesunderprovisionofsection23Eand23HoftheSCRA.

6. Mr.KVRamanaShettyandMr.AtulGuptarepliedtotheaboveshowcausenoticevidetheirindividual
replieseachdatedFebruary19,2015,interaliastatingthat:
a. ThepublicshareholdinginthecompanyasonJune03,2013was25.01%andpromotershareholding
asonthatdatewas74.99%;
b. ThattheNoticeesbelievedthattheminimumthresholdforOfferforSale(hereinafterreferredtoas
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
achievingRs.25crorethresholdeitherat1%or2.97%sharesofthenoticeecompany;
c. ThattheNoticeesbelievedthattheOFSwasfacilitatingwindowmadeavailabletodivesttheexcess
shareholdingthroughsecondaryrouteoverandabovethepiecemealsaleinthesecondarymarket.
The OFS process would ensure fair price and avoid sudden supply of stock, which would be in the
interestofthepromoters;
d. ThattheybelievedthatsincetheydonotqualifytheminimumoffersizeaspertheOFSguidelines,
theyhadnochoicebuttodivestintheopenmarketonthestockexchangethroughsecondarysale;

e. ThattheywouldhaveobtainedpriorapprovalfromSEBItodivesttheexcessshareholdingthrough
open market secondary sale on the stock exchange, instead of OFS, if in their understanding such
approvalwasnecessaryforcasesnotdoingOFS.TheyunderstoodthatSEBIhadgrantedapprovals

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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
promotersoftheircompanyandtheywouldhavetoselltheequitysharesinthesecondarymarket,
therefore,thepromoterssold2.97%sharesinopenmarketthroughsecondaryrouteonthefloorof
theexchange;

g. ThatthepromotershavebeenatalossbynotbeingentitledtoavailtheOFSprocessforsale/divest
oftheexcessshareholding.Correspondingly,theinvestors/publicshareholdershavebeenbenefited
bythesaleintheopenmarketthroughstockexchange;
h. That the sale of shares by the promoters on the floor of the exchange in belief of a bonafide
interpretationoftheSEBIcircularcannotbeconsideredasadefault.

7. Inordertoproceedinthematter,anoticeofhearingdatedMarch13,2015,wassenttothecompany
andthepromotersviz.Mr.AtulGuptaandMr.K.B.Ramana,grantingthemanopportunityforpersonal
hearingonApril24,2015.TheNoticeesvideletterdatedApril22,2015,authorizedMr.SEshwarand
Mr.NarendraJoshitorepresenttheminthematter.Accordingly,onthescheduleddate,theAuthorized
Representatives(AR)appearedalongwithMr.AtulGupta.TheARsreiteratedthesubmissionsmadeby
Mr.KVRamanShettyandMr.AtulGuptaintheirrepliesdatedFebruary19,2005andsubmittedcopies
thereof.TheARsundertooktofilewrittensubmissionsonbehalfofthecompanybyMay5,2015.

8. Subsequently,thecompanysubmitteditsreplydatedMay04,2015statingthatthesesubmissionswere
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
companywasinformedthatthecompanyhadalreadybeenheardonApril24,2015,and,incaseithad
hadanyfurthersubmissionstomake,thecompanywasadvisedtodosolatestbyMay25,2015.The
companyvideemaildatedMay20,2015providedcopiesoflettersdatedJuly31,2014andFebruary24,
2014thatweresenttotheLearnedWholeTimeMember,priortothepassingofthefinalorder.

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9. Accordingly,thesubmissionsofthecompanyareinteraliasummarizedhereunder:
a. Thatthe companybelievedthat theminimumthresholdforOfferforSaleis Rs.25 crores and such
threshold should be achieved either at 1% or 10% or such lesser percentage so as to achieve
minimumpublicshareholding(i.e.2.97%);
b. ThattheywerenotachievingRs.25croresthresholdeitherat1%or2.97%shares;
c. Thatthepromotershadundertakentoachievetheminimumpublicshareholdingof25%onorbefore
June03,2013.Accordingly,thecompanydidnottakeanyoftheothermethodsavailablewiththe
companyforincreasingthepublicshareholdingto25%;
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 paidup
capitalofthecompanyonJune03,2013.Hence,asonJune03,2013,thepublicshareholdingofthe
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
percentageasonJune03,2013was26,12,765shares(74.99%);
e. Thatthecompanywas,thus,incompliancewithSEBIrequirementofminimumpublicshareholding
andthatthecompanyhadvideitsemaildatedJune04,2013intimatedBSEoftheaforesaidsaleof
sharesandconsequentincreaseinthepublicshareholdinginthecompanyto25.01%.

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/associatedwiththecompanyorwithanyofthepromoter/directorsofthecompany.
Also,whetheragreement,ifany,wasenteredbetweenMr.AtulGuptaandMs.RajshreeChoudharyfor
the bulk sale of 1,03,500 shares by Mr. Atul Gupta to Ms. Rajshree Choudhary. Clarification was also
soughtonhowthepriceofRs.94.75forsaleof1,03,500shareswasarrivedat,whenlasttradedprice
on April 16, 2013 for a trade of 2 shares was Rs. 92.90 and there was no trading in the shares of the
companyformorethanamonth.

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11. Vide email dated May 28, 2015, it was informed by Mr. Atul Gupta that Ms. Rajshree Choudhary was
neitherrelatednorassociatedorconnectedtoTuliveoritspromotersandthattherewasnoagreement
enteredintobetweenMr.AtulGuptaandMs.RajshreeChoudhary.Thesaidemailfurtherstatedthat
thetradewasatthemarketdeterminedpricewithinlimitspermittedbyBSE.

12. ThedetailsofthetradelogandorderlogoftheopenmarkettransactionbetweenMr.AtulGuptaand
Ms.RajshreeChoudharyweresoughtfromBSE.FromthedetailsreceivedfromBSE,itcametonotice
thatasynchronizeddealinthescripofTulivewasexecutedbetweenMs.RajshreeChowdharyandMr.
AtulGuptafor1,03,500sharesonJune03,2013atRs.94.75,i.e.atanincrementofRs.1.85tothelast
tradedpriceofRs.92.90onApril16,2013.Fromaperusaloftheorderlogofthetradeexecuted,itwas
observedthatthebuyandthesellorderswereplacedwithinatimegapof5secondsandthequantity
1,03,500 shares as well as the price of Rs. 94.75 matched. In view of the same, comments of the
Noticeesweresoughtonthesynchronizeddealexecutedasaforesaidtoincreasetheminimumpublic
shareholdinginthecompany,defeatinginspirittheultimateobjectivebehindtheexerciseofachieving
the MPSnorms.Also,clarificationwas inter aliasoughtfrom theNoticeesastowhetherthesaidMs.
RajshreeChoudharywasstillholdingthesharesorwhethertheshareshavebeenfurthertransferred.

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
additiontotheirentitlementintheRightsIssue.TheunsubscribedandunrenouncedsharesintheRights
Issueresultedinallotmentofadditionalsharestosuchpublicandpromotershareholdersinproportion
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
publicshareholdersimmediatelypriortodisinvestmentwas177,whichincreasedto285immediately
postdisinvestment;

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b. ThattheWTMofSEBIhadmentionedinpara5ofhavingdealtwithsaletoMs.RajshreeChoudhary
ontheflooroftheExchangeincludinginquiringwithBSE;
c. ThattheWTMofSEBIafteranalyzingthefactsandinformationhaspassedtheOrderinfavourofthe
promoters of the company by revoking the restrictions passed in the directions issued vide interim
orderdatedJune04,2013;
d. That the WTM of SEBI after being convinced with the dilution to the public had appointed
AdjudicatingOfficer(AO)onlyforthelimitedpurposeofimposingpenaltiesduetonotadoptingthe
prescribedmethodsfordilutionofshareholdingtothepublic;
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
methodsasstipulatedinSEBIcirculars;
f.

ThatifthetradeofMs.RajshreeChoudharywastobeconsideredbytheWTMtobeinvalidtrade
and not in accordance with the law, there was no likelihood for him to revoke the June 03, 2013
directions;

g. ThathenceallassumptionsareincorrectasregardsthetradeofMs.RajshreeChoudhary;
h. That as per the latest available data from the Registrar, Ms. Rajshree Choudhary does not hold
1,03,500sharesinthecompanyanditisnotwithintheknowledgeofthecompanytowhomithas
beensold;
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.

ThatthepromotershavebeenatlossbynotavailingtheOFSprocessforsale/divestingtheexcess
shareholding, whereas the investors/ public shareholders have benefited by sale in open market
throughthestockexchange;

k. That the sale of shares by promoters on the floor of the Exchange in belief of a bonafide
interpretationofSEBIcircularcannotbeconsideredasadefault.

14. Vide the said letter the Noticees had sought another opportunity of hearing before arriving at a
conclusion.AccordinglyvideemaildatedJuly08,2015,anotheropportunityofhearingwasgrantedto
theNoticeesonJuly16,2015.Mr.AtulGuptaalongwithMr.NarendraJoshi(AR)appearedonbehalfof
theNoticees.TheARsreiteratedthesubmissionsmadeinreplydatedJune15,2015.

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CONSIDERATIONOFISSUESANDFINDINGS

15. IhaveexaminedtheSCN,thesubmissionsmadebytheNoticeesintheirrepliesandduringthepersonal
hearing and the documents available on record. The issues that arise for consideration in the present
caseare:

a. Whetherthecompanyanditspromotersviz.Mr.AtulGupta&Mr.K.V.Ramanadidnotadoptthe
prescribed methods of compliance stipulated under SEBI circulars CIR/CFD/DIL/10/2010 dated
December16,2010,CIR/CFD/DIL/1/2012datedFebruary08,2012andCIR/CFD/DIL/11/2012dated
August29,2012toincreasethepublicshareholdinginthecompanytocomplywiththeMPSnorms,
asstipulatedundertheamendedrules19(2)(b)andnewlyintroducedRule19(A)ofSCRR,thereby
failingtocomplywithClause40AoftheEquityListingAgreementanddirectionsissuedbySEBIby
the aforementioned circulars, thus, violating provisions of Section 21 of SCRA and proviso to Rule
19A(1)oftheSCRR?

b. Whether the aforesaid failure on the part of the Noticees to comply with the aforesaid SEBI
Circulars,SCRRandSCRAattractsmonetarypenaltyundersection23Eand23HoftheSCRA,and,if
so,whatwouldbethemonetarypenaltythatcanbeimposedontheNoticees?

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
forcarryingoutthemandateoftheSCRA,theSCRRwereframedbytheCentralGovernment.Section21
oftheSCRAmandatesthecompliance,byalllistedcompanies,oftheconditionsofthelistingagreement
withthestockexchange.TheSCRRinteralia,prescribestherequirementswhichhavetobesatisfiedby
companiesforthepurposeofgettingtheirsecuritieslistedonanystockexchangeinIndia.Section21of
theSCRAreadsasunder:

Conditionsforlisting.
21.Wheresecuritiesarelistedontheapplicationofanypersoninanyrecognisedstockexchange,such
personshallcomplywiththeconditionsofthelistingagreementwiththatstockexchange.

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17. The SCRR was amended vide notification of the Securities Contracts (Regulation) (Amendment) Rules,
2010(hereinafterreferredtoas'Firstamendment')bytheCentralGovernmentdatedJune04,2010and
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
newrule;Rule19(A)wasintroducedtotheSCRRrespectively.

18. TheamendedRule19(2)(b)andnewlyintroducedRule19(A)ofSCRRreadasunder:
Requirementswithrespecttothelistingofsecuritiesonarecognisedstockexchange.
19(2)
(b)(i)Atleasttwentyfivepercentofeachclassorkindofequitysharesordebenturesconvertibleinto
equitysharesissuedbythecompanywasofferedandallottedtopublicintermsofanofferdocument;or
(ii) At least ten per cent of each class or kind of equity shares or debentures convertible into equity
sharesissuedbythecompanywasofferedandallottedtopublicintermsofanofferdocumentifthepost
issuecapitalofthecompanycalculatedatofferpriceismorethanfourthousandcrorerupees:

Providedthattherequirementofpostissuecapitalbeingmorethanfourthousandcrorerupeesshallnot
applytoacompanywhosedraftofferdocumentispendingwiththeSecuritiesandExchangeBoardof
IndiaonorbeforethecommencementoftheSecuritiesContracts(Regulation)(Amendment)Rules,2010,
if it satisfies the conditions prescribed in clause (b) of subrule 2 of rule 19 of the Securities Contracts
(Regulation)Rules,1956asexistedpriortothedateofsuchcommencement:

Providedfurtherthatthecompany,referredtoinsubclause(ii),shallincreaseitspublicshareholdingto
atleasttwentyfivepercent,withinaperiodofthreeyearsfromthedateoflistingofthesecurities,in
themannerspecifiedbytheSecuritiesandExchangeBoardofIndia.

ContinuousListingRequirement

19A.(1)Everylistedcompanyotherthanpublicsectorcompanyshallmaintainpublicshareholdingofat
leasttwentyfivepercent.:

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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
publicshareholdingtoatleasttwentyfivepercent,withinaperiodofthreeyearsfromthedateofsuch
commencement,inthemannerspecifiedbytheSecuritiesandExchangeBoardofIndia.

Explanation:Forthepurposesofthissubrule,acompanywhosesecuritieshasbeenlistedpursuanttoan
offerandallotmentmadetopublicintermsofsubclause(ii)ofclause(b)ofsubrule(2)ofrule19,shall
maintain minimum twenty five per cent public shareholding from the date on which the public
shareholdinginthecompanyreachestheleveloftwentyfivepercentintermsofsaidsubclause.

(2)Wherethepublicshareholdinginalistedcompanyfallsbelowtwentyfivepercentatanytime,such
companyshallbringthepublicshareholdingtotwentyfivepercentwithinamaximumperiodoftwelve
monthsfromthedateofsuchfallinthemannerspecifiedbytheSecuritiesandExchangeBoardofIndia.

(3) Notwithstanding anything contained in this rule, every listed public sector company shall maintain
publicshareholdingofatleasttenpercent.:

Providedthatalistedpublicsectorcompany

(a) which has public shareholding below ten per cent, on the date of commencement of the Securities
Contracts(Regulation)(SecondAmendment)Rules,2010shallincreaseitspublicshareholdingtoatleast
tenpercent,inthemannerspecifiedbytheSecuritiesandExchangeBoardofIndia,withinaperiodof
threeyearsfromthedateofsuchcommencement;

(b) whose public shareholding reduces below ten per cent, after the date of commencement of the
SecuritiesContracts(Regulation)(SecondAmendment)Rules,2010shallincreaseitspublicshareholding
toatleasttenpercent,inthemannerspecifiedbytheSecuritiesandExchangeBoardofIndia,withina
periodoftwelvemonthsfromthedateofsuchreduction.

19. Thustheprovisionsquotedaboverequiredalllistedcompanies(otherthanpublicsectorcompanies)to
achieveandmaintaintheMPSof25%ofeachclassorkindofequitysharesordebenturesconvertible

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into equity shares issued by such companies. Those companies with public shareholding of less than
25%wererequiredtoachievethesame,withinaperiodofthreeyearsfromthedateofcommencement
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
shareholdingasprovidedforintheSCRR.Also,itisprescribedthatwherethecompanyisrequiredto
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
publicshareholdingtotherequiredlevel:
(a)issuanceofsharestopublicthroughprospectus;or
(b)offerforsaleofsharesheldbypromoterstopublicthroughprospectus;or
(c) sale of shares held by promoters through the secondary market in terms of SEBI circular
CIR/MRD/DP/05/2012datedFebruary1,2012;or
(d) Institutional Placement Programme (IPP) in terms of Chapter VIIIA of SEBI (Issue of Capital and
DisclosureRequirements)Regulations,2009,asamended;or
(e) Rights Issues to public shareholders, with promoter/promoter group shareholders forgoing their
entitlementtoequityshares,whetherpresentorfuture,thatmayarisefromsuchissue;or
(f) Bonus Issues to public shareholders, with promoter/promoter group shareholders forgoing their
entitlementtoequityshares,whetherpresentorfuture,thatmayarisefromsuchissue;or
(g)anyothermethodasmaybeapprovedbySEBIonacasetocasebasis

20. In order to align the requirements in the Listing Agreement with the requirements specified in Rule
19(2)(b)andRule19AofSCRRandtospecifythemannerinwhichpublicshareholdingmayberaisedto
theprescribedminimumlevel,SEBIissuedaCircularNoCIR/CFD/DIL/10/2010datedDecember16,2010
to suitably amend Clause 40A of the Listing Agreement. This circular interalia provided the following
methodsforcomplyingwiththeMPSrequirement:
Issuanceofsharestothepublicthroughprospectus;
Offerforsale(OFS)ofsharesheldbypromoterstopublicthroughprospectus;
Saleofsharesheldbypromotersthroughthesecondarymarketi.e.OFSthroughStockExchange;

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21. Subsequently,SEBIissuedanothercirculardatedFebruary08,2012whichinteraliaprovidedthatlisted
companiesmayachievetheMPSrequirementalsothrough:
InstitutionalPlacementProgramme(IPP)

22. With a view to further facilitate listed companies to comply with the minimum public shareholding
requirementswithinthetimespecifiedintheSCRR,SEBIissuedcirculardatedAugust29,2012,which
furtherspecifiedthefollowingadditionalmethodstocomplywiththeMPSrequirements:
Rights Issues to public shareholders, with promoters/promoter group shareholders forgoing their
rightsentitlement;
Bonus Issues to public shareholders, with promoters/promoter group shareholders forgoing their
bonusentitlement;
AnyothermethodasmaybeapprovedbySEBI,onacasetocasebasis.

23. Thus,InotethatvidecirculardatedAugust29,2012,SEBIhadalsospecifiedthatlistedentitiesdesirous
ofachievingtheMPSrequirementthroughothermeansmayapproachit(SEBI)withappropriatedetails
thatwouldbeconsideredbySEBIbasedonmerit.

24. SEBI also initiated a consultative process with these companies and market participants to elicit a
concreteplanofactionasregardsensuringcompliancewiththeMPSrequirementandheldaseriesof
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
prescribedmethods.

25. InotethatTulivewasoneofthe105listedcompaniesagainstwhominterimorderdatedJune04,2013
waspassedfornotcomplyingwiththeMPSnormsasstipulatedundertheamendedrules19(2)(b)and
newlyintroducedRule19(A)ofSCRRwithintheduedatei.e.,June03,2013.ThesaidOrderdatedJune
04,2013interaliadirectedasfollows:
freezing of voting rights and corporate benefits like dividend, rights, bonus shares, split, etc. with
respecttotheexcessofproportionatepromoter/promotergroupshareholdinginthenoncompliant

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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 noncompliant 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
shareholdingrequirement;
restrained the shareholders forming part of the promoter/promoter group in the noncompliant
companies from holding any new position as a director in any listed company, till such time these
companiescomplywiththeminimumpublicshareholdingrequirement;
restrainthedirectorsofnoncompliantcompaniesfromholdinganynewpositionasadirectorinany
listed company, till such time these companies comply with the minimum public shareholding
requirement.
TheinterimorderwaspassedwithoutprejudicetotherightofSEBItotakeanyotheraction,against
the noncompliant companies, their promoters and/ or directors or issuing such directions in
accordancewithlaw.

26. IfurthernotethattheinterimdirectionsagainstTulive,itsdirectors,promotersandpromotergroupas
above,wererevokedbythelearnedWholeTimeMember(WTM),SEBI,videOrderdatedOctober22,
2013 based on the submissions made by the company in reply to the interim order. I find that the
companyhadinteraliasubmittedasfollowsbeforetheWTMofSEBI:
a. That the Company had received disclosures under the SEBI (Substantial Acquisition of Shares and
Takeover)Regulations,2011andSEBI(ProhibitionofInsiderTrading)Regulations,1992fromoneof
its Promoter and Director, Mr. Atul Gupta, intimating therein the sale of 1,03,500 shares
representing2.97%ofthepaidupsharecapitaloftheCompanyonJune03,2013inopenmarket;
b. ThattheabovesalehadresultedintheincreaseofthepublicshareholdingintheCompanyto25.01%
asonJune03,2013;
c. That the Company believed that the minimum threshold for the Offer for Sale (OFS) is Rs.25 Crore
andthatsuchthresholdshouldbeachievedeitherat1%or10%orsuchlesserpercentagesoasto
achieveMPS.AsitwasnotachievingtheRs.25Crorethreshold,itbonafidelythoughtthatitcould
notavailtheOFSmodeandhadsoldtheequitysharesinthesecondarymarket;

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d. ThattheCompanyalsorequestedSEBItoconsideritscaseforpostfactoapproval;
e. Thatpriortothedisinvestment,theCompanyhad177shareholders;
f.

ThatthesharesweresoldtooneMr.RajshreeChoudharywhowasneitherapromoternoradirector
oftheCompanyandpursuanttothesame,thepromoters'holdingwasreducedto74.99%.

27. Basedonthesubmissionsmadeasabove,theLearnedWTMofSEBIrevokedthedirectionsissuedvide
the interim order dated June 04, 2013 against the company, its directors, promoters and promoter
group.However,whilerevokingtheinterimdirections,theLearnedWTMnotedthatthesaleof2.97%
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
specificpriorpermissionsfromSEBIforthesaleof1,03,500sharesrepresenting2.97%byitspromoter
intheopenmarket.Inthiscontext,theOrdernotedthatseveralcompanieshadapproachedSEBIatan
early stage, with a request to permit them for open market sale so as to achieve compliance of MPS
requirementsandSEBIhadgrantedpermissionstomanysuchcompanies.

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
OrderfurtheralsorecordedthattheCompanyhadtheprimaryresponsibilitytocomplywiththeMPS
requirement by adopting the methods available as per the circulars issued by SEBI, and in case the
Companywasexperiencinganydifficulty,itshouldhaveapproachedSEBIwithitsproposedmethodfor
approval,whichtheCompanyhasclearlyfailedtodo.

29. Thus,whilerevokingtheinterimdirectionsagainstthecompany,itsdirectors,promotersandpromoter
groupwithimmediateeffectvideOrderdatedOctober22,2013,theLearnedWTMinteralianotedthat
therewasadeviationfromthemethodsmentionedinthecircularsforbringingtheshareholdingofthe
publicshareholdersinthecompanyatthestipulatedminimumlevelof25%.Hence,videthesaidOrder,
thematterwasreferredforadjudicationproceedingsunderSections23Eand23HofSCRAreadwiththe
Rules,basedonwhichtheextantadjudicationhavebeeninitiated.

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30. I,thus,notefromthesaidOrderdatedOctober22,2014thatthepromoterofTulivehadsold1,03,500
equitysharesrepresenting2.97%ofthepaidupsharecapitaloftheCompanyonJune03,2013inopen
marketontheflooroftheExchangetooneMs.RajshreeChoudhary,whowasneitherapromoternora
directorofthecompany,pursuanttowhichthepromotersholdingwasreducedto74.99%.Asperthe
shareholdingpatternforthequarterendedSeptember2013availableonBSEwebsite,thenameofMs.
RajshreeChoudharywasmentionedasoneofthepublicshareholderholding2.97%ofthepaidupshare
capitaloftheCompany.

31. However,Inotethatthesaleof2.97%ofthepaidupsharecapitalofTuliveintheopenmarketbythe
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
sharesinopenmarket.

32. InoteherethattheNoticeeshavestatedthattheymisinterpretedtheprovisionregardingOFS,dueto
whichthepromotersofTulivehadsold1,03,500equitysharesrepresenting2.97%ofthepaidupshare
capital of the Company on June 03, 2013 in open market on the floor of the Exchange to one Ms.
RajshreeChoudhary.Inthematter,IfindthatSEBIhadspecificallyvidecirculardatedAugust29,2012,
i.e.muchbeforetheimpugnedsale,specifiedthatlistedcompaniesdesirousofachievingtheminimum
publicshareholdingrequirementthroughothermeanscouldapproachSEBIwithappropriatedetailsfor
considering the same on merit, however, the Noticees did not seek SEBIs permission for their open
market sale so as to achieve compliance of MPS requirements. If the company and/or its
promoters/directorshadanydoubtaboutthemethodthattheyshouldadopttocomplywiththeMPS
requirement, they could have approached SEBI. The submission of the Noticees cannot be accepted
especiallyinlightofthefactthatvidecirculardatedAugust29,2012,SEBIhadofferedtoconsiderany
method,otherthantheonesspecificallyprovidedforinvariousprecedingcircularsandthroughthesaid
circular, so that a company could come up with an acceptable way to fulfill the required criterion of
minimumpublicshareholding.

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33. ItbecomespertinenttomentionherethattounderstandtherationalebehindinclusionofRule19Ain
theSCRR,aPressReleasedatedJune04,2010issuedbytheMinistryofFinance,GovernmentofIndia,
followingtheintroductionofRule19A,isrelevantandreproducedhereinbelow:
A dispersed shareholding structure is essential for the sustenance of a continuous market for listed
securitiestoprovideliquiditytotheinvestorsandtodiscoverfairprices.Further,thelargerthenumber
ofshareholders,thelessisthescopeforpricemanipulation.

34. Thus,Inotethattheunderlyingphilosophybehindtherequirementofminimumpublicholdingof25%is
to ensure a larger public float, to stave off any attempts of manipulation. I note here that the in the
matterofM/s.GilletteIndiaLtd.Vs.SEBI,theHonbleSecuritiesAppellateTribunal(SAT)videOrder
datedJuly03,2013hasalsoobservedasfollows:

Inouropinion,theAppellantseemstohaveoverlooked,whetherdeliberatelyorinadvertently,thefact
thattheunderlyingphilosophybehindtherequirementofaminimumpublicholdingof25%isprevention
ofconcentrationofsharesinthehandsofafewmarketplayersbyensuringasoundandhealthypublic
floattostaveoffanymanipulationorperpetrationofotherunethicalactivitiesinthesecuritiesmarket
whichwouldunfortunatelybetheirrefragableconsequenceofthereinsofthemarketbeinginthehands
ofafew.

35. In the extant case, I note from the price volume data available on the BSE website that there was no
tradinginthesharesofthecompanysinceApril17,2013tillJune03,2013,when1,03,500shareswere
soldbythepromoterMr.AtulGuptatooneMs.RajshreeChoudharyattherateofRs.94.75.Thelast
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
sharesatRs.92.95.ItisobservedfromthepricevolumedataavailableontheBSEwebsitethatthescrip
wasverythinlytradedduringtherelevantpointoftime,withnotradingtakingplaceforperiodsranging
formorethanamonth.

36. Itwas,hence,importantintheinterestoftheinvesting publicand consideringthe primeobjectiveof

the SCRA of preventing undesirable transactions in securities that the company and promoters adopt

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fromoneofthemethodslaiddownbySEBItocomplywiththeMPSnorms.However,Ifindthatthesale
of 1,03,500 shares by Mr. Atul Gupta to Ms. Rajshree Choudhary in the open market to comply with
MPSnormwasactuallyasynchronizednegotiateddeal,executedonthemarketthoughthecallauction
mechanism,soastomerelytechnicallycomplywiththeminimumpublicshareholdingnormsinletter,
but,notinitstruespirit.

37. Tobetterunderstandthesame,anextractfromtheOrderlogofBSEonJune03,2013isplacedbelow:

ORDER_ID

ORDERTIME

RATE
(Rs.)

16000028004289

10:38:24.022002

91.05

100

16000028004289

10:38:29.456538

91.05

100

16000028004289

10:38:29.459436

91.05

100

16000028004715

11:12:56.130331

94.75

103500

11000021004548

11:13:01.064241

94.75

103500

QTY

BUY
/
MEMBER
SELL NAME
B.LODHA
B
SEC.LTD.
B.LODHA
B
SEC.LTD.
B.LODHA
B
SEC.LTD.
B.LODHA
B
SEC.LTD.
B.LODHA
S
SEC.LTD.

CLIENT
NAME
RAJSHREE
CHOWDHARY
RAJSHREE
CHOWDHARY
RAJSHREE
CHOWDHARY
RAJSHREE
CHOWDHARY

CLIENT
PHONE

ATULGUPTA

43039224

28444555
28444555
28444555
28444555

TEXT
ORDERADDED
SUCCESSFULLY
ORDERDELETED
SUCCESSFULLY
ORDERDELETED
SUCCESSFULLY
ORDERADDED
SUCCESSFULLY
ORDERADDED
SUCCESSFULLY

38. I note here that BSE vide Notice No. 201304027 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.
201302197 dated February 19, 2013 & 2013032812 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
intimatedthattheperiodiccallauctionsessionsofonehoureachshallbeconducteddailythroughout
thetradinghourswiththefirstsessionstartingat9:30amandlastsessionendingat3.30pmasfollows:
9:30amto10:30am,10:30amto11:30am,11:30amto12:30pm,12:30pmto1:30pm,1:30pmto
2:30 pm and 2:30 pm to 3:30 pm. It was further made clear in the said notice that each periodic call
auctionsessionshallconsistoftwoperiodsasfollows:

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OrderEntryPeriod

45

OrderEntry/Modification/CancellationAllowed

minutes

Randomstoppagebetween44thand45thminute(systemdriven)
Dissemination of Indicative Price, Cummulative Buy and Sell
Quantity

Order matching and Trade 15

OrderMatching/TradeConfirmation

Confirmation Period including minutes

OrderEntry/Modification/CancellationNotAllowed

BufferPeriod(upto7minutes)

Buffer Period To facilitate transition between two call

auctions

39. TheaforesaidBSENoticeinteraliaalsostatedthatamaximumpricebandof20%shallbeapplicableon
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
regularintervalsduringtheorderentryperiodofeachperiodiccallauctionsessionaspartofthemarket
picturebroadcast
Theindicativeequilibriumprice+nextbest4bidsandoffers.
If the indicative equilibrium price does not get determined, then the best bids and offers shall be
displayed.

40. ThescripofTulivebyvirtueofbeingilliquidwascoveredundersuchperiodiccallauctionmechanism.
Thus,forthecallauctionsessionstartingat10:30am,orderscouldbeenteredupto11:13beforethe
system driven random stoppage would get activated. In the context of the extant case, firstly sale
throughopenmarketwasnotoneofthemethodsthatcouldbeadoptedforcomplyingwithMPSnorms
withouttheapprovalofSEBI.Evenpresumingforamomentthatsuchapprovalwasnotrequired,inthat
casetoo,ifpromoterMr.AtulGuptaintendedtoincreasethepublicshareholdinginitstruespiritinthe
companybyoffloading1,03,500sharesintheopenmarketthroughthecallauctionmechanism,then
undernormalcircumstances,Mr.AtulGuptacouldhaveenteredhisorderatthestartofthesessionso
thattheinformationcouldhavegotdisseminatedtothemarketduringtheperiodiccallauctionsession
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
mechanisminordertocarryoutasynchronizedtrade.

41. InotethatthetradewasacrossdealexecutedthroughthestockbrokerM/s.B.LodhaSecuritiesLtd.In
thecaseofGIRMarketing&TradingCo.Pvt.Ltd.vs.SEBI(Appealno.113of2011decidedonAugust
5,2011),ithasbeenheldbytheHonbleSecuritiesAppellateTribunal(SAT)thatcrossdealsperseare
not illegal but the common broker executing the buy and sell orders is not expected to match those
ordersbyputtinginordersforthesamequantity,atthesamepriceandatthesametime.

42. Further as per the details available on the website of M/s. ASL Capital Holdings Pvt. Ltd. (hereinafter
referredtoasASL),astockbroker/tradingmemberofNationalStockExchangeofIndiaLtd.(hereinafter
referredtoasNSE),theclientphone28444555aspertheBSEOrderlogappearstobeofASL.Further,
aspertheinformationavailableinpublicdomainMr.RavikantChoudharyistheManagingDirectorand
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
matchingthepriceandquantitythroughthreetranchesexecutedonthreetradedaysviz.May21,2014
(30,000sharesatRs.109.75),May22,2014(35,000sharesatRs.110)andMay27,2014(38,480shares
atRs.110.10).AsperBSEswebsite,1,03,480sharesarebeingheldbyASLasatquarterendedMarch
2015.

43. Thus, from all of the above, it appears that the Noticees under the garb of misinterpretation of SEBI
circularsinthematterbythem,onlytriedtocircumventallpreferablyexecutablemethodssuggested
bySEBIinvariouscircularsforraisingthepublicshareholdinguptotherequisitebenchmark,toexecute
an synchronized offmarket deal onmarket. It appears from the manner in which the trade was
executedthatitwasapartofanarrangementbetweentheNoticeesandASL/itsdirectorstoparkthe
shareswithASL/itsdirectorstotechnicallycomplywiththeMPSnorms,but,bycircumventingthetrue
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
concentrationofshareholdinginthehandsofselectfew,whichcouldmakethesecuritysusceptibleto
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
mannerinwhichtheshareshavebeentransferred,theobjectbehindtheexercisedidnotgetaddressed
duetotheulteriormotiveoftheNoticees.

44. Since it is exceedingly difficult to prove facts which are especially within the knowledge of parties
concerned,thelegalproofinsuchcircumstancespartakesthecharacterofaprudentman'sestimateas
totheprobabilitiesofthecase.InotethattheHonbleSecuritiesAppellateTribunal(SAT)inthematter
ofKetanParekhvs.SEBIhasobservedasfollows:
....Anytransactionexecutedwiththeintentiontodefeatthemarketmechanismwhethernegotiatedor
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
fromtheattendingcircumstancesbecausedirectevidenceinsuchcasesmaynotbeavailable....Thislist
offactors,intheverynatureofthings,cannotbeexhaustive.Anyonefactormayormaynotbedecisive
anditisfromthecumulativeeffectofthesethataninferencewillhavetobedrawn.

45. Inthenormaltrading/normalperiodiccallauctionsession,sellersandbuyerstransactwithoutknowing
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,
buyersandsellersentertheirbuyandsellorders.TheExchangemechanismensuresthatthetradesare
executed at the best price. However, this purpose gets defeated when trades are put with the prior
understanding.Itispertinenttonotethatsynchronizeddealwithexactmatchingofpriceandquantity,
isonlypossibleiftheordersareputinthesystemwithpriorunderstanding.Insuchsituations,prices
andquantitiesarenegotiatedoutsidethesystemandordersareexecutedsimultaneously.Ifindfrom
the manner in which orders in respect of the aforementioned trade between the promoter Mr. Atul
GuptaandMs.RajshreeChoudharyattherateofRs.94.75for1,03,500shareswereplacedjustafew
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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mechanismtamperswithpricediscoverymechanismofthestockexchangeandisagainsttheconceptof
transparency. Besides, it defeated the very objective behind such exercise to provide liquidity to the
investorsandtodiscoverfairprices.

46. The Noticees, I note, have inter alia stated that the WTM of SEBI had appointed Adjudicating Officer
(AO)onlyforthelimitedpurposeofimposingpenaltiesduetonotadoptingtheprescribedmethodsfor
dilutionofshareholdingtothepublic.ThoughIconcurwiththesaidargumentoftheNoticees,Inote
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
specificallyappointedtoadjudgethenonadoptionoftheprescribedmethodforachievingMPSbythe
Noticeesbyfollowingdueprocessesunderlaw.Itwasduringthisprocessofascertainingthesamethat
it came to knowledge that Mr. Atul Gupta had sold 1,03,500 equity shares representing 2.97% of the
paidupsharecapitaloftheCompanytoMs.RajshreeChoudhary,throughasynchronizeddealexecuted
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
shareshavebeenfurthertransferredsubsequentlytostockbrokerASL.Therebyduringtheadjudication
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
discoveryoffactsduringtheadjudicatingproceedingscanbynomeansbeconsideredtobeoutsidethe
jurisdictionoftheAdjudicatingOfficer.Aninquiryintowhetherprescribedmethodsforcomplyingwith
theMPSnormswereadoptedwillbeincompletewithoutlookingatthewayinwhichthenormswere
actuallyachieved.ItisnecessarytodosotojudgetheintentionoftheNoticeesandtoseewhetherthey
forsomegenuinereasondidnotadheretotheprescribedmethods,orifthemethodswerebypassedto
circumventthetruespiritofthenorms.Onlyaftersuchanexaminationcanthegravityoftheoffencebe
determined. Itisobvious thateven theNoticeesthemselvesunderstand this,astheyhaverepeatedly
triedtoemphasizetheirclaimthatthecontraventionwasduetoagenuinemisreadingoftheprovision.
TheNoticeeshavealsoclaimedthatconsideringtheirbonafide,theybelievethatnopenaltyshouldbe
imposedonthem,howeveritappearsthattheyparkedtheirshareswithstockbrokerASL/itsdirectors
inordertocircumventthetruespiritbehindtheMPSnorms.Hence,bythesamelogic,thenonadoption

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oftheprescribedmethodsforcomplyingwithMPSnormsforapparentlycircumventingthetruespiritof
theMPSnorms,whiletechnicallycomplyingwiththeletterofthelaw,hastobeviewedmoreseriously.

47. I,therefore,fromalloftheabovefindthatTuliveanditspromoters,viz.(a)Mr.AtulGuptaand(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/11/2012datedAugust29,2012readwithprovisotoRule19A(1)oftheRules,havefailed
to comply with Clause 40A of the Listing Agreement and directions issued by SEBI by the
aforementionedcirculars,andhave,thus,violatedprovisionsofSection21oftheSCRAandprovisoto
Rule19A(1)oftheRules.TheNoticeesarethereforeliabletopenaltyunderprovisionsofSection23E
and23HoftheAct,whichreadasunder:
Penaltyforfailuretocomplywithprovisionoflistingconditionsordelistingconditionsorgrounds.
23E.Ifacompanyoranypersonmanagingcollectiveinvestmentschemeormutualfund,failstocomply
withthelistingconditionsordelistingconditionsorgroundsorcommitsabreachthereof,itorheshallbe
liabletoapenaltynotexceedingtwentyfivecrorerupees.

Penaltyforcontraventionwherenoseparatepenaltyhasbeenprovided.
23H. Whoever fails to comply with any provision of this Act, the rules or articles or byelaws or the
regulationsoftherecognisedstockexchangeordirectionsissuedbytheSecuritiesandExchangeBoard
ofIndiaforwhichnoseparatepenaltyhasbeenprovided,shallbeliabletoapenaltywhichmayextend
toonecrorerupees.

48. While determining the quantum of monetary penalty under Section 23E and 23H of the SCRA, I have
consideredthefactorsstipulatedinSection23JofSCRA,whichreadsasunder:
23JFactorstobetakenintoaccountbytheadjudicatingofficer
WhileadjudgingquantumofpenaltyunderSection23I,theadjudicatingofficershallhavedueregardto
thefollowingfactors,namely:
(a)theamountofdisproportionategainorunfairadvantage,whereverquantifiable,madeasaresultof
thedefault;
(b)theamountoflosscausedtoaninvestororgroupofinvestorsasaresultofthedefault;
(c)therepetitivenatureofthedefault.

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49. Inviewofthechargesasestablished,thefactsandcircumstancesofthe,thequantumofpenaltywould
depend on the factors referred in Section 23J 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,theavailabilityofaminimumportion/numberofshares(floatingstock)ofalistedcompany
withthepublicensuresthatthereisareasonabledepthinthemarketandthepricesofthesecurities
are less susceptible to manipulation. Therefore, in the interest of all investors and also for the
developmentofthesecuritiesmarket,theNoticeesoughttohavecompliedwiththeMPSrequirement
in its true spirit, rather than merely technically complying with the letter of law. I also note that in a
separateproceedingvideOrderdatedFebruary4,2015,apenaltyofRs.4,65,000/hasbeenimposedon
Mr. Atul Gupta for his failure to make disclosure under Regulation 13(4) read with 13(5) of the SEBI
(ProhibitionofInsiderTrading)Regulations,1992ontwooccasionsviz.August26,2010andonOctober
6,2010,whenhesoldsharesofTuliveworthmorethanRs.5Lakh.

50. AsperSection23Eand23HofSCRA,theNoticeesareliabletoapenaltyofuptoRupeesTwentyFive
croreandRupeesOneCrorerespectivelyforthecontravention/noncompliance.Further,underSection
23JofSCRA,theadjudicatingofficerhastogivedueregardtocertainfactorswhichhavebeenstatedas
abovewhileadjudgingthequantumofpenalty.Itisnotedthatnoquantifiablefiguresareavailableto
assess the disproportionate gain or unfair advantage made as a result of such noncompliance by the
Noticee.Furtherfromthematerialavailableonrecord,itisnotpossibletoascertaintheexactmonetary
losstotheinvestorsonaccountofnoncompliancebytheNoticee.

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
factsasbroughtoutabove,itappearsthattheNoticeeshadanarrangementwithastockbrokerASL/its
directorstotheprejudiceoftheinterestsoftheinvestingpublic,defeatingtheprimeobjectiveofthe

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SCRAofpreventingundesirabletransactionsinsecuritiesandforcorneringthebenefitsflowingfromthe
policiesoftheGovernment.

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
negotiateddealbetweenthepromoterMr.AtulGuptaandstockbrokerASL/itsdirectorsonmarket,to
defeattheverypurposeoflargerpublicfloattoenablethegeneralpublictohaveashareinthewealth
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
executingasynchronized negotiateddealonmarket,Iamoftheopinionthatthematter needstobe
viewedseriously.

ORDER

53. Aftertakingintoconsiderationallthefactsandcircumstancesofthecase,IimposeapenaltyofRupees
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
February08,2012andCIR/CFD/DIL/11/2012datedAugust29,2012readwithprovisotoRule19A(1)of
theRules,thereby,failingtocomplywithClause40AoftheListingAgreementanddirectionsissuedby
SEBIbytheaforementionedcircularsandthusviolatingprovisionsofSection21oftheSCRAandproviso
toRule19A(1)oftheRules.

54. TheNoticeesshallpaythesaidamountofpenaltybywayofdemanddraftinfavourofSEBIPenalties
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),
Mumbai400051.

55. Intermsofrule6oftheRules,copiesofthisorderaresenttotheNoticeeandalsototheSecuritiesand
ExchangeBoardofIndia.

Date:August31,2015

AnitaKenkare

Place:Mumbai

AdjudicatingOfficer

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