BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. CFD/APIL/AO/DRK-AKS/EAD3-688-705/13-30/2015]

__________________________________________________
UNDER SECTION 15 I OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992
READ WITH RULE 5(1) OF SECURITIES AND EXCHANGE BOARD OF INDIA
(PROCEDURE

FOR

HOLDING

INQUIRY

AND

IMPOSING

PENALTIES

BY

ADJUDICATING OFFICER) RULES, 1995

In respect of:
Mr. Bikramjit
Ahluwalia
(Acquirer and PAC)

Ms. Ram Piari

(PAC)

Ms. Pushpa Rani

(PAC)

Ms. Raman Pal

(PAC)

Ms. Rohini S.
Ahluwalia (PAC)

Ms.Rohini Ahluwalia
(PAC)

Ahluwalia Builders &

Development Group
(Private Limited)
(PAC)

Capricon Industrials
Ltd. (PAC)

Tidal Securities Pvt. Mr. Shobhit Uppal

Ltd. (PAC)
(PAC)

Mr. Vikas Ahluwalia

(PAC)

Ms. Rachna Uppal

(PAC)

Ms. Sudarshan
Walia
(PAC)

Ms. Sudarshan
Ahluwalia
(PAC)

Ms. Mukta Ahluwalia Mr. Madan Gopal

(PAC)
(PAC)

Mr. Raj Kumar

Ahluwalia
(PAC)

Mr. Santosh Ahluwalia

(PAC)

FACTS IN BRIEF
1. Securities and Exchange Board of India (hereinafter referred to as SEBI) while examining
the Letter of Offer filed by B. Braun Singapore Pte. Ltd. along with B. Braun Melsungen
AG to acquire 26% shares of the Ahlcon Parenterals (India) Ltd. (hereinafter referred to as
'APIL') observed certain non compliance with regard to SEBI (Substantial Acquisition of
Shares and Takeovers) Regulations, 1997 (hereinafter referred to as Takeover
Regulations).
APPOINTMENT OF ADJUDICATING OFFICER
2. I was appointed as Adjudicating Officer under Section 15 I of the Securities and Exchange
Board of India Act, 1992 (hereinafter referred to as SEBI Act), read with Rule 3 of

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Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing
Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as Adjudication
Rules) to inquire into and adjudge under Section 15H (ii) of the SEBI Act for the violation
of Regulations 11 (2) read with 14 (1) alleged to have been committed by Mr. Bikramjit
Ahluwalia (Acquirer & PAC) along with PACs viz., Ms. Ram Piari, Ms. Pushpa Rani, Ms.
Raman Pal, Ms. Rohini S. Ahluwalia, Ms. Rohini Ahluwalia, Ahluwalia Builders &
Development Group (Private) Limited, Capricon Industrials Ltd., Tidal Securities Pvt. Ltd.,
Mr. Shobhit Uppal, Mr. Vikas Ahluwalia, Ms. Rachna Uppal, Ms. Sudarshan Walia, Ms.
Sudarshan Ahluwalia, Ms. Mukta Ahluwalia, Mr. Madan Gopal, Mr. Santosh Ahluwalia and
Mr. Raj Kumar Ahluwalia (PAC) (hereinafter referred to as 'noticees / Promoter group')
and the same was communicated vide proceedings of the Whole Time Member appointing
Adjudicating Officer dated 29.05.2014.
SHOW CAUSE NOTICE, REPLY AND HEARING
3. A common Show Cause Notice No. A&E/EAD3/DRK-AKS/18333/2014 dated 26.06.2014
(herein after referred to as SCN) was sent to all the noticees by Registered Post
Acknowledgement Due (herein after referred to as 'RPAD') in terms of the provisions of
Rule 4 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating
Officer) Rules, 1995 requiring the noticees to show cause as to why an inquiry should not
be held against all the noticees and why penalty, if any, should not be imposed on the all
noticees under Section 15H (ii) of the SEBI Act.
4. In the said SCN, it was alleged that 4.79% equity shares were acquired by Mr. Bikramjit
Ahluwalia (part of the Promoter Group) during the period from July 27, 2010 to August 04,
2010 which led to the violation of Regulations 11 (2) read with 14 (1) of the Takeover
Regulations.
5. Noticees vide their applications dated 17.07.2014 sought extension of time to submit a
reply tho the SCN and accordingly vide their email dated 30.07.2014 and letter dated
11.08.2014 submitted a common reply to the SCN as follows:

The noticees hereby submit that, in the instant case Mr. Bikramjit Ahluwalia (herein after
referred to as 'noticee- acquirer') had acquired 3,45,000 equity shares from the open
market in different tranches at ` 79.50. As per proviso of Regulation 11(2) of Takeover
Regulation, public announcement is exempted if the acquisition is made through open
market purchase in normal segment on the stock exchange and the post-acquisition
shareholding of the acquirer together with persons acting in concert with him is less
than seventy five per cent of the share capital of the Company. Relevant filings in this
regard under Regulation 7(3) of the Takeover Regulation have been made by noticeeacquirer and Company, as the case. The total shareholding of noticee-acquirer was
29,41,312 shares aggregating to 40.85% as on 30.09.2010

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6. Noticees were granted an opportunity of hearing vide common hearing notice dated
04.08.2014 to appear on 20.08.2014 at 03:00 pm at SEBI Bhavan, Mumbai. The hearing
notice was sent by RPAD. Noticees vide their letter dated 19.08.2014 authorised Mr.
KRCV Seshachalam, Advocate (herein after referred to as 'AR') to represent them in the
present matter. Noticees also requested to adjourn the scheduled hearing for a period of 3
weeks as they didn't get the time to brief their counsel due to the holidays.
7. Acceding to the request of the noticees, again vide common hearing notice dated
20.08.2014, noticees were granted a final opportunity of hearing on 04.09.2014 at 03:00
pm at SEBI Bhavan, Mumbai.
8. At the time of hearing the AR, sought adjournment to file a further detailed reply to the
SCN. As requested by the AR, time was granted till 15.09.2014 to submit a detailed reply
to the SCN. Further, it was mutually agreed to schedule the next hearing in the matter on
18.09.2014 at 03:00 pm at SEBI Bhavan, Mumbai. Noticees vide their letter dated
15.09.2014 submitted a common detailed reply to the SCN as follows;

Noticee-acquirer submits that he was holding 47,63,205 shares as on 30 th June, 2010.

This constituted 66.15% of the total issued capital of APIL. During the period from 2707-2010, Noticee-acquirer had acquired 3,45,000 shares from the open market in
different tranches as follows:

Date
27/7/2010
28/7/2010
29/7/2010
30/7/2010
02/8/2010
03/8/2010
04/8/2010

No. Of shares
32051
33000
30000
35100
26032
173817
15000
3,45,000

% of Acquisition
0.445
0.458
0.417
0.487
0.362
2.414
0.208
4.791

Noticee-acquirer submits that with the above acquisition, his shareholding had become
70.95% and that the above acquisitions were done with a view to consolidate his
holdings in the APIL.

As soon as the acquisition was done, noticee-acquirer had complied with the reporting
requirement under Regulations 7(1), 7(1A) of the SAST Regulation, 1997. The
Company had also complied with Regulation 7(3) of the SAST Regulation, 1997 within
the stipulated time. Therefore, noticee-acquirer 's acquisition is exempt from making a
public announcement under second proviso to Regulation 11(2) of the SEBI (SAST)
Regulations 1997.

Noticee-acquirer had acquired the said shares in the open market in the normal
segment of the stock exchange where the shares of APIL are listed. His post
acquisition shareholding together with persons acting in concert with him was 70.95%,

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which was within seventy five per cent (75%) threshold limit mentioned in the said
Regulation.

In view of the specific language of second proviso to Regulation 11(2), noticee-acquirer

respectfully submits that his acquisition is exempt from making any public
announcement.

9. Apart from Mr. KRCV Seshachalam noticees also authorised Mr. S.K. Sachdeva, CFO of
Ahluwalia Contracts (India) Ltd. to represent them in the matter. At the time of the hearing,
the ARs reiterated the submissions made in the replies dated 30.07.2014, 11.08.2014 and
15.09.2014. The ARs submitted that the infractions are miniscule except the acquisition
made during the period 27.07.2010 to 04.08.2010 and in one instance the excess shares
were sold. Therefore, the ARs requested to take a lenient view in the matter. The ARs
submitted that as per their understanding of second proviso to Regulation 11(2) of the
Takeover Regulations, the acquisition of 5% shares or voting rights can be made in each
financial year provided the overall shareholding does not cross 75%. The ARs submitted
that as per their understanding in the financial year 2000-2001 the creeping acquisition
limit was 10% for each financial year under Regulation 11(1) of the Takeover Regulations
which was subsequently brought down to 5% in the year 2002. The ARs undertook to
submit a copy of the Prospectus of Ahlcon Parenterals (India) Ltd., documentary proof
regarding the target company being under BIFR and additional submissions if any on or
before September 22, 2014. Accordingly, noticees vide their email dated 20.09.2014
submitted the aforesaid documents.
10. Noticee-acquirer vide his email dated 04.10.2014 requested to keep the proceedings in
abeyance as he would like to submit consent application in the matter. Since sufficient
time had lapsed, vide office note dated 16.12.2014 the status of his consent application
was sought from the concerned department. The department informed that noticeeacquirer's consent application was received on 16.10.20145 but the application was
returned to him vide letter dated 14.11.2014 for rectification of some deficiencies.
Thereafter the application was resubmitted by the noticee-acquirer. As he had failed to
resubmit the application within 15 days from the date of communication of the earlier letter
for deficiencies, the same was returned to him on 19.12.2014. Noticee-acquirer vide his
email dated 03.01.2015 and letter received on 05.01.2015 submitted that he has
resubmitted consent application in the matter. Once again vide email dated 16.02.2015,
the status of noticee-acquirer's consent application was sought from the concerned
department. The department replied vide email dated 16.02.2015 stating that noticeeacquirer's consent application has not been registered and has been returned to him vide
letter dated 10.02.2015.

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CONSIDERATION OF EVIDENCE AND FINDINGS

11. I have taken into consideration the facts and circumstances of the case and the material
made available on record.
12. Noticee-acquirer has admitted that during the period from July 27, 2010 to August 04,
2010 he had acquired 4.79% shares.
13. Regulation 11 of the Takeover Regulations makes provision for public announcement in
case of consolidation of holdings. A bare reading of Regulation 11 (2) of the Takeover
Regulations makes it clear that any acquirer who has 55% but less than 75% of the shares
or voting rights in a company acquires any additional shares or voting rights in the
company has to make a public announcement. As per Regulation 14 (1) of the Takeover
Regulations the said public announcement has to be made not later than 4 working days.
However, the second proviso to Regulation 11 (2) makes an exception to the said
Regulation. It states that an acquirer can acquire upto 5% additional shares or voting
rights subject to that the said acquisition is made through open market purchase in normal
segment on the stock exchange and the post acquisition shareholding of the acquirer
together with persons acting in concert with him shall not increase beyond 75%.
14. In the present matter it is observed from the material made available on record that
Promoter group's shareholding on 01.01.2009 had increased from 61.12% to 61.19% i.e.,
an increase of 0.07%. Thereafter the Promoter group / Acquirer- Noticees acquired further
5.38% shares during March 2010. Thus, the Promoter group in the month of March 2010
crossed the limit of 5% by 0.45%. Hence, the current acquisition of 4.79% shares does not
qualify for the exception. Therefore, the statutory embargo to the effect that the acquirer
must make a public announcement to acquire any additional shares in accordance with
the Regulation comes into operation which noticees have failed to comply with.
15. Noticees have submitted that as per their understanding of second proviso to Regulation
11(2) of the Takeover Regulations, the acquisition of 5% shares or voting rights can be
made in each financial year provided the overall shareholding does not cross 75%. The
said understanding is not correct in view of the fact that SEBI vide its Circular dated
06.08.2009 had clarified the interpretation of the second proviso which is almost 1 year
before the aforesaid acquisitions. The Circular at paras 3 (b), (c) and (d) states as follows;
" b. The acquirer together with persons acting in concert with him, holding shares or voting
rights as specified at (a) above, may acquire additional shares or voting rights upto a
maximum of five per cent (5 %) voting rights in the target company in one or more
tranches, without any restriction on the time-frame within which the same can be acquired;
c. The aforesaid acquisition of five per cent (5 %) shall be calculated by aggregating all
purchases, without netting the sales."

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d. Consequent to such acquisition, the percentage of shareholding / voting rights of the

acquirer, together with persons acting in concert with him, in the target company, shall not
increase beyond seventy five per cent (75 %). This limit is applicable irrespective of the
level of minimum public shareholding required to be maintained by the target company in
terms of clause 40A of the Listing Agreement.
16. From the aforesaid Circular of SEBI, it is clear that the acquisition of 5% shares in multiple
tranches or at once can be done only till the time the limit of 5% is reached without making
a public announcement from the open market purchase. In other words the moment 5%
shares or voting rights are acquired by an acquirer whose shares or voting rights in the
target company is between 55% to 75%, any additional shares or voting rights can be
acquired only after making a public announcement. As discussed above the Promoter
group during the period January 2009 to March 2010 had acquired 5.45% shares in the
target company. Thus, they had crossed the limit of 5% in March 2010 itself and therefore,
for the current acquisitions of shares in multiple tranches during the period 27.07.2010 to
04.08.2010 noticees had to make a public announcement in terms of Regulation 11 (2) of
Takeover Regulations which noticees had failed to do so.
17. At this juncture, I would like to quote the order of the Honble Supreme Court of India in
Swedish Match AB & Anr. Vs SEBI dated 25.08.2004 wherein it was held as follows:
..Indisputably, the purport and object of which a regulation is made must be duly
fulfilled. Public announcement is at the base of Regulations 10, 11 and 12. Except in
a situation which would bring the case within one or the other 'exception clause', the
requirement of complying with the mandatory requirements to make public
announcement cannot be dispensed with..."
18. In view of the above discussions and Hon'ble Supreme Court of India's Order, it can be
concluded that the noticees have failed to comply with Regulations 11 (2) read with 14 (1)
of the Takeover Regulations for the aforesaid transactions during the period 27.07.2010 to
04.08.2010. The text of the said provisions are as follows:
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997
Consolidation of holdings
...
11. (2) No acquirer, who together with persons acting in concert with him holds, fifty-five per
cent (55%) or more but less than seventy-five per cent (75%) of the shares or voting rights in a
target company, shall acquire either by himself or through [or with] persons acting in concert
with him any additional shares entitling him to exercise voting rights or voting rights therein,
unless he makes a public announcement to acquire shares in accordance with these
Regulations:
Provided that in a case where the target company had obtained listing of its shares by making
an offer of at least ten per cent (10%) of issue size to the public in terms of clause (b) of subrule (2) of rule 19 of the Securities Contracts (Regulation) Rules, 1957, or in terms of any
relaxation granted from strict enforcement of the said rule, this sub-regulation shall apply as if

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for the words and figures seventy-five per cent (75%), the words and figures ninety per cent
(90%) were substituted.
Provided further that such acquirer may, notwithstanding the acquisition made under regulation
10 or sub-regulation (1) of regulation 11, without making a public announcement under these
Regulations, acquire, either by himself or through or with persons acting in concert with him,
additional shares or voting rights entitling him upto five per cent. (5%) voting rights in the target
company subject to the following:(i) the acquisition is made through open market purchase in normal segment on the stock
exchange but not through bulk deal /block deal/ negotiated deal/ preferential allotment; or the
increase in the shareholding or voting rights of the acquirer is pursuant to a buy back of shares
by the target company;
(ii) the post acquisition shareholding of the acquirer together with persons acting in concert with
him shall not increase beyond seventy five per cent.(75%).
Timing of the public announcement of offer.
14. (1) The public announcement referred to in regulation 10 or regulation 11 shall be made by
the merchant banker not later than four working days of entering into an agreement for
acquisition of shares or voting rights or deciding to acquire shares or voting rights exceeding the
respective percentage specified therein:
Provided that in case of disinvestment of a Public Sector Undertaking, the public announcement
shall be made by the merchant banker not later than 4 working days of the acquirer executing
the Share Purchase Agreement or Shareholders Agreement with the Central Government or the
State Government as the case may be, for the acquisition of shares or voting rights exceeding
the percentage of shareholding referred to in regulation 10 or regulation 11 or the transfer of
control over a target Public Sector Undertaking.

19. The said failure attracts penalty under Section 15H (ii) of the SEBI Act. The text of the said
provision is as follows:

SEBI Act
Penalty for non-disclosure of acquisition of shares and takeovers.
15H. If any person, who is required under this Act or any rules or regulations made thereunder,
fails to,
...
(ii) make a public announcement to acquire shares at a minimum price;
...
he shall be liable to a penalty of twenty-five crore rupees or three times the amount of profits
made out of such failure, whichever is higher.

20. In this regard, the provisions of Section 15J of the SEBI Act and Rule 5 of the Rules
require that while adjudging the quantum of penalty, 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

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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

21. The material made available on record has not quantified the amount of disproportionate
gain or unfair advantage made as a result of noticees default. There is also no material
made available on record to assess the amount of loss caused to an investor or group of
investors as a result of noticees default. It has been observed from the material made
available on record that it is not the first time that Promoter group has failed to make public
announcement. During September 2005 and March 2010, when Promoter group had
acquired shares they had failed to make public announcement under Regulations 11 (2)
read with 14 (1) of the Takeover Regulations. Further, it is also noted from material made
available on record that in the year 2000-2001 Promoter group had also failed to make a
public announcement under Regulation 11 (1) of the Takeover Regulations. 3 separate
adjudication orders imposing monetary penalty in the aforesaid instances have also been
passed.
22. It has been observed from the material made available on record that one of the noticees
namely Mr. Madan Gopal has expired and therefore the current proceedings against him
are abated.
23. In view of the abovementioned conclusion and after considering the factors under Section
15J of the SEBI Act, I hereby impose a penalty of ` 2,00,00,000/- (Rupees Two Crore
only) jointly and severally on all the noticess mentioned at para 2 of this adjudication order
under Section 15H (ii) of the Securities and Exchange Board of India Act, 1992 which is
appropriate in the facts and circumstances of the case.
ORDER
24. In exercise of the powers conferred under Section 15 I of the Securities and Exchange
Board of India Act, 1992, and Rule 5 of Securities and Exchange Board of India (Procedure
for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995, I hereby
impose a penalty of ` 2,00,00,000/- (Rupees Two Crore only) jointly and severally on all the
noticees viz Mr. Bikramjit Ahluwalia, Ms. Ram Piari, Ms. Pushpa Rani, Ms. Raman Pal, Ms.
Rohini S. Ahluwalia, Ms. Rohini Ahluwalia, Ahluwalia Builders & Development Group
(Private) Limited, Capricon Industrials Ltd., Tidal Securities Pvt. Ltd., Mr. Shobhit Uppal,
Mr. Vikas Ahluwalia, Ms. Rachna Uppal, Ms. Sudarshan Walia, Ms. Sudarshan Ahluwalia,
Ms. Mukta Ahluwalia, Mr. Madan Gopal, Mr. Santosh Ahluwalia and Mr. Raj Kumar
Ahluwalia in terms of the provisions of Section 15H (ii) of the Securities and Exchange

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Board of India Act 1992 for the violation of Regulations 11 (2) read with 14 (1) of SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997. In the facts and
circumstances of the case, I am of the view that the said penalty is commensurate with the
default committed by all the noticees.
25. The penalty shall be paid by way of Demand Draft drawn 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 shall be forwarded to Chief General Manager- EFD- DRA II,
Securities and Exchange Board of India, Plot No. C4-A, G Block, Bandra Kurla Complex,
Bandra (E), Mumbai 400 051.
26. In terms of the provisions of Rule 6 of the Securities and Exchange Board of India
(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules 1995,
copies of this order are being sent to all the noticees and also to the Securities and
Exchange Board of India, Mumbai.

Place: Mumbai
Date: 25.02.2015

D. RAVI KUMAR
CHIEF GENERAL MANAGER &
ADJUDICATING OFFICER

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