Page 1 of 7

BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA
[ADJUDICATION ORDER NO. CFD/APIL/AO/DRK-AKS/EAD3-605-618/149-162/ 2014]
__________________________________________________
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:
Capricon Industrials
Ltd.
(Acquirer)

Mr. Bikramjit
Ahluwalia (PAC)
Ms. Sudarshan
Walia (PAC)
Ms. Rohini Walia
(PAC)
Ms. Rachna Uppal
(PAC)
Mr. Madan Gopal
(PAC)
Ahuwalia Builders &
Development Group
(Private Limited)
(PAC)
Tidal Securities Pvt.
Ltd. (PAC)
Mr. Shobhit Uppal
(PAC)
Mr. Vikas Ahluwalia
(PAC)
Mr. Raj Kumar
Ahluwalia
(PAC)
Mr. Santosh
Ahluwalia (PAC)
Ms. Mukta
Ahluwalia
(PAC)
Mr. MKG Pillai
(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 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
Brought to you by http://StockViz.biz
Page 2 of 7

Act for the violation of Regulations 11 (2) read with 14 (1) alleged to have been
committed by Capricon Industrials Ltd. (Acquirer), Mr. Bikramjit Ahluwalia, Ms.
Sudarshan Walia, Ms. Rohini Walia, Ms. Rachna Uppal, Mr. Madan Gopal, Ahluwalia
Builders & Development Group (Private) Limited, Mr. Shobhit Uppal, Mr. Vikas
Ahluwalia, Mr. Raj Kumar Ahluwalia, Ms. Mukta Ahluwalia, Mr. Santosh Ahluwalia,
Tidal Securities Pvt. Ltd. and Mr. MKG Pillai (PAC) (hereinafter referred to as
'noticees') 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/18335/2014 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 10,000 (0.14%) physical shares were acquired by
Capricon Industrials Ltd. (part of the Promoter Group) on 15.09.2005 which led to the
violation of Regulations 11 (2) read with 14 (1) of the Takeover Regulations.
5. Noticees vide their letter dated 17.07.2014 requested for time till 30.07.2014 to submit
a reply to the SCN as considerable time had lapsed since the aforesaid transaction.
Noticees request was acceded to and vide letter dated 22.07.2014 noticees were
granted time till 30.07.2014 to submit a reply to the SCN.
6. Noticees vide their email dated 30.07.2014 and letter dated 11.08.2014 submitted a
common reply to the SCN as follows:
The Noticees submit that the total shareholding of the Promoter group of the
Company had increased by 0.14% (i.e. from 61.16% to 61.30%) from the period
April 1, 2006 to June 30, 2006. In this regard, please note that Capricon Industrials
Ltd. (part of the then Promoter group of the Company) acquired 10,000 Equity
Shares (Capricon Shares) from Mr.S.S Gupta in physical form on September 15,
2005 by way of open market acquisition. Such increase was not reflected in the filing
made by the Company under clause 35 of the listing agreement for the quarter
ended September, 2005, however the same is reflected in the disclosures made
under Regulations 8(2) and 8(3) by the promoters and the Company, respectively.
The Capricon Shares were dematerlised at later date and therefore filing made by
the Company under clause 35 of the listing agreement in quarter ended June 30,
2006 records an increase of 0.14% in the shareholding of the Promoter group of the
Company.

Brought to you by http://StockViz.biz
Page 3 of 7

Noticees humbly submit that at the time of the impugned acquisition, Capricon
Industrials Ltd. did not realize that any provisions of Takeover Regulations were
being violated. While noticees understand that the same cannot be considered to be
sufficient justification for absolving them, noticees submit that the violation was
inadvertent and that there was no willful and/or deliberate intention on the part of
them to violate any provisions of the law. Noticees assure and promise that they will,
henceforth, strictly adhere to the provisions of Takeover Regulations.

Noticees further submit that, pursuant to the acquisition there was no change in the
management and control of the Company and no prejudice was suffered by the
investors/shareholders on account of the impugned acquisition. In the light of above,
noticees request to be pardoned for the aforementioned violation.

7. 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.
8. 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.
9. At the time of hearing, the AR sought adjournment to file a further detailed reply to the
SCN. As requested by the AR, the AR was given time 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;
At the outset noticees submit that Mr. Bikramjit Ahluwalia, Mr. Sudershan Ahluwalia,
Ms. Rohini S Ahluwalia (herein after referred to as 'Acquirer- Noticees') are the
Directors on the Board and the impugned acquisition was done by them on their own
separately, without knowledge and consent of the other noticees mentioned in the
notice.

Acquirer-Noticees submit that the other noticees who are deemed persons acting in
concert per the extant regulations had no role to play at all in the acquisition. They
were passive persons in the acquisition and the notices were issued to them on
technical reasons. Acquirer-Noticees reiterate that the other noticees had no
knowledge of their acquisition and noticees had done it on our own without informing
the other noticees.

Acquirer-Noticees submit that they were holding 44,37,940 shares on 31st
December, 2009. This constituted 61.64 % of the total issued capital of APIL.
Noticees submit that they had acquired 10,000 physical shares of APIL (non-Demat)
from one Mr. S.S. Gupta (who was earlier part of the Promoter Group / PAC) on
Brought to you by http://StockViz.biz
Page 4 of 7

September 15, 2005 by way of open market acquisition. The said acquired shares
were dematerlised at a later date. The total holding of all the persons acting in
concert as stated in the notice as on 30th September, 2005 was 44,13,852 shares
constitute 61.30% There was an increase of 0.14% from the earlier holding with this
acquisition.

Acquirer-Noticees submit that the above acquisitions were done inadvertently.
Noticees were under a mistaken impression that the said Mr. S.S. Gupta continued
to be part of Promoter Group/ PAC. Acquirer-Noticees further submit that the said
acquisition of 10,000 shares was from the open market in normal segment on the
stock exchange and not through any bulk deal or block deal or negotiated deal or
preferential allotment.

Acquirer-Noticees submit that as demonstrated above, they had acquired the said
shares in the open market in the normal segment of the stock exchange where the
shares of APIL are listed.

Acquirer-Noticees submit that their post acquisition shareholding together with
persons acting in concert was 61.30% which was within 5% creeping acquisition limit
prescribed in the Regulations and 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), Acquirer-
Noticees respectfully submit that their acquisition is exempt from making any public
announcement.

10. 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.



Brought to you by http://StockViz.biz
Page 5 of 7

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. Acquire-Noticees namely Mr. Bikramjit Ahluwalia, Mr. Sudershan Ahluwalia, Ms. Rohini
S Ahluwalia being the Directors of Capricorn Industrials Ltd. have submitted they had
acquired 10,000 physical shares of APIL (non-Demat) from one Mr. S.S. Gupta (who
was earlier part of the Promoter Group / PAC) on September 15, 2005 by way of open
market acquisition. Thus, the aforesaid acquisition of shares is not in dispute.
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 share or voting right
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.

14. In the present matter, Capricon Industrials Ltd. had acquired 10,000 (0.14%) physical
shares on September 15, 2005. In view of this current acquisition of additional shares
when the noticees already held amongst themselves 61.16% of the total paid up share
capital, 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 the noticees have failed to comply with.
15. Noticees submission that in view of the specific language of second proviso to
Regulation 11 (2), their acquisition is exempted from making any public announcement
is not acceptable as the second proviso to Regulation 11 (2) of the Takeover
Regulations was not in effect at the time of aforesaid acquisition which was on
September 15, 2005.
16. Over here, 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..."

17. In view of the above discussions and Hon'ble Supreme Court of India's Order, it can be
concluded that the noticees failed to comply with Regulations 11 (2) read with 14 (1) of
the Takeover Regulations for the aforesaid transaction. The text of the said provisions
are as follows:

Brought to you by http://StockViz.biz
Page 6 of 7

SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997

Consolidation of holdings

...
11. (2) An acquirer, who together with persons acting in concert with him has acquired, in
accordance with the provisions of law, 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, may acquire either by
himself or through persons acting in concert with him any additional share or voting right,
only if he makes a public announcement to acquire shares or voting rights in accordance
with these regulations.

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:

18. 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.

19. 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
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

20. 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 Mr. Madan Gopal has expired and therefore
the current proceedings against him are abated.

21. In view of the abovementioned discussions, conclusion and after considering the factors
under Section 15J of the SEBI Act, I hereby impose a penalty of ` 15,00,000/- (Rupees
Fifteen Lakh only) jointly and severally on all the rest of the noticess mentioned at para
Brought to you by http://StockViz.biz
Page 7 of 7

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
22. 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 ` 15,00,000/- (Rupees Fifteen Lakh only) jointly and
severally on all the noticees viz Capricon Industrials Ltd., Mr. Bikramjit Ahluwalia, Ms.
Sudarshan Walia, Ms. Rohini Walia, Ms. Rachna Uppal, Ahluwalia Builders &
Development Group (Private) Limited, Mr. Shobhit Uppal, Mr. Vikas Ahluwalia, Mr. Raj
Kumar Ahluwalia, Ms. Mukta Ahluwalia, Mr. Santosh Ahluwalia, Tidal Securities Pvt.
Ltd. and Mr. MKG Pillai in terms of the provisions of Section 15H (ii) of the Securities
and Exchange Board of India Act 1992 for the failure to comply with 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 mentioned herein
above.

23. 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- CFD,
Securities and Exchange Board of India, Plot No. C4-A, G Block, Bandra Kurla
Complex, Bandra (E), Mumbai 400 051.

24. 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 D. RAVI KUMAR
CHIEF GENERAL MANAGER &
Date: 30.09.2014 ADJUDICATING OFFICER
Brought to you by http://StockViz.biz