Order in respect of Growth Techno Projects Limited

WTM/PS/115/CFD/DEC/2015 BEFORE THE SECURITIES AND EXCHANGE BOARD OF INDIA CORAM: PRASHANT SARAN, WHOLE TIME MEMBER ORDER Under sections 11(1), 11(2)(j), 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 read with section 12A of the Securities Contracts (Regulation) Act, 1956 in the matter of non-compliance with the requirement of minimum public shareholding by listed companies In respect of Growth Techno Project Limited

1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") had passed an interim order dated June 04, 2013 (hereinafter referred to as "the interim order ") with respect to 105 listed companies who did not comply with the Minimum Public Shareholding ("MPS") norms as stipulated under rules 19(2)(b) and 19A of the Securities Contracts (Regulation) Rules, 1957 (hereinafter referred to as "SCRR") within the due date i.e., June 03, 2013. The interim order was passed without prejudice to the right of SEBI to take any other action, against the non-compliant companies, their promoters and/or directors or issuing such directions in accordance with law. The interim order was to be treated as a show cause notice by those companies for action contemplated in paragraph 18 thereof.

2. Growth Techno Project Limited (hereinafter referred to as "the Company") is one such company against whom the interim order was passed. The equity shares of the Company are listed on the National Stock Exchange of India Limited ("NSE") and on the erstwhile Delhi Stock Exchange Limited. The scrip is suspended for trading at NSE.

3. The Company did not file any reply to the interim order. In the interest of justice, the Company was afforded an opportunity of personal hearings on July 03, 2015 and the schedule of such hearing was communicated vide SEBI’s email dated May 27, 2015. However, the Company through its Managing Director, Mr. Amit Parwal, vide email dated June 26, 2015, stated that it would not be able to attend the personal hearing due to previous engagements and requested for a date of hearing after the month of July 2015. The Company forwarded a representation dated June 26, 2015 and requested that the same be treated as reply.

4. Thereafter, the Company was afforded an opportunity of personal hearing on August 13, 2015, when Mr. Amit Parwal, Promoter and Managing Director of the Company appeared and made submissions on the lines of the submissions dated August 10, 2015 filed during the hearing. Such submissions were reiteration of the submissions forwarded vide the representation dated June 26, 2015. Vide the above written submissions, the Company inter alia submitted the following:

(a) The Company is almost defunct since 1997 and trading was suspended in the stock exchange. (b) Its main promoter and managing director, Mr. Acharya Arun Dev was dealing with the affairs of the Company. He expired in 2007 and since then the Company could not pick-up and became defunct. (c) The Company lost a land dispute and is trying to settle the creditors out of compensation which will be received from the court. At present, the Company is very hard pressed for funds and is not in a position to comply with the listing requirements as there is no cash generation or reserves in the Company for the last many years. The Company in all likelihood may soon go for liquidation. (d) The promoter contribution in the Company is around 85% and the shares of the promoter, Late Mr. Acharya Arun Dev are under attachment by the Income Tax Department. The legal heirs {Mr. Amit Parwal, the M.D., is the son of Late Acharya Arun Dev) are debarred from dealing or transferring the same. As such, promoters cannot legally comply with the directions of SEBI. (e) Apart from the Income Tax Department, the holding of the company and other assets of the main promoter are also under attachment by the Special Court at Mumbai. The Special Court has already sold off the movable properties of Late Acharya Arun Dev through auction. (f) The shares of the Company have no value because of suspension and the company becoming defunct. In such a situation, no one would come to purchase its shares. Its existing shareholders are not active. The Company also submitted that there is no chance of recovery in the near future and that in the annual general meeting, only 10 to 12 shareholders are present. The Company also submitted that it has no employees as it could not afford them. (g) According to the Company, it would be in the interest of public shareholders and stakeholders if the Company is delisted from both the stock exchanges. If the same happens, the Company would be required to only make the annual filing to the RoC till it is closed under section 560 or the Company may go for voluntary winding up.

(h) In the last Annual General Meeting held in 2014, the shareholders of the Company have advised the Company to be delisted. The resolution (certified copy of such resolution was not submitted) stated: “RESOLVED THAT AS SO MANY FORMALITIES HAVE COME IN THE NEW COMPANIES ACT, 2013 AND THE COMPANY IS UNABLE TO COPE WITH THE LISTING FORMALITIES OF QUARTERLY REPORTS AND OTHER FORMALITIES WHICH REQUIRE ADVERTISEMENTS IN NEWSPAPERS AND SINCE THE COMPANY IS ALMOST DEFUNCT AND NON TRADING COMPANY AT STOCK EXCHANGE SINCE LONG, IT IS DIFFICULT FOR COMPANY TO FOLLOW THESE RULES AND IT IS SUGGESTED THAT KEEPING IN VIEW THE NO WORKING AT ALL, IT WILL BE BETTER TO GO FOR DELISTING. RESOLVED FURTHER THAT IT WILL BE IN THE INTEREST OF SHAREHOLDERS AND OTHER STAKEHOLDERS AND KEEPING IN VIEW SO MANY FORMALITIES OF NEW ACT AND EXTREMELY HIGH EXPENSES TO MAINTAIN THE STATUS OF A LISTED COMPANY INSPITE OF NO WORKING AND NO INCOME, COMPANY MAY REQUEST STOCK EXCHANGES, MCA AND SEBI TO RELIEVE THE BURDEN OF BEING LISTED COMPANY AND COMPANY GROWTH TECHNO PROJECTS LIMITED BE DELISTED FROM STOCK EXCHANGES AS SHARES OF COMPANY HAVE NOT TRADED SINCE LONG AND LESS THAN 16% HOLDING IS WITH GENERAL PUBLIC AND IN THE INTEREST OF SHAREHOLDERS, OTHER STAKEHOLDERS, COMPANY BE MADE DELISTED AND BE MADE AN UNLISTED PUBLIC COMPANY.”

(i) It was submitted that Mr. Amit Parwal is regularly attending various appeals filed by the Company to have the attachment and for deletion of liability. No one is willing to become Independent Director or Woman Directors. After great efforts, the Company could find one director as woman and independent director on August 07, 2015.

(j) The Company further submitted that its financial position is deteriorating day by day and the directors are unable to infuse more funds into the Company. The Company requested that in such circumstances, it would be better if the Company is delisted so that legal complications and penalties can be avoided and the Company management can more fully commit itself to resolving pending legal complications in the Company so as to salvage the Company and its assets for the maximum benefit of all shareholders including minority shareholders.

(k) The Company requested SEBI to allow it to delist and additionally requested SEBI to take steps for compulsorily delisting the Company as it has no objection for the same.

5. I have considered the interim order passed in the matter against the Company, its promoters and directors. The interim order was issued against the Company as it failed to maintain the minimum public shareholding of 25% as mandated under rule 19A of the SCRR and Clause 40A of the Listing Agreement read with section 21 of the Securities Contract (Regulation) Act, 1956 ("SCRA"). The Company has admitted that its promoter holds around 85%. NSE, vide email dated December 01, 2015, has informed that as per the shareholding pattern of the Company for the quarter ended December 2005 (latest as available with NSE), the promoters’ shareholding stood at 85.89%. From the above, it can be inferred that the public shareholding in the Company is only around 15%, which is less than the mandated minimum of 25% in a listed company. The Company is therefore in violation of the MPS requirements.

6. With respect to the submissions pertaining to “delisting”, I note that the Company has not taken any steps towards delisting prior to June 04, 2013. In view of the same, I find that such submissions are made without any seriousness and therefore do not warrant any consideration. This proceeding is a quasi-judicial proceeding pursuant to the interim order passed against the Company and further action (confirming the interim order along with action as contemplated in the interim order or revoking the interim order) in respect of the Company, its promoters and directors would be taken based on the status of compliance with the MPS norms.

7. Considering the facts and circumstances of the case, it is clear that the Company has not complied with the MPS requirements till date in breach of rule 19A of the SCRR and Clause 40 A of the Listing Agreement read with section 21 of the SCRA, and such non-compliance being continuous in nature, it becomes necessary for SEBI, to confirm the directions issued vide the interim order against the Company, its directors and promoters/promoter group. Further, for proper regulation of the securities market and in view of the continuing nature of the violations committed by the Company, SEBI may also initiate other action, as appropriate in law, against the Company, its directors and promoters.

8. Accordingly, I, in exercise of the powers conferred upon me under section 19 of the Securities and Exchange Board of India Act, 1992 read with sections 11(1), 11(2)(j), 11(4) and 11B thereof and section 12A of the Securities Contracts (Regulation) Act, 1956, hereby confirm the directions issued vide the interim order dated June 04, 2013 against the company, Growth Techno Projects Limited, its directors, promoters and promoter group.

9. This Order shall remain in force till further directions.

10. Copy of this Order shall be served on the stock exchanges and depositories for their information and necessary action.

PRASHANT SARAN WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA Date: December 15th, 2015 Place: Mumbai