Order in respect of Mr. Amit H. Tilala in the matter of Esaar (India) Ltd.

Under Sections 11 and 11B of the Securities and Exchange Board of India Act, 1992

In the matter of M/s. Esaar (India) Ltd.

S.No Name of the Noticee PAN 1 Mr. Amit H. Tilala AHXPT6046P

BACKGROUND

1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) conducted an investigation into the trading activities in the scrip of Esaar (India) Limited (hereinafter referred to as “Company” / “EIL”) for the period June 30, 2011 to February 28, 2015 (hereinafter referred to as ‘Investigation Period’). In the course of investigation, while analyzing the trading activities during April 03, 2013 to August 20, 2014 (hereinafter referred to as “Seventh Patch”), it is observed that price of EIL opened at Rs.11.51 and closed at Rs. 62.25 thereby registering an increase of Rs. 50.74 in the scrip price during this period. On further analysis of trades executed during the Seventh Patch, it was noticed that the trades executed by Mr. Amit H Tilala (hereinafter referred to as ‘Noticee’) were not appearing to be trades executed in normal course of dealing in securities.

Order in respect of Mr. Amit H. Tilala in the matter of M/s. Esaar (India) Ltd.

2. I find from the Investigation Report that for the purpose of detailed analysis the entire Investigation Period was divided into several patches and during the Seventh Patch of the Investigation Period, it has been observed that Noticee purchased 1,044 shares of EIL in 192 trades and contributed Rs. 223.70 to net Last Traded Price (hereinafter referred to as “LTP”). It was further observed that out of total 192 trades, Noticee had executed trades at a price more than LTP in 132 trades thereby contributed to 14.48% of the market positive LTP. It was also noticed that Noticee was placing order in miniscule quantities on a continuous basis. Quantity of such buy orders placed by Noticee varied from 1 to 75 shares in the scrip of EIL. Details of trades executed by the Noticee are summarized below:

Table-1 Net LTP Positive LTP Negative LTP Zero LTP % of + LTP to S. Buye Total Buyer N r No of QTY No of QTY No of QTY No of Market + Name Rs. QTY traded Rs. Rs. O PAN trades traded trades traded trades traded trades LTP Rs.1,730.7 9 AHX Amit H 1. PT60 223.70 1,044 192 250.65 240 132 -26.95 475 29 329 31 14.48 Tilala 46P Market 50.74 4,44,97,647 25,872 1,730.79 51,74,488 2,353 -1,680.05 28,27,449 1,967 3,64,95,710 21,552 100.00 Total

3. During the course of investigation, it was observed that Noticee had placed buy orders in the range of 1 to 75 shares. Further, out of 132 trades, which was executed at a price more than LTP, it was noticed that in 94 trades, Noticee had placed buy orders for only 1 share, which was 71.21% of his trades executed at more than LTP and thereby he contributed to 10.50% to the market LTP. In total, out of 132 instances, in 129 instances, the Noticee had placed buy orders in the range of 1 to 75 shares and contributed to 14.48% of the market positive LTP. The pattern of placing buy orders in miniscule quantities on a continuous basis for over a period of 64 days and at a price above than the LTP was alleged to be manipulative and executed with an intention to inflate the price of the scrip so as to create a misleading appearance of genuine trading in the scrip of EIL. The acts of Noticee

Order in respect of Mr. Amit H. Tilala in the matter of M/s. Esaar (India) Ltd.

of dealing in a particular securities on a continuous basis at a price above the LTP in miniscule quantities have been alleged to be in breach of provisions of Regulations 3(a), 3(b), 3(c) and 3(d), 4(1), 4(2)(a) and 4(2)(e) of SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003 (hereinafter referred to as "PFUTP Regulations").

SHOW CAUSE NOTICE

4. Based on the aforesaid findings in the Investigation Report, a Show Cause Notice dated February 14, 2018 (hereinafter referred to as “SCN”) was issued to the Noticee asking him to show cause as to why necessary directions under sections 11(1), 11(4) and 11B of Securities and Exchange Board of India Act, 1992 (hereinafter referred to as “SEBI Act”) should not be issued against him for the alleged violations of the aforesaid provisions of PFUTP Regulations. The said SCN was received/ delivered to the Noticee by speed post. Subsequently, in compliance with the principle of nature justice, Noticee has been provided with an opportunity of personal hearing, which was scheduled on February 20, 2019. I note from the records that the Noticee was communicated vide letter dated January 23, 2019 about scheduling of personal hearing, however, neither Noticee nor any authorised persons appeared on his behalf on the scheduled date of hearing. I see from records that the Noticee has also not filed any reply to the SCN issued in the matter. I am of the view that sufficient opportunity has been accorded to the Noticee to submit his reply in response to the SCN, however, for the reasons best known to him, the Noticee has decided not to submit any explanation and also not to appear for the personal hearing to put forward his case. Therefore, I find it appropriate to proceed to decide the matter on merit on the basis of materials available on record.

CONSIDERATION OF ISSUES:

5. Based on the above, following issue requires consideration in the matter: (a) Whether trades of Noticee caused inflation in the price of EIL to be held as manipulative in nature and/or had ingredient to create a misleading appearance in the trading of the scrip of EIL?

Order in respect of Mr. Amit H. Tilala in the matter of M/s. Esaar (India) Ltd.

6. Before proceeding to examine the aforesaid question in terms of the facts of the matter, it would be proper to refer to the relevant provisions of the PFUTP Regulations which read as under:-

PFUTP Regulations

3. Prohibition of certain dealings in securities No person shall directly or indirectly— (a) buy, sell or otherwise deal in securities in a fraudulent manner; (b) use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of the Act or the rules or the regulations made there under; (c) employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange; (d) engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made there under. 4. Prohibition of manipulative, fraudulent and unfair trade practices (1) Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities. (2) Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely:— (a) indulging in an act which creates false or misleading appearance of trading in the securities market; (e) any act or omission amounting to manipulation of the price of a security;

7. I note that investigation has found that the Noticee had traded in the scrip of EIL during the Seventh Patch and purchased 1,044 shares in 192 trades. It was further found that out of 192 trades, in 132 trades, Noticee had placed/executed trades at a price more than the LTP and thereby allegedly contributed Rs.223.70 to net LTP, which was 14.48% of the market positive LTP. Details of 132 trades wherein Noticee had executed trades over and above the LTP are as under:

Order in respect of Mr. Amit H. Tilala in the matter of M/s. Esaar (India) Ltd.

Table-2 No. of trades in % to the Total Sell order Buy order No. of which buy Total LTP market quantity quantity quantity trades order was contribution positive traded range market LTP order 94 1 94 1 to 25000 181.70 10.50 94 29 2 22 1 to 30000 46.95 2.71 22 7 3 7 1 to 20000 6.40 0.37 7 3 4 1 24 3.90 0.23 1 10 5 2 100 to 291 8.85 0.51 2 30 10 3 100 2.25 0.13 3 0 25 25 1 350 0.35 0.02 0 41 41 1 180 0.05 0.00 0 1 75 1 1 0.20 0.01 129 Total 132 240 250.65 14.48

8. It may be noted from the above that out of total 132 trades, in 94 trades Noticee placed buy orders for only 1 share, whereas sell orders were available in the range up to 25000. In all the 94 instances, the Noticee had placed buy orders only and has contributed to 10.50% to the market LTP. This pattern of placing such buy orders in very small quality was repeated in 132 instances on a continuous basis over a period of 64 days during the period February 11, 2014 to August 14, 2014. I also note from the above that out of 132 trades executed by Noticee, in 129 instances, Noticee had placed his buy orders in the range of 1 to 75 shares and contributed to 14.48% of the market positive LTP. Noticee has been alleged to have placed orders in miniscule quantities during the relevant period of time and got his orders executed over the LTP. Some of the trades executed by the Noticee (in the descending order of their LTP contribution with very small quantities of buy orders) have also been illustrated in the SCN as under:

Order in respect of Mr. Amit H. Tilala in the matter of M/s. Esaar (India) Ltd.

Table-3 Date of the Trade details Buy order details Sell order details trade Trade LTP Time Price Qt Time Price Qt Time Price Qty number variance y y 14/08/2014 1 9.00 11:21:56 56.00 1 11:21:56 Market 1 10:30:32 56.00 200 order 12/08/2014 12 7.70 14:52:31 53.70 1 14:52:31 Market 1 09:43:32 53.70 100 order Market 2000 07/04/2014 62 5.55 14:35:10 56.75 1 14:35:10 order 2 14:21:47 56.75 0 Market 09/04/2014 2 5.30 10:03:53 56.90 2 10:03:53 order 2 09:00:25 56.90 151 Market 07/04/2014 65 5.05 14:41:53 56.65 2 14:41:53 order 2 14:37:00 56.65 200 9. From the above table, it is observed that on August 14, 2014, a sell order was placed at 10:30:32 for 200 shares at Rs.56.00 per share and the Noticee had placed a buy order at 11:21:56 for 1 share at that price. Accordingly, the trade was executed at Rs.56 which was Rs.9.00 (LTP contribution) more than last traded price. Though, the sell order was available for 200 shares the Noticee had bought only share and with this purchase of 1 share, the Noticee has jacked up the price by Rs.9.00. Again, on August 12, 2014, a sell order was placed at 09:43:32 for 100 shares at Rs.53.70 per share and Noticee placed a buy order at 14:52:31 for only 1 share at that price to match the sell offer, thereby allegedly contributed LTP of Rs.7.70. Similarly, Noticee continued to place buy orders in smaller quantities in comparison to the quantity of sell orders available in the system and thereby continued to contribute to LTP of the scrip.

10. It is further noted that Noticee commenced trading from 11/02/2014 and traded upto 14/08/2014 during the Seventh Patch ( 03/04/2013 to 20/08/2014), when the scrip witnessed price rise from Rs 11.51/- to Rs. 64.05/- Noticee had executed only two trades before 05/03/2014 when the price reached its peak. Majority of trades executed by Noticee were post 05/03/2014. It is also noted that Noticee had executed trades in the range of Rs 41.50 to Rs 62.80 over the period and Noticee placed market orders for buy after the sale order placed already placed in the system, which operates on anonymity.

11. I have gone through the allegations made in the SCN and material available on record. I find that Noticee has not filed any reply disputing the trades executed by him. It is also not disputed that such trades were executed in smaller quantities over a long period of time. However, on a careful

Order in respect of Mr. Amit H. Tilala in the matter of M/s. Esaar (India) Ltd.

perusal of records and trades executed by Noticee vis-à-vis the total no. of trades that took place during the relevant period, I find that most of the times, buy orders were placed by Noticee only after the sell orders were placed in the system. It is also found that the orders were placed on the market price i.e. the price at which sell orders were already available in the system. As observed from the table-3 above, the buy orders were placed by the Noticee subsequent to the sell orders already placed by the sellers and the investigation has not found out any relation of Noticee with the corresponding seller(s). Accordingly in the Investigation Report, no action has been proposed against the sellers who were the counter parties of the buy orders of the Noticee. It is also noted from the details of trades executed by the Noticee that out of his 132 trades alleged to have contributed to LTP, except for three (03) trades, in the remaining 129 trades, sell orders were placed by the sellers prior to the buy orders placed by the Noticee. Also in the 03 trades, wherein the buy orders were placed by Noticee prior to the sell order, I find that the contribution of LTP is negligible, even less than Rs 1.00.

12. I further note that the alleged buy orders were placed by Noticee at prevalent market price on the platform of the exchange. There is no material available on record to suggest that Noticee, after buying the scrips has subsequently sold the shares of EIL. The SCN also does not make any allegation of selling of shares by Noticee during the Seventh Patch of Investigation Period or even thereafter, hence it can be inferred that the investigation has not found that Noticee had made any gain or profit by dealing in the scrip of EIL and accordingly, there is also no such allegation made in the SCN against the Noticee.

13. I further find from the details of trades of Noticee as furnished in table-1 that though the Noticee had purchased 1044 shares of EIL in 192 trades, the total trades executed in the said scrip during the period was 25,872 involving 4,44,97,647 shares. Similarly, Noticee had executed 132 trades for 240 shares which were alleged to have made positive LTP contribution of Rs 250.65 in the scrip of EIL. However, when compared with the total no. of trades executed during period, and the volume of total shares traded during the period, the contribution of trades executed by the Noticees is found to be around 5% only. Further, during the specific period when the contribution to positive LTP by the Noticee was allegedly arising out of 132 trades in which Noticee had traded in only 240 shares, the total traded quantity of shares of EIL during the same period was as high as 51, 74,488, hence

Order in respect of Mr. Amit H. Tilala in the matter of M/s. Esaar (India) Ltd.

the quantity of shares traded by the Noticee was very small in comparison to the traded quantity. Therefore, considering the small number of trades executed by the Noticee during the Seventh Patch as compared to the total no. of trades in the same scrip, the trades executed by Noticee were not significant enough to be held as manipulative, more particularly, in the absence any connection of Noticee with sellers or any other attending factors which can lead one to conclude that the trades executed by the Noticee, mostly to match the sell orders, were unusual or abnormal in nature.

14. Thus, in the absence of any connection between the Noticee (buyer) and sellers in the instant case and in the absence of any tangible evidence to suggest that the Noticee made any wrongful gains from such price increase, the materials available on record are not sufficient to hold that the acts of Noticee while dealing in the scrip of EIL can be held to have caused inflation in the price of the EIL or to be held as manipulative trade practice in nature. Accordingly, the charge against Noticee does not stand established. DIRECTION:

15. Based on the finding recorded above contained at para 11 to 14, I, in exercise of the powers conferred upon me in terms of Section 19 read with Sections 11(1), 11(4) and Section 11B of the SEBI Act, dispose of the present proceedings against the Noticee without any direction.

-Sd-

S.K. MOHANTY DATE: MAY 31, 2019 WHOLE TIME MEMBER PLACE: MUMBAI SECURITIES AND EXCHANGE BOARD OF INDIA

Order in respect of Mr. Amit H. Tilala in the matter of M/s. Esaar (India) Ltd.