Order in respect of Tea Time Limited

WTM/PS/89/CFD/NOV/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 Tea Time 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. Tea Time 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 Bombay Stock Exchange Limited (“BSE”) and the Calcutta Stock Exchange Limited (“CSE”).

3. The Company was afforded an opportunity of personal hearing on July 31, 2014 and was informed to the Company vide SEBI’s letter dated June 17, 2014. However, the Company vide its letter dated July 01, 2014 informed that its Annual General Meeting and Board Meeting are scheduled on the date scheduled for personal hearing and requested for rescheduling the same. The Company did not file any reply to the interim order cum SCN thereafter.

4. The Company was afforded another opportunity of personal hearing on July 03, 2015, when Mr. K.K. Ganeriwala, Director appeared and made oral submissions. The Company was granted liberty to file written submissions within a period of one week. The Company filed its submissions vide letter dated July 09, 2015 and inter alia submitted that – (a) The Company was incorporated on September 18, 1979 in Kolkata, West Bengal. It was engaged in the business of exporting tea to the Middle East countries mainly Iraq and Libya. Due to the political uncertainties in Iraq, the business of the Company had to be discontinued many years back. (b) The share capital of the Company comprised of 26,73,000 equity shares of Rs.10/- each and the same were listed on BSE and CSE. The Company was in compliance with the Listing Agreements. (c) As the performance of the Company started deteriorating, some of the public shareholders created pressure on the promoters to buy their shares as they were not getting the exit opportunity at their expected price. Therefore, the promoters purchased a few shares, which increased their shareholding to 81.42%. (d) The promoters were under the impression that their shareholding will be diluted as per SEBI/Stock Exchange norms once the performance of the Company stabilized. (e) However, the performance of the Company continued to deteriorate more and finally the business of the Company was completely suspended. The promoters therefore never got the opportunity to offload their excess shareholding to the public. Despite their excess shareholding, the promoters never took advantage by way of corporate benefits like dividend, bonus etc. (f) As the operations of the Company were suspended, there were no senior level employees/company secretary/compliance officer to look after its periodical compliances including listing compliances. As a result, the trading in the shares of the Company was suspended by BSE. (g) Thereafter, rule 19A came into existence which provided for continuous listing conditions. The methods prescribed by SEBI for complying with the MPS norms were not feasible as the business operations and the trading of its shares were suspended. (h) However, the Company proposed that a bonus issue could be made to public shareholders for complying with the MPS norms. (i) The Company has already initiated steps for implementing the bonus issue.

5. Thereafter, vide letters dated July 23, 2015 and August 19, 2015, the Company inter alia submitted that in the EGM convened on August 17, 2015, the members approved Bonus Issue of 2,30,919 equity shares to the public shareholders in the ratio 93 : 200. According to the Company, 2,30,919 bonus shares would be allotted to the public shareholders, which would increase their shareholding to 25.05%.

6. Thereafter, the Company vide letter dated September 09, 2015, informed that it had completed the allotment of 2,30,919 bonus equity shares to its public shareholders in terms of SEBI Circular no. CIR/CFD/DIL/11/2012 dated August 29, 2012. As per the Company, the promoters now hold 74.95% and the public shareholders hold 25.05% of the equity share capital. The Company also enclosed the revised shareholding pattern and requested SEBI to withdraw the interim order issued against it, its promoters and directors.

7. I have considered the interim order as passed against the Company and the submissions of the Company. The interim order was issued against the Company, its promoters and promoter group and directors, as the Company was non-compliant with the provisions of rule 19A of the SCRR and Clause 40A of the Listing Agreement read with section 21 of the Securities Contract (Regulation) Act, 1956 ("SCRA"), by not maintaining atleast the minimum level (of 25%) of public shareholding as of June 03, 2013 (the time line before which such compliance was to be achieved). The Company has admitted such non-compliance and submitted that it has complied with the MPS norms on September 09, 2015, when it had completed the allotment of bonus shares to its public shareholders. According to the Company, the public shareholders now hold 25.05% of the equity shares of the Company, which is in compliance with the MPS norms.

8. I note that BSE, vide e-mail dated October 09, 2015 confirmed that the Company is in compliance with the MPS requirements by adopting the method specified under Clause 40a(ii)(f) of the Listing Agreement (i.e. issue of Bonus shares to public shareholders with promoters forgoing their entitlement). As regards the ‘suspension of trading of company’s shares due to penal reasons’, BSE vide email dated October 15, 2015, informed that suspended companies seeking resumption of trading have to complete all pending compliances and comply with the applicable revocation norms which inter alia stipulate that there should be no difference between issued and listed capital. BSE stated that though the Company filed an application dated July 24, 2015 for revocation of suspension, it was non-compliant with the MPS norms at the relevant point in time. BSE further stated that the Company did not obtain listing approval with respect to the 2,30,919 bonus equity shares and that the Company also had certain pending non-compliances including resolution of difference in share capital, to be addressed before the stock exchange could revoke the suspension. In this regard, I note that the Company, vide e-mails dated October 09, 2015 and October 16, 2015, has stated that it is complying with the requirements for revocation of suspension and forwarded a letter dated September 10, 2015 of BSE, wherein the stock exchange has granted in-principle approval for listing of 2,30,919 bonus shares.

9. In view of the above, it becomes clear that the Company has delayed in complying with the MPS requirements as it was able to achieve compliance only by September 09, 2015. Though the Company has made submissions regarding its difficulties in achieving compliance within the due date, it is to be noted that the relevant statute does not provide for any exemption or relaxation of the continuous listing requirements mandated under rule 19A of the SCRR. Therefore, a listed company shall comply with all applicable laws including the continuous listing requirements as stipulated under the SCRA and SCRR.

10. Considering the fact that the Company has now complied with the MPS requirements as stipulated under rule 19A of the SCRR read with clause 40A of the listing agreement, it would be appropriate and reasonable to vacate the directions issued vide the interim order against the Company, its promoters and directors. However, in respect of the non-compliance of the MPS requirements by the Company within the due date, I am of the considered view that, as contemplated in paragraph 18 of the interim order, the case be referred for adjudication proceedings under sections 23E and 23H of the SCRA.

11. 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 revoke the directions issued vide the interim order dated June 04, 2013 against the company, Tea Time Limited, its directors, promoters and promoter group, with immediate effect. The matter is referred for adjudication proceedings under sections 23E and 23H of the Securities Contracts (Regulation) Act, 1956. For this purpose, an adjudicating officer shall be appointed by SEBI in terms of section 23I of the Securities Contracts (Regulation) Act, 1956 read with the Securities Contracts (Regulation) (Procedure for Holding Inquiry and Imposing Penalties By Adjudicating Officer) Rules, 2005, and such adjudicating officer shall conduct the inquiry in accordance with law.

12. 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: November 10, 2015 Place: Mumbai