Order in the matter of Tatia Global Vennture Ltd.

UNDER SECTIONS 11, 11(4), 11A AND 11B OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

In re Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

IN THE MATTER OF S. NO. NAME PAN 1 Tatia Global Vennture Ltd. AAACT1724B

1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”), in the interest of investors, vide its letter dated August 7, 2017 took pre-emptive interim measures under section 11(1) of Securities and Exchange Board of India Act, 1992 (“SEBI Act”), in respect of certain listed companies identified as “shell companies” by the Ministry of Corporate Affairs including Tatia Global Vennture Ltd. (hereinafter referred to as “TGVL” / “Company”). In view of the said objective, SEBI vide the said letter dated August 7, 2017 placed the scrip of TGVL in the trade to trade category with limitation on the frequency of trades and imposed a limitation on the buyers by way of 200% deposit on the trade value, so as to alert them while trading in the scrip. The said measures were initiated by SEBI pending final determination after verification of credentials and fundamentals of the company by the exchanges, including by way of audit and forensic audit, if necessary. The measures also envisaged, on the final determination, delisting of the company from the stock exchange, if warranted. By virtue of these measures, trading in the scrip was not suspended, but was allowed under strict monitoring so that investors could take informed investment decisions till SEBI and Stock Exchanges complete detailed examination of such companies.

Order in the matter of Tatia Global Vennture Ltd.

2. Aggrieved by the aforesaid letter dated August 7, 2017 issued by SEBI, TGVL filed an appeal No. 216 of 2017 before Hon’ble Securities Appellate Tribunal (hereinafter referred to as “SAT”). Hon’ble SAT vide order dated September 11, 2017 allowed TGVL to withdraw the appeal with liberty to pursue the representation filed before SEBI against the said letter dated August 7, 2017. Hon’ble SAT directed SEBI to dispose of the representation of TGVL as expeditiously as possible and in any event within a period of four weeks from September 11, 2017. Hon’ble SAT also held that passing of any order on the representation made by the appellant would not preclude SEBI from further investigating the matter and initiate appropriate proceedings if deemed fit.

3. Pursuant to the decision of Hon’ble SAT that the communication of SEBI dated August 7, 2017 is in the nature of quasi-judicial order, in the interest of natural justice, an opportunity of personal hearing was granted to TGVL on September 20, 2017. The authorized representative of TGVL had appeared for the said hearing.

4. Thereafter, SEBI vide interim order dated October 9, 2017 (hereinafter referred to as “interim order”), had modified, subject to para 23 of the interim order, the actions envisaged in SEBI’s letter dated August 07, 2017 and the consequential actions taken by Stock Exchanges, against TGVL as under:

i. The trading in securities of TGVL shall be reverted to the status as it stood prior to issuance of letter dated August 7, 2017 by SEBI. ii. Stock Exchange shall appoint an independent forensic auditor, inter alia, to further verify: a) Misrepresentation including of financials and/or business of TGVL and consolidating subsidiaries, if any; b) Misuse of the funds/books of accounts of TGVL and consolidating subsidiaries, if any. iii. The promoters and directors in TGVL are permitted only to buy the securities of TGVL. The shares held by the promoters and directors in TGVL shall not be allowed to be transferred for sale by depositories. iv. The other actions envisaged in SEBI’s letter dated August 07, 2017 in para 1 (d) as may be applicable, and the consequential action taken by Stock Exchanges shall continue to have effect against TGVL.

5. Vide the interim order, SEBI had advised TGVL to file its reply/objections to the said interim order within 30 days from the date of receipt thereof and also indicate in its reply whether it desires to avail an opportunity of personal hearing on a date and time to be fixed on a specific request made in that regard.

6. Vide an email dated October 9, 2017, a copy of interim order was forwarded to TGVL. Subsequently, a physical copy of interim order was also sent to TGVL vide letter dated October 11, 2017 on its address on record, and the same was delivered.

Reply and hearing

7. TGVL submitted its reply/objections to the Interim order vide letter dated October 31, 2017. Vide the said letter dated October 31, 2017, TGVL had also requested for personal hearing in the matter. An opportunity of hearing was provided to TGVL on January 03, 2018 but TGVL requested for an adjournment on the ground of certain unrest in Mumbai on January 3, 2018. Acceding to the request of TGVL, the hearing was adjourned to April 4, 2018 when its authorized representatives appeared and made submissions on its behalf. During the hearing, entity was granted three weeks’ time to submit additional documents. Vide letter dated April 25, 2018, the entity had sought additional 2 weeks’ time to submit additional documents, which was granted to the entity. The entity submitted the additional information vide letter dated May 07, 2018

8. The reply/written submissions of TGVL with respect to the specific observations of the interim order are summarized as under:

A. Observations in SEBI Interim Order (para 17 (i) to 17 (v)):

The total assets appearing in the Annual Report of 2016-17 in the subsidiaries are the land held by the subsidiaries as stock in trade and the relevant title documents for the same are provided by the company. As per the annual report 2016-17, total assets held in subsidiary amounts to Rs.9.89 crore.

From the preliminary examination of title documents/sale deeds provided by the company, it is observed that all the land parcels except one were purchased by the subsidiaries on May 26, 2008. One land parcel of 1.07 acres was purchased by Sundervans Infrastructure and Developers Private Limited (one of the subsidiary) on May 26, 2009, of which sale deed is not provided. It is also observed that most of the land parcels are purchased from related parties (Promoter/Director/Companies in which KMPs have interest).

The details of supporting title documents/sale deed provided by the company for verification in comparison to the total assets of the subsidiaries as appearing in the annual Report for the year 2016-17 and Value as per Auditor’s Certificate, is as under:

(Rs. in lakhs) Sr. Name of Subsidiary Extent Total Value of Value as per No (in Assets of land (cost Books acres) Subsidiari price) as (as per es as on per the land auditor March 31, deeds certificate 2017 provided by with respect company to Inventories) 1 Dever Betta Lands Pvt. 41.38 183.41 16.55 141.60 Ltd. 2 Sundervans 44.4* 146.00 17.76 141.30 Infrastructure & developers Pvt. Ltd. 3 Thali Estate Pvt. Ltd. 41.55 146.64 17.02 142.19 4 Sagarvar Gambhira 23.74 154.81 9.49 154.05 Developers Pvt. Ltd. 5 Kalyanang Developers 34.52 192.48 13.81 141.13 Pvt. Ltd. 6 Pajjuvasami 34.25 165.75 13.70 157.42 Developers Pvt. Ltd. Total 219.84 989.09 88.34 877.69 *excludes 1.07 acres sale deed dated May 26, 2009 of which the Sale deed is not provided by the company.

As per the explanation given for the total assets of the company, the entire amount of Rs. 9.89 crore appearing as total Assets of subsidiaries is stock in trade held in form of land, however, as per the explanation of Rs. 8.77 crore inventory appearing in Consolidated Financial Statement of 2016-17, the auditor has certified that inventory (land holding) amount is Rs. 8.77 crore.

From the above, it is observed that the land extent (in acres) as per the sale deeds provided by the company and the auditor’s certificate with respect to inventories of Rs. 8.77 crore is the same. As per the auditor’s certificate, the “Inventories have been valued as cost price being the lesser of cost or market price and as per the accounting standard prescribed by ICAI in this regard”. However, as noted from the preliminary examination of the sale deeds provided by the company, the total cost price of land purchased by the subsidiaries of TGVL is Rs. 88.34 lakh. Hence, there is a significant discrepancy in the cost of the land shown in the consolidated financials of TGVL and the actual cost as per the sale deeds. Also, there is a mismatch in the explanation provided by the company regarding the total assets of subsidiaries and inventories appearing in consolidated financials of TGVL for the FY 2016-17. Thus, there is a prima facie evidence of misrepresentation of financials / transactions by the company.

TGVL’s reply vide letter dated October 31, 2017:

a. SEBI has observed that the total assets of the subsidiary companies in the consolidated financial statements stood at Rs 9.89 crores comprising the entire assets as inventories of the subsidiary companies while the Inventory valuation provided in our earlier submission and that of auditors' certificate stated only Rs 8.77 crores.

b. In this regard, we would like to draw your kind attention to fact that the inventory figures submitted by the company as duly certified by Auditors is true and correct as the total assets of the subsidiary companies includes consolidated cash and bank balances of Rs. 4,40,360 and Rs. 1,06,97,410 towards other current assets. Hence, to surmise that the difference is misrepresentation of financial statements seems to be erroneous and arbitrary.

c. The reconciliation and break up of assets of our subsidiary company is elucidated herein-below for ready reference:

Sr. Name Of Land Cash & Other Current Total No. Subsidiary (Inventories) Bank Assets Assets (Rs.) Balances (including Trade (Rs.) (Rs.) Receivables) (Rs.) 1 Deverbetta 1,41,59,750 81,244 41,00,000 1,83,40,994 Lands Pvt Ltd 2 Kalyanang 1,41,13,535 78,362 50,56,000 1,92,47,897 Developers Pvt Ltd 3 Pajjuvasami 1,57,42,467 74,876 7,57,530 1,65,74,873 Developers Pvt Ltd 4 Sundervans 1,41,30,305 60,154 4,09,194 1,45,99,653 Infrastructure and Developers Pvt Ltd 5 Sagarvar 1,54,04,943 71,287 5,222 1,54,81,462 Gambhira Developers Pvt Ltd 6 Thali Estates Pvt 1,42,18,727 74,427 3,69,465 1,46,62,619 Ltd Total 8,77,69,727 4,40,350 1,06,97,411 9,89,07,498

TGVL’s Additional reply vide letter dated May 05, 2018 a. The company TGVL had diversified in to Real Estate and Infrastructure Development in the year 2007-08 along with its existing business activities which were subdued from some time due to industrial and sectoral recession. As part of diversification initiative the company had acquired and procured land with proper title and ownership. Keeping the challenges foreseen in procurement of large parcel of lands with escalation cost in the process the company incurred development costs to procure and obtain land in lieu of accessible and peaceful possession such as removal of encroachment/occupants, uneven landscapes fillings, re-habilitation etc. to name a few out of range of issues involved in aggregating huge parcels of land.

Thus, the cost of the land is the sum total of cost of the circle value, cost of the land plus the development cost of the land. The circle value cost as appearing in the sale deed is the guideline value of the land as fixed by the Sub-Registrar of respective circle, in which the land is situated. The development value is the cost of the land development incurred by the land owners and aggregators towards cost such as land fillings, cost of standing trees, cost of standing crops, evacuation and rehabilitation of the occupants of land, etc. and so on, which is paid as Development Cost. Added to this is the cost of registration which is paid towards the stamp duty and Sub-Registration office expenses. Thus, the total value of the land inventory is the combined values of all the above. b. The Company, in the process as enumerated above, procured land admeasuring about 200 plus acres in the subsidiary companies. The lands were procured and registered at the circle rate prevailing and registered accordingly as per normal practices totaling about Rs. 88 lakhs. Further, as depicted above the costs incurred in the process were considered and recorded towards cost of development and finally clubbed under the Inventories total amounting to Rs. 9.89 crores.

The workings of the same collating with the figures as appearing in the company balance sheets are attached. c. The company had duly disclosed all the transactions details in the financial statements with regard to the same including the related party transactions by way of notes to the accounts forming part of financial statements. d. The average costs of land per acre incurred by the companies (including the cost of development) were measured and validated with the independent valuer’s report dated 27/11/2008 by Shri S Mani which is attached. e. The company also corroborated the valuation exercise with some of the published peer sales notices/advertisements for sale of plots happening within the vicinity of the land. The sales were through the process of public advertisement as appearing in the leading newspapers such as Economic Times etc. The acquisition cost of the company were more competitive on measured comparison by virtue of appeared advertisements. Copies of the advertisement clippings are attached. f. All the payments were duly made only through the banking channel. The respective bank payments details are enclosed. g. Hence, to summarize, we submit that the project land were procured by the company at the rates (including the costs of development) at par with the market prevailing rates duly justified by the valuation reports and peer sale notices as enumerated above.

Further, the reconciliation of the registered value and the recorded value as per the books are attached.

B. Observations in SEBI Interim Order – para (17 (vi) to 17(vii)):

In the submission made by the company to the Stock Exchanges, the company has stated that "the company is currently engaged in to and primarily focused on Infrastructure related business activities likes of Information Technology Park on Joint Investment model basis. The company is also engaged into township plan through inorganic business model by way of its wholly owned subsidiaries where it holds land bank of 200 plus acres in the immediate vicinity of information technology hub of Bangalore City as part of its business model. The nature and type of business in which the company is primarily engaged requires long gestation period alongside the various statutory clearance from the concerned governments and statutory bodies which are currently under process work."

In this regard, it is noted that the land parcel was acquired in 2008 and till date no clearance for the same has been received as per company’s reply. Since, the land was purchased from related entities in May 2008 and no statutory clearance has been received from the concerned governments and statutory bodies till date, the purchase of land is prima facie not in interest of the minority shareholders as the subsidiaries have not generated any income from these assets till date.

TGVL’s reply (for para 17 vi- 17 vii) vide letter dated October 31, 2017:

a. The company had purchased the lands in the year 2008 in the subsidiary companies which was duly accounted, recorded and disclosed appropriately. The total land measuring of 200 acres plus is huge tract of land. The company's aim was to go for integrated township and for that purposes certain additional land was also required to be purchased which were falling in between this land parcel. The clearance of company's land could not be obtained easily as the intermediary lands which were falling in vicinity were carrying out agricultural activities and the local laws does not easily permit the conversion of such land for non-agricultural purposes b. The land parcels do take long time to get clearances of numerous types at different stages. The system is taking long time in clearances but company has successfully got clearance for various stages. For instance; getting land pattas

86 chittas in respective company's name, mutation completed by entry in 'A' registers, land possessions certificate obtained from revenue department, etc. Hence, we request your kind self to appreciate the fact that Company has been making sincere and persistent efforts over the period of time towards its stated objectives c. The subsidiary Company continues to hold the lands as rightful owner and the value of such land have grown much higher which can be materialized only when the monetization of this land happens. The shareholders' value is fully protected under the valuation of this lands and all the shareholders are in real terms & rightful owners sitting on appreciated values (however not immediately monetized the intrinsic value is at most comfort levels). d. Based on above submission it is incorrect to presume that the purchase of land is against the interest of minority shareholders. In any case, owing of such assets in real terms is in itself a good benchmark and same cannot be termed as 'shell' operation in any form.

TGVL’s Additional reply (for 17vi to 17vii) submitted vide letter dated May 05, 2018 a. All approvals and sanctions related to acquisition of land have been duly taken. Details thereof are annexed. b. The company has successfully completed its task of obtaining all the local approvals such as Patta Transfers, Chitta, A-register, Adangal, Field Map, Possession certificate from local authority, etc. which are required to be registered and obtained from government in the name of company to protect the land so as to have lawful entitlement. c. The details of the various approval and recording obtained by the company are enumerated in the table in form of Annexure along with the detailed document copies of such approvals.

C. Observations in SEBI Interim Order (para 17 (viii)):

The Company has provided list of entities from whom Loans and Advances are receivable as on March 31, 2017 along with the amount receivable. The total long term Loans & Advances as per the Balance Sheet of the year 2016-17 is Rs. 19.44 crore. The company has provided the break-up of these loans and advances along with the supporting agreements and confirmation of accounts sent by company to the entity except for advance of Rs. 8.05 lakhs to Prince Property Managements of which the company has not submitted agreement for verification. From the preliminary examination of agreements submitted by the company, it is observed that: a) Advance of Rs. 11.94 crore is appearing as advance against purchase of property worth Rs. 51.04 crore. The company has provided 2 agreements for sale entered into on January 04, 2016 between TGVL and Prince Foundations Ltd. for purchase of land. As per the agreements, the said properties are under mortgage with some banks and will be transferred in the name of TGVL on release of mortgage and if the release of documents is delayed beyond June 30, 2016, TGVL will get interest at the rate of 9%.

As per the confirmation of accounts (2016-17) submitted by company, it appears that the company has charged the amount of Rs. 91 lakhs as interest receipts to Prince Foundations Ltd. which implies that the release of documents of land mortgage has not yet taken place and the land is not yet transferred in the name of TGVL. Further, the interest due had not been received till March 31, 2017. Hence, the advance amount is prima facie not in interest of public shareholders, as the company has purchased mortgaged property whose title is yet not received by them even after more than 15 months of purchase as on March 31, 2017. b) Further, from the confirmation of accounts of Prince Foundation Ltd. given by the company, it appears that TGVL has received Rs. 6 crore from Prince Foundation Ltd. No explanation is provided by TGVL for receipt of funds from the party to whom advance for purchase of property is given. c) As per the Agreements for Sale with Prince Foundation Ltd, "the Purchaser (TGVL) has paid a sum of Rs. 15 crore (7.5 crore + 7.5 crore) as advance sale consideration for property which is by way of adjustment of the loan amount already lying with Vendor (Prince Foundations Ltd.)."

Hence, prima facie there is no clarity regarding as to when there was transfer of funds related to the advance for purchase of property and no detail has been provided by the company in this respect. Thus, the genuineness of these property related transactions is suspect. d) With respect to advance of Rs. 7.27 crore to Jaswanth Chand Bhandari, as per the agreement dated Aug 23, 2013, given by the company the advance is for joint venture in jointly funding Tamil Movies over a course of time, where the entity to whom advance is given assures a guaranteed return of 12% p.a. return on investment. Against the agreement the company has given advance of Rs. 6.5 crore in year 2016-17 to the entity, however, interest had not been received until March 31, 2017. The agreement does not specify any amount of advance. As the advance does not relate to the nature of business of company which is textile and infrastructure related activities, the advance amount is prima facie not in interest of minority shareholders. e) The company has given an advance of Rs. 10 lakhs in Oct 2013 for purchase of residential property worth Rs. 20 lakhs.

As per the reply of company this property's registration of sale deed has not been completed till date. Hence, prima facie the amount of advance is not in interest of minority shareholders as no interest is being received for the delay in registration.

TGVL’s reply for 17(viii) vide letter dated October 31, 2017:

a. The company had entered in agreement with M/s Prince Foundation Pvt. Ltd for acquiring the land for a sum of Rs. 51.04 crore and paid advance of Rs. 15 crore balance of payment subject to conditions as set out in the agreement. In the interim period the company was entitled for interest amount @ 9%. This interest was duly received by the Company in timely manner so far without any default over the years. The Company is confident to receive back the entire amount including that of interest shortly. b. Further, as there was certain delay in the terms of agreement, our Company has asked the concerned party (i.e. Prince Foundations Pvt. Ltd) to pay back the amount as the commitment made under the agreement was not being honored. It is on this count that Prince Foundations Pvt. Ltd has paid back a sum of Rs. 6 crore and had requested some time to pay back the dues as they were going through some financial imbalances due to poor sales etc. Our Company is confident to get back the outstanding amount during the current fiscal year along with due interest. Without prejudice to above M/s Prince Foundations Ltd is one of large and reputed developer in the Chennai region with impeccable track record of executing milestone projects. The company is having joint venture with various projects across region and is reputable brand with banks & fund houses who have funded them in hundreds of crores for their projects. Hence, to contemplate and surmise the transaction is not genuine is unfair and unwarranted. c. The company has deployed its funds in the venture with Mr. Jaswanth Chand Bhandari to earn an assured return of 12% on the funds deployed. The company has duly received the interest due up to 31.03.2017 and to say interest is not received is incorrect and to presume the entire transaction which is generating the assured return without any single failure as not genuine is improper and unjustified d. The company has advanced a sum of R. 10 Lakhs to Mr. P. Malarvannan on a property value of Rs. 20 Lakhs. The company is in due process to complete the said transaction and the company is fully protected lawfully with claim on the property

TGVL’s additional reply for 17(viii) submitted vide letter dated May 05, 2018 a. The advances made to Prince Management Services Pvt. Ltd. were short term in nature and have duly been fully recovered as on this date of submissions. The copy of the bank statement reflecting the amount received is enclosed. b. The company has made certain advances to M/s. Prince Foundation Ltd. based on such terms keeping in mind the commercial interests of the company. Prince Foundation Ltd. is among one of the reputed name in Chennai who has history and track of delivering some iconic real estate development in city. The company had duly considered the product delivery of this brand exhibiting the delivery and hence entered into agreement to jointly promote and develop Information and Technology Park in the IT hub of Chennai city. The company has also envisaged the interest of its shareholders and to protect the same against opportunity cost combined with capital appreciation has included the minimum interest on such sums advances so that the company can earn income even on standalone basis apart from capital appreciation from project outcome. A copy of the agreement and Form 26AS for TDS deduction is enclosed.

Further, as there was some extended delay happening in the project on account of certain delaying clearances, the amount was called back by the company from Prince Foundation Ltd. and in this process Prince Foundation Ltd. has already remitted back Rs. 5 crore and the balance shall be recovered at the earliest. Further, the company is entitled to receive 9% interest till the date of full repayment. The copy of repayment confirmation statements of Prince Foundation Ltd, and Bank statements are attached.

c. The company has made advances to Mr. Jaswant Chand Bhandari considering the short term deployment generating better returns of the sums. The said party said to be one of the prominent film producers had presented and asserted better returns on the investment and having been convinced the company’s funds were deployed in better return generating sectors. The company has duly received the return in form of interest in timely manner without any default or delay. The funds are recoverable at short term notice and are considered safe investment keeping in mind the brand value of the party. The copy of confirmation and receipts of interest, Form 26AS and bank statements for TDS deduction are enclosed.

D. Observation in SEBI Interim Order (17 (ix to xii)):

All the trade receivables of Rs 6.80 crore are more than 2 year old as per the reply of company. Of the total receivables of Rs. 6.80 crore, around Rs. 6.09 crore is receivable from the 6 subsidiaries. The company in its reply has stated that the receivables from subsidiaries are against procurement of lands at subsidiary level for infrastructure projects. In this regard the company has not provided any back-up documents showing compliance of related party procedure.

As per the details of the total assets in subsidiary the company has submitted the details of land purchased by subsidiary amounting to around Rs. 88 lakhs only. Hence, no details have been provided by the company with respect to the balance amount appearing as receivable from subsidiary and against which property the said amount is receivable. For the balance receivables the company has not provided any documents/ contract. Hence, the authenticity of same is doubtful.

For the receivables other than from subsidiaries amounting to Rs. 71 lakhs approx., TGVL has not provided any details or supporting documents.

Further, the classification of advance given to subsidiary for purchase of land as Trade Receivable is also questionable as "A receivable shall be classified as 'trade receivable', if it is in respect of the amount due on account of goods sold or services rendered in the normal course of business. Hence, amounts due under contractual rights, other than arising out of sale of goods or rendering of services, cannot be included within Trade Receivables." (Guidance Note ICAI)

TGVL’s reply for 17(ix to xii) vide letter dated October 31, 2017:

a) The outstanding trade receivables from the subsidiaries stand at Rs 6.09 crores and for others receivables which are on account of holding company stands at Rs 0.71 lakhs. Adding up, total outstanding stands at Rs 6.80 crores. The company has funded the land costs at subsidiary level towards the land related payments over a period of time and in course of settling dues which has arisen on account of such land acquisition in earlier period. As narrated above, the integrated township plan had certain initial issues in acquiring additional tracts of lands thereby funded cost stands as it is in the books and thus shown above 2 years period. To back up the same we have already submitted the confirmation certificates from both the parties counter signing the confirmations. Hence, to say no documents were produced is incorrect.

b) The company's subsidiary has total inventory cost at Rs. 8,77,68,727/- on consolidated basis. The consolidated cost includes sale consideration, development cost reimbursed and stamp duty etc. Further, your kind self has considered a cost of Rs 88 lakhs which is only the value as appearing in sales deed. The other cost such as development cost paid, stamp duty etc. have been ignored. Hence, to surmise that the recorded cost as in books is untrue is incorrect and improper.

c) For the other receivables amounting to Rs. 71 lakhs approximately the details are here-under for your kind consideration:

Sr. No. Name of the Party Amount (Rs.) 1 Subhkam Capital Vennture 27,480 Ltd. 2 Shankar Durga 67,25,000 3 Niharika Creations 2,85,894 Total 70,38,374 d) The company has funded the subsidiary for the purposes of land and the integrated project of the company is on consolidated basis and cannot be isolated to individual company wise. Hence, the amount which was used primarily to facilitate business transaction on consolidated basis was classified under Trade receivables. Further, the said funds was not in nature of advance or loan carrying any specific rate of return or contractual obligation to be classified under Loans & advances.

TGVL’s additional reply for 17(ix to xii) vide letter dated May 05, 2018:

a) Further the details of other advances, breakup of the same alongside the confirmation and respective payment details are provided.

b) The company has procured the lands from project development and have classified as inventories in the subsidiary company. The funds infused by the holding company in to subsidiaries towards the same were on account of the same and related to trade of the company. The funds infused were neither advances nor loans bearing any interest or service related income. Hence such sums were rightly classified as trade Receivables.

E. Observation in SEBI Interim Order (17 (xiii) to (xiv)):

“The company has provided copy of board resolution for bad debts of Rs. 1.55 crore along with the arbitration proceeding details with respect to the receivable amount verification. The company has however not provided the documentary evidence of which the amount of Rs. 1.22 crore was written back.

As per the board resolution, the amount is not immediately payable due to contractual failure on the part of concerned parties and hence considered the amount to be written back. The names of parties of whom payable is written back is provided in resolution. The company has not provided any backup papers/contracts against whom this amount was payable. Further, the amount of payable written back Rs. 1.22 crore is net off against bad debts of Rs. 1.55 crore which has resulted in understatement of "other income" & "Expenses" of the company, thereby not reflecting true & fair view of the financials.”

TGVL’s reply for (17 (xiii) to (xiv)) vide letter dated October 31, 2017:

a) The resolution for bad debts as discussed in the interim order also covers the details of parties whose amounts were written back in the books as against bad debts. The amount written-off in the books and amount written-back in the books is on one single reason and count. The net effect on the financials of the company remains same in any given case. The transactions were netted off as standing in the ledger account of concerned parties. When the net result is not getting impacted there cannot be a situation or case of under-estimating of income or overstating of expenditure and to construe the same as not reflecting true and fair view is unfair.

TGVL’s additional reply for 17((xiii) to (xiv)) vide letter dated May 05, 2018:

b) The company has invested certain amount in Stallion Brands P Ltd as loan and equity. The said company failed in its business venture resulting in losses for the company. The arbitration process currently under process are expected to yield some recovery but the time and quantification is not certain. Further, the said company was also struck off by the registrar of companies and under such circumstances found prudent to write off the amounts in the books of the company and according a resolution to this effect was also passed. The copies of board Resolution, Ledger and bank statements is enclosed.

c) Further, the company also has certain inbound investment participation by few individuals who failed to meet out the agreed commitment and based on the final round of discussion and deliberation it was decided to cease the payment already received and write back such dues in the books of the company. The said write back was rightly accounted against the write off in the books and only the net effect of the same was recognized in the profit and loss statement. The said transaction was covered in the above referred board resolution itself.

The write back in the books has in fact shown revenue and reduced the impact of bad debts in to the books resulting in higher reported profit. A copy of statement is enclosed.

F. Observation in SEBI Interim Order (17 (xv)):

The company has provided the break-up of Income from Operations of Rs. 1.44 crore. The company has not provided any supporting documents (invoices/deeds, etc.). Further the balance of Rs. 4 lakhs is miscellaneous income, of which no details have been provided but the same has also been included in "Income from Operations" for the year 2016-17.

TGVL’s reply for (17 (xv)) vide letter dated October 31, 2017:

a) The company has duly provided the details of the interest receipts comprising of Income from Operations with party wise break up. The break-up of miscellaneous income was not sought by SEBI and thus was not exclusively provided. However, we are herewith submitting the break-up of Miscellaneous income as under:

S.No Particulars Amount (Rs.) 1 Operating Revenues 1,39,77,880 2 Other income(Profit on sale of 4,23,433 car) Total 1,44,01,313

TGVL’s additional reply for 17 (xv)) vide letter dated May 05, 2018:

a) The documentary evidence regarding income from operations amounting to Rs. 1,44,101,313/- and miscellaneous income of Rs. 4,23,433/- lakhs is enclosed along with the copy of ledger accounts and Form 26AS for TDS deduction.

Consideration of issues

9. In light of the observations of the interim order and the submissions made by TGVL, the following issue arises for consideration:

Whether in light of the facts and circumstances of the case, the findings of the interim order and the submissions of the company in response thereto, the directions issued against the company, its promoters and directors vide the interim order need to be confirmed, revoked or modified in any manner?

10. Considering the above mentioned facts and circumstances and the replies of TGVL to the findings of the interim order, I observe the following:

Regarding the discrepancy in the cost of the land shown in the consolidated financials of TGVL and the actual cost as per the sale deeds:

a) TGVL has not provided supporting sale deed with respect to land parcel of 1.07 acres purchased by Sundervans Infrastructure and Developers Private Limited (one of the subsidiary) on May 26, 2009.

b) TGVL has stated in its reply that the Total Assets of Subsidiaries are as under:

Sr. No. Total Assets of Subsidiaries component Amount

1 Land (Inventories) 8,77,69,727 2 Cash & Bank Balances 4,40,350 3 Other Current Assets (including Trade receivables) 1,06,97,411 Total 9,89,07,498

However, TGVL has not provided any supporting documents with respect to Cash & Bank Balances and other current assets. Hence the same cannot be verified at this stage.

c) TGVL provided the bank payments details on company’s letter head instead of providing the highlighted bank statements.

d) It has been observed w.r.t land payment details that same cheque no. with same cheque date was paid to the same entity but with different amounts. Such pattern was observed in the following instances where payment was made to entity named M/s. Leela Biotech and Industries Ltd.(“ Leela Biotech”) The Bank Branch is also same across all payments noted in the table below

S. Chequ Chequ Amount Shown as payment Payment No. e No. e Date (Rs.) towards land purchased made to by subsidiary 1 4815 25/03/ 31,73,581 M/s. Devar Betta Lands Pvt. Leela 2008 Ltd. Biotech 2 4815 25/03/ 44,76,419 M/s. Pajjuvasami Leela 2008 Developers Pvt. Ltd. Biotech Total 76,50,000 3 36566 25/03/ 50,23,960 M/s. Kalayanang Leela 3 2008 Developers Pvt. Ltd. Biotech 4 36566 25/03/ 23,26,040 M/s. Sagarvar Gambhira Leela 3 2008 Developers Pvt. Ltd. Biotech Total 73,50,000 5 36561 25/03/ 37,78,514 M/s. Kalayanang Leela 3 2008 Developers Pvt. Ltd. Biotech 6 36561 25/03/ 38,10,641 M/s. Kalayanang Leela 3 2008 Developers Pvt. Ltd. Biotech 7 36561 25/03/ 22,18,806 M/s. Pajjuvasami Leela 3 2008 Developers Pvt. Ltd. Biotech 8 36561 25/03/ 35,39,385 M/s. Thali Estates Pvt. Ltd. Leela 3 2008 Biotech 9 36561 25/03/ 13,52,680 M/s. Sundervans Leela 3 2008 Infrastructure & Developers Biotech Pvt. Ltd. Total 1,47,00,026 Also, in the following instances the same cheque number with same date & amount is shown as payment towards land parcel purchased by different subsidiaries. Such pattern was observed in the following instances where payment was made to M/s. Leela Biotech and Industries Ltd.:

S. Cheque Cheque Amount Shown as Payment made No. No. Date (Rs.) payment towards to land purchased by subsidiary 1. 3 65606 28/01/2008 84,00,000 M/s. Thali Estates Leela Biotech Pvt. Ltd. 2. 3 65606 28/01/2008 84,00,000 M/s. Sundervans Leela Biotech Infrastructure & Developers Pvt. Ltd. Total 1,68,00,000

3. 3 65608 11/02/2008 10,00,000 M/s. Thali Estates Leela Biotech Pvt. Ltd. 4. 3 65608 11/02/2008 10,00,000 M/s. Sundervans Leela Biotech Infrastructure & Developers Pvt. Ltd. Total 20,00,000 5. 3 65612 14/03/2008 5,00,000 M/s. Thali Estates Leela Biotech Pvt. Ltd. 6. 3 65612 14/03/2008 5,00,000 M/s. Sundervans Leela Biotech Infrastructure & Developers Pvt. Ltd. 7. 3 65621 19/08/2008 3,33,000 M/s. Thali Estates Leela Biotech Pvt. Ltd. 8. 3 65621 19/08/2008 3,33,000 M/s. Sundervans Leela Biotech Infrastructure & Developers Pvt. Ltd. Total 16,66,000 In the absence of highlighted bank statements, it is not clear whether the payment made through cheques to M/s. Leela Biotech and Industries Ltd. was made on a consolidated basis.

e) The company did not submit any document to support payments made towards development cost (land fillings, cost of standing trees, cost of standing crops, evacuation and rehabilitation of the occupants of land, etc.).

f) As per the valuation report submitted by TGVL, the fair market value as on November 2008, is derived in the range of Rs. 6,00,000/- to Rs. 8,00,000 per acre which means estimated fair market values of the land is Rs. 13.19 crores to Rs. 17.58 crores approximately as on 27/11/2008. The sale deeds submitted by TGVL are dated May 2008 and valuation certificate is dated November 2008, which indicates that the exercise of valuing the land took place after purchasing the land. Further, the valuation report submitted by TGVL does not talk about the cost of development, which TGVL has referred in its submissions.

g) The Copies of the advertisement/clippings submitted by the company cannot be accepted as no date and publication house are mentioned in the copies submitted.

I note that in the interim order, the observations of discrepancies regarding value of assets of subsidiaries of TGVL have been found to be prima facie misrepresentation of financials / transactions by TGVL. As observed above, the justifications provided by TGVL in this regard have not been backed by verifiable documentary evidence e.g. no documents to show Cash and Bank Balance, current assets, proof of development on the land etc. TGVL has been provided sufficient time and opportunity to provide adequate explanation to the observations of the interim order and support them with verifiable documentary evidence, but it has failed to do so. I, therefore, find that at this stage the findings regarding prima facie evidence of misrepresentation of financials / transactions by TGVL stands confirmed.

Regarding the pending clearance and approvals from government / authorities regarding development of land parcel.

a) I note that with regard to the clearances / approvals from the relevant authorities, TGVL has submitted that it has obtained the following local sanctions and has enclosed copies of the same:

i) Patta Transfer Order in the name of the Company ii) Chitta in the name of the company iii) “A” register entry in the name of the company iv) Possession Certificates from the Thasildar in the name of the company v) FMB of the respective land and surveys.

b) It is noted that the said supporting documents provided by the company are in local language (Tamil) and could not be verified.

c) As per TGVL’s admission “the Project Specific clearances will be applied only after the completion of targeted land acquisition and depending on what type of development the company would take up according to the market conditions and other commercial parameters, which shall be done once the prospective development model and financial closure is decided and freezed”.

d) Admittedly, the project specific clearances have not been obtained by TGVL till date and therefore, the concern, raised in the interim order that the purchase of land was not in the interest of minority shareholders, still remains.

Regarding Loans and Advances are receivable as on March 31, 2017 a) W.r.t advance of Rs. 8.05 Lakh given to Prince Property Management, the company did not submit any supporting loan agreement. While providing the reply vide letter dated May 05, 2018, the company provided copy of bank statement showing Rs. 8.05 Lakh deposited in the account of TGVL from Price Property Management on April 24, 2018. Due to insufficient explanation, it appears that the company called back the advance only prior to furnishing the reply to SEBI, otherwise the same was pending as per the confirmation of accounts (2016-17) submitted vide letter dated September 25, 2017.

b) With respect to Advance of Rs. 11.94 crore to Prince Foundations Ltd., TGVL in its objections to Interim Order has stated that “this interest was duly received by the Company in timely manner so far without any default over the years. The Company is confident to receive back the entire amount including that of interest shortly.” However, from the confirmation of account provided by TGVL vide reply dated September 25, 2017, TGVL had charged interest of Rs. 91 lakhs receivable from Prince Foundations Ltd and the same was not received till March 31, 2017. TGVL has not provided any supporting document/clarification with respect to the receipt of this interest amount.

c) W.r.t to the confirmation of accounts for FY 2015-16, interest payable (net of TDS) of Rs. 1,21,01,047 is recorded in the month of January 2016. The same amount is reflected in the confirmation of accounts for FY 2016-17 as interest receivable on 20/04/2016. The same is deposited in the bank account of TGVL on 20/04/2016 as per the bank statements of 2016-17. However, it has been observed from the bank statement that Rs. 1,21,00,000 was remitted back from TGVL to Prince Foundation on 21/04/2016, which is not reflected in confirmation of accounts of 2016-17 indicating mis-match of the said transaction.

d) As per the confirmation of account for FY 2016-17, TGVL received 15.84 Lakhs from Prince Foundation Ltd. However, the same is not appearing in the bank statement provided by TGVL as on that date indicating mis-match of the said transactions.

In addition to the above, the following is also noted: Date Particulars Withdrawal Deposit 02/05/2016 Prince Foundation Ltd. 15,00,000 11/01/2017 Prince Foundation Ltd. 1,50,00,000 12/01/2017 Jaswant Chand Bhandari 1,50,00,000 12/01/2017 Prince Foundation Ltd. 1,50,00,000 18/01/2017 Jaswant Chand Bhandari 1,50,00,000 21/01/2017 Prince Foundation Ltd. 1,00,00,000 24/01/2017 Jaswant Chand Bhandari 1,00,00,000 02/02/2017 Prince Foundation Ltd. 1,00,00,000 03/02/2017 Jaswant Chand Bhandari 1,00,00,000 Source: Extracted from bank statement provided by TGVL for 01/04/2016 to 31/03/2017

It appears from the above transactions that there was movement of funds (same amounts) from Prince Foundation Ltd. to TGVL and thereafter to Mr. Jaswant Chand Bhandari which need to be verified in detail while conducting audit.

e) Also, TGVL has not addressed SEBI’s observation with supporting back-up documents regarding the observation “no clarity regarding as to when there was transfer of funds related to the advance for purchase of property and no detail has been provided by the company in this respect. Thus, the genuineness of these property related transactions is suspect.”

Hence, the explanation given by the company with respect to the advance to Prince Foundations Ltd. is insufficient.

f) W.r.t advance of Rs. 7.27 crore to Mr. Jaswant Chand Bhandari, from the bank statements submitted by TGVL, it appears that in certain entries the amount deposited by Prince Foundation Ltd. to TGVL was further given to Mr. Jaswant Chand Bhandari. Further, the company has not addressed the observation as to “the advance does not relate to the nature of business of company which is textile and infrastructure related activities”.

g) W.r.t advance of Rs. 10 Lakh to Mr. P. Malarvannan, TGVL has not stated any timeline or reason as to why the registration of sale deed of the property is pending registration since October 2013.

As noted in the interim order, the payment of advance towards purchase of property was not in the interest of minority shareholders in light of the facts and circumstances mentioned therein. The explanation / justification provided by TGVL in this regard is not backed by sufficient documentary evidence as observed above. Further, the movement of funds (same amounts) from Prince Foundation Ltd. to TGVL and thereafter to Mr. Jaswant Chand Bhandari appearing in the bank statement of TGVL has also not been explained. Thus, in my view these aspects need to be verified by way of an audit.

Regarding the trade receivables of Rs 6.80 crore a) With regard to treatment of Rs. 6.09 crore as receivable from the 6 subsidiaries, TGVL has submitted the following:

“The company has procured the lands from project development and have classified as inventories in the subsidiary company. The funds infused by the holding company in to subsidiaries towards the same were on account of the same and related to trade of the company. The funds infused were neither advances nor loans bearing any interest or service related income. Hence such sums were rightly classified as trade Receivables.”

b) TGVL has not offered any explanation regarding the accounting standard under which the above view has been taken by TGVL w.r.t. trade receivables. c) Further, apart from ledger accounts, TGVL has not provided any documentary evidence as to the invoices/agreements against which this amount is receivable, for verification.

Considering the above, in my view, the explanation provided by TGVL in this regard appears to be insufficient and the correctness of financials with respect to trade receivables needs to be ascertained by way of an audit.

Regarding write-off and write-back in the books of TGVL.

a) As per the resolution passed at the meeting of the Board of Directors of TGVL, Rs. 1.55 crore was written off w.r.t Stallion Brands Pvt. Ltd. It may be noted that the entity is related to TGVL as Bharat Jain Tatia is the director in both the companies. It is also pertinent to note that the name of company (Stallion Brands Pvt. Ltd.) has been struck off by RoC in its records. b) The company did not submit any proof in the form of banking statements w.r.t amount written-back in the books amounting to Rs. 1.22 crores. c) TGVL has not provided any documentary evidence including backup papers/contracts with the parties/individuals with whom investment commitments were made and were later written back, for verification.

The absence of documentary evidence in support of the submissions regarding write-off and write-back by TGVL raises suspicion regarding their genuineness. Thus, the same needs to be checked by way of an audit.

Regarding the break-up of Income from Operations of Rs. 1.44 crore.

The company has provided documents like copy of ledger accounts (Interest receipts) and Form 26AS for TDS deduction. However, the company did not provide highlighted bank entries to confirm such income. The same requires verification by an auditor.

11. It is noted that subsequent to the interim order, TGVL was given opportunities to submit its explanations in respect of the observations made in the interim order. In respect of several transactions noted above, TGVL has provided insufficient explanation / justification, which is not backed by independently verifiable documentary evidence. TGVL was given ample time and opportunity to submit its explanation in respect of the observations of the interim order with verifiable documents, however it has failed to do so as has been observed in earlier paragraphs. Considering the above, I find that the facts and circumstances of the case as brought out in the interim order have not changed, so as to justify the dis-continuation/ modification/ revocation of the directions passed in the interim order against TGVL, its promoters and directors.

ORDER

12. In view of the foregoing, I, in exercise of the powers conferred upon me under sections 11, 11(4), 11A and 11B read with section 19 of the Securities and Exchange Board of India Act, 1992 hereby confirm the directions issued against TGVL, its promoters and directors vide interim order dated October 9, 2017 and the audit shall continue.

13. Copy of this Order shall be forwarded to the recognized stock exchanges for information and necessary action. A copy of this Order shall also be forwarded to the Ministry of Corporate Affairs and Serious Fraud Investigation Office for their information.

Sd/-

DATE: December 28th, 2018 MADHABI PURI BUCH PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA