1. In the year 1993, Mr. Tapan Manojbhai Shah (“Mr.

Tapan Manoj”) moved to Mumbai from

his home city of Ahmedabad and commenced his journey to broking superstardom. After
initially having worked with a giant brokerage house where he learnt the ropes of the trade
under the tutelage of various seasoned stockbrokers, he eventually applied for, and received
from SEBI, his registration as a stock broker. Mr. Tapan Manoj, fondly known as TM sir by
the employees at his new brokerage house Peterfat Trading Company Limited (“PFTC”), was
widely regarded as a broker of stellar reputation, integrity and character. Various corporates,
including large investment firms swore by his reputation, and only traded through him.
Promoters of various listed companies also were often seen with Mr. Tapan Manoj at various
glamorous parties frequented by movie stars, fund managers and politicians. It was widely
known and believed, that any company Mr. Tapan Manoj recommended, would turn to gold,
with stocks often observing a meteoric rise in price within a couple of years. PFTC, apart
from being registered as a stockbroker, further procured, through its subsidiaries/group
companies, registration as a depository participant, investment adviser etc.

2. It is at one such glitzy party in the year 2012, that Mr. Tapan Manoj met Mr. Kapil Varma,
a multi-millionaire businessman and his spouse, Ms. Tishita Mehta a commodities trader of
some standing. Mr. Kapil Varma, an alumnus of a premier engineering college, was widely
regarded as a tech guru and visionary, which coupled with his familial wealth, had catapulted
him to tremendous success. The trio immediately hit it off, due to shared interests in the
Indian stock markets and the driven nature of their personalities and were a hip clique in their
social circles. Mr. Kapil Varma and Mr. Tapan Manoj further shared a professional
relationship with Mr. Kapil Varma appointing PFTC as his sole stockbroker. Further, Mr.
Tapan Manoj, who wanted to enter the commodities markets, also invested heavily in Ms.
Tishita Mehta’s commodities brokerage house, Tishita Commodities Private Limited (“Tishita
Commodities”) and was inducted as a non-

1
executive director therein. In the year 2016, Mr. Tapan Manoj controlled about 25% of Tishita
Commodities, which was flourishing, and generated huge volumes of commodities trades on
the Indian commodities markets. Mr. Tapan Manoj, was also designated the head of the ‘other
investments’ department in the company, which was in charge of proprietary
stock/commodities investments.

3. In the year 2016, Mr. Kapil Verma, was seeking partners to support his venture into the
Artificial Intelligence space, being carried out through a newly launched division dedicated to
AI development in Techaatma Limited (“Techaatma”), a company that had for decades been a
frontrunner in revolutionary tech development. Techaatma, had capitalised on its Promoter,
Managing Director and CEO, Mr. Kapil Varma’s strong leadership, broad network and
technical know-how and had come to be a market-leader in a diverse array of tech products,
including but not limited to web-based app development, trading software, smart home
systems, etc. The company had opened to a strong IPO in 2003 and had generated year on
year profits until the year 2014, when strong competition in the sector, entry of high paying
competing companies etc led to a slump in operations and consequently profits. Techaatma,
was also mired by protests and strikes by its employees, protesting against non-payment of
competitive salaries and benefits. Such circumstances led to Techaatma defaulting in certain
loans to banks and other financial institutions, resulting in a massive downgrade in its credit
ratings and banks and financial institutions refusing to finance the company. It is also during
such time that personal tragedy struck Mr. Kapil Varma, with him and Ms. Tishita Mehta
undergoing a protracted and acrimonious separation which finally culminated into a divorce
by mutual consent in the year 2017.

4. While Techaatma found it difficult to source funds from banks and financial institutions,
Mr. Kapil Varma, as a stop gap arrangement in order to commence the new AI department,
had sought funding from certain banks and financial institutions through his personal holding
company, The Local Brain Limited (“The Local Brain”), which was categorised as a
promoter/promoter group entity in Techaatma, holding 26% shares therein. For the purposes
of acquiring such loan, certain assets were posted as collateral with the banks and financial

2
institutions, and the loan obtained. Funds obtained vide such loan was infused into Techaatma
by Mr. Kapil Varma in order to set up the AI division, which thereafter commenced
operations in the year 2015. In the year 2016, Mr. Kapil Varma, however, found it
increasingly difficult to service the loan taken from banks and financial institutions, and was
in dire need of funds. The market was replete with rumours that the banks and financial
institutions would either consider a restructuring package in relation to the loan or initiate
insolvency proceedings.

5. Due to his strong belief in Mr. Kapil Varma and his vision, Mr. Tapan Manoj was keen to
help him and Techaatma tide through difficult times. Mr. Tapan Manoj, for such purposes,
ended up taking a loan for INR 100 cr from New India Finance (“NIF”), an NBFC registered
with the RBI with which Mr. Tapan Manoj had a longstanding relationship. NIF, had
provided funding to Mr. Tapan Manoj’s various endeavours in the past, including PFTC. To
secure such loan, Mr. Tapan Manoj opted for NIF’s Loan-Against – Shares facility (“LAS”)
and was required to place 3X security cover as collateral. Given Mr. Tapan Manoj’s strong
personal investments and access to securities, Mr. Tapan Manoj posted such collateral with
NIF, and acquired the loan. The LAS facility was for a tenure of 5 years, with an option to
renew, and was captured in a LAS Facility Agreement between PFTC and NIF.

6. PFTC infused the said 100 crores into The Local Brain by means of a loan at the interest
rate of 2% per annum and having a tenure of 10 years. For the purposes of such loan, a Loan
Agreement was entered into between PFTC, The Local Brain and Mr. Kapil Varma, and
provided for stipulations in relation to the loan. Various safeguards were also provided therein
in addition to circumstances that constituted an event of default, and the consequences
thereof. One such clause, was that The Local Brain assigned a call option to PFTC, which
could be exercised upon the occurrence of certain condition subsequent, i.e. the share price of
Techaatma increasing by 600% during the lifetime of the loan. Such call option would entitle
PFTC to acquire equity shares aggregating to 99.99% of the fully diluted equity share capital
of

3
The Local Brain at any time during the tenure of the loan in terms of the said Loan
Agreement. Any such acquisition would result due satisfaction of any and all debt owed to
PFTC. Extracts of the Loan Agreement containing key clauses are placed in Annexure – A.

7. Techaatma’s AI division, since 2016, took off in a big way, and was a major contributor to
its topline by 2021. Techaatma from time to time announced projects that it undertook to the
stock exchanges, and there was significant investor interest in the stock. Techaatma’s stock
price further saw a manifold increase in price and volume traded from such period, and was
being routinely recommended across social media channels such as telegram, WhatsApp etc.
Finfluencers too, took to recommending Techaatma’s scrip in a big way, touting it to be the
next big multibagger with huge potential. In 2019, Techaatma launched the beta version of its
AI-driven platform for video content creation. The product, through generative AI,
transformed physical video production into an entirely digital process. Mr. Kapil Varma and
Mr. Tapan Manoj both themselves took to social media from time to time to post about the
company, the new product and its potential. Notably, Mr. Tapan Manoj, in his capacity as a
stock broker of known repute, went on a series of television shows on financial news
channels with the famous journalists from time to time, where he supported the notion that AI
was the future of innovation in technology, and touted Techaatma to be the largest and most
sophisticated producer of AI software by 2026. PFTC’s research reports too, which were sent
to clients from time to time, contained in-depth analysis of the stock including various
forward-looking statements pertaining to Techaatma

8. By December 2020, Techaatma had tided over its troubles and was once again on track
with profits being posted for three straight quarters. Techaatma’s stock had almost tripled in
price since 2016, and various foreign portfolio investors and mutual funds had entered the
scrip. There was increased trading activity in the scrip during such period, with enhanced
volumes. Techaatma, for the purposes of exploring inorganic expansion to supplement its
video content creation prowess, had completed acquisitions of various upcoming startups
which

4
further added to investor interest in the company. In January 2021, Techaatma appointed a
merchant banker to identify further potential targets to acquire. The adviser to the transaction
identified Trebleclef Limited (“Trebleclef”) and Tagorestop Limited, both generators of AI
based music production softwares, as potential acquisitions. By March 2021, Techaatma had
formed an ‘Acquisition Committee’ to identify and approve targets, assist the Board of
Directors in discharging its responsibilities relating to oversight of the company’s acquisition
strategy in relation to the potential acquisitions etc. The said committee had three meetings in
the month of April 2021, and was chaired by the MD & CEO of the company. The Committee
vide its resolution dated April 29, 2021, decided to approach Trebleclef through its merchant
banker to initiate talks of a merger. Upon realising the synergies that could be created post
merger, Trebleclef, a newly listed company, was keen to harness the benefits accruing to the
business from such merger and commenced preparation for the purposes thereof. In May
2021, the two companies appointed their respective legal advisers who were tasked with
preparing definitive transaction documents. Similarly, registered valuers were also appointed
to arrive at a fair swap ratio.

9. In June 2021, the re-payment of the first tranche of the loan amount in accordance with the
Loan Agreement fell due. Mr. Kapil Varma, in spite of his best efforts, was unable to liquidate
a three-storey building in Khar, Mumbai belonging to The Local Brain that he had proposed
to sell to raise funds to repay PFTC due to ongoing litigation with its tenants. With no other
avenue to service the loan, The Local Brain commenced liquidation of two other real estate
assets situated in Pune and Goa and sold shares of Techaatma amounting to INR 10 crores
through a series of transactions in the open market. The counter parties to the sale
transactions on the platform of the stock exchange, were retail investors, fund houses, etc. By
August 2021, The Local Brain was able to re-pay the first tranche of payments required under
the Loan Agreement.

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10. In the meanwhile, given the complexities of a merger between two listed companies,
various valuation exercises were being carried out by the valuers so as to arrive at a fair value
for the transaction. On November 3, 2021, the board of the Techaatma and Trebleclef both
approved the merger, subject to regulatory approvals, and a swap ratio of 4:1. Upon
announcement of the merger, the price of shares of Techaatma unexpectedly fell by 10% in
terms of the closing price. The detailed price movement during the week of the disclosure
was as follows –

A. Open High Price Low Price Close Price

Price
Date

01-Nov-21 201.55 205.10 198.06 203.40

02-Nov-21 203.40 207.10 202.15 205.20

03-Nov-21 205.20 209.90 184.68 184.68

04-Nov-21 184.68 185.10 184.00 184.00

05-Nov-21 184.00 187.15 186.10 186.00

11. Mr. Tapan Manoj, upon the merger being disclosed to the stock exchanges, once again
took to social media to publish praises of Techaatma’s ‘key and strategic acquisitions. He
further, during the course of his television appearances, spoke highly of the potential of the
company while detracting its competitors. Pursuant thereto, and upon disclosure of the results
for the quarter ended December 2021, which were extremely positive, the price of the scrip
further increased resulting in the scrip recording a new all-time high.

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12. In March 2022, SEBI initiated an investigation under Section 11 C of the SEBI Act in
relation to trading by some suspected entities in the scrip of Techaatma in and around the
time the disclosure pertaining to the merger was announced to the stock exchanges. SEBI,
upon completion of such investigation, issued an Interim Order and show cause notice (“SCN
1” / “Interim Order”) to The Local Brain and Mr. Kapil Varma, alleging violations of Section
12 A (e) of the SEBI Act and Regulation 4 (1) of the Securities and Exchange Board of India
(Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”) in relation to the sale
of shares by The Local Brain in June and July 2021. SEBI, vide such show cause notice,
stated that Mr. Kapil Varma and The Local Brain were privy to unpublished price sensitive
information pertaining to the merger of Techaatma and TrebleClef, and had sold shares in the
open market while being in possession of such information. Vide the Interim Order, which
was passed under Sections 11 (1), 11 B and 11 (4) of the SEBI Act, SEBI passed the
following directions against Mr. Kapil Varma and The Local Brain –

(a) Mr. Kapil Varma and The Local Brain were restrained from buying, selling, or
dealing in securities, either directly or indirectly, in any manner whatsoever until
further orders;

(b) Mr. Kapil Varma and The Local Brain’s bank accounts were impounded to the
extent of unlawful gains computed in the order and they were directed to deposit such
amounts in an escrow account.

13. The Interim Order stated that the noticees may, within 21 days from the date of receipt of
the order, file their reply/objections, if any, and indicate whether they desire to avail an
opportunity of personal hearing on a date and time to be fixed on a specific request to be
made in that regard. The Interim Order stated that the same was passed on account of extreme
urgency in the matter as there was a high likelihood of further violations being committed by
the Noticees. Mr. Kapil Varma and The Local Brain who were of the view that there were no
violations of any applicable law in their conduct, appointed a reputed law firm to represent
them in the proceedings before SEBI. Pursuant

7
to representations made by the Noticees in the proceedings, a confirmatory order came to be
passed in the matter on March 29, 2023, confirming the directions contained in the Interim
Order (“Impugned Order 1”). On May 1, 2023, the Noticees filed a joint appeal before the
Hon’ble Securities Appellate Tribunal (“SAT”) in Mumbai impugning the Order dated March
29, 2023.

14. In April 2022, during the course of routine diligence, NIF discovered that the loan
provided to PFTC for working capital purposes pursuant to the LAS Facility Agreement, had
instead, been diverted by it to The Local Brain. Upon such end-use of the funds lent being
discovered, and given the recent Interim Order/SCN1 issued by SEBI which was in the public
domain, NIF officials met with Mr. Tapan Manoj inquiring about the said diversion of the
loan amount, the terms of the agreement pursuant to which such loan had been extended to
The Local Brain, the recoverability of such loan, etc. In spite of being assured about the
recoverability of the said loan amounts, and assurances as to servicing the second tranche of
the loan, NIF escalated the issue to its board of directors, which in turn, decided to
immediately recall the pending loan amounts and reported the same to SEBI as such use of
funds by PFTC amounted to a breach of the LAS Facility Agreement.

15. SEBI, upon perusal of such report, commenced further enquiry into the matter, and within
a period of 4 weeks thereafter, issued a show cause notice (“SCN 2”) to PFTC, The Local
Brain, and Mr. Kapil Varma, alleging that by virtue of the Loan Agreement which contained
onerous clauses, PFTC had in fact acquired indirect control over Techaatma. The show cause
notice required PFTC to show cause as to why no direction to make an open offer is ought to
be issued by SEBI in terms of the Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011 (“Takeover Code”). The show cause
notice further alleged that Mr. Kapil Varma and The Local Brain, by not disclosing the factum
of the said Loan Agreement which essentially gave up control of Techaatma to PFTC, were in
violation of Regulation 30 of the Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements)

8
Regulations, 2015 (“LODR Regulations”). It was further alleged, that The Local Brain and
Mr. Kapil Varma by not disclosing the Loan Agreement, were in violation of provisions of the
SEBI Act read with provisions of the Securities and Exchange Board of India (Prohibition of
Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 2003
(“PFUTP Regulations”).

16. The Noticees to the aforesaid show cause notice, through their legal advisers, conducted
an inspection of documents, and vehemently denied all allegations and participated in the said
proceedings. In spite of putting forth a vehement defence, a final order came to be passed
against all the Noticees on March 29, 2023 (“Impugned Order 2”) holding them liable for the
alleged violations. Notably, vide the said order, SEBI issued the following directions against
PFTC –

(a) PFTC was directed to make a public announcement to acquire shares of the target
company in accordance with the provisions of the Takeover Code, within a period of
45 days from the date of the order;

(b) PFTC was directed to, along with the offer price, pay interest at the rate of 10%
per annum from the date when they incurred the liability to make the public
announcement till the date of payment of consideration, to the shareholders who were
holding shares in the target company on the date of violation and whose shares are
accepted in the open offer, after adjustment of dividend paid, if any.

17. The said order further, while holding Mr. Kapil Varma and The Local Brain to be in
violation of the LODR Regulations and the PFUTP Regulations, imposed a penalty of INR
1.5 crores for violation of the PFUTP Regulations and INR 50 lacs for violation of the LODR
Regulations on them, payable jointly and severally. On May 1, 2023, the Noticees filed
appeals before the Hon’ble Securities Appellate Tribunal (“SAT”) in Mumbai impugning the
Order dated March 29, 2023.

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18. In September 2022, SEBI issued yet another show cause notice (“SCN 3”), this time to
Mr. Tapan Manoj, Tishita Commodities, Ms. Tishita Mehta and certain other entities, alleging
violations of provisions of the SEBI Act read with provisions of the PFUTP Regulations and
PIT Regulations. The SCN stated that the investigation department of SEBI, had initiated an
investigation into the scrip of Techaatma on account of a sudden spurt in price/volume
therein, which unearthed a series of manipulative trades entered in the scrip by Tishita
Commodities commencing from the year 2019. The SCN alleged that Tishita Commodities,
had during the investigation period, placed numerous buy orders in the scrip above the last
traded price (LTP), thereby contributing significantly to the total market positive LTP in the trading time
scrip. Moreover, many such orders were for either single shares, or a miniscule number of
shares and trades consequent to such orders placed were entered into with a set of connected
entities, namely Bob Traders LLP, Rangun Traders LLP, one Mr. Brijesh Varora and Mr.
Arnav Sampat. Order and Trade Log data for certain sample manipulative trades are placed as
Annexure – B.1

19. The SCN, based on the basis of KYC/UCC data, bank transactions, off - market
transactions and MCA data, etc., stated the following connections amongst the aforesaid 5
entities:

1
Participants may refer to the order log/trade log data as an indicative sample in aid of their submissions.

10
20. The SCN, alleged that the connected entities had traded in tandem and in a concerted
manner to artificially pump up the scrip of Techaatma during the investigation period. Their
trades, in effect, resulted in the establishing of a New High Price (“NHP”) in the scrip. In
support of its contention in relation to the charge of price manipulation, the SCN relied on the
following analysis of the trades carried out by Tishita Commodities and other
suspected/connected entities –

11
21. The SCN, lastly alleged that it was Mr. Tapan Manoj who had created a manipulative
artifice to increase the price of the scrip of Techaatma to make unlawful gains on behalf of
PFTC. Apart from the above, the SCN also stated that all of Tishita Commodities’ trades in
Techaatma were carried out while Tishita Commodities was in possession of unpublished
price sensitive information pertaining to the Loan Agreement which was material in nature,
thus rendering them in violation of the PIT Regulations. Additionally, in support of its
contention insider trading, the SCN relied on Call Data Records (“CDRs”) between Ms.
Tishita Mehta and Mr. Kapil Varma and Mr. Tapan Manoj, which displayed that during the
course of the investigation period, and especially in and around the time when the Loan
Agreement was entered into in 2016 and sometime thereafter again in the year 2019, there
were various phone calls between Ms. Tishita Mehta and Mr. Kapil Varma, and between Ms.
Tishita Mehta and Mr. Tapan Manoj. The Noticees, vide their legal representatives contested
the show cause notice vehemently before SEBI. SEBI, however, vide an order dated March
29, 2023 (“Impugned Order 3”), rejected the contentions of the Noticees and passed a final
order in the matter, inter alia, holding Mr. Tapan Manoj and Tishita Commodities to be in
violation of

12
provisions of the PFUTP Regulations. Further, SEBI, vide the order further held Tishita
Commodities, Mr. Tapan Manoj and Ms. Tishita Mehta to be in violation of Regulation 4 (1)
and Regulation 3 (1) of the PIT Regulations, as applicable. On May 1, 2023, Tishita
Commodities, Ms. Tishita Mehta and Mr. Tapan Manoj filed appeals before the Hon’ble
Securities Appellate Tribunal (“SAT”) in Mumbai impugning the Order dated March 29,
2023.

22. The Hon’ble SAT, given the inter-connected nature of the dispute, has decided to hear all
appeals together.

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 ANNEXURE - A

This loan agreement ("Loan Agreement") is entered into between Peterfat Trading
Company Limited, ("Lender"), a company incorporated under the provisions of the
Companies Act, 1956 having its registered office at Mumbai and The Local Brain
(“Borrower”), a company incorporated under the provisions of the Companies Act, 1956,
having its registered office at Mumbai and Mr. Kapil Varma.

1. Loan Amount and Interest Rate

1.1. Lender agrees to lend to Borrower and Borrower agrees to borrow from Lender
the principal amount of INR 1,00,000,000 (Indian Rupees One Hundred Crores)
("Loan Amount"), to be disbursed in one lump sum payment on the Effective Date.

1.2. The Loan Amount shall accrue interest at the rate of 2% per annum ("Interest
Rate"), calculated on the outstanding principal amount, compounded annually.

2. Loan Term

2.1. The term ("Loan Term") of this Loan Agreement shall be for a period of ten (10)
years commencing from the date this Loan Agreement is entered into.

3. Repayment

3.1. Borrower shall repay the Loan Amount together with all accrued and unpaid
interest thereon in 2 equal tranches ("Instalments") commencing on 5 years from the
date of disbursal (“Tranche 1”), and the second tranche after 5 years from the payment
of Tranche 1 (“Tranche 2”), until the Loan Amount and all accrued interest have been
fully repaid.

3.2. The Borrower shall have the right to prepay the Loan Amount, in whole or in
part, without incurring any prepayment penalty or fee.

3.3. The Borrower shall be eligible for a discount on the Interest Rate of 1% if the
Borrower repays the entire Loan Amount within 5 years from the date of this Loan
Agreement being entered into.

4. Call Option

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 4.1. The Borrower shall assign call option in favour of the Lender which could be
exercised in the event the equity share price of Techaatma Limited increases to the
extent of 600% during the lifetime of the Loan Agreement.

4.2. The call option as contained hereinabove shall entitle the Lender to acquire equity
shares aggregating to 99.99% of the fully diluted equity share capital at face value at
any time during the tenure of the Loan.

4.3. Acquisition of equity shares in terms of Clause 4.2 as contained hereinabove

would result due satisfaction of any remaining debt owed by the Borrower to the
Lender.

5. Protective Covenants and Veto Rights

5.1. The following limited protective rights shall accrue in favour of the Lender and
will require prior consent of the Lender:

5.1.1. Issue or agreement to issue any equity shares of the Borrower

5.1.2. Buyback of equity shares, reduction or alteration of the share capital of the
Borrower 5.1.3. Amending Charter Documents of the Borrower

5.1.4. Acquisition by the Borrower through subscription, purchase or otherwise, of the

securities of any other body corporate

5.1.5. Borrower shall promptly notify Lender in writing of any proposed or ongoing
developments, projects and initiatives in relation to the AI Division.

5.1.6. The Borrower shall not undertake any development of new AI products,
including but not limited to the development, acquisition, licensing, or deployment of
AI technologies, products, or services, without the prior written approval of the
Lender. Such approval shall not be unreasonably withheld, delayed, or conditioned.

5.1.7. The Borrower shall provide the Lender with all relevant information,
documents, and updates regarding development of the AI Division, as reasonably
requested by Lender, to facilitate the evaluation process and ongoing monitoring.

6. The following events shall constitute an event of default ("Event of Default")

under this Agreement:

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6.1. Failure by Borrower to make any payment of principal or interest when due and
such failure continues for a period of 20 days after written notice thereof by Lender to
Borrower;

6.2. Breach by Borrower of any covenant, representation, or warranty contained

herein, which breach, if capable of being cured, continues for a period of 20 days after
written notice thereof by Lender to Borrower;

6.3. Insolvency or bankruptcy of Borrower;

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