Talaulicar's Goan flat and Pendse's posthumous relief

J E Talaulicar served the Tatas for the best part of four decades. In 1980, as managing director of Telco (now Tata Motors), he’d pulled off a Rs 48-crore convertible debentures issue with the help of a young and sharp stockbroker called Nimesh Kampani.

In India’s Industrialists, Margaret Herdeck and Gita Piramal write on how the issue had run into rough weather due to difficult market conditions. In a half-hour discussion, Kampani, who'd originally recommended a smaller issue size of Rs 20 crore, convinced Talaulicar he could raise the entire sum. “Kampani was convinced that an organised campaign both in and outside India could sell the issue.”

The Telco issue marked the start of the non-resident investment scheme in India. A provision in the public issue guidelines that allowed raising of non-resident funds on a repatriable basis had caught Kampani’s eye.  Organising 12 conferences in West Asia, Singapore and London, Talaulicar and Kampani managed to raise $12 million abroad and the rest locally, by building a sub-broker network to tap funds from smaller towns, write Herdeck and Piramal.
 

Another transaction two decades later would make Talaulicar’s name linger in the financial press for years.  In 2001, then a director of Tata Finance and chairman of its subsidiary, Nishkalp Investments, he wanted to settle in his home state of Goa after retirement. He wanted to buy a flat in Miramar. 
 

In a letter dated November 30, 2001, and subsequent submissions to the Securities and Exchange Board of India (Sebi), Talaulicar said he’d consulted the then Tata Finance head, Dilip Pendse, who’d suggested he apply for a Rs 75 lakh loan from Tata Home Finance, another group entity. In September 2000, Talaulicar applied for the said loan.

But, in March 2001, Pendse is said to have informed Talaulicar that this was unlikely to come through. This left Talaulicar with no option but to sell the 100,000 Tata Finance shares held by his kin and himself. He sought Pendse’s help to get these sold. It was alleged that Pendse arranged the sale at Rs 69 apiece, fetching Rs 69 lakh for Talaulicar, even as the shares were trading at less than half that price in the market.

Sebi levied a penalty of Rs 1.5 lakh on Pendse for alleged insider trading. In 2008, the Securities Appellate Tribunal set aside this order. It questioned why Talaulicar, being a professional of equal standing, would require Pendse’s help to sell shares, and that, “This is a case where the word of Talaulicar was used against the notice and in the absence of any corroboration, the only way out was to allow the noticee to cross-examine Talaulicar.”

The Supreme Court also held that cross-examination needed to be allowed. In February-March 2010, Pendse’s advocate did cross-examine Talaulicar. Seven years later, in March 2017, the personal hearings for Pendse were concluded. On April 4, he gave additional replies. Three months later, he hanged himself from the ceiling fan of his Matunga (Mumbai) office.

The Sebi adjudicating officer referred to media reports of his demise, which would have abated the charges. But, went on to dispose of the case, since this was not brought on record. He did not find enough evidence or grounds to impose a new penalty. For Pendse, like many, the 16-year process itself proved to be the punishment. Would he have gone for the rope if the order had come three weeks earlier?