BEFORE THE ADJUDICATING OFFICER SECURITIES AND EXCHANGE BOARD OF INDIA [ADJUDICATION ORDER NO.

CFD-DCR/ WDIL/AO/DRK-DS/EAD3- 431/97 -2013] ______________________________________________________________________ UNDER SECTION 15 I OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ WITH RULE 5(1) OF SECURITIES AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES, 1995 Against White Diamond Industries Limited [PAN No. AAACW0337R] 312A, Kailash Plaza, Vallabh Baug Lane, Ghatkopar (East) Mumbai 400 077 ______________________________________________________________________ FACTS OF THE CASE IN BRIEF 1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI'), while examining the offer document of White Diamond Industries Limited (hereinafter referred to as the 'Noticee/Company/WDIL'), observed that the noticee had delayed in making certain disclosures to the stock exchanges. The shares of the company are listed at BSE.

APPOINTMENT OF ADJUDICATING OFFICER

2. I was appointed as the Adjudicating Officer under section 15 I of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'SEBI Act') read with Rule 3 of the Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as Rules), Section 19 of the SEBI Act read with Regulations 44 and 45 of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997 (hereinafter referred to as the SAST Regulations) and Regulation 35 of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 to inquire into and adjudge under Section 15A(b) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the SEBI Act) the alleged violation of Regulation 8(3) of the SAST Regulations committed by the noticee. The said appointment was communicated vide

Page 1 of 8

proceedings of the Whole Time Member appointing Adjudicating Officer dated February 15, 2013.

SHOW CAUSE NOTICE, HEARING AND REPLY

3. A Show Cause Notice dated April 15, 2013 (hereinafter referred to as 'SCN') was served on the noticee in terms of the provisions of Rule 4 of the Rules, requiring it to show cause as to why an inquiry should not be held against the noticee and why penalty, if any, should not be imposed on it under Section 15A(b) of the SEBI Act for the alleged violation of the provision of Regulation 8(3) of the SAST Regulations.

4. It was alleged in the SCN that the noticee had delayed in making the yearly disclosures to all the stock exchanges on which the shares of the company are listed within the time specified under Regulation 8(3) of the SAST Regulations. Thus, it was alleged that the noticee had violated Regulation 8(3) of the SAST Regulations. The details of such delay is as under:

Sr. No. 1 2 3 4 5 6 7 8 9

Regulation/ SubRegulation 8(3) 8(3) 8(3) 8(3) 8(3) 8(3) 8(3) 8(3) 8(3)

Year of non-compliance No. of days 1998 1999 2000 2001 2002 2003 2004 2005 2008 1,579 1,214 848 483 118 748 382 17 35

5. The SCN stated that the reply shall reach within 15 days from date of receipt of the notice, failing which it shall be presumed that the noticee has no reply to submit and the matter shall be proceeded on the basis of material available on record. The said SCN was sent through Hand Delivery Acknowledgement Due (HDAD).

Page 2 of 8

6. However, the said SCN came back undelivered with the remark "office shifted". Thereafter, vide letter dated May 03, 2013, the SCN was forwarded to the new address of the noticee through HDAD and was served on the noticee. 7. Since no reply was received from the noticee, vide hearing notice dated August 08, 2013, the noticee was granted final opportunity to submit the reply to SCN on or before August 20, 2013 and was advised to attend the hearing on August 23, 2013 at SEBI Bhavan, Mumbai. The said hearing notice was sent through HDAD and was served on the noticee. 8. Vide letter dated August 23, 2013, the noticee tendered apology for not being able to attend the personal hearing and requested to postpone the hearing for a week. 9. Acceding to the request of the noticee, vide hearing notice dated August 28, 2013, the noticee was granted final opportunity of being heard and was advised to attend the hearing on September 06, 2013 at SEBI Bhavan, Mumbai. The said hearing notice was also sent through HDAD and was served on the noticee. However, the noticee failed to attend the said hearing. 10. Vide letter dated September 11, 2013, the noticee was submitted that it could not attend the hearing on account of the religious festive days. 11. Thereafter vide letter dated September 23, 2013, the noticee replied to the SCN and made the following submissions: a. The Company was taken over by Sapna Infratech Private Limited along with Mr. Mahesh Mohanlal Rupani, Mr. Prashant Mahesh Rupani and Mr. Darshak Mahesh Rupani vide an open offer from the erstwhile promoters of White Diamond Industries Ltd viz Mr. Rameshchandra Popatlal Kothari and Mr. Jaynish Rameshchandra Kothari in Financial year 2010-11(Open Offer Started: December 20, 2010 Open Offer Closed: January 17, 2011) adhering to the Regulations laid down by SEBI. The non-compliance of Regulation 8(3) of SEBI (SAST) Regulations, 1997 observed in the SCN pertains to the year from 1998-2008, the duration wherein the erstwhile promoters were in charge of Company's affairs and the present management is not completely aware of the entire events which happened at that point of time. As observed from the website the erstwhile promoters

Page 3 of 8

of the Company have been penalized by SEBI for the purported noncompliance of Regulation 8(1) and 8(2) of SEBI SAST Regulations, 1997 vide two separate Orders both dated 31.05.2013 of the Adjudication Officer. b. We state that since we were not in charge of the Company when the compliance with Regulation 8(3) was purportedly not done, we deny that the omission thereof observed in the said SCN was committed by us. Nevertheless, it is humbly submitted that the Company can adhere to the said Regulation only when it is duly informed about the change by the Promoters therein which was not done in the instant case and thereby the Company is deemed not in default from its responsibility to adhere with the Regulation 8(3) of the SEBI (SAST) Regulations. c. It may be appropriate here to add that no wrongful gains were made by the Company by the purported noncompliance of erstwhile promoters. It was an inadvertent error by the erstwhile promoters and the Company being not informed about the change may be deemed to have been absolved of its responsibility under Regulation 8(3) of SAST Regulations.

12. Thereafter, vide notice dated November 14, 2013, the noticee was granted a final opportunity of being heard on November 22, 2013 at SEBI Bhavan, Mumbai. The said hearing notice was sent through HDAD and was served on the noticee.

13. Vide letter dated November 22, 2013, the noticee authorised Ms. Mamta Patil, Advocate, Juris Metrix, (AR) to appear on its behalf. AR of the noticee appeared for the hearing and made following submissions: a) The post acquisition of the company by the current management, there has been no violation by the noticee. b) Pursuant to the alleged non-disclosures neither anybody gained anything nor it caused prejudice to anyone. c) The said non disclosure was an inadvertent error on the part of the erstwhile promoter. d) In the present case,, the fiduciary duty to make the disclosure under regulation 8(3) of the SAST Regulations does not arise as the noticee did not receive the disclosures under regulations 8(1) and 8(2) of the SAST Regulations from the erstwhile promoters.

Page 4 of 8

CONSIDERATION OF EVIDENCE AND FINDINGS

14. I have taken into consideration the facts and circumstances of the case, and the material made available on record.

15. It was alleged in the SCN that the noticee had delayed in making the annual disclosures of the holdings of the promoters or persons(s) having control over the company to all the stock exchanges on which the shares of the company were listed within the stipulated time frame as required under Regulation 8(3) of the SAST Regulations. 16. As per the requirements of Regulation 8(3) of the SAST Regulations, every company is required to make the disclosures regarding the change in respect of the holdings of the persons holding 15% and above and also holdings of the promoters or persons(s) having control over the company to all the stock exchanges on which the shares of the company are listed within 30 days from the financial year ending March 31 as well as the record date of the company for the purposes of declaration of dividend.

17. The noticee has submitted that the delayed filing of the abovementioned disclosures was inadvertentl. The noticee has further submitted that the delayed compliance of Regulation 8(3) of SAST Regulations occurred during the earlier management. Further, the noticee has also submitted that the company did not make any wrongful gain nor did any investor suffer any loss on account of said omission.

18. It is observed that there was a considerable delay by the noticee in making the abovementioned disclosures. The delay in filing such disclosures continued for almost 9 years as alleged in para 4 at pre-page 2. 19. The noticee has submitted that the non disclosure was an inadvertent error on the part of the erstwhile promoters and nobody gained anything on account of the non disclosure. The noticee further submitted that fiduciary duty to make the disclosure did not arise as the noticee did not receive the disclosures from the promoters.

Page 5 of 8

20. In this regard, it is noted that regulation 8(3) nowhere mentions that a company should make disclosure to the stock exchanges after the receipt of disclosures from the persons mentioned in regulation 8(1) and 8(2). Further, it is observed from the letter of offer filed by the present promoters of the company that despite the non-receipt of the disclosure from the erstwhile promoters in the year 2010, the noticee made the disclosures under regulation 8(3) without any delay.

21. In view of the facts and material made available on record, it can be concluded that the noticee has delayed in complying with the provisions of Regulation 8(3) of the SAST Regulations within the stipulated time. The text of the said provision is as follows:" 8. Continual disclosure. (3) Every company whose shares are listed on a stock exchange, shall within 30 days from the financial year ending March 31, as well as the record date of the company for the purposes of declaration of dividend, make yearly disclosures to all the stock exchanges on which the shares of the company are listed, the changes, if any, in respect of the holdings of the persons referred to under subregulation (1) and also holdings of promoters or person(s) having control over the company as on 31st March." 22. The aforesaid delay makes the noticee liable for penalty under Section 15A(b) of the SEBI Act which is reproduced below:

"Penalty for failure to furnish information, return, etc. 15A. If any person, who is required under this Act or any rules or regulations made thereunder, (b) to file any return or furnish any information, books or other documents within the time specified therefor in the regulations, fails to file return or furnish the same within the time specified therefor in the regulations, he shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less;"

Page 6 of 8

23. In this regard, the provisions of Section 15J of the SEBI Act and Rule 5 of the Rules require that while adjudging the quantum of penalty, the adjudicating officer shall have due regard to the following factors namely; a. the amount of disproportionate gain or unfair advantage wherever quantifiable, made as a result of the default; b. the amount of loss caused to an investor or group of investors as a result of the default; c. the repetitive nature of the default.

24. With regard to the above factors to be considered while determining the quantum of penalty, it is noted that the disproportionate gain or unfair advantage made by the noticee or loss caused to the investors as a result of the delay on the part of the noticee to make the disclosures are not available on record. Further, it may also be added that it is difficult to quantify the unfair advantage made by the noticee or the loss caused to the investors in a default of this nature.

25. At this juncture, I would like to quote the judgement of the Honble Supreme Court of India in the matter of SEBI Vs. Shri Ram Mutual Fund [2006] 68 SCL 216(SC) wherein it was held that : once the violation of statutory regulations is established, imposition of penalty becomes sine qua non of violation and the intention of parties committing such violation becomes totally irrelevant. Once the contravention is established, then the penalty is to follow. 26. Having considered the facts and circumstances of the case, submissions made by the noticee and after taking into account the factors under section 15J of the SEBI Act, 1992, I find that a penalty of `2,25,000 [Rupees Two Lakhs Twenty Five Thousand Only] on the noticee would commensurate with the delay on the part of the noticee in making the yearly disclosures in this case.

ORDER 27. In exercise of the powers conferred under Section15 I of the Securities and Exchange Board of India Act, 1992, and Rule 5 of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995, I hereby, impose a penalty of `2,25,000

Page 7 of 8

[Rupees Two Lakhs Twenty Five Thousand Only] on White Diamond Industries Ltd. in terms of the provisions of Section 15A(b) of the Securities and Exchange Board of India Act,1992 for the delay in complying with the provisions of Regulation 8(3) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997. In the facts and circumstances of the case, I am of the view that the said penalty is commensurate with the delay on the part of the noticee in making the yearly disclosures.

28. The penalty shall be paid by way of Demand Draft drawn in favour of SEBI Penalties Remittable to Government of India payable at Mumbai within 45 days of receipt of this order. The said demand draft shall be forwarded to the Deputy General Manager, CFD-DCR, Securities and Exchange Board of India, Plot No. C4-A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400 051.

29. In terms of the provisions of Rule 6 of the Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules 1995, copies of this order are being sent to White Diamond Industries Ltd. and also to the Securities and Exchange Board of India, Mumbai.

Place: Mumbai Date: November 29, 2013

D. RAVI KUMAR CHIEF GENERAL MANAGER & ADJUDICATING OFFICER

Page 8 of 8