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SEBI had directed all listed companies to obtain the SEBI Complaints Redressal System (SCORES) authentication and also redress the pending investor grievances within the stipulated time period. The shares of the company are compulsorily listed at Madras Stock Exchange (MSE), Jaipur Stock Exchange (JSE), Delhi Stock Exchange (DSE) and Calcutta Stock Brought to you by Page 2 of 11 Exchange (CSE)
Originalbeschreibung:
Originaltitel
Order in the matter of Kukar Sons (Indo French) Exports Ltd.
SEBI had directed all listed companies to obtain the SEBI Complaints Redressal System (SCORES) authentication and also redress the pending investor grievances within the stipulated time period. The shares of the company are compulsorily listed at Madras Stock Exchange (MSE), Jaipur Stock Exchange (JSE), Delhi Stock Exchange (DSE) and Calcutta Stock Brought to you by Page 2 of 11 Exchange (CSE)
SEBI had directed all listed companies to obtain the SEBI Complaints Redressal System (SCORES) authentication and also redress the pending investor grievances within the stipulated time period. The shares of the company are compulsorily listed at Madras Stock Exchange (MSE), Jaipur Stock Exchange (JSE), Delhi Stock Exchange (DSE) and Calcutta Stock Brought to you by Page 2 of 11 Exchange (CSE)
UNDER SECTION 15-I OF SECURITES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES 1995
In respect of: M/s. Kukar Sons (Indo French) Exports Ltd. (CIN- L18101RJ1987PLC004017)
1. Securities and Exchange Board of India (hereinafter referred to as SEBI) vide Circulars No. CIR/OIAE/2/2011 dated June 03, 2011, CIR/OIAE/1/2012 dated August 13, 2012 and CIR/OIAE/1/2013 dated April 17, 2013 had directed all listed companies to obtain the SEBI Complaints Redressal System (SCORES) authentication and also redress the pending investor grievances within the stipulated time period/submit Action Taken Report (ATR).
2. SEBI observed that M/s. KukarSons (Indo French) Exports Ltd.(hereinafter referred to as"KSEL"/"Noticee"/ "the company") had neither obtained the SCORES authentication/submit ATR nor redressed the grievance of investor(s) and therefore, had failed to comply with the aforesaid SEBI Circulars. The shares of the company are listed at Madras Stock Exchange (MSE), Jaipur Stock Exchange (JSE), Delhi Stock Exchange (DSE) & Calcutta Stock Brought to you by http://StockViz.biz Page 2 of 11
Exchange (CSE). The shares are compulsorily delisted from Bombay Stock Exchange (BSE).
3. Based on the aforesaid observations, it was alleged that by failing to obtain SCORES authentication/submit ATR and to redress the pending investor grievances within the stipulated time as directed, the Noticee has violated the aforesaid SEBI Circulars No. CIR/OIAE/1/2011 dated June 03, 2011, CIR/OIAE/1/2012 dated August 13, 2012 and CIR/OIAE/1/2013 dated April 17, 2013. The alleged violation, if established, makes the Noticee liable for monetary penalty under Sections 15C and, 15HB of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'SEBI Act').
APPOINTMENT OF ADJUDICATING OFFICER
4. Vide order dated November 09, 2012, ShriSudeep Mishra, Deputy General Manager was appointed as Adjudicating Officer under Section 15-I of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the"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 the "Rules") and the same was Communicated vide proceedings of Whole Time Member appointing AdjudicatingOfficer dated November 23, 2012, to inquire into and adjudge under Section 15C and 15HB of the SEBI Act, for the aforesaid alleged violations by the Noticee.
5. Subsequently, the matter was transferred to the undersigned and I was appointed as Adjudicating Officer under Section 15-I of the SEBI Act, 1992 read with Rule 3 of the Rules, 1995 vide order dated September 23, 2013, to inquire into and adjudge under Section 15C and 15HB of the SEBI Act, for the alleged non-redressal of investor grievancesand failure in obtaining SCORES authentication/ submit ATR. Brought to you by http://StockViz.biz Page 3 of 11
SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING
6. Show Cause Notice no. ILO/AS/842/2014 dated January 08, 2014 (hereinafter referred to as "SCN") was served on the Noticee by Registered Post in termsof the provisions of Rule 4 of the Rules requiring the Noticee 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 the Noticee under Section 15C and 15HB of the SEBI Act for the non-redressal of investor grievances, failure to obtain SCORES authentication and failure to submit ATRinspite of being calledupon by SEBI in writing to do so.
7. In the said SCN, it was alleged that 04 investor complaintswere pending against it and was also advised to file ATR in respect to the said complaint by the company through SCORES. It was also informed thatSEBI vide circular no. CIR/OIAE/2/2011 dated June 03, 2011 stipulated that alllisted companies shall view the complaints pending against them and submitAction Taken Report (ATR) in SCORES failing which shall be treated as nonredressalof the investor grievance by the company. It was also mentioned that the Noticee had not obtained/ activated the SCORESauthentication as required under the SEBI circular no. CIR/OIAE/1/2012 datedAugust 13, 2012 and Circular No. CIR/OIAE/1/2013 dated April 17, 2013.
8. As advised, vide letter dated January 21, 2014, the Noticee filed its reply/written submissions to the allegations mentioned in the aforesaid SCN. The written submissions made by the Noticee are mainly to the following effect:
We have resolved all the complaints as mentioned in the SCN and details are as under:
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i. With respect to complaint no. SEBIE/RJ13/0000239/1(Mr.YogeshJagdishbhai Mehta) - The investor has transferred his shares to other shareholder and has received full value of claim. We are attaching herewith copy of the draft received by the investor along with copy of letter and copy of receipt registered post sent to investor. It is also stated that the said fact has been submitted to SCORES now. ii. With respect to complaint no. SEBIP/RJ/11/0000170/1(Ms.SwapnaSinha) - The investor has en given point wise reply of queries raised. We are attaching herewith copy of the letter and copy of receipt registered post sent to investor. ATR has been submitted on 10.06.2013 on SCORES also. iii. With respect to complaint no. SEBIP/RJ12/0000017/1(Mr.Satram Das) - The matter has been settled amicably with Mr. Satram Das. He has also no complaint pending with the company. A copy of letter received from Mr. Satram Das is enclosed herewith. ATR has been submitted on 02.07.2013 on SCORES also. iv. With respect to complaint no. SEBIP/RJ13/0000131/1(Mr.Alice Mathai) The investor has en given point wise reply of queries raised. We are attaching herewith copy of the letter and copy of receipt registered post sent to investor. ATR has been submitted on 10.06.2013 on SCORES also. v. With abovementioned facts we would also like to pray that since all cases except one the replies have already been given earlier and now no complaint is pending against us to non response or non compliance. vi. We would like to request you that there are no operations in the company since last many years and company is regularly complying all the legal formalities in time. Due to non operations the company is in hard financial crunch. By looking into the position we request you to not to levy penalty on us. There was no intention of not cooperating with the authorities or delays in settlement of investors grievances but only overlook the matter.
9. After considering reply/written submissions filed by the Noticee and in the interest of natural justice, an opportunity of personal hearing was granted to the Noticee before me on March 04, 2014. The intimation of the same was sent to Brought to you by http://StockViz.biz Page 5 of 11
the Noticeevide hearingnotice dated February 18, 2014 advising it to appear on March 04, 2014 at 11:30 a. m. at the SEBI Indore local office.
10. The Noticee vide itsanother reply dated March 01, 2014 stated that The dates of receipt of complaint mentioned in the complaint status record are not correct. It is true that we received such complaints but these were settled by sending information to the investor telephonic conversation or by sending letters to them within the suitable time however we could not keep record of such letters. We got the online password of SCORES on May 30, 2013. We are Sick company and do not have any activities since last two decades. We wish to inform you that we had replied to all the complaints filed with the company. The reason of delay in addressing of complaints that one our director was involved in marriage ceremony of his daughter during 2013. Due to that we could not pay timely attention on these complaints.
CONSIDERATION OF EVIDENCE AND FINDINGS
11. I have taken into consideration the facts and circumstances of the case and the Material made available on record.
12. The issues that arise for consideration in the present case are :
a) Whether the Noticee by delay in obtaining SCORES authentication, delay in submission of ATR and by delay in redressing the investor grievances has violated the aforesaid SEBI Circulars?
b) Does the violation, if any, on the part of the Noticee attract monetary penaltyUnder Sections 15Cand 15HB of the SEBI Act?
c) If so, what would be the monetary penalty that can be imposed taking into Consideration the factors mentioned in Section 15J of the SEBI Act? Brought to you by http://StockViz.biz Page 6 of 11
13. It is observed from the available records that as on the date of issuance of SCN there were 4 investor complaintspending against the Noticee and the details of the same were provided to the Noticee along with the SCN issued to it. Details of the same are tabulated as under:
Sr. No. Name of the complainant Date Reason behind filing complaint Reply by the Noticee 1 Mr. YogeshJagdishbhai Mehta 23.07.2013 Non receipt of Dividend Complainant has received full value of claim. Fact has been submitted to SCORES. 2 Mr. Satram Das 16.01.2012 Non receipt of Dividend Complaint has been settled with Mr. Satram Das. He has no complaint pending with the company. Copy of letter dated un received from Mr. Satram Das is enclosed. ATR has been submitted on 02.07.2013. 3 Ms. SwapnaSinha 04.01.2004 Non receipt of Dividend Company vide its reply dated 16.01.2014 stated that the company has not declared any dividend for the year 2009-2012. In the light of the fact we assume that the complaint is resolved. ATR has been submitted on 10.06.2013. 4 Mr. Alice Mathai 08.05.2014 Non receipt of Dividend Company vide its reply dated 16.01.2014 stated that the company has not declared any dividend for the year 2009-2012. In the light of the fact we assume that the complaint is resolved. Brought to you by http://StockViz.biz Page 7 of 11
ATR has been submitted on 10.06.2013
14. From the details above, it is clear there were four investor complaints pending pertaining to non-receipt of dividend filed by the complainants. I note from the aforesaid circular dated June 03, 2011, that all companies, whose securities are listed on stock exchanges, were hereby advised to obtain SCORES authentication by September 14, 2012.It is also noted that all companies against whom complaints are pending on SCORES, shall take appropriate necessary steps within 7 days of receipt of complaint by the concerned company through SCORES, so as to resolve the complaint within 30 days of receipt of complaint and also keep the complainant duly informed of the action taken thereon. It was also stipulated that failure on the part of the company to update the ATR in SCORES, would be treated as non-redressal of investors' complaints.
15. On the allegations above, the Noticee submitted that there are no operations in the company since last many years and company is regularly complying all the legal formalities in time. It is submitted that due to non-operations the company is in hard financial crunch. However, no evidence has been provided that Noticee has been declared as Sickcompany. It is stated that complaints were settled by sending information to the investor through telephonic conversation or by sending letters to them within the suitable time however they could not keep record of such letters. These contentions are not acceptable.
16. TheNoticeehas submitted that there was no intention of not cooperating with the authorities or delays in settlement of investors grievances but only overlook the matter not acceptable to me.This only shows casual approach of the company towards the grievances of the investors.
17. Further, as submitted by the Noticee that though it received these complaints but were settled by sending information to the investor through telephonic Brought to you by http://StockViz.biz Page 8 of 11
conversation or by sending letters to them within the suitable time, however it could not keep record of such letters. This contention is again not acceptable.
18. I note from the circular no. CIR/OIAE/2/2011 dated June 3, 2011 all complaints pertaining to companies will be electronically sent through SCORES at http://scores.gov.in/Admin. The companies were required to view the complaints pending against them and submit ATRs along with supporting documents electronically in SCORES. However, the noticee got the online password of SCORES on May 30, 2013. Since the failure on the part of the company to update the ATR in SCORES will be treated as non-redressal of investor complaints by the company. It was also mentioned that the submission of physical ATR will not be accepted for complaints lodged in SCORES. Therefore, the contentions made by the Noticee that these complaints were settled by sending information to the investor through telephonic conversation or by sending letters to them not acceptable.
19. In this regard, I note from the circular no. CIR/OIAE/1/2012 dated August 13, 2012, that all companies whose securities are listed on stock exchanges, were hereby advised to obtain SCORES authentication by September 14, 2012 in terms of the aforesaid circular. However, the company got the SCORES password/ authentication on May 30, 2013.Thus, theNoticeehas failed to comply with the said circular within the stipulated time.
20. I also observe that vide circular no CIR/OIAE/1/2013 dated April 17, 2013, it was directed by SEBI that the companies which are yet to obtained SCORES user ID and Password are required to send their details as per the enclosed form-A to SEBI (hard copy) and by email to scores@sebi.gov.in and obtain the SCORES user ID and password.It was also specifically mentioned in the said circular that failure to obtain SCORES user ID and password within 30 days from issue of this circular would not only be deemed as non-redressal of investor grievancesbut also indicate willful avoidance of the same. Brought to you by http://StockViz.biz Page 9 of 11
21. It is also pertinent to note that keeping in view the great importance of speedy redressal of investors grievances, SEBI has introduced a SEBI Complaints Redress System, known as SCORES for this purpose. Thus, by May 16, 2013, the Noticee was under an obligation to obtain SCORES user ID and password, however, based on the submissions made by it is observed that theNoticee willfully avoided it. Therefore, the aforesaid contentions made by Noticee are not acceptable to me and I hold the charges as alleged in the SCN dated January 08, 2013 as established against it.
22. In view of the above and also taking into account the available material on records, I am of the opinion that the Noticee had failed to abide by the directives issued in SEBI Circular No. CIR/OIAE/2/2011 dated June 03, 2011, Circular No. CIR/OIAE/1/2012 dated August 13, 2012, Circular No. CIR/OIAE/1/2013 dated April 17, 2013.Further, it can be seen that the Noticee has delayed the resolution of the complaints of the investors. Therefore the charge of violation of Section 15C and 15HB is established against the Noticee.
23. Therefore, theallegation of delay in obtaining SCORES authenticationand delay in submission of ATRand delay in resolution of investor grievances within the stipulated time as directed is established against the Noticee.The Honble Supreme Court of India in the matter of SEBI Vs. Shri Ram MutualFund held that once the violation of statutory regulations is established, imposition ofpenalty becomes sine qua non of violation and the intention of parties committing suchviolation becomes totally irrelevant. Once the contravention is established then thepenalty is to follow.
24. The provisions of sections 15C of SEBI Act, 1992 are reproduced hereunder:
15C.Penalty for failure to redress investors' grievances.-
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If any listed company or any person who is registered as an intermediary, after having been called upon by the Board in writing, to redress the grievances of investors, fails to redress such grievances within the time specified by the Board, such company or intermediary shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crorerupees, whichever is less.
15HB. Penalty for contravention where no separate penalty has been provided Whoever fails to comply with any provision of this Act, the rules or the regulations made or directions issued by the Board thereunder for which no separate penalty has been provided, shall be liable to a penalty which may extend to one crore rupees.].
25. While determining the quantum of monetary penalty, it is important to considerthe factors stipulated in section 15J of SEBI Act, which reads as under:-
15J - Factors to be taken into account by the adjudicating officer
While adjudging quantum of penalty under section 15-I, the adjudicating officershall have due regard to the following factors, namely:-
a. the amount of disproportionate gain or unfair advantage, wherever quantifiable, madeas a result of the default; b. the amount of loss caused to an investor or group of investors as a result of thedefault; c. the repetitive nature of the default.
26. I observe that from the material available on record it is difficult to quantify theamount of gain or unfair advantage accrued to the Noticee or the extents of loss suffered by the investors as a result of the failure to activate/ obtain Brought to you by http://StockViz.biz Page 11 of 11
SCORES authentication/non-submission of action taken report and redress the investor. Grievances within stipulated time.
ORDER
27. In view of the above, after considering all the facts and circumstances of the case and exercising the powers conferred upon me under Section15 I of the SEBI Act and Rule 5 of the Adjudication Rules, I impose a penalty of `1,00,000/- (Rupees One lakh only) under the provisions of Section 15 C of the SEBI Act for delay inredressal investor grievances within stipulated time and `1,00,000/- (Rupees one lakh only) under the provisions of Section 15 HB of the SEBI Act for delay in obtaining SCORES authentication &delay in submission of ATR by the Company, thereby resulting into consolidated penalty of `2,00,000 (`TwoLacs Only). I am of the view that the said penalty would commensurate with the aforesaid failure committed by the Company.
28. The penalty shall be paid by way of Demand Draft drawn in favour of SEBI Penalties Remittable to Government of India payable at Ahmedabad within 45 days of receipt of this order. The said demand draft shall be forwarded to the Deputy General Manager (OIAE), Securities and Exchange Board of India, Western Regional Office-II, Unit No. 002, Ground floor, Sakar-I, Near Gandhigram railway Station, Ashram Road, Ahmedabad380009.
28. 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, copy of this order is being sent to the Noticee and also to the Securities and Exchange Board of India Mumbai.
Date: October 31, 2014 Achal Singh Place: Indore Adjudicating Officer Brought to you by http://StockViz.biz