BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

(ADJUDICATION ORDER NO: OIAE/EAD-3/AO/DRK-VB/687/11-2015)

______________________________________________________________
UNDER SECTION 15 - I OF THE SECURITIES AND EXCHANGE BOARD OF
INDIA ACT, 1992 READ WITH RULE 5 OF THE SECURITIES AND EXCHANGE
BOARD OF INDIA (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING
PENALTIES BY ADJUDICATING OFFICER) RULES, 1995.
In respect of:
Govind Rubber Ltd,
418-422, Creative Industrial Estate,
72, N.M.Joshi Marg,
Lower Parel,
Mumbai 400 011
---------------------------------------------------------------------------------------------------------------BACKGROUND:
1. Securities and Exchange Board of India (hereinafter referred to as SEBI)
observed that Govind Rubber Ltd. (hereinafter referred to as 'the Noticee / the
Company / Govind Rubber") had not redressed 2 investor grievances pending
against it out of which 1 complaint was pending for more than two years as per
SEBI Complaints Redress System ( hereinafter referred to as 'SCORES').
APPOINTMENT OF ADJUDICATING OFFICER:
2. The undersigned was appointed as Adjudicating Officer under section 15-I of the
Securities and Exchange Board of India Act 1992 (hereinafter known as 'SEBI
Act') read with Rule 3 of the SEBI (Procedure for Holding Inquiry and Imposing
Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as
Adjudication Rules) vide communiqu dated May 21, 2013, to inquire into and
adjudicate under Section 15 C of the SEBI Act, the alleged violations by the
Company.
SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING:
3. A Show Cause Notice No. A&E/EAD-3/DRK-VVK/18877/2013 dated July 30, 2013
(hereinafter referred to as SCN) was served upon the noticee on August 05,
2013 by Registered Post Acknowledgement Due
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(hereinafter referred to as

RPAD) under Rule 4 (1) of the Adjudication Rules, to show cause as to why an
inquiry be not held against the noticee and penalty be not imposed under Section
15 C of the SEBI Act, for the alleged non redressal of 2 investor grievances /
complaints against the noticee in SCORES out of which 1 complaint was pending
for more than two years. It was mentioned in the SCN that SEBI vide its letter
dated January 22,2013, had directed the noticee to resolve the aforesaid 2
investor grievances. It was also mentioned in the said letter that if the noticee fails
to redress the complaints, SEBI may take action against the noticee under
Sections 15 C and 24 of the SEBI Act. Further, the SCN also refers to SEBI's letter
dated February 15,2013 wherein the noticee was again directed to resolve the
aforesaid 2 investor grievances failing which SEBI may initiate Regulatory Actions
against the noticee which includes debarring from securities market and or /
imposing penalty. It was also alleged in the SCN that noticee has not activated the
SCORES authentication
4. The noticee vide its letter dated August 26,2013 submitted a reply to the aforesaid
SCN. and made the following submissions
a) The Company has obtained SCORES authentication within stipulated time limit
and got login ID and password from the respective department but could not login
SCORES authentication due to some error which may be of password or some
other.
b) No response has been received from both of the complainants on reply given by
us through R & T, and we confirm that our R & T will send further two reminders to
the respective complainants.
c) Neither the Company nor R & T could locate the earlier complaints from the said
investors, had those located, the same could have been resolved either by the
Company or R & T immediately.
5. Thereafter, for the purpose of inquiry, an opportunity of hearing was granted to the
noticee on May 05, 2014 vide hearing notice dated April 11, 2014 which was
served upon the noticee by Registered post. Noticee vide its letter dated October
24, 2013 submitted a reply to the SCN as under:
a) In respect of the first complainant namely Ms.Monisha Jeet(Monisha) who seems
to be prospective buyer reported to the Company regarding non receipt of the
shares duly transferred and on investigation it was revealed that the subjected
share certificates were never received by the Company from Monisha but the said
certificates were lodged by some another investor and after the documents were
found in order the transfer effect was given and duly transferred share certificate
were dispatched to the transferee. Ms. Monisha was called upon to furnish
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satisfactory documentary evidence in support of her claim but till date she did not
bother either to respond or to comply with our requisition.
b) With respect to the second complainant namely Mr. Harjit Singh had reported to
the Company in the past regarding non receipt of share certificate duly transferred.
The said shares were duly transferred and subsequently dematerialized by the
complainant on April 23,2008. As on date the shareholder is holding the shares in
electronic mode and there is no complaint pending.
c) As per records both complaints were duly resolved as far as back in the year 2007
- 2008 and nothing remain to be complied with and further neither company nor R
& T agent were / are in receipt of any complaint from the said two investors as on
date.
6. The aforesaid hearing was postponed and thereafter, final opportunity of hearing
was granted to the noticee on May 23, 2014 vide hearing notice dated May 12,
2014 which was served upon the noticee by Hand Delivery Acknowledgement
Due. The hearing on May 23, 2014 was attended by Mr. Shailesh Parekh
(Authorised Representative of the Noticee, hereinafter referred to as "AR") and the
AR apart from reiterating the submission made by the noticee in its reply dated
24.10.2013 made the following submissions;
(a) Noticee would submit within three weeks from today the proof showing that
noticee had transferred the shares on April 23,2008 and the proof of
communication sent by Noticee to complainant along with the proof of delivery.
Noticee shall provide the communication/confirmation by complainant about
redressal of his grievance
7. Thereafter, the noticee vide its letter dated June 13, 2014 submitted the proof of
delivery of share certificate sent to the investor by the Registrar of the company
CONSIDERATION OF CASE AND FINDING:
8. I have taken into consideration the facts and circumstances of the case and the
material available on record.
9. From the material available on record, it is noted that the noticee was required to
obtain SCORES Authentication before September 14,2012 and the noticee has
obtained the SCORES Authentication on September 17,2012.
10. In respect to the allegation of non redressal of investor grievances, it is observed
from the records that 2 complaints viz. 1 complaint of Ms.Monisha Jeet dated
March 04,2011 for non receipt of shares duly transferred and 1 complaint of
Harjit Singh dated June 19, 2007 for non receipts of shares duly transferred were
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pending against the noticee. With respect to the non redressal of the first
complaint, the noticee submitted that the complainant has not responded to its
letter to furnish satisfactory documentary evidence in support of her claim and with
regard to the second complaint the noticee submitted that the complaint was duly
redressed and its submissions were already mentioned at pre paras no. 4 to 7
above and same is not repeated for sake of brevity.
11. It is noted from the available records / SCORES printout as provided by the
concerned department of SEBI that 2 complaint of Ms.Monisha and Mr Harjit
Singh was forwarded by SEBI to the noticee for redressal of grievance on March
28,2011 and June 23, 2007 respectively. It is relevant to mention that efforts were
made by the noticee to redress said grievances only from October 31,2012 and
October 05,2012 respectively (as shown in SCORES printout) after considerable
lapse of time. The noticee filed ATR in respect of aforesaid complaints on August
20,2013 and August 07, 2013 respectively.
12. In respect of the complaint of Ms.Monisha regarding non receipt of the shares duly
transferred, the company submitted that the subjected share certificates were
never received by the Company from Ms.Monisha but the said certificates were
lodged by some another investor and after the documents were verified the
transfer effect was given and duly transferred share certificate were dispatched to
the transferee. Ms. Monisha was called upon by the noticee to furnish
documentary evidence in support of her claim but she did not respond till date.
However, I note that the concerned department of SEBI on March 15,2013 has
advised the noticee to send two reminders after a gap of 15 days each and send
the ATR at the earliest. The noticee submitted the ATR on August 20,2013
wherein it mentioned that it has requested the complainant to furnish purchase
and despatch proof and the details of the payment made..Further, on August
20,2013 the concerned department advised noticee to send one more reminder
and then send the final ATR with all required documents to treat the complaint as
redressed. However, It is noted that the noticee has given the second reminder to
the complainant on September 06,2013 and given the proof of dispatch but has
not submitted the final ATR to treat the complaint as redressed. As on January
2015, it is noted that the said complaint is still pending in SCORES and not been
redressed by the noticee.

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13. With respect to the second complaint of Mr. Harjit Singh regarding non receipt of
share certificate duly transferred, The noticee has submitted that said shares were
duly transferred on April 23,2008 and subsequently dematerialized by the
complainant. However, the complainant has not reponded to the noticee. I note
that the concerned department of SEBI on August 08,2013 had advised the
noticee to send two reminders after a gap of 15 days each and to send the final
ATR with all required documents. Further, It is noted that the noticee had given the
reminder vide email to complainant on August 14,2013 but has not submitted the
final ATR to treat the complaint as redressed. During the hearing held on May
23,2014, the noticee was advised to provide proof showing that noticee had
transferred the shares on April 23,2008. The noticee vide its letter dated June
13,2014 has submitted the proof of dispatch of share certificate sent to the
complainant by RPAD. From the above it can be concluded that the complaint has
been redressed by noticee but still appearing as pending in SCORES due to nonsubmission of final ATR.
14. It is noted that as per SEBI circular dated August 13,2012, the Noticee was
required to submit the ATR and redress the grievances with in a period of 30 days
which it had failed to do so Further, the Noticee also failed to respond to the
SEBI's aforesaid communiqu dated January 22 2013 and February 15, 2013 /
Circulars / Public Notice. Therefore, the allegation of non-submission of action
taken report and failed to redress the grievances within the specified period of 30
days as alleged is established against the Noticee.
15. At this juncture, I would like to quote the judgement of the Honble Supreme Court
of India in the matter of SEBI Vs. Shriram Ram Mutual Fund 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.
16. In view of the aforesaid conclusions, I am of the opinion that the noticee has
considerably delayed in taking steps to resolve the aforesaid investor grievances
and therefore has failed to redress the investor grievances. Hence the noticee has
violated Section 15 C of the SEBI Act. The text of the said provision is reproduced
as under;

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SEBI Act
Penalty for failure to redress investors grievances
15C. 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 crore rupees, whichever is less.

17. For determining the quantum of penalty under Section 15 C of the SEBI Act, the
factors stipulated in section 15 J of the SEBI Act, have been taken into
consideration.
15J - Factors to be taken into account by the adjudicating officer
While adjudging quantum of penalty under section 15-I, 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.

18. 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 redress the investor grievances 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.
19. 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 ` 2,00,000 /-(Rupees Two Lakh Only) under
Section 15C of the SEBI Act on the noticee would commensurate for non
redressal of investor grievances.
ORDER:
20. In exercise of the powers conferred under Section 15-I of the Securities and
Exchange Board of India Act, 1992, and Rule 5 of Securities and Exchange Board
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of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating

Officer) Rules, 1995, I hereby impose a penalty of ` 2,00,000/- (Rupees Two Lakh
only) upon the noticee under the provisions of Section 15C of the SEBI Act for non
redressal of investor grievances within the prescribed time period. I am of the view
that the said penalty is commensurate with the aforesaid failure committed by the
noticee.
21. The noticee shall pay the said amount of penalty by way of Demand Draft in favour
of SEBI - Penalties Remittable to Government of India, payable at Mumbai,
within 45 days of receipt of this order. The Demand Draft shall be forwarded to the
Chief General Manager (OIAE), Securities and Exchange Board of India, SEBI
Bhavan, Plot No.C4-A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai
400 051.
22. 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 Govind Rubber Ltd having office
at.418-422, Creative Industrial Estate,72, N.M.Joshi Marg,Lower Parel, Mumbai
400 011 and also to the Securities and Exchange Board of India, in terms of Rule
6 of the Adjudication Rules.

Date: 06.02.15

D. RAVI KUMAR

Place: Mumbai

CHIEF GENERAL MANAGER &

ADJUDICATING OFFICER

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