BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

ADJUDICATION ORDER NO. JJ/AK/AO87/2015

UNDER SECTION 15-I OF SECURITIES 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. Persian Carpet and Textiles Limited
(PAN AAACP0685K)
In the Matter of M/s Persian Carpet and Textiles Limited
_____________________________________________________________________________________________
BACKGROUND
1. Securities and Exchange Board of India (hereinafter referred to as "SEBI")
came out with a Circular dated June 03, 2011 dealing with the processing of
investor complaints against listed companies through SEBI Complaints
Redress System (hereinafter referred to as "SCORES"). In terms of said
Circular, all listed companies were inter alia required to view the complaints
pending against them, redress them and submit Action Taken Reports
(hereinafter referred to as "ATRs") electronically in SCORES. As the SCORES
is online electronic system, therefore, for the purposes of accessing the
complaints of the investors against them, as uploaded in the SCORES, listed
companies were required to login to SCORES system electronically through a
company specific user id and password, to be provided by SEBI. For the
purpose of generating said user id and password, listed companies which
were yet to obtain SCORES user id and password, were required to submit the
details for authentication to SEBI, in the format annexed to the said Circular.
However, it was observed that M/s Persian Carpet and Textiles Limited
(hereinafter referred to as "Noticee") did not submit the details to SEBI
which were required to be furnished in terms of the said Circular.

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Adjudication Order in respect of M/s Persian Carpet and Textiles Limited

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2. In order to further remind the Noticee about the compliance with the
requirements as laid down in the SEBI Circular dated June 03, 2011, letters
dated November 21, 2011 and January 11, 2012 were sent to the Noticee
informing about the commencement of processing of investor complaints in a
centralized web based complaints redress system SCORES in terms of the
Circular and advising the Noticee to send the information (i.e. details for
authentication) as required in the Circular, at the earliest.
3. As observed from the contents of the Circular, SCORES introduced electronic
dealing of the complaints of the investors, by the respective companies. Thus,
once a complaint against a company was uploaded by SEBI in the SCORES, it
amounted to calling upon by SEBI to such company to redress the investor
grievance. Accordingly, it was incumbent upon such company to redress the
investor complaint. It was observed that three investor complaints were
pending against the Noticee as on August 27, 2012. However, it was alleged
that the Noticee failed to redress pending investor grievances and also failed
to obtain SCORES authentication in spite of being called upon by SEBI to do so
thereby violating the provisions of Section 15C of the SEBI Act, 1992.
4. Shri Praveen Trivedi was appointed as the Adjudicating Officer to inquire and
adjudge under Section 15C of the SEBI Act, 1992, the alleged violations
committed by the Noticee. Pursuant to the transfer of Shri Praveen Trivedi,
the undersigned was appointed as Adjudicating Officer vide Order dated
December 18, 2013.
SHOW CAUSE NOTICE, HEARING & REPLY
5. Show Cause Notice (SCN) in terms of the provisions of Rule 4(1) of SEBI
(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating
Officer) Rules, 1995 (hereinafter referred to as "Adjudication Rules") was
issued to the Noticee on September 18, 2013, calling upon the Noticee to show
cause why an inquiry should not be held against it under Rule 4(3) of the
Adjudication Rules read with Section 15I of the SEBI Act, 1992 for the alleged
violations.

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Adjudication Order in respect of M/s Persian Carpet and Textiles Limited

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6. I find from the records that the aforesaid SCN was sent at the last known
address of the Noticee at "471, Green Avenue, Amritsar, Punjab - 143001". The
said SCN was duly delivered to the Noticee through the Department of Post.
7. Noticee vide letter dated October 19, 2013 had submitted its reply in the
matter, which inter alia stated as under:
"..........
Our Company had already replied to your Mumbai Office regarding
complaint number SEBIP/PB11/0000022/1(P) of Mr. Shailesh Goyal and
copy of this reply with postal receipt dtd. 25-10-2011 is enclosed herewith.
Now again after receipt of your letter, we have checked our records and
did not find the name of Mr. Shailesh Goyal in our shareholders data base.
However, we can make more detailed search if he provides us his Ledger
Folio Number.
Further, we are sorry to say that due to frequent changes in compliance
officers of the company, we could not furnish the authentication details for
implementation details of company for SCORES. Now we are enclosing
herewith authentication details of company for SCORES and request you to
create a username and password which will enable our comapny to view
and resolve investor grievances' in SCORES. We have also scanned copy of
authentication details to scores@sebi.gov.in and hard copy to Manager,
OIAE, SEBI Head Office, Mumbai.
......"
8. Subsequent to the appointment of the undersigned, in the interest of natural
justice and in order to conduct an inquiry in terms of rule 4(3) of the
Adjudication Rules, the Noticee was granted an opportunity of personal
hearing on February 06, 2015, vide notice dated January 12, 2015 at SEBI,
Head Office, Mumbai. The said Notice of hearing dated January 12, 2015 was
duly delivered via hand at the aforesaid address of the Noticee through
Lucknow Local Office of SEBI on January 20, 2015 (Delivery report is present
on record).
9. Noticee again vide letter dated January 24, 2015 had submitted its reply in the
matter, which inter alia stated as under:
"..........
Firstly we want to inform you that Persian Carpet & Testiles Limited is a
Sick Industrial Unit and is duly registered as such with Hon'ble BIFR and

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Adjudication Order in respect of M/s Persian Carpet and Textiles Limited

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proceedings are going on at present. this registration with Hon'ble BIFR

took place on 22/04/2002 and we quote you the relevant paragraph of the
minutes.
"The Bench observed that SB and PSIDC had expressed serious
objection to the company being declared sick. Having heard the
submission made in the hearing today and taking into account the SIA
report and the company's rejoinders thereto, the bench observed that
after disallowing the provisions as indicated in para 12, 14 and 15 above
aggregating to Rs.46.79 lakh, the restructured accumulated loss of the
company as on 31.03.1999 would be Rs. 708.81 lakh. as the company's
net worth as on 31.03.1999 was rs. 624.28 lakhs, it would have been
entirely eroded even by the restructured, though lower, accumulated loss
of Rs. 708.81 lakhs. Further this figure of loss did not include the interest
of approximately Rs. 112 lakh due to SB since 24.4.1997. In view of the
company fulfilling the other criteria for sickness under the Act, the
Bench was satisfied that the company had become a sick industrial
company in terms of Section 3(1) of the Act and accordingly declared it to
be so."

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We have complied with the requirement of generating User ID and

passwords as pointed out by you in the above notice, but admittedly there
was delay in doing it for reasons given below:
1. The management was busy in settling dues of secured Creditors and
also Draft Rehabilitation Scheme for revival of the unit.
2. The person who is taking care of all sectarial work including letters
from SEBI became very sick and had to go for heart surgery. As a
result he did not attend the office and take care of' the matters in his
responsibility.
As a result, there was big delay and sincerely apologize for this lapse on
our part. We hope you will appreciate this and will be good enough to
condone this.
Referring again to paragraph 3 of your notice, we repeat the Company has
already generated User ID and password and has submitted Action Taken
Reports (ATR) electronically in Scores.
Regarding paragraph 4 and 5 of your Notice Annexure ' A' and annexure
'B', both these letters pertain to generation of user ID and password and
submission of ATR electronically, this the Company has already done.
Regarding paragraph 6 of your Notice, it relates to Complaint of Mr.
Shailesh Goyal. It is submitted that Mr. Shailesh Goyal has never intimated
or lodged any complaint directly to the Company and as such it was not
possible to give any answer. We only came to know of his complaint after
receiving your letter. Moreover Mr. Goyal does not give the Folio no. and
in the absence of this we are unable to trace this fact whether Shailesh
Goyal is a registered shareholder or not. We can sort out this matter after
knowing the Folio number and share certificate number. In his letter
Shailesh Goyal gives names of 12 companies and holding of 200 shares of
PCTL. He should give us proper details of these shares to send our reply to
him including declaration of Dividend. Since PCTL is a sick industrial unit
Adjudication Order in respect of M/s Persian Carpet and Textiles Limited
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registered as such with "BIFR" since 2002; the company has not declared
any dividend.
Regarding our lapse, we assure you, it will not repeat and we have taken
necessary steps that it does not happen again. Sickness of man concerned
with such matters and our engagement with Hon'ble BIFR were principally
responsible. Please condone this delay is our earnest request to your good
self.
Regarding visit to Mumbai to be present on 6th February to attend the
proceedings before your good self, we have explained the whole situation
in this letter and request your good self to condone the delay and drop the
penal proceedings against us because we are sick Company and registered
as such with Hon'ble BIFR.
........"

10. Noticee vide letter dated February 03, 2015 stated as under:
".......

Our company had already replied to your Mumbai Office regarding

complaint number SEBIP/PB11/0000022/1 (P) of Mr. Shailesh Goyal.
You had allotted us following user ID and password on 06-11-2013 for
logging into SCORES to resolve shareholders complaints:Login ID : p00100
Old Password : p001001234
New Password :- Amritsar@1
We had resolved all the complaints pending in SCORES and also submitted
the ATRs alongwith supporting documents electronically in SCORES. Now
we had no complaint pending in SCORES.
Our Company is a Sick Industrial Unit registered as such with Honble
BIFR and its entire capital is eroded and the Shares of the company are
not traded at any of its stock exchanges.
In the light of above explanations, you are requested to withdraw show
cause notice under Rule 4(3) of SEBI (Procedure for Holding Inquiry and
Imposing Penalties by Adjudicating Officer) Rules, 1995 and drop the legal
proceedings against our company.
Also once again we request you to waive your requirement of our
representative to be present personally on 06.02.2015. Despite our written
explanations, if you still feel necessary for our representative to be present,
the undersigned will come over to Mumbai. Just now he is unable to
undertake the trip having fractured rib. Two certificates are enclosed.
Accordingly, please fix another date after 17-03-2015......"

11. Acceding to the request of the Noticee, in the interest of natural justice and in
order to conduct an inquiry in terms of rule 4(3) of the Adjudication Rules, the
Noticee was granted a final opportunity of personal hearing on February 24,
2015, vide notice dated February 09, 2015 at SEBI, Head Office, Mumbai. The

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Adjudication Order in respect of M/s Persian Carpet and Textiles Limited

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said Notice of hearing dated February 09, 2015 was sent through registered
post.
12. On the scheduled date of personal hearing, Ms. Aarti Bhardiye, Practicing
Company Secretary, appeared as Authorised Representative (AR). During the
hearing, the AR made the following submissions, which inter alia, stated as
under:

We reiterate the submissions made by the Noticee vide letters dated

January 24, 2015 and February 03, 2015.
We submit the additional written submissions vide letter dated February
19, 2015 in the matter.
We request 3 days time to submit the Action taken reports from SCORES
database of 3 pending complaints showing as resolved and status of
pending complaints as on dated as shown in SCORES.

13. Noticee vide letter dated February 19, 2015 had submitted additional written
submissions in the matter, which inter alia stated as under:
".......
.....we had in time replied to the query of Mr. Shailesh Goyal on 25-102011 and as such the complaint stands fully redressed. Our fault is not the
non-redressal of complaint in time, but non uploading of the action taken in
the SCORES system. The same also now stands uploaded.
Even as on dated, the SCORES system shows complaints only from 6 share
holders which were duly redressed after their uploading in SCORES. This
shows that the company does not have a record of repetitive non-redressal.
The lapse which was only on account of non-uploading of ATR in the
SCORES system was due to frequent changes in compliance officers of the
company and the management had no intention to do any contravention or
be careless in redressal of the investor complaints.
you would further appreciate that the matter has not resulted in any
financial loss to the complainant.
Our company is a sick industrial unit registered as such with Hon'ble
BIFR and its entire capital is eroded and the shares of the company are not
traded at any of its stock exchanges.
..............."
14. Noticee vide email dated February 26, 2015 stated that the company had
never declared dividend since incorporation and submitted the present status
of complaints in SCORES database.
ISSUES FOR CONSIDERATION

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Adjudication Order in respect of M/s Persian Carpet and Textiles Limited

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15. After perusal of the material available on record, I have the following issues
for consideration, viz.,
A. Whether the Noticee has failed to resolve investor grievances?
B. Whether the Noticee is liable for monetary penalty under Section 15C of
the SEBI Act, 1992?
C. What quantum of monetary penalty should be imposed on the Noticee
taking into consideration the factors mentioned in Section 15J of the SEBI
Act, 1992?
FINDINGS
16. On perusal of the material available on record and giving regard to the facts
and circumstances of the case, I record my findings hereunder.
ISSUE 1: Whether the Noticee has failed to resolve investor grievances?
17. SEBI introduced an online electronic system for resolution of investor
grievances, i.e., SCORES in 2011. For the purposes of accessing the complaints
of the investors against them, as uploaded in the SCORES, listed companies
were required to login to SCORES system electronically through a company
specific user id and password, to be provided by SEBI. By not submitting the
details for authentication as required by the Circular, the Noticee did not
obtain the user id and password which was essential for accessing the
complaints pertaining to the Noticee, as uploaded on the SCORES for
redressing the investors grievances and subsequent redressal thereof. Vide
letters dated November 21, 2011 and January 11, 2012 the Noticee was once
again advised to obtain the SCORES authentication. However, the Noticee
failed to obtain the SCORES authentication. From the SCN I also note that the
Noticee did not resolve 3 (three) investor grievances pending against it as on
August 27, 2012.

18.

I note that, the Noticee has submitted that it is under the purview of Board for
Industrial and Financial Reconstruction (BIFR). I am of the opinion that the

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Adjudication Order in respect of M/s Persian Carpet and Textiles Limited

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Noticee being registered with BIFR does not have bearing on the present
proceedings. I am also of the opinion that financial crunches cannot be used as
a plea to get away with regulatory obligations like dealing with investor
grievances by uploading ATRs in SCORES. Further, from the information
available on the website of Ministry of Corporate Affairs, i.e., MCA21:
Company

Master

Details

(http://www.mca.gov.in/DCAPortalWeb/dca/CompanyMaster.do). I note that

the Company Status (for eFiling) is active and that the Noticee had conducted
its last AGM on September 30, 2013. I fail to appreciate that if the Noticee was
able to carry out these activities, then why had the Noticee not carried out the
process of obtaining SCORES authentication and redressing the grievances of
investors. I note that though SEBI had introduced online electronic system for
resolution of investor grievances, i.e., SCORES vide Circular dated June 03,
2011; the Noticee had obtained SCORES authentication (user id and
password) on November 06, 2013 i.e. subsequent to the issuance of SCN and
thereafter initiated the process of redressing the grievances of investors. I
note that the said SEBI Circular clearly states that all listed companies are
required to view the complaints pending against them and submit ATRs
alongwith supporting documents electronically in SCORES and failure to
update the ATR in SCORES will be treated as non redressal of investor
complaints by the company.
19.

Further, Honble SAT in S. S. Forgings & Engineering Limited & Others v SEBI,
Appeal No. 176 of 2014 (decided on August 28, 2014) has, inter-alia, observed
that Undoubtedly, an obligation is cast upon every listed company
to redress investors grievances in a time bound manner as may be prescribed by
SEBI from time to time. This Tribunal has consistently held that redressal
of investors grievances is extremely important for the Regulator to regulate the
capital market. If the grievances are not redressed within a time bound
framework, it leads to frustration among the investors who may not be
motivated to further invest in the capital market. Hence the importance of
complaints redressal system initiated by SEBI in June, 2011 cannot be

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Adjudication Order in respect of M/s Persian Carpet and Textiles Limited

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undermined and its sanctity has to be maintained by all the listed

companies.. Therefore, I hold that the Noticee has failed in its duty of
resolving the investor grievances pending against it as alleged in the SCN.
ISSUE 2: Whether the Noticee is liable for monetary penalty under Section
15C of the SEBI Act, 1992?
20. The provisions of Section 15C of the SEBI Act, 1992, read as under:
15C Penalty for failure to redress investors' grievances: 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.
21. In the matter of SEBI Vs. Shri Ram Mutual Fund [2006] 68 SCL 216 (SC), the
Honble Supreme Court of India has held that In our considered opinion,
penalty is attracted as soon as the contravention of the statutory obligation as
contemplated by the Act and the regulation is established and hence the
intention of the parties committing such violation becomes wholly irrelevant.
22. A listed company is expected to comply with the extant regulatory and
statutory requirements. As already observed, the Noticee failed in resolving
the investor grievances pending against it, despite being called upon to do so
by SEBI. Therefore, the Noticee is also liable for monetary penalty under
Section 15C of the SEBI Act, 1992.
ISSUE 3: What quantum of monetary penalty should be imposed on the
Noticee taking into consideration the factors mentioned in Section 15J of
the SEBI Act, 1992?
23. While imposing monetary penalty it is important to consider the factors
stipulated in Section 15J of the Act, which reads as under:
15J - Factors to be taken into account by the adjudicating officer

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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.
24. In the absence of material on record, the amount of disproportionate gain or
unfair advantage made as a result of the default and the amount of loss caused
to the investors due to the said default cannot be quantified. However, the fact
remains that the Noticee, being a listed company, failed to fulfil its duty of
complying with SEBI Circulars. It is the duty of SEBI to ensure speedy
resolution of investor grievances and to further the cause SEBI has come out
with SCORES which is a centralized web based complaints redress system that
enable investors to lodge and follow up their complaints and track the status
of redressal of such complaints from anywhere. After introduction of SCORES,
all listed companies are required to view the complaints pending against them
and submit ATRs alongwith supporting documents electronically in SCORES
and SEBI Circular dated June 03, 2011 clearly states that failure to update the
ATR in SCORES will be treated as non redressal of investor complaints by the
company. However, listed companies like the Noticee which do not obtain
SCORES authentication and do not resolve investor grievances and upload
ATRs in SCORES despite SEBI Circulars frustrate the entire process. It is of
utmost importance that every listed company assigns high priority to investor
grievances and takes all necessary steps to redress the grievances of investors
at the earliest, which the Noticee has failed to do. Hence, the omission on part
of the Noticee is detrimental to the interest of investors in securities market.
However, while determining the quantum of monetary penalty, I have also
considered the submissions of the Noticee that it is under the purview of BIFR
and has not declared any dividend since incorporation. I have also considered
the fact that the Noticee has taken SCORES authentication on November 06,
2013 and has resolved the three (3) investor grievances pending against it as
mentioned in the SCN on March 21, 2015.

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Adjudication Order in respect of M/s Persian Carpet and Textiles Limited

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ORDER
25. Considering the facts and circumstances of the case, in terms of the provisions
of SEBI Act, 1992 and Rule 5(1) of the Adjudication Rules, I hereby impose a
penalty of ` 1,00,000/- (Rupees One Lakh only) under Section 15C of the SEBI
Act, 1992, on M/s Persian Carpet and Textiles Limited.
26. 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
Regional Director, Northern Regional Office, Securities and Exchange Board of
India, 5th Floor, Bank of Baroda Building, 16, Sansad Marg, New Delhi
110001.
27. In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding Inquiry
and Imposing Penalties by Adjudicating Officer) Rules 1995, copies of this
Order are being sent to the Noticee and also to Securities and Exchange Board
of India.

Date: April 28, 2015

Place: Mumbai

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Jayanta Jash
Adjudicating Officer

Adjudication Order in respect of M/s Persian Carpet and Textiles Limited

April 28, 2015

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