BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

(ADJUDICATION ORDER NO:AO/SG-AS/EAD/12/2016)
_________________________________________________________________
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:
KCC Software Ltd.
M-78, Connaught Place
New Delhi- 110001
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FACTS OF THE CASE

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 the 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. 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 were required to submit the details for
authentication to SEBI, in the format annexed to the said Circular. However,
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it was observed that KCC Software 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.
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, a letter
dated April 18, 2012 was 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 one
investor complaint was pending against the Noticee as on August 27, 2012.
4. It was alleged that by not submitting the details for authentication as required
by the Circular and further required by letter dated April 18, 2012, Noticee
did not obtain the user id and password which was essential for accessing
the complaints pertaining to it, as uploaded on the SCORES for redressing
the investors grievances and subsequent redressal thereof, within specified
time. Thus, it was alleged that Noticee had failed to redress the investor
grievances rendering the Noticee liable for imposition of penalty under
Section 15C of the Securities and Exchange Board of India Act, 1992
(hereinafter referred to as 'SEBI Act').

APPOINTMENT OF ADJUDICATING OFFICER

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5. Shri Praveen Trivedi was appointed as Adjudicating Officer, vide Order dated
22.08.2012 under Section 15-I of the SEBI Act read with Rule 3 of SEBI
(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating
Officer) Rules, 1995 (hereinafter referred to as Adjudication Rules) to
inquire into and adjudge under the provisions of Section 15C of the SEBI
Act for the alleged violations committed by the Noticee. Pursuant to the
transfer of Shri Praveen Trivedi, Shri JayantaJash was appointed as
Adjudicating Officer and the said appointment was communicated vide
Order dated 18.12.2013. Subsequently upon the

transfer of Shri

JayantaJash, the undersigned has been appointed as the Adjudicating

Officer vide Order dated 22.06.2015.
SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING
6. A Show Cause Notice dated 31.07.2013 (hereinafter referred to as SCN)
was served on the Noticee. The SCN was issued to the Noticee under the
provisions of Rule 4 (1) of the Adjudication Rules, to show cause as to why
an inquiry should not be held against the Noticee under Rule 4 (3) of the
Adjudication Rules read with Section 15 I of the SEBI Act for the alleged
violations. A copy of the letter dated 18.04.2012 was also annexed with the
SCN. The SCN issued to the Noticee inter alia mentioned the following :
a. It was alleged in the SCN that one investor complaint was pending
against the Noticee as on 27.08.2012. The details of the investor
complaint pending against the Noticeeare given below:
Registration
No.

Name
Complainant

SEBIP/DH12/0
000309/1 (P)

SatramDas

of Received
Date
12-042012

Pending Days / Nature

Resolution
Complaint
Time
161
Non-receipt
Dividend

of

of

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7. The Noticee vide its letter dated 14.08.2013 submitted its reply to the SCN
and inter alia made the following submissions:
a. Noticee stated that immediately on receipt of SCN, Noticee submitted
the details of the authentication to SEBI in the prescribed Performa for
the generation of user id and password. The details of authentication
were submitted electronically on 08.08.2013 and physically sent through
speed post to SEBI,Mumbai on 13.08.2013.
b. Complaint of Shri Satram Das has been duly redressed vide letter dated
12.08.2013 sent to the complainant (Noticee enclosed a copy of the said
letter). As per the said letter, the Noticee forwarded a copy of Annual
Report of the Company and inforned that the Company has not declared
any dividend.
c. Noticee regretted that it had failed to act on SEBIs communication
regarding implementation of SCORES due to oversight.
d. Further, the Noticee submitted that Section 15 C of the SEBI Act is not
applicable in the instant case.
8. 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 by the previous Adjudicating Officer on 06.01.2015at
SEBI Bhavan, Mumbai vide hearing notice dated 09.12.2014. The said
hearing notice was served through SEBI, Northern Regional Office, New
Delhi (hereinafter referred to as NRO). In response to the same, Noticee
vide its letter dated 03.01.2015 requested to adjourn the scheduled hearing
after 15.01.2015 as the Company Secretary, Ms. PrakritiWason was
suffering from high fever.Acceding to the request of the Noticee, vide
hearing notice dated 07.01.2015, Noticee was granted another opportunity
of hearing on 27.01.2015 at SEBI Bhavan, Mumbai. Hearing notice dated
07.01.2015 was served on the Noticee through NRO and by email.
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9. In response to the hearing notice dated 07.01.2015, Noticee vide its letter
dated 24.01.2015 made additional submissions to the SCN as follows:
a. Letter dated 18.04.2012 was addressed to Connaught Place. At that
time Company was not operating any office / activity from the said
premises. Registered Office of the Company was shifted from
Connaught Place to Janakpuri on 24.04.2002.However, the Registered
Office of the Company was shifted back to Connaught Place on
21.10.2013. Since the letter dated 18.04.2012 was addressed to a
wrong address the provisions of Section 15 C of SEBI Act are not
applicable. The Noticee has submitted copies of Form 18 filed by it with
RoC in support of its claim.
b. Even for the sake of argument it is presumed that letter dated
18.04.2012 was received by the Noticee then also the requirements of
Section 15 C are not fulfilled.
c. The letter is about SCORES and advising the Noticee to send the
information as required vide SEBI Circular No. CIR/OIAE/2/2011 dated
03.06.2011. By having failed to submit the details for the authentication
as required by the Circular for obtaining user id and password for
SCORES does not attract the provision of Section 15 C of the SEBI Act.
There were no grievances of investors to redress in the letter.
d. Enquiry should be dropped because of the following reasons also:
i.

Shri Praveen Trivedi, Adjudicating Officer was not fulfiling the

qualification to be an Adjudicating Officer as he was holding the
post of Joint Legal Advisor and not Divisional Chief.

ii.

SEBI Section 15-I do not allow change / replacement of

Adjudicating Officer. In the instant case, the SCN dated 13.07.2013

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was issued by Shri Praveen Trivedi and latter Shri JayantaJash was
appointed as Adjudicating Officer.
iii.

There is inordinate delay of 16 months in holding an inquiry after

SCN dated 31.07.2013 was issued.

iv.

Noticee has not been provided with copy of order of appointment of

Adjudicating Officers.

10. Vide letter dated 27.01.2015 Noticee stated that it has explained its position
vide its letter dated 14.08.2013 and written submission dated 24.01.2015. It
has nothing more to add in the personal hearing. Pursuant to the transfer of
erstwhile Adjudicating Officer, the undersigned vide hearing notice dated
31.08.2015 granted an opportunity of hearing to the Noticee on 28.09.2015
at SEBI Bhavan, Mumbai.The said hearing notice was served through
Speed Post Acknowledgement Due. Proof of service is on record.
11. Since the Noticee failed to attend the aforesaid hearing, the Noticee was
granted a final opportunity of hearing vide hearing notice dated 09.10.2015
on 29.10.2015 at SEBI Bhavan, Mumbai. The Noticee was also granted time
till 23.10.2015 to make additional submissions, if any. Along with the hearing
notice dated 09.10.2015, communique of appointment orders of previous
Adjudicating Officers and the appointment order of the undersigned were
also enclosed.The said hearing notice was served through Speed Post
Acknowledgement Due.
12. Vide Office Note EAD/ON/251/2015 dated 27.10.2015 followed by Office
Note EAD/ON/279/2015 dated 02.12.2015 and emails dated 21.01.2016
and 02.02.2016, NRO was requested to provide the following information:

Whether the entity has obtained SCORES authentication? If so, when?

The status of the complaints along with number of days taken for
resolution, if any.

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13. NRO vide its emails dated 28.01.2016and 02.02.2016 provided the status of
complaint pertaining to the Noticee and vide its emails dated 02.02.2016
provided the date on which the Noticee obtained SCORES authentication.
14. Considering the facts and circumstances of the case, the submission of the
Noticee before the previous Adjudicating Officer that in light of its written
submissions in the matter, it has nothing further to add in the personal
hearing and failure of the Noticee to avail the opportunity of hearing before
the undersigned despite having been granted the opportunity, I deem it
appropriate to decide the matter on the basis of facts / material available on
record.
ISSUES FOR CONSIDERATION
15. Before dealing with the primary issue in the matter, I would like to address
the preliminary issues raised by the Noticee at paras 9 d (i-iv) at pages 5-6.
The submission of Noticee at para 9 d (i) is factually incorrect. In my
opinion, the interpretation given by the Noticee of Section 15-I of the SEBI
Act at 9 d (ii) is not correct as on a bare perusal of the said Section, no such
restriction / embargo can be read into it. Submission of the Noticee at para 9
d (iii) is a matter of record. As regards para 9 d (iv), communique of
appointment orders of previous Adjudicating Officers and the appointment
order of the undersigned wereprovided to the Noticee vide hearing notice
dated 09.10.2015 and the Noticee was also granted time till 23.10.2015 to
make additional submissions, if any.
16. After perusal of the material available on record, I have following issues for
consideration, viz.,
A. Whether the Noticee has violated the provisions of Section 15C of SEBI
Act?
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B. Whether the Noticee is liable for monetary penalty under Section 15C of
the SEBI Act?
C. What quantum of monetary penalty should be imposed on the Noticee?
FINDINGS
17. 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 violated the provisions of Section
15C of SEBI Act?
18. It has already been observed that SEBI introduced an online electronic
system for resolution of investor grievances, i.e., SCORES in 2011. As per
SCN, once a complaint against a company is uploaded by SEBI in the
SCORES, it amounted to calling upon by SEBI to such company to redress
the investor grievance. 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. I note that SCN
dated 31.07.2013 inter alia alleged that 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 foraccessing the complaints
pertaining to the Noticee, as uploaded on the SCORES for redressing the
investor grievances and subsequent redressal thereof.
19. Noticees contention that it did not receive the reminder letter dated
18.04.2012 as it had changed its officeis tenable since it has submitted
copies of Form No.18in support of its claim.
20. It is observed from SEBI Circular No. CIR/OIAE/2/2011 dated 03.06.2011
that it deals with commencement of SCORES and advises all companies
whose securities are listed on various Stock Exchanges to comply with the
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provisions of the said Circular. Vide Circular No. CIR/OIAE/1/2012 dated

13.08.2012, SEBI advised all listed companies to obtain SCORES
authentication

by

14.09.2012.

Subsequently

vide

Circular

No.

CIR/OIAE/1/2013 dated 17.04.2013, SEBI advised the companies which

were yet to obtain SCORES user id and password to obtain it within 30 days
of issue of the said Circular. Notwithstanding the fact that the Noticee has
not received SEBIs reminder letter dated 18.04.2012, the provisions of
these Circulars are applicable to the Noticee as well.
21. It is noted from the information received from NRO that the Noticee had
obtained SCORES authentication on 16.08.2013. Thus, the Noticee has not
obtained SCORES authentication within the time as specified by SEBI.
22. I note that Honble Securities Appellate Tribunal in the matter of Port
Shipping Company Ltd. Vs. SEBI decided on 29.04.2015 observed as
follows:
As held by this Tribunal in case of M/s. Vidarbha Industries Ltd. (supra)
and Rakan Steels (supra) where a listed company fails to obtain SCORES
authentication within the time stipulated by SEBI, then it amounts to violating
the directions of SEBI and in such a case penalty is imposable under
Section 15HB of SEBI Act
23. I, however, note that instant adjudication proceedings are under Section
15C of SEBI Act and not under Section 15HB of the SEBI Act.
24. 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
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rupees for each day during which such failure continues or one crore
rupees, whichever is less.
25. In the instant matter as confirmed by NRO, the Noticee has obtained
SCORES authentication on 16.08.2013 which as per SCN was essential for
accessing the complaints. It is observed from the Action History and copy of
the letter dated 12.08.2013 addressed to the complainant that the Noticee
had taken steps to resolve the complaint by writing a letter dated 12.08.2013
to the complainant that the Noticee has not declared any dividend. Based on
the dispatch proof of the said letter, the complaint was treated as closed by
SEBI on 04.10.2013.Thus, it is seen that the Noticee has resolved the
complaint. For the reasons mentioned in this order,Ifind merit in the
submissions made by the Noticee at paras 9 (b) and 9 (c) at page 5.
26. In view of the aforesaid conclusion arrived at, the allegation that the Noticee
has violated the provisions of Section 15C of the SEBI Act is not tenable.
ISSUE 2: Whether the Noticee is liable for monetary penalty under
Section 15C of the SEBI Act?
27. In view of the finding at para 26, the Noticee is not liable for monetary
penalty under Section 15C of the SEBI Act.
ISSUE 3: What quantum of monetary penalty should be imposed on the
Noticee?
28. Since, the Noticee is not liable for monetary penalty in the instant matter,
this issue deserves no consideration.

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ORDER
29. In view of my findings noted in the preceding paragraphs, I hereby dispose
of the Adjudication Proceedings initiated against KCC Software Ltd. vide
SCN dated 31.07.2013.
30. In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding
Inquiry and Imposing Penalties by Adjudicating Officer) Rules 1995, a copy
each of this Order is being sent to KCC Software Ltd. and also to Securities
and Exchange Board of India.

Date: 08.02.2016
Place: Mumbai

Suresh Gupta
Adjudicating Officer

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