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BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA


ADJUDICATION ORDER NO. PJ/VP/09/2016
__________________________________________________________________
UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF
INDIA ACT,1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR
HOLDING INQUIRYANDIMPOSING PENALTIES BY ADJUDICATING
OFFICER) RULES, 1995
In respect of:
M/s Unity Agrotech Industries Limited
(PAN Not Available)
In the matter ofM/s Unity Agrotech Industries Limited
__________________________________________________________________
BACKGROUND
1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") came
out with Circular viz., Circular No. CIR/OIAE/1/2012 dated August 13, 2012
(hereinafter referred to as "Circular"), directing all the companies whose
securities were listed on stock exchanges to obtain SEBI Complaints Redress
System(SCORES) authentication by September 14, 2012 and also redress the
pending investor grievances within the stipulated time period failing which
appropriate enforcement action would be initiated against them. It was noticed
that M/s. Unity Agrotech Industries LTD.(hereinafter referred to as the
Noticee/ Company) has failed to comply with the said provisions.
2. SEBI observed from SCORESthat two (2)complaintswere filed by the
investor.The said complaints was not resolved within the specified time in terms of
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SEBICircular No. CIR/OIAE/1/2012 dated August 13, 2012. The same was
alsocommunicated to the Noticee by SEBIvide its letter Ref. No. OIAE1/SD/12191/2014 dated 29.04.2014 (inadvertently mentioned as dated 18.11.2014
in the Show Cause Notice).
3. It was therefore alleged that,the Noticee hasfailed to obtain SCORES
authentication and also failed to resolve the investor complaints within the
specified

time,

thereby

failing

to

comply

with

SEBI

Circular

No.

CIR/OIAE/1/2012 dated August 13, 2012thereby making the Noticee liable for
penalty under Section 15 HB and Section 15C of the SEBI Act, 1992.
APPOINTMENT OF ADJUDICATING OFFICER
4. The undersigned was appointed as Adjudicating Officer vide order dated
29.12.2015under section 19 of SEBI Act read with section 15-I of SEBI Act read
with rule 3 of SEBI (Procedure for Holding Inquiry and Imposing Penalties by
Adjudicating Officer) Rules, 1995 (hereinafter referred to as Rules) to inquire
into and adjudge under Section 15 HB and 15C of the SEBI Act, the alleged
violations of the provisions of Circular No. CIR/OIAE/1/2012 dated August 13,
2012.
SHOW CAUSE NOTICE,REPLY ANDHEARING
5. Show Cause Notice No. EAD/PJ/VRP/1694/2016 dated 13.01.2016(hereinafter
referred to as 'SCN') was issued to the Noticee under rule 4 of the Rules to show
cause as to why an inquiry should not be held and penalty be not imposed under
Section 15 HBand Section 15C of SEBI Act for the alleged violation of provisions
of the circular bynot obtaining SCORES authentication and failing to redresstwo
(2) investor complaintswithin the prescribed time. The SCN was sent by Hand
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Delivery to the Registered Office of the company as per the MCA website,
however, it was returned undelivered with a remark Consignee shifted/ Moved.
Thereafter, an opportunity of personal hearing was granted on 12.02.2016 vide
hearing notice dated 21.01.2016 forwarding the copy of the SCN dated 13.01.2016
and advising the Noticee to reply within 14 days.The said hearing notice was sent
through hand delivery and/ or affixture. The hearing notice could not be
delivered; hence, the hearing notice was affixed at the address of the Noticee on
01.02.2016.The Noticee failed to reply to the SCN and also did not appear for the
hearing. The SCN was also sent by Hand Delivery/ Affixture on 9.02.2016 to the
address as per SEBI SCORES website www.scores.gov.in .The SCN could not be
delivered; hence, it was affixed at the address of the Noticee on 11.02.2016.
Thereafter, another opportunity of hearing was granted to the Noticee on
11.03.2016 vide hearing notice dated 25.02.2016 sent through Hand Delivery and
through Affixture. The Noticee was advised to furnish the reply by10.03.2016.The
notice sent through hand delivery could not be delivered and hence the said notice
was affixed on the door of the premises on 27.02.2016. However, the Noticee has
failed to reply to the SCN till date and further failed to appear before the
undersigned for the opportunities of hearing granted on 12.02.2016 and
11.03.2016.In the said SCN and in the hearing notices it was specifically stated
that,if the Noticee fails to submit their reply to the SCN or fails to attend the
hearing proceeding on the stipulated date and time, it will be presumed that
Noticee has no submissions to offer in its defense and the matter would be further
proceeded with on the basis of the material available on record. I note that the
Noticee failed to submit the reply to the SCNin spite of sending it on the
registered address available Ministry of Corporate Affairs websiteand also failed to
appear for hearings to substantiate their case towards the allegations stated in the
SCNs. For the reasons mentioned above, I observe that the Noticee was provided
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with enough opportunities to submit reply/ to be heard and hence, I am


constrained to proceed ex-parte with the matter on the basis of the material
available on record.
CONSIDERATION OF ISSUES
6. I have carefully perused the documents available on record. It is observed that the
allegation against the Noticee is that they have failed to obtain SCORES
authentication and failed to redress2(two) investor complaints.
7. The issues that, therefore, arise for consideration in the present case are:
7.1. Whether the Noticee has violated
7.1.1. the provisions of Circular viz., SEBI Circular No. CIR/OIAE/1/2012
dated August 13, 2012 by failing to obtain SCORES authentication
which attracts monetary penalty under Section 15 HB of SEBI Act?
7.1.2. the provisions of Circular viz., SEBI Circular No. CIR/OIAE/1/2012
dated August 13, 2012 by failing to redress two

investor

complaintswithin the prescribed time which attract monetary penalty


under Section 15C of SEBI Act?
7.2. If so, what would be the monetary penalty that can be imposed taking into
consideration the factors mentioned in Section 15J of SEBI Act?
FINDINGS
8. Before moving forward, it is pertinent to refer to the provisions of Circular, which
reads as under:

CIRCULAR Ref. No. CIR/OIAE/1/2012 August 13, 2012


SEBI had issued Circular No.CIR/OIAE/2/2011 dated June 3, 2011 regarding
commencement of SEBI Complaints Redress System (SCORES) and advising all companies
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whose securities are listed on various stock exchanges to comply with the provisions of the said
circular.
1. In this regard, all companies whose securities are listed on stock exchanges, are hereby advised
to obtain SCORES authentication by September 14, 2012 in terms of the aforesaid circular.
2. 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.
3. In case of failure to comply with the above, SEBI would be constrained to initiate enforcement
actions as per the law as may be deemed appropriate.

---------------------------------------------------------------------------------------9. The first issue for consideration is whether the Noticee by failing to obtain
SCORES authentication has violatedthe provisions of Circular viz., SEBI Circular
No. CIR/OIAE/1/2012 dated August 13, 2012. I find from the records that the
Noticee was provided ample opportunity to submit it reply to the show cause
notice and defend his case. Further, an opportunity of personal hearing was
granted to the Noticee to appear and plead their case in the matter. I find from
the said facts that the Noticee has admitted the charge of violating the provisions
of Circular viz., SEBI Circular No. CIR/OIAE/1/2012 dated August 13, 2012 by
failing to obtain SCORES authentication. At this juncture I rely on the following
judgments:
9.1. The Honble Securities Appellate Tribunal (SAT) in the matter of

Classic Credit Ltd. vs. SEBI (Appeal No. 68 of 2003 decided on


December 08, 2006) wherein it, inter alia, observed that
"............ the appellants did not file any reply to the second show-cause notice. This being so,
it has to be presumed that the charges alleged against them in the showcause notice were
admitted by them.
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9.2. The Honble SAT has recently in the matter of Sanjay Kumar Tayal &

Others v SEBI (Appeal No. 68 of 2013 decided on February 11, 2014),


inter-alia, observed that
As rightly contended by Mr. Rustomjee, learned senior counsel for
respondents, appellants have neither filed reply to show cause notices issued to them nor
availed opportunity of personal hearing offered to them in the adjudication proceedings and,
therefore, appellants are presumed to have admitted charges leveled against them in the show
cause notices..

10. The second issue for consideration is whether the Noticee has violated the
provisions of Circular viz., SEBI Circular No. CIR/OIAE/1/2012 dated August
13, 2012 by failing to redress two investor complaints within the prescribed time
which attract monetary penalty under Section 15C of SEBI Act. I find from the
plain reading of section 15 C which says that, 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 investor, 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. Thus I find that one of the
paramount ingredients of section 15 C is that, the entity has to be called upon by
the Board in writing to redress the grievances of investor then the entity is liable
for a monetary penalty. In the case in hand the letter Ref. No. OIAE1/SD/12191/2014 dated 29.04.2014 issued by SEBI calling upon the Noticee to
redress the investor complaints was not delivered. I find from the above facts that,
the service of letter dated 29.04.2014 was not a good service of letter in term of
following Judgments:
10.1. The Hon'ble Securities Appellate Tribunal, in Alka India Ltd. Vs.
SEBI (Order dated June 10, 2009) inter alia, observed as follows:
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"A copy of the courier receipt has been placed on record to substantiate its stand. We have
perused this receipt. In the column meant for the name of the receiver, the Stock Exchange,
Mumbai has been written. The Bombay Stock Exchange has categorically denied having
received any information from the appellant. In view of the denial made by the Bombay
Stock Exchange, the onus is upon the appellant to establish that the letter making the
necessary disclosures allegedly sent by courier was actually received by the Bombay Stock
Exchange. No such evidence has been placed on record. Even, if we were to accept the
courier receipt, it is only evidence of the fact that some letter was sent to Bombay Stock
Exchange but there is no proof forthcoming of its actual receipt by the Stock Exchange.
Moreover, what was that letter and whether it contained the disclosures are facts which also
need to be established. The appellant failed to discharge this onus...... In view of this
matter, no fault can be found with the impugned order."
10.2. The Honble SAT, in Kalinidee Rail Nirman Ltd. Vs SEBI dated
19.07.2010 wherein it was held as follows:
the agency through which the document is sent acts as an agent of the sender
and if a dispute were to arise whether the said document has been received by the addressee
or not, the onus would be on the sender to establish the fact by clear and cogent evidence in
this regard. Admittedly, the appellant has not placed on record any acknowledgement
received from BSE in regard to the mails that were allegedly sent containing the compliance
reports. On the other hand, we have on record a letter from BSE specifically stating that it
had not received the compliance reports for the aforesaid quarters from the appellant.
. In view of the matter, no fault could be found with the impugned order.
11. In the cited cases, there was a dispute whether the letter was received or not by
the receiver and in the absence of evidence as to receipt it was held that the
document was not received. In the case in hand, there is no dispute but it is
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established that the letter was not delivered. Further, I find from the MCA21
website of Ministry of Corporate Affairs that the Noticee status is shown as a
dormant company and the details of last AGM or filing of Annual Reports are not
available on the website.I also observe from the past SEBI Orders available on
SEBI website that there is a usual practice in such cases in respect of service of
documents that if the letter/ documents are undelivered then final opportunity is
given by way Notice issued through newspaper publication specifying the entity
name. In the case in hand, based on the available records it is observed that there
is no such publication.Therefore, I find from the above facts and the judgments
passed by Honble SAT that, the requirement under Section 15C of the SEBI Act,
1992 which states that after having been called upon by the Board in
writing... remains unfulfilled.
12. In view of the above the charges of violation of section 15C of SEBI Act by the
Noticee are not established.
13. In view of the facts of the matter, I rely on the case of M/s Port Shipping
Company Limited, The Hon'ble Securities Appellate Tribunal has made the
following observation Argument of the appellant that there was no operating income, no
permanent employee, no pending investor grievance, no prejudice caused to any investor and that
the shares of the appellant company were not traded for more than six years, cannot be a ground
to disobey the directions given by SEBI. Obligation to obtain SCORES authentication was not
dependent on there being operating income or pending investor grievance or trading of shares on the
stock exchanges. Admittedly, the appellant company continues to be a listed company and,
therefore, it was obligatory on part of appellant company to obtain SCORES authentication
within the time stipulated by SEBI. However, the appellant has consistently failed and neglected
to comply with the directions of SEBI and it is only when SEBI initiated penalty proceedings, the
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appellant chose to comply with the directions of SEBItherefore, in the facts of the present case
appellant deserved higher penalty.However, after taking all the factors set out by the appellant as
mitigating factors, the adjudicating officer of SEBI has imposed nominal penalty of Rs.
1,50,000/- as against the imposable penalty of Rs.1 crore. In such a case, it cannot be said that
the penalty imposed is excessive or unreasonable
10. In the light of the above facts and relying on the cited case laws, I am of the firm
belief that it is established without doubt that the Noticee has violated the
provisions of thesaid Circular by not obtaining SCORES authentication.
11. Further, I note that the Honble Supreme Court of India in the matter of SEBI Vs.
Shri Ram Mutual Fund [2006] 68 SCL 216(SC) has also 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 Regulations is established and hence the intention of the parties
committing such violation becomes wholly irrelevant.
12. In view of the foregoing, I am convinced that it is a fit case to impose monetary
penalty under Section 15 HB of the SEBI Act, which read as under:

Penalty for contravention where no separate penalty has been provided.


15HB. 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 shall not be less than one lakh rupees but which may extend to one
crore rupees.

13. While determining the quantum of monetary penalty under Section 15 HB of


SEBI Act, I have considered the factors stipulated in Section 15-J of SEBI Act,
which reads as under:
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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.

14. 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 failure on the part of
the Noticee to obtain SCORES authentication within the stipulated time are not
available on record. Further, it may also be added that it is not possible to quantify
the unfair advantage made by the Noticee or the loss caused to the investors in a
default of this nature. However, lack of due diligence demonstrated by the Noticee
is a risk to the securities market and thus loss to the investors to that extent.
ORDER
15. After taking into consideration all the facts and circumstances of the case, I
impose a penalty of Rs1,00,000/-(RupeesOne lac only) under Section 15 HBof
the SEBI Act(Total :-Rupeesone laconly) on the Noticee i.e. M/s Unity
Agrotech Industries Ltd. ,which in my opinion, will be commensurate with the
violations committed by the Noticee.
16. 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 said demand draft should be
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forwarded to ShriN Hariharan, Chief General Manager, Securities and Exchange


Board of India,SEBI Bhavan, Plot No. C4-A, 'G' Block, BandraKurla Complex,
Bandra(E),Mumbai-400051.
17. In terms of rule 6 of the Rules, copies of this order are sent to the Noticee and
also to the Securities and Exchange Board of India.

Date: 29.03.2016

PrasadP. Jagadale

Place: Mumbai

Adjudicating Officer

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