Alka India Ltd. vs Sebi

Date of Decision : 07.08.2019

Appeal No. 228 of 2017

Alka India Ltd. 102, 1st Floor, Morya Landmark II, Off New Link Road, Andheri (West), Mumbai - 400 053. ... Appellant

Versus

1.

Securities and Exchange Board of India SEBI Bhavan, Plot No. C-4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051.

2. BSE Ltd.

Floor 25, P. J. Towers, Dalal Street, Mumbai - 400 001 ... Respondents

Mr. Rajiv Singh, Advocate with Mr. Saurabh Bachhawat, Advocate i/b Shubhangi Chavan for the Appellant.

Mr. Vishal Kanade, Advocate with Mr. Kaushal Parsekar, Advocate i/b Legasis Partners for the Respondent Nos. 1. Mr. Manish Chhangani, Advocate i/b Khaitan & Co. for the Respondent Nos. 2.

CORAM : Justice Tarun Agarwala, Presiding Officer Dr. C. K. G. Nair, Member Justice M. T. Joshi, Judicial Member 2

Per : Justice Tarun Agarwala, Presiding Officer (Oral)

1. The facts leading to the filing of the present appeal is that the

scheme of amalgamation of Janice Textiles Ltd. (hereinafter referred

to as, 'the transferor company') with Alka India Ltd. (the Appellant

transferee company) was sanctioned by the High Court of

Ahmedabad on November 16, 2005 and High Court of Bombay on

August 26, 2005. In terms of clause 11 of the scheme of

amalgamation, the transferee company was directed to issue and allot

shares to the shareholders of the transferor company in the ratio of

1:25. There were 430 shareholders in the transferor company

holding 53,75,900 shares. The appellant was required to issue and

allot the shares to the shareholders of the transferor company in the

proportion of 1:25. These 430 shareholders of the transferor

company would have got 13,43,97,500 shares of the appellant

company. The allotment of the shares were never made by the

appellant till date and consequently, two complaints were made by

the shareholders of the transferor company to the Securities and

Exchange Board of India (hereinafter referred to as, 'SEBI') on

February 8, 2014 with regard to the non issuance of the shares of the

appellant company pursuant to the scheme of amalgamation. 3

2. The said complaints were forwarded to the appellant on the

SCORES platform. As per the circular dated December 18, 2014 all

listed companies were required to make efforts for resolution of

complaint within 30 days. Since the same was not done, a show

cause notice dated June 28, 2016 was issued calling upon the

appellant to show cause as to why a penalty should not be imposed

under Section 15A(a) and 15C of the Securities and Exchange Board

of India Act, 1992 (hereinafter referred to as, 'SEBI Act'). After

considering the reply and, after granting an opportunity of hearing,

the Adjudicating Officer (hereinafter referred to as, 'AO') passed the

impugned order imposing a penalty of Rs. 25 lacs under Section 15C

for non redressal of the complaints. The appellant, being aggrieved

by the order, has filed the present appeal.

3. We have heard Shri Mr. Rajiv Singh, the learned counsel for the

appellant and Shri Vishal Kanade, the learned counsel for SEBI and

Mr. Manish Chhangani, the learned counsel for BSE Ltd. (hereinafter

referred to as, 'BSE').

4. It was contended that the complaints were redressed by the

appellant even though there was a delay of one year and eight months

and, therefore, the finding that the complaints were not redressed by

the appellant is incorrect. It was further contended that no loss was 4

caused to the investors and the AO should have thus, taken into

consideration the factors contemplated under Section 15J of the SEBI

Act. It was also contended that in similar situations AO has imposed

a penalty of Rs. 1 lac for non redressal of the complaints on the

SCORES platform and, therefore, the penalty in the case of the

appellant was harsh and unwarranted.

5. Having heard the learned counsel for the appellant and having

perused the records, we find that the contention raised by the

appellant has no merit and deserves to be rejected. In the first

instance, we are of the opinion that the complaints of the investors

have not been redressed till date and the contention of the appellant

that the complaints were redressed and stood disposed of is wholly

incorrect. The complaints of the shareholders of the transferor

company were that they did not receive the shares of the appellant

company pursuant to the scheme of amalgamation which was

sanctioned by the two High Courts in 2005. The complaints were

addressed by the appellant by intimating that the company has not

received the NOC or relaxation from SEBI for preferential issue and

the company is still in the process of listing the said preferential issue

on the platform of exchange. Such intimation does not amount to

disposal or redressal of the complaint. We find from the record that

the last correspondence for clearance from the exchange platform 5

was made by the appellant in the year 2008. Till date the shares have

not been allotted to the complainants and, therefore, it is incorrect to

state that the appellant had redressed the complaints of the

complainants.

6. The contention that the complainants did not suffer any loss and

that the factors contemplated under Section 15J ought to have been

considered is patently erroneous. Admittedly, not only the

complainants but all the shareholders of the transferor company have

not been allotted the shares by the appellant pursuant to the scheme

of amalgamation sanctioned by the High Courts. We also find in the

meanwhile, the transferor company has been delisted on September

20, 2015. In the absence of allotment of the shares to the

shareholders of the transferor company, such shareholders, including

the complainants, were deprived of allotment of the shares which has

resulted in an opportunity loss. The contention that no loss was

suffered by the complainants is patently misconceived.

7. In the light of the aforesaid, we do not find any mitigating

circumstances to reduce the quantum of penalty. The decisions cited

by the appellant which were passed by the AO imposing lesser

quantum of penalty are distinguishable on its own facts and are not

applicable in the instant case. We consequently, do not find any 6

reason to interfere in the quantum of penalty imposed by the

respondent under Section 15C of the SEBI Act.

8. For the reasons stated aforesaid, the appeal lacks merit and is

dismissed.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C. K. G. Nair Member

Sd/-

Justice M. T. Joshi Judicial Member 07.08.2019 Prepared & Compared by PTM