B. P. Alloys Ltd. vs Sebi

BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI

DATE : 21.08.2015

Misc. Application No. 185 of 2015 And Appeal No. 269 of 2015

B. P. Alloys Ltd. 179, Industrial Area A, Ludhiana 141 003. ..... Appellant

Versus

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

Ms. Rinku Valanju, Advocate for the Appellant. Mr. Kumar Desai, Advocate with Mr. Pulkit Sukhramani, Advocate i/b The Law Point for the Respondent.

CORAM : Justice J. P. Devadhar, Presiding Officer Jog Singh, Member

Per : Jog Singh (Oral)

1.

With the consent of the parties the appeal and the Miscellaneous

Application have been heard and are being disposed of by this order.

Misc. Application No. 185 of 2015

2. As there is a delay of about 12 days in filing the appeal. Miscellaneous

Application No. 185 of 2015 has been moved by the learned counsel for the

appellant. After hearing both the counsel and for the reasons stated in the

Miscellaneous Application, the same is allowed.

2 Appeal No. 269 of 2015

3. The present appeal is preferred by the appellant against the impugned order

dated February 18, 2015 by which the learned adjudicating officer has imposed a

penalty of ` 3 lacs on the notice under Section 15C of the Securities and Exchange

Board of India Act, 1992 (for short SEBI Act, 1992) for the alleged violation of

the contents of SEBI Circular dated June 3, 2011 read with circular dated April 17,

2013 requiring the appellant to obtain SCORES authentication and redress the

investors' grievances on time.

4. Briefly stated the facts of the case are that the appellant is a company

incorporated under the Companies Act, 1956 and was incorporated on November

30, 1987 vide CIN - L27107PB1987PLC007827 having its registered office at

179, Industrial Area - A, Ludhiana. The company entered the Capital Market in

August, 1993 and its shares were listed at Ludhiana Stock Exchange, Delhi Stock

Exchange, Jaipur Stock Exchange and Vadodara Stock Exchange. It is pertinent

to note that all these exchanges are non-functional since more than a decade. The

company has only about 5000 shareholders.

5. The main contention of the appellant is that the stock exchanges viz.

Ludhiana Stock Exchange (LSE), Delhi Stock Exchange (DSE), Jaipur Stock

Exchange (JSE) and Vadodara Stock Exchange (VSE) where the appellant

company was listed were non-functional, non-operational, derecognized. Even

when they were fully functional they had not provide any guidance with regard to

SEBI Rules, Regulations, their implications and consequences to small companies

like the appellant.

6. We have heard both learned counsel for the parties and perused the

pleadings. Shri Kumar Desai, learned counsel for the respondent brought to our

notice circulars dated June 3, 2011, August 13, 2012 and April 17, 2013 by which

all the companies whose shares have been listed on the Stock Exchanges were 3

required to obtain SCORES authentication with the User ID and Password which

were essential for accessing the complaints and subsequent redressal within the

specified time. From June 3, 2011 onwards SEBI started the system of processing

of investors' complaints against listed companies through SEBI Complaints

Redressal System (SCORES). From the records we note that repeated

opportunities are given to the appellant to obtain SCORES authentication as well

as to redress few investors' complaints. But the same was not done. SEBI had to

issue a show cause notice on March 26, 2014 for continued violations of its

circulars. Pursuant to the show cause notice a detailed enquiry was conducted into

the charges levelled against the company under Section 15-I of the 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.

7. After affording due opportunity of being heard to the appellant on

February 12, 2015, the learned adjudicating officer passed the impugned order on

February 18, 2015 imposing monetary penalty of ` 3 lacs after proving the

violations against the appellant in accordance with due process established by law.

We see no reason to interfere in the matter as impugned order has taken into

consideration even the mitigating factors and imposed a token penalty of ` 3 lacs

as against a maximum penalty of ` 1 crore imposable under the law.

8. In the present case both the violations have been proved as per law. The

appellant did not get User ID and Password as required by SCORES for years

together on the ground that the Stock Exchanges where its shares were listed was

non-functional. This is no ground in the eyes of law. The reason is that all the

circulars were duly displayed by SEBI from time to time on its Website and Stock

Exchanges as such do not come in the way of companies either for getting

SCORES authentication or in timely redressing the investors' grievances.

Similarly, there is no explanation for sitting over the complaints of the investors

for more than 2 years. This Tribunal has consistently held that timely redressal of 4

the investors' grievances by the companies is of utmost importance. Keeping this

importance in mind, SEBI by circular dated August 2, 2011, SEBI has introduced

a system of processing investors' complaints in a centralized web based

complaints redress system, which is commonly known as 'SCORES'. Under this

system a centralized database of all the complaints and their online movement to

the concerned intermediaries is monitored. Similarly, online upload of action

taken reports (ATR) by the concerned entities and its viewing by investors of the

action on the complaints and their current status etc. all are displayed. Violation

of such an important regulatory measure cannot be taken lightly in the facts and

circumstances of the present case.

9. Accordingly, the appeal is, hereby, dismissed with no order as to costs.

Sd/-

Justice J. P. Devadhar Presiding Officer

Sd/-

Jog Singh Member

21.08.2015 Prepared & Compared by PTM