Kiev Finance Ltd. vs Sebi

Date : 04.08.2015

Appeal No. 351 of 2014

Kiev Finance Ltd. Room No. 26, 3rd Floor, 133 Canning Street, Kolkata - 700 001. ...... 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

Dr. S. K. Jain, Authorized Representative 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.

The present appeal is preferred by the appellant against the impugned

order dated August 12, 2014 passed by the learned adjudicating officer of the

respondent imposing a consolidated monetary penalty of ` 3 lac on the

appellant for violating various circulars issued by SEBI from time to time

regarding timely redressal of investors' grievances under Sections 15 HB and

15C of the Securities and Exchange Board of India Act, 1992 (for short SEBI

Act, 1992).

2. Briefly stated the facts of the case are that the appellant alongwith some

other erring companies, was called upon by SEBI vide letter dated July 18, 2

2013 to submit requisite information regarding SCORES authentication and

redressal of the pending investors' complaints by August 5, 2013. The

appellant did not do anything pursuant to the said letter issued by SEBI.

Finally, a show cause notice dated January 30, 2014 was issued to the appellant

and an enquiry was conducted in the alleged violations of the norms and for

imposition of penalties under said Sections i.e. 15HB and 15C of the SEBI

Act, 1992. After conducting an enquiry as per the procedure prescribed under

the SEBI (Procedure for Holding Inquiry and imposing Penalties by the

Adjudicating Officer) Rules, 1995 read with Section 15-I of the SEBI Act,

1992 and after affording due opportunity of hearing to the appellant, the

learned Adjudicating Officer held the appellant guilty of violating the said

circulars and, accordingly, imposed penalty of ` 1,50,000/- each under

Sections 15HB and 15C of the SEBI Act, 1992.

3. Learned authorized representative for the appellant, Shri S. K. Jain,

fairly states that he has no grievance as far as penalty of ` 1,50,000/- under

Section 15HB of the SEBI Act, 1992 has been imposed on the appellant but he

is aggrieved of imposition of another penalty of ` 1,50,000/- under Section

15C of the SEBI Act, 1992. The point urged by Shri Jain is that the learned

Adjudicating Officer failed to appreciate that the appellant had already

redressed the grievance of the investors and had sent shares certificate duly

transfer in his favor by its letter dated September 11, 2013 immediately after

receiving validly executed share transfer deed alongwith original shares

certificate. Thus, the imposition of the penalty of ` 1,50,000/- under Section

15C of the SEBI Act, 1992 is not justified and is liable to be set aside. 3

4. In this context, Shri Jain further submits that Section 15C does not

contemplate imposition of any penalty for delayed submission of an action

taken report as required by the SCORES.

5. Shri Kumar Desai, learned counsel for the respondent has drawn our

attention towards SEBI Circular dated June 3, 2011 which, interalia, provides

that failure on a part of the company to update the action taken report in

SCORES is to which treated as non redressal of complaint by the said

company.

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

pleadings. We have gone through Section 15C as well as SEBI's circular

dated June 3, 2011. Section 15C categorically provides that in case a listed

company or an intermediary fails to redress grievance of investors' as per the

norms laid down by SEBI, it shall be liable to a penalty of ` 1 lac per day

which may go up to ` 1 crore. Now, looking into the contents of SEBI's

circular dated June 3, 2011 we hold that failure on the part of a company to

update the ATR in SCORES or undue delay in doing so, has to be treated as

non-redressal of investors' complaints by the said company. Thus, a conjoint

reading of Section 15C and the SEBI's circular dated June 3, 2011 makes it

abundantly clear that SEBI has powers to impose penalty on a company for

failure to redress investors' grievances as per the SCORES within the meaning

of Section 15C. It does include a power to impose punishment on a defaulter

company for delayed and / or non submission of an action taken report as

required by SCORES.

7. We are convinced that timely redressal of 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 4

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. In

fact, it is one of the important duties cast upon the SEBI to see that there is

speedy redressal of grievances of investors and the appellant has admittedly

failed to upload and do the needful as regards the redressal of complaints of

various investors.

8. In view of the above discussion of law and fact, appeal, being bereft of

any merits, is, hereby, dismissed with no order as to costs.

Sd/-

Justice J. P. Devadhar Presiding Officer

Sd/-

Jog Singh Member

04.08.2015 Prepared & Compared by PTM