Order against Kanel Oil and Export Industries Limited and its Directors

1. Kanel Oil & Export Industries Limited (hereinafter referred to as the Company) is a company incorporated under the Companies Act, 1956 and having its registered office at 203 Abhijeet, Building Mathakhali, Cross Rd Ellisbridge, Ahmedabad 380006. The directors of the Company are Mr. Thakkar K. Dhiren, Mr. Khese S. Umesh and Mr Thakkar K. Hitesh Bhai. The Securities and Exchange Board of India (hereinafter referred to as SEBI) received several complaints against the Company from investors. As on September 24, 2008, a total of sixty four investor grievances were pending unresolved by the Company. The investor complaints received against the Company were forwarded to it for redressal. Periodical reminders were also sent to it for resolving such complaints. Though, the complaints and reminders sent to the registered office of the Company were delivered, it had failed to redress such complaints.

2. Thereafter, SEBI, vide letter dated September 25, 2008 advised the Company to resolve all the grievances within thirty days from the date of receipt of the said letter and to submit a status report. In the said letter, SEBI made a reference to Sections 15C and 24 of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the SEBI Act). The said letter which was sent to the Company by registered post, was acknowledged by it. But it had failed to file the status report with SEBI, as advised. Therefore, a reminder was sent to the Company (addressed to its company secretary) by SEBI on November 24, 2008 advising it to resolve the pending complaints and to submit the status report within seven days. It was also mentioned in the said letter that in case of failure, SEBI would initiate such actions as deemed appropriate. Thereafter, the Company was again advised by SEBI, vide letter dated December 22, 2008 to resolve the investor grievances. Despite acknowledging the said letter, the Company had not only failed to redress the grievances but also failed to respond to the letters of SEBI. Thereafter, a public notice was also given on January 23, 2009 in the website of SEBI (www.sebi.gov.in) advising the Company to resolve the pending investor grievances and to submit the Action Taken Report. Despite such letters and public notice, SEBI had not received any response from the Company.

3. In view of the above, a show cause notice dated November 6, 2009 was sent to the Company by SEBI under Section 11B and 11(4)(b) of the SEBI Act requiring it to show cause as to why it should not be restrained from accessing the securities market and prohibit it from dealing in securities till such time the pending investor grievances against the Company are resolved. Similar notices dated November 10, 2009 were also sent to its directors, Mr. Thakkar K. Dhiren, Mr. Khese S. Umesh and Mr Thakkar K. Hitesh Bhai. The aforesaid notices were acknowledged by the Company and its directors. Subsequently, vide letter dated November 21, 2009 (received by SEBI on November 30, 2009), the Company filed its reply. It was inter alia, stated in the reply that pursuant to the SEBI’s earlier letters dated September 25, 2008, November 24, 2008 and December 22, 2008 and public notice dated January 23, 2009, the Company had resolved almost all pending investor’s complaints and hardly one or two were still to be resolved. In view of the same, the Company requested for the extension of two weeks time for filing a total report about resolution of pending investor’s complaints. However, no such report was filed by the Company till date. Thereafter, an opportunity of personal hearing was also granted by SEBI to the Company and its aforesaid directors, on August 5, 2010.

Further, a paper publication was also made by SEBI on June 13, 2010, in respect of the aforesaid show cause notice and hearing in various newspapers having nationwide and statewide circulation including ‘Sandesh’ (Rajkot Edition) and ‘Gujarat Samachar’ (Vadodara Edition). Despite taking all possible measures, neither the Company nor its directors attended the said hearing on August 5, 2010.

4. I have considered the facts of the case and the material available on record. I note that sufficient opportunities have been provided to the Company and its directors to redress the pending investor grievances by SEBI, as stated above in this Order. However, the Company not only failed to resolve the pending investor grievances but also failed to provide any response on the action taken by it, if any, in resolving the complaints. The Action Taken Report was also not submitted by the Company. There are sixty four complaints pending against the Company as stated in the letter dated September 25, 2008. There is no material on record to show that the Company had redressed the pending investor grievances. Though, the Company, vide letter dated November 21, 2009 informed SEBI that it had resolved almost all pending investor complaints, it had not filed any Action Taken Report as advised by SEBI and as undertaken by it. The protection of the investors in the securities market is one of the paramount duties of SEBI and the present case involves a listed company that not only failed to redress the investors’ grievances but also failed to respond to the letters/show cause notice issued by SEBI. None of the directors of the Company have also responded to the letters/show cause notice issued by SEBI. Therefore, it would be against the interest of the investors to permit such Company and its directors to access or deal in the securities market. In view of the above, I find it appropriate to pass necessary directions against the Company and its aforesaid directors who are in-charge and responsible for the affairs of the Company, for their failure to redress the grievances of the investors. I also note that, SEBI had earlier initiated proceedings under Section 11B of the SEBI Act against the Company and its directors for non-redressal of investor grievances and vide an Order dated October 10, 2003 debarred them from the securities market for a period of five years from. Taking into account, the lapses of the Company in not redressing the investor grievances, I find it appropriate to issue necessary direction against the Company and its aforesaid directors who are in charge and responsible for the affairs of the Company for their failure to redress the grievances of the investors.

5. In view of the foregoing, I, in exercise of the powers conferred upon me under Section 19 of the Securities and Exchange Board of India Act, 1992 read with Sections 11(4)(b) and 11B thereof, hereby restrain the company, Kanel Oil & Export Industries Limited (having its registered office at 203 Abhijeet-1, Nr. Mithakhali Six Roads, Ellisbridge, Ahmedabad 380006) and its directors, Mr. Thakkar K. Dhiren (Permanent Account No. ABJPT6724C), Mr. Khese S. Umesh (Permanent Account No. AARPK1059J) and Mr. Thakkar K. Hitesh Bhai (Permanent Account No. ABJPT6722E) from accessing the securities market and prohibit them from buying, selling or otherwise dealing in securities, directly or indirectly, till all the pending investor grievances against the said company are resolved and the same is reported to and confirmed by the Securities and Exchange Board of India.

6. This Order shall come into force with immediate effect.

DR. K. M. ABRAHAM WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA PLACE: MUMBAI DATE: DECEMBER 15, 2010