Order in the matter of Toheal Pharmachem Limited and its directors

1. Toheal Pharmachem Limited (hereinafter referred to as the company) is a company incorporated under the companies Act, 1956, having its registered office at 5th Floor, Nilkanth Palace, B Block, Opp. Seema Hall, 100 ft., Sanjay Sachin Road, Satellite, Ahmedabad–380015. The Securities and Exchange Board of India (hereinafter referred to as SEBI) received several complaint against the company from the investors. As on September 24, 2008, a total of seventy nine investor grievances were pending unresolved by the Company. The investor complaints received against the Company were forwarded to the company for redressal and periodical reminders were also sent to the company for resolving such pending complaints. The complaints and reminders sent to the Company were returned undelivered.

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 returned undelivered. Thereafter, a public notice was 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 steps, SEBI had not received any response from the Company or its directors.

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. The said notice was returned undelivered. An attempt to serve the notice by pasting at the last known address was made by the Western Regional Office of SEBI, but without any success. Similar notices dated November 11, 2009 were also sent to directors, Mr. Pandit Atul Bhadursha and Mr. Macchar Yogendra Harilal. The notices sent to the directors were acknowledged by them. Inspite of the notices being served on the directors, no response was received from neither the company nor the directors. Thereafter, an opportunity of personal hearing was granted by SEBI to the company and all its aforesaid directors, on August 5, 2010. Since the letters issued to the company was returned undelivered and the letters issued to the directors were served and no reply was received from them, a paper publication was made by SEBI on June 13, 2010, in respect of the said show cause notices and the hearing in various newspapers having nationwide and statewide circulation including ‘Hindustan Times’ (Mumbai, New Delhi & Kolkata Edition) ‘Sandesh’ (Rajkot Edition) and ‘Gujarat Samachar’ (Vadodara Edition).

On the basis of the paper publication, on the date of hearing, the company and the aforesaid directors were represented by Ms. Rupal Patel, practicing company secretary. The company representative requested for the list of complaints pending against the company to be send by electronic mail. During the personal hearing, she also requested for three months time to resolve the pending investor grievances. As per the company’s request, the list of complaints was sent to the company and to the company representative by electronic mail on August 9, 2010 and the company was granted 3 months time to redress the complaints. Thereafter, vide letter dated October 20, 2010, the company submitted the Action Taken Report which was not in the specified format and the requisite documents like the dispatch proof, other documentary evidence required to treat the complaint as resolved were not enclosed. The company was advised telephonically to do the needful. Subsequently, vide letter dated December 11, 2010, the company submitted the revised action taken report along with the required documents but only 2 complaints could be redressed out of the 79 complaints pending as on September 24, 2008. Since the complaints were pending, the company was advised, vide SEBI letter dated March 16, 2011 to inform the current status of all 94 pending complaints including the latest received complaints (pending as on March 16, 2011).

The company vide letter dated April 11, 2011 forwarded a fresh action taken report for all the 94 pending complaints. Out of the 94 pending complaints only 59 could be treated as redressed on the basis of the action taken report received from the company. Once again the company submitted an Action Taken Report on June 10, 2011 and on the basis of which only 7 complaints were pending. On July 8, the company has forwarded the entire documents viz. letter sent to the complainants, dispatch proof from which it is clear that the company has taken positive action to redress all the complaints. As there are no complaints pending for redressal from the company, I do not consider that the present case is a fit one to issue any directions. Accordingly, I dispose of the proceedings initiated against the Company and its directors as ordered here in below.

4. In view of the above, 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 dispose of the proceedings initiated, vide show cause notices dated November 6, 2009 and November 11, 2009 issued to Toheal Pharmachem Limited and its directors namely, Mr. Pandit Atul Bhadurshah and Mr. Macchar Yogendra Harilal, without any directions for the reasons stated above.

DR. K. M. ABRAHAM WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA PLACE: MUMBAI DATE: JULY 19, 2011