Rencal Chemicals (India) Ltd. vs Sebi

Date of Decision: 5.2.2018

Misc. Application No.5 of 2018 And Appeal No.4 of 2018

Rencal Chemicals (India) Ltd. 24 Mahavir Centre Sector 17, Vashi, Navi Mumbai - 400704. ..... Appellant

Versus

Securities and Exchange Board of India SEBI Bhavan, Plot No.C4A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai - 400051. ... Respondent

Mr. Yeshwanth Shenoy, Advocate i/b. Nahar Mahala for the Appellant.

Mr. Vishal Kanade, Advocate with Mr. Pranav N. Jain and Mr. Chirag Bhavsar, Advocates i/b. MDP & Partners for the Respondent.

CORAM : Justice J. P. Devadhar, Presiding Officer Dr. C.K.G. Nair, Member

Per : Justice J. P. Devadhar (Oral)

1.

This appeal is filed to challenge the order passed by the

Adjudicating Officer of Securities and Exchange Board of India (SEBI for

short) on 29th November, 2017. By the said order penalty of Rs.6 lacs is

imposed on the appellant under section 15HB of Securities and Exchange 2

Board of India Act, 1956 (SEBI Act for short) for failing to obtain SEBI

Complaint Redressal System ('SCORES') authentication within the

stipulated time inspite of SEBI issuing circulars in that behalf from time to

time.

2. It is not in dispute that SEBI from 3.6.2011 has issued various

circulars and finally by its consolidated circular dated 18th December, 2014

SEBI called upon all the listed companies to obtain SCORES authentication

within the time stipulated therein. However, the appellant failed to apply

for SCORES authentication and in fact applied for SCORES authentication

belatedly on 28.10.2015 and the same was granted to the appellant on 21st

January, 2016.

3. In view of the failure on the part of the appellant to comply with the

SEBI circulars, proceedings were initiated against the appellant and by the

impugned order penalty of Rs.6 lac is imposed on the appellant under

Section 15HB of the SEBI Act. Challenging the aforesaid order the present

appeal is filed.

4. Mr. Yeshwanth Shenoy, learned counsel appearing on behalf of the

appellant submitted that firstly the delay in obtaining SCORES

authentication did not in any way affect the investors because at the

relevant time no investor grievance was pending. Secondly, it is submitted

that in several cases the Adjudicating Officer has imposed penalty of Rs.1

lac whereas in the present case exorbitant penalty of Rs.6 lac is imposed on

the appellant which is wholly unjustified. Thirdly, it is submitted that the

mitigating factors set out in Section 15J of SEBI Act have not been taken 3

into consideration while passing the impugned order. Accordingly, it is

submitted that the impugned order deserves to be quashed and set aside.

5. We see no merit in the above contentions.

6. Fact that no investor grievance were pending at the relevant time

cannot be a ground for the appellant to disobey the circulars issued by SEBI

from time to time. Whether there was any investor complaint or not,

appellant was bound to comply with the circulars issued by SEBI within the

time stipulated therein. In none of the circulars issued by SEBI it was

stated that SCORES authentication has to be obtained only if there is a

pending investor grievance. Therefore, the appellant who is guilty of

disobeying the circulars issued by SEBI from time to time and who has

applied for SCORES authentication after delay of 10 months from the date

of issuing last circular dated December 18, 2014 is not justified in

contending that no penalty could be imposed on the ground that no investor

complaint was pending at the relevant time.

7. Argument of the appellant that lesser penalty has been imposed in

several other cases is without any merit. Quantum of penalty depends upon

facts of each case. Therefore, fact that in some cases lesser penalty has

been imposed cannot be a ground to hold that even in the present case

lesser penalty ought to have been imposed. Therefore, argument of the

appellant that in several cases lesser penalty has been imposed merits no

consideration.

8. Argument of the appellant that various mitigating factors set out in

section 15J of the SEBI Act have not been taken into consideration while 4

imposing penalty against the appellant is also without any merit. Penalty

imposable under Section 15HB of SEBI Act for disobeying the circulars

issued by SEBI is up to Rs.1 crore. However, the AO after taking into

consideration all the mitigating factors has imposed penalty of Rs.6 lac as

against imposable penalty of Rs.1 crore. In such a case, penalty of Rs.6 lac

imposed against the appellant cannot be said to be harsh, excessive and

exorbitant.

9. For all the aforesaid reasons, we see no merit in the appeal and the

same is hereby dismissed with no order as to costs.

10. In view of the disposal of the appeal, the Misc. Application no.5 of

2018 does not survive and the same is also disposed of as infructuous.

Sd/-

Justice J. P. Devadhar Presiding Officer

Sd/-

Dr. C.K.G. Nair Member

5.2.2018 Prepared and compared by RHN