S.S. Forgings & Engineering Ltd vs Sebi

S.S. Forgings & Engineering Ltd. 1011, Embassy Centre, 207, Nariman Point, Mumbai - 21. ...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

Mr. Devendra Udani, Advocate for the Appellant.

Mr. Kumar Desai, Advocate with Mr. Tomu Francis, Advocate for the Appellant.

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

Per : Jog Singh (Oral)

1.

The appellant has preferred the present appeal against the impugned

order dated September 30, 2013 passed by the Ld. Adjudicating Officer (AO)

of Securities and Exchange Board of India (SEBI) by which a consolidated

penalty of Rs. 7 lac has been imposed on the appellant in terms of provisions

of Sections 15A(a) and 15C of the Securities and Exchange Board of India

Act, 1992 (SEBI Act). A penalty of Rs. 5 lac has been imposed on the

Appellant for failure to redress investors' grievances and additional penalty of

Rs. 2 lac has been imposed for failure to submit an Action Taken Report

(ATR) as required by the SEBI after redressal of the two grievances in

question.

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

the pleadings. Undoubtedly, an obligation is cast upon every listed company to

redress investors' grievances in a time bound manner as may be prescribed by

SEBI from time to time. Section 15C of the SEBI Act provides that if any

listed company or any person who is registered as an intermediary, fails to

redress the grievances of investors within the time which may be prescribed by

SEBI in a given case, a penalty of Rs. 1 lac is imposable for every day till such

failure continues or Rs. 1 crore, whichever is less. Similar penalty is prescribed

by Section 15A(a) imposable on a person if it fails to furnish any document,

return or report to the SEBI within the prescribed time limit.

3. In the present case SEBI has called upon the Appellant to redress

grievances of two investors as reflected in the SCORES which is a centralized

web-based Complaints Redressal System by letter dated January 22, 2013

within 7 days. Again reminders were sent on February 15, 2013 and March 8,

2013 to the appellant and it failed to redress the grievances of investors' in

question.

4. Accordingly, SEBI appointed Ld. AO as per rules and issued Show

Cause Notice (SCN) dated July 31, 2013 and after finding reply submitted by

the appellant dated September 4, 2013 to be unsatisfactory, the Ld. AO

imposed monetary penalty of Rs. 5 lac under Section 15C and Rs. 2 lac under

Section 15A(a) of SEBI Act respectively.

5. This Tribunal has consistently held that redressal of investors'

grievances is extremely important for the Regulator to regulate the capital

market. If the grievances are not redressed within a time bound framework, it

leads to frustration among the investors' who may not be motivated to further 3

invest in the capital market. Hence the importance of complaints redressal

system initiated by SEBI in June, 2011 cannot be undermined and its sanctity

has to be maintained by all the listed companies.

6. In the case in hand, however, the appellant has not redressed the

grievances of only two investors for a long period upto two years or so. We,

therefore, do not find any legal infirmity in the impugned order dated

September 30, 2013 as such. However, it is admitted position that the appellant

has undertaken action towards redressal of two investors' grievances after the

SCN dated July 31, 2013 and during the pendency of present appeal both the

grievances have been redressed and Action Taken Report (ATR) has been

furnished by the Appellant to the satisfaction of the SEBI.

7. Therefore, in view of the peculiar facts and circumstances of the present

case, we are inclined to reduce the consolidated penalty to Rs. 2 lac under

Section 15C and 15A(a) of the SEBI Act to be paid by the appellant within two

months from the date of receipt of copy of this order, failing which the original

penalty imposed against the Appellant shall revive.

8. With the above said modification of the impugned order, the appeal is

partly allowed with no order as to costs.

Sd/-

Justice J.P. Devadhar Presiding Officer

Sd/-

Jog Singh Member

Sd/-

A.S. Lamba Member 28.08.2014 Prepared and compared by:

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