Spicebulls Investments Ltd. vs Sebi

Date : 24.08.2015

Appeal No. 313 of 2015

Spicebulls Investments Ltd. 60-D, Street No. C-5, Sainik Farms, New Delhi - 110 062. ...... 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. Ashok Chhabra, Advocate with Mr. Jai Pachpute, Advocate for the Appellant. Mr. Kumar Desai, Advocate with Mr. Tomu Francis, Advocate for the Respondent.

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

Per : Jog Singh (Oral)

1.

The appellant has impugned the order dated March 16, 2015 passed by

the learned Adjudicating Officer imposing penalty of ` 1 lac under Section

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

Act, 1992) for not seeking authentication under the SEBI Complaints Redress

System (for short 'SCORES') on time and not redressing the investors'

grievances as per the norms laid down by SEBI.

2. Facts of the case are that the appellant is a registered public limited

company under the provisions of Companies Act, 1956 in the name of

Progressive Automobiles Ltd. Its name was later on changed as Twenty First 2

Century Capitals Ltd. and is presently known as Spicebulls Investments Ltd.

The Company has limited business operations with four employees and less

than 50 shareholders. Its shares are listed on Delhi Stock Exchange and Uttar

Pradesh Stock Exchange which are stated to be non-operational since last

about one decade.

3. Allegations against the appellant is that it did not seek timely

authentication under the SCORES and also did not redress grievance of one

investor. Coupled with this is the allegation of non-submission of timely

action taken report (ATR) in respect of redressal of the investor's grievance in

question.

4. Shri Ashok Chhabra, and Mr. Jai Pachpute, learned counsel for the

appellant submit that the appellant sought authentication under SCORES on

time and as per the time frame provided by SEBI in its circular dated April 17,

2013. It is also submitted by Shri Ashok Chhabra that the complainant Mr.

Janak Modi was never a shareholder or a member of the appellant company

and this fact was duly informed to SEBI which agreed with the appellant in

this regard and closed the matter in October 2013 itself.

5. After hearing the learned counsel for the parties and perusing the

pleadings, we note that SEBI by circular dated June 3, 2011 bearing ref. no.

CIR/OIAE/2/2011 informed all the listed companies and all the recognized

Stock Exchanges that it had commenced processing of investor's complaints in

a centralized web based complaints redress system (SCORES) and advised

them to comply with the said circular.

6. Next, in continuation of circular dated June 3, 2011, SEBI issued

another circular on August 13, 2012 advising listed companies to obtain the 3

SCORES registration, resolve the pending investor grievances on SCORES

within 30 days of receipt of the compliant. The relevant part of the said

circular is mentioned hereinbelow :-

"All companies against whom complaints are pending on SCORES, shall take appropriate necessary steps within 7 days of receipt of the complaint by the concerned company through SCORES, so as to resolve the complaint within 30 days of receipt of complaint and also keep the complainant duly informed of the action taken thereon."

7. Finally, on April 17, 2013 SEBI issued third circular and called upon all

the companies to invariably get the authentication under SCORES and User

ID, Password within 30 days of that circular. It is a matter of record that the

appellant applied for authentication of SCORES on May 15, 2013 and also

supplied all the registration papers alongwith hard copies thereof on May 16,

2013. The appellant's request for authentication was promptly accepted by

SEBI by granting User ID and Password and the appellant started availing

access to SCORES immediately thereafter with effect from May 23, 2013.

Therefore, in our considered view, the appellant cannot be held guilty of not

seeking authentication under SCORES as mandated by SEBI's circular dated

April 17, 2013 within 30 days prescribed therein. This charge, therefore, fails

and has to be answered in the favour of the appellant.

8. Turning to the second issue, we note that action history annexed by the

appellant at page no. 38 of the memo of appeal clearly reveals that SEBI had

accepted the plea that said complainant Mr. Janak Modi was not at all

connected with the affairs of the appellant company as he was neither a

shareholder nor a member of the appellant company at the relevant time or at

any point of time thereafter. This factum is not disputed by the Respondent.

Therefore, non redressal of the any alleged grievance of such a person would 4

not amount to violation of any law because the complainant had no locus to

raise grievance before the appellant company of which he was never a

shareholder or a member.

9. In the facts and circumstances of the case, the appeal, therefore,

succeeds and the impugned order seeking to impose a penalty of ` 1 lac under

Section 15C of the SEBI Act, 1992 is, hereby, quashed and set aside with no

order as to costs.

Sd/-

Justice J. P. Devadhar Presiding Officer

Sd/-

Jog Singh Member

24.08.2015 Prepared & Compared by PTM