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Securities and Exchange Board of India (hereinafter referred to as "SEBI") came out
with a Circular dated June 03, 2011 dealing with the processing of investor complaints
against listed companies through SEBI Complaints Redress System (hereinafter
referred to as "SCORES"). In terms of said Circular, all listed companies were inter alia
required to view the complaints pending against them, redress them and submit Action
Taken Reports (hereinafter referred to as "ATRs") electronically in SCORES. As the
SCORES is online electronic system, therefore, for the purposes of accessing the
complaints of the investors against them, as uploaded in the SCORES, listed companies
were required to login to SCORES system electronically through a company specific
user id and password, to be provided by SEBI. For the purpose of generating said user
id and password, listed companies which were yet to obtain SCORES user id and
password, were required to submit the details for authentication to SEBI, in the format
annexed to the said Circular. However, it was observed that M/s Krisons Electronic
Systems Ltd (hereinafter referred to as "Noticee/the Company") did not submit the
details to SEBI which were required to be furnished in terms of the said Circular.
2.
As observed from the contents of the Circular, SCORES introduced electronic dealing of
the complaints of the investors, by the respective companies. Thus, once a complaint
against a company was uploaded by SEBI in the SCORES, it amounted to calling upon
by SEBI to such company to redress the investor grievance. Accordingly, it was
incumbent upon such company to redress the investor complaint. It was observed that
one (01) investor complaint was pending against the Noticee as on July 20, 2012.
3.
It was alleged that by not submitting the details for authentication as required by the
Circular Noticee did not obtain the user id and password which was essential for
accessing the complaints pertaining to it, as uploaded on the SCORES for redressing the
investors grievances and subsequent redressal thereof, within specified time. Thus, it
was alleged that Noticee had failed to redress the investor grievances which renders
the Noticee liable for imposition of penalty under Section 15C of the Securities and
Exchange Board of India Act, 1992 (hereinafter referred to as 'SEBI Act').
APPOINTMENT OF ADJUDICATING OFFICER
4.
Shri Ram Mohan Rao was appointed as the Adjudicating Officer vide order dated August
22, 2012 under section 15-I of SEBI Act and Rule 3 of SEBI (Procedure for Holding
Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter
referred to as Adjudication Rules) to inquire and adjudge under Section 15C of the
SEBI Act, 1992, the alleged violations committed by the Noticee. Subsequent to the
transfer of Shri Ram Mohan Rao, the undersigned was appointed as Adjudicating Officer
vide order dated June 25, 2013.
SHOW CAUSE NOTICE, REPLY AND HEARING
5.
A Show Cause Notice (herein after referred to as SCN) was issued to the Noticee in
terms of the provisions of Rule 4(1) of SEBI (Procedure for Holding Inquiry and
Imposing Penalties by Adjudicating Officer) Rules, 1995 to show cause as to why an
inquiry be not held against it in terms of rule 4 of the Rules read with section 15I of
SEBI Act, 1992 and penalty be not imposed under section 15C of SEBI Act, 1992 for the
violations alleged to have been committed by the Noticee.
6.
find
from
the
records
that
the
aforesaid
SCN
bearing
No.
SEBI-
NRO/AO/VKV/DL/243/2016 dated February 02, 2016 was sent at the address "3/14A
1st Floor Vijay Nagar, Double Storey, Delhi- 110009. The said SCN was duly served
through the Department of Post.
7.
Vide letter dated February 15, 2016 the Noticee had submitted its reply in the matter,
which inter alia stated as under:
8.
and was duly uploaded on our SCORES ID. When no reply was received from the
Complainant and as per instructions of SEBI we sent a reminder to the complainant vide
our letter dated 21/09/2015 (marked as Annexure 5). This was duly uploaded as ATR
in our SCORES ID.
As per our RTAs record the share certificate no 20000 were received for transfer on
01/10/2015 and were transferred on 10/10/2015 in favor of the Complainant (Folio
no. 5314) and sent to the complainant vide their letter dated 14/10/2015 (marked as
Annexure 6) and same was duly uploaded on our SCORES ID and the case was disposed
off on 29/10/2015 by OIAE-NRO-DO.
Further we would also like to submit that our company had only 1 (one) compliant
against us, which was not redress within prescribed time. We would also like to
emphasize on the fact that the delay was due to technical error and we doesnt had any
malafide intention to delay the transfer process or redressal of complaint. Also our
company always gives preference to its Investor and redresses their complaints (if any)
at priority basis. We sincerely apologize for the same and assure your good office
regarding non-repentance of the same.
On the basis of above we humbly request you that not to initiate any inquiry against the
company in terms of Rule 4 of the SEBI (Procedure for holding inquiry and imposing
penalties by Adjudicating Officer) Rules, 1995 and not to impose any penalty on us under
section 15C of the SEBI Act
In the interest of natural justice and in order to conduct an inquiry in terms of rule 4(3)
of the Adjudication Rules, the undersigned issued a notice of hearing vide hearing
notice no. SEBI-NRO/OW/AO/VKV/DL/HN/303/201 dated February 15, 2016 to the
Noticee. A copy of the aforesaid SCN along with its annexures was also enclosed along
with the hearing notice to attend the hearing in the matter on July 24, 2016 at SEBI
Northern Regional Office, New Delhi. The hearing notice was duly served through
Department of post.
PERSONAL HEARING
9.
On the scheduled date of personal hearing, Mr. R.S Bhatia, Company Secretary appeared
as Authorised Representative (AR). During the hearing, the AR made the following
submissions, which inter alia, stated as under:
The AR reiterated the submissions made vide letter dated February 15, 2016
10. Further, vide letter dated February 26, 2016 the Noticee had submitted its reply in the
matter, which inter alia stated as under:
The Complaint was received by SEBI on 16/10/2012, no action could have been
taken for redressal of the same as No SCORES Login ID was created at that time.
Further when the ID was created and Clarification was sought from the Subordinate
Organization on 05/06/2013, the company filed the respective action taken report for
the same on 26/07/2013 notifying the complainant that no dividend was declared by
the company and accordingly the case was disposed off on 29/07/2013.
Further we would also like to submit that our company was unable to redress the
complaint within prescribed time as initially no scores id was created. When the id
was created the complaint was redressed within the prescribed time. We would also
like to emphasize on the fact that the delay was due to technical error and we had no
malafide intention in delaying the redressal of complaint. Also our company always
gives preference to its Investor and redresses their complaints (if any) at priority basis.
We sincerely apologize for the same and assure your good office regarding nonrepentance of the same.
After perusal of the material available on record, I have the following issues for
consideration, viz.,
a) Whether the Noticee has failed to resolve investor grievances?
b) Whether the Noticee is liable for monetary penalty under Section 15C of the
SEBI Act, 1992?
c) What quantum of monetary penalty should be imposed on the Noticee taking
into consideration the factors mentioned in Section 15J of the SEBI Act, 1992?
FINDINGS
12.
On perusal of the material available on record and giving regard to the facts and
circumstances of the case, I record my findings hereunder.
14.
Since, the Noticee had obtained SCORES authentication and had taken necessary steps
of resolving the pending investor grievance(s); I hold that the allegation of not
resolving investor grievances, as alleged in the SCN, does not stand established.
ISSUE 2: Whether the Noticee is liable for monetary penalty under Section 15C
of the SEBI Act, 1992?
15.
The provisions of Section 15C of the SEBI Act, 1992, read as under:
15C Penalty for failure to redress investors' grievances: If any listed company or
any person who is registered as an intermediary, after having been called upon by the
Board in writing, to redress the grievances of investors, fails to redress such grievances
within the time specified by the Board, such company or intermediary shall be liable to a
penalty of one lakh rupees for each day during which such failure continues or one crore
rupees, whichever is less.
16.
Since the allegation against the Noticee of not resolving the investor grievance pending
against it has not been established; therefore, the Noticee is not liable for monetary
penalty under Section 15C of the SEBI Act, 1992.
ISSUE 3: What quantum of monetary penalty should be imposed on the Noticee
taking into consideration the factors mentioned in Section 15J of the SEBI Act,
1992?
17.
Since, the Noticee is not liable for monetary penalty in the instant matter, this issue
deserves no consideration.
18.
19.
In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding Inquiry and
Imposing Penalties by Adjudicating Officer) Rules 1995, copies of this order are being
sent to M/s Moonbeam Industries Ltd (Formerly known as MBI Intercorp Ltd) and also
to Securities and Exchange Board of India.
Adjudicating Officer