1. Vide order dated December 28, 2004, issued by Securities and Exchange Board of India (hereinafter referred to as �SEBI�), I was appointed as the Adjudicating Officer under Rule 3 of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 to enquire into and to adjudge under Sec.15-I of Securities and Exchange Board of India Act, 1992 for the alleged violation of Sec. 11C of Securities and Exchange Board of India Act, 1992 against �Amluckie Investment Co. Ltd., having its address at 10, Princep Street, 2^nd Floor, Kolkata � 700 072., For the sake of convenience, the said Amluckie Investment Co. Ltd., will be referred hereinafter in this order as �the noticee�. Originally, Shri K.R.C.V. Seshachalam, Deputy Legal Adviser, SEBI was appointed as the Adjudicating Officer in the matter and vide the aforesaid order dated December 28, 2004, the case was transferred to me.

 

2.      As per the information provided to me by SEBI, SEBI conducted investigation in to the alleged price manipulation in the shares of Universal Media Network Ltd. During the course of the said investigation, summons dated May 07, 2004 was issued by Shri R. Ravichandran, Investigating Authority of SEBI in the matter, directing the noticee to furnish the information and produce certain documents mentioned in the Annexure to the said summons by June 11, 2004. and the said summons was served through the Eastern Regional Office of SEBI at Kolkata. �The noticee vide its letter dated June 11, 2004 sought extension of time by twenty days for submission of reply.� However, there was no reply from the noticee after the requesting for extension of time.�

 

3.     Subsequently, the investigating authority issued a fresh summons on July 6, 2004 directing the noticee to furnish the information and produce certain documents mentioned in the Annexure to the said summons by July 19, 2004. The said summons dated July 06, 2004 was also served through the Eastern Regional Office of SEBI at Kolkata and the same was received by the noticee. However, as per the information furnished to me by SEBI, there was no compliance of the said summons by the noticee.

 

4.     I issued notice dated May 06, 2005 to the noticee under Rule 4(1) of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 calling upon the noticee to show cause as to why an inquiry should not be held against it and penalty be not imposed under Sec. 15A(a) of Securities and Exchange Board of India Act, 1992 for its failure to produce the documents and furnish the information as demanded by the Investigating Authority vide the aforesaid summons. In reply, the noticee vide its letter dated June 1, 2005 submitted reply to the show cause notice in which it was �submitted that it complied with the first summons dated May 07, 2004 vide its letter dated June 11, 2004 and also complied with the second summons dated July 06, 2004 by submitting the desired information under cover of its letter dated July 20, 2004 which was sent by post to the investigating authority.� The noticee also forwarded a copy of the letter dated July 20, 2004 addressed to �the investigating authority vide which, as per the noticee the required information was furnished to the Investigating Authority.

 

5.      On perusal of �the reply received from the noticee, I was of the opinion that an inquiry should be held in the matter and accordingly, a notice of inquiry dated June 9, 2005 in terms of Rule 4(3) of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995 was issued to the noticee.� Vide the said notice, the noticee was advised that �June 21, 2005 was fixed as the date of inquiry and �the noticee or its authorized representative/ lawyer may appear for the inquiry at my office at Mumbai on the above date for inquiry/ personal hearing.

�

6.      On June 21, 2004, Shri Vijay Kumar Chandak, a chartered accountant appeared before me as the authorised representative of the noticee and filed a letter of authority issued by the noticee authorizing him to appear before me for the purpose of adjudication. The following is the summary of details of the proceedings and the submissions made by authorised representative at the time of inquiry/ personal hearing: At the commencement of the proceedings I explained the aforesaid authorised representative of the offence, i.e. non furnishing of information/ documents in compliance �with the summonses dated May 07, 2004 and July 06, 0205 issued by the Investigating Authority. The authorised representative was also explained of the penalty prescribed under Sec. 15A (a) of Securities and Exchange Board of India Act, 1992. The authorized representative reiterated the submissions of the noticee made vide the written replies filed by them in response to the show cause notices issued by the Adjudicating Officer. The authorised representative further submitted that the noticee was willing to extend all cooperation as and when required� by SEBI. On being specifically asked by me as to whether the noticee would be filing any further documents in support of its contentions made in the reply to the show cause notice, the authorised representative replied in negative.

 

7.      Before deciding the issues which required to be examined by me, the provisions of Securities and Exchange Board of India Act, 1992 with respect to the issuance of summons by the investigating authorities and the consequences of non- compliance are perused by me. Sec. 11C of Securities and Exchange Board of India Act, 1992, interalia provides that the Investigating Authority may require any intermediary or any person associated with securities market in any manner to furnish such information to or produce such books, or registers, or other documents, or record before him or any persons authorized by him. Sec. 15A (a) of Securities and Exchange Board of India Act, 1992 provides for imposition of monetary penalty by the Adjudicating Officer in case of any person, who is required under Securities and Exchange Board of India Act, 1992 or any rules or regulations made thereunder to furnish any document, return or report, fails to furnish the same, he shall be liable to a penalty of Rupees One lakh for each day during such failure continues or Rupees one crore, whichever is less.

 

8.      It was alleged by SEBI that the noticee failed to comply with the summonses dated May 7, 0204 and July 6, 2004 issued by the Investigating Authority as mentioned above.

 

9.     The noticee did not dispute the fact that the investigating authority of SEBI issued the summonses. However, the noticee in its reply to the show cause notice submitted that all the documents as directed by the investigating authority were submitted by it through its letters dated June 11, 2004 and July 20, 2004.� The noticee also submitted in its reply to the show cause notice that the desired information / documents were submitted by them were sent by post to the investigating authority.� However, the noticee did not furnish any documentary evidence which proves that the aforesaid letters were sent to the Investigating Authority and were received by �him. �In the absence of any documentary evidence in support of its claims, I am not inclined to accept the submissions of the noticee that it promptly complied with the summons issued by the Investigating Authority. A copy of the letter dated June 11, 2004 vide which the noticee claimed that it submitted the required information/ documents to the Investigating Authority in reply to the summons dated May 7, 2004 is available on records and from which I noticed that the said letter dated June 11, 2004 was only a request to extend the date of submission of documents for a period of twenty days and no information/ documents as required by the Investigating Authority were submitted vide the said letter. �It is also noticed that vide the second summons issued by the Investigating Authority on July 6, 2004 the same information/ documents which was directed to be produced vide the first summons dated May 7, 2004. From this �it is clear that only because of the first summons dated May 7, 2004 was not complied with by the noticee, the Investigating Authority had to issue fresh summons and therefore the question of complying with both the summons does not arise.�

 

10. �From the above, it may� be seen that the �noticee did not submit any information/ document to the investigating authority in spite of issuing two summons viz., summons dated May 07, 2004 and July 06, 0204 and its claims that it complied with both the summons are not substantiated with any documentary evidence. Therefore, I conclude that the failure of the noticee in furnishing the documents/ information in compliance with the summons dated May 7, 2004 and July 6, 2004 issued by the Investigating Authority is established.

 

11. Since the failure of producing the documents before the Investigating Authority of SEBI by the noticee is established, the quantum of penalty has to be decided by me.

 

12. �Section 15A (a) of Securities and Exchange Board of India Act, 1992 prescribes a penalty of Rs. one lakh for each day during which the failure to furnish any documents etc. to SEBI continues or Rs. one crore whichever is less.

 

13. ��To determine the quantum of penalty under Section 15A (a), I�� considered the following factors as provided in the section 15J of Securities and Exchange Board of India Act, 1992 viz.(a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default ; (b) the amount of loss caused to an investor or group of investors as a result of the default and; (c) the repetitive nature of the default.

 

14. �As regards the disproportionate gain or unfair advantage there are no quantifiable figures available on record with respect to the default of the noticee. There are also no figures or data on record to quantify the amount of loss caused to an investor or group of investors as a result of the default. However, the failure of the noticee in furnishing the documents/ records to the investigating authority causes hindrance to the investigation of SEBI. Had the noticee furnished the required information, the Investigating Authority might be in a better position to unearth the manipulations committed by various persons with respect to the trading in the scrip of Universal Media Network Ltd.

 

15. �The violation committed by the noticee was repetitive in nature as they failed to furnish the required information to the Investigating Authority of SEBI, even though summonses were issued to it on two occasions.

 

16. �While determining the quantum of penalty, I have also taken into consideration various recent decisions of the Hon�ble Securities Appellate Tribunal. The undertaking of the noticee that it would extend cooperation to SEBI as and when demanded must also be taken into consideration, in my view should be seen from a positive angle and should be a mitigating factor in determining the quantum of penalty.

 

17. �In the matter of Mayfair Paper & Board Pvt. Ltd. v. SEBI (Appeal No.95 of 2004) the penalty of Rs.75,00,000 imposed by the Adjudicating Officer in a case facts of which are similar to the instant case was reduced to Rs.15,000 by the Hon�ble Securities Appellate Tribunal. In the said matter, the Hon�ble Securities Appellate Tribunal also observed that the provision for enhanced penalties in the year 2002 does not mean that SEBI should impose sky high penalties. I have also referred to various recent decisions of the Hon�ble Securities Appellate Tribunal with respect to the penalties imposed by adjudicating officers in cases similar to the instant one. �

ORDER

18. �Therefore in exercise of the powers conferred under section 15-1(2) read with Sec. 11C, Sec. 15 A(a) of the Securities and Exchange Board of India Act, 1992 and Rule 5 of the Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995, I hereby impose a penalty of Rs. 20,000/- (Rupees Twenty thousand only) on Amluckie Investment Company Ltd. In my view, the above penalty commensurates with the default of the noticee, in the facts and circumstances of the case.

 

19. �The noticee shall pay the amount of penalty imposed with respect to each of them by way of demand draft in favour of �SEBI- Penalties Remittable to Government of India�, payable at Mumbai within 45 days of receipt of this order. The said demand draft should be forwarded to Shri R. Mohan, General Manager, Securities and Exchange Board of India, Mittal Court, �B� Wing, 1^st Floor, 224, Nariman Point, Mumbai � 400 021.

 

20. �In terms of Rule 6 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995, copies of this order are sent to the noticee and also to Securities and Exchange Board of India.��

 

 

Date:�� June 30, 2005������ ��������� ������������������ A. Chandra Sekhar Rao

Place: Mumbai��������������������������������������������� Adjudicating Officer