1. 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 15A read with Sec.11 C (3) of Securities and Exchange Board of India Act, 1992 against M/s. S.V.Sales Agency, having its place of business at 1/1 A Vasitart Row, Kolkata � 700 001.

 

2. The aforesaid appointment of me as the Adjudicating Officer was communicated to me vide proceedings dated July 15, 2004.

 

3. Vide summons dated October 16, 2002, M/s. S. V. Sales Agency was directed by the Investigating Authority of SEBI to produce certain documents mentioned in the Annexure to the said summons and also to be present in person. From an unauthenticated photocopy of the said summons furnished to me by SEBI, I noticed that M/s. S. V. Sales Agency received the said summons as the said photocopy bears the stamp of the authorized signatory of M/s. S.V. Sales Agency. In reply, M/s. S.V. Sales Agency, vide letter dated October 23, 2002 requested the Investigating Authority to fix a fresh date to comply with the summons and therefore, the Investigating Authority issued fresh summons on November 22, 2002 directing M/s. S.V. Sales Agency to appear before it on November 29, 2002. From the information provided to me by SEBI, it appears that the said summons was sent by courier to M/s. S.V. Sales Agency.� However, it appears that there was no compliance to the said summons and hence the Investigating Authority issued another summons on February 20, 2003 and the same was served through M/s. N.M. Lohia, Member, The Calcutta Stock Exchange Association Ltd.. However, M/s. S.V. Sales Agency failed to comply with the said summons. �

 

4. In view of the above, I issued a notice dated December 14, 2004 to M/s. S.V. Sales Agency under Rule 4 of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 calling upon it to show cause as to why an inquiry should not be held against it and penalty be not imposed under Sec. 15A of Securities and Exchange Board of India Act, 1992. The said notice dated December 14, 2004 was sent to M/s. S.V. Sales Agency by Registered Post with Acknowledgment Due. However, the said notice was returned undelivered by the postal authorities with an endorsement �not known�. �Hence, I requested the Eastern Regional Office of SEBI at Kolkata to serve the aforesaid notice dated December 14, 2004 by way of affixture as provided under Rule 7 ( c) of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995. Accordingly, service by way of affixture was carried out by Shri B.N. Sahoo, Assistant General Manager, SBEI, Kolkata on February 8, 2005 and report dated February 11, 2005 was forwarded to me. Since there was no reply to the said notice by M/s. S.V. Sales Agency, I was of the opinion that an inquiry should be held in the matter and accordingly a notice of inquiry dated March 2, 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 M/s. S.V. Sales Agency fixing March 18, 2005 (at 2:30 PM) as the date of inquiry. M/s. S.V. Sales Agency was advised to appear for the inquiry at the Eastern Regional Office of SEBI at Kolkata before me. The said notice was served by way of affixture by Shri B.N. Sahoo, Assistant General Manager, SEBI as provided under Rule 7(c) of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995 and report dated March 8, 2005 was forwarded to the said officer.

 

5. However, on March 18, 2005 neither any representative/ lawyer of M/s. S.V. Sales Agency appeared before me nor any reply was received by me from M/s. S.V. Sales Agency. In these circumstances, I was left with no option but to proceed with the inquiry against M/s. S.V. Sales Agency as I was of the opinion that M/s. S. V. Sales Agency was willfully neglecting to appear before me or to reply to the show cause notice.

 

6. Sec. 11 C 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 it. Vide the aforesaid summons, the Investigating Authority directed M/s. S.V. Sales Agency to produce all the documents relating to its investments in Globe Stocks & Securities Ltd. 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 Rs. One lakh for each day during such failure continues or Rs. one crore, whichever is less. The charge of SEBI leveled against M/s. S.V. Sales Agency was that it failed to comply with various summons issued by the Investigating Authority as mentioned above. In the instant case, I gave sufficient opportunity to M/s. S.V. Sales Agency to defend the aforesaid charges of non furnishing of information directed to be produced by the Investigating Authority. However, M/s. S.V. Sales Agency neither issued any reply to the notice issued by me nor appeared before me for inquiry/ personal hearing. In these circumstances, I assume that M/s. S.V. Sales Agency has no grounds to defend the charges leveled against it by SEBI. Therefore, I conclude that the charges of non furnishing the documents to SEBI in response to summons issued by Investigating Authority are established with respect to M/s. S.V. Sales Agency.�

 

7. �Since the failure of producing the documents before the Investigating Authority of SEBI by M/s. S.V. Sales Agency is established, the quantum of penalty has to be decided by me.

 

8. �As I mentioned above, 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.

 

9. 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.

 

10. As regards the disproportionate gain or unfair advantage there are no quantifiable figures available on record with respect to the default of M/s. S.V. Sales Agency. 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 violation committed by M/s. S.V. Sales Agency was repetitive in nature as it failed to furnish the required information to the Investigating Authority of SEBI, even though summons were issued to it on three occasions.

 

�ORDER

 

11. Therefore in exercise of the powers conferred under section 15-1(2) read with Sec. 11C (3), 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. 30,000/- (Rupees Thirty thousand only) on M/s. S.V. Sales Agency. M/s. S.V. Sales Agency shall pay the said amount of penalty 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 Jayanta Jash, Deputy General Manager, Securities and Exchange Board of India, Eastern Regional Office, 3^rd Floor, L&T Chambers, 16 Camac Street, Kolkata � 700 017. .
    
    
12. 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 M/s. S.V. Sales Agency and also to Securities and Exchange Board of India.��

 

Date:�� March 31, 2005�� ����� ��������� ������� A. Chandra Sekhar Rao

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