ADJ/UN/3/2003-04
ORDER OF ADJUDICATION PROCEEDINGS UNDER SEBI (PROCEDURE FOR HOLDING ENQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES, 1995 AGAINST DINESH DALMIA TECHNOLOGY TRUST IN THE MATTER OF INVESTIGATIONS IN THE CASE OF DSQ SOFTWARE LTD.
Under Rule 3 of SEBI (Procedure for Holding Enquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995, Chairman, SEBI, vide his Order dated April 2, 2003 read with Order dated July 24, 2003, appointed the undersigned as Adjudicating Officer in place of Shri Ananta Barua to enquire into and adjudge alleged violation of Section 15 A of the SEBI Act, 1992 by Dinesh Dalmia Technology Trust.
The proceedings were initiated for alleged violation of failure to comply with following letters/summons issued by SEBI for personal appearance/ production of documents/ submission of information relating to the dealings in the shares of DSQ Software Ltd. by Dinesh Dalmia Technology Trust:
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Letter No./ Date of summons/ letters
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Addressed at
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Letter/summons for personal appearance/production of documents
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Summons dated June 18, 2002
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407/408, GR Complex, Mount Road, Nandanam, Chennai – 600 035.
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For personal appearance on June 26, 2002
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IES/ID/RKK/SP/DSQ/ 12263 dated July 3, 02 along with summons
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Same as above
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For personal appearance on July 9, 2002
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IES/ID2/RKK/SP/DSQ/13456/2002 dated July 18, 2002 with summons
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Same as above
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For personal appearance on July 25, 2002
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Show cause notice under adjudication proceedings were issued at the address as appearing on the summons and was hand delivered through the Southern Regional Office of SEBI against their acknowledgement. However, there was no reply. Thereafter, reminder letter no. ADJ/UN/22440/2003 dated November 28, 2003 was sent advising them to expedite their reply and also giving them an opportunity of personally presenting their case on December 8, 2003. Although this letter was duly received by them, they failed to turn up on the appointed date, A further opportunity was granted to them to appear on November 24, 2004 which letter was sent both by speed post and courier. While the letter sent by courier was accepted by them on November 12, 2004, the speed post was returned undelivered with the reason “Refused – 18.11.2004”.
Appreciation of evidence and findings
Summons dated June 18, 2002
No proof of dispatch or delivery is available on record in respect of this summons.
Summons dated July 3, 2002
From the records made available, it is noted that the summons has been acknowledged vide their letter dated July 8, 2002 stating that on the basis of legal advice obtained, the noticee will not fall within the purview of S.11 (2) (i) of the Act as he is not a person associated with securities market and therefore no enquiry or investigation can be conducted in respect of the noticee and requesting to drop the investigation which is without jurisdiction or statutory authority.
Since the summons was acknowledged and a reply given with a request to drop the proceedings, it would be difficult to hold that they have not responded to the summons.
Summons dated July 18, 2002
This summons was issued along with a letter drawing his attention to the judgment of Gujarat High Court in the matter of Karnavati Fincap Ltd. in which SEBI’s power to call for information / documents from a person who is having the relevant information / documents was upheld and advising appearance in person before the investigating authority on July 25, 2002 but apparently they failed to turn up.
Conclusion
It is noted that Dinesh Dalmia Technology Trust did not appear in response to the summons on frivolous grounds. Apparently the information sought was in respect of their dealings in their group company shares and they should have come forward and co-operated with the investigating authority.
In considering levy of penalty for non-compliance to summons, an important aspect to be borne in mind is whether the non-compliance was willful or otherwise. From the facts and peculiar circumstances of the case, from their failure to appear before the adjudicating officer even though the letters were duly received at their end and from their refusing to accept the letter sent by speed post etc., it is apparent that Dinesh Dalmia Technology Trust has deliberately chosen to ignore the summons. They failed to avail the opportunities given to them by the adjudicating officer to clarify their position/ adduce evidence if any.
In view of the above and considering the facts and circumstances of the case, a penalty of Rs.5 lacs (Rupees five lacs only) is levied under Section 15 A (a) of SEBI Act, 1992 after considering the factors enumerated under Section 15J of the SEBI Act, 1992.
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Bombay
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Usha Narayanan
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3rd December, 2004
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Adjudicating Officer
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NOTE: This order could not be served upon the delinquent by personal delivery to him or to his agent or by registered post at his last known address, and therefore, the delinquent, if he so desires, may procure a certified copy of the order from Investigation Department, SEBI on payment of charges as may be applicable (which is currently Rs.5/- per page subject to a minimum of Rs.50/-).