ADJ/UN/7/2003-04
ORDER OF ADJUDICATION PROCEEDINGS UNDER SEBI (PROCEDURE FOR HOLDING ENQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES, 1995 AGAINST DSQ HOLDINGS LIMITED IN THE MATTER OF INVESTIGATIONS IN THE CASE OF DSQ SOFTWARE LTD. AND DSQ INDUSTRIES 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 DSQ Holdings Ltd.
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. and DSQ Industries Ltd. by DSQ Holdings Ltd.:
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Letter No./ Date of summons/ letters
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Letter/summons for personal appearance/production of documents
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DSQ Industries Ltd.
IES/ID@/RKK/SP/42053/2001 dated December 14, 2001 along with summons
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Production of documents by December 18, 2001
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IES/ID2/RKK/SP/DSQ/1061/2002 dated Jan. 17, 2002 with summons
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Production of documents by Jan. 24, 2002
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IES/ID2/RKK/SP/DSQ/4130/2002 dated March 11, 2002 with summons
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Production of documents by March 19, 2002
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DSQ Software Ltd.
IES/ID2/RKK/SP/DSQ/5205/2002 dated March 26, 2002 with summons
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For personal appearance on April 17, 2002 at 11.00 A.M.
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Summons dated June 18, 2002
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For personal appearance on July 01, 2002 at 11.00 A.M.
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Show cause notice dated June 03, 2003 under adjudication proceedings issued by Shri Ananta Barua at the address as appearing on the summons viz. 407/408, G R Complex, Mount Road, Nandanam, Chennai – 600 035 was sent by hand delivery through the Southern Regional Office of SEBI. This was acknowledged vide DSQ Holdings Ltd. letter dated June 20, 2003 expressing their inability to respond to the show cause notice immediately as their Director Shri Dinesh Dalmia is out of the country on a business tour and seeking four weeks additional time to reply to the said show cause notice.
Upon non receipt of reply even after elapse of substantial time, a letter no. ADJ/UN/22095/2003 dated November 24 , 2003 was sent advising them to expedite their reply and also giving them an opportunity of personally presenting their case on December 2, 2003. Since they failed to turn up on the appointed date, a further opportunity was granted to them to appear on December 15, 2003 vide letter No. ADJ/UN/7/22764 dated December 3, 2003. In the meantime a letter dated December 2, 2003 was received from them on December 4, 2003 seeking alternate date stating that their director was not well. Subsequently, one more opportunity was granted 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
DSQ Industries Ltd.
The two summons dated December 14, 2001 and January 17, 2002 were acknowledged by DSQ Holdings Ltd. vide their letter dated January 28, 2002 giving details of the movement of shares from their demat account and shares received as loan, etc. Apparently the information provided was not complete prompting SEBI to send letter No. IES/ID2/RKK/SP/DSQ/4130/2002 dated March 11, 2002 with summons, detailing deficiency in the information furnished and advising them to furnish complete information. No further information forthcame from them.
DSQ Software Ltd.
Apparently there was no response to both the summons dated March 26 and June 18, 2002 requiring personal appearance.
Conclusion
It is noted that DSQ Holdings Ltd. has given only partial information and when further information/ personal appearance was sought to clarify the position, they failed to respond/ appear. 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 and from their failure to appear before the adjudicating officer each time with a different excuse and refusing to accept the letter sent by speed post etc., it is apparent that DSQ Holdings Ltd. has deliberately chosen to avoid 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.10 lacs (Rupees Ten 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/-).