Order against Topsun Vintra (P) Ltd

1. Vide order dated July 8, 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 the alleged violation of Sec. 11C of Securities and Exchange Board of India Act, 1992 against Topsun Vintra (P) Ltd. a company having its address at 210, Old China Bazar Street, Kolkata – 700 001. For the sake of convenience, Topsun Vintra (P) Ltd. will be referred hereinafter in this order as ‘the noticee’. The aforesaid appointment of Adjudicating Officer was communicated to me vide proceedings dated July 15, 2004. 
   
    
2. As per the information provided to me by SEBI, SEBI conducted investigation in to the alleged price manipulation in the shares of Patriot Trading Company Ltd. During the course the said investigation, summons dated October 22, 2003, was issued by Shri Jayanta Jash, Investigating Authority of SEBI in the matter, directing, interalia the noticee to furnish the information and produce certain documents mentioned in the annexure to the said summons by November 4, 2003. As per the information furnished to me and based on the unattested photocopies of documents made available to me by SEBI, the aforesaid summons dated October 22, 2003 was served through Bubna Stock Broking Services Ltd., a member of Calcutta Stock Exchange on  the noticee. However, it was alleged that there was no compliance of the said summons by the noticee.
   
    
3. In view of the above, I issued a notice dated December 13, 2004 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. Though the aforesaid summons dated October 22, 2003 indicates that also prior to the said date, summons was issued to the noticee to produce certain information and documents on September 11, 2003. As per the information provided to me by SEBI, the said earlier summons was not served on the noticee. Therefore, the noticee was charged with non compliance of only the summons dated October 22, 2003. The aforesaid notice dated December 13, 2004 was sent to the noticee by registered post with acknowledgment due. Since there was no reply to the said notice by the noticee within 14 days, the time which was stipulated by me for the noticee to file its reply, I was of the opinion that an inquiry should be held in the matter and accordingly a notice of inquiry dated January 14, 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 fixing April 26, 2005 as the date of inquiry. It was advised that the authorised representative/ lawyer of the noticee may appear for the inquiry at my office at Mumbai on the above date. The said notice was sent by speed post acknowledgment due. However, the same was returned undelivered with a postal endorsement ‘no such company in this address returned to sender’. In these circumstances, I requested vide letter dated January 27, 2005, the Eastern Regional Office of SEBI at Kolkata to arrange for the service of the notice of inquiry on the noticee. Vide letter dated February 11, 2005, the Eastern Regional Office of SEBI informed me that since it was not possible to serve the aforesaid notice of inquiry on the noticee, it advised Bubna Stock Broking Services Ltd. to serve the notice on the noticee. Vide the aforesaid notice of inquiry, February 14, 2005 was fixed as the date of inquiry/ personal hearing of the noticee. Vide letter dated February 18, 2005, the Eastern Regional Office of SEBI forwarded the letter dated February 14, 2005 received from Bubna Stock Broking Services Ltd. as per which the notice of inquiry issued by me was served on the authorised representative of the noticee and the said authorised representative would appear before me.
   
    
4.  On March 4, 2005 one Shri Anand Kumar Tiwari appeared before me and filed an undated letter issued by the noticee authorising him to appear in the matter before me. I decided to conduct the inquiry on the same date. At the commencement of the proceedings, I explained the aforesaid authorised representative the violation, i.e., non compliance with the summons dated October 22, 2003 issued by the investigating authority of SEBI. The authorised representative has also been explained the penalty prescribed under Sec. 15A (a) of Securities and Exchange Board of India Act, 1992. When I asked the authorised representative whether the noticee was in receipt of the summons dated October 22, 2003 issued by the investigating authority, the authorised representative replied that the noticee never received the said summons. When I showed the authorised representative a copy of the letter dated October 25, 2003 issued by Bubana Stock Broking Services Ltd and addressed to the Topsun Vintra Pvt. Ltd. from which it could be seen that the letter along with summons issued by the investigating authority was received by Topsun Vintra Pvt. Ltd. The authorised representative replied that he was not aware as to who acknowledged the receipt of the summons. The authorised representative further submitted that the noticee never received the show cause notice issued under Rule 4 of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995 by me. 
   
    
5. In view of the above, I decided to serve a copy of show cause notice dated December 13, 2004 and a copy of aforesaid letter dated October 25, 2003 to the authorised representative. The authorised representative was advised to file the reply of noticee by March 18, 2005. The authorised representative agreed to file the reply by March 18, 2005 and submitted that in view of the poor financial condition of the noticee, the next hearing in the matter may be held at Kolkata. I adjourned the matter and informed the authorised representative that the next date and place of hearing would be communicated to him in due course. The photocopies of the documents stated above were handed over the authorised representative.
   
    
6. Vide letter dated March 11, 2005, my office informed the noticee that March 18, 2005 was fixed as the next date of inquiry in the matter and that the venue of inquiry would be at the Eastern Regional Office of SEBI at Kolkata. 
   
    
7. On March 18, 2005, the aforesaid authorised representative of the noticee, Shri Anand Kumar Tiwari appeared before me for the hearing at Kolkata and submitted that no written reply was being filed by the noticee in respect of the show cause notice dated December 13, 2004. The authorised representative further submitted that the noticee was never in receipt of the summons issued by the investigating authority of SEBI and the signature bearing on the letter dated October 25, 2003 of Bubna Stock Broking Services Ltd. vide which the summons issued by the investigating authority of SEBI were forwarded, was not of any Director or employee of the noticee. The authorised representative also filed a photocopy duly certified by him as the true copy of the extract of client ledger and photocopies of the contract notes dated January 7, 2002 and January 4, 2002. The said documents apparently were the documents which were required to be furnished by the noticee in response to the summons dated October 22, 2003 by the investigating authority of SEBI. The authorised representative submitted that since the noticee never received the summons issued by the investigating authority of SEBI, it was not liable for any penalty. As per the authorised representative, the noticee came to know about the issuance of summons by the investigating authority of SEBI only after launching of the instant adjudication proceedings and noticee obtained the copies of the documents from Bubna Stock Broking Services Ltd. 
   
    
8. Before deciding the issues which require 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 it. Sec. 15A (a) of Securities and Exchange Board of India Act, 1992 provides for imposition of monetary penalty of Rupees one lakh for each day during such failure continues or Rupees one crore, whichever is less by the Adjudicating Officer in case 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.
   
   
    
9. It was alleged by SEBI that the noticee failed to comply with the summons dated October 22, 2003 issued by the investigating authority as mentioned above.
   
    
10.  It is the case of the noticee that the summons issued by the investigating authority of SEBI on October 22, 2003, which was forwarded through a covering letter of Bubna Stock Broking Services Ltd. was not received by it. As per the noticee, the signature contained on the aforesaid covering letter of Bubna Stock Broking Services Ltd. was not of any director or employee of the noticee. SEBI furnished me an unauthenticated photocopy of the letter dated October 25, 2003 of Bubna Stock Broking Services Ltd. vide which the summons issued by the investigating authority of SEBI was allegedly served on the noticee.  The said photocopy of letter dated October 25, 2003 bears a signature of an unnamed person who merely wrote in hand ‘for Topsun Vintra (P) Ltd.’ and the date of the said signature was mentioned as ‘3/11’. From the above it can be seen that neither the seal of the noticee was affixed on the letter dated October 25, 2003 of Bubna Stock Broking Services Ltd. nor the name of the person who received the said letter was mentioned. Even the letter of Bubna Stock Broking Services Ltd., does not give details of the person to whom the summons was handed over.
    
     
11. In my view from the said photocopy of the letter dated October 25, 2003 issued by Bubna Stock Broking Services Ltd. it cannot be conclusively proved that the noticee was in receipt of the summons issued by the investigating authority. Further, there is no material on record to nullify the vehement denial of the noticee that it was ever in receipt of the summons issued by the investigating authority. To sum up, I am of the view that no sufficient evidence exists on record to make the noticee liable for penalty as provided under Section 15A (a) of Securities and Exchange Board of India Act, 1992. 
    
    ORDER
    
     
12.  Since I found that no sufficient evidence exists on record to make the noticee liable for monetary penalty in terms of Sec.15A (a) of Securities and Exchange Board of India Act, 1992, no penalty is imposed by me on the noticee. 
    
     
13. 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: April 28, 2005                             A. Chandra Sekhar Rao

Place: Mumbai                                     Adjudicating Officer