Order In The Matter Of Adjudication Proceedings Against Jsk Holdings Pvt. Ltd

ORDER UNDER SECTION 15I OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT READ WITH RULE 5 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES, 1995 IN THE MATTER OF ADJUDICATION PROCEEDINGS AGAINST JSK HOLDINGS PVT. LTD. 

1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) vide order dated January 9, 2006 appointed the undersigned as the Adjudicating Officer to inquire into and adjudge under Section 15I read with Sections 15A(b) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the ‘SEBI Act’), the violations alleged to have been committed by JSK Holdings Pvt. Ltd. (hereinafter referred to as ‘the noticee’) on account of the delay in complying with the disclosure requirements under Regulation 8(1) and 8(2) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as Takeover Regulations) in respect of its shareholding in Kakatiya Textiles Ltd. (hereinafter referred to as KTL).

FACTS OF THE CASE 

2. Shri L G Ramamurthi and Shri Sumanth Ramamurthi filed a draft letter of offer with SEBI on December 26, 2005 in respect of acquisition of 20% shares of KTL. It was observed from the said draft letter of offer that apparently the noticee who is stated to be promoter of KTL did not comply with the provisions of Regulations 8(1) and 8(2) of the Takeover Regulations within the stipulated time. The said violation attract penalty under the provisions of Section 15A (b) of the SEBI Act and hence adjudication proceedings were initiated against the noticee.

NOTICE AND REPLY 

3. A Show Cause Notice (hereinafter referred to as ‘SCN’) A&E/BS/60735/2006 dated February 20, 2006 was issued to the noticee in terms of the provisions of Rule 4 of SEBI (Procedure for Holding Inquiry and Imposing penalties by Adjudicating Officers) Rules, 1995 (hereinafter referred to as the Rules), requiring the noticee to show cause as to why an inquiry should not be held for the violation alleged to have been committed by the noticee. 

 

4. The noticee replied to the show cause notice vide letter dated March 15, 2006 and submitted that it had made the required disclosure to the company from time to time in accordance with the provisions of Regulation 8(1) and 8(2) of Takeover Regulations. Copies of intimations sent to the company for the years 1999-2000, 2000-2001, 2001-2002, 2002-2003, 2003-2004 and 2004-2005 were submitted along with the reply. 

 

5. Considering the reply of the noticee, it was   decided to conduct an inquiry into the matter and the noticee was advised to attend the hearing on July 21, 2006. It is noted that the said notice for personal hearing sent by registered post returned undelivered with the remarks ‘addressee left’. The noticee was granted another opportunity of hearing on August 24, 2006. It is noted that the said notice for personal hearing sent by registered post returned undelivered with the remarks ‘addressee left’.
   
   
6. As the noticee was granted sufficient time and opportunities to present its case and the noticee failed to avail the opportunity of hearing, the enquiry is proceeded with on the basis of available facts and records.

CONSIDERATION OF EVIDENCE AND FINDINGS

7. The issue for consideration in the matter is whether there had been any delay on the part of the noticee in complying with the provisions of Regulations 8(1) and 8(2) of the Takeover Regulations. The text of the said Regulations are as follows:
   

8(1) Every person, including a person mentioned in Regulation 6 who holds more than 15% shares or voting rights in any company, shall, within 21 days from the financial year ending March 31, make yearly disclosures to the company, in respect of his holdings as on 31^st March.


8(2) A promoter or every person having control over a company shall, within 21 days from the financial year ending March 31, as well as the record date of the company for the purposes of declaration of dividend, disclose the number and percentage of shares or voting rights held by him and by persons acting in concert with him, in that company to the company.


8. It is noted from the details provided in the draft letter of offer that there was delay in complying with the said regulations as stated below.

Regulation	Due Date of compliance	Actual Date of Compliance	Delay
8(1)	21.4.1999	19.2.2000	305
8(2)	21.4.1999	19.2.2000	305
8(1)	21.4.2000	9.6.2000	50
8(2)	21.4.2000	9.6.2000	50
8(1)	21.4.2001	28.5.2001	38
8(2)	21.4.2001	28.5.2001	38
8(1)	21.4.2002	14.5.2002	24
8(2)	21.4.2002	14.5.2002	24
8(1)	21.4.2004	6.4.2005	350
8(2)	21.4.2004	6.4.2005	350

 

9. It is noted from the reply submitted by the noticee that it submitted the required information to the Company on the following dates
   

Financial Year	Date of submission
1999-2000	10.4.2000
2000-2001	13.4.2001
2001-2002	10.4.2002
2002-2003	9.4.2003
2003-2004	10.4.2004
2004-2005	9.4.2005

 

10. It is noted that along with the reply the noticee forwarded copies of the above information submitted to the company on the dates mentioned above. On perusal of the said documents, it is noted that the same appear to have been received by the company and also bear the stamp of the company.
    
    
11. In the absence of any evidence to the contrary, veracity of the said documents can not be tested on the basis of the draft offer document filed by the acquirers. This is especially so as the noticee failed to attend the hearing granted to it in the matter. In view of the same, on the basis of the evidence available, it is not possible to arrive at a finding as to whether there has been any delay on the part of the noticee in making disclosures in terms of the provisions of the Regulations 8(1) and 8(2) of the Takeover Regulations. Hence the alleged violation cannot be adjudicated under Section 15A(b) of SEBI Act on the basis of the evidence available in the matter. Hence the matter is accordingly disposed of.
    
    
12. In terms of the provisions 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 JSK Holdings Pvt. Ltd. and to Securities and Exchange Board of India.