ADJUDICATION ORDER UNDER RULE 5 OF THE SEBI (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES, 1995 IN THE MATTER OF ADJUDICATION PROCEEDINGS AGAINST M/S MATHER & PLATT INDIA LTD.
I was appointed as Adjudicating Officer by SEBI vide order dated November 30, 2004, to inquire into and adjudge the alleged contravention of Section 15C of SEBI Act, 1992 by M/S Mather & Platt India Ltd. (hereinafter referred to as the company), in the matter of non redressal of the grievances of the investors.
NOTICE AND REPLY
A show cause notice A&E/BS/27549/2004 dated December 7, 2004 was issued to the company in terms of the provisions of Rule 4 of SEBI (Procedure for Holding Enquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995. In the show cause notice it was stated that the company did not redress the grievances of investors when called upon to do so by SEBI vide its letter OIAE/SK/19721/2004 dated September 3, 2004. Vide the said letter, SEBI informed the company that as on July 30, 2004, 53 complaints of the investors were pending for more than 6 months for redressal and called upon the company to resolve the same.
Vide show cause notice cited, in view of the 53 unresolved complaints, the company was asked to show cause as to why an inquiry should not be held against the company in terms of Rule 4 of SEBI (Procedure for Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995 and why penalty should not be imposed on it under Section 15C of the SEBI Act, 1992.
The company submitted its reply vide letter dated December 20, 2004 and made the following submissions:
1. As informed vide SEBI letter OIAE/SK/19721/2004 dated September 3, 2004, the company got the copy/ details of complaints from SEBI officials.
2. The company submitted the details of redressal of 64 complaints through M/s Sharepro Services, Registrar & Transfer Agent of the company vide their letter SH/MP/SEBI/02/2004 dated September 23, 2004.
3. The company subsequently followed up with SEBI and was informed that out of 64 complaints, 39 were kept pending as on November 20, 2004 for want of some additional details.
4. The said details for above-mentioned 39 complaints were submitted by the company vide letter dated December 16, 2004.
Subsequently upon consideration of the submissions of the company, an opportunity of personal hearing was granted to it. Shri Sanjay Kumar Mutha, Company Secretary attended the hearing on January 18, 2005 and made the following submissions.
1. Most of the complaints were pertaining to scheme of arrangement of cancellation of odd lot shares.
2. As some of the shareholders were not aware of this scheme and inspite of encashing the redemption or interest warrant, they still asked for the share certificates.
3. The company has provided details of all such cases in its reply dated December 16, 2004 and December 20, 2004.
The company further submitted that it has been given to understand that there are approximately 15 unresolved complaints. The company stated that details of these complaints along-with details of de-merger/ cancellation taken place during 2003 would be submitted by January 25, 2005.
Vide letter dated January 24, 2005, the company submitted the above details. The company stated that pursuant to scheme of arrangement as approved by the Hon’ble High Court of judicature at Bombay vide order dated April 18, 2001, Mather and Platt (India) Ltd. was de-merged into three companies, Mather and Platt (India) Ltd., Mather and Platt Pumps Ltd. and Mather and Platt Fire Systems Ltd. Consequently, the shareholders in Mather and Platt (India) Ltd. have become the shareholders in all three companies and shares of de-merged companies were allotted in lieu of old shares held in Mather and Platt (India) Ltd. In lieu of old 100 shares of Mather and Platt (India) Ltd., 60 shares of Mather and Platt Pumps Ltd., 18 shares of Mather and Platt Fire Systems Ltd. and 4 shares of Mather and Platt (India) Ltd. were allotted to the shareholders.
Consequent to the de-merger as aforesaid, the shareholders were holding the shares in de-merged companies in odd lots. As the trading in shares are compulsorily in de-mat mode, it was expensive to hold the shares in odd lot in de-mat mode by the shareholders.
Subsequently, Mather and Platt Pumps Ltd. & Mather and Platt (India) Ltd. brought schemes of arrangement for cancellation of shares as approved by the Hon’ble High Court of judicature at Bombay vide its order dated 16.08.2002 to provide an exit route to the shareholders and pursuant to the said schemes the shareholders were given the following options to cancel their shares in Mather and Platt Pumps Ltd. & Mather and Platt (India) Ltd.
1. Mather and Platt Pumps Ltd. : Shareholders may cancel upto 500 shares of Rs.10/ each and will be issued 500, 11% non-convertible debentures of Rs.15/ each in lieu of shares cancelled without surrender of share certificate.
2. Mather and Platt (India) Ltd. : Shareholders may cancel up-to 100 shares of Rs.10/ each and will be paid Rs.15/ each in lieu of shares cancelled without surrender of share certificate.
It is further submitted vide above letter that the company is given to understand that 3 investor complaints are pending out of the 64 complaints for want of further clarification. The company has provided the details of these complaints as follows:
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S/N
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Complaint Reference
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Name of Investor
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Action in brief
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1.
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2003/0024315/01
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V N Hinduja
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After the scheme of cancellation of shares, investor has received 480 debentures for Mather & Platt Pumps which was sent on 30/9/2003 vide ucp no. 19181 under folio no. V0004025
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2.
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2004/0009328/01
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Jyoti Prakash Maskara
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Details provided by the investor are not correct. The company has asked for correct details and exact nature of complaint. As per company’s records, complainant is not a shareholder.
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3.
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2004/0011940/01
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Jyoti Prakash Maskara
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Details provided by the investor are not correct. The company has asked for correct details and exact nature of complaint. As per company’s records, complainant is not a shareholder.
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APPRECIATION OF EVIDENCE AND FINDINGS
Vide letter OIAE/SK/19721/2004 dated September 3, 2004, SEBI had informed the company that 53 complaints of investors are pending for more than 6 months against the company as on July 30, 2004 and called upon it to resolve these grievances. In this regard the provisions of section 15 C of the SEBI Act reads as under
“If any listed company or any person who is registered as an intermediary ,after having been called by the Board in writing, to redress the grievances of investors, fails to redress such grievances within the time specified by the Board, such company or intermediary shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less.”
It is noted that the company was informed the details of the 53 complaints as per SEBI letter OIAE/SK/19721/2004 dated September 3, 2004. Vide the said letter the company was advised to appraise the steps being taken by it to redress the pending grievances and also the time frame within which the company proposed to resolve them.
In this regard it is noted that the company was de-merged into three companies, Mather and Platt (India) Ltd., Mather and Platt Pumps Ltd. and Mather and Platt Fire Systems Ltd. In lieu of old 100 shares of Mather and Platt (India) Ltd., 60 shares of Mather and Platt Pumps Ltd., 18 shares of Mather and Platt Fire Systems Ltd. and 4 shares of Mather and Platt (India) Ltd. were allotted to the shareholders.
It is further noted that the company brought schemes of arrangement for cancellation of shares, where shareholders might cancel up-to 100 shares of Rs.10/ each and as per the scheme of arrangement would be paid debenture of Rs.15/ each in lieu of shares cancelled without surrender of share certificate.
It is noted that most of the complaints related to the cancellation of shares which were resolved as specified in the details provided by the company vide its letters dated September 23, 2004 and December 16, 2004.
It is noted from the submissions of the company that there are only 3 unresolved complaints as per the show cause notice. Out of these three complaints, two complainants are not shareholder of the company as per its records and details and exact nature of complaints have been sought from the complainant. Further it is submitted by the company as regards the remaining one complaint, after the scheme of cancellation of shares, the investor had received 480 debentures for Mather & Platt Pumps which was sent on 30/9/2003 vide ucp no. 19181 under folio no. V0004025.
ORDER
Considering the factors such as the entire complaints were pertaining to the scheme of arrangement as approved by the Hon’ble High Court of judicature at Bombay vide its order dated 16.08.2002 and also taking into account the fact that the said complaints pertaining to cancellation of shares have been resolved by the company, I am of the view that no penalty needs to be imposed in terms of the provisions of Section 15C of SEBI Act, 1992 on Mather & Platt India Ltd.
PLACE: Mumbai S. Biju
DATE : January 31, 2005 Adjudicating & Enquiry Officer