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 SARDAR SAROVAR NARMADA NIGAM 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 Sardar Sarovar Narmada Nigam 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/27543/2004 dated December 7, 2004 was issued to the company in terms of 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, 107 complaints of the investors were pending for redressal and called upon the company to resolve the complaints.
In view of the 107 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 SEBI Act, 1992.
The company submitted its reply vide letter dated December 15, 2004 and made the following submissions:
1. In response to SEBI letter OIAE/SK/19721/2004 dated September 3, 2004, the company attended SEBI office and discussed the matter with SEBI official on October 4, 2004. A copy of action taken report of 118 complaints was submitted.
2. The company was informed vide letter dated November 20, 2004 that 80 complaints were pending and it submitted action taken report vide letter dated December 1, 2004 for 45 complaints.
3. On telephonic enquiry on December 15, 2004, the company was informed that only 57 complaints were pending. The company did not receive copy of 19 complaints for which it requested for issue of duplicate copy of the complaints vide its letter dated December 15, 2004.
4. The company submitted that it would resolve these 57 complaints within one month period.
Further, Vide letter dated December 20, 2004, the company submitted action taken report along with the copies of the reply sent to the investors for 27 pending complaints.
Subsequently upon consideration of the submissions of the company, an opportunity of personal hearing was granted to it. Shri N.M. Patel, Company Secretary attended the hearing on January 17, 2005 and made the following submissions.
1. It is submitted that out of 107 complaints, 91 complaints have been resolved and 16 complaints are pending.
2. Out of 16 pending complaints, 4 complaints are not traceable from company’s records and therefore copy of the same will be obtained from SEBI.
3. The remaining 12 complaints are mostly pertaining to issue of duplicate bond certificate wherein the company has asked the bond holders to submit indemnity bond as well as advertisement charges but the investors are not responding.
The company submitted that it will forward Action Taken Report for these 12 complaints. The same was submitted by the company vide its letter dated January 15, 2005. Vide the said letter, the company also submitted the present status of complaints as follows:
|
Type
|
Unresolved complaints as on 30.7.2004
|
Complaints Resolved
|
Pending complaints as on 15.1.2005
|
|
1
|
1
|
1
|
-
|
|
2
|
2
|
1
|
1
|
|
3
|
8
|
6
|
2
|
|
4
|
95
|
83
|
12
|
|
5
|
1
|
-
|
1
|
|
Total
|
107
|
91
|
16
|
Further details of pending 16 cases was submitted as follows:
|
Type
|
Pending Complaints
|
Complaint Letters not received
|
Balance Pending
|
|
1
|
-
|
-
|
-
|
|
2
|
1
|
-
|
1
|
|
3
|
2
|
-
|
2
|
|
4
|
12
|
3
|
9
|
|
5
|
1
|
1
|
0
|
|
Total
|
16
|
4
|
12
|
APPRECIATION OF EVIDENCE AND FINDINGS
Vide letter OIAE/SK/19721/2004 dated September 3, 2004, SEBI has informed the company that 107 complaints of investors are pending 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 107 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. Out of these 107 complaints, 95 complaints were category IV complaints (related to debentures).
It is noted from the submissions of the company that 91 complaints have been resolved out of 107 complaints as stated in the show cause notice. It is further noted from the submissions made by the company that it has not received complaint letter for 4 complaints and the company has taken measures to obtain the same.
It is further noted that the company has submitted action taken report for the balance complaints pending (12) where it has indicated the steps being taken to resolve these complaints like, format for duplicate bond certificate is sent to the investor, investor is asked to furnish details of folio/ certificate number, fixed deposit receipt/ redemption warrant is sent to the investor, bond certificate is dematerialized/ transferred/ redeemed etc.
ORDER
Considering the fact that the company has resolved 91 complaints out of 107 complaints as per the show cause notice and further necessary measures are being taken to resolve the remaining complaints, 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 Sardar Sarovar Narmada Nigam Ltd.
PLACE: Mumbai S. Biju
DATE : January 31, 2005 Adjudicating & Enquiry Officer