1. Home
  2. »
  3. Enforcement
  4. »
  5. Orders
  6. »
  7. Orders of SAT

In the matter of Enkay Textfood Industries Ltd

Jan 23, 2006
|
Orders : Orders of SAT

IN THE SECURITIES APPELLATE TRIBUNAL

MUMBAI

 

Appeal No. 194/2004

Date of Decision

23.1.2006

 

 

 

In the matter of:

 

Enkay Textfood Industries Ltd.

Appellant – Represented by

 

Mr. K.R. Khata & Mr. Vishwabhushan Kamble, Advocates

Versus

 

 

Securities & Exchange Board

Respondent –Represented by

of India

Mr. Ravi Hegde, Advocate

 

Coram:

            Justice N.K. Sodhi, Presiding Officer

            R. N. Bhardwaj, Member

 

Per:  Justice N.K. Sodhi, Presiding Officer (oral)

 

 

            Challenge in this appeal is to the order dated 23.6.2004 passed by the adjudicating officer whereby he has imposed a penalty of Rs. 10 lakhs on M/s. Enkay Textfood Inds. Ltd. (for short “the Company”).

    2.            The appellant is a company incorporated under the provisions of the Companies Act.  The Securities and Exchange Board of India (for short “the Board”) received a large number of complaints from the investors of the Company to the effect that the shareholders had not received the shares after transfer and in the case of some others they had not received the dividend as declared by the Company.  The adjudicating officer was required to enquire into the alleged contravention of the provisions of Section 15C of the Securities and Exchange Board of India Act, 1992 (hereinafter called “the Act”).   A show cause notice was issued to the Company which filed its reply and after considering the same and also the materials on record, the adjudicating officer found that the grievances of the investors (shareholders) had not been redressed inasmuch as the share certificates had not been transferred and that there were as many as 251 complaints in this regard.  Taking a serious view of the matter, he imposed a penalty of Rs. 10 lakhs under Section 15C of the Act.  Hence this appeal.

    3.            We have heard the learned counsel for the parties and having perused the impugned order we are of the view that the penalty imposed is rather harsh.  It is true that the Company had failed to redress the grievances of its shareholders and that the share certificates had not been transferred but all this happened because the Company was in financial difficulties and had approached the Board for Industrial and Financial Reconstruction (for short BIFR) for its rehabilitation.  It is also true that BIFR has rejected the claim of the appellant for its rehabilitation but the fact remains that there were serious financial difficulties faced by the Company.  Be that as it may, we are inclined to take a lenient view in the circumstances of the present case.  While upholding the finding of the adjudicating officer that the Company had failed to redress the grievances of its investors, we reduce the penalty to Rs. 5 lakhs.

    4.            The appeal stands disposed of as above leaving the parties to bear their own costs.

Justice N.K. Sodhi

Presiding Officer

 

 

R.N. Bhardwaj

Member

 

 

 

 

 

 

 

Mumbai

Dated: 23.1.2006