BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA  

[ADJUDICATION ORDER NO. AP/AO-10/2006-07]

 

In respect of 

COVERAGE & CONSULTANTS LTD.

AND  

In the matter of Investigations in

 

OJAS TECHNOCHEM PRODUCTS LTD.

 

1.0  Securities and Exchange Board of India (hereinafter referred as ‘SEBI’) conducted investigations in the scrip of Ojas Technochem Products Ltd. (hereinafter referred as ‘OTP’) for the period November, 1999 to February 2000. Pursuant to this investigations, SEBI appointed Mr. K.R.C.V. Seshachalam, as the Adjudicating Officer under Rule 3 of SEBI (Procedure For Holding Inquiry And Imposing Penalties By Adjudicating Officer) Rules, 1995 (hereinafter referred as ‘Adjudication Rules’) read with Section 15 I of SEBI Act, 1992 to inquire into and adjudge the alleged failure of Coverage & Consultants Ltd. (hereinafter referred was ‘CCL’) to comply with the summons issued by the Investigating Officer under provisions of Section 11C (3) and 11C (5) of SEBI Act, 1992 for which penalty is imposable under Sections 15A (a) of SEBI Act, 1992. The aforesaid appointment was conveyed vide order dated July 22, 2004 and vide order dated December 28, 2004, the matter was transferred to Mr. A. Chandrasekhar Rao. Subsequently vide order dated February 03, 2006, the matter was transferred to the undersigned.

 

2.0        In terms of Rule 4(1) of the Adjudication Rules, a show cause notice dated June 13, 2006 was sent to CCL alleging non-compliance of summons dated March 1, 2004 issued by the Investigating Authority. The said show cause notice was served on CCL through registered post acknowledgement due on June 24, 2006. Vide said notice, CCL was directed to furnish its reply within 14 days of receipt of this notice. I have noted that CCL has not responded to the notice issued in the instant proceedings and the time for doing so expired.

 

3.0        In the instant case the allegation against CCL is that it did not respond to the summons dated March 01, 2004 issued under Section 11C (3) and 11C (5) of SEBI Act, 1992. However, upon examining the material on record, it is clear that the aforesaid summons is not served at all, in the first place. From the unauthenticated photocopies furnished, I find that the summons dated March 01, 2004 was despatched through Speed post with Acknowledgement due on March 03, 2004. I also find that the aforesaid summons was returned undelivered by the postal authorities with the comments, dated March 04, 2004, “addressee not in this address”, in Hindi. That the aforesaid summons was not at all served on CCL is unambiguously confirmed from the contents of pages 48 of the copy  of the investigation report of OTP furnished to the undersigned. The relevant portions of the contents are reproduced as under:

 

“To ascertain the exact degree of manipulation and to reach the root of the manipulator summons were issued to CCL asking it to appear before as and to furnish documents. The letter containing summons, however came back undelivered with the remark, ‘Address shifted’ – and that made investigation process a little difficult……….

 

The address of M/s Coverage Consultants Ltd. as per our records is at

203, Apollo Towers, 2, M.G. Road

Indore (M.P.), 452001

 

Summons dated March 01, 2004 was sent to the address mentioned above and came back undelivered with the remark ‘Address shifted, though in the past they accepted letters/summons sent to them at the address given above in another case of Design Auto Systems Limited.

 

4.0        From the aforesaid it is clear that the matter has been referred for Adjudication despite the full knowledge that summons has not been served on CCL. From the material on record, there is nothing to suggest that fresh summons was issued to CCL in the matter of OTP. If the summons is not served, then the legal obligation on CCL to furnish information and to be present before the IO does not arise. Logically, in the absence of legal obligation in the first place, default of obligation does not arise at all.

 

5.0        Considering the fact that there is not an iota of doubt about the notice not being served, I am not inclined to proceed further in the matter. Also, in terms of Rule 4(3) of Adjudication Rules, a duty is cast upon the A.O. to proceed with the inquiry only if he is of the opinion that inquiry should be held. For the reasons recorded above, I am of the firm view that inquiry should not be held in the matter for the alleged violations in the SCN.

 

6.0        As no inquiry is needed to be held in this case, for the reasons already mentioned, I am hereby dropping the charges against Coverage & Consultants Ltd.  in the instant Adjudication proceedings.

 

7.0        This order of adjudication is made and passed on 20^th day of July 2006 at Mumbai.

 

 

AMIT PRADHAN

ADJUDICATING OFFICER