ORDER
UNDER RULE 5(1) OF THE SEBI (PROCEDURE FOR HOLDING ENQUIRY AND IMPOSING PENALTY BY THE ADJUDICATING OFFICER) RULES, 1995 READ WITH SECTION 15C OF THE SEBI ACT, 1992.
AGAINST
M/s DATABASE FINANCE LIMITED
1. M/s Data Base Finance Limited (for brevity’s sake, hereinafter referred to as DFL) is a company that was listed on the Bombay Stock Exchange and the Inter Connected Stock Exchange of India Limited (hereinafter referred to as BSE and ICSCIL respectively). However as on date, while trading of the shares of DFL appears to have been suspended on the BSE, their shares are hardly traded on the ICSCIL.
2. The Securities and Exchange Board of India (for brevity’s sake, hereinafter referred to as the SEBI) received several complaints from the shareholders of DFL alleging failure on the part of the company to redress their grievances relating to non receipt of credit in their respective demat account, in lieu of original shares sent for splitting/dematerialization.
3. In view of the same, SEBI sent several letters at different points of time to DFL i.e. May, 24, 2002, June 13, 2002 and April 11, 2003 to mention just a few, and advised them to redress the said grievances. Every reply of DFL in response to the said reminders was issued in a standardized format in which DFL mentioned that the said shares /share certificates did not match with their records and hence fell under the category of fake and forged shares. DFL further mentioned that the concerned entities were repeatedly sending their complaints, even though the same were bogus and in this context mentioned that they had filed a case against the entity/entities in the Additional Chief Metropolitan Magistrate, 33rd Court, Ballard Pier, Mumbai but did not enclose a copy of the said complaint.
4. As the numbers of complaints of the investors pending resolution kept increasing, SEBI vide their letter dated July 10, 2003 called upon DFL to resolve 29 complaints of their investors (that were pending redressal by DFL as on June 30, 2003) within 15 days of the receipt of the said letter and report compliance thereof, so as to reach them within 21 days of the receipt of the said letter. DFL were warned that non redressal of the said grievances within the stipulated time frame would invite action under Section 15C of the SEBI Act, 1992 (for brevity’s sake, hereinafter referred to as the Act). Details of the said complaints were also forwarded to DFL vide the aforesaid letter.
5. In their reply dated July 16, 2003 send via hand delivery, DFL contended that they had resolved all the complaints earlier pending with them and merely reiterated the contentions advanced by them earlier. They denied any complaints pending, of whatsoever nature, at their end and hence requested deletion of the names of the 29 complainants from the list of complaints sent to SEBI.
6. It may be relevant to state here that one of the complainants along with a few others filed a case before the Hon’ble Court of Gujarat at Ahmedabad, with a prayer that DFL be directed to split the shares and deposit the split shares in each of their demat accounts. The Hon’ble High Court vide order dated February 06, 2002 directed SEBI to take necessary steps against DFL as per the guidelines, for any breach committed by DFL. Consequently SEBI was periodically calling upon DFL to redress the investor complaints pending with them which kept increasing such that as on July 14, 2003, the unredressed complaints went up to 30 in number.
Subsequently the following petitions were filed before the Hon’ble High Court of Gujarat at Ahmedabad for non compliance of the court order dated February 06, 2002:
SCA No.2821/2003 - Ronak Shah Vs. UOI & Ors
SCA No.2822/2003 - Krushank Shah Vs. UOI & Ors.
SCA No.2823/2003 - Kanubahi Punamchand Sanghvi Vs. UOI &
Ors.
SCA No. 2824/2003 - Sanjay Shah Vs. UOI & Ors.
SCA No. 2825/2003 - Kanak narpatlal Shah Vs.UOI & Ors.
SCA No.2826/2003 - Himanshu Shah Vs.UOI & Ors.
SCA No.2827/2003 - Falguni Shah Vs. UOI & Ors.
SCA No. 2828/2003 – Vasuben Shah Vs. UOI & Ors.
SCA No. 2829/2003 - Surekha Shah Vs. UOI & Ors.
7. In view of the same, SEBI vide their letter dated August 14, 2003 while calling upon DFL to resolve the complaints of the investors, also advised them to explain the measures taken by them for redressing the complaints of Kanubahi Punamchand Sanghvi, Sanjay Shah, Kanaknarpatlal Shah, Vasuben Shah and Surekha Shah.
8. In their reply dated August 29, 2003, DFL stated that the complaints made by Kanubhai Punamchand Sanghvi, Sanjay Shah, Kanaknarpatlal Shah, Vasuben Shah and Surekha Shah, fell under the category of ‘fake and forged’ shares, which fact was duly communicated to all the complainants, who were advised to provide details pertaining to the proof of payment of their investment with DFL. DFL also mentioned that since they had not received any such details from the complainants, they had filed necessary complaints before the Hon’ble Chief Metropolitan Magistrate Court, 33rd Court, Ballard Pier, Mumbai against all of them. Once again, no documents were enclosed in support of these submissions.
9. In view of the fact that SEBI had vide its letters dated July 10, 2003 and August 14, 2003 called upon DFL to redress the grievance of the investors and no positive action was initiated by them except them contending that the said shares/share certificates were ‘fake and forged’, SEBI initiated adjudication proceeding against DFL and in this context appointed Shri S V Krishna Mohan as the Adjudicating Officer vide order of the Chairman, SEBI dated May 31, 2004. In the interim period, I was appointed as the Adjudicating Officer vide order dated September 30, 2004, to inquire into and adjudge the alleged contravention of Section 15C of the SEBI Act, 1992 (hereinafter referred to as the Act) by DFL.
NOTICE/ REPLY/ PERSONAL HEARING:
10. Accordingly, I issued a notice dated October 06, 2004 to DFL at the address of their registered office under Rule 4 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995, (Rules) in terms of which DFL were advised to show cause as to why proceedings should not be initiated against them and why penalty should not be imposed upon them under Section 15C of the Act. DFL were advised to make their submissions, if any, along with supporting documents that they wished to rely upon, within 14 days from the date of the receipt of the notice, and were also advised to note that in case they failed to reply within the stipulated period, it would be presumed that they had no adequate explanation to offer.
11. DFL did not respond to the said notice and even failed to submit any written explanation. Thereafter a notice of hearing dated November 29, 2004 was sent to the registered office of DFL advising them to appear for a personal hearing scheduled before me on December 27, 2004. The said notice was returned undelivered with a noting by the postal authorities that the party had ‘left’. Hence, another notice of hearing dated May 04, 2005 in which DFL were advised to appear for a personal hearing scheduled before me on May 11, 2005 was sent to DFL at their registered address and a copy of the same was also sent by hand delivery to their corporate office. A copy of the said notice was also faxed to the number of DFL as mentioned in all their letters addressed to SEBI.
12. While a confirmation report in respect of the fax sent was received, the notice sent to the registered address was once again returned undelivered with a noting by the postal authorities that the party had ‘left’ while the notice sent by hand delivery to the corporate address could not be delivered, since the office was found to be sealed by the police. Another notice dated May 18, 2005 sent to DFL to appear before me on May 24, 2005 also met the same fate. Enquiries made on May 24, 2005, over phone at the telephone number; 56390471, obtained from their Share Transfer Agent (STA); Sharex Dynamic (India) Pvt. Ltd (Sharex) confirmed the address to which the notices were sent, to be the corporate office of DFL. The said address is also available on the website of the BSE where the shares of DFL were listed. Hence in terms of Rule 7(c) of the Rules, a notice dated May 25, 2005 advising DFL to participate in the proceedings scheduled on May 30, 2005 was affixed on the door of the said address and the same was witnessed by two persons. However nobody appeared on behalf of DFL on the said date.
13. Strangely enough, in the meantime DFL kept addressing several letters to SEBI dated February 09,2004, April 2, 2004, April 2, 2005, May 2, 2005 all of which mentioned the address to which the notices issued by me were sent. In all these letters, DFL kept reiterating their contention of having redressed all the grievances of their investors and that no complaints were pending from genuine investors. However no documents were submitted by them to substantiate their contentions.
14. In view of the difficulty in servicing the notices upon DFL and in order to verify certain other related facts of the case, summons were issued to Sharex in terms of Rule 4 (6) of the Rules to appear before me on June 9, 2005. On the scheduled date, Shri T Sasikumar, Director of Sharex appeared before me and made his submissions which are summarized below:-
a. Sharex were appointed as the Electronic Agent of DFL only for the purpose of the demat shares of the company since 2001 and had entered into a tripartite agreement with them in this regard.
b. The transfer of the physical shares of DFL is being handled in house and hence DFL does not have a common share agency.
c. Sharex tried to prevail upon DFL to appoint a common share agency, especially since SEBI had imposed a dead line by March 2004.
d. The services of Sharex were being undertaken by DFL on a retainer basis.
e. The first request for demat of shares of DFL was received on April 05, 2001 which was a rejection request for demat for various reasons (details were provided).
f. They continued to receive requests from DFL for demat and the latest request for demat was made on March 10, 2005. They undertook to provide these details.
g. Sharex had the list of the shareholders of DFL from May 19, 2001 only and undertook to provide the percentage of the shares of DFL held in the demat and physical form.
h. They were still associated with DFL especially because the office of DFL was in the same areas as theirs.
i. The office address of DFL is Vatsa House, 4th Floor, Janmabhoomi Marg, Fort, Mumbai – 400 001. Ph No. was 56375688/ 56316947. The name of the contact person in DFL is Shri Samadhan.
The following documents were also submitted by Sharex
List of Shareholders as on 03.06.2005 in CDSL
List of Shareholders as on 03.06.2005 in NSDL
List of pending requests for Demat
List of Remat cases
List of Demat cases including rejections
15. Details of the correspondence entered into with DFL regarding prevailing upon them to appoint a common share agency as well as details regarding issued capital of DFL were undertaken to be provided along with the names of the Directors and Promoters of DFL. Subsequently these documents were also forwarded.
16. Thereafter, another notice of hearing dated June 9, 2005 was served upon DFL through Sharex vide letter dated June 9, 2005 at the address given by Sharex, in which DFL were advised to participate in the hearing proceedings before me and make their submissions if any on June 13, 2005. DFL were also advised to note that no further extension would be offered to them and in case they failed to appear for the hearing, the matter would be proceeded on the basis of the material available on record. This time although the notice was acknowledged by DFL on June 9, 2005, they did not either appear for the said proceedings or even reply to the said notice.
CONSIDERATION OF ISSUES:
17. I have taken into consideration the facts and circumstances of the case and examined in detail the submissions advanced by Sharex and the documents submitted by them as well as the other material available on record.
18. Before proceeding to analyze the issues involved, I consider it essential to recapitulate the main facts of the case in brief, which lead to the initiation of the present proceedings.
DFL had made an initial public issue of shares of 35,00,000 equity shares of Rs 10/- each for cash at par aggregating to Rs 3,50,00,000 in June 1996. Several persons upon application were allotted shares and share certificates were issued in their names. During the year 2001, some of the shareholders are stated to have sent their shares for splitting which were of the amount of Rs 10/- each to a share of Rs 1/- each with a request to credit the same to their respective demat accounts with the depository participants. Details of their client number and the depository participant were also sent to DFL. However their requests were not acceded to by DFL on the ground that the shares/share certificates were fake and forged. The matter was consistently followed up by the shareholders, to no avail. The matter was brought to the notice of SEBI, who in turn prevailed upon DFL, time and again to redress the grievance of the investors. However as DFL consistently maintained that the shares were fake and forged and since no positive action emanated from these endeavors, these shareholders approached the Gujarat High Court which vide their order dated December 3, 2004 without going into the merits of the case, disposed off the petitions with an observation that since SEBI were already seized of the matter by way of the present proceedings, no further orders were required to be passed by them. The Hon’ble Court further granted permission to the petitioners to withdraw their prayer relating to splitting of the shares certificates for availing the alternative remedy before the appropriate forum.
These facts are undisputed and form part of the material available on record.
19. I have perused in detail the related documents that have been submitted by the shareholders in question to SEBI in the course of the correspondence maintained with SEBI, to evidence them being the original allottees of the shares issued by DFL in 1996 in the public issue. The details relevant to the said allottees are as follows:-
|
Name of the allottee
|
Application Number
|
No. of Shares allotted
|
Certificate Number
|
Distinctive Number
|
|
Ronak Shah
|
0244080
|
1000
|
430-439
|
02132501 – 02133500
|
|
Vashuben Shah
|
0244081
|
1000
|
420-429
|
02131501 – 02132500
|
|
Himnansu Shah
|
0244175
|
1000
|
440-449
|
02133501 – 02134500
|
|
Sanjay Shah
|
0244165
|
1000
|
185-194
|
02108001 - 02109000
|
|
Palguni Shah
|
0244179
|
1000
|
400-409
|
02129501 – 02130500
|
|
Krushank Shah
|
0244154
|
1000
|
410-419
|
02130501 – 02131500
|
20. When confronted with these details, DFL have consistently maintained their earlier stand of the shares being fake and forged. I have noted that this issue was taken up by SEBI with M/s Chanukya Info Financial Services Pvt Ltd. (Chanakya) who had acted as the Registrar to the public issue brought out by DFL. Chanakya stated that DFL were handling the share transfers in house and upon Shri Madhavan, the Director of Chanukya being advised during the meeting held on May 29, 2002 to confirm whether the said complainants were the original allotees or not, he confirmed in writing to SEBI that Shri Ronak Shah, Shri Sanjay Shah and Shri Krushank Shah were found in the list of the 100 original allottees.
21. These facts being as they are, I have noted that at every given opportunity, DFL were advised by SEBI to redress the grievances of the investors and warned that failure to do so would invite action under Section 15C of the Act. There are letters of SEBI dated July 10, 2003 and August 14, 2003 to DFL in this regard on record. Details of the said complaints which are 30 in number as on date, and appear to be pending since October 2001 (although some of them were received thereafter) were also forwarded vide the aforesaid letters to DFL.
22. Upon analyzing these 30 complaints, it is noted that they pertain to Type III category which includes complaints relating to non receipt of share certificates in exchange of allotment letters/ after transfer/after transmission/ after conversion/ after endorsement/ after consolidation/ after splitting or non receipt of bonus shares or even non receipt of share certificates against duly executed indemnity bonds sent to the company.
23. In this regard, reference may be made to the SEBI circular SMD/Policy/ Cir-10/2002 dated 7th May, 2002 which advices all stock exchanges to amend their listing agreement to incorporate after sub-clause (1) of Clause 12A, the new sub clause (1a) as under:-
“The company agrees that in respect of the transfer of shares, where the company has not effected transfer of shares within 1 month or where the company has failed to communicate to the transferee, any valid objection to the transfer within the stipulated time period of 1 month, it shall compensate the aggrieved party for the opportunity losses caused during the period of the delay.”
24. It is noticed that DFL did not act in accordance with the aforesaid provisions of the Listing Agreement. From the material available on record, it appears that all the shareholders have invested a substantial amount of their money by applying in the public issue of the equity shares of DFL. I believe that in complaints of such nature, the burden on the part of the company to dispense their duty is of no consequence when compared to the losses suffered by the investors, in as much as, the non receipt of such share certificates within the stipulated time frame deprives them of an opportunity to sell the said shares at an opportune time to their advantage. In the instant case, the shareholders were, as per the facts on record, in need of money and hence wished to dispose their shares. This failure on the part of DFL would therefore, not only have violated the above quoted provisions of the Listing Agreement but would have also prejudicially affected the interest of the investors who have been deprived of the opportunity to sell their shares at an opportune time.
25. Although DFL have consistently maintained that the shares/share certificates were fake and forged, they have never at any point of time, produced any document to support their contentions despite being called upon to do so. No explanation as to how these “fake and forged” shares were brought into the market has been or was ever provided.
26. DFL have only stated that they had filed an FIR as regards these fake and forged shares but have not submitted any documents to substantiate their stand. Assuming in their favour, there is no information as to the present status of the said complaint stated to have been lodged in 1999, whether charges are framed, the stage of trial before the criminal trial court etc.
27. On the other hand, there appear to be on record, counter charges that as DFL is carrying out in house, the transfer of the physical shares of their company, they are deliberately taking advantage of the said fact and transacting with the physical shares handed over to them, either for splitting or dematerialization and earning substantial returns from the said shares. The fact that these shares are not being misused by them either for the purpose of indulging in irregular trading or otherwise could have been argued before this forum by DFL with sufficient evidence. However the same was never done.
28. In fact, this information could have easily been provided to SEBI either in its reply dated May 2003 or in the present proceedings or in any of their letters being periodically sent to SEBI. Instead even though DFL were advised by SEBI time and again and vide the letters earlier cited, to redress the grievances of the investors within a period of 30 days, they not only failed to do so, but also failed to respond to the said advice of SEBI. Furthermore, all the notices issued by this forum were not responded to and no efforts were made to participate in the adjudication proceedings despite being afforded a fair and reasonable opportunity to present their case.
29. Under similar circumstances, it could be stated that the registrar is responsible for introduction of such “fake and forged” shares into the market. In the present case however, as stated above, DFL is inarguably handling the transfer of the physical shares of the company, in house. This fact has been contended not only by Chanakya and Sharex but also stands corroborated by the documents submitted by Sharex in this regard. I have noted the fact that as on date only 34,36,998 shares of DFL constituting 6.44% of their total share capital are in demat form. The remaining shares continue to be held in the physical form. The other documents submitted by Sharex also evidence the fact that DFL has not appointed a common share agency, in clear violation of Regulation 53A of the SEBI (Depositories and Participants) Regulations 1996 which came into force on September 02, 2003 and makes it imperative for all companies to appoint a common agency; either in house or a SEBI registered RTA to handle the share registry work relating to both the physical and demat shares of the company.
This is of course a fact that is incidental to the present proceedings, though a matter of concern that needs to be addressed by SEBI in separate proceedings.
30. Keeping the facts abovestated in mind, can it be said that DFL has proved beyond all doubt that the concerned complainants were not their shareholders? All along DFL have maintained their stand that the shares/share certificates were fake and forged and had made elaborate reference to this aspect, time and again, at different fora, but till date have not placed on record, any proof to substantiate their stand. On that scope, the contention of DFL suffers. Even in the present proceedings, not a whisper on this aspect that has been brought to my notice. DFL have therefore failed to prove that the said complainants are not bonafide shareholders or even holders in due course.
31. In fact, a careful scrutiny of the strenuous attempts on the part of DFL points out that their charge is insignificant and the grave men of the matter that the shares were fake and forged remains disputed. Consequently, the said contention remains an unproven statement, which hence cannot find place in the findings. Hence any inferences drawn by this forum, based on mere surmises of DFL and unsupported by legal pleadings cannot constitute evidence on record.
32. There is another aspect of the matter which cannot be lost sight of. DFL have failed to take up the case in the present forum despite prevailing upon them repeatedly and have been unable to place on record any evidence/ material to suggest their having filed the first information report (if at all) alleging that the shares are fake and forged.
33. I thus have before me, the case of a company which has undoubtedly not taken any care to redress the grievances of their investors. Admittedly there are several shareholders who are facing the similar predicament of having forwarded the share certificates to DFL. This inaction on their part in non redressing the grievances of the investors has no doubt resulted in subjecting the shareholders to undue harassment in that, they have had to plead their case before different courts of law and in the process would have incurred considerable expenses. That apart, the non credit of the shares forwarded to the company for splitting has also deprived these investors of the opportunity losses which they were otherwise entitled to enjoy.
34. This action on the part of DFL clearly highlights an illegal and dishonest manner of functioning with malafide intentions. The malafides of DFL is further apparent from the fact that while all the notices issued by this forum were sent to the address mentioned in their letter heads, (of their letters sent to SEBI) the ultimate address to which the final notice was sent, that was acknowledged by them, was never brought to the notice of SEBI and it was for this forum to exact the same through other sources. Thus while evading all the notices issued by SEBI, DFL have at the same time, maintained a façade of having pleaded their case with SEBI, by way of letters, sent periodically.
35. In the Bank of Baroda vs SEBI (Appeal No.2 and 4 of 2000) decided on 27.7.2000, the Hon’ble Securities Apellate Tribunal had observed as under:
“It is needless to say that investors by and large are often at the receiving end in the hands of certain unscrupulous market players. There was no focused attention to protect their interest in the securities market. Their plight was in no way different from the plight of consumers. In view of the comparable position in which the investors and the consumers are placed, it is felt appropriate to cite the following observations made by the Supreme Court in Lucknow Development Authority vs M K Gupta 91994) 1 SCC 243 recognising the need for a specific consumer protection legislation enacted by the Parliament and a constructive approach in interpreting the provisions of the law.
The Supreme Court observed that:
“It appears appropriate to ascertain the purpose of the Act, the objective it seeks to achieve and the nature of social purpose it seeks to promote as it shall facilitate in comprehending the Issue involved and assist in construing various provisions of the Act effectively. To begin with the preamble of the Act which can afford useful assistance to ascertain the legislative intention, it was enacted, to provide for the protection of the interest of consumers’. Use of the word ‘protection’ furnishes key to the minds of makers of the Act. Various definitions and provisions which elaborately attempt to achieve this objective have to be construed in this light without departing from the settled view that a preamble cannot control otherwise plain meaning of a provision. In fact the law meets long felt necessity of protecting the common man from such wrongs for which the remedy under ordinary law for various reasons has become illusory. Various legislation and regulations permitting the state to intervene and protect interest of the consumers have become a heaven for unscrupulous ones as the enforcement machinery either does not move or it moves ineffectively, inefficiently and for reasons which are not necessary to be stated. The importance of the Act lay in promoting welfare of the society by enabling the consumer to participate directly in the market economy. It attempts to remove the helplessness of a consumer which he faces against powerful business, described as ‘a network of rackets’ or a society in which producers have secured power to ‘rob the rest’ and the might of public bodies which are degenerating into storehouses of inaction where papers do not move from one desk to another as a matter of duty and responsibility but for extraneous consideration leaving the common man helpless, bewildered and shocked. The malady is becoming so rampant, widespread and deep that the society instead of bothering, complaining and fighting against it, is accepting it as part of life………..”
These observations, it is felt, are in equal force applicable to the cause of helpless investors.
36. DFL instead of redressing the complaints of its investors regarding non transfer of shares lodged for splitting/dematerialization is avoiding its responsibility and stating in stereotyped letters that the said shares are fake and/or forged. SEBI on their part have been inundated with letters from investors demanding redressal of their grievances. These complaints of the investors are pending since the year 2001 with no relief in sight for them. The fate of the original share certificates lodged by the investors for transfer is not known. It is thus clear that DFL have abdicated their responsibility towards the investors with a bald statement that in all these cases, the share/share certificate are ‘fake and forged’, without any evidence to prove the contrary. .
37. Having regard to their conduct, DFL are not entitled to any discretionary relief. In the result, for the findings recorded on various points for consideration, it is clearly established that DFL is guilty of non compliance of Section 15C of the Act and the non redressal of the investor grievances by them even after being upon by SEBI cannot be viewed leniently.
Section 15C of the Act in this regard 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.”
38. In view of the above, DFL would be liable for such penalty as I think fit to impose, in accordance with the provisions quoted above. However, while adjudging the quantum of penalty to be levied, it would also be necessary to consider the following factors as provided in the section 15J of the Act, which also find mention in Rule 5(2) of the SEBI (Procedure for holding enquiry and imposing penalty by the Adjudicating Officer) Rules, 1995, i.e., the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; the amount of loss caused to an investor or group of investors as a result of the default and the repetitive nature of the default.
39. As regards the disproportionate gain or unfair advantage enjoyed by DFL, there are no quantifiable figures available on record. The same would instead have to be discerned from their conduct. However, the default on the part of DFL is bound to have caused an unquantifiable loss to the investor class as a whole in as much as the complaints are pending since 2001. There are however, no figures or data available on record to quantify even the opportunity losses of an investor or group of investors, as a consequence on the part of DFL. What is however known is that the shares were seen to be trading last at about Rs.90/- per share at a given point of time and each of the investors are stated to have invested considerable amount of money on the said shares, which are no longer in their possession. What is however, most apparent to consider, is the failure on the part of DFL to heed the requests of the investors to resolve their complaints and in the process, openly flout the directives issued by SEBI and/or the provisions of the Act and the Rules/Regulations framed thereunder, which to a large extent, indicates the manner in which DFL is functioning. Moreover the complaints of the investors remain unresolved till date and thus the default of DFL is continuing till date.
40. Hence on a judicious exercise of the discretion conferred upon me, bearing in mind the factors enumerated above as well as after taking into consideration the facts and circumstances of the present case discussed in detail earlier, I am inclined to hold that although penalty need not be imposed upon DFL strictly in terms of the quantum specified in Section 15C of the Act, the present case warrants the imposition of a stringent penalty.
PENALTY:
41. In view of the clear violation of section 15C of the SEBI Act, 1992 and the gravity of the charges established against DFL, in exercise of the powers conferred upon me under Rule 5 of the SEBI (Procedure for Holding Enquiry and Imposing Penalty by the Adjudicating Officer) Rules, 1995 and in the interest of justice, equity and good conscience, I think it appropriate to levy a penalty of Rs. 25,00,000/-(Rupees twenty five lakhs only) on M/s Database Finance Limited for their failure to redress the grievances of the investors within the time specified by SEBI, which default is in fact continuing till date.
42. The penalty amount shall be paid within a period of 45 days from the date of receipt of this order through a cross demand draft drawn in favour of “SEBI- Penalties remittable to the Government of India” and payable at Mumbai which may be sent to Shri Sujit Prasad, Deputy General Manager, Securities and Exchange Board of India, Exchange Plaza, IVth Floor, Bandra Kurla Complex, Bandra (East) Mumbai 4000 51.
PLACE: MUMBAI G. BABITA RAYUDU
DATE: JUNE 27, 2005 AJUDICATING OFFICER