ORDER UNDER RULE 5 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES, 1995 IN THE MATTER OF ADJUDICATION PROCEEDINGS AGAINST PANNA AGROFINE PVT. LTD.
1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) vide order dated March 3, 2005 appointed the undersigned as the Adjudicating Officer to inquire into and adjudge under Section 15I of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the ‘SEBI Act’), the violation alleged to have been committed by Panna Agrofine Pvt. Ltd. (hereinafter referred to as the noticee) on account of its failure to furnish to SEBI, information regarding its dealings in the scrip of Soundcraft Industries Limited (hereinafter referred to as SIL).
FACTS OF THE CASE
2. SEBI conducted investigation into the trading in the scrip of SIL during the period July 2001 and January 2002. During the course of the investigation prima facie it appeared to the investigating authority that the noticee had executed substantial number of trades in the scrip and manipulated the price of the scrip. In view of the same, the investigating authority of SEBI issued summons to the noticee for personal appearance before it and also to furnish information regarding dealings of the noticee in the scrip. It is alleged that the noticee failed to comply with the said summons issued by the investigating authority and also failed to furnish necessary information sought by the investigating authority. On account of the alleged failure on the part of the noticee to furnish necessary information to the investigating authority, adjudication proceedings were initiated against it under the provisions of Section 15I and Section 15 A (a) of the SEBI Act.
3. A show cause notice A&E/BS/38078/2005 dated April 8, 2005 was issued to the noticee in terms of Rule 4 of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as the “Rules”) seeking reply of the noticee as to why an inquiry should not be held in respect of the violations alleged to have been committed by it.
4. It is noted that the said notice sent by registered post has been returned undelivered. Due to the above facts, substituted service of the show cause notice was effected on January 4, 2006 in terms of the provisions of Rule 7 of the Rules.
5. The noticee did not reply to the show cause notice. However in the interest of justice, it was decided to conduct an inquiry in the matter. In view of the same, the noticee was advised to attend the inquiry on March 2, 2006. It is noted that the noticee failed to attend the inquiry on the said date.
6. As the noticee failed to reply to the show cause notice and failed to attend the hearing, the inquiry is proceeded on the basis of the facts and material available on record.
CONSIDERATION OF EVIDENCE AND FINDINGS
7. The issue for consideration in the matter is whether the noticee failed to comply with the summons / letters dated 16.01.2004, 30.01.2004, 20.02.2004, 22.06.2004, 16.07.2004, 25.10.2004 and 31.11.2004 issued by investigating authority requiring the noticee to furnish the information to it and whether the noticee is liable to the penalty prescribed under Section 15 A (a) of the SEBI Act, 1992. Section 11C (3) of the SEBI Act empowers the investigating authority of SEBI to require any person associated with securities market to furnish such information or produce such records as may be required by the investigating authority and Section 11C (5) empowers the investigating authority to examine such persons. Timely submission of information is very important in concluding investigation proceedings and non cooperation by an entity can be detrimental to the interest of the investors and securities market on account of any delay in the investigation.
8. It is noted that investigating authority issued letter dated January 16, 2004 to the noticee requiring it to furnish details like personal details and trading details in the scrip of SIL etc. The noticee was required to submit the said details by January 27, 2004. In this regard it is noted that the letter sent to the noticee has been returned undelivered.
9. The investigating authority again sent a letter to the noticee on January 30, 2004 requiring the noticee to provide the said details by February 7, 2004. It is noted that this letter also could not be served on the noticee.
10. The investigating authority sent another letter dated February 20, 2004 to the noticee requiring the noticee to submit the said details by March 1, 2004. It is noted that stock broker M/s Rajkumar C. Basantani (hereinafter referred to as Basantani) was advised to deliver the letter to the noticee. It is noted that the letter is received by Basantani, however there is no proof available on record indicating that the notice was served on the noticee.
11. Subsequently, the investigating authority issued summons dated June 22, 2004 to the noticee requiring the noticee to furnish the said details by June 30, 2004. It is noted that the summons could not be delivered to the noticee.
12. Further, the investigating authority vide its letter dated July 16, 2004 advised the Stock Broker Shri Rajkumar C Basantani to serve the summons on the noticee and the noticee was required to furnish the details by July 26, 2004. Shri Basantani vide its letter dated August 26, 2004 informed that the summons sent to the noticee by courier has been returned undelivered. It is mentioned in the said letter that Shri Basantani again delivered the summons to the noticee on August 25, 2004, however no acknowledgement by the noticee is available on record.
13. Further, the Investigating Authority issued summons dated October 25, 2004 to the noticee advising it to appear before the investigating authority on November 25, 2004. It is noted that the said summons could not be served on the noticee.
14. The investigating authority vide its letter dated November 30, 2004 required the noticee to appear before it on December 8, 2004. It is noted that this letter was addressed to the Stock Broker Shri Rajkumar C Basantani, advising the broker to serve the same on the noticee. It is further noted that no proof is available on record indicating that the summons was served on the noticee.
15. In view of the same, on the basis of the material available on record it is noted that there is no proof available on record indicating the service of the summons and letters on the noticee. Further it is pertinent to note that the show cause notice sent in present adjudication proceedings also returned undelivered. As no proof of service of the summons / notice is available, in view of the facts and circumstances of the case, it can not be concluded that the noticee failed to furnish information sought by the investigating authority of SEBI. In view of the same no penalty is imposed on Panna Agrofine Pvt. Ltd., in terms of the provisions of Section 15A(a) of the SEBI Act.
16. In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules 1995, copies of this order are sent to Panna Agrofine Pvt. Pvt. Ltd. and to the Securities and Exchange Board of India.
| Place: Mumbai |
S. Biju
|
| June 28, 2006 |
Adjudicating Officer
|