Order against M/s. Sushila Devi Rathi in the matter of Globe Stock & Securities Ltd

1. I was appointed as the Adjudicating Officer under Rule 3 of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 to enquire into and to adjudge under Sec.15-I of Securities and Exchange Board of India Act, 1992 for the alleged violation of 15A read with Sec.11 C (3) of Securities and Exchange Board of India Act, 1992 against Ms. Sushila Devi Rathi having her place of residence at 11A Umakanta Sen Lane, Kolkata- 700 030.
   
    
2. The aforesaid appointment of me as the Adjudicating Officer was communicated to me vide proceedings dated July 15, 2004.
    
3. As per the information provided to me by SEBI,  vide summons dated May 5, 2003, Ms. Sushila Devi Rathi was directed by the Investigating Authority of SEBI to produce certain documents mentioned in the Annexure to the said summons and also to be present in person on May 12, 2003. However, as there was no response from Ms. Sushila Devi Rathi  a fresh summons dated May 20, 2003 was issued to Ms. Sushila Devi Rathi to produce on May 26, 2003 all documents relating to her investments in Globe Stock & Securities Ltd. etc. From an unauthenticated photocopy of letter dated September 8, 2003 issued by PDC Securities Pvt. Ltd. Member, The Calcutta Stock Exchange Association Ltd., which was made available to me by SEBI, it appears that the aforesaid summons dated May 5, 2003 was served on Ms. Sushila Devi Rathi by the said member of the Stock Exchange. However, as per SEBI, there was no compliance of the aforesaid summons by Ms. Sushila Devi Rathi which was in violation of Sec. 11C (3) of Securities and Exchange Board of India Act, 1992.  
   
    
4. In view of the above, I issued a notice dated December 15, 2004 to Ms. Sushila Devi Rathi under Rule 4 of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 calling upon her to show cause as to why an inquiry should not be held against her and penalty be not imposed under Sec. 15A(a) of Securities and Exchange Board of India Act, 1992. The said notice dated December 15, 2004 was sent to Ms. Sushila Devi Rathi by Registered Post with Acknowledgment Due and the same was received by her as evident from the acknowledgement card received by my office.  Since there was no reply to the said notice by Ms. Sushila Devi Rathi,  I was of the opinion that an inquiry should be held in the matter and accordingly a notice of inquiry dated January 17, 2005  in terms of Rule 4(3) of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995 was issued to Ms. Sushila Devi Rathi fixing January 27, 2005 (at 12:30 PM) as the date of inquiry. Ms. Sushila Devi Rathi or her authorised representative/ lawyer was advised to appear for the inquiry at my office at Mumbai before me. The said notice was sent by speed post acknowledgment due.  My office neither  received any acknowledgment nor the notice returned undelivered. Therefore, I assumed that the said notice was duly delivered to Ms. Sushila Devi Rathi.
   
    
5. On March 18, 2005 neither any representative/ lawyer of Ms. Sushila Devi Rathi appeared before me nor any reply was received by me from Ms. Sushila Devi Rathi. In these circumstances, I was left with no option but to proceed with the inquiry against Ms. Sushila Devi Rathi as I was of the opinion that Ms. Sushila Devi Rathi was willfully neglecting to appear before me or to reply to the show cause notice.
   
    
6. Sec. 11 C of Securities and Exchange Board of India Act, 1992, interalia provides that the Investigating Authority may require any intermediary or any person associated with securities market in any manner to furnish such information to or produce such books, or registers, or other documents, or record before him or any persons authorized by it. Vide the aforesaid summons, the Investigating Authority directed Ms. Sushila Devi Rathi to produce all the documents relating to its investments in Globe Stocks & Securities Ltd. Sec. 15A (a) of Securities and Exchange Board of India Act, 1992 provides for imposition of monetary penalty by the Adjudicating Officer in case of any person, who is required under Securities and Exchange Board of India Act, 1992 or any rules or regulations made thereunder to furnish any document, return or report, fails to furnish the same, he shall be liable to a penalty of Rs. One lakh for each day during such failure continues or Rs. one crore, whichever is less. The charge of SEBI leveled against Ms. Sushila Devi Rathi was that it failed to comply with various summons issued by the Investigating Authority as mentioned above. In the instant case, I gave sufficient opportunity to Ms. Sushila Devi Rathi to defend the aforesaid charges of non furnishing of information directed to be produced by the Investigating Authority. However, Ms. Sushila Devi Rathi neither issued any reply to the notice issued by me nor appeared before me for inquiry/ personal hearing. In these circumstances, I assume that Ms. Sushila Devi Rathi has no grounds to defend the charges leveled against it by SEBI. Therefore, I conclude that the charges of non furnishing the documents to SEBI in response to summons issued by Investigating Authority are established with respect to Ms. Sushila Devi Rathi. 
    
7.  Since the failure of producing the documents before the Investigating Authority of SEBI by Ms. Sushila Devi Rathi is established, the quantum of penalty has to be decided by me.
    
8.  As I mentioned above, Section 15A (a) of Securities and Exchange Board of India Act, 1992 prescribes a penalty of Rs. One lakh for each day during which the failure to furnish any documents etc. to SEBI continues or Rs. One crore whichever is less.
    
9. To determine the quantum of penalty under Section 15A (a), I  considered the following factors as provided in the section 15J of Securities and Exchange Board of India Act, 1992 viz.(a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default ; (b) the amount of loss caused to an investor or group of investors as a result of the default and; (c) the repetitive nature of the default. 
    
10. As regards the disproportionate gain or unfair advantage there are no quantifiable figures available on record with respect to the default of Ms. Sushila Devi Rathi. There are also no figures or data on record to quantify the amount of loss caused to an investor or group of investors as a result of the default. However, the violation committed by Ms. Sushila Devi Rathi was repetitive in nature as it failed to furnish the required information to the Investigating Authority of SEBI, even though summons were issued to her on two occasions. 
    
     ORDER
    
     
11. Therefore in exercise of the powers conferred under section 15-1(2) read with Sec. 11C (3), Sec. 15 A(a) of the Securities and Exchange Board of India Act, 1992 and Rule 5 of the Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995, I hereby impose a penalty of Rs. 30,000/- (Rupees Thirty thousand only) on Ms. Sushila Devi Rathi. Ms. Sushila Devi Rathi shall pay the said amount of penalty by way of demand draft in favour of “SEBI- Penalties Remittable to Government of India”, payable at Mumbai within 45 days of receipt of this order. The said demand draft should be forwarded to Shri Jayanta Jash, Deputy General Manager, Securities and Exchange Board of India, Eastern Regional Office, 3^rd Floor, L&T Chambers, 16 Camac Street, Kolkata – 700 017. .
    
    
12. In terms 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 Ms. Sushila Devi Rathi and also to Securities and Exchange Board of India.

Date: March 31, 2005                             A. Chandra Sekhar Rao

Place: Mumbai                                         Adjudicating Officer