IN THE OFFICE OF THE ADJUDICATING OFFICER,
SECURITIES & EXCHANGE BOARD OF INDIA, 3rd FLOOR
L & T CHAMBERS
16, CAMAC STREET
KOLKATA – 700 017
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ORDER NO. Adj/Kol/34/04
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FILE NO. EDIFAR/34/2004
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DATE : 29-11-2004
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Passed By : SHRI JAYANTA JASH
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Despatched On : 29-11-2004
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ORDER IN ORIGINAL IN THE MATTER OF FILING OF DOCUMENTS ON THE ELECTRONIC DATA INFORMATION FILING AND RETRIEVAL (EDIFAR) WEBSITE UNDER CLAUSE 51 OF THE LISTING AGREEMENT BY EASTERN SILK INDUSTRIES LTD.
N.B. i) This copy is granted free of cost for the use of the person to whom it is issued.
Name and address of the party : Eastern Silk Industries Ltd.
of 19, R N Mukherjee Road
Kolkata - 700001
Show cause Notice(s) : One
Number and Date : SEBI/ERO/JJ/2004/7791
July 9, 2004
Notice for Hearing : One
Number and Date : SEBI/ERO/BM/2004/7870
July 27, 2004
Nature of Contravention : Alleged non-compliance of
Clause 51 of the Listing Agreement read with Regulation 17(3) {erstwhile Regulation 18(3) of the SEBI (Central Listing Authority) Regulation, 2003} in the matter of filing of information on the EDIFAR website.
Present during the hearing : K.T. Sheth
held on August 16, 2004 at SEBI’s Company Secretary
Kolkata Office
1.0 ORDER OF APPOINTMENT:
1.1 The undersigned has been appointed as an Adjudicating Officer by Securities and Exchange Board of India in terms of an Order dated June 30, 2004, to conduct an enquiry into alleged non compliance with the requirements of Clause 51 of the Listing Agreement read with Regulation 17(3) {erstwhile Regulation 18(3)} of the SEBI (Central Listing Authority) Regulations, 2003 by M/s Eastern Silk Industries Ltd.
2. SHOW CAUSE NOTICE & HEARING:
2.1 On appointment as Adjudicating Officer, as per the procedure laid down in SEBI (Procedure for holding inquiry and imposing penalty by Adjudicating Officer) Rules, 1995 (hereinafter referred to as the "SEBI Rules") a notice dated July 9, 2004 in accordance with Rule 4 of SEBI Rules, was served on M/s Eastern Silk Industries Ltd. calling upon it to show cause within 15 days as to why an enquiry should not be held against them for the alleged violations mentioned in the Order.
2.2 The company was also called upon to explain by giving a written reply including evidence, if any, within 15 days from the date of service of the notice as to why an inquiry should not be held against them for imposing penalty in accordance with Section 15 A(b) of Securities and Exchange Board of India Act 1992 read with the said Regulations and also the said Rules. The company submitted its reply vide letter dated July 12, 2004.
2.3 The company was also given an opportunity for personal hearing to provide adequate opportunity to present the views in the matter. Accordingly, an opportunity of personal hearing was granted in terms of provisions of sub-rule(3) of Rule 4 of the said Rules to the company vide letter No.SEBI/ERO/BM/2004/7870 dated July 27, 2004. The company was advised to be present before the Adjudicating Officer at SEBI, Eastern Regional Office, L& T Chambers 3rd Floor 16 Camac Street, Kolkata – 700017 on August 16, 2004.
2.4 Shri K.T. Sheth, Company Secretary appeared for the personal hearing on behalf of the company. During the personal hearing, Shri Sheth made submissions in addition to the written reply to the show cause notice.
3. SUBMISSION OF THE COMPANY
3.1 Shri Sheth has stated during the hearing that the company was advised by the Stock Exchange, Mumbai vide letter dated March 26, 2003 to download the registration form and to forward the duly filled in registration form along with the required documents. Shri Sheth has also stated that in response to the aforesaid letter of the Stock Exchange, Mumbai, the company vide its letter dated May 12, 2003 forwarded a duly filled in and signed EDIFAR Registration form along with the above mentioned documents to the Stock Exchange, Mumbai. Shri Sheth also submitted that during June, 2003, the representative of the company’s Mumbai office contacted the Stock Exchange, Mumbai in this regard and was advised that the login ID and password would be forwarded to the company in due course.
3.2 Shri Sheth during the hearing has submitted that the company has been complying with all the provisions of the listing agreement and as such there was no reason for not uploading the financial statements on SEBI’s EDIFAR website as these statements are also faxed as well as sent by letter to all the stock exchanges where the company’s shares are listed.
3.3 Shri Sheth has stated that the company was unable to comply in absence of login ID and password which was to be allotted by the Stock Exchange, Mumbai. However Shri Sheth on behalf of the company has submitted that it will once again pursue the Stock Exchange, Mumbai as well as the National Stock Exchange and Calcutta Stock Exchange in the matter to expedite obtaining login in ID and password.
4. FINDINGS:
4.1 I have carefully considered the reply filed by the company and also from the submissions made by them during the personal hearing. It is observed that the company was advised by the Stock Exchange, Mumbai vide letter dated March 26, 2003 to download the registration form and to forward the duly filled in registration form along with the required documents. As submitted by the company, in response to the aforesaid letter of the Stock Exchange, Mumbai, the company vide its letter dated May 12, 2003 forwarded a duly filled in and signed EDIFAR Registration form along with the required documents to the Stock Exchange, Mumbai. Shri Sheth also submitted that during June, 2003, the representative of the company’s Mumbai office contacted the Stock Exchange, Mumbai in this regard and was advised by the Stock Exchange that the login ID and password would be forwarded to the company in due course.
4.2 Under clause 51 of the Listing Agreement the company was required to upload the the following financial statements/documents with effect from quarter ended September 2002 in the EDIFAR website.
· Financial Statements comprising of Balance Sheet, Profit and Loss Account and full version of annual report, half yearly financial statements including cash flow statements and quarterly financial statements
· Corporate Governance report
· Shareholding pattern statement
· Action taken against the company by any regulatory agency
It was observed that the company failed to comply with the above requirements.
4.3 The company has contended that it was unable to comply in absence of login ID and password which was to be allotted by the Stock Exchange, Mumbai. However, the company did not submit any documentary evidence which could show that the company reminded the stock exchange regularly to enable it to upload the required information in EDIFAR. Mere submission of EDIFAR Registration form to the exchange cannot absolve the company from its responsibility to comply with clause 51 of the listing agreement i.e. uploading information under EDIFAR.
4.4 On going through the EDIFAR website it is found that the company’s name appears in the EDIFAR website but the required information has not been uploaded.
4.5 The information as specified in Clause 51 of the Listing Agreement is of immense importance as it would help the investors to have information on the company and its management and also to have information on the functioning of the company. The company was required to upload the information from the quarter ended September 2002. The company has not yet uploaded the information on EDIFAR. Hence there is already a delay of more than two years in uploading the information on the EDIFAR. Therefore, submissions made by Shri Sheth on behalf of the company cannot be accepted.
5. CONCLUSION
From the facts as stated above it is established that there has been non-compliance of Clause 51 of the Listing Agreement with respect to uploading of information on EDIFAR website and are liable to be penalized.
6. ORDER
6.1 In respect of the said contravention Regulation 18(3) of the CLA Regulation prescribes penalty under sub section (b) of Section 15A of SEBI Act .
While imposing penalty I have considered the contentions of the company that the violation was due to absence of login ID and password which was to be allotted by the Stock Exchange, Mumbai. I have also considered that only after being advised by the Stock Exchange, Mumbai, the company vide its letter dated May 12, 2003 forwarded a duly filled in and signed EDIFAR Registration form along with the required documents to the Stock Exchange, Mumbai. I have also considered the contention of the company that it has been complying with all the provisions of the listing agreement. I have also considered the fact that the company has not yet uploaded the information on EDIFAR. I have not found any documentary evidence showing company’s eagerness to adhere to clause 51 of the listing agreement and that there is already a delay of more than two years in uploading the information on the EDIFAR. I have considered all the factors as specified in section 15(J) of the SEBI Act while adjudging quantum of penalty. Considering the facts and circumstances of the case and taking into account the contentions of the company, I consider that:
- a penalty of Rs.40,000/- (Rupees Forty Thousand) only be imposed in the company.
6.2 As such I hereby impose a penalty of Rs.40,000/- (Rupees Forty Thousand) only on the company. Hence the penalty amount of Rs.40,000/- which shall be paid by the company by way of Demand Draft in favour of “SEBI – Penalties Remittable to Government of India”, Mumbai may be forwarded to Ms. Neelam Bharadwaj, Deputy General Manager, Securities and Exchange Board of India Mittal Court, ‘B’ Wing, 1st Floor, 224, Nariman Point, Mumbai – 400 021 within 45 days of receipt of this order.
| Date: December 29, 2004 |
(JAYANTA JASH ) |
| Place: KOLKATA |
Adjudicating Officer |