Order against ATV Projects India Limited

Sep 29, 2005

Orders : Orders of AO

ADJUDICATION ORDER UNDER RULE 5 OF THE SEBI (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES, 1995 IN THE MATTER OF ADJUDICATION PROCEEDINGS AGAINST ATV PROJECTS INDIA LIMITED.

1. I was appointed as Adjudicating Officer by SEBI vide order dated November 28, 2004, to inquire into and adjudge the contravention of Section 15 C of SEBI Act, 1992 alleged to have been committed by ATV Projects India Limited (hereinafter referred to as the company), on account of its failure to redress the grievances of the investors.

NOTICE AND REPLY

2. A show cause notice A&E/BS/27537/2004 dated December 7, 2004 was issued to the company in terms of provisions of Rule 4 of SEBI (Procedure for Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995. In the show cause notice it was stated that the company did not redress the grievances of investors when called upon to do so by SEBI vide its letter OIAE/SK/18983/2004 dated August 26, 2004. Vide the said letter, SEBI informed the company that as on July 30, 2004, 61 complaints of the investors were pending to be redressed by the company and the said complaints have been pending for more than more than six months. In view of the same, SEBI vide its letter dated August 26, 2004 called upon the company to redress the grievances of the investors.

3. As the company is alleged to have failed to redress the complaints of the investors, adjudication proceedings were initiated against it vide SEBI’s order dated November 28, 2004. A show cause notice dated December 7, 2004 was issued to the company requiring it to show cause as to why an inquiry should not be held against the company in terms of Rule 4 of SEBI (Procedure for Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995 and why penalty should not be imposed on it under Section 15 C of SEBI Act, 1992.

4. The company in its reply dated December 15, 2004 submitted that they had attended the following complaints and the same had been intimated to SEBI

· 35 complaints with action taken report as on date 20.10.2004

· 21 complaints with action taken report on date 16.09.2004

5. Further the company had stated that it is a financially sick company registered with BIFR and there was inadequate staff in the Share Department. Suitable steps are being taken to appoint additional staff and hence it is requested that the company may be granted time till December 30, 2004 by which time the company would be able to resolve the remaining complaints.

6. Subsequently, the company vide its letter dated 01.01.2005 stated that it had taken steps for resolving 51 complaints.

7. Considering the reply submitted by the company it was felt that an opportunity of hearing may be granted to the company and accordingly the company was advised to attend the hearing scheduled on January 14, 2005. However the company vide its letter dated January 7, 2005 sought an adjournment of the hearing and accordingly the hearing was adjourned to January 25, 2005. As the company again failed to attend the hearing on the above date, another opportunity of hearing was granted to it on March 18, 2005. Shri. Bijay Kumar, Company secretary attended the hearing on March 18, 2005 as the authorized representative of the company and made the following submissions

· We are submitting the Action Taken Report for 59 complaints and for two complaints the details are not with the company. We have requested SEBI office for the details of the complaint copy for the pending two complaints.

· Out of the 59 complaints, 11 complaints were pertaining to non receipt of dividend, annual report and the same have been sent to the shareholders.

· 23 complaints were pertaining to non receipt of share certificates after transfer and 4 complaints were pertaining to non receipt of credit with Depositary Participant. Out of the 23 complaints, in 11 cases the share certificates have been sent by post and the remaining complaints, we have asked the shareholders to furnish indemnity for issue of duplicate share certificates.

· 9 complaints are pertaining to conversion of fully convertible debentures against which the share certificates have been dispatched in 1993. At the time of conversion we have furnished the details of conversion to the shareholders and if the shareholder has complaint of non receipt, we are asking the shareholders to furnish indemnity for issue of duplicate share certificates.

· 3 complaints are pertaining to delayed interest payment on debentures and we have written to the debenture holders giving the details of claim for confirmation.

· 3 complaints are pertaining to redemption amount on debentures and the company has replied stating that share certificates have been issued against the fully convertible debentures and thereafter the debenture certificates stands cancelled with effect from September 1993 as per the terms of issue of debentures.

· 2 complaints are pertaining to non receipt of share certificates after transmission and the company has requested the shareholders to furnish the copies of death certificate, succession certificate for further action.

· 2 complaints are pertaining to non receipt of share certificates after consolidation. The company by post had sent the share certificates after getting the correct address.

· Two investors had given complaints which were mentioned twice.

CONSIDERATION OF EVIDENCE AND FINDINGS

8. The issue for consideration in this matter is whether the company after having been called upon by SEBI to redress the grievances of the investors failed to do so. In this regard, it is noted that vide letter No: OIAE/SK/18983/2004 dated August 26, 2004; SEBI had informed the company that 61 investors complaints are pending against the company for more than six months as on July 30, 2004 and called upon the company to redress the grievances of the investors. In this regard, the company vide, its letter dated October 20, 2004 stated that it may be granted time till 15th November to resolve the pending complaints.

9. Subsequently in the personal hearing granted to the company on March 18, 2005 the company had submitted the measures taken for redressing the grievances of the investors. It is noted from the submissions of the company that it has taken measures for redressing the grievances of the investors in the manner stated above.

10. Vide letter dated April 4, 2004, the company submitted that is referred to BIFR in 1998 as the net worth got eroded completely and steps were being pursued seriously for rehabilitation in consultation with the lead operating agency IDBI.

11. The company further submitted that earlier the work was handled in-house and the number of documents handled by the share department was quite high in volume. But due to financial sickness most of the staff left all of a sudden and due to which the work got seriously affected and data was unable to be collected for timely follow up with the investor complaints. Again new staff was recruited and since then from January 2004 all the complaints are being pursued seriously with the sole intention of reducing the number to nil.

12. As the company has a shareholder base of 1.44 lakh and from in house it was given to outside agency and also there was change of Registrar & Transfer agent from Big Share Services Pvt Ltd to Sharex Dynamics (I) Pvt. Ltd. Now, the company has appointed new staff and all the data is under the process of computerization for reference and data collection. As on date no transfers are pending with the company for more than 15 days as per listing agreement. Most of the complaints have been resolved and share certificates have been dispatched by registered post/couriers. But due to high document volume and acute shortage of staff, it is not possible to retrieve the records of dispatch and hence the company has written to the shareholders (with postage paid reply letters) for confirmation of the receipt of the share certificates and so far it has been receiving favorable responses from the shareholders as to receipt of the share certificates and in due course of time the company would be able to get the confirmation from all the complainants.

13. The company is in the process of computerization of the entire share data for reference and data collation for speedy follow up of investor complaints. The company has hired additional staff and software consultant for upgrading the data and within one month the company would be able to complete the computerization. Therefore, in view of the above difficult situation, the company requested to take a lenient view and asked time of two months for resolving all complaints.

14. The failure on the part of the company to redress the grievances of the investors, have to be viewed seriously. However considering the fact that the accumulation of unresolved complaints was due to the financial difficulties faced by the company and the company has initiated the process for redressing the grievances of the investors and as stated in the latest status report submitted by the company and records available, it is seen that the company had resolved the complaints mentioned in the show cause notice, a lenient view is taken in the matter.

15. Considering the submissions of ATV Projects Ltd that it had resolved the complaints mentioned in the show cause notice and considering the facts and circumstances of the case, I am of the view that no penalty needs to be imposed on ATV Projects India Ltd, in terms of the provisions of Section 15 C 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 ATV Projects (I) Ltd. and to Securities and Exchange Board of India.

Place : MUMBAI BIJU S

SEPTEMBER 29, 2005 ADJUDICATING OFFICER