|
IN THE SECURITIES APPELLATE TRIBUNAL MUMBAI Appeal No. 82
of 2005 Date of Decision: 21.8.2006 Pentafour Products
Ltd.���������������������������������� ��� ���������� Appellant Versus Securities &
Exchange Board of Present:� Mr. K.S. Menon, Advocate for the appellant Mr. Ravi Hegde & Mr. Anand Upadhyay, Advocates for
the respondent Coram: ������� Justice
N.K. Sodhi, Presiding Officer C. Bhattacharya, Member R. N. Bhardwaj, Member Per:� Justice
N.K. Sodhi, Presiding Officer (oral) ������� �This appeal under Section 15T of the
Securities and Exchange Board of India Act, 1992 (for short the Act) is
directed against the order dated 25.6.2004 passed by the adjudicating officer
imposing a penalty of Rs. 25 lacs on the appellant under Section 15C of the Act
for its failure to redress the grievances of its investors within the time
specified by the Securities and Exchange Board of India (for short the Board). 2.���� It is
not in dispute that as many as 345 complaints against the appellant had been
filed by its investors/shareholders most of which pertain to the non-transfer
of share certificates either on allotment or otherwise. By a letter dated 29.4.2003
the Board called upon the company to redress the grievances of its investors and
in spite of this letter the appellant failed to do so. The details of the
complaints had been sent along with the letter. The company not only failed to
redress the grievances but also failed to respond to the letters from the
Board.� Adjudication proceedings were
initiated under Chapter VI A of the Act and an adjudicating officer was appointed
to enquire into the matter.� The
adjudicating officer also issued a notice calling upon the company to show
cause why a penalty be not imposed on it in terms of Section 15C of the Act for
its failure to redress the grievances of its investors.� The appellant did not submit any reply to
this notice. By another letter, the adjudicating officer advised the company to
attend a personal hearing and even that was not responded to. It is thus clear
that the Company neither submitted its reply to the show cause notice nor
attended the personal hearing on different dates despite an opportunity being
provided to it. The adjudicating officer has found that some of the requests
for the transfer of shares were pending with the Company since November 1997
and that they all remained unresolved till date. He also found that the Company
was negligent.� There was dereliction of
statutory duty besides lack of concern for its investors. The action of the
Company in not redressing the grievances prejudicially affected the interest of
the investors as they were deprived of the opportunity to sell the shares at an
opportune time.� By an order dated
25.6.2004 the adjudicating officer imposed a penalty of Rs. 25 lacs holding the
company guilty of violating the provisions of Section 15C.� Hence this appeal. ������� 3.���� We have
heard the learned counsel for the parties. The learned counsel for the
appellant opened his submissions by stating that the grievances of the investors
now stand redressed. He could not point out any material in support of this
contention. Having gone through the record it is clear that the grievances
still remain unresolved and the interest of the shareholders have been
adversely affected. The appellant company has not allowed them to exit at an
opportune time.� The provisions regarding
redressal of grievances have been flagrantly violated by the appellant company
and in the circumstances we find no ground to interfere with the finding recorded
by the adjudicating officer. 4.���� In the
result, the appeal fails and the same stands dismissed with no order as to
costs. Justice N.K. Sodhi Presiding Officer C. Bhattacharya Member R.N. Bhardwaj Member |