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by SEBI. For the purpose of generating said user id and password, listed
companies were required to submit the details for authentication to SEBI, in the
format annexed to the said Circular. However, it was observed that
EnchanteJewelleryLimited (hereinafter referred to as Noticee) did not submit
the details to SEBI which were required to be furnished in terms of the said
Circular.
2. In order to further remind the Noticee about the compliance with the
requirements as laid down in the SEBI Circular dated June 03, 2011, a letter
dated November 14, 2011 was sent to the Noticee informing about the
commencement of processing of investor complaints in a centralized web
based complaints redress system SCORES in terms of the Circular and
advising the Noticee to send the information (i.e. details for authentication) as
required in the Circular, at the earliest.
3. Subsequently, one more letter dated January 18, 2012 was sent to the Noticee
reminding the Noticee that it has not submitted the authentication details
required by the said Circular and the aforesaid letter dated November 14, 2011
for implementation of SCORES. The letter advised the Noticee to submit the
said information as per the format in the Annexure enclosed with the said
Circular within 7 days. The information was necessary to create user name and
password which would have enabled the Noticee to view and resolve investor
grievance in SCORES. The letter also advised the Noticee to email soft copy of
its reply to scores@sebi.gov.in. The letter clearly informed that in order to
process the investor grievance on SCORES, the Noticee was required to
submit the aforementioned information, failing which, SEBI may initiate
appropriate action including initiation of Adjudication Proceedings, debarment
from accessing capital markets, prosecution proceedings against the Noticee
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and its directors. The letter also clearly specified that investor grievance lodged
in SCORES would be considered for closing in the system only upon uploading
the ATR in SCORES.
4. As observed from the contents of the Circular, SCORES introduced electronic
dealing of the complaints of the investors, by the respective companies. Thus,
once a complaint against a company was uploaded by SEBI in the SCORES, it
amounted to calling upon by SEBI to such company to redress the investor
grievance. Accordingly, it was incumbent upon such company to redress the
investor complaint. It was observed that four investor complaints were pending
against the Noticee as on August 27, 2012.
5. It was alleged that by not submitting the details for authentication as required
by the Circular and further required by the two letters dated November 14,
2011 and January 18, 2012, Noticee did not obtain the user id and password
which was essential for accessing the complaints pertaining to it, as uploaded
on the SCORES for redressing the investors grievances and subsequent
redressal thereof, within specified time. Thus, it was alleged that Noticee had
failed to redress the investor grievances which renders the Noticee liable for
imposition of penalty under Section 15C of the Securities and Exchange Board
of India Act, 1992 (hereinafter referred to as 'SEBI Act').
APPOINTMENT OF ADJUDICATING OFFICER
6. Shri Praveen Trivedi was appointed as Adjudicating Officer, vide Order dated
22.08.2012 under Section 15-I of the SEBI Act read with Rule 3 of SEBI
(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer)
Rules, 1995 (hereinafter referred to as Adjudication Rules) to inquire into
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and adjudge under the provisions of Section 15C of the SEBI Act for the
alleged violations committed by the Noticee. Pursuant to the transfer of Shri
Praveen Trivedi, Shri JayantaJash was appointed as Adjudicating Officer and
the said appointment was communicated vide Order dated 18.12.2013.
Subsequently upon the transfer of Shri JayantaJash, the undersigned has
been appointed as the Adjudicating Officer vide Order dated 22.06.2015.
SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING
7. A Show Cause Notice dated 30.08.2013 (hereinafter referred to as SCN) was
served on the Noticee. The SCN was issued to the Noticee under the
provisions of Rule 4 (1) of the Adjudication Rules, to show cause as to why an
inquiry should not be held against the Noticee under Rule 4 (3) of the
Adjudication Rules read with Section 15 Iof the SEBI Act for the alleged
violations.
8. The details of 4 investor complaints pending against the Noticee as stated in
the SCN are given below:
S.
No
.
Registrati
on No.
Name of
Complainant
Received
Date
Nature of
Complaint
SEBIE/HY
12/000015
5/1 (P)
SEBIE/HY
12/000015
6/1 (P)
SEBIP/HY
11/000009
0/1 (P)
SEBIP/HY
Bimal Kumar
15-07-2012
Bimal Kumar
15-07-2012
MohitBakliwal
05-07-2011
Non-receipt of
duplicate share
certificate
Non-receipt of
duplicate share
certificate
Non-receipt of
Bonus
Sanjay Kumar
05-07-2011
Non-receipt of
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11/000009
1/1 (P)
Jain
Bonus
9. Noticee vide its email dated 11.09.2013 acknowledged the receipt of the SCN
as received on 05.09.2013 and inter alia replied as follows:
We did not receive SEBIs letter dated November 11, 2011 or reminder
letter dated January 18, 2012. Our non-registration with SCORES was
not willful.
In order to mobilise working capital for the revival of the Company, the
Company negotiated with a Public Sector Bank to take a portion of its
factory premises on rent. The PSU Bank required the Company to
undertake considerable civil work at the property to bring the premises
in conformity with what the Bank desired. During the said period of
SEBIs two letters, the civil work was in progress and there was
considerable labour at the site. It is quite possible that the letters of
SEBI entrusted to the post office for delivery, if so delivered, were
misplaced or mishandled by the labour / contractor at the site.
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Prior to SEBIs letter dated 30.08.2013, we did not receive any letter,
intimation or direction from SEBI on the subject of the grievances of Shri
Bimal Kumar, MohitBakliwal or Sanjay Kumar Jain.
The complaint of MohitBakliwal and Sanjay Kumar Jain pertains to nonreceipt of bonus. The Company is a sick industrial company and has not
declared any bonus. The grievances of MohitBakliwal and Sanjay
Kumar Jain are ill founded.
10. Noticee vide its email dated 13.09.2013 informed that it has submitted its
SCORES application and enclosed a copy of the same along with the mail. A
physical copy of the SCORES application was also being sent to the address
mentioned on the SCORES application form then. Further the Noticee in its
aforesaid email stated as follows:
We seek your assistance in the matter of redressal of the grievance of Mr.
Bimal Kumar. The RTI has informed us that no request for issuance of
duplicate shares was ever received by them from Mr. Bimal Kumar. The RTI
further informs us that as per their records, there is no shareholder by the
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name of Bimal Kumar. The RTI has informed us that to proceed in the matter,
they require a copy of the grievance filed by him with SEBI, which would
contain his particulars i.e., contact information, folio, etc. Would it be possible
for SEBI to provide us with a copy of Mr. Bimal Kumars complaint so that we
may act on the same.
We would also be extremely grateful if copies of the grievances filed by the
other individuals are provided to us so that we may contact them and inform
them that the Company has not issued any bonus.
11. Vide its letter dated 18.09.2013, Noticee submitted its reply to the SCN wherein
it made submissions similar to those made by it vide its email dated 11.09.2013
and further made following additional submission:
13. We submitted our application for registration with SCORES and SEBI was
pleased to provide us with a user name and password. We logged onto the
SCORES website to retrieve the copies of the pending complaints. As per the
SCORES website, no complaints against the company have been received
and no complaints are pending. Printouts of the relevant pages of the
SCORES website are enclosed for your perusal.
12. In the interest of natural justice and in order to conduct an inquiry in terms of
Rule 4 (3) of the Adjudication Rules, the Noticee was granted an opportunity of
personal hearing on 27.10.2015 at SEBI Bhavan, Mumbai vide hearing notice
dated 22.09.2015. A copy each of the complaint details of Shri Bimal Kumar,
Shri MohitBakliwaland Shri Sanjay Kumar Jain was also enclosed with the
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hearing notice and the Noticee was advised to submit additional reply, if any on
or before 20.10.2015.
13. Noticee vide its letter dated 13.10.2015 submitted a detailed reply to the SCN
wherein inter alia it submitted as follows:
E..
F. A case for levy of penalty under Section 15C of the ACT for failure to
address the said pending investor grievances within the time specified by
the Board is not made out and we make the following submission for your
consideration.
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Company could not have redressed the said four investor grievances and
upload the Action Taken Reports as SEBI had not uploaded the said four
investor grievances on the SCORES website. The essential requirement of
the investor grievance being uploaded on the website SCORES was thus
not fulfilled by SEBI.
5. As the said four investor grievances had not been uploaded on the
SCORES website, the Company requested SEBI to provide the copies of
the grievances so that the Company could redress the same.
6. The Company followed up with SEBI the matter of obtaining the pending
investor grievances. The Company followed up the matter by email, it
visited the SEBI office,it asked the RTA to help in obtaining investor
grievances, it asked the compliance consultant to help in obtain the
pending investor grievances, etc. The Company was extremely worried
and concerned as the Company was at a crucial stage of revival and was
concerned that a penalty would derail its efforts of revival. The Company
was informed by the SEBI staff, albeit orally, that SEBI was seized of the
matter of locating the pending investor grievances, the pending investor
grievances will be uploaded on the SCORES website as soon as they are
located, the Company will be intimated, and therefore do not keep calling
SEBI in panic as the notice states, and common senses dictates, that the
time to redress the grievance starts when the grievance is uploaded on
SCORES, as a grievance cant be redressed till it is uploaded; so if the
grievance hasnt been uploaded why the panic, and now that the Company
has obtained SCORES registration,it can redress the grievances when the
same are communicated to it after being uploaded on the SCORES
website.
7. The matter rested thereafter. We are surprised and shocked that the
matter has been reopened after a period of 734 days (2 years and 4 days)
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on the pretext that the Company had sought a copy of the grievances, the
grievances are being provided, and therefore the adjudication will
commence.
8. SEBI located the pending investor grievances and uploaded them onto
the SCORES website on January 30. 2015.
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17. In light of fact that the Company uploaded the Action Taken Reports
onto the SCORES website on February 12, 2015 after receipt of the
grievances from the SCORES website on January 30, 2015, the Company
redressed the grievances within the time specified by the Board, and thus
the penalty provisions of Section 15 C of the ACT are not applicable.
There was no violation of the statutory obligation as contemplated by the
ACT, and thus the provisions of Section 15 C of the ACT are not
applicable.
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14. In response to the hearing notice dated 22.09.2015, Noticee vide its letter
dated 14.10.2015 stated as follows:
The Company has made detailed submissions in its petition, and the
same are self explanatory.
We request you to permit the Company to make oral arguments to the
Adjudicating Officer via Skype. This would assist the Company in saving
resources as the Company is a sick industrial company duly registered with
BIFR. Furthermore, the undersigned Director who will be making the oral
arguments, if permitted by SEBI, suffers from excruciating back pain, and a
long journey is extremely painful.
15. As regardsNoticees request to attend the hearing via Skype, Noticee was
informed vide email dated 15.10.2015 that arrangements through electronic
mode have been made at SEBI, Northern Regional Office, New
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17. Vide Office Note dated 28.10.2015 certain clarifications / information were
sought from NRO. NRO vide its Office Note dated 16.12.2015 provided the
clarifications / information.
CONSIDERATION OF ISSUES, EVIDENCE AND FINDINGS:
18. After perusal of the material available on record, I have the following issues for
consideration, viz.,
A. Whether the Noticee has violated the provisions of Section 15C of SEBI
Act?
B. If the answer to the above is affirmative, then whether the Noticee is liable
for monetary penalty under Section 15C of the SEBI Act?
C. If the answer to the aforesaid is affirmative, then to determine the quantum
of monetary penalty to be imposed on the Noticee taking into consideration the
factors mentioned in Section 15J of the SEBI Act?
ISSUE 1: Whether the Noticee has violated the provisions of Section 15C
of SEBI Act?
19. The allegation in the matter against the Noticee is that by not submitting the
details for authentication as required by the Circular and further required by two
letters dated November 14, 2011 and January 18, 2012, Noticee did not obtain
the user id and password which was essential for accessing the complaints
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Subsequently
vide
Circular
No.
CIR/OIAE/1/2013
dated
17.04.2013, SEBI advised the companies which were yet to obtain SCORES
user id and password to obtain it within 30 days of issue of the said Circular.
22. It is noted from the submission of the Noticee and the information received
from NRO that the Noticee had obtained SCORES authentication on
18.09.2013.Thus, the Noticee has not obtained SCORES authentication within
the time as specified by SEBI.
23. I note that Honble Securities Appellate Tribunal in the matter of Port Shipping
Company Ltd. Vs. SEBI decided on 29.04.2015 observed as follows:
As held by this Tribunal in case of M/s. Vidarbha Industries Ltd. (supra)
and Rakan Steels (supra) where a listed company fails to obtain SCORES
authentication within the time stipulated by SEBI, then it amounts to violating
the directions of SEBI and in such a case penalty is imposable under
Section 15HB of SEBI Act
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24. I, however, note that instant adjudication proceedings are under Section 15C of
SEBI Act and not under Section 15HB of the SEBI Act.
25. Regarding investor complaints, it is observed that when NRO was requested to
offer their comments on Noticees submission that as on 18.09.2013 none of
the four complaints were uploaded on SCORES website and they
wereuploaded on 31.01.2015, NRO submitted as follows:
all the four complaints were uploaded on the following dates on SCORES
websiteSl. No.
Registration No.
SEBIP/HY12/0000156/1
15/07/2012
SEBIP/HY11/0000090/1
21/05/2011
SEBIE/HY12/0000155/1
15/07/2012
SEBIP/HY11/0000091/1
21/05/2011
NAME
COMP AGAINST
Comp.
receipt
date
Comp.
disposal
date
Complaint
forwarded
date
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SEBIE/HY12/0000155/1
Bimal
Kumar
SEBIE/HY12/0000156/1
Bimal
Kumar
SEBIP/HY11/0000090/1
SEBIP/HY11/0000091/1
MOHIT
EnchanteJewellery 21/05/2011 16/02/2015 30/01/2015
BAKLIWAL
Ltd
/ PRAMOD
JAIN
SANJAY
KUMAR
JAIN /
PRAMOD
JAIN
26. It is seen from the screen shot of SCORES as on 19.09.2013 submitted by the
Noticee that no complaints were pending against it as on that date. From
NROs submission and the Action History submitted by it, it is seen that the
complaints were indeed forwarded to the Noticee on 30.01.2015.
27. As regards the allegation about failure of the Noticee to redress the investor
complaints, it is observed from para 2 of SEBI Circular No. CIR/OIAE/1/2012
dated 13.08.2012 that all companies against whom complaints were pending in
SCORES were to take appropriate necessary steps within 7 days of receipt of
complaint through SCORES so as to resolve the complaint within 30 days of
receipt of complaint. I also note that instant adjudication proceedings are under
Section 15C of SEBI Act. The provisions of Section 15C of SEBI Act read as
under:
"15C Penalty for failure to redress investors' grievances: If any listed
company or any person who is registered as an intermediary, after having been
called upon by the Board in writing, to redress the grievances of investors, fails
to redress such grievances within the time specified by the Board, such
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33. In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding
Inquiry and Imposing Penalties by Adjudicating Officer) Rules 1995, a copy
each of this Order is being sent to EnchanteJewellery Limited having office
at Plot no. 3 & 4, UdyogVihar Phase- IV, Gurgaon, Haryana- 122015 and
also to Securities and Exchange Board of India.
Date: 19.01.2016
Place: Mumbai
SURESH GUPTA
ADJUDICATING OFFICER
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