This document is an adjudication order from the Securities and Exchange Board of India regarding Hatigor Tea Estates Limited's failure to comply with SEBI circulars requiring companies to obtain authentication on the SCORES system for addressing investor complaints and to redress pending investor grievances. The order finds that Hatigor Tea Estates Limited violated the circulars by not obtaining SCORES authentication or addressing one pending investor complaint within the required time period. While the company argued it was not subject to the circulars as an unlisted company, the order notes it was listed on the Calcutta Stock Exchange. Therefore, the order establishes the violation and imposes a monetary penalty on the company for non-compliance under relevant sections of SEBI
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Original Title
Adjudication Order against Hatigor Tea Estates Limited in the matter of SCORES
This document is an adjudication order from the Securities and Exchange Board of India regarding Hatigor Tea Estates Limited's failure to comply with SEBI circulars requiring companies to obtain authentication on the SCORES system for addressing investor complaints and to redress pending investor grievances. The order finds that Hatigor Tea Estates Limited violated the circulars by not obtaining SCORES authentication or addressing one pending investor complaint within the required time period. While the company argued it was not subject to the circulars as an unlisted company, the order notes it was listed on the Calcutta Stock Exchange. Therefore, the order establishes the violation and imposes a monetary penalty on the company for non-compliance under relevant sections of SEBI
This document is an adjudication order from the Securities and Exchange Board of India regarding Hatigor Tea Estates Limited's failure to comply with SEBI circulars requiring companies to obtain authentication on the SCORES system for addressing investor complaints and to redress pending investor grievances. The order finds that Hatigor Tea Estates Limited violated the circulars by not obtaining SCORES authentication or addressing one pending investor complaint within the required time period. While the company argued it was not subject to the circulars as an unlisted company, the order notes it was listed on the Calcutta Stock Exchange. Therefore, the order establishes the violation and imposes a monetary penalty on the company for non-compliance under relevant sections of SEBI
In the matter of SCORES Adjudications - Adjudication Order No.
: SM/AO8/2014 dated August 12, 2014
Adjudication Order in the matter of Hatigor Tea Estates Limited. Page 1 of 6 BEFORE THE ADJUDICATING OFFICER SECURITIES AND EXCHANGE BOARD OF INDIA (ADJUDICATION ORDER NO.: SM/AO8/2014) _______________________________________________________________________________ UNDER SECTION 15 - I OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ WITH RULE 5 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES, 1995. In respect of: HATIGOR TEA ESTATES LIMITED (PAN AAACH6672G)
In the matter of SCORES
Background:
1. Securities and Exchange Board of India (hereinafter referred to as SEBI) vide Circulars No. CIR/OIAE/1/2012 dated August 13, 2012 and CIR/OIAE/1/2013 dated April 17, 2013 had directed all listed companies to obtain SEBI Complaints Redressal System (SCORES) authentication and also redress the pending investor grievances within the stipulated time period.
2. SEBI observed that certain companies including Hatigor Tea Estates Limited(hereinafter referred to as 'the Noticee/the Company') had neither obtained the SCORES authentication nor redressed the grievance of investor(s) and therefore, had failed to comply with the aforesaid SEBI Circulars
3. Thereafter, vide letter dated July 18, 2013, the aforesaid companies were again advised to submit the requisite information regarding SCORES authentication and redress the pending investor complaints by August 05, 2013. However, the Noticee once again failed to comply with the SEBI directive.
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In the matter of SCORES Adjudications - Adjudication Order No.: SM/AO8/2014 dated August 12, 2014 Adjudication Order in the matter of Hatigor Tea Estates Limited. Page 2 of 6 4. Based on the aforesaid observations, it was alleged that by failing to obtain SCORES authentication and to redress the pending investor grievances,the Noticee has violated the aforesaid SEBI Circulars No. CIR/OIAE/1/2012 dated August 13, 2012 and CIR/OIAE/1/2013 dated April 17, 2013. The alleged violation, if established, makes the Noticee liable for monetary penalty under Sections 15HB and 15C of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as SEBI Act).
Appointment of Adjudicating Officer:
5. The undersigned was appointed as Adjudicating Officer under section 15-I of the SEBI Act read with Rule 3 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as Adjudication Rules), to inquire into and adjudicate under Section 15HB and 15C of the SEBI Act, the alleged violations by the Noticee.
Show Cause Notice, Reply of Noticee and Personal Hearing:
6. A Show Cause Notice SEBI/ERO/SM/ADJ/3419/2014 dated January 30, 2014 (hereinafter referred to as SCN) was issued to the Noticee under Rule 4 (1) of the Adjudication Rules, to show cause as to why an inquiry be not held against the Noticee and penalty be not imposed under Sections 15HB and 15C of the SEBI Act, for the violations alleged to have been committed by the Noticee, namely, failure to obtain SCORES authentication and failure to redress investor grievance. The copies of the documents/evidence relied upon in the SCN were provided to the Noticee along with the SCN.
7. The Noticeesubmitted their reply to the SCN vide letter dated February 13, 2014. Thereafter, the Noticee was granted an opportunity of personal hearing on April 25, 2014. Shri Vinod Agarwal, the Authorized Representative (AR) of the Noticee appeared for the hearing, and made submissions on behalf of the Noticee, reiterating the earlier written submissions.
8. The submissions made by the Noticeeare summarized below: Brought to you by http://StockViz.biz
In the matter of SCORES Adjudications - Adjudication Order No.: SM/AO8/2014 dated August 12, 2014 Adjudication Order in the matter of Hatigor Tea Estates Limited. Page 3 of 6 The Noticeestated that the securities of the company are not listed under any stock exchange and hence, they were not required to comply with the directions of SEBI issued under the said Circulars. To substantiate the aforesaid contentions, the MCA data printout was also enclosed. However, company was shown as listed in the Calcutta Stock Exchange but the shares of the Noticee have been stopped from trading for last several years. The Noticee had now sent the requisite data to SEBI on April 09, 2014 and received the SCORES authentication on April 15, 2014.
Consideration of Issues and Finding:
9. I have examined the SCN, and other documents available on record.
10. The issues that arise for consideration in the present case are : a) Whether the Noticee by failing to obtain SCORES authentication and by failing to redress the investor grievances has violatedthe aforesaid SEBI Circulars? b) Does the violation, if any, on the part of the Noticee attract monetary penalty under Sections 15HB and 15C of the SEBI Act? c) If so, what would be the monetary penalty that can be imposed taking into consideration the factors mentioned in Section 15J of the SEBI Act?
11. It is observed from the records that SEBI had advised the Noticee to furnish the authentication details for implementation of SCORES within a specific time period as per the format/annexure enclosed with the said Circulars (in both hard copy and soft copy) and toresolve the investors grievances in SCORES. It was also stipulated that failure on the part of the company to update the ATR in SCORES, would be treated as non-redressal of investors' complaints.
12. In the instant case, it is noted that the Noticee had not complied with the aforesaid SEBI Circulars. The plea taken by the Noticee that they were an unlisted company and hence outside the ambit of the aforesaid SEBI Circulars is not tenable since by their own admission, they were shown as listed at the Calcutta Stock Brought to you by http://StockViz.biz
In the matter of SCORES Adjudications - Adjudication Order No.: SM/AO8/2014 dated August 12, 2014 Adjudication Order in the matter of Hatigor Tea Estates Limited. Page 4 of 6 Exchange. Moreover, the Noticee did furnish the requisite details to SEBI, albeit with considerable delay and was provided the SCORES authentication on April 15, 2014. It is also observed that there was one complaint pending against the Noticee.
13. Based on the material on record, I am of the view that the violation is established against the Noticee since they had not complied with the requirements of SCORES within the given time period. The statement that the Noticeewere ignorant of the listing status/regulatory provisions is not justified. It is a well established legal maxim that "Ignorantiajuris non excusat", or "ignorance of the law excuses no one". A listed company is expected to comply with the extant regulatory and statutory requirements. I find that in the instant matter, the Noticee failed to exercise reasonable care and diligence in discharge of its duty as a listed company and therefore is liable for penalty.
14. In view of the above and also taking into account the available material on records, I am of the opinion that the Noticee had failed to abide by the directives issued by SEBI vide Circulars No. CIR/OIAE/1/2012 dated August 13, 2012 and No. CIR/OIAE/1/2013 dated April 17, 2013, and thereby violated Sections 15HB and 15C of the SEBI Act and had neither obtained the SCORES authentication nor redressed the grievance of investor(s) and had failed to submit the information within the stipulated time. Therefore, the alleged violation of the provisions of the aforesaid SEBI Circulars by the Noticee as specified in the SCN stand established.
15. The Honble Supreme Court of India in the matter of SEBI Vs. Shri Ram Mutual Fund [2006] 68 SCL 216(SC) and (2006) 131 Comp. Cas. 591 (SC) held that: In our considered opinion, penalty is attracted as soon as the contravention of the statutory obligation as contemplated by the Act and the Regulations is established and hence the intention of the parties committing such violation becomes wholly irrelevant.
16. In view of the above violation, the Noticee is liable for monetary penalty under Sections 15HB and 15C of the SEBI Act which read as follows:
15HB.Penalty for contravention where no separate penalty has been provided.- Brought to you by http://StockViz.biz
In the matter of SCORES Adjudications - Adjudication Order No.: SM/AO8/2014 dated August 12, 2014 Adjudication Order in the matter of Hatigor Tea Estates Limited. Page 5 of 6 15HB.Whoever fails to comply with any provision of this Act, the rules or the regulations made or directions issued by the Board thereunder for which no separate penalty has been provided, shall be liable to a penalty which may extend to one crore rupees.
15C.Penalty for failure to redress investors grievances.
15C. 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 company or intermediary shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less.
17. While determining the quantum of penalty under Section 15 HB of SEBI Act, it is important to consider the factors stipulated in Section 15J of SEBI Act, which reads as under:-
15J.Factors to be taken into account by the adjudicating officer: 15J.While adjudging quantum of penalty under section 15-I, the adjudicating officer shall have due regard to the following factors, namely:- (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; (c) the repetitive nature of the default.
18. It is difficult, in cases of such nature, to quantify the disproportionate gains or unfair advantage enjoyed by an entity because of the default and also the magnitude of consequent losses suffered by the investors. I note that there was an investor complaint pending against the Noticee. In the absence of complete details, it is difficult to quantify the quantum of penalty. However, the lack of due diligence demonstrated by the Noticee is a risk to the securities market and thus loss to the investors to that extent.
ORDER
19. In view of the above, after considering all the facts and circumstances of the case and exercising the powers conferred upon me under Section 15 I of the SEBI Act Brought to you by http://StockViz.biz
In the matter of SCORES Adjudications - Adjudication Order No.: SM/AO8/2014 dated August 12, 2014 Adjudication Order in the matter of Hatigor Tea Estates Limited. Page 6 of 6 and Rule 5 of the Adjudication Rules, I hereby impose a penalty of Rs.1,50,000/- (Rupees One Lakh Fifty Thousands) only under the provisions of Section 15HB of the SEBI Act and Rs.1,50,000/- (Rupees One Lakh Fifty Thousands) only under the provisions of Section 15C of the SEBI Act, on the Noticee, thereby resulting into consolidated penalty of Rs.3,00,000/- (Rupees Three Lakhs) only. I am of the view that the said penalty would be commensurate with the aforesaid failure committed by the Noticee.
20. The Noticee 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 Demand Draft shall be forwarded to the Regional Director, Securities and Exchange Board of India, Eastern Regional Office, L & T Chambers, Third Floor, 16, Camac Street, Kolkata - 700017.
21. Copy of this order is being sent to the Noticee and also to the SEBI, in terms of the Adjudication Rules.