M / s Shreeyash Industries Limited is a company incorporated under the companies Act, 1956 having its registered office at No 1-11-252 / a 3, jabbar apartments, Begumpet, Hyderabad, Andhra Pradesh. The company was earlier known as Range Apparels Ltd and as per the records available the earlier address of the company was No 5-8-272, 276 and 322, Ayesha Residency, Public Garden Road, Nampally, Hyderabad - 500 001
Original Description:
Original Title
Adjudication order in respect of M/s Shreeysh Industries Limited
M / s Shreeyash Industries Limited is a company incorporated under the companies Act, 1956 having its registered office at No 1-11-252 / a 3, jabbar apartments, Begumpet, Hyderabad, Andhra Pradesh. The company was earlier known as Range Apparels Ltd and as per the records available the earlier address of the company was No 5-8-272, 276 and 322, Ayesha Residency, Public Garden Road, Nampally, Hyderabad - 500 001
M / s Shreeyash Industries Limited is a company incorporated under the companies Act, 1956 having its registered office at No 1-11-252 / a 3, jabbar apartments, Begumpet, Hyderabad, Andhra Pradesh. The company was earlier known as Range Apparels Ltd and as per the records available the earlier address of the company was No 5-8-272, 276 and 322, Ayesha Residency, Public Garden Road, Nampally, Hyderabad - 500 001
SECURITIES AND EXCHANGE BOARD OF INDIA (ADJUDICATION ORDER NO: SEBI/SRO/SBM/AO/3 of 2014) _____________________________________________________________________ UNDER SECTION 15- I OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 READ WITH RULE 5 OF SECURITIES AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES,1995 In respect of: M/s Shreeyash Industries Limited (Erstwhile name - Range Apparels Ltd) No 1-11-252/A3, Jabbar Apartments Begumpet Hyderabad _____________________________________________________________________ Background: 1. M/s Shreeysh Industries Limited is a company incorporated under the Companies Act, 1956 having its registered office at No 1-11-252/A 3, Jabbar Apartments, Begumpet, Hyderabad, Andhra Pradesh. The shares of the company are listed on the Bombay Stock Exchange ( BSE ) and Madras Stock Exchange ( MSE ). The company was earlier known as Range Apparels Ltd and as per the information downloaded from the BSE website the address of the company was mentioned as No 1-11-252/A 3, Jabbar Apartments, Begumpet, Hyderabad, Andhra Pradesh. As per the records available the earlier address of the company was No 5-8-272, 276 & 322, Ayesha Residency, Public Garden Road, Nampally, Hyderabad - 500 001. BSE has also informed that M/s Shreeyash Industries Ltd was suspended from 18 th February 2002 to 8 th March 2011 for penal reasons.
2. Securities and Exchange Board of India ( hereinafter referred to as SEBI ) had issued Circular No CIR/OIAE/2/2011 dated June 3, 2011 regarding commencement of the SEBI Complaints Redress System ( SCORES ) and advising all companies whose securities are listed on various stock exchanges to comply with the provisions of the said Circular. In this regard, SEBI again vide Brought to you by http://StockViz.biz Page 2 of 7
Circular no. CIR/OIAE/1/2012 dated August 13, 2012 advised all companies whose securities were listed on stock exchanges to obtain SCORES authentication by September 14, 2012 failing which it was informed that appropriate enforcement action would be initiated against them.
3. It was observed by SEBI that M/s. Shreeyash Industries Limited (hereinafter referred to as Noticee) had failed to obtain the SCORES authentication within the timeline stipulated under the afore-mentioned circular dated August 13, 2012. In this regard, SEBI issued as many as four letters to the Noticee advising it to obtain the SCORES authentication and also to redress the investor grievances pending against it. The details of letters sent by SEBI to the Noticee are mentioned below :
a) Letter dated July 25, 2011 was sent to the Noticee by ordinary post advising it to obtain the SCORES authentication and to redress the investor grievances pending against it. The Noticee failed to respond to the said letter.
b) Another letter dated November 23, 2011 was sent to the Noticee by Registered Post with acknowledgement due. However, the letter was not claimed by the Noticee and the same was returned undelivered.
c) A Letter dated August 13, 2012 was again sent to the Noticee advising them to furnish the SCORES authentication details and also to redress the 5 investor grievances pending against it. The details of the five (5) pending investor grievances were also sent along with the letter dated August 13, 2012 to the Noticee with specific instructions issued to them to take such steps to redress the grievances within 15 days from the date of receipt of the above said letter. The said letter was sent to the address of the Noticee by Speed Post with Acknowledgement due and the same was also acknowledged by them, which is evidenced by the receipt of the acknowledgement due card.
d) Since there was no response from the Noticee to the earlier letters issued to them by SEBI another letter dated September 8, 2012 was issued to the Noticee advising them to submit the SCORES authentication details and also to redress the five pending grievances against it. The said letter was sent to the address of the Noticee by Speed Post with acknowledgement due and the same was also delivered, as evidenced from the proof of delivery of the letter, which was downloaded from the postal department website. Brought to you by http://StockViz.biz Page 3 of 7
4. In addition to the above steps taken by SEBI an advertisement dated October 21, 2012 was also issued by SEBI in the newspapers in respect of the companies based in Andhra Pradesh, which included the name of the Noticee whose securities were traded / listed on the Stock Exchanges. Specifically, the advertisements were issued in the Deccan Chronicle and also in the Sakshi dated 21.10.2012. Vide the advertisement, the companies based in Andhra Pradesh, including the Noticee were advised to obtain the SCORES authentication within 7 days of the advertisement date failing which it was mentioned that SEBI would initiate appropriate enforcement proceedings against the defaulting companies. However, it was noted by SEBI that the Noticee has failed to obtain the SCORES authentication within the time frame, as advised. Consequently, the five investor grievances were shown as pending to be resolved against the Noticee in the SCORES. It was further observed that till the date of initiation of the adjudication proceedings i.e. as on November 26, 2012, the Noticee had not only taken any steps to obtain the SCORES authentication as advised but also failed to redress the pending grievances against it in the SCORES within the time specified.
APPOINTMENT OF ADJUDICATING OFFICER
5. The undersigned was appointed as the Adjudicating Officer under Section 15-I of the Securities and Exchange Board of India Act ( hereinafter known as 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 ) vide an Order dated 26 th November, 2012, to inquire into and adjudicate under the provisions of Sections 15 C and 15 HB of the SEBI Act, the alleged violations committed by the Noticee of the above stated Circulars/ instructions of SEBI.
SHOW CAUSE NOTICE AND REPLY
6. A Show Cause Notice ref AO/SCN/SBM/EIL/ 20016 /2013 / 1 dated August 12, 2013 (hereinafter referred to as SCN) was issued to the Noticee in terms of the Brought to you by http://StockViz.biz Page 4 of 7
provisions of Rule 4 of the Adjudication Rules to show cause as to why an inquiry be not held against it and penalty be not imposed u/s 15 HB and 15 C of the SEBI Act, for the alleged violations committed by the Noticee of not obtaining the SCORES authentication and consequently not redressing the investor grievances . The copies of the documents relied upon in the SCN were provided to the Noticee along with the SCN. The SCN was addressed to the Noticee at their address located at No 5-8-272, 276 & 322, Ayesha Residency , Public Garden Road, Nampally, Hyderabad 500 001, Andhra Pradesh and the SCN was sent to the afore mentioned address by Speed Post with Acknowledgement Due. The SCN which was sent to the Noticee at the above mentioned address returned undelivered with remarks Door Locked . I note that the SCN was sent to the Noticee at the same address where the earlier letters dated August 13, 2012 and September 8, 2012 were sent and also delivered to the Noticee.
7. I am therefore of the view that sufficient opportunities have been provided to the Noticee to take necessary steps to obtain the SCORES authentication and also to redress the pending grievances against it. I note that some of the letters that were sent by SEBI to the Noticees address in the past were also received by them, which is evident from the proof of delivery of these letters. Also, I note that SEBI issued an advertisement dated October 21, 2012 in both Deccan Herald and Sakshi against those companies based in Andhra Pradesh whose securities are traded on the Stock Exchanges but not obtained SCORES authentication, advising the companies to obtain the SCORES authentication within 7 days. I note that the name of the Noticee also appeared in the said advertisement issued by SEBI. It is further observed that the Noticee finally took steps to obtain the SCORES authentication only on 16 th May 2013 i.e. almost 7 months after the advertisement was issued by SEBI, as aforesaid. Consequently, due to the delay on the part of the Noticee to obtain the SCORES authentication, the investor complaints were pending against it in the SCORES. Hence, I am proceeding with the inquiry based on the documents and material available on record.
8. The particulars of the entire allegations against the Noticee in so far as not obtaining the SCORES authentication within the prescribed time frame and also failing to resolve the long pending grievances received against it from the complainants are not in dispute as no reply was received from the Noticee (being a listed company ) towards the SCN. The fact cannot be ignored that Brought to you by http://StockViz.biz Page 5 of 7
being a listed company, the Noticee had failed to respond to the earlier letters issued to them by SEBI advising them to take steps to obtain SCORES authentication and subsequently even after SEBI had issued an advertisement in this regard it took the Noticee further period of seven months from the advertisement date to finally obtain the SCORES authentication.
9. The available records downloaded from the SCORES site reveal that there were five complaints pending against the Noticee. However, out of the five complaints I note that the complaints received from two complainants viz. Ms. Manju Chugh and Mr. Hitesh Shah were entered in the SCORES twice and therefore, effectively there were only three pending complaints against the Noticee and not five as reported in the SCORES. I further note that in the case of a complaint lodged by Ms. Manju Chugh, on May 18, 2011 as regards non-receipt of 1500 shares sent by her for transfer, these 1500 shares were transferred in the name of Ms. Manju Chugh on June 15, 2012 and subsequently the R & T agent of the Noticee viz. M/s Bigshare Services Pvt. Ltd. had dispatched the share certificates to her by Regd. Post on June 28, 2012 i.e. the transfer of shares and dispatch of the certificates took place almost a year after the complainant had lodged her grievance. Thereafter, the Noticee had uploaded the ATR in the SCORES informing the status of the complaint on July 5, 2013 after the SCORES authentication was obtained by them on May 16, 2013. In terms of the Circular dated June 03, 2011, all listed companies were inter alia required to view the complaints pending against them, redress them and submit Action Taken Reports (ATRs) electronically in SCORES. As the SCORES is an online electronic system, respective listed companies were required to login to the SCORES system electronically through a company specific user ID and password, to be provided by SEBI, for the purposes of accessing the complaints of the investors against them, as uploaded in the SCORES. In order to generate the said user ID and password, listed companies were required to submit the details for authentication to SEBI, in the format annexed to the above said Circular. In the instant case, it is however, noted that the Noticee had delayed in taking steps to obtain the SCORES authentication. In the case of another complaint that was lodged against the Noticee by Mr. Hitesh Shah I note that the complaint was received on May 22, 2011 and the same was shown as resolved in the SCORES only on June 3, 2013 i.e. the Noticee took almost two years to redress the grievance. In the absence of material on record due to lack of response from the Noticee the amount of disproportionate gain or unfair advantage made by the Noticee as a result of such default committed cannot be Brought to you by http://StockViz.biz Page 6 of 7
quantified. However, incidences of this nature wherein a listed company fails to adhere to the instructions issued by SEBI in the matters relating to redress of grievances of investors definitely compromise the securities market regulatory framework, to the detriment of the investors at large.
10. I note that the Noticee has inordinately delayed in taking steps to obtain the SCORES authentication although they were provided with ample opportunities through various letters and advertisements issued by SEBI in this regard. Further, there was also delay that has been observed on the part of the Noticee to resolve the grievances received by it evident from the observations made in the pre-paragraphs. The Noticee has not shown any tenacity to take such proactive steps to immediately obtain the SCORES authentication despite several instructions issued by SEBI. The same is amply clear from the manner in which the Noticee took almost seven months to obtain the SCORES authentication even after an advertisement was issued by SEBI in this regard. Such casual display of attitude by listed companies towards regulatory instructions and more particularly on matters relating to investor complaints redress mechanism cannot be ignored and the violations against the Noticee stands established.
Order
11. In view of the above, after considering the facts and circumstances of the case and exercising the powers conferred upon me under the provisions of Section 15 I of the SEBI Act and Rule 5 of the Adjudication Rules, I impose a monetary penalty of Rs 2,00,000/- (Rupees Two Lakh only) under the provisions of Section 15 C read with 15 HB of the SEBI Act on the Noticee. I am of the view that the said penalty would be commensurate with the violations committed by the Noticee.
12. 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 the receipt of this order. The said demand draft shall be forwarded to the Deputy General Manager, Office of Investor Assistance and Education, Securities and Exchange Board of India, Southern Regional Office, Overseas Towers, 7th Floor, 756-L, Anna Salai, Chennai 600 002.
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13. In terms of Rule 6 of the Adjudication Rules, copy of this order is being sent to the Noticee (M/s Shreeyash Industries Ltd.) and also to SEBI.
Place: Chennai Suresh B Menon Date : September 30, 2014 Adjudicatiing Officer