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BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. AS/AO/09/2014]

UNDER SECTION 15-I OF SECURITES AND EXCHANGE BOARD OF INDIA ACT,
1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING INQUIRY AND
IMPOSING PENALTIES BY ADJUDICATING OFFICER) RULES 1995

In respect of:
M/s. Kukar Sons (Indo French) Exports Ltd.
(CIN- L18101RJ1987PLC004017)

F-23(A&B) Malviya Industrial Area, Jaipur,-302017
___________________________________________________________________

FACTS OF THE CASE IN BRIEF

1. Securities and Exchange Board of India (hereinafter referred to as SEBI) vide
Circulars No. CIR/OIAE/2/2011 dated June 03, 2011, CIR/OIAE/1/2012 dated
August 13, 2012 and CIR/OIAE/1/2013 dated April 17, 2013 had directed all
listed companies to obtain the SEBI Complaints Redressal System (SCORES)
authentication and also redress the pending investor grievances within the
stipulated time period/submit Action Taken Report (ATR).

2. SEBI observed that M/s. KukarSons (Indo French) Exports Ltd.(hereinafter
referred to as"KSEL"/"Noticee"/ "the company") had neither obtained the
SCORES authentication/submit ATR nor redressed the grievance of investor(s)
and therefore, had failed to comply with the aforesaid SEBI Circulars. The
shares of the company are listed at Madras Stock Exchange (MSE), Jaipur
Stock Exchange (JSE), Delhi Stock Exchange (DSE) & Calcutta Stock
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Exchange (CSE). The shares are compulsorily delisted from Bombay Stock
Exchange (BSE).

3. Based on the aforesaid observations, it was alleged that by failing to obtain
SCORES authentication/submit ATR and to redress the pending investor
grievances within the stipulated time as directed, the Noticee has violated the
aforesaid SEBI Circulars No. CIR/OIAE/1/2011 dated June 03, 2011,
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 15C and, 15HB of the Securities and
Exchange Board of India Act, 1992 (hereinafter referred to as 'SEBI Act').

APPOINTMENT OF ADJUDICATING OFFICER

4. Vide order dated November 09, 2012, ShriSudeep Mishra, Deputy General
Manager was appointed as Adjudicating Officer under Section 15-I of the
Securities and Exchange Board of India Act, 1992 (hereinafter referred to as
the"SEBI Act") read with Rule 3 of the Securities and Exchange Board of
India(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating
Officer)Rules, 1995 (hereinafter referred to as the "Rules") and the same was
Communicated vide proceedings of Whole Time Member appointing
AdjudicatingOfficer dated November 23, 2012, to inquire into and adjudge under
Section 15C and 15HB of the SEBI Act, for the aforesaid alleged violations by
the Noticee.

5. Subsequently, the matter was transferred to the undersigned and I was
appointed as Adjudicating Officer under Section 15-I of the SEBI Act, 1992 read
with Rule 3 of the Rules, 1995 vide order dated September 23, 2013, to inquire
into and adjudge under Section 15C and 15HB of the SEBI Act, for the alleged
non-redressal of investor grievancesand failure in obtaining SCORES
authentication/ submit ATR.
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SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING

6. Show Cause Notice no. ILO/AS/842/2014 dated January 08, 2014 (hereinafter
referred to as "SCN") was served on the Noticee by Registered Post in termsof
the provisions of Rule 4 of the Rules requiring the Noticee to show cause as to
why an inquiry should not be held against the Noticee and why penalty, if
any,should not be imposed on the Noticee under Section 15C and 15HB of the
SEBI Act for the non-redressal of investor grievances, failure to obtain SCORES
authentication and failure to submit ATRinspite of being calledupon by SEBI in
writing to do so.

7. In the said SCN, it was alleged that 04 investor complaintswere pending against
it and was also advised to file ATR in respect to the said complaint by the
company through SCORES. It was also informed thatSEBI vide circular no.
CIR/OIAE/2/2011 dated June 03, 2011 stipulated that alllisted companies shall
view the complaints pending against them and submitAction Taken Report
(ATR) in SCORES failing which shall be treated as nonredressalof the investor
grievance by the company. It was also mentioned that the Noticee had not
obtained/ activated the SCORESauthentication as required under the SEBI
circular no. CIR/OIAE/1/2012 datedAugust 13, 2012 and Circular No.
CIR/OIAE/1/2013 dated April 17, 2013.

8. As advised, vide letter dated January 21, 2014, the Noticee filed its reply/written
submissions to the allegations mentioned in the aforesaid SCN. The written
submissions made by the Noticee are mainly to the following effect:

We have resolved all the complaints as mentioned in the SCN and details are
as under:

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i. With respect to complaint no. SEBIE/RJ13/0000239/1(Mr.YogeshJagdishbhai
Mehta) - The investor has transferred his shares to other shareholder and has
received full value of claim. We are attaching herewith copy of the draft received
by the investor along with copy of letter and copy of receipt registered post sent
to investor. It is also stated that the said fact has been submitted to SCORES
now.
ii. With respect to complaint no. SEBIP/RJ/11/0000170/1(Ms.SwapnaSinha) - The
investor has en given point wise reply of queries raised. We are attaching
herewith copy of the letter and copy of receipt registered post sent to investor.
ATR has been submitted on 10.06.2013 on SCORES also.
iii. With respect to complaint no. SEBIP/RJ12/0000017/1(Mr.Satram Das) - The
matter has been settled amicably with Mr. Satram Das. He has also no
complaint pending with the company. A copy of letter received from Mr. Satram
Das is enclosed herewith. ATR has been submitted on 02.07.2013 on SCORES
also.
iv. With respect to complaint no. SEBIP/RJ13/0000131/1(Mr.Alice Mathai) The
investor has en given point wise reply of queries raised. We are attaching
herewith copy of the letter and copy of receipt registered post sent to investor.
ATR has been submitted on 10.06.2013 on SCORES also.
v. With abovementioned facts we would also like to pray that since all cases
except one the replies have already been given earlier and now no complaint is
pending against us to non response or non compliance.
vi. We would like to request you that there are no operations in the company since
last many years and company is regularly complying all the legal formalities in
time. Due to non operations the company is in hard financial crunch. By looking
into the position we request you to not to levy penalty on us. There was no
intention of not cooperating with the authorities or delays in settlement of
investors grievances but only overlook the matter.


9. After considering reply/written submissions filed by the Noticee and in the
interest of natural justice, an opportunity of personal hearing was granted to the
Noticee before me on March 04, 2014. The intimation of the same was sent to
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the Noticeevide hearingnotice dated February 18, 2014 advising it to appear on
March 04, 2014 at 11:30 a. m. at the SEBI Indore local office.

10. The Noticee vide itsanother reply dated March 01, 2014 stated that The dates
of receipt of complaint mentioned in the complaint status record are not correct.
It is true that we received such complaints but these were settled by sending
information to the investor telephonic conversation or by sending letters to them
within the suitable time however we could not keep record of such letters. We
got the online password of SCORES on May 30, 2013. We are Sick company
and do not have any activities since last two decades. We wish to inform you
that we had replied to all the complaints filed with the company. The reason of
delay in addressing of complaints that one our director was involved in marriage
ceremony of his daughter during 2013. Due to that we could not pay timely
attention on these complaints.

CONSIDERATION OF EVIDENCE AND FINDINGS

11. I have taken into consideration the facts and circumstances of the case and the
Material made available on record.

12. The issues that arise for consideration in the present case are :

a) Whether the Noticee by delay in obtaining SCORES authentication, delay
in submission of ATR and by delay in redressing the investor grievances
has violated the aforesaid SEBI Circulars?

b) Does the violation, if any, on the part of the Noticee attract monetary
penaltyUnder Sections 15Cand 15HB 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?
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13. It is observed from the available records that as on the date of issuance of SCN
there were 4 investor complaintspending against the Noticee and the details of
the same were provided to the Noticee along with the SCN issued to it. Details
of the same are tabulated as under:

Sr.
No.
Name of the
complainant
Date Reason
behind filing
complaint
Reply by the Noticee
1 Mr.
YogeshJagdishbhai
Mehta
23.07.2013 Non receipt of
Dividend
Complainant has received full
value of claim. Fact has been
submitted to SCORES.
2 Mr. Satram Das 16.01.2012 Non receipt of
Dividend
Complaint has been settled with
Mr. Satram Das. He has no
complaint pending with the
company. Copy of letter dated un
received from Mr. Satram Das is
enclosed. ATR has been
submitted on 02.07.2013.
3 Ms. SwapnaSinha 04.01.2004 Non receipt of
Dividend
Company vide its reply dated
16.01.2014 stated that the
company has not declared any
dividend for the year 2009-2012.
In the light of the fact we assume
that the complaint is resolved.
ATR has been submitted on
10.06.2013.
4 Mr. Alice Mathai 08.05.2014 Non receipt of
Dividend
Company vide its reply dated
16.01.2014 stated that the
company has not declared any
dividend for the year 2009-2012.
In the light of the fact we assume
that the complaint is resolved.
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ATR has been submitted on
10.06.2013

14. From the details above, it is clear there were four investor complaints pending
pertaining to non-receipt of dividend filed by the complainants. I note from the
aforesaid circular dated June 03, 2011, that all companies, whose securities are
listed on stock exchanges, were hereby advised to obtain SCORES
authentication by September 14, 2012.It is also noted that all companies against
whom complaints are pending on SCORES, shall take appropriate necessary
steps within 7 days of receipt of complaint by the concerned company through
SCORES, so as to resolve the complaint within 30 days of receipt of complaint
and also keep the complainant duly informed of the action taken thereon. 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.

15. On the allegations above, the Noticee submitted that there are no operations in
the company since last many years and company is regularly complying all the
legal formalities in time. It is submitted that due to non-operations the company
is in hard financial crunch. However, no evidence has been provided that
Noticee has been declared as Sickcompany. It is stated that complaints were
settled by sending information to the investor through telephonic conversation or
by sending letters to them within the suitable time however they could not keep
record of such letters. These contentions are not acceptable.

16. TheNoticeehas submitted that there was no intention of not cooperating with the
authorities or delays in settlement of investors grievances but only overlook the
matter not acceptable to me.This only shows casual approach of the company
towards the grievances of the investors.

17. Further, as submitted by the Noticee that though it received these complaints
but were settled by sending information to the investor through telephonic
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conversation or by sending letters to them within the suitable time, however it
could not keep record of such letters. This contention is again not acceptable.

18. I note from the circular no. CIR/OIAE/2/2011 dated June 3, 2011 all complaints
pertaining to companies will be electronically sent through SCORES at
http://scores.gov.in/Admin. The companies were required to view the complaints
pending against them and submit ATRs along with supporting documents
electronically in SCORES. However, the noticee got the online password of
SCORES on May 30, 2013. Since the failure on the part of the company to
update the ATR in SCORES will be treated as non-redressal of investor
complaints by the company. It was also mentioned that the submission of
physical ATR will not be accepted for complaints lodged in SCORES. Therefore,
the contentions made by the Noticee that these complaints were settled by
sending information to the investor through telephonic conversation or by
sending letters to them not acceptable.

19. In this regard, I note from the circular no. CIR/OIAE/1/2012 dated August 13,
2012, that all companies whose securities are listed on stock exchanges, were
hereby advised to obtain SCORES authentication by September 14, 2012 in
terms of the aforesaid circular. However, the company got the SCORES
password/ authentication on May 30, 2013.Thus, theNoticeehas failed to comply
with the said circular within the stipulated time.

20. I also observe that vide circular no CIR/OIAE/1/2013 dated April 17, 2013, it was
directed by SEBI that the companies which are yet to obtained SCORES user ID
and Password are required to send their details as per the enclosed form-A to
SEBI (hard copy) and by email to scores@sebi.gov.in and obtain the SCORES
user ID and password.It was also specifically mentioned in the said circular that
failure to obtain SCORES user ID and password within 30 days from issue of
this circular would not only be deemed as non-redressal of investor
grievancesbut also indicate willful avoidance of the same.
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21. It is also pertinent to note that keeping in view the great importance of speedy
redressal of investors grievances, SEBI has introduced a SEBI Complaints
Redress System, known as SCORES for this purpose. Thus, by May 16, 2013,
the Noticee was under an obligation to obtain SCORES user ID and password,
however, based on the submissions made by it is observed that theNoticee
willfully avoided it. Therefore, the aforesaid contentions made by Noticee are not
acceptable to me and I hold the charges as alleged in the SCN dated January
08, 2013 as established against it.

22. 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 in SEBI Circular No. CIR/OIAE/2/2011 dated June 03, 2011, Circular No.
CIR/OIAE/1/2012 dated August 13, 2012, Circular No. CIR/OIAE/1/2013 dated
April 17, 2013.Further, it can be seen that the Noticee has delayed the
resolution of the complaints of the investors. Therefore the charge of violation of
Section 15C and 15HB is established against the Noticee.

23. Therefore, theallegation of delay in obtaining SCORES authenticationand delay
in submission of ATRand delay in resolution of investor grievances within the
stipulated time as directed is established against the Noticee.The Honble
Supreme Court of India in the matter of SEBI Vs. Shri Ram MutualFund held
that once the violation of statutory regulations is established, imposition
ofpenalty becomes sine qua non of violation and the intention of parties
committing suchviolation becomes totally irrelevant. Once the contravention is
established then thepenalty is to follow.

24. The provisions of sections 15C of SEBI Act, 1992 are reproduced hereunder:

15C.Penalty for failure to redress investors' grievances.-

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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 crorerupees,
whichever is less.

15HB. Penalty for contravention where no separate penalty has been
provided
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.].

25. While determining the quantum of monetary penalty, it is important to
considerthe factors stipulated in section 15J of SEBI Act, which reads as under:-

15J - Factors to be taken into account by the adjudicating officer

While adjudging quantum of penalty under section 15-I, the adjudicating
officershall have due regard to the following factors, namely:-

a. the amount of disproportionate gain or unfair advantage, wherever
quantifiable, madeas a result of the default;
b. the amount of loss caused to an investor or group of investors as a result of
thedefault;
c. the repetitive nature of the default.

26. I observe that from the material available on record it is difficult to quantify
theamount of gain or unfair advantage accrued to the Noticee or the extents of
loss suffered by the investors as a result of the failure to activate/ obtain
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SCORES authentication/non-submission of action taken report and redress the
investor. Grievances within stipulated time.

ORDER

27. In view of the above, after considering all the facts and circumstances of the
case and exercising the powers conferred upon me under Section15 I of the
SEBI Act and Rule 5 of the Adjudication Rules, I impose a penalty of
`1,00,000/- (Rupees One lakh only) under the provisions of Section 15 C of the
SEBI Act for delay inredressal investor grievances within stipulated time and
`1,00,000/- (Rupees one lakh only) under the provisions of Section 15 HB of the
SEBI Act for delay in obtaining SCORES authentication &delay in submission of
ATR by the Company, thereby resulting into consolidated penalty of `2,00,000
(`TwoLacs Only). I am of the view that the said penalty would commensurate
with the aforesaid failure committed by the Company.

28. The penalty shall be paid by way of Demand Draft drawn in favour of SEBI
Penalties Remittable to Government of India payable at Ahmedabad within 45
days of receipt of this order. The said demand draft shall be forwarded to the
Deputy General Manager (OIAE), Securities and Exchange Board of India,
Western Regional Office-II, Unit No. 002, Ground floor, Sakar-I, Near
Gandhigram railway Station, Ashram Road, Ahmedabad380009.

28. In terms of the provisions of Rule 6 of the Securities and Exchange Board of
India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating
Officer) Rules 1995, copy of this order is being sent to the Noticee and also to
the Securities and Exchange Board of India Mumbai.


Date: October 31, 2014 Achal Singh
Place: Indore Adjudicating Officer
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