BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

(ADJUDICATION ORDER NO: OIAE/EAD-3/AO/DRK-ASR/730/55-2015)
____________________________________________________________________
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:
TSR Darashaw Limited
Registrar to an Issue & Share Transfer Agent
SEBI Regn No: INR000004009
6-10, Haji Moosa Patrawala Industrial Estate,
20 Dr. E Moses Road, Near Famous Studio,
Mahalakshmi (West),
Mumbai- 400011

FACTS IN BRIEF
1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI') in its
report observed fraudulent activity pertaining to the transfer of shares of Tata
Power Company Ltd (hereinafter referred to as "TPCL") by TSR Darashaw
Limited.(formerly known as Tata Share Registry Ltd and hereinafter referred to as
Noticee / TSR).
APPOINTMENT OF ADJUDICATING OFFICER
2. I was appointed as Adjudicating Officer under Section 15-I of the Securities and
Exchange Board of India Act, 1992 (hereinafter referred to as SEBI Act), read
with Rule 3 of Securities and Exchange Board of India (Procedure for Holding
Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter
referred to as Adjudication Rules) to inquire into and adjudge under Section
15HB of the SEBI Act the violation of clauses 2 & 3 of schedule III read with
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regulation 13 of Securities and Exchange Board Of India (Registrars to an Issue

and Shares Transfer Agents) Regulations, 1993 (hereinafter referred to as STA
Regulations) alleged to have been committed by the Noticee and the same was
communicated vide proceedings of the Whole Time Member appointing
Adjudicating Officer dated February 18, 2015.
SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING:
3. A Show Cause Notice No. A&E/EAD-3/DRK-ASR/63/2015 dated February 27,
2015 (hereinafter referred to as SCN) was served on the Noticee on March 02,
2015 through Hand Delivery Acknowledgment Due (hereinafter referred to as
HDAD) under Rule 4 (1) of the Adjudication Rules, 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 15HB of the SEBI Act. The following
was stated / alleged in the aforesaid SCN:
(a) Ms. B. Hemalatha (hereinafter referred to as "Hemalatha"), executed a Power of
Attorney (hereinafter referred to as 'PoA') dated December 11, 1991 in favour of
her father, Shri J. P. Balasubramaniam (hereinafter referred to as 'JPB').
Hemalatha, who held shares of TPCL, expired in December 1995. In June 1996,
JPB forwarded the PoA to Noticee for registration and the same was registered in
the record of TSR vide Reg. No 146733 dated July 01, 1996.
(b) Noticee received 'transfer form' signed by JPB for 1,900 shares of TPCL on
February 14, 2002 and executed the transfer of shares to Shri Anil Kumar
Bhootra (hereinafter referred to as 'AKB') on February 20, 2002.
(c) JPB vide his letter dated March 05, 2003, sent the Succession Certificate, Death
certificate and duly filled transmission form to TSR for transmission of 1,900
shares of TPCL. Noticee vide letter dated March 19, 2003 informed JPB that the
1900 shares of TPCL were already transferred to AKB pursuant to the transfer
form signed by JPB. JPB vide letter dated March 28, 2003, informed Noticee that
he had never signed any transfer form.
(d) Share transfer form used for transfer of 1,900 shares of TPCL in February 2002
was obtained from Registrar of Companies, Mumbai on February 01, 2002. The
same was executed on February 08, 2002 and received by the Noticee on
February 14, 2002 and the transfer was done on February 20, 2002. It is also
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noted from the transfer form that the signature, name and address of witness is
mentioned as one Shri Dilip Shah, 15A, Appavu Nagar, Dharmapuri, Tamilnadu.
Within the short span of time from the issuance of the transfer form on February
01, 2002, the same was sent to Dharmapuri and then returned to Mumbai for its
execution. The shares of TPCL were subsequently sold by AKB on March 15,
2002.
(e) JPB did not send the death and succession certificate of his daughter prior to
2002. However, Noticee was aware of the death of Hemalatha and had also
acknowledged the same vide its letter dated June 29, 2001.
(f) It is alleged in the SCN that Noticee did not obtain transferor's confirmation at the
time when Noticee received 'transfer form' signed by JPB for transfer of 1,900
shares of TPCL to AKB considering the circumstances under which the shares
had been received for transfer. Therefore, Noticee failed to fulfill its duty as a
Share Transfer Agent in this regard.
(g) In view of the above, it is alleged in the SCN that Noticee has violated the
provisions of clauses 2 & 3 of schedule III read with regulation 13 of STA
Regulations. The texts of the aforesaid provisions are produced hereunder;
Securities and Exchange Board of India (Registrars to an Issue and Share
Transfer Agents) Regulations, 1993
13. To abide by Code of Conduct. Every registrar to an issue and share
transfer agent holding a certificate shall at all times abide by the Code of Conduct
as specified in Schedule III.
SCHEDULE III
CODE OF CONDUCT
2. A Registrar to an Issue and Share Transfer Agent shall fulfill its obligations in a
prompt, ethical and professional manner.
3. A Registrar to an Issue and Share Transfer Agent shall at all times exercise
due diligence, ensure proper care and exercise independent professional
judgment.
4. In response to the SCN, the Noticee vide its letter dated March 14, 2015 made
following submissions:

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(a) JPB had made a complaint to SEBI with respect to same matter in May 2003,
which was closed by SEBI in 2003 itself.
(b) The STA Regulations are not retrospective in nature.
(c) JPB ceased to be the PoA holder of Hemalatha after December 19, 1995 after
she had expired. However, JPB forwarded the PoA dated December 11, 1991
executed by Hemalatha in his favour, for registration in June 1996. This shows
malafide intention of JPB.
(d) On September 10, 1996, TSR received letter from JPB, requesting to re-post the
shares of TPCL. Clarification was sought from JPB in this regard by TSR.
However, JPB did not respond to the same. JPB suppressed this fact from SEBI
and The Hon'ble High Court of Judicature at Madras (hereinafter referred to as
'The High Court').
(e) The shares of TPCL were transferred based on transfer deed which was
complete in all respects and signatures of JPB were also matching with the
records available with TSR.
(f) JPB also lodged shares of Andhra Valley Power Supply Co Ltd. (hereinafter
referred to as "AVPS") for transfer with the signatures of PoA holder in November
1996 and 1997, which is much after the demise of Hemalatha. Thus, it is evident
that JPB has himself acted unlawfully and concealed this information from SEBI
and High Court.
(g) The SCN does not mention anything regarding JPB concealing the fact of the
death of Hemalatha and submissions of PoA after her death.
(h) There is no mention of letter dated June 22, 2001 addressed by JPB to TSR
intimating the demise of Hemalatha, in the SCN. JPB queried in the same letter
whether the shares can be transferred in favour of legal heirs if he produces the
legal heirship certificate, other documents and share certificates. JPB did not
mention in this letter that the share certificates are lying with the Share transfer
agent (STA) and not with him.
(i) In JPB's letter dated June 22, 2001 addressed to the Noticee, he mentioned that
Hemalatha was not alive. JPB did not forward the supporting documents i.e.
death certificate, to enable Noticee to take note of death of Hemalatha in its
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record. Merely on the basis of intimation, which may or may not be authentic,
TSR cannot take any action without supporting documents i.e. Death Certificate.
(j) Noticee submitted that as part of due diligence process, a remark is updated in its
system on receipt of death certificate of any shareholder.
(k) SEBI has no guidelines for STA to verify the veracity of the aspects like location
of origin and execution and the address of witness with respect to share transfer
procedure. The transfer of shares of TPCL was processed based on complete
transfer form, in a bonafide and legal manner in accordance with the law.
Thereafter, dematerializing and sale of shares by AKB is outside the purview of
TSR and in no way it can be surmised that transfer has been processed by TSR
in connivance with AKB.
(l) With respect to the records of 1996 pertaining to dispatch of certificates, STA's
are required to retain the records for three years as per SEBI uniform guidelines
to STA.
(m)Noticee denied that it had failed to exercise due skill, proper care and
independent professional judgment and violated Clause 2 & 3 of Code of Conduct
of Schedule III as specified under Regulation 13 of STA Regulations. The facts
disclosed clearly show that Noticee exercised due diligence as prescribed in the
Code of Conduct, Schedule lll, Regulation 13 of STA Regulations. It is further
submitted that there is no fraudulent act by TSR. The Noticee herein is a mere
facilitator for transfer and is not a beneficiary in respect of any alleged irregularity
as alleged or at all.
(n) The Noticee also requested for an opportunity of personal hearing in the matter.
5. Thereafter, as requested by the Noticee, an opportunity of hearing was granted to
the Noticee on March 23, 2015 at SEBI Bhavan, Mumbai vide hearing notice dated
March 16, 2015. The said notice of hearing was served on the Noticee on March
17, 2015 through HDAD under Rule 4 (3) of the Adjudication Rules and the proof
of service of the same is on record.
6. In respect of notice of hearing dated March 16, 2015, a letter dated March 20,
2015 was received from the Noticee confirming that Shri Avinash V. Joshi
(Advocate), Ms. Cruzine Goes (Chief Manager of the Noticee) and Shri Mahendra
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Wala (Manager of the Noticee), (hereinafter collectively referred to as 'ARs') would

be appearing on the date of hearing.
7. The aforesaid hearing on March 23, 2015 was attended by the ARs, who
reiterated the submissions made in Noticee's reply dated March 14, 2015. ARs
submitted that the Noticee had reposted shares of TPCL to JPB in November or
December of 1996. However, Noticee is unable to produce any record of the
aforesaid reposting of shares to JPB. The ARs further submitted that the action
under Section 15HB of the SEBI Act, 1992 read with Clauses 2 & 3 of Code of
Conduct of Schedule III as specified under Regulation 13 of STA Regulations
cannot be taken in a retrospective manner. Further, ARs gave an undertaking to
put their best efforts to trace the copies of documents related to the complaint of
JPB to SEBI and other correspondence/ documents available with them in support
of their case, on or before March 27, 2015.
8. Vide its letter dated March 27, 2015, Noticee submitted a copy of specimen
intimation letter and circular dated April 21, 1995 sent to all the shareholders of
TPCL whose name was appearing in the register as on record date for subdivision of shares of TPCL. Noticee also stated in its aforesaid letter that it is
unable to produce copy of record of reposting of shares of TPCL to JPB.
9. Thereafter, an email dated April 02, 2015 was received from the Noticee wherein
the chronology of events in the matter was provided by the Noticee.
CONSIDERATION OF EVIDENCE AND FINDINGS:
10. I have taken into consideration the facts and circumstances of the case and the
material available on record.
11. It is noted from the documents and evidence available that the Noticee was very
well aware of the demise of its shareholder viz., Hemalatha and inspite of the
same the Noticee transferred shares of TPCL to AKB within a short period of 6
days from the date of receipt of transfer form by the Noticee.
a. Noticee had posted shares of TPCL and AVPS to Hemalatha after subdivision
of shares in 1996. The shares of TPCL were returned undelivered to the
Noticee by postal authority with the comments "Shares returned to the sender,
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addressee expired". Noticee vide letter dated October 30, 1996 sought
confirmation from JPB on the comments made by postal authority as JPB was
PoA holder at that time in the records of Noticee and informed JPB that the
shares of TPCL are being retained by the Noticee.
b. Noticee has submitted that JPB vide his letter dated June 22, 2001 had
informed Noticee about the demise of Hemalatha who was his daughter and
shareholder of TPCL. JPB vide his aforesaid letter informed Noticee that he is
in possession of legal heirship certificate from Tehsildar, Dharmapuri and
sought advice from Noticee regarding transferring of shares of TPCL in his
and his wife's name, who were the legal heirs as per the heirship certificate.
Noticee vide its letter dated June 29, 2001 addressed to JPB offered its
condolences on the demise of Hemalatha. Noticee informed JPB that it does
not recognise a legal heirship certificate and provided JPB with information on
procedure of transmission of shares in case of death of a shareholder.
12. It is noted from above discussions / facts that Noticee was very well aware of the
demise of the shareholder viz., Hemalatha. In this regard, Noticee has submitted
that merely on the basis of intimation of JPB, which may or may not be authentic,
TSR cannot take note of death of Hemalatha in its record without supporting
documents i.e. Death Certificate of Hemalatha. However, it is noted that in the
year 1996 when the shares of TPCL were returned undelivered to Noticee by
postal authority with the comments "Shares returned to the sender, addressee
expired", Noticee sought confirmation from JPB on the comments made by postal
authority and retained the shares of TPCL with itself. The death of Hemalatha was
confirmed by JPB vide his letter dated June 22, 2001, which was acknowledged by
the Noticee in its letter dated June 29, 2001. Under these circumstances in my
opinion postal authority / father will not lie about the death of any person / his own
daughter. However, in February 2002, when the Noticee received request for
transfer of shares of TPCL from AKB, Noticee transferred the shares of TPCL to
AKB without seeking any confirmation from JPB / seller confirmation. In this
regard, considering the peculiar circumstances under which the shares were
transferred by the Noticee, I am of the view that the noticee should have exercised
utmost caution, care and diligence before transferring the shares of TPCL to AKB.
13. It is noted from the records made available that share transfer form purportedly
signed by JPB as PoA holder was used for transfer of 1,900 shares of TPCL to
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AKB. The aforesaid transfer form was received by the Noticee on February 14,
2002 and the transfer was effected on February 20, 2002. Noticee has submitted
that the signature on the transmission form matched exactly with that of PoA
holder i.e. JPB. Noticee has submitted that SEBI has no guidelines for STA to
verify the veracity of the aspects like location of origin and execution and the
address of witness with respect to share transfer procedure. The transfer of shares
of TPCL was processed based on complete transfer form, in a bonafide and legal
manner in accordance with the law. As discussed at pre-paras 11 and 12, Noticee,
despite being aware of the death of Hemalatha at the time of receiving the share
transfer form, allowed the execution of share transfer in the name of AKB based
on signatures of JPB as holder of PoA. However, Noticee was aware since 1996
that Hemalatha was not alive. Hence, the Noticee failed to take proper care and
diligence while conducting its duty as the share transfer agent.
14. The Noticee submitted copies of the PoA, the duly filled Share transfer form used
for transfer of shares of AVPS and TPCL. From the perusal of the aforesaid
documents along with other documents submitted by the Noticee, certain
discrepancies have been noticed and brief of the same is given below:
a. The signatures of JPB on the share transfer form used for transfer of
shares of AVPS have been attested by the Branch Manager, Tamil
Nadu Mercantile Bank Ltd, Dharmapuri Branch. However, Noticee
transferred the shares of TPCL to AKB without any such attestation of
the signature of JPB.
b. The size and style of font used on the stamp of PoA holder viz, JPB on
the share transfer forms used for AVPS is different from the stamp on
the share transfer form of TPCL. In addition to the above, the dots are
placed after the name and P. A. Holder in the seal used for transfer
forms of AVPS which is missing in the case of seal used for transfer
forms of TPCL.
c. The

Noticee

produced

copies

of

only

selective

documents/

correspondences related to the transfer of shares of TPCL but crucial

document like proof of reposting of shares of TPCL was not made
available by the Noticee.These documents submitted by the noticee
itself are more than 3 years old.
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d. The copy of PoA dated December 11, 1991 does not bear the signature
of JPB that are on the share transfer forms of AVPS and TPCL.
15. Noticee has also submitted that the share transfer form of TPCL were complete in
all respects and signatures of JPB were also matching with the records available
with TSR. In this regard, I note that the PoA does not bear the signature of JPB
and therefore it is not clear that how Noticee confirmed the matching of signature
on transfer forms with the signature of JPB.
16. Noticee has also submitted that JPB had made a complaint to SEBI with respect to
same matter in May 2003, which was closed by SEBI in 2003 itself. However,
relevant documents were not submitted by the Noticee indicating the closure of
this complaint by SEBI.
17. The Noticee has also submitted that the action under Section 15HB of the SEBI
Act, 1992 read with Clauses 2 & 3 of Code of Conduct of Schedule III as specified
under Regulation 13 SEBI (Registrar to an Issue and Share Transfer Agents)
Regulation, 1993 cannot be taken in a retrospective manner.
18. It is the contention of the Noticee that the transfer of shares of TPCL was done
within the framework of various rules and regulations laid down by SEBI and no
specific provision of SEBI Act or STA Regulations has been violated by the
Noticee in the process of transfer of shares of TPCL to AKB. In this regard, I am of
the view that it is practically not possible to foresee every possible situation that
may arise in future and have a specific provision for the same. SEBI has also
issued various circulars on time to time to provide guidelines to Registrar to an
Issue and Share Transfer Agents on various aspects. I also note that the Schedule
III as specified under Regulation 13 of STA Regulations provides broader
guidelines for Registrar to an Issue and Share Transfer Agents. The aforesaid
schedule specifically and clearly stipulates that a Registrar to an Issue and share
transfer agent shall act with due skill, diligence and care in conduct of all their
activities. In addition to the above, being a SEBI registered intermediary, the
Noticee should have its own systems and procedures in fulfilling its obligations
towards investors effectively.
19. In view of the above facts, discussions and circumstances of the case and the
material made available on record, it can be concluded that the Noticee has failed
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to act with due skill, diligence and care while transferring the shares of TPCL to
AKB from the account of Hemalatha.
20. Though the Noticee has failed to act with due skill, diligence and care in the instant
case, I agree with the contention of the Noticee on pre-para 17. However, this
does not preclude SEBI from taking any further action, as deemed fit, in
accordance with law against the Noticee for the fraudulent transfer of shares of
TPCL in the name of AKB.

ORDER:
21. Considering the facts and circumstances and the material made available on
record and the reasons stated above, no penalty is levied on the Noticee under
Section 15HB of the SEBI Act, 1992 in the present adjudication proceeding.
However, this does not preclude Securities and Exchange Board of India from
taking any further action, as deemed fit, in accordance with law against the
Noticee viz, TSR Darashaw Ltd. for the fraudulent transfer of shares of Tata Power
Company Limited in the name of Shri Anil Kumar Boothra.
22. 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 TSR Darashaw Ltd, Registrar to an
Issue & Share Transfer Agent (SEBI Registration No: INR000004009) having
address at 6-10, Haji Moosa Patrawala Industrial Estate, 20 Dr. E Moses Road,
Near Famous Studio, Mahalakshmi (West), Mumbai- 400011 and also to the
Securities and Exchange Board of India, Mumbai.

Date: April 13, 2015

D. RAVI KUMAR

Place: Mumbai

CHIEF GENERAL MANAGER &

ADJUDICATING OFFICER

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