BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. AO/SM-LS/ERO/12/2016]
_________________________________________________________________________
UNDER SECTION 15-I OF SECURITIES 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 Camellia Trading & Investment Ltd.
(PAN: AACCC4564E)
In the matter of Non obtaining of SCORES Authentication
_________________________________________________________________________
FACTS OF THE CASE IN BRIEF
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 (hereinafter referred to as SEBI Circulars) had directed all listed companies to
obtain SEBI Complaints Redressal System (SCORES) authentication within the stipulated
time period as prescribed by SEBI and also redress any pending investor grievances within
the stipulated time period.

2.

It was observed that certain companies including Camellia Trading & Investment Ltd.
(hereinafter referred to as the Noticee/the Company) had failed to obtain the SCORES
authentication and therefore, had failed to comply with the aforesaid SEBI Circulars.

3.

Thereafter, a letter dated December 02, 2013, was issued to the aforesaid companies,
including the Noticee, whereby the companies were once again advised to submit the
requisite information regarding SCORES authentication by December 18, 2013.
However, the Noticee failed to submit the requisite information.

APPOINTMENT OF ADJUDICATION OFFICER

4.

Shri S V Krishanmohan was appointed as the Adjudicating Officer vide order dated May
07, 2014, to inquire and adjudge under section 15-I of SEBI Act and rule 3 of SEBI
(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules,
1995 (hereinafter referred to as Rules) to enquire into and adjudge under section 15HB
of SEBI Act for the alleged violation of SEBI Circulars by the Noticee. Pursuant to the

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transfer of Shri S V Krishanmohan, the undersigned was appointed as Adjudicating

Officer vide Order dated June 22, 2015.
SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING
5.

A Show Cause Notice No. SEBI/ERO/SVK/ADJ/M-556/2015 dated March 06, 2015

(herein after referred to as SCN) was issued to the Noticee under rule 4 of the Rules to
show cause as to why an inquiry be not held against them in terms of rule 4 of the Rules
read with section 15-I of SEBI Act and penalty be not imposed under Section 15HB of
SEBI Act for the violations alleged to have been committed by the Noticee. The Noticee
submitted a reply to the SCN vide its letter received on March 26, 2015, wherein the
Noticee has submitted that it had already made the necessary application under the SEBI
Complaint Redressal System vide its Form dated March 24, 2015.

6.

Thereafter, the Noticee was granted an opportunity of personal hearing on December 02,
2015, however the Noticee did not appear for the said hearing. Keeping in view the
principle of natural justice another opportunity of hearing was granted to the Noticee on
December 22, 2015, wherein Shri K Balaji (Compliance Officer) and Ms. Debika
Chatterjee (Authorized Representative) of the Noticee appeared before me and reiterated
the submissions made earlier. The Noticee has also made its written submissions vide its
letter dated December 22, 2015 wherein it has inter alia stated the following :a. The Noticee has already applied for SCORES authentication and has also got an
e-mail reply from SEBI confirming its application and allotting the Login ID and
password.
b. The Noticee has a total of 56 equity share holders and the total no. of equity shares
is 2,45,000 at the rate of Rs. 10 per share. Out of the 56 shareholders, 6 are
promoter-share holders having a combined holding of 7.31% of the total equity
share capital.
c. The shares of the Noticee are only listed in the Calcutta Stock Exchange.
d. The Noticee has already applied of voluntary delisting of equity shares and has
also got in-principle approval from the Calcutta Stock Exchange.
CONSIDERATION OF ISSUES AND FINDINGS

7.

I have examined the SCN, the reply and the submissions of the Noticee, and other
information and documents available on record. The issues that arise for consideration in
the present case are :
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a) Whether the Noticee by failing to obtain SCORES authentication has failed to comply
with SEBI Circular No. CIR/OIAE/1/2012 dated August 13, 2012 and
CIR/OIAE/1/2013 dated April 17, 2013?
b) Does the violation, if any, on the part of the Noticee attract monetary penalty under
Section 15 HB 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?
8.

The Noticee was required to comply with the SEBI Circulars within the stipulated time
period as prescribed by SEBI. Since the Noticee did not comply with the SEBI Circulars,
vide letter dated December 02, 2013 the Noticee was advised to obtain SCORES
authentication by December 18, 2013. It is observed that the Noticee once again failed
and neglected to comply. Therefore, SEBI initiated adjudication proceedings against the
Noticee, and the erstwhile AO had issued a SCN dated March 06, 2015. The Noticee
provided a reply to the SCN wherein it stated that the Noticee has already applied for
SCORES authentication. The Noticee has reiterated this fact through its written
submission dated December 22, 2015. On verification from the concerned department I
note that the Noticee has obtained SCORES authentication as on July 09, 2015.

9.

Failure to comply with the directions of SEBI contained in the SEBI circular and
thereafter the directions contained in the letter dated December 2, 2013 amounts to
repeated violation of the directions given by SEBI.

10.

In view of the foregoing, the alleged violation of the provisions of the aforesaid SEBI
Circular by the Noticee as alleged in the SCN stands established which in turn attracts
imposition of penalty.

11.

In this regard, it is pertinent to note that the Honble Securities Appellate Tribunal in the
matter of Port Shipping Company Ltd. Vs. Securities and Exchange Board of India has
held that :Under Section 15HB, penalty imposable for non compliance of SEBI direction is not less
than one lakh rupees but may extend to one crore rupees. In the present case, after considering
all mitigating factors the adjudicating officer of SEBI has imposed penalty of Rs. 1,50,000/as against penalty of Rs. 1 crore imposable under Section 15HB of SEBI Act which cannot
be said to be excessive or unreasonable. Argument of the appellant that there was no operating
income, no permanent employee, no pending investor grievance, no prejudice caused to any
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investor and that the shares of the appellant company were not traded for more than six years,
cannot be a ground to disobey the directions given by SEBI. Obligation to obtain SCORES
authentication was not dependent on there being operating income or pending investor
grievance or trading of shares on the stock exchanges. Admittedly, the appellant company
continues to be a listed company and, therefore, it was obligatory on part of appellant company
to obtain SCORES authentication within the time stipulated by SEBI. However, the
appellant has consistently failed and neglected to comply with the directions of SEBI and it
is only when SEBI initiated penalty proceedings, the appellant chose to comply with the
directions of SEBI. Therefore, in the facts of the present case appellant deserved higher
penalty. However, after taking all the factors set out by the appellant as mitigating factors,
the adjudicating officer of SEBI has imposed nominal penalty of Rs. 1,50,000/- as against
the imposable penalty of Rs. 1 crore. In such a case, it cannot be said that the penalty
imposed is excessive or unreasonable
12.

In view of the aforementioned violation, the Noticee is liable for monetary penalty under
Section 15HB of SEBI Act which reads as follows:
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.

13.

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:
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.

14.

With regard to the above factors to be considered while determining the quantum of
penalty, it is noted that the disproportionate gain or unfair advantage made by the Noticee
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or loss caused to the investors as a result of the failure on the part of the Noticee to obtain
SCORES authentication are not available on record. Further, it may also be added that it
is difficult to quantify the unfair advantage made by the Noticee or the loss caused to the
investors in a default of this nature. However, 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
15.

After taking into consideration all the facts and circumstances of the case, I impose a
penalty of ` 1,50,000/- (Rupees One lakh and Fifty Thousand only) under Section 15 HB
of the SEBI Act against the Noticee which will be commensurate with the violations
committed by it.

16.

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 said demand draft should be forwarded to the Regional
Director, SEBI Eastern Regional Office, 16, Camac Street, 3rd. Floor, Unit 301, Kolkata
700017.

17.

In terms of Rule 6 of the Rules, copy of this order is sent to the Noticee and to the
Securities and Exchange Board of India.

Date: January 25, 2016

Place: Kolkata

S MADHUSUDHANAN
ADJUDICATING OFFICER

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