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communicated
to
the
Noticee
by
SEBIvide
its
letter
Ref.
No.
referred to as 'SCN') was issued to the Noticee under rule 4 of the Rules to show
cause as to why an inquiry should not be held and penalty be not imposed under
Section 15 HBand Section 15C of SEBI Act for the alleged violation of provisions
of the circular bynot obtaining SCORES authentication and failing to
redressone(1) investor complaintwithin the prescribed time. The SCN was sent by
Speed Post Acknowledgement Due(SPAD), however, it was returned undelivered
Adjudication Order in respect of M/s Mark Omega Organic Industries Limited
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with a remark Company Close. Since the SCN sent through SPAD could not be
delivered, the SCN dated 09.02.2016 was issued and affixed on the door of the
premises, on the alternate address by Hand Delivery. Since the same could not be
delivered, the SCN was affixed at the alternate address on 10.02.2016advising the
Noticee to reply within 14 days. However, the Noticee has failed to reply to the
SCN till date and further failed to appear before the undersigned for the
opportunity of hearing granted on 11.03.2016 vide hearing notice dated
25.02.2016affixed on the door of the premises on 27.02.2016, advising the noticee
to send its reply by March 10, 2016.In the said SCN and in the hearing notices it
was specifically stated that,if the Noticee fails to submit their reply to the SCN or
fails to attend the hearing proceedings on the stipulated date and time, it will be
presumed that Noticee has no submissions to offer in its defense and the matter
would be further proceeded with on the basis of the material available on record. I
note that the Noticeehas failed to submit the reply to the SCN and also failed to
appear for hearings to substantiate their case towards the allegations stated in the
SCNs. For the reasons mentioned above, I observe that the Noticee was provided
with enough opportunities to submit reply/ to be heard and hence, I am
constrained to proceed ex-parte with the matter on the basis of the material
available on record.
CONSIDERATION OF ISSUES
6. I have carefully perused the documents available on record. It is observed that the
allegation against the Noticee is that they have failed to obtain SCORES
authentication and failed to redress 1(one) investor complaint.
7. The issues that, therefore, arise for consideration in the present case are:
7.1. Whether the Noticee has violated
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9. The first issue for consideration is whether the Noticee by failing to obtain
SCORES authentication has violatedthe provisions of Circular viz., SEBI Circular
No. CIR/OIAE/1/2012 dated August 13, 2012. I find from the records that the
Noticee was provided ample opportunity to submit it reply to the show cause
notice and defend his case. Further, opportunities of personal hearing was granted
to the Noticee to appear and plead their case in the matter. I find from the said
facts that the Noticee has admitted the charge of violating the provisions of
Circular viz., SEBI Circular No. CIR/OIAE/1/2012 dated August 13, 2012 by
failing to obtain SCORES authentication. At this juncture I rely on the following
judgments:
9.1. The Honble Securities Appellate Tribunal (SAT) in the matter of
10. The second issue for consideration is whether the Noticee has violated the
provisions of Circular viz., SEBI Circular No. CIR/OIAE/1/2012 dated August
13, 2012 by failing to redress one investor complaint within the prescribed time
Adjudication Order in respect of M/s Mark Omega Organic Industries Limited
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which attract monetary penalty under Section 15C of SEBI Act. I find from the
plain reading of section 15 C which says that, 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 investor, 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. Thus I find that one of the
paramount ingredients of section 15 C is that, the entity has to be called upon by
the Board in writing to redress the grievances of investor then the entity is liable
for a monetary penalty. In the case in hand the letter Ref. No.
OIAE1/KP/28839/2014 dated 30.09.2014issued by SEBI calling upon the
Noticee to redress the investor complaint was not delivered. I find from the above
facts that, the service of letter dated 30.09.2014 was not a good service of letter in
term of following Judgments:
10.1. The Hon'ble Securities Appellate Tribunal, in Alka India Ltd. Vs.
SEBI (Order dated June 10, 2009) inter alia, observed as follows:
"A copy of the courier receipt has been placed on record to substantiate its stand. We have
perused this receipt. In the column meant for the name of the receiver, the Stock Exchange,
Mumbai has been written. The Bombay Stock Exchange has categorically denied having
received any information from the appellant. In view of the denial made by the Bombay
Stock Exchange, the onus is upon the appellant to establish that the letter making the
necessary disclosures allegedly sent by courier was actually received by the Bombay Stock
Exchange. No such evidence has been placed on record. Even, if we were to accept the
courier receipt, it is only evidence of the fact that some letter was sent to Bombay Stock
Exchange but there is no proof forthcoming of its actual receipt by the Stock Exchange.
Moreover, what was that letter and whether it contained the disclosures are facts which also
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need to be established. The appellant failed to discharge this onus...... In view of this
matter, no fault can be found with the impugned order."
10.2. The Honble SAT, in Kalinidee Rail Nirman Ltd. Vs SEBI dated
19.07.2010 wherein it was held as follows:
the agency through which the document is sent acts as an agent of the sender
and if a dispute were to arise whether the said document has been received by the addressee
or not, the onus would be on the sender to establish the fact by clear and cogent evidence in
this regard. Admittedly, the appellant has not placed on record any acknowledgement
received from BSE in regard to the mails that were allegedly sent containing the compliance
reports. On the other hand, we have on record a letter from BSE specifically stating that it
had not received the compliance reports for the aforesaid quarters from the appellant.
. In view of the matter, no fault could be found with the impugned order.
11. In the cited cases, there was a dispute whether the letter was received or not by
the receiver and in the absence of evidence as to receipt it was held that the
document was not received. In the case in hand, there is no dispute but it is
established that the letter was not delivered. I also observe from the past SEBI
Orders available on SEBI website that there is a usual practice in such cases in
respect of service of documents that if the letter/ documents are undelivered then
final opportunity is given by way Notice issued through newspaper publication
specifying the entity name. In the case in hand, based on the available records it is
observed that there is no such publication. Therefore, I find from the above facts
and the judgments passed by Honble SAT that, the requirement under Section
15C of the SEBI Act, 1992 which states that after having been called upon by
the Board in writing... remains unfulfilled.
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12. In view of the above the charges of violation of section 15C of SEBI Act by the
Noticee are not established.
13. In view of the facts of the matter, I rely on the case of M/s Port Shipping
Company Limited, The Hon'ble Securities Appellate Tribunal has made the
following observation Argument of the appellant that there was no operating income, no
permanent employee, no pending investor grievance, no prejudice caused to any 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 SEBItherefore, 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
14. In the light of the above facts and relying on the cited case laws, I am of the firm
belief that it is established without doubt that the Noticee has violated the
provisions of thesaid Circular by not obtaining SCORES authentication.
15. Further, I note that the Honble Supreme Court of India in the matter of SEBI Vs.
Shri Ram Mutual Fund [2006] 68 SCL 216(SC) has also held that In our considered
opinion, penalty is attracted as soon as the contravention of the statutory obligation as
Adjudication Order in respect of M/s Mark Omega Organic Industries Limited
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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 foregoing, I am convinced that it is a fit case to impose monetary
penalty under Section 15 HB of the SEBI Act, which read as under:
18. 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 or loss caused to the investors as a result of the failure on the part of
the Noticee to obtain SCORES authentication within the stipulated time are not
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available on record. Further, it may also be added that it is not possible 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
19. After taking into consideration all the facts and circumstances of the case, I
impose a penalty of Rs1,00,000/-(Rupees One lac only) under Section 15 HB of
the SEBI Act(Total :-Rupees One lac only) on the Noticee i.e. M/s Mark
Omega Organic Industries Limited,which in my opinion, will be commensurate
with the violations 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 said demand draft should be
forwarded to Shri N Hariharan, Chief General Manager, Securities and Exchange
Board of India, SEBI Bhavan, Plot No. C4-A, 'G' Block, Bandra Kurla Complex,
Bandra(E),Mumbai-400051.
21. In terms of rule 6 of the Rules, copies of this order are sent to the Noticee and
also to the Securities and Exchange Board of India.
Date: 31.03.2016
Prasad P. Jagadale
Place: Mumbai
Adjudicating Officer
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