JUDGMENT
Kumar Rajaratnam, J. (Presiding Officer)
1. Appeal is taken up with consent of parties.
2. The appellant, Padmini Technologies Ltd., challenges the order passed by the adjudicating officer wherein the adjudicating officer has imposed a penalty of Rs. 10 lakhs for failure to redress the investor grievances within the time stipulated by the Board.
3. SEBI had issued a show cause notice dated 19.8.2003 to the company alleging that the company had not redressed 321 complaints of the investors which was pending as on 22.4.2003, and asking them why an inquiry should not be held in terms of Rule 4 of SEBI (Procedure for Holding Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995 and penalty imposed under Section 15C of SEBI Act, 1992.
4. The appellant vide letter dated 23.9.2003 informed that more than 60 complaints were resolved. On verification by SEBI, it found that 73 complaints were resolved and 248 complaints were still pending out of 321 complaints. It was found that majority of the cases related to seeking transfer of share certificate, which does not incur financial outlay to the company unlike other complaints that relate to payment of dividend or interest on debentures etc.
5. By letter dated 29.12.03 the appellant requested for grant of 30 days time and not to hold proceedings for the reasons that, there were seizure and search by the CBI in their office and the company was passing through a severe financial crisis.
6. The appellant was granted extension of time till 15.1.2004 to reply and it was informed that no further extension would be granted.
7. It was observed by SEBI that the appellant did not transfer the shares in favour of the investor as required under sub-clause (3) of Clause 12A of the Listing Agreement, which reads as follows:
“The company agrees that in respect of transfer of shares where the company has not effected transfer of shares within one month or where the company has failed to communicate to the transferee any valid objection to the transfer within the stipulated time period of one month, the company shall compensate the aggrieved party for the opportunity losses caused during the period of the delay.”
8. Section 15C of the SEBI Act, 1992 reads as follows:
“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 crore rupees, whichever is less.”
9. In these circumstances, we have no hesitation in confirming the order passed by the adjudicating officer.
10. There is a bare mention of Section 15J in the impugned order without dealing with it adequately. Section 15J of the SEBI Act reads as follows:
“15-J Factors to be taken into account by the adjudicating officer
While adjudging the quantum of penalty under Section 15-I, the adjudicating officer shall have due regard to the following factors namely:-
1. the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default;
2. the amount of loss caused to an investor or group of investors as a result of the default;
3. the repetitive nature of the default”
11. While dealing with the quantum of penalty, it would not be out of place to mention that we have already imposed a penalty of Rs. 1.5 lakhs in appeal 46/05 (for failure to furnish timely information). In both these cases Padmini Technologies is the appellant and penalties arise under similar circumstances, although under different provisions of law (one is for not furnishing timely information and other for non-redressal of investor grievance). The Company has already been imposed a penalty of Rs. 1.5 lakhs in appeal 46/05 for more or less the same allegations with regard to the same cause of action.
12. Taking all these factors into account, the ends of justice will be met if in all the three appeals, (appeal 46/05, 66/05 & 45/05) Rs. 1.5 lakhs is imposed on each of the appellants.
13. We dismiss the appeal, except in so far as modification of the penalty is concerned. The appellant is directed to deposit a sum of Rs. 1.5 lakhs within 4 weeks from the date of receipt of this order.
14. No order as to costs.