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SEBI observed that Vakrangee Softwares Ltd. Had failed to redress the investor grievances. SEBI had issued an ADJUDICATION order UNDER SECTION 15-i of the SEBI Act, 1992. The undersigned was appointed as Adjudicating Officer UNDER SECTION 15-I of the Securities and Exchange Board of India Act, 1992 READ WITH RULE 5 OF SEBI (Procedure for Holding inquiry and Imposing Penalties) Rules, 1995.
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Adjudication Order in respect of Vakrangee Softwares Limited. in the matter of Non-redressal of Investor Grievances
SEBI observed that Vakrangee Softwares Ltd. Had failed to redress the investor grievances. SEBI had issued an ADJUDICATION order UNDER SECTION 15-i of the SEBI Act, 1992. The undersigned was appointed as Adjudicating Officer UNDER SECTION 15-I of the Securities and Exchange Board of India Act, 1992 READ WITH RULE 5 OF SEBI (Procedure for Holding inquiry and Imposing Penalties) Rules, 1995.
SEBI observed that Vakrangee Softwares Ltd. Had failed to redress the investor grievances. SEBI had issued an ADJUDICATION order UNDER SECTION 15-i of the SEBI Act, 1992. The undersigned was appointed as Adjudicating Officer UNDER SECTION 15-I of the Securities and Exchange Board of India Act, 1992 READ WITH RULE 5 OF SEBI (Procedure for Holding inquiry and Imposing Penalties) Rules, 1995.
SECURITIES AND EXCHANGE BOARD OF INDIA [ADJUDICATION ORDER NO.OIAE/VSL/AO/DRK-DS/EAD-3/ 572/ 116-14] 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: Vakrangee Softwares Limited [PAN No. : AAACV9920D] Vakrangee House 66 Marol Co-op Industrial Estate Off M V Road, Marol, Andheri East Mumbai- 400059 ___________________________________________________________________
FACTS OF THE CASE IN BRIEF 1. Securities and Exchange Board of India (hereinafter referred to as SEBI) observed that Vakrangee Softwares Ltd. (hereinafter referred to as "VSL"/ "Noticee"/ "the company") had failed to redress the investor grievances.
APPOINTMENT OF ADJUDICATING OFFICER 2. The undersigned 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 Adjudicating Officer dated May 10, 2013, to inquire into and adjudge under Section 15C of the SEBI Act, for the alleged non-redressal of investor grievances.
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Page 2 of 8 SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING
3. A Show Cause Notice no. A&E/EAD/DRK-BM/18310/2013 dated J uly 23, 2013 (hereinafter referred to as "SCN") was served on the Noticee by HDAD in terms of 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 of the SEBI Act for the non-redressal of investor grievances inspite of being called upon by SEBI to do so in writing.
4. In the said SCN, it was alleged that Noticee was informed vide letter dated J anuary 22, 2013 that 10 investor complaints were pending against it in the SCORES and was advised/ directed to take the step within seven days so as to redress the complaints within thirty days of the receipt of the letter. As 9 grievances remained unresolved, Noticee was reminded vide letter dated February 15, 2013 to redress the pending complaints and submit action taken report. It was also informed vide this letter that a company must submit its action taken report within 7 days of receipt of complaint through SCORES and the complaint must be resolved within a period of 30 days, failing which SEBI may initiate Regulatory action against the company which includes debarring from securities market and/ or imposing penalty. Vide another reminder dated March 8, 2013, SEBI informed that the performance of the Noticee is not satisfactory and was reminded to redress the 6 pending complaints. It was observed the noticee had neither replied to the aforesaid letters dated J anuary 22, 2013, February 15, 2013 and March 8, 2013 nor redressed the investor grievances within the stipulated time inspite of being called upon by SEBI in writing to do so. Further, it is observed that as on May 24, 2013 there were 5 investor grievances pending against the Noticee in SCORES for more than 30 days out of which two grievances were pending for more than two years.
5. In response to the SCN, Noticee submitted its reply vide email as well as letter dated August 13, 2013 stating that:
Complainant Complaint Details Action taken by the company Remarks
Vinay Lohia Non-receipt of shares in public/ We had attached an online transaction Not a shareholder from J une 8, 2012. Brought to you by http://StockViz.biz
Page 3 of 8 rights issue report evidencing the proof of credit of shares in his account on SCORES We had sent an explanation regarding his query and also a mail asking for confirmation from the complainant, but the company failed to receive any reply from the complainant. Shankar Raman 1.Bonus got credited 2. Bonus value is not credited. We have attached form 2 filed with the registrar of companies alongwith the list of allottees including the name of the complainant on SCORES The complaint of Shankar Raman is not genuine since the bonus issue was given in the ratio of 1:1, thus there was no fractional amount which was payable to him. Shah Mona Kumari Non-receipt of bonus Telephonic conversations were taking place between the complainant and the company. The company had asked for bank verification and address proof from the complainant from which the complainant has only submitted bank verification on J uly 29, 2013. We have called the complainant on 30.07.2013 after receipt of bank verification from the complainant and requested for the address proof, after receipt of which necessary action will be taken. MC Sheth Non-receipt of bonus The RTA of the company had sent a reply to the complainant The shares were transferred in the name of Mr. Kalpesh T. Parikh. Brought to you by http://StockViz.biz
Page 4 of 8 regarding his query, the reply letter alongwith the dispatch proof is attached on SCORES MC Sheth Non-receipt of dividend We have attached the confirmation mail as received from the bank confirming the payment of the dividend to the complainant on SCORES Our RTA has already given reply regarding the complaint. Since the shares were in the name of Kalpesh T. Parikh, the dividends were paid to him.
6. An opportunity of hearing was granted to the Noticee vide hearing notice dated November 13, 2013 to appear before the undersigned for personal hearing on November 28, 2013 at 15:00 hrs. at SEBI Bhavan, Mumbai. Noticee vide its letter dated November 27, 2013 requested for a later date for the personal hearing. Acceding to the request of the Noticee, final opportunity of hearing was granted to the Noticee vide hearing notice dated J anuary 3, 2014 to appear before the undersigned on J anuary 22, 2014 at 12:30 hrs. at SEBI Bhavan, Mumbai. Noticee vide its letter dated authorized Ms. Darshi Shah, Company Secretary of the Noticee and Mr. Kamlesh Singh, Sr. Manager as its Authorized Representatives (ARs). During the course of the hearing, ARs while reiterating the submissions made vide reply dated August 13, 2013, further stated that as of now no investor complaints are pending.
CONSIDERATION OF EVIDENCE AND FINDINGS
7. I have taken into consideration the facts and circumstances of the case and the material made available on record.
8. On perusal of the records, it is noted that five complaints were pending against the Noticee, the details are given as follows:
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Page 5 of 8 Name Category Date Days (pending) Vinay Lohia Non- receipt of shares in Public/ Rights issue 17.04.2012 408 Shankar Raman Others 20.06.2012 344 Shah Mona kumari No-receipt of bonus 31.01.2013 119 MC Sheth No-receipt of bonus 03.05.2013 27 MC Sheth Non-receipt of dividend 03.05.2013 27
9. With respect to the complaint of Mr. Vinay Lohia, Noticee states to have submitted an online transaction report evidencing the proof of credit of shares in his account. It can be seen from the copy of the transaction page of BO account, that on April 17, 2012, 50 bonus shares were credited into the account of the complainant. Noticee had also written a letter dated April 26, 2012 to the Noticee stating that "the shares were allotted on 14.04.2012 to the eligible share holders, the same became tradable with effect from 19.04.2012, before which the bonus shares could not be sold. Mr. Lohia seems to have sold the bonus shares before the same got credited in his account, and that is the only reason why the bonus shares got auctioned". From these letters it can be seen that the Noticee had credited/ transferred the shares on April 17, 2012 itself. Noticee had also written an email dated November 23, 2012 to the complainant stating that "if your grievance is still unresolved, you may kindly furnish us a letter giving the complete details of your query/ complaint to enable us to investigate and reply". No records are made available to show that the complainant has reverted.
10. With respect to the complaint of Mr. Shankar Raman, Noticee has produced the list of allotees, where complainant was allotted 2870 shares. Noticee vide its email dated November 23, 2012 had stated that as the matter is five months old, we trust the same might have been resolved by now. However, "if your grievance is still unresolved, you may kindly furnish us a letter giving the complete details of your query/ complaint to enable us to investigate and reply". No records are made available to show that the complainant has reverted.
11. With respect to the complaint of Shah Mona Kumari, Noticee in its reply has stated that it had asked for bank verification and address proof from the complainant from which the complainant has only submitted bank verification on J uly 29, 2013. Further the Noticee had called the complainant on 30.07.2013 Brought to you by http://StockViz.biz
Page 6 of 8 after receipt of bank verification from the complainant and requested for the address proof, after receipt of which necessary action will be taken.
12. With respect to the complaint of Mr. MC Sheth regarding non-receipt of bonus shares, the Noticee had stated that the RTA of the company had sent a reply dated May 8, 2013 to the complainant regarding his query. However, SEBI - Office of Investor Assistance and Education (OIAE) has confirmed that the said complaint has been resolved.
13. With respect to the another complaint of Mr. MC Sheth regarding non-receipt of dividend, Noticee had submitted a letter dated May 8, 2013 stating that the "dividend warrants for the financial- year 2007 to 2010 have already been dispatched to Mr. Kalpesh T Parikh (KTP). The Noticee has submitted the dispatch proof of this letter. Noticee has also submitted the confirmation emails dated August 13, 2013 and August 6, 2013 as received from the bank confirming the payment of the dividend to KTP. These email shows the paid status of the dividend warrant to KTP.
14. Further, a confirmation was sought from OIAE as to whether the aforesaid complaints have been resolved or not on SCORES and OIAE via e-mail dated August 06, 2014 confirmed that all the complaints have been resolved by the Noticee.
15. In light of the above discussions, it can be seen that the Noticee has resolved all the complaints but with delay. Therefore the charge of violation of Section 15C is established against the Noticee.
16. The Honble Supreme Court of India in the matter of SEBI Vs. Shri Ram Mutual Fund held that once the violation of statutory regulations is established, imposition of penalty becomes sine qua non of violation and the intention of parties committing such violation becomes totally irrelevant. Once the contravention is established then the penalty is to follow.
17. The provisions of sections 15C of SEBI Act are reproduced hereunder: Penalty for failure to redress investors grievances. 15C. 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, Brought to you by http://StockViz.biz
Page 7 of 8 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.
18. While determining the quantum of monetary penalty, 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.
19. 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 delay on the part of the noticee to redress the investor grievances 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.
20. Having considered the facts and circumstances of the case, submissions made by the noticee and after taking into account the factors under Section 15J of the SEBI Act, 1992, I find that a penalty of ` 2,00,000 /-(Rupees Two Lakhs Only) under Section 15C of the SEBI Act on the Noticee would commensurate for delay in redressing investor grievances.
ORDER 21. In exercise of the powers conferred under Section 15-I of the Securities and Exchange Board of India Act, 1992, and Rule 5 of Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995, I hereby impose a penalty of ` 2,00,000 /- (Rupees Two Lakhs Only) on Vakrangee Softwares Ltd. in terms of the provisions of Section 15C of the Securities and Exchange Board of India Act, 1992 for the non redressal of the complaints. In the facts and circumstances of the case, I am of the view that the said penalty is commensurate with the delay in redressal of the investor complaints. Brought to you by http://StockViz.biz
Page 8 of 8
22. The penalty shall be paid by way of Demand Draft drawn 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 shall be forwarded to Chief General Manager- OIAE, Securities and Exchange Board of India, Plot No. C4-A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051.
23. 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 Vakrangee Softwares Ltd. and also to Securities and Exchange Board of India Mumbai.
Place: Mumbai D. RAVI KUMAR Date: August 07, 2014 CHIEF GENERAL MANAGER & ADJUDICATING OFFICER