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SEBI had conducted an examination into the draft letter of offer filed by the acquirer to acquire 26% of the voting capital of One Source Ideas Venture Limited. The Noticee had failed to make disclosures to the Stock Exchanges within the prescribed timeline, as required under Regulation 8 (3) of the SEBI (Substantial Acquisition of Shares and Takeover Regulations) Regulations, 1997.
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Adjudication Order against One Source Ideas Venture Limited
SEBI had conducted an examination into the draft letter of offer filed by the acquirer to acquire 26% of the voting capital of One Source Ideas Venture Limited. The Noticee had failed to make disclosures to the Stock Exchanges within the prescribed timeline, as required under Regulation 8 (3) of the SEBI (Substantial Acquisition of Shares and Takeover Regulations) Regulations, 1997.
SEBI had conducted an examination into the draft letter of offer filed by the acquirer to acquire 26% of the voting capital of One Source Ideas Venture Limited. The Noticee had failed to make disclosures to the Stock Exchanges within the prescribed timeline, as required under Regulation 8 (3) of the SEBI (Substantial Acquisition of Shares and Takeover Regulations) Regulations, 1997.
[ADJUDICATION ORDER NO. EAD-2/DSR/PU/179/2014] ________________________________________________________________ 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 One Source Ideas Venture Limited (Erstwhile Anugraha Jewellers Limited) [PAN AABCA8385L] ________________________________________________________________ Background 1. Securities and Exchange Board of India (hereinafter referred to as SEBI) had conducted an examination into the draft letter of offer filed by Shri B. P. Jhunjhunwala and others (HUF) (acquirer) to acquire 26% of the voting capital of One Source Ideas Venture Limited (erstwhile Anugraha Jewellers Limited) (hereinafter referred to as the Noticee/OSIVL), a company listed on the Bombay Stock Exchange (BSE), Coimbatore Stock Exchange (CoSE) and the Madras Stock Exchange (MSE). Upon examination, it was, inter alia, observed that the Noticee had failed to make disclosures to the Stock Exchanges within the prescribed timeline, as required under Regulation 8 (3) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (herein after referred to as the Takeover Regulations). Appointment of Adjudicating Officer 2. SEBI has, therefore, initiated Adjudication proceedings against the Noticee and I have been appointed as the Adjudicating Officer (AO), vide order dated February 20, 2014 under Section 15 Brought to you by http://StockViz.biz Page 2 of 8 I of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'SEBI Act') read with Rule 3 of the SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter referred to as 'said Rules') to inquire into and adjudge under Section 15A(b) of the SEBI Act, the alleged violation of the provisions of law by the Noticee.
Show Cause Notice, Reply and Personal Hearing 3. A show cause notice dated March 14, 2014 (hereinafter referred to as 'SCN') was issued to the Noticee under Rule 4(1) of the said Rules to show cause as to why an inquiry should not be held and penalty should not be imposed on it under Section 15A (b) of the SEBI Act for the alleged violation of the provisions of law. However, the said SCN was returned undelivered. Therefore, vide email dated April 07, 2014, the said SCN was forwarded to the Noticee on its email ID anugrahajewellersltd@gmail.com. Thereafter, vide email and letter dated April 08, 2014, the Noticee acknowledged the receipt of the said SCN and requested time to file its reply in the matter. Accordingly, vide letter dated April 16, 2014, the Noticee filed its detailed reply in the matter. In the interest of natural justice and in order to conduct an inquiry as per Rule 4 (3) of the said Rules, an opportunity of personal hearing was granted to the Noticee on July 04, 2014. However, the said notice of hearing was returned undelivered. Therefore, another opportunity of personal hearing was granted to the Noticee on August 04, 2014. The Director of the Noticee, Mr. Ashok Bothra, appeared on behalf of the Noticee on the scheduled date and reiterated the written submissions made by the Noticee in its reply dated April 16, 2014. Also, vide email dated July 31, 2014, the Noticee filed another letter in the matter.
Brought to you by http://StockViz.biz Page 3 of 8 Consideration of Issues, Evidence and Findings 4. I have carefully perused the charges leveled against the Noticee as mentioned in the SCN, written submissions made and all the documents available on record. In the instant matter, the following issues arise for consideration and determination:
a. Whether the Noticee has violated the provisions of Regulation 8 (3) of the Takeover Regulations? b. Whether the Noticee is liable for monetary penalty prescribed under Section 15 A (b) of the SEBI Act for the aforesaid violation? c. If so, what should be the quantum of monetary penalty?
5. Before proceeding further, I would like to refer to the relevant provision of the Takeover Regulations which read as under:
Takeover Regulations
8 (3) Every company whose shares are listed on a stock exchange, shall within 30 days from the financial year ending March 31, as well as the record date of the company for the purposes of declaration of dividend, make yearly disclosures to all the stock exchanges on which the shares of the company are listed, the changes, if any, in respect of the holdings of the persons referred to under sub-regulation (1) and also holdings of promoters or person(s) having control over the company as on 31st March.
6. It has been alleged in the SCN that the Noticee had failed to make yearly disclosures to the Stock Exchange in the prescribed timeline, as required under Regulation 8 (3) of the Takeover Regulations between the years 1998 to 2011. The details of the said delayed disclosures as provided by the Merchant Banker are as under:
7. Further, BSE and MSE were requested by SEBI to furnish the details of compliance of the Regulation 8 (3) of the Takeover Regulations by the Noticee for the period 2001 to 2011. MSE vide its e-mail dated January 22, 2014 informed that it had not received any disclosures under Regulation 8 (3) of the Takeover Regulations, while BSE vide its e-mail dated January 21, 2014, provided the following details;
Regulation Due date of compliance Actual date of compliance 8 (3) 30/04/2001 28/04/2004 8 (3) 30/04/2002 28/04/2004 8 (3) 30/04/2003 28/04/2004 8 (3) 30/04/2004 28/04/2004 8 (3) 30/04/2005 14/04/2005 8 (3) 30/04/2006 25/04/2013 8 (3) 30/04/2007 12/04/2007 8 (3) 30/04/2008 25/04/2013 8 (3) 30/04/2009 15/04/2009 8 (3) 30/04/2010 15/04/2010 8 (3) 30/04/2011 15/04/2011
8. The Noticee vide its reply dated April 16, 2014, while admitting the violation of the provisions of Regulation 8 (3) of the Takeover Regulations, submitted the details of actual delay in the following tabular format.
Brought to you by http://StockViz.biz Page 5 of 8 * The Noticee has resubmitted the disclosures on December 24, 2012 and has not submitted any other disclosures subsequently
9. The Noticee also submitted that the aforesaid delay in making disclosures was neither deliberate nor willful, and had occurred inadvertently. The Noticee further submitted that neither any loss, nor any financial gain was caused to anybody due to the said delay.
10. I find that the Noticee, as a company listed on stock exchanges is under a statutory obligation to make the necessary disclosures to the stock exchanges on which it is listed on a yearly basis in accordance with Regulation 8 (3) of the Takeover Regulations. The disclosure made under Regulation 8(3) of Takeover Regulations by a company is made public only through Stock Exchange. It is with this end in view that the Regulations require the making of disclosures so that investing public is not deprived of vital information. The disclosures made by companies listed on the stock exchanges are the means to attain such end and therefore, dissemination of complete information is required. I also note that Madras Stock Exchange vide its email dated January 22, 2014 confirmed that it did not receive any disclosures from the Noticee. The Noticee has admittedly neglected its duty of making the disclosures during the period 2000 - 2001, S. No Financial Year Due date of compliance date of compliance provided by BSE Delay as per BSE Actual Date of Compliance Actual Delay 1 2 3=2-1 4 5=4-1 1 2000-01 30/04/2001 28/04/2004 1094 28/04/2004 1094 2 2001-02 30/04/2002 28/04/2004 729 28/04/2004 729 3 2002-03 30/04/2003 28/04/2004 364 28/04/2004 364 4 2003-04 30/04/2004 28/04/2004 Nil 28/04/2004 Nil 5 2004-05 30/04/2005 28/04/2004 Nil 28/04/2004 Nil 6 2005-06* 30/04/2006 25/04/2013 2552 24/12/2012 2430 7 2006-07 30/04/2007 12/04/2007 Nil 12/04/2007 Nil 8 2007-08* 30/04/2008 25/04/2013 1821 24/12/2012 1699 9 2008-09 30/04/2009 15/04/2009 Nil 15/04/2009 Nil 10 2009-10 30/04/2010 15/04/2010 Nil 15/04/2010 Nil 11 2010-11 30/04/2011 15/04/2011 Nil 15/04/2011 Nil Brought to you by http://StockViz.biz Page 6 of 8 2001-2002, 2002 - 2003, 2005 - 2006 and 2007- 2008 thereby demonstrating the casual and unbecoming attitude in fulfilling statutory obligations.
11. In view of the above, I conclude that the Noticee did not comply with the provisions of Regulation 8 (3) of the Takeover Regulations for which it is liable for monetary penalty under Section 15 A (b) of the SEBI Act, which reads as under:
15A. Penalty for failure to furnish information, return, etc. - If any person, who is required under this Act or any rules or regulations made thereunder,- .. (b) to file any return or furnish any information, books or other documents within the time specified therefor in the regulations, fails to file return or furnish the same within the time specified therefor in the regulations, he 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;
12. In Appeal No. 66 of 2003 - Milan Mahendra Securities Pvt. Ltd. Vs SEBI the Honble SAT has observed that, the purpose of these disclosures is to bring about transparency in the transactions and assist the Regulator to effectively monitor the transactions in the market.
13. At this instant, it is important to quote the observations of the Honble Supreme Court of India in the matter of SEBI v. Shri Ram Mutual Fund [2006] 68 SCL 216(SC) wherein, the Hon'ble Court, inter alia, held: 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.
Brought to you by http://StockViz.biz Page 7 of 8 14. While imposing 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.
15. I observe that, from the material available on record, any quantifiable gain or unfair advantage accrued to the Noticee or the extent of loss suffered by the investors as a result of the defaults cannot be computed. However, I find that the violation is repetitive in nature inasmuch as the same had continued for a considerable period as evident from the table mentioned in Para nos. 8 and 10 of this order.
ORDER
16. In view of the above, after considering all the facts and circumstances of the case and exercising the powers conferred upon me under section 15-I (2) of the SEBI Act read with Rule 5 of the said Rules, I hereby impose a penalty of ` 5,00,000/- (Rupees Five Lakh Only) on the Noticee i.e. One Source Ideas Venture Limited (erstwhile Anugraha Jewellers Ltd.) under Section 15 A (b) of the SEBI Act. In my view, the penalty imposed on the Noticee is commensurate with the defaults committed by it.
17. The above penalty amount shall be paid by the Noticee through a duly crossed demand draft drawn in favour of SEBI Penalties Remittable to Government of India and payable at Mumbai within Brought to you by http://StockViz.biz Page 8 of 8 45 days of receipt of this order. The said demand draft shall be forwarded to The Division Chief, Corporate Finance Department - DCR, Securities and Exchange Board of India, Plot No. C4-A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400 051.
18. In terms of the Rule 6 of the said Rules, copy of this order is sent to the Noticee and also to Securities and Exchange Board of India.
Date: August 22, 2014 D. SURA REDDY Place: Mumbai ADJUDICATING OFFICER Brought to you by http://StockViz.biz
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