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BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA
[ADJUDICATION ORDER NO. EAD-2/DSR/RG/PU/180/2014]
________________________________________________________________
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
Gee Gee Granites Ltd.
[PAN AAACG3024B]
______________________________________________________________________
1. Securities and Exchange Board of India (hereinafter referred to as
SEBI) conducted an examination into the draft letter of offer filed by
Shri Asit Kumar Ghosh (acquirer) to acquire 26% shares of Gee Gee
Granites Limited (hereinafter referred to as the Noticee), a company
listed on the Bombay Stock Exchange (BSE) and Madras Stock
Exchange (MSE). Upon examination, it was, inter alia, observed that
the Noticee had failed to make disclosures to the Stock Exchange 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 April 02, 2014 under Section 15 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.
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Show Cause Notice, Reply and Personal Hearing
3. A show cause notice dated May 20, 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.

4. The Noticee submitted its reply to the SCN vide letter dated June
04, 2014. Thereafter, in order to conduct inquiry, an opportunity
of personal hearing was granted to the Noticee on August 04,
2014. The said hearing notice was also forwarded to the Noticee
vide email dated July 24, 2014. The authorized representative,
Shri Vishal Dedhia, appeared on behalf of the Noticee on the
scheduled date and reiterated the written submission made by
the Noticee in its reply.

5. Further, vide letter dated August 07, 2014, the Authorized
Representative had stated that the Noticee is willing to file a
Consent Application within two weeks time i.e. before August
23, 2014. Vide email dated August 22, 2014, it has been intimated
by the Authorised Representative of the Noticee that the
company is not in a position to file the said consent application by
August 23, 2014 due to the ill health of one Shri Gopichand
Idandas, Promoter of the Noticee and has further requested time
till August 30, 2014 to file the same. However, I find that the
personal hearing in the matter was concluded on August 04, 2014
after which the Noticee had sufficient time to file the consent
application. The said extension of time to file the consent
application on the ground of one of the promoter's ill health
seems to be nothing but a delaying tactic adopted by the Noticee
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to prolong the present adjudication proceedings . In view of the
above, I am proceeding further in the matter on the basis of the
material available on record.

Consideration of Issues, Evidence and Findings
6. 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?

7. 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.

8. It has been alleged in the SCN that the Noticee had failed to make yearly
disclosures to the Stock Exchanges in the prescribed timeline, as required
under Regulation 8 (3) of the Takeover Regulations between the years 2001
to 2011. The details of the said delayed disclosures are as under:
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Regulation Due date of
compliance
Date of
compliance
Delay- in
number of
days
8 (3) 30/04/2001 02/09/2013 4508
8 (3) 30/04/2002 02/09/2013 4143
8 (3) 30/04/2003 02/09/2013 3778
8 (3) 30/04/2004 02/09/2013 3412
8 (3) 30/04/2005 02/09/2013 3047
8 (3) 30/04/2006 02/09/2013 2682
8 (3) 30/04/2008 06/08/2008 98
8 (3) 30/04/2009 15/07/2009 76
8 (3) 30/04/2010 14/10/2011 532
8 (3) 30/04/2011 02/09/2011 125

9. The Noticee vide its reply dated June 04, 2014 submitted that the compnay
was in to the business of manufacturing granite buildings slabs of various
colors. Pursuant to heavy losses, the company stopped its operations. The
net worth of the company had gone negative. Thereafter, in the year 1999
the company was declared as a sick company by the Board for Industrial
and Financial reconstruction (BIFR) within the meaning of Section 3 (i)of
the Sick Industrial Companies Act, 1985. However, in the year 2005, BIFR
declared that the company had ceased to be a sick industrial company and
therefore was no longer required to be dealt with by BIFR. The Noticee
further submitted that as the company was unable to comply with the
listing agreement and SEBI compliances on time, it went under suspension
at BSE in the year 2006. In the year 2011, as a process of revival, the
management of the Noticee had decided to take steps for revocation of the
suspension on the BSE. It was during the said process that the
management of the company started complying with all the listing
agreement clauses and other compliances. Due to the said reasons the
Noticee states that there was a delay in compliance with Regulation 8(3) of
the Takeover Regulations. It is further submitted by the Noticee that the
said suspension was revoked by BSE in the year 2012 and in the same year
the trading in the shares of the company was resumed.

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10. I find that the Noticee is listed on the BSE and MSE. Further, the
acquirer, Shri Asit Kumar Ghosh had filed a draft letter of offer for
issuing Public Announcement on October 31, 2013 in order to acquire
26% shares in the Noticee company in compliance with the
Takeovers Regulations, 2011. I find from the Noticee's reply dated
June 04, 2014 that the shares of Noticee were not traded on the stock
exchange for a period of 5 years (approx.). I note from the
submissions of the Noticee that it has admittedly filed the necessary
disclosures as required under the Takeover Regulations belatedly.

11. 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. However, the
Noticee has neglected its duty of making the disclosures in
compliance with Regulation 8(3) of the Takeover Regulations since
2001 and the same continued till 2011, thereby demonstrating the
casual and unbecoming attitude on the part of the Noticee in
fulfilling statutory obligations.

12. In view of the above and based on the documents available on
record, I find that, admittedly, the Noticee did not comply with the
provisions of Regulation 8 (3) of the Takeover Regulations for a
period of 10 years 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,-
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..
(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;

13. 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.

14. 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.

15. 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.

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16. 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 over a period of 10 years, i.e.,
every year since 2001 to 2006 and 2008 to 2011, as evident from the
table mentioned in Para no. 8 of this order.

ORDER
17. 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 ` 6,00,000/- (Rupees Six Lakh Only) on
the Noticee i.e. Gee Gee Granites 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.

18. 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
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.

19. 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 26, 2014 D. SURA REDDY
Place: Mumbai ADJUDICATING OFFICER
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