BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

(ADJUDICATION ORDER NO: OIAE/EAD-3/AO/DRK-VB/685/10-2015)

______________________________________________________________
UNDER SECTION 15 - I OF THE SECURITIES AND EXCHANGE BOARD OF
INDIA ACT, 1992 READ WITH RULE 5 OF THE SECURITIES AND EXCHANGE
BOARD OF INDIA (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING
PENALTIES BY ADJUDICATING OFFICER) RULES, 1995.
In respect of:
Grauer & Weil India Ltd.
Growel House, Akurli Road,
Kandivali(E),
Mumbai 400 101
---------------------------------------------------------------------------------------------------------------BACKGROUND:
1. Securities and Exchange Board of India (hereinafter referred to as SEBI)
observed that Grauer & Weil India Ltd. (hereinafter referred to as 'the Noticee /
the Company / GWIL") had not redressed 3 investor grievances pending against
it, out of which 2 complaints were pending for more than 2 years as per SEBI
Complaints Redress System ( hereinafter referred to as 'SCORES').
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 known 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
Adjudication Rules) vide communiqu dated May 21, 2013, to inquire into and
adjudicate under Section 15 C of the SEBI Act, the alleged violations by the
Company.
SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING:
3. A Show Cause Notice No. A&E/EAD-3/DRK-VVK/18974/2013 dated July 30,
2013 (hereinafter referred to as SCN) was served upon the noticee on August
03, 2013 by Hand Delivery Aknowledgement Due (hereinafter referred to as
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HDAD) under Rule 4 (1) of the Adjudication Rules, to show cause as to why
an inquiry be not held against the noticee and penalty be not imposed under
Section 15 C of the SEBI Act, for the alleged non redressal of 3 investors
grievances / complaints against the noticee in SCORES out of which 2
complaints were pending for more than two years. It was mentioned in the SCN
that SEBI vide letter dated January 22,2013, had earlier directed the noticee to
resolve 4 investor grievances. It was also mentioned in the said letter that if the
noticee fails to redress the complaints, SEBI may take action against the
noticee under Sections 15 C and 24 of the SEBI Act. Further, the SCN also
refers to SEBI's letter dated February 15,2013 wherein the noticee was again
directed to resolve the aforesaid 3 investor grievances failing which SEBI may
initiate Regulatory Actions against the noticee which includes debarring from
securities market and or / imposing penalty. It was also alleged in the SCN that
noticee has not activated the SCORES authentication
4. The noticee vide its letter dated August 19,2013 submitted a reply to the
aforesaid SCN and made the following submissions
a) There is only one pending Complaint of Ms. Latha Prakash. The second complaint
also by the same shareholder is actually a repetition of the first complaint. Thus
both the complaints showing on SCORES portal are one and the same. We also
wish to point out that as on date even these two complaints have been redressed.
The letter from the shareholder agreeing to withdraw the complaints is attached as
Annexure. Thus there are no complaints pending redressal at present.
b) The Physical Share Certificate was returned to the Complainant after due
endorsement. However, through an oversight the shares were credited to a wrong
folio no. M00648 belonging to one Mr. Anil Mahendra and Charu Mahendra and
the same folio was mentioned on the physical certificate too. Thus, in the Master
Records of the Company, the said 50 Shares were showing in the name of Mr.
Anil Mahendra & Charu Mahendra (M00648) instead of the Complainant.
c) The said error came to the notice of the RTA in 2008, when the Complainant sent
the physical share certificate for dematerialising. The RTA, without the knowledge
of the Company simply rectified the master data of the Company and transferred
credit of original 50 shares to the folio of the Complainant (P01161) from the Folio
No. M00648.
d) Thus as per Master Records of the Company, Mr. Anil Mahendra & Charu
Mahendra (M00648) were the Shareholder of the said 50 Equity Shares of Rs. 10/each, for the Period 1994 to 2008, though the original Share Certificate was lying
with Complainant.
e) Due to this error, bonus shares issued by the Company during the Period 1994 to
2008 i.e. in 2001 (1:1), 2002 (1:1), 2003 (2:1) and 2005 (4:1) (4 years) were
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credited to Mr.Anil Mahendra & Charu Mahendra (M00648) instead of the

Complainant. Thus Complainant did not receive credit of 325 Bonus Shares. In the
year 2011,each share of the Company with face value of Rs. 10 was split into 10
shares of Re. 1 each. Thus the said 325 bonus shares were converted into 3250
shares.
f) Mr. Anil Mahendra & Charu Mahendra dematerialised the said Bonus Shares and
till date he is holding the said shares in demat mode.

5. Thereafter, for the purpose of inquiry, an opportunity of hearing was granted to

the noticee on April 23, 2014 vide hearing notice dated April 11, 2014 which
was served upon the noticee by Registered post. In the aforesaid notice, it was
stated that if no appearance is made by the noticee on the scheduled date of
hearing, then, the matter would be decided on the basis of evidence available
on records. The hearing on April 23, 2014 was attended by Mr. Chintan Gandhi
(Company Secretary of the Noticee) (herein after referred to as "AR") and the
AR made the following submissions that :
the Noticee had redressed the grievance of Complainant as the
shares/bonus shares are already dematerialized in the name of Complainant
(Latha Prakash). The Authorized Representative assured that the proof
(original / certified copy) of dematerialisation of said shares in favour of
Complainant and the communication between Noticee and the Complainant
of such redressal would be provided within a period of one week from today.
6. Thereafter, the noticee vide its letter dated April 30, 2014 submitted the proof
that the Bonus Shares were already credited to Complainant A/c, whereby he
submitted copy of Combined Comparison Report of NSDL / CDSL received
from Registrar & Transfer Agent showing the credit of 3250 Equity Shares into
the Account of Complainant. Further , the noticee submitted the copies of print
out of SCORES website wherein Complainant have confirmed to SEBI that the
shares have been received in her demat account and thus the status of
Complaint stands resolved.
7. Further, the noticee vide its letter dated May 07,2014 submitted the
Confirmation letter from the Complainant regarding the credit of 3250 Equity
Shares into her demat account and withdrawal of Complaint filed with SEBI
against the Company

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CONSIDERATION OF CASE AND FINDING:

8. I have taken into consideration the facts and circumstances of the case and the
material available on record.
9. From the material available on record, it is noted that the noticee was required
to obtain SCORES Authentication before September 14,2012 and the noticee
has obtained the SCORES Authentication on November 17,2011.Therefore,
the allegation in this regard does not stand established.
10. In respect to the allegation of non redressal of investors grievances, it is
observed from the records that 4 complaints were pending against the noticee
as per SEBI letter dated January 22,2013. However, of the four complaints
pending on January 22,2013, the noticee has submitted that it has resolved
two complaints as is evident from the extract of SCORES website. With regard
to the remaining two complaints, the noticee has submitted that both the
complaints showing on SCORES are one and the same and is filed by Ms.
Latha Prakash. The second complaint by the same shareholder is repetition of
the first complaint. Thus both the complaints are filed in respect of the Non
receipt of bonus shares and both were pending for more than 2 years. With
regard to these complaints, the noticee submitted that the complaints were duly
redressed and its submissions were already mentioned at pre paras no. 4 to 7
above and same is not repeated for sake of brevity.
11. It is noted from the available records / SCORES printout as provided by the
concerned department of the SEBI that the 2 complaints of Ms Latha Prakash
were forwarded by the concerned department of SEBI to the noticee for
redressal of grievance on April 20,2010 and July 15,2010 respectively. It is
relevant to mention that efforts were made by the noticee to redress said
grievances only from August 23, 2012 (as shown in SCORES printout) i.e. after
huge time gap. The noticee filed ATR in the said complaints on August 23,
2012 submitting that it has sought the details from the RTA as the matters
pertain to the shareholder from 1995 till date. Second ATR was filed by the
noticee on August 22, 2013 submitting that the Bonus shares were credited to
complainant's

account

in

demat

mode

Complainant's/investor's Withdrawal Letter.

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and

further

submitted

the

12. I note that as per SEBI circular dated August 13,2012, the Noticee was
required to redress the grievances with in a period of 30 days which it had
failed to do so . Therefore, it is established that the Noticee had failed to
redress the grievances of the complainant as alleged i.e. within the specified
period of 30 days.
13. 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.
14. In view of the aforesaid observations, I am of the opinion that the noticee has
delayed considerably in taking steps to resolve the aforesaid investor
grievances and therefore has failed to redress the investor grievances within
the specified period. Hence the noticee has violated Section 15 C of the SEBI
Act. The text of the said provision is reproduced as under;

SEBI Act
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, 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.

15. For determining the quantum of penalty under Section 15 C of the SEBI Act,
the factors stipulated in section 15 J of the SEBI Act, have been taken into
consideration.
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;

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(c) the repetitive nature of the default.

16. 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 investor 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 investor in
a default of this nature.
17. 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 ` 3,00,000 /-(Rupees Three Lakh
Only) under Section 15C of the SEBI Act on the noticee would commensurate
for non redressal of investor grievances within the prescribed time period.
ORDER:
18. 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 ` 3,00,000/(Rupees Three Lakh only) upon the noticee under the provisions of Section
15C of the SEBI Act for non redressal of investors grievances. I am of the view
that the said penalty is commensurate with the aforesaid failure committed by
the noticee.
19. 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 Demand Draft shall be
forwarded to the Chief General Manager (OIAE), Securities and Exchange
Board of India, SEBI Bhavan, Plot No.C4-A, G Block, Bandra Kurla Complex,
Bandra (East), Mumbai 400 051.
20. 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
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Officer) Rules 1995, copy of this order is being sent to Grauer & Weil India Ltd
having office at Growel House, Akurli Road, Kandivali(E),Mumbai 400 101 and
also to the Securities and Exchange Board of India, in terms of Rule 6 of the
Adjudication Rules.

Date: 04.02.15

D. RAVI KUMAR

Place: Mumbai

CHIEF GENERAL MANAGER &

ADJUDICATING OFFICER

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