BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. ISD/MSRGL/AO/DRK-AKS/EAD3-723/48-2015]

__________________________________________________
UNDER SECTION 15 I OF SECURITIES AND EXCHANGE BOARD OF INDIA
ACT, 1992 READ WITH RULE 5(1) OF SECURITIES AND EXCHANGE
BOARD OF INDIA (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING
PENALTIES BY ADJUDICATING OFFICER) RULES, 1995
In respect of:
Mipco Seamless Rings (Gujarat) Ltd.
iLabs Centre, Ground Floor
A-Block, Unit No. 18, Hitec City
Hyderabad- 500081, Telangana

FACTS IN BRIEF
1. Securities and Exchange Board of India (hereinafter referred to as SEBI)
while examining the draft Letter of Offer filed by Shri Sachendra Tummala to
acquire 20% shares of Mipco Seamless Rings (Gujarat) Ltd. (hereinafter
referred to as 'Mipco / Noticee / Company') observed certain noncompliances of SEBI (Substantial Acquisition of Shares & Takeover)
Regulations 1997 (hereinafter referred to as 'SAST Regulations'). The
shares of the company are listed at BSE Ltd. (hereinafter referred to as
'BSE').
APPOINTMENT OF ADJUDICATING OFFICER
2. I was appointed as Adjudicating Officer under Section 15 I of the Securities
and Exchange Board of India Act, 1992 (hereinafter referred to as SEBI

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Act), read with Rule 3 of Securities and Exchange Board of India (Procedure
for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules,
1995 (hereinafter referred to as Adjudication Rules) to inquire into and
adjudge under Section 15A (b) of the SEBI Act the violation of Regulation 8(3)
of SAST Regulations alleged to have been committed by the noticee and the
same was communicated vide proceedings of the Whole Time Member
appointing Adjudicating Officer dated 26.04.2013.
SHOW CAUSE NOTICE, REPLY AND HEARING
3. A Show Cause Notice No. A&E/EAD3/DRK/CS/14339/2014 dated 20.05.2014
(herein after referred to as SCN) was served on the noticee vide Speed Post
Acknowledgement Due 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 15A (b) of the SEBI Act.
4. In the said SCN, it was alleged that the noticee had violated Regulation 8(3)
of the SAST Regulations. The details in this regard are as follows:
Sr.

Regulation

No.

Due

date

for Actual

compliance

date

compliance

of Delay in compliance
(in no. of days)

8(3)

30.04.1998

30.01.2003

1,736

8(3)

30.04.1999

30.01.2003

1,371

8(3)

30.04.2000

30.01.2003

1,005

8(3)

30.04.2001

30.01.2003

640

8(3)

30.04.2002

30.01.2003

275

8(3)

30.04.2004

12.10.2004

224

8(3)

30.04.2007

18.09.2007

141

5. No reply was received from the noticee, therefore vide hearing notice dated
08.08.2014 noticee was advised to submit a reply to the SCN on or before
22.08.2014 and was also granted an opportunity of hearing on 26.08.2014 at

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04:00 pm at SEBI Bhavan, Mumbai. In response to the same, the noticee vide
its email dated 22.08.2014 stated that it has not received the SCN and
requested for a copy of the same. Vide our email dated 22.08.2014 noticee
was provided with a scanned copy of the SCN.
6. Noticee vide its email dated 22.08.2014 requested for time till 15.09.2014 to
submit a reply to the SCN as the matter was related to old records and there
has been change of management through Open Offer. Noticee further
requested to adjourn the scheduled hearing to 15.09.2014.
7. In response to the same, vide hearing notice dated 26.08.2014 noticee was
advised to submit a reply to the SCN on or before 10.09.2014 and attend the
hearing on 15.09.2014 at 11:00 am at SEBI Bhavan, Mumbai.
8. Noticee submitted a reply to the SCN vide its letter dated 09.09.2014 as
follows:

It was at the time of Due Diligence carried by the present management that
the enumerated delays were noticed and the old management was requested
to make good the same in total compliance of the Takeover Code.

After the takeover of Management by the present team, there has been no
occasion of any delays whatsoever in compliance of any of the Regulatory
compliances as the Management is very particular on all these aspects and
runs the enterprise under a good corporate governance module. Hence the
allegations of delays on the Company subsequent to take over by present
Management are denied ab-initio and the Company or its Management is not
liable for any enquiry or penalties under the regulations. At most, the same
can be attributed to the old Management Team who was liable for the
compliance for the period stated.

9. In response to the hearing notice, noticee vide its letter dated 12.09.2014
authorised Shri Sanjiv Kumar Tandon, Director (herein after referred to as
AR) to attend the scheduled hearing. At the time of hearing the AR reiterated
the submissions made in the reply dated September 09, 2014 and submitted

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that though the company is listed at BSE, there is no activity in the company.
The AR further submitted that the non-compliances took place during the time
of earlier management.
CONSIDERATION OF EVIDENCE AND FINDINGS
10. I have taken into consideration the facts and circumstances of the case and
the material made available on record.
11. It is observed from the records that noticee has delayed in making disclosures
under Regulation 8(3) of the SAST Regulations for the financial years 19971998 to 2001-2002, 2003-2004 and 2006-2007. Noticee has submitted that
the aforesaid delays were under previous management and the current
management is not liable for the said delays.
12. Noticee's aforesaid submission may not be accepted as Regulation 8(3) of
the SAST Regulations unequivocally states that the disclosure has to made
by the company. Therefore, the obligation is on the company to satisfy the
provisions of Regulation 8(3) of the SAST Regulations. It may be added that
noticee is a separate and distinct legal entity from the management of the
company with a perpetual succession. Moreover, the Adjudication proceeding
is against the Noticee and not against erstwhile / present management.
13. In view of the above facts and circumstances of the case and the material
made available on record, it can be concluded that the noticee has failed to
comply with Regulation 8(3) of the SAST Regulations for the financial years
1997-1998 to 2001-2002, 2003-2004 and 2006-2007 as depicted in pre para
4. The text of the said provision is reproduced below:SEBI (Substantial Acquisition of Shares & Takeover) Regulations 1997

.
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

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the company for the purpose 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 subregulation (1)1 and also holdings of promoters or person(s) having control over
the company as on 31st March.

14. The said violation attracts penalty under Section 15A (b) of the SEBI Act. The
text of the said provision is reproduced below:SEBI Act
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.

15. In this regard, the provisions of Section 15J of the SEBI Act and Rule 5 of the
Rules require that while adjudging the quantum of penalty, 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

16. It has been noted from the material available on record that it is difficult to
quantify any gain or unfair advantage accrued to the noticee as a result of this
kind of default by the noticee. SEBIs examination has also not quantified the
profit / loss for the nature of default / non compliance by the noticee and no
material is made available on record to assess the disproportionate gain or
1

8 (1) Every person, including a person mentioned in Regulation 6 who holds more than
fifteen percent shares or voting rights in any company, shall, within 21 days from the financial
year ending March 31, make yearly disclosures to the company, in respect of his holdings as on
31st March.

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unfair advantage and amount of loss caused to an investor or group of

investors as a result of default of the noticee.
17. In view of the abovementioned conclusion and after considering the factors
under Section 15J of the SEBI Act, I hereby impose a penalty of
` 7,00,000/- (Rupees Seven Lakh only) on the noticee under Section 15A (b)
of the Securities and Exchange Board of India Act, 1992 for its failure to make
disclosures under Regulation 8 (3) SEBI (Substantial Acquisition of Shares &
Takeover) Regulations 1997 which is appropriate in the facts and
circumstances of the case.
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 ` 7,00,000/(Rupees Seven Lakh only) on Mipco Seamless Rings (Gujarat) Ltd. in terms
of the provisions of Section 15A (b) of the Securities and Exchange Board of
India Act, 1992 for its failure to make disclosures under Regulation 8 (3) SEBI
(Substantial Acquisition of Shares & Takeover) Regulations 1997 for the
financial years 1997-1998 to 2001-2002, 2003-2004 and 2006-2007. In the
facts and circumstances of the case, I am of the view that the said penalty is
commensurate with the default committed by the noticee.
19. 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- EFD, Securities and Exchange Board of India, Plot
No. C4-A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051.

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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
Officer) Rules 1995, copies of this order are being sent to Mipco Seamless
Rings (Gujarat) Ltd. having corporate office at iLabs Centre, Ground Floor,
A-Block, Unit No.18, Hitec City, Hyderabad- 500081, Telangana and also to
the Securities and Exchange Board of India, Mumbai.

Place: Mumbai

D. RAVI KUMAR
CHIEF GENERAL MANAGER &
ADJUDICATING OFFICER

Date: 30.03.2015

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