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BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA


ADJUDICATION ORDER NO. JJ/AM/AO80/2015

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:
Rathi Steels Limited
(PAN AAACR1143A)
In the Matter of: Rathi Steels Limited
_____________________________________________________________________________________________
BACKGROUND
1. Securities and Exchange Board of India (SEBI) came out with a Circular
dated June 03, 2011 dealing with the processing of investor complaints
against listed companies through SEBI Complaints Redress System
(SCORES). In terms of said Circular, all listed companies were inter alia
required to view the complaints pending against them, redress them and
submit Action Taken Reports (ATRs) electronically in SCORES. As the
SCORES is online electronic system, therefore, for the purposes of
accessing the complaints of the investors against them, as uploaded in the
SCORES, listed companies were required to login to SCORES system
electronically through a company specific user id and password, to be
provided by SEBI. For the purpose of generating said user id and
password, listed companies which were yet to obtain SCORES user id and
password, were required to submit the details for authentication to SEBI,
in the format annexed to the said Circular. However, it was observed that
Rathi Steels Limited (Noticee) did not submit the details to SEBI which
were required to be furnished in terms of the said Circular.
2. In order to further remind the Noticee about the compliance with the
requirements as laid down in the SEBI Circular dated June 03, 2011, letter
dated April 16, 2012 were sent to the Noticee informing about the
commencement of processing of investor complaints in a centralized web
based complaints redress system SCORES in terms of the Circular and
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Adjudication Order in respect of Rathi Steels Ltd.


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advising the Noticee to send the information (i.e. details for


authentication) as required in the Circular, at the earliest.
3. As observed from the contents of the Circular, SCORES introduced
electronic dealing of the complaints of the investors, by the respective
companies. Thus, once a complaint against a company was uploaded by
SEBI in the SCORES, it amounted to calling upon by SEBI to such company
to redress the investor grievance. Accordingly, it was incumbent upon
such company to redress the investor complaint. It was observed that two
investor complaints were pending against the Noticee as on August 27,
2012. However, it was alleged that the Noticee failed to redress pending
investor grievance and also failed to obtain SCORES authentication in
spite of being called upon by SEBI to do so thereby violating the
provisions of Section 15C of the SEBI Act, 1992.
4. Shri Praveen Trivedi was appointed as the Adjudicating Officer to inquire
and adjudge under Section 15C of the SEBI Act, 1992, the alleged
violations committed by the Noticee. Pursuant to the transfer of Shri
Praveen Trivedi, the undersigned was appointed as Adjudicating Officer
vide Order dated December 18, 2013.
SHOW CAUSE NOTICE, HEARING & REPLY
5. Show Cause Notice (SCN) in terms of the provisions of Rule 4(1) of SEBI
(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating
Officer) Rules, 1995 (Adjudication Rules) was issued to the Noticee on
August 08, 2013, calling upon the Noticee to show cause why an inquiry
should not be held against it under Rule 4(3) of the Adjudication Rules
read with Section 15I of the SEBI Act, 1992 for the alleged violations.
6. The aforesaid SCN was duly delivered to the Noticee through the
Department of Post. Vide letter dated August 29, 2013 the Noticee
submitted its reply to the SCN and inter alia stated that they had resolved
the two complaints (as mentioned in the SCN) on July 03, 2013 and stated
that as on August 29, 2013 there were no complaints pending for
resolution in SCORES.
7. Subsequent to the appointment of the undersigned, vide Notice dated
February 09, 2015 the Noticee was given an opportunity of personal
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hearing on March 03, 2015. The said Notice dated February 09, 2015 was
duly delivered to the Noticee through the Northern Regional Office (NRO)
of SEBI. However the Noticee did not avail the opportunity of personal
hearing. Vide letter dated February 13, 2015 the Noticee, inter alia, made
the following submissions:
We give below for your perusal, datewise details of communications and
replies thereto with regard to the complaint for which the Show Cause has
been issued
Date
20.09.2012
20.09.2012

Particulars
Email received
Email replied

03.10.2012

Above email also replied


by letter to SEBI, Mumbai
Letter from SEBI, New
Delhi
Sent email to SEBI New
Delhi
Visited SEBI, New Delhi

03.06.2013
12.06.2013
18.06.2013

19.06.2013

28.06.2013
08.08.2013

29.08.2013

Letter sent to complainant


at Kolkata and Bhilai
address
Letter sent to SEBI, New
Delhi
Received Show Cause
Notice from SEBI, New
Delhi
Reply to Show Cause
Notice

Remarks
Complaint, copy enclosed
Intimating that the complainant does not appear in
the companys share holders list
Intimating that the complainant does not appear in
the companys share holders list, copy enclosed
For visiting SEBI, New Delhi, copy enclosed
Sought appointment for 18.06.2013 to clarify the
complaint grievance
Mr. Nagar Mal Lohia met the concerned person and
informed that the name of the company to which the
complainant pertains has been wrongly mentioned as
Rathi Steels Ltd. Regn.No. 021218 instead of Rathi
Industries Ltd.
Intimating that the complainant does not appear in
the companys share holders list, copy enclosed
Intimating that reply sent to complainant and sought
appointment, copy enclosed
Copy enclosed

Informing that as per information uploaded from


SCORES there is no pending complaints to be resolved
and attached screenshot copy enclosed

ISSUES FOR CONSIDERATION


8. After perusal of the material available on record, I have the following
issues for consideration, viz.,
A. Whether the Noticee has failed to resolve investor grievances?
B. Whether the Noticee is liable for monetary penalty under Section 15C
of the SEBI Act, 1992?
C. What quantum of monetary penalty should be imposed on the Noticee
taking into consideration the factors mentioned in Section 15J of the
SEBI Act, 1992?
FINDINGS
9. On perusal of the material available on record and giving regard to the
facts and circumstances of the case, I record my findings hereunder.
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ISSUE 1: Whether the Noticee has failed to resolve investor


grievances?
10. As already observed, SEBI introduced an online electronic system for
resolution of investor grievances, i.e., SCORES in 2011. For the purposes
of accessing the complaints of the investors against them, as uploaded in
the SCORES, listed companies were required to login to SCORES system
electronically through a company specific user id and password, to be
provided by SEBI. Further, vide letter dated April 16, 2012 the Noticee
was informed about the commencement of SCORES and the Noticee was
advised to send the details for authentication as required in the Circular.
In this regard, the Noticee has submitted that it had obtained the user id
and password for SCORES and had resolved the investor grievances.
Subsequently, SEBI has confirmed that the Noticee had obtained SCORES
authentication on July 17, 2012 and had resolved the pending investor
grievances (as mentioned in the SCN) and the same were closed in the
SCORES database on July 03, 2013.
11. Since the Noticee had obtained SCORES authentication and had taken
necessary steps of resolving the pending investor grievances before the
issuance of SCN; I hold that the allegation of not resolving investor
grievances, as alleged in the SCN, does not stand established.
ISSUE 2: Whether the Noticee is liable for monetary penalty under
Section 15C of the SEBI Act, 1992?
12. The provisions of Section 15C of the SEBI Act, 1992, read as under:
15C Penalty for failure to redress investors' grievances: 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.
13. Since the allegation against the Noticee of not resolving the investor
grievance pending against it has not been established; therefore, the
Noticee is not liable for monetary penalty under Section 15C of the SEBI
Act, 1992.

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March 31, 2015

ISSUE 3: What quantum of monetary penalty should be imposed on the


Noticee taking into consideration the factors mentioned in Section 15J
of the SEBI Act, 1992?
14. Since, the Noticee is not liable for monetary penalty in the instant matter,
this issue deserves no consideration.

ORDER
15. In view of my findings noted in the preceding paragraphs, I hereby
dispose of the Adjudication Proceedings initiated against the Noticee vide
Show Cause Notice dated August 08, 2013.
16. In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding
Inquiry and Imposing Penalties by Adjudicating Officer) Rules 1995,
copies of this Order are being sent to the Noticee and also to Securities
and Exchange Board of India.

Date: March 31, 2015


Place: Mumbai

Jayanta Jash
Adjudicating Officer

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