BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

ADJUDICATION ORDER NO. VKV/DL/AO-05/2015-16
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:
M/s Hisar Spinning Mills Ltd.
(PAN- AAACH3754M)
9th K M Stone, Hisar-Bhiwani Road,
V.P.O. Dabra (Hisar), Haryana-125005
In the matter of Non-redressal of investor grievance(s)

BACKGROUND
1.

Securities and Exchange Board of India (hereinafter referred to as "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 (hereinafter referred to as
"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
(hereinafter referred to as "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 M/s Shri Hisar Spinning Mills Ltd. (hereinafter referred to as "Noticee/the
Company") did not submit the details to SEBI which were required to be furnished in terms
of the said Circular.

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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, a letter dated April 16, 2012 was 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
advising the Noticee to send the information (i.e. details for authentication) as required in
the Circular, at the earliest. Both the above mentioned letters returned undelivered.

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 one investor complaint(s)
were pending against the Noticee as on March 30, 2015. It was alleged that Noticee had
failed to redress pending investor grievances which render the Noticee liable for imposition
of penalty under section 15 C of the Securities and Exchange Board of India Act, 1992
(hereinafter referred to as SEBI Act).

APPOINTMENT OF ADJUDICATING OFFICER

4.

Shri Ram Mohan Rao was appointed as the Adjudicating Officer vide order dated August 22,
2012 to inquire and adjudge under Section 15C of the SEBI Act, 1992, the alleged violations
committed by the Noticee. Subsequent to the transfer of Shri Ram Mohan Rao, the
undersigned was appointed as Adjudicating Officer vide order dated June 25, 2013

SHOW CAUSE NOTICE, REPLY AND HEARING

5.

A Show Cause Notice (herein after referred to as SCN) was issued to the Noticee in terms
of the provisions of Rule 4(1) of SEBI (Procedure for Holding Inquiry and Imposing Penalties
by Adjudicating Officer) Rules, 1995 to show cause as to why an inquiry be not held against
it in terms of rule 4 of the Rules read with section 15I of SEBI Act, 1992 and penalty be not

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imposed under section 15C of SEBI Act, 1992 for the violations alleged to have been
committed by the Noticee.

SHOW CAUSE NOTICE AND REPLY

6.

find

from

the

records

that

the

aforesaid

SCN

bearing

No.

SEBI-

NRO/AO/VKV/GSS/1173/2015 dated August 18, 2015 was sent at the registered office
address of the Noticee at "9th K M Stone, Hisar-Bhiwani Road, V.P.O. Dabra (Hisar),
Haryana-125005. The said SCN was duly delivered to the Noticee through the Department
of Post.

7.

Noticee vide letter dated August 28, 2015 had submitted its reply in the matter, which inter
alia stated as under:
"..........
Kindly refer to notice no. SEBI-NRO/AO/VKV/GSS/1173/2015 dated August 18,2015 received
by us on August 24, 2015. We submit here to parawise replies to the notice as under

It is submitted that Company has obtained SCORES authentication and the Company
is viewing the complaints pending against it and redressing them and submitting
action taken reports. However, due to oversight final action taken report in one case
could not be submitted within stipulated time, though the company has submitted
the temporary action taken report on the matter involved.

The reply to the shareholder was sent through speed post on August 25, 2015 vide
no. AP348086295IN. The final action taken report was also uploaded on SCORES on
august 25, 2015.

..
8.

In the interest of natural justice and in order to conduct an inquiry in terms of rule 4(3) of
the Adjudication Rules, the Noticee was granted an opportunity of personal hearing Vide
Hearing notice no: SEBI/NRO/AO/VKV/GSS/26573/2015 dated September 16, 2015 at SEBINRO, New Delhi on October 07, 2015. The said Notice of hearing was duly served to the
Noticee through the Department of Post.

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PERSONAL HEARING
9.

On the scheduled date of personal hearing, Mr. Sanjeev Kumar Goel, Practicing Company
Secretary, appeared as Authorised Representative (AR). During the hearing, the AR made
the following submissions, which inter alia, stated as under:
"..........

We reiterate the submissions made by the Noticee vide letter dated August 28, 2015.
Further, the pending complaint of the complainant has been resolved by the noticee.
The AR also informed that Company has taken up matter with the complainant
directly regarding non-receipt of dividend. Further, it was also informed that
Company has never declared dividend.
We have no further submissions to make in the matter.
..........
ISSUES FOR CONSIDERATION
10.

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

11.

On perusal of the material available on record and giving regard to the facts and
circumstances of the case, I record my findings hereunder.
ISSUE 1: Whether the Noticee has failed to resolve investor grievances?

12.

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

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login to SCORES system electronically through a company specific user id and password,
to be provided by SEBI. In this regard, from the submissions of the Noticee I note that it
had provided details for authentication for SCORES user id & password on October 07,
2011.

13.

With regard one pending investor complaint relating to non-receipt of dividend as

mentioned in the SCN, the Noticee contended that it had never declared dividend and had
already informed the complainant about the same, action taken report has been uploaded
on SCORES and it had duly redressed the investor grievances and were disposed on
September 02, 2015. Subsequently, SEBI has also confirmed that the Noticee had obtained
SCORES authentication and had resolved the pending investor grievance (as mentioned in
the SCN) on August 18, 2015.

14.

Since, the Noticee had obtained SCORES authentication and had taken necessary steps of
resolving the pending investor grievance(s); 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?

15.

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.

16.

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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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?
17.

Since, the Noticee is not liable for monetary penalty in the instant matter, this issue
deserves no consideration.

18.

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 18, 2015.

19.

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 M/s
Hisar Spinning Mills Ltd and also to Securities and Exchange Board of India.

Date: February 02, 2016

Vijayant Kumar Verma

Place: New Delhi

Adjudicating Officer

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