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2015 (6) TMI 73 - AT - Companies LawPenalty under section 15C of the Securities and Exchange Board of India Act, 1992 - Failed to obtain SEBI Complaints Redress System (SCORES) Login ID and the password within time stipulated in the Circular dated 13.08.2012 - Held that - It is only after SEBI notice dated 21.03.2014 the appellant chose to apply for and obtain SCORES registration on 05.04.2014. Fact that the appellant on receipt of notice took immediate steps to obtain SCORES Login ID and password and also took steps to resolve the investor grievances immediately thereafter would not obliterate the inordinate delay on part of the appellant in applying for and obtaining SCORES Login ID and password. If the appellant had obtained the SCORES Login ID and password within time stipulated by SEBI then the appellant could attend to the investor grievance much earlier. Therefore, it is apparent that time and again the appellant has failed to obtain the SCORES registration within the time stipulated by SEBI and thereby the appellant has failed to resolve the investor grievances within the time stipulated by SEBI. Fact that there was only one investor grievance and the fact that appellant took steps to resolve the same immediately after receiving the show cause notice from SEBI does not wash out the inordinate delay in taking the first step under SCORES i.e. obtaining Login ID and password and thereafter resolve the investor grievances within the time stipulated by SEBI. In these circumstances, failure to obtain SCORES Login ID and password for redressing the investor grievances within the time stipulated by SEBI would constitute violation of Section 15C of SEBI Act. For violating provisions contained under section 15C of SEBI Act, penalty is imposable at the relevant time was ₹ 1 lac per day during which the failure continues or ₹ 1 crore whichever is less. In the present case, failure on part of the appellant to obtain SCORES Login ID and password is more than one and half year and therefore the penalty imposable would be ₹ 1 crore. However, after taking all mitigating factors into consideration the adjudicating officer has imposed nominal penalty of ₹ 1 lac on the appellant which cannot be said to be excessive or arbitrary or unreasonable. Thus, no case is made out to interfere with the order passed by the adjudicating officer, wherein imposing nominal penalty of ₹ 1 lac is imposed on the appellant. - Decided against the appellant.
Issues:
1. Restoration of appeal due to non-appearance. 2. Imposition of penalty under section 15C of the SEBI Act. 3. Failure to obtain SCORES Login ID and password. 4. Justification for penalty imposition. 5. Penalty amount determination. 6. Mitigating factors consideration. Issue 1: Restoration of appeal due to non-appearance The appellant filed a Miscellaneous Application seeking restoration of the appeal, which was dismissed earlier due to non-appearance. The appellant's representative cited being held up in a traffic jam as the reason for missing previous hearings. The appeal was restored by consent and taken up for hearing. Issue 2: Imposition of penalty under section 15C of the SEBI Act The appellant was aggrieved by an adjudication order imposing a penalty of Rs. 1 lac under section 15C of the SEBI Act. The penalty was due to the appellant's failure to obtain SCORES Login ID and password to redress investor grievances within the stipulated time. Issue 3: Failure to obtain SCORES Login ID and password The appellant, a sick industrial undertaking, claimed inability to obtain SCORES registration within the stipulated time due to commercial operations suspension until 2012-13. Despite obtaining registration later, the appellant failed to access information promptly, leading to delayed resolution of investor complaints. Issue 4: Justification for penalty imposition The appellant argued that the penalty imposition was unjustified due to the company's poor financial condition, delayed registration under SCORES, and immediate steps taken upon notice reception. However, the tribunal found no merit in these contentions. Issue 5: Penalty amount determination The tribunal noted that failure to obtain SCORES registration for over a year and a half could warrant a penalty of Rs. 1 crore. Despite this, a nominal penalty of Rs. 1 lac was imposed by the adjudicating officer, considering mitigating factors. Issue 6: Mitigating factors consideration After assessing all factors, the tribunal upheld the nominal penalty of Rs. 1 lac, deeming it neither excessive, arbitrary, nor unreasonable. Consequently, the appeal was dismissed as no grounds were found to interfere with the adjudicating officer's decision. In conclusion, the tribunal allowed the Miscellaneous Application for appeal restoration but dismissed the restored appeal, maintaining the nominal penalty of Rs. 1 lac imposed under section 15C of the SEBI Act.
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