2015 (10) TMI 1905 - AT - Companies Law

Penalty imposed under Section 15C of SEBI Act, 1992 - Appellant failed to obtain SCORES Authentication within stipulated time and redress investor grievance - Appellant obliged with the same after receiving SCN - Contended by Appellant is that company was dormant from past 7 years, was in poor financial condition and it was virtually impossible to hire a Company Secretary - No loss caused to the investors; penalty to be set aside. Held That - Appellant being a listed company is bound to comply with the directions of SEBI and redress investor grievances - No investor loss caused can be the ground to set aside penalty imposed - Penalty cannot be said as unreasonable and harsh as same is imposed after considering all mitigating factors - Appeal dismissed - Decided in favour of Respondent.

Summary

Issues:
Violation of SEBI Act by failing to comply with SEBI circular and letter within stipulated time leading to penalty imposition under section 15C of SEBI Act.

Analysis:
The appellant was penalized under section 15C of the SEBI Act for failing to obtain SCORES authentication and redress investor grievances within the specified time frame, as mandated by SEBI circular and subsequent letter. The appellant's non-compliance with SEBI directions led to the imposition of a penalty of Rs. 3 lac. The appellant argued that due to financial constraints and other reasons, it was unable to meet the requirements on time, and no investor loss occurred. However, the tribunal found no merit in these contentions, emphasizing the appellant's obligation as a listed company to adhere to SEBI directives promptly. The appellant's actions were deemed violative of the SEBI Act, despite subsequent compliance after a show cause notice was issued.

The tribunal highlighted that the penalty for failure to redress investor grievances within the stipulated time under section 15C of the SEBI Act ranges from Rs. 1 lac to Rs. 1 crore, with a daily penalty accrual provision. Despite the potential for a penalty exceeding Rs. 1 crore in this case, the Adjudicating Officer exercised discretion and imposed a penalty of Rs. 3 lac, considering mitigating factors. The tribunal deemed this penalty reasonable and not excessive. Ultimately, the tribunal dismissed the appeal, upholding the adjudication order and the penalty imposed, emphasizing the importance of timely compliance with SEBI regulations for listed companies.