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TMI Blog2015 (7) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... on of law and the regulators’ orders in this regard. Even after passing of the impugned order dated May 9, 2005 no steps were taken to redress the investors’ grievances. As the investors’ grievances increased to 114, fresh letter was issued to the appellant on September 25, 2008 calling upon the appellant to redress investors’ grievances. As the appellant failed and neglected to redress investors’ grievances, proceedings were initiated and by impugned order dated March 25, 2011 penalty of ₹ 20 lac under Section 15C and penalty of ₹ 2 lac under Section 15A(a) of SEBI Act has been imposed. Penalty at the rate of ₹ 1 lac per day from September 25, 2008 till passing of impugned order dated March 25, 2011 for not redressing 114 investors’ grievances would be more than ₹ 1 crore, however, inspite of persistent default on part of appellant, Ld. adjudicating officer has taken a lenient view and imposed penalty of ₹ 20 lac under Section 15C and penalty of ₹ 2 lac 15A(a) of SEBI Act which cannot be said to be unreasonable or excessive. Argument of the appellant that it was a sick company and had only few employees and, therefore, investors’ grievance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeals have been heard and are being disposed of by this common order. 3. First, we may deal with the facts of appeal no. 60 of 2014 as it relates to older impugned order dated May 9, 2005. On July 30, 2004 SEBI found that 80 complaints of investors were pending redressal with the company for more than preceding 6 months. Accordingly, SEBI called upon the appellant vide letter dated September 3, 2004 to do the needful expeditiously. On appellants failure to do so a show cause notice dated December 7, 2004 as per the provisions of Rule 4 of SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 was issued to the appellants for taking appropriate action as per law. 4. The appellant filed reply dated December 21, 2004 stating therein that the company not in a position to make regular payment of fees to its R T agents and hence it led to accumulation of investors grievances. It was also stated that needful would be done within four weeks by resolving the pending investors complaints but nothing seems to have been done by the appellant. The appellant was called upon to attend a hearing before the adjudicating officer on January 17, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellant after lapse of 1036 days. 6. Learned counsel for the appellant, Shri Rahul Totala, vehemently argued that the two orders are required to be quashed and set aside in as much as the complaints in question have since been redressed. It is stated by the appellant in para 5(v) of the appeal that there were four directors in the company, namely, Mr. Chandrakant Gandhi Mr. S. K. Gandhi, Mr. Rinki S. Gandhi and Mr. Mahesh Thakar. Mr. Suryakant Patel resigned from the board of directors on June 22, 1987. Mr. Rinki Gandhi was appointed on the board of directors on December 30, 1987. He also resigned from the board of directors on March 1, 2005 and tendered his resignation to the company but company failed to file Form 32 with the concerned Registrar of Companies and hence, the name of Rinki Gandhi still appears as a director of the company on the MCA records. Mr. Mahesh Thakar resigned from the board of direction on June 5, 2006. The founder director Mr. Chandrakant Gandhi expired on October 10, 2006 and Mr. Shashikant Gandhi expired on October 15, 2007. After 2007, the company has not appointed any director as it was not carrying on any business activities. There was no d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as passed on May 9, 2005 there were about 80 complaints by the investors pending. When second order was passed on March 25, 2011 there were 114 complaints pending. In this connection, we note that speedy redressal of grievances is an important task assigned to the SEBI by law. If investors do not get the reply or their dues on time or do not get their shares demated etc. expeditiously, it leads to frustration and they may be discouraged to invest any more in the scrip of the company or even in other shares. This may, therefore, adversely affect the growth of capital market. Section 15C of the SEBI Act enjoins upon SEBI to levy penalty on listed company which has failed to redress investors grievances within the specified time prescribed by the Board. Undoubtedly, it is to be done after affording reasonable opportunity to the company which has been duly done in the present two appeals. Keeping in view the seriousness of the matter, a penalty of ₹ 1 lac for each day during which such failure to redress investors grievances continues has been prescribed by law which can be levied upon the defaulter company subject to a maximum of ₹ 1 crore. In the present case, admittedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 2 lac 15A(a) of SEBI Act which cannot be said to be unreasonable or excessive. 13. Argument of the appellant that it was a sick company and had only few employees and, therefore, investors grievances could not be redressed does not impress us, because, obligation under the SEBI Act to comply with investors grievances is made mandatory and for non compliance stringent penalty of ₹ 1 lac per day is prescribed. Therefore, irrespective of being a sick company and irrespective of their being only few employees, appellant was obliged to redress investors grievances from time to time. 14. Moreover, above argument is a dishonest one as can be seen from the conduct of the appellants / its directors. As soon as SEBI passed an order on December 15, 2010 restraining appellants and its directors from entering the capital market till redressal of investors grievances pending since 2004, appellant took steps to redress all investors grievances immediately and applied for revoking the debarment order dated December 15, 2010. Accordingly, by order dated December 17, 2013 the debarment order was revoked. Thus, it is clear that the appellant took steps to redress investor grievance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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