M/s Vidarbha Industries Limited vs Securities and Exchange Board of India on 1 December 2014

1. Appellant is aggrieved by the order passed by Adjudication Officer (“AO” for short) of Securities and Exchange Board of India (“SEBI” for short) on August 28, 2014. By that order penalty of ` 2 lac is imposed on the appellant under Section 15HB of the Securities and Exchange Board of India Act, 1992 (“SEBI Act, 1992” for short). On ground that the appellant had failed to comply with the requirements specified in SEBI circular dated April 17, 2013.

2. Relevant facts are that SEBI had introduced an online electronic system for resolution of investors grievances i.e., SCORES in the year 2011. For the purpose of accessing the complaints of the investors against the companies as uploaded in the SCORES, listed companies were required to log in to SCORES system electronically through a company specific user id and password to be provided by SEBI.

3. By a circular dated April 17, 2013 SEBI called upon all listed companies to inter alia redress the grievances of the companies within 30 days of the receipt of the complaints and all listed companies which were yet to obtain SCORES user id and password were required to obtain the same. It is a matter of record that the appellant had failed to submit the details for authentication to SEBI in the format annexed to the circular dated April 17, 2013. Vide letter dated November 26, 2013 the appellant was once against advised to obtain the SCORES authentication. Admittedly, the appellant has failed to obtain the SCORES authentication done from SEBI. In its reply to the show cause notice, appellant had contended that it is not a listed company and hence the requirements of circular dated April 17, 2013 were not applicable to the appellant.

4. However, investigation conducted by SEBI revealed that some time in the past appellant had applied for delisting and thereafter no further steps were taken. As a result, it is not in dispute that the shares of appellant company still continue to be listed on the stock exchanges. In these circumstances, since the appellant being a listed company, failure

on part of the appellant to comply with the SEBI circular dated April 17, 2013 constitutes violation of SEBI circular for which penalty imposable under Section 15HB of SEBI Act is ` 1 lac per day or ` 1 crore whichever is less. Thus, in the present case, as against penalty of ` 1 crore imposable against the appellant, the AO of SEBI has imposed penalty of ` 2 lac which cannot be said to be arbitrary, excessive or unreasonable.

5. In these circumstances, we see no reason to interfere with the order impugned in the appeal.

6. Accordingly, the appeal being devoid of any merit is dismissed with no order as to costs.

Sd/- Justice J.P. Devadhar Presiding Officer

Sd/-

Jog Singh

Member

Sd/- A S Lamba Member 01.12.2014 Prepared & Compared By: PK