_____________________________________________________________________________ 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: Indage Restaurant and Leisure Ltd (PAN: Not available) CIN L15520MH1982PLC028415 Indage House, 82, Dr. Annie Besant Road, Worli, Mumbai 400018 In the matter of non-redressal of investor complaint and non-filing of ATR _________________________________________________________________________ BACKGROUND
1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") operationalised SEBI Complaints Redress System (hereinafter referred to as SCORES), and with this respect has issued circulars inter-alia circulars ref. no. CIR/OIAE/2/2011 dated June 3, 2011, CIR/OIAE/1/2012 dated August 13, 2012 and circular no. CIR/OIAE/1/2013 dated April 17, 2013, instructing inter-alia all the listed companies to implement SCORES system at their end and redress pending investor complaints referred by SEBI in the SCORES
2. SEBI referred an investor complaint through SCORES bearing ref. no. SEBIP/MH15/0003776/1 (hereinafter, referred to as investor complaint) to Indage Restaurant and Leisure Ltd (hereinafter, also referred to as Noticee). SEBI observed from SCORES that investor complaint was not resolved and Action Taken Report (hereinafter, referred to as ATR) within specified time in terms of SEBI circular ref. no. CIR/OIAE/2/2011 dated June 3, 2011, CIR/OIAE/1/2012 dated August 13, 2012 and circular no. CIR/OIAE/1/2013 dated April 17, 2013. It was alleged that Noticee was called upon / had knowledge that Noticee was supposed to file ATR and resolve the investor complaint, however, Noticeee did not file ATR and resolve the investor complaint in specified time, thereby Noticee fail to comply with provisions of said circulars and section 15A(a) and section 15C, respectively, of the SEBI Act 1992 (hereinafter, referred to as SEBI Act) APPOINTMENT OF ADJUDICATING OFFICER
3. SEBI, vide order dated March 10, 2016, appointed an Adjudicating Officer under section 19 of the SEBI Act read with section 15-I(1) of the SEBI Act and Rule 3 of SEBI(Procedure for holding inquiry and imposing penalties by adjudicating officer) rules, 1995, to inquire and adjudge under section 15A(a) and section 15C of the SEBI Act in respect of the Noticee for failure to file ATR and redress / resolve the pending investor complaint within specified time.
4. Upon changes in Adjudicating Officers in the present case, vide order / communique dated May 18, 2017, the proceedings were transferred to present Adjudicating Officer. _______________________________________________________________________________________ Adjudication Order in respect of Indage Restaurant and Leisure Ltd ihe matter of non-filing of ATR and non-redressal of investor complaint Page 2 of 9 SHOW CAUSE NOTICE, PERSONAL HEARING, WRITTEN SUBMISSIONS (if any)
5. A Show Cause Notice no. EAD/PJ/VRP/12541/2016 dated April 29, 2016 (hereinafter referred to as 'SCN') was served on the Noticee through digitally signed e-mail, requiring the Noticee to show cause as to why an inquiry should not be held against the Noticee in terms of Rule 4 of SEBI (Procedure for Holding Inquiry and Imposing Penalties by Adjudication Officer) Rules, 1995 and penalty be not imposed under Section 15A(a) and Section 15C of the SEBI Act for alleged violation as brought out above. The said SCN was delivered through digitally signed e-mail sent to Noticee at its contact e-mail ID irl.legal@indagegroup.com on May 2, 2015.
6. SEBI vide communique dated December 5, 2017 revised the application of penal provision for non-filing / delay in filing of ATR in SCORES from Section 15A(a) of SEBI Act to Section 15HB of SEBI Act. Vide Notice reference no. SEBI/HO/EAD-8/JS/DJ/OW/ P/562/1/2018 dated January 5, 2018, Noticee was
a) informed about the said change in penal provision from section 15A(a) to section 15HB,
b) informed about about change in Adjudicating Officer,
c) reminded to submit its reply to SCN, latest by January 22, 2017, and
d) granted an opportunity of hearing on January 25, 2017
7. The said notice was affixed on January 06, 2018 as well as delivered through speed post AD on January 8, 2018 at last known address of the Noticee viz, Indage House, 82, Dr. Annie Besant Road, Worli, Mumbai 400018 as per information obtained from Bombay Stock Exchange (hereinafter, referred to as BSE) and information available at the website of Ministry of Corporate Affairs (hereinafter, referred to as MCA).
8. In the said notice dated January 5, 2018, there was an inadvertent typographic error in writing date of filing reply and date of hearing wherein year was written as 2017. Therefore, vide another notice of hearing dated January 16, 2018, Noticee was clarified that Reply to SCN shall be submitted latest by January 24, 2018 and hearing has been granted on January 25, 2018 at 11:00 am. The said notice dated January 16, 2018 was affixed (on January 16, 2018) as well as delivered through speed post AD (on January 18, 2018) at the last known address of the Noticee viz, Indage House, 82, Dr. Annie Besant Road, Worli, Mumbai 400018 as per information obtained from BSE and information available at the website of MCA.
9. Noticee didnt appear for the scheduled hearing on January 25, 2018. However, written submissions was received from the Noticee vide its e-mail dated January 25, 2018 on the same day at 6:45 pm, wherein scanned copy of its letter dated January 25, 2018 was enclosed. Original reply of Noticee was also received on January 31, 2018. Vide the said reply, Noticee made following key submissions: The Registrar & Transfer Agents have not intimated the company about the status of complaint made by the shareholder of the company. However, the company undertakes to sort out and solve the complaint made by one of the shareholder regarding non-receipt of share certificate. _______________________________________________________________________________________ Adjudication Order in respect of Indage Restaurant and Leisure Ltd ihe matter of non-filing of ATR and non-redressal of investor complaint Page 3 of 9 In this regard, we are enclosing herewith a copy of an order of the High Court judicature at Bombay dated 16/12/2017 received by us on 13/01/2018, declaring the company as would up by & under the direction order of the honourable court, under the provision of the Companies Act, 1956, and also ordered to appoint an official liquidator to take charge of all the books and affairs of the company immediately. The company intends to challenge this order of the court & will be filing the petition for revocation of the winding up order. In view of the above, we express our inability to furnish any information at this point of time in this regard.
10. Vide notice ref. no. SEBI/HO/EAD-8/JS/DJ/OW/ P/3765/1/2018 dated February 2, 2018 to Noticee, while referring to contention of Noticee made in its reply dated January 25, 2018 that Registrar & Transfer Agents have not intimated Noticee about the status of complaint made by shareholder, attention of Noticee was drawn to the action history of investor complaint in SCORES clearly showing the trail of the receipt of the investor compliant by Noticee in SCORES system and same remaining unresolved. The said action history of the complaint was part of the SCN and also provided once again for ready reference. Noticee was advised to submit reply to allegations against Noticee for non-redressal of the investor complaint latest by February 14, 2018. It was also pointed out to the Noticee that it didnt availed the previous opportunity of hearing, and one more opportunity of hearing was provided to Noticee to appear on February 15, 2018, 4:00 pm.
11. One person by the name of Shri Sumit Chandrakumar Khot appeared for the hearing on February 15, 2018, belatedly at 4:50 pm. Said person submitted that he has been authorised to attend the hearing, however, couldnt produce the authorisation letter for his appearance for the hearing. It may be mentioned that it was clearly mentioned in the hearing notice that the person appearing for the hearing should carry proper authorisation for the proceedings.
12. In the interest of the case, hearing proceedings were carried forward after obtaining photo identity of the representative. During the hearing, it was requested on behalf of Noticee to provide some more time to make our further submissions in the matter. In this regard, Noticee was allowed time till February 21, 2018 before noon to necessarily make its submissions, if any, in the matter through e- mail to ead-8@sebi.gov.in. Noticee, if desire, can also avail hearing on February 21, 2018 before noon. On non-receipt of submissions by the above time granted to Noticee, it will be construed that Noticee has no further submissions to make.
13. Further as per the request of the Noticee another hearing was granted on February 21, 2018. It is to be mentioned that the hearing was not availed of by the Noticee, and also, no further submissions were made by the Noticee till date in the present matter. Hence, accordingly, present proceedings are being continued further based on the information already available on records. CONSIDERATION OF ISSUES AND FINDINGS
14. Given the charges framed in the SCN read with subsequent Notices issued to Noticee, reply of the Noticee, and any other material available on records, following issues arise for consideration in the present case: _______________________________________________________________________________________ Adjudication Order in respect of Indage Restaurant and Leisure Ltd ihe matter of non-filing of ATR and non-redressal of investor complaint Page 4 of 9
a) Whether the Noticee has failed to redress the investor complaint and file ATR within the specified time?
b) Whether the Noticee has failed to comply SEBI circular no. CIR/OIAE/2/2011 dated June 3, 2011 read with SEBI circular no. CIR/OIAE/1/2012 dated August 13, 2012 read with SEBI circular no. CIR/OIAE/1/2013 dated April 17, 2013?
c) Whether the Noticee is liable for monetary penalty under Section 15C and Section 15HB of the SEBI Act?
d) If so, what quantum of monetary penalty should be imposed on the Noticee taking into consideration the factors mentioned in Section 15J of the SEBI Act? FINDINGS Issue a) Whether the Noticee has failed to redress the investor complaint and file ATR within the specified time
15. On perusal of the relevant investor complaint in the present case, it is noted that the investor complaint was received by SEBI in SCORES on August 13, 2015. From the content of the complaint, it is noted that complaint pertains to non-receipt of shares by complainant / investor and in this regard complainant also provided its new address to send the share certificate at the same. It is noted that SEBI forwarded the investor complaint to Noticee through SCORES on August 17, 2015, hence, Noticee was called upon to redress the investor complaint. From the action history available in SCORES, following is noted: SEBI, on August 17, 2015 forwarded the investor complaint to the Noticee stating please examine and resolve the complaint at the earliest SEBI, vide reminders on September 8, 2015 and September 27, 2015 in SCORES, advised the Noticee to resolve the investor complaint at the earliest while in the later reminder, it was also cautioned that on failure to redress the investor complaint Noticee will be liable for regulatory action under SEBI Act. On behalf of Noticee, on October 19, 2015, an ATR was filed on October 19, 2015 stating that Sir, New exchanged share certificate already sent to company on 25/08/2015 for authorised signatory, common seal but still not received the same from them and also they are not responding to us. Regards, for Sharex Dynamic (I) Pvt Ltd.. SEBI, on February 2, 2016 put one more reminder stating that the investor complaint has been pending for substantial period of time and Noticee was advised to redress the same on priority, and in case of non-compliances may attract regulatory action under SEBI Act. Upon, non-receipt of any further update from the Noticee on redressal of investor complaint, SEBI initiated the present adjudication proceedings, and update about the same was provided to Noticet through SCORES on February 17, 2016.
16. It is noted that ATR / update was filed on behalf of the Noticee on October 19, 2015 inter- alia stating that new exchanged share certificate already sent to Noticee on 25/08/2015 for signature but not received back and also there is no response from Noticee. However, it is to _______________________________________________________________________________________ Adjudication Order in respect of Indage Restaurant and Leisure Ltd ihe matter of non-filing of ATR and non-redressal of investor complaint Page 5 of 9 be noted that above initial ATR was filed after two months from receipt of investor complaint in SCORES which amounts to a delay of one month against the requirement of submission of ATR within thirty days from receipt of investor complaint as per circular ref. no. CIR/OIAE/1/2013 dated April 17, 2013. Hence, it is established that there has been delay in submission of ATR to SEBI, which is in violation of said circular reference no. SEBI CIR/OIAE/1/2013 dated April 17, 2013.
17. From the action history in SCORES, it is noted that investor complaint was received by Noticee in SCORES system on August 17, 2015, and further reminders were sent by SEBI on September 8, 2015 and September 27, 2015 advising Noticee to redress the investor complaint. In an update / ATR filed on behalf of Noticee on October 19, 2015 it was informed to SEBI stating that Sir, New exchanged share certificate already sent to company on 25/08/2015 for authorised signatory, common seal but still not received the same from them and also they are not responding to us. Regards, for Sharex Dynamic
(I) Pvt Ltd..
18. Noticee in its reply dated January 25, 2018 inter-alia stated that Registrar & Transfer Agents (RTA) have not intimated Noticee about the status of complaint made by shareholder, however, the Noticee undertakes to sort out and solve the complaint made by one of the shareholder regarding non-receipt of share certificate. From the above submissions, it is clear that the complaint remained unresolved till date and it is also noted that Noticee has tried to shift onus of non-redressal on its RTA. Vide notice dated February 2, 2018, reply / submissions from Noticee were sought with respect to allegation of non-redressal of investor complaint, and in the same notice action history of investor complaint clearly showing the trail of receipt of investor complaint by Noticee was also highlighted vis- a-vis the contention of the Noticee that its RTA didnt provide it the status of the investor complaint. Vide the said notice, Noticee was advised to submit its reply latest by February 14, 2018 with respect to allegations against Noticee for non-redressal of investor complaint, and also an opportunity of hearing was granted to Noticee on February 15, 2018, 4:00 pm.
19. Noticee failed to make its further submissions to the allegations, and in the hearing availed on February 15, 2018, merely more time was sought for the Noticee to make submissions. Accordingly, time till February 21, 2018 was provided to Noticee to make further submissions, if any, and also another opportunity of hearing, if required by Noticee, was granted on February 21, 2018. It is to mention that Noticee failed to avail the above opportunities to make its further submissions, if any, in the matter.
20. Hence, the matter is being decided based on reply already made by noticee and material on record already provided to Noticee. The same, clearly shows that Noticee didnt redress the investor complaint despite receipt of investor complaint in SCORES along with subsequent reminders from SEBI, as well as being followed up by its RTA. Fact remains that complaint remains unresolved till current date, which is also an admitted fact by the Noticee in reply to the SCN. Hence, there is a failure on part of the Noticee in redressal of investor complaint. _______________________________________________________________________________________ Adjudication Order in respect of Indage Restaurant and Leisure Ltd ihe matter of non-filing of ATR and non-redressal of investor complaint Page 6 of 9 Issue b) Whether the Noticee has failed to comply SEBI circular no. CIR/OIAE/2/2011 dated June 3, 2011 read with SEBI circular no. CIR/OIAE/1/2012 dated August 13, 2012 read with SEBI circular no. CIR/OIAE/1/2013 dated April 17, 2013?
21. Before going forward, it is pertinent to refer the relevant provisions from the said circulars pertaining to SCORES viz, SEBI circular no. CIR/OIAE/2/2011 dated June 3, 2011, SEBI circular no. CIR/OIAE/1/2012 dated August 13, 2012 and SEBI circular no. CIR/OIAE/1/2013 dated April 17, 2013: Circular CIR/OIAE/2/2011 dated June 3, 2011 bearing subject Processing of investor complaints against listed companies in SEBI Complaints redress System (SCORES)
2. All complaints pertaining to companies will be electronically sent through SCORES at http://scores.gov.in/Admin. The companies are required to view the complaints pending against them and submit ATRs along with supporting documents electronically in SCORES. Failure on the part of the company to update the ATR in SCORES will be treated as non redressal of investor complaints by the company. Submission of physical ATR will not be accepted for complaints lodged in SCORES. For complaints forwarded to companies on or before 20/5/2011, physical ATRs should be submitted. Circular CIR/OIAE/1/2012 dated August 13, 2012 bearing subject Redressal of investor grievances against listed companies in SEBI Complaints redress System (SCORES)
2. All companies against whom complaints are pending on SCORES, shall take appropriate necessary steps within 7 days of receipt of complaint by the concerned company through SCORES, so as to resolve the complaint within 30 days of receipt of complaint and also keep the complainant duly informed of the action taken thereon.
3. In case of failure to comply with the above, SEBI would be constrained to initiate enforcement actions as per the law as may be deemed appropriate. Circular CIR/OIAE/1/2013 dated April 17, 2013 bearing subject Redress of Investor grievances through SCORES
2. Failure by companies to file Action Taken Reports under SCORES within 30 days of date of receipt of the grievance may also attract the provisions of Sec 15A(a) of the SEBI Act, 1992.
22. In terms of the said Circular ref. CIR/OIAE/2/2011 dated June 03, 2011, all listed companies were inter alia required to view the details of the complaints pending against them, redress them and submit the ATR electronically in SCORES. As the SCORES is an online electronic system, therefore, for the purposes of accessing the complaints of the investors against them, as uploaded in SCORES, listed companies were required to login to SCORES system electronically. It is noted that Noticee has taken SCORES authentication and had access to SCORES at the time it received investor complaint from SEBI.
23. As per provisions of circular reference no. SEBI CIR/OIAE/1/2012 dated August 13, 2012, Noticee was liable to take necessary steps within seven days of receipt of investor complaint through SCORES, so as to resolve the same within thirty days of receipt of investor complaint. _______________________________________________________________________________________ Adjudication Order in respect of Indage Restaurant and Leisure Ltd ihe matter of non-filing of ATR and non-redressal of investor complaint Page 7 of 9 It is noted that Noticee has failed to comply with these provisions and also has not redressed the investor complaint even till date as per information on record and admission of Noticee in its reply to SCN. Hence, the non-redressal of investor complaint amount to violation of SEBI circular ref. no. CIR/OIAE/1/2012 dated August 13, 2012.
24. Given the above, Noticee has failed to file the ATR and redress the investor complaint within specified time. In this context, reliance is placed upon the Order of Honble SAT in the matter of S. S. Forgings & Engineering Limited & Others v SEBI, Appeal No. 176 of 2014 (decided on August 28, 2014) wherein, it was observed that Undoubtedly, an obligation is cast upon every listed company to redress investors grievances in a time bound manner as may be prescribed by SEBI from time to time This Tribunal has consistently held that redressal of investors grievances is extremely important for the Regulator to regulate the capital market. If the grievances are not redressed within a time bound framework, it leads to frustration among the investors who may not be motivated to further invest in the capital market. Hence the importance of complaints redressal system initiated by SEBI in June, 2011 cannot be undermined and its sanctity has to be maintained by all the listed companies. Given the above, it is held that the Noticee has violated the provisions of the aforementioned provisions as charged. Issue c) Whether the Noticee is liable for monetary penalty under Section 15C and Section 15HB of the SEBI Act?
25. Noticee in its reply to SCN has informed that Honorable Bombay High Court in its order dated 16/12/2017 received by Noticee on 13/01/2018, declared the Noticee as would up by & under the direction order of the honorable court, under the provision of the Companies Act, 1956, also ordered to appoint an official liquidator to take charge of all the books and affairs of the company immediately. Noticee has further submitted that it intends to challenge this order of the court & will be filing the petition for revocation of the winding up order.
26. It is clear that the violations have been committed by the Noticee, and where violation has occurred the consequences of liability of monetary penalty in terms of the law is inevitable and it is immaterial that the company is now not listed on the stock exchange.
27. Reliance is placed upon the order of the Honble Supreme Court of India in the matter of Chairman, SEBI Vs Shriram Mutual Fund ({2006} 5 SCC 361) wherein it was held that In our view, the penalty is attracted as soon as contravention of the statutory obligations as contemplated by the Act is established and therefore, the intention of the parties committing such violation becomes immaterial.. Hence, we are of the view that once the contravention is established, then the penalty has to follow and only the quantum of penalty is discretionary.
28. To boost investor confidence in the securities market it is essential that priority should be assigned to redressal of investor complaints, if any, by the listed companies / registered intermediary. It is pertinent to note that Noticee was listed at BSE during the relevant time of receipt of complaint and, and de-listed by BSE in December 2017. The importance of _______________________________________________________________________________________ Adjudication Order in respect of Indage Restaurant and Leisure Ltd ihe matter of non-filing of ATR and non-redressal of investor complaint Page 8 of 9 complaints redressal system SCORES initiated by SEBI in June, 2011 cannot be undermined and its sanctity has to be maintained by all the listed companies.
29. Noticee, being listed company at the time of receipt of investor complaint, was expected to comply with the extant regulatory and statutory requirements for filing ATR and redress investor complaint within specified time as per relevant provisions mentioned above. However, Noticee has failed in its statutory obligation and, therefore, the charge of violation of section 15HB and 15C for not filing ATR and non-redressal of investor complaint, respectively, stands established against the Noticee. Section 15HB and Section 15C of SEBI Act reads as follows: Penalty for contravention where no separate penalty has been provided. 15HB. Whoever fails to comply with any provision of this Act, the rules or the regulations made or directions issued by the Board thereunder for which no separate penalty has been provided, shall be liable to a penalty which shall not be less than one lakh rupees but which may extend to one crore rupees. Penalty for failure to redress investors grievances. 15C. 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 which shall not be less than one lakh rupees but which may extend to one lakh rupees for each day during which such failure continues subject to a maximum of one crore rupees. Issue d) - If so, what quantum of monetary penalty should be imposed on the Noticee taking into consideration the factors mentioned in Section 15J of the SEBI Act?
30. While determining the quantum of penalty under Section 15C of the SEBI Act, it is important to consider the factors specified in Section 15J of the SEBI Act which read as under:- 15J - Factors to be taken into account by the adjudicating officer While adjudging quantum of penalty under section 15-I, the adjudicating officer shall have due regard to the following factors, namely:- (a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; (b) the amount of loss caused to an investor or group of investors as a result of the default; (c) the repetitive nature of the default.
31. There is no material available on record to assess the amount of loss caused to investor(s) or the amount of disproportionate gain or unfair advantage made by the Noticee as a result of default in filing ATR and redressal of investor complaint, neither has it been so alleged by SEBI.
32. While the fact is that ATR was filed belatedly with minor delay of around one month, however, investor complaint remained unresolved for significant time even till date. ORDER
33. In view of the above, after considering all the facts and circumstances of the case and the factors mentioned in the provisions of Section 15J of the SEBI Act, it is determined that the alleged violation against the Noticee stands established and for the same, hereby impose _______________________________________________________________________________________ Adjudication Order in respect of Indage Restaurant and Leisure Ltd ihe matter of non-filing of ATR and non-redressal of investor complaint Page 9 of 9 monetary penalty of Rs.1,00,000/-(Rupees One lakh only) under section 15HB and penalty of Rs. 2,50,000/- (Rupees Two Lakh Fifty Thousand only) section 15C of SEBI Act, on Noticee Indage Restaurant and Leisure Limited.
34. The Noticee shall remit / pay the said amounts of penalty (total Rupees Three Lakh Fifty Thousand only) within 45 (forty five) days of receipt of this order either by way of Demand Draft (DD) in favour of SEBI - Penalties Remittable to Government of India, payable at Mumbai, or through e-payment facility into Bank Account, the details whereof are as follows:- Account No. for remittance of penalties levied by Adjudication Officer Bank Name State Bank of India Branch Bandra Kurla Complex RTGS Code SBIN0004380 Beneficiary Name SEBI Penalties Remittable To Government of India Beneficiary A/c No. 31465271959
35. The Noticee shall forward said Demand Draft or the details / confirmation of penalty so paid through e-payment to the Division Chief, Enforcement Department 1, Division of Regulatory Action - II [ EFD1-DRA-II ] SEBI Bhavan, Plot No.C4-A, G Block, BandraKurla Complex, Bandra (East), Mumbai 400 051. The Format for forwarding details / confirmations of e- payments made to SEBI shall be in the form as provided at Annexure A of Press Release No. 131/2016 dated August 09, 2016 shown at the SEBI Website which is produced as under;
1. Case Name :
2. Name of Payee:
3. Date of payment:
4. Amount Paid:
5. Transaction No:
6. Bank Details in which payment is made:
7. Payment is made for: (like penalties/disgorgement/recovery/Settlement amount and legal charges along with order details)
36. In terms of rule 6 of the Adjudication Rules, copies of this order is being sent to the Noticee and also to the SEBI. Date: February 22, 2018 Place: Mumbai Jeevan Sonparote Adjudicating Officer