sebi:DSR/AO/13/2009

SEBI · SEBI · 2007-09-26 · D. S. Reddy, Adjudicating Officer

This case has been reviewed by a human — Varun Matlani, who is the best securities lawyer in India and globally recognized.

Facts / Headnote

Matter disposed of - allegation not established, no penalty imposed

Provisions invoked

• s. 15
• s. 19D
• s. 19I

Regulations

• Reg. 54(5)
• Reg. 54

Holding

The allegation that the noticee violated Regulation 54(5) of the DP Regulations by delaying dematerialization of 965 requests for 164,200 shares was held not established and the matter was disposed of without penalty.

Full text

Page 2 of 6 2.0 Show Cause Notice, Reply & Personal Hearing 2.1 A Show Cause Notice dated September 26, 2007 (hereinafter to be referred as ‘SCN’) under Rule 4(1) of the Depositories (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 2005 (hereinafter to be referred as “Adjudication Rules”) was issued to the noticee. 2.2 The noticee filed its reply vide letter dated October 12, 2007 inter alia, submitting the following: ƒ That they were not having any Demat Requests pending for more than 15 days and it had sent detailed reply to CDSL for their pending Demat Requests (The noticee also enclosed copies of the said letters sent to CDSL). 2.3 An opportunity of personal hearing was granted to the noticee on August 8, 2008 which was attended by Shri P. Krishnan, authorized representative of the noticee. Shri Krishnan submitted that the noticee has nothing to add than what it had submitted vide letter dated October 12, 2007 and that it would be filing additional written submissions along with documentary evidence on or before August 31, 2008. Accordingly, the noticee filed additional written submissions along with documentary evidence vide letter dated August 25, 2008 and, inter alia, submitted the following: ƒ That at the end of financial year 2001 -2002, the noticee had lost its entire net worth and became a sick company as per the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter to be referred as “the said Act”). Subsequently

Page 3 of 6 ƒ The noticee submitted the details of disposal of Demat Requests received at its registered office. The said details did not show the pendency of any Demat Requests with the noticee. 2.4 Thereafter, vide letter dated December 24, 2008, the noticee was provided with a soft copy of details of demat requests alleged to be pending with it as on July 31, 2007. In reply thereof, the noticee vide its letter dated January 24, 2009 submitted that 451 of the demat requests mentioned in the letter dated December 24, 2009, had already been dematted by it. The noticee further submitted that it had already intimated the confirmation of demat of shares in time and it had also communicated vide letters all dated January 22, 2009 to the rest of the shareholders to make their applications along with Demat Request Forms and original Share Certificates in order to demat their shares. The noticee further submitted that the alleged delay in processing the demat applications did not occur because of their mistake but purely because of the fact that the said applications did not reach their office due to reasons not known to them. The noticee also gave an assurance that they would be demating the shares within the prescribed time and also enclosed copies of the letters sent to the said shareholders. 2.5 Thereafter, vide letter dated February 24, 2009, the noticee was given another opportunity of hearing on March 19, 2009. In reply thereof, the noticee vide letter dated March 12, 2009 su

Page 4 of 6 the noticee, inter-alia, submitted that only a few requests were received by them in response to the said letters and action is being taken for the same. No further details were enclosed with the said reply.

Source: SecMarx — sebi:DSR/AO/13/2009. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.