sebi:SRP/RK/AO-234/2011
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Facts / Headnote
Penalty imposed
Provisions invoked
- s. 19
- s. 12
- s. 3(1)
- s. 15I
- s. 17
- s. 19H
- s. 19D
- s. 19G
- s. 19I
Regulations
- Reg. 53
- Reg. 54(5)
- Reg. 53A
- Reg. 56
- Reg. 53(B)
Parties
- PIL
Holding
The Noticee violated regulation 54(5) by delaying dematerialization and regulation 53A read with SEBI Circular dated December 27, 2002 by failing to maintain share registry work at a single point, and is liable for penalty under sections 19D and 19G; the charge under regulation 53B was given benefit of doubt. A total penalty of Rs. 4,00,000 was imposed.
Full text
Page 2 of 13 APPOINTMENT OF ADJUDICATING OFFICER 3. Earlier, Smt. Jyoti Jindgar was appointed as the Adjudicating Officer under section 19H of the Depositories Act to inquire into and adjudge under sections 19C, 19D and 19G of the Depositories Act the aforesaid alleged violations committed by PIL. Consequent upon proceeding of Smt. Jyoti Jindgar on deputation to the Competition Commission of India, the undersigned has been appointed as the Adjudicating Officer.
Page 3 of 13 6. In order to conduct inquiry in terms of rule 4(3) of the aforesaid Rules, the Noticee was granted an opportunity of hearing on June 28, 2011, vide notice dated June 9, 2011. Mr. Dinesh S Purandare, Advocate and Mr. Manoj Agarwal, Company Secretary of PIL, appeared on behalf of the Noticee and reiterated that Shri Kishan Bharwani was neither an investor nor the real owner of shares in question. A written submission in this regard has been submitted by the Noticee vide letter dated July 11, 2011.
Page 4 of 13 11. On July 8, 2005, Shri Bharwani requested for dematerialization of the shares purchased from SIPL and lodged 2690 physical share certificates, representing 2,47,355 shares of PIL, with his Depository Participant, namely, SAM Global Securities Limited (hereinafter referred to as ‘DP’). The DP allotted a Dematerialization Request Number (DRN – 2604447) and sent these share certificates directly to PIL on July 9, 2005. These share certificates were received by PIL on the same day. As per regulation 54(5) of the Depositories Regulations the Noticee had 15 days’ time to process the dematerialization request. However, as shares were not credited in the demat account of Shri Bharwani even after the expiry of statutory period of 15 days, therefore, vide email dated August 4, 2005 the DP sought information from PIL regarding the reason for delay under intimation to Central Depository Services (I) Limited (CDSL / the Depository). On August 5, 2005 the Depository informed that it has learnt that because of large number of share certificates involved, PIL required a further time of 1 - 2 days to do the dematerialization. As shares were not credited in the demat account of Shri Bharwani even afterwards, therefore, he also sent a reminder to PIL on August 16, 2005. The demat request remained pending. Therefore, on August 24, 2005, Shri Bharwani lodged complaint with SEBI against the Noticee alleging delay in dematerialization of shares.
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Source: SecMarx — sebi:SRP/RK/AO-234/2011. 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.