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BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA


ADJUDICATION ORDER NO. PJ/VP/06/2016
__________________________________________________________________
UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF
INDIA ACT,1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR
HOLDING INQUIRYANDIMPOSING PENALTIES BY ADJUDICATING
OFFICER) RULES, 1995
In respect of:
M/sAlexcon Extrusions Limited
(PAN Not Available)
In the matter ofM/s Alexcon Extrusions Limited
__________________________________________________________________
BACKGROUND
1. Securities and Exchange Board of India (hereinafter referred to as "SEBI") came
out with Circular viz., Circular No. CIR/OIAE/1/2012 dated August 13, 2012
(hereinafter referred to as "Circular"), directing all the companies whose
securities were listed on stock exchanges to obtain SEBI Complaints Redress
System(SCORES) authentication by September 14, 2012 and also redress the
pending investor grievances within the stipulated time period failing which
appropriate enforcement action would be initiated against them. It was noticed
that M/s Alexcon Extrusions Limited(hereinafter referred to as the Noticee/
Company) has failed to comply with the said provisions.
2. SEBI observed from SCORESthat one (1) complaintwas filed by the investor.The
said complaint was not resolved within the specified time in terms of SEBICircular
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No. CIR/OIAE/1/2012 dated August 13, 2012. The same was also
communicated to the Noticee by SEBIvide its letter Ref. No. OIAE1/MRG/31575/2014 dated 05.11.2014. (Inadvertently mentioned as dated
18.11.2014 in the Show Cause Notice).
3. It was therefore alleged that,the Noticee hasfailed to obtain SCORES
authentication and also failed to resolve the investor complaint with in the
specified

time,

thereby

failing

to

comply

with

SEBI

Circular

No.

CIR/OIAE/1/2012 dated August 13, 2012thereby making the Noticee liable for
penalty under Section 15 HB and Section 15C of the SEBI Act, 1992.
APPOINTMENT OF ADJUDICATING OFFICER
4. The undersigned was appointed as Adjudicating Officer vide order dated
29.12.2015under section 19 of SEBI Act read with section 15-I of SEBI Act read
with rule 3 of SEBI (Procedure for Holding Inquiry and Imposing Penalties by
Adjudicating Officer) Rules, 1995 (hereinafter referred to as Rules) to inquire
into and adjudge under Section 15 HB and 15C of the SEBI Act, the alleged
violations of the provisions of Circular No. CIR/OIAE/1/2012 dated August 13,
2012.
SHOW CAUSE NOTICE,REPLY ANDHEARING
5. Show Cause Notice No. EAD/PJ/VRP/1610/2016 dated 13.01.2016(hereinafter
referred to as 'SCN') was issued to the Noticee under rule 4 of the Rules to show
cause as to why an inquiry should not be held and penalty be not imposed under
Section 15 HBand Section 15C of SEBI Act for the alleged violation of provisions
of the circular bynot obtaining SCORES authentication and failing to redress
one(1) investor complaintwithin the prescribed time. The SCN was sent by Hand
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Delivery, however, it was returned undelivered with a remark No such


consignee. Thereafter, an opportunity of personal hearing was granted on
12.02.2016 vide hearing notice dated 21.01.2016 forwarding the copy of the SCN
dated13.01.2016 and advising the Noticee to reply within 14 days. The said hearing
notice was sent through hand delivery and/ or affixture. The hearing notice could
not be delivered, hence, the hearing notice was affixed at the address of the
Noticee on 30.01.2016.The Noticee failed to reply to the SCN and also did not
appear for the hearing. Thereafter, another opportunity of hearing was granted to
the Noticee on 25.02.2016 vide hearing notice dated 15.02.2016 sent through
Speed Post Acknowledgement Due, Hand Delivery and through Affixture. The
Noticee was advised to furnish the reply by 24.02.2016. The said notice sent
through Speed Post Acknowledgement Due was returned undelivered with a
remark left. The notice sent through hand delivery could not be delivered and
hence the said notice was affixed on the door of the premises on
16.02.2016.However, the Noticee has failed to reply to the SCN till date and
further failed to appear before the undersigned for the opportunities of hearing
granted on 12.02.2016 and 25.02.2016.In the said SCN and in the hearing notices it
was specifically stated that,if the Noticee fails to submit their reply to the SCN or
failsto attend the hearing proceeding on the stipulated date and time, it will be
presumed that Noticee has no submissions to offer in its defense and the matter
would be further proceeded with on the basis of the material available on record. I
note that the Noticee failed to submit the reply to the SCN in spite of sending it
on the registered address available Ministry of Corporate Affairs websiteand also
failed to appear for hearings to substantiate their case to wards the allegations
stated in the SCNs. For the reasons mentioned above, I observe that the Noticee
was provided with enough opportunities to submit reply/ to be heard and hence, I

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am constrained to proceed ex-parte with the matter on the basis of the material
available on record.
CONSIDERATION OF ISSUES
6. I have carefully perused the documents available on record. It is observed that the
allegation against the Noticee is that they have failed to obtain SCORES
authentication and failed to redress 1(one) investor complaint.
7. The issues that, therefore, arise for consideration in the present case are:
7.1. Whether the Noticee has violated the provisions of Circular viz., SEBI
Circular No. CIR/OIAE/1/2012 dated August 13, 2012 by failing to obtain
SCORES authentication and failing to redress one investor complaintwithin
the prescribed time?
7.2. Does the violation, if any, attract monetary penalty under Section 15 HB and
15C of SEBI Act?
7.3. If so, what would be the monetary penalty that can be imposed taking into
consideration the factors mentioned in Section 15J of SEBI Act?
FINDINGS
8. Before moving forward, it is pertinent to refer to the provisions of Circular, which
reads as under:

CIRCULAR Ref. No. CIR/OIAE/1/2012 August 13, 2012


SEBI had issued Circular No.CIR/OIAE/2/2011 dated June 3, 2011 regarding
commencement of SEBI Complaints Redress System (SCORES) and advising all companies
whose securities are listed on various stock exchanges to comply with the provisions of the said
circular.

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1. In this regard, all companies whose securities are listed on stock exchanges, are hereby advised
to obtain SCORES authentication by September 14, 2012 in terms of the aforesaid circular.
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.

---------------------------------------------------------------------------------------9. The issue for consideration is whether the Noticee has failed to obtain SCORES
authentication and redress 1(one) investor complaint within the prescribed time.I
find from the website www.scores.gov.in that the Noticee is listed on listed on
Ahmedabad Stock Exchange and Calcutta Stock Exchange amongst the existing
stock exchanges. The Noticee was required to comply with the said SEBI Circular
within the stipulated time period as prescribed by SEBI as it is a listed company.
However the Noticee failed to obtain SCORES authentication in complianceof
terms of SEBI circular dated 13.08.2012. Further the Noticee also failed to resolve
the investor complaint in spiteof being called upon in writing vide letter Ref. No.
OIAE-1/MRG/31575/2014 dated 05.11.2014.
10. In view of the facts of the matter, I rely on the case of M/s Port Shipping
Company Limited, The Hon'ble Securities Appellate Tribunal has made the
following observation Argument of the appellant that there was no operating income, no
permanent employee, no pending investor grievance, no prejudice caused to any investor and that
the shares of the appellant company were not traded for more than six years, cannot be a ground
to disobey the directions given by SEBI. Obligation to obtain SCORES authentication was not
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dependent on there being operating income or pending investor grievance or trading of shares on the
stock exchanges. Admittedly, the appellant company continues to be a listed company and,
therefore, it was obligatory on part of appellant company to obtain SCORES authentication
within the time stipulated by SEBI. However, the appellant has consistently failed and neglected
to comply with the directions of SEBI and it is only when SEBI initiated penalty proceedings, the
appellant chose to comply with the directions of SEBItherefore, in the facts of the present case
appellant deserved higher penalty.However, after taking all the factors set out by the appellant as
mitigating factors, the adjudicating officer of SEBI has imposed nominal penalty of Rs.
1,50,000/- as against the imposable penalty of Rs.1 crore. In such a case, it cannot be said that
the penalty imposed is excessive or unreasonable
11. The Honble Securities Appellate Tribunal (SAT) in the matter of Classic

Credit Ltd. vs. SEBI (Appeal No. 68 of 2003 decided on December 08, 2006)
wherein it, inter alia, observed that
"............ the appellants did not file any reply to the second show-cause notice. This being so, it
has to be presumed that the charges alleged against them in the showcause notice were admitted by
them.

12. The Honble SAT has recently in the matter of Sanjay Kumar Tayal &

Others v SEBI (Appeal No. 68 of 2013 decided on February 11, 2014), interalia, observed that
As rightly contended by Mr. Rustomjee, learned senior counsel for
respondents, appellants have neither filed reply to show cause notices issued to them nor availed
opportunity of personal hearing offered to them in the adjudication proceedings and, therefore,
appellants are presumed to have admitted charges leveled against them in the show cause
notices..

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13. In the light of the above facts and relying on the cited case laws, I am of the firm
belief that it is established without doubt that the Noticee has violated the
provisions of thesaid Circular by not obtaining SCORES authentication andfailing
to redress the investor complaint within the prescribed time.
14. Further, I note that the Honble Supreme Court of India in the matter of SEBI Vs.
Shri Ram Mutual Fund [2006] 68 SCL 216(SC) has also held that In our considered
opinion, penalty is attracted as soon as the contravention of the statutory obligation as
contemplated by the Act and the Regulations is established and hence the intention of the parties
committing such violation becomes wholly irrelevant.
15. In view of the foregoing, I am convinced that it is a fit case to impose monetary
penalty under Section 15 HB and Section 15C of the SEBI Act, which read as
under:

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 havingbeen
called upon by the Board in writing, to redress the grievances of investors, fails to redresssuch
grievances within the time specified by the Board, such company or intermediary shall beliable to a
penalty[which shall not be less than one lakh rupees but which may extend to onelakh rupees for
each day during which such failure continues subject to a maximum of onecrore rupees.

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16. While determining the quantum of monetary penalty under Section 15 HB and
Section 15C of SEBI Act, I have considered the factors stipulated in Section 15-J
of SEBI Act, which reads 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.

17. With regard to the above factors to be considered while determining the quantum
of penalty, it is noted that the disproportionate gain or unfair advantage made by
the Noticee or loss caused to the investors as a result of the failure on the part of
the Noticee to obtain SCORES authentication and failure to resolve the complaint
within the stipulated time are not available on record. Further, it may also be added
that it is not possible to quantify the unfair advantage made by the Noticee or the
loss caused to the investors in a default of this nature. However, lack of due
diligence demonstrated by the Noticee is a risk to the securities market and thus
loss to the investors to that extent.
ORDER
18. After taking into consideration all the facts and circumstances of the case, I
impose a penalty of Rs1,00,000/-(RupeesOne lac only) under Section 15 HBand
a penalty of Rs 1,00,000/-(Rupees One lac only)under Section15C of the SEBI
Act(Total :-Rupees Two lacsonly) on the Noticee i.e. M/s Alexcon Extrusions
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Limitedwhich in my opinion, will be commensurate with the violations committed


by the Noticee.
19. The Noticee shall pay the said amount of penalty by way of demand draft in
favour of SEBI - Penalties Remittable to Government of India, payable at
Mumbai, within 45 days of receipt of this order. The said demand draft should be
forwarded to ShriN Hariharan, Chief General Manager, Securities and Exchange
Board of India,SEBI Bhavan, Plot No. C4-A, 'G' Block, BandraKurla Complex,
Bandra(E),Mumbai-400051.
20. In terms of rule 6 of the Rules, copies of this order are sent to the Noticee and
also to the Securities and Exchange Board of India.

Date: 29.03.2016

PrasadP. Jagadale

Place: Mumbai

Adjudicating Officer

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