BEFORE THE ADJUDICATING OFFICER
SECURITIES AND EXCHANGE BOARD OF INDIA
[ADJUDICATION ORDER NO. ORDER/GR/AE/2019-20/3888]
__________________________________________________________________
UNDER SECTION 15-I OF THE SECURITIES AND EXCHANGE BOARD OF INDIA
ACT, 1992 READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING INQUIRY
AND IMPOSING PENALTIES) RULES, 1995
In respect of:
Real Realty Management Company Limited (presently known as Real Eco-
Energy Limited) [PAN: AAACH3865P]
In the matter of Real Realty Management Company Limited
__________________________________________________________________
BACKGROUND
1. Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) received a
draft letter of offer (DLO) filed by Corporate Professionals Capital Pvt Ltd, manager to
the offer, on behalf of Mr. Dharm Swetank Patel (Acquirer) vide letter dated December
01, 2015. It was observed that previously there had been a scheme of arrangement
covering inter alia the merger of Real Realty Management Company Private Limited
into Hillock Agro Foods (I) Ltd which became effective on February 07, 2013. In regards
to the same, the name of the transferee company was changed from Hillock Agro
Foods (I) Ltd to Real Realty Management Company Limited (hereinafter referred to as
“Noticee / RRML / company”). Pursuant to the aforesaid scheme, 19 entities
comprising the promoters group, namely, Rajesh Rajyaguru, Paresh Joshi, Darshan
Dashani, Haresh Tank, Harish Rajyaguru, Tushar Rajyaguru, Shilpa Rajyaguru, Preeti
Rajyaguru, Bindu Rajyaguru, Deepti Rajyaguru, Madhusudan Rajyaguru, Nilesh Joshi,
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Jayshree Joshi, Urvashi Joshi, Samir Dashani, Hasit Dashani, Bindu Tank, Manoj
Tank, and Bhanumatiben M Rajyaguru acquired 36,00,000 shares of RRML
comprising 74.95% of the share capital. It is alleged that RRML received disclosures
under the provisions of SEBI (Prohibition of Insider Trading) Regulations, 1992
(hereinafter referred to as “PIT Regulations, 1992”) from the aforesaid promoter group
entities, however it failed to make the requisite disclosures to the stock exchanges,
and thus violated Regulation 13(6) of PIT Regulations, 1992.
2. It may be noted that RRML had changed its name to Real News & Views Ltd.
Subsequently the name of the company was changed to Real Eco-Energy Limited on
October 06, 2018.
APPOINTMENT OF ADJUDICATING OFFICER
3. Initially, Shri Satya Ranjan Prasad, Chief General Manager, was appointed as the
Adjudicating Officer (AO) in the matter to inquire into and adjudge under Section
15A(b) of the SEBI Act, 1992, the aforesaid violation alleged to have been committed
by the Noticee, and the same was communicated to the AO vide communique dated
September 06, 2018. Pursuant to the transfer of Shri Satya Ranjan Prasad, the
undersigned has been appointed as the AO in the matter by SEBI and the same was
communicated to the undersigned vide communique dated May 22, 2019. These
proceedings are therefore been carried forward from where they had been left off by
the previous AO, and an opportunity of personal hearing was granted as detailed
hereinafter.
SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING
4. A Show Cause Notice no. SEBI/EAD-4/ADJ/SRP/MCS/OW/28189/1/2018 dated
October 08, 2018 (hereinafter referred to as 'SCN') was issued to the Noticee in terms
of Section 15I of the SEBI Act, 1992 read with Rule 4 of SEBI (Procedure for Holding
Inquiry and Imposing Penalties) Rules, 1995 (hereinafter referred to as “Rules”) for the
violations as specified in the SCN.
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5. The Noticee submitted written submissions in the matter vide letter dated March 05,
2019. The main contentions made therein are reproduced as below –
“We refer to your above Notice SEBI/EAD-4/ADJ/SRP/MCS/OW/281891/2018
dated October 08, 2018 in the matter of Real Realty management Company Ltd.
Which is now known as Real Eco-Energy Limited. At the outset, we express our
deep regrets for delay in replying the above Notice due to the fact that the Company
was earlier taken over by Mr. Rajesh Rajyaguru &Association through a scheme of
Amalgamation during May 2013 and subsequently again taken over by Mr. Dharm
Patel during March 2016 through an Open offer under SEBI (SAST) Regulations,
2011 and it took us time to lay hand at the earlier records and find out the relevant
documents. We sincerely apologise for such delay and request you to condone the
same.
We reiterate to what is stated in Paragraph 2 of your Notice and state that the copies
of the disclosure made by the Allottees were sent to the Bombay Stock Exchange
Ltd. (BSE). However, it appears that the same is not available in the records of the
BSE. We have now found some other documents in this regard, and now submit the
following documents:
Sr. Annexure Particulars of Documents
1 A Copies of disclosure made by the Allottes under Form A
under Regulation 13 (6) of the SEBI (PIT) Regulations,
1992 with a copy of the letter dated May 20, 2013 sent by
the Company to the Ahmedabad Stock Exchange Ltd.
(ASE) duly acknowledged by the ASE on 20 May, 2013.
2 B Copies of disclosure made by the Allottes under Form B
under Regulation 13 (2A) of the SEBI (PIT) Regulations,
1992 with a copy of the letter dated May 20, 2013 sent by
the Company to the Ahmedabad Stock Exchange Ltd.
(ASE) duly acknowledged by the ASE on 20 May, 2013.
3 C Copies of the disclosure made by the Company under
Regulation 29(1) of SEBI (SAST) regulations, 2011 with a
copy of the letter dated May 18, 2013 sent by the company
the Ahmedabad Stock Exchange Ltd. (ASE) duly
acknowledged by the ASE on 18 May, 2013.
4 D Copy of the receipt issued by Professionals Courier
evidencing despatch of the above documents to BSE on
May 20, 2013.
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We therefore request you to appreciate that the company had complied with
the provisions of the applicability SEBI regulations. We request to drop the
proceedings initiated on account of non-availability of the relevant disclosure
in the records of BSE.
We also wish to inform that we would like to avail an opportunity for person
appearance in any hearing if fixed in the matter. ”
6. In its aforesaid reply, the Noticee has enclosed the following documents –
i. Copy of disclosures it received from the promoter group entities under the PIT
Regulations, 1992, and copy of its letter dated May 20, 2013 sent to the
Ahmedabad Stock Exchange Ltd.
ii. Copy of disclosures under Regulation 29(1) of SAST Regulations, 2011, and
copy of its letter dated May 20, 2013 to the Ahmedabad Stock Exchange Ltd.
iii. Copy of the receipt issued by Professional Courier evidencing dispatch of the
above documents to BSE on May 20, 2013.
7. Pursuant to the appointment of the undersigned as AO, in terms of Rule 4 (3) of the
Rules and as per the Noticee’s request, an opportunity of personal hearing was granted
to the Noticee on July 11, 2019. In the said hearing, the authorized representative
appeared on behalf of the Noticee and reiterated the written submissions made earlier
in the matter by the Noticee vide its reply dated March 05, 2019.
CONSIDERATION OF ISSUES AND FINDINGS
8. I have carefully examined the material available on record, and the submissions made
by the Noticee. The issues that arise for consideration in the present case are :
I. Whether the Noticee has violated the provisions of Regulation 13(6) of PIT
Regulations, 1992?
II. Does the violation, if established, attract monetary penalty under Section
15A(b) of SEBI Act, 1992?
III. Quantum of penalty.
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FINDINGS
9. Before I proceed with the matter, it is pertinent to mention the relevant legal provisions
alleged to have been violated by the Noticee and the same is reproduced below:
PIT Regulations, 1992
Disclosure by company to stock exchanges.
13(6) Every listed company, within two working days of receipt, shall disclose to all stock
exchanges on which the company is listed, the information received under sub-regulations (l),
(2), (2A), (3), (4) and (4A) in the respective formats specified in Schedule III.
Issue I) Whether the Noticee has violated the provisions of Regulation 13(6) of
PIT Regulations, 1992?
10. As per the material available on record, I note that 19 entities comprising the promoters
group of the Noticee, namely, Rajesh Rajyaguru, Paresh Joshi, Darshan Dashani,
Haresh Tank, Harish Rajyaguru, Tushar Rajyaguru, Shilpa Rajyaguru, Preeti
Rajyaguru, Bindu Rajyaguru, Deepti Rajyaguru, Madhusudan Rajyaguru, Nilesh Joshi,
Jayshree Joshi, Urvashi Joshi, Samir Dashani, Hasit Dashani, Bindu Tank, Manoj
Tank, and Bhanumatiben M Rajyaguru acquired 36,00,000 shares of the Noticee
comprising 74.95% of the share capital, pursuant to a scheme of arrangement which
became effective on February 07, 2013.
11. It has been alleged in the SCN that the Noticee failed to make the requisite disclosures
to the stock exchanges under Regulation 13(6) of PIT Regulations, 1992 with regards
to the disclosures it received from the aforementioned promoter group entities under
the PIT Regulations, 1992.
12. I note that the Noticee has enclosed copies of various disclosures made by the
promoter group entities under PIT Regulations, 1992 in its reply to the SCN, and on
perusal of the same, I note that the Noticee has stated to have received the following
–
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i. Disclosures under Regulation 13(1) of PIT Regulations, 1992 from Bindu
Tank, Urvashi Joshi, Rajesh Rajyaguru, Jayshri Joshi, and Manoj Tank, on
May 18, 2013.
ii. Disclosures under Regulation 13(2A) of PIT Regulations, 1992 from Bindu
Tank, Urvashi Joshi, Rajesh Rajyaguru, Darshan Dashani, Jayshri Joshi,
Manoj Tank, Deepjeet Rajyaguru, Madhusudanbhai Rajguru, Hasit Dashani,
Harish Rajyaguru, Preetiben rajyaguru, Haresh Tank, Paresh Joshi,
Binduben Rajyaguru, Bhanumati Rajyaguru, Nilesh Joshi, Tushar Rajyaguru,
Shilpaben Rajyaguru, and Samir Dasani on May 18, 2013.
13. I further note that in reply to the SCN, the Noticee has submitted that it had made
disclosures under Regulation 13(6) of the PIT Regulations, 1992 to the Ahmedabad
Stock Exchange. In this regard, I note that the provisions of the aforesaid regulation
states that the listed company has to file the disclosures it has received to “all stock
exchanges on which the company is listed”. From the aforesaid, it is clear that the
Noticee had to file disclosures to all stock exchanges (including BSE) where the
Noticee was also listed. From the material available on record, I note that BSE vide its
email dated April 08, 2016 has informed SEBI that they have not received the requisite
disclosures under Regulation 13(6) of PIT Regulations, 1992 from the Noticee.
Accordingly, I find no merit in the above submission of the Noticee.
14. I have also perused the documents viz. copy of courier receipt furnished by the Noticee
to substantiate its claim of disclosures having been made to BSE on May 20, 2013. On
perusal, I am of the view that the unsigned and unstamped courier receipts with a
mention of BSE as addressee which have been submitted by the Noticee do not
establish that disclosures were indeed made to the BSE in the required format
mandated under Regulation 13(6) of the PIT Regulations. In fact from the said courier
receipt, even the contents of the documents purportedly sent through the said courier
is also not evident.
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15. I also find it relevant to mention that the Hon’ble Securities Appellate Tribunal
(hereinafter be referred to as, the “Hon’ble SAT”) in the matter of Mega Resources
Ltd. v. SEBI (Appeal No. 49/2001 dated March 19, 2002) had observed that, “....the
regulation is not simply on sending the information, it requires disclosure. Mere
dispatch of the information is short of the said requirement..... Regulation 7(1) requires
the acquirer to disclose the aggregate of this holding... Thus the requirement is that
the information should reach the person to whom it is meant. The obligation does not
end by simply posting the information in a letterbox... I am not inclined to view that by
posting a letter under certificate of posting, stating the shareholding by itself is sufficient
compliance of regulation 7(1). In my view the Appellant has failed to comply with the
requirement of regulation 7(1), for the reason that it has failed to make the disclosure
of the requisite information”.
16. As already noted above, BSE has confirmed to SEBI that are not in receipt of the
requisite disclosures in the instant matter from the Noticee. At this juncture, I also find
it relevant to mention that the Hon’ble SAT, in the matter of Kalindee Rail Nirman
(Engineers) Limited v. Securities and Exchange Board of India (Appeal No. 97 of
2010 dated July 19, 2010) had observed that, “.. the agency through which the
document is sent acts as the agent of the sender and if a dispute were to
arise whether the said document has been received by the addressee or not, the onus
would be on the sender to establish the fact by clear and cogent evidence in
this regard. Admittedly, the appellant has not placed on record any acknowledgment
received from BSE in regard to the mails that were allegedly sent containing the
compliance reports. On the other hand, we have on record a letter from BSE
specifically stating that it had not received the compliance reports for the aforesaid
quarters from the appellant. … In this view of the matter, no fault can be found with the
impugned order…”.
17. In view of the above, I hold that the Noticee has violated the provisions of Regulation
13(6) of the PIT Regulations, 1992.
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Issue II) Does the violation, if established, attract monetary penalty under
Section 15A(b) of SEBI Act, 1992?
18. I note that the Hon’ble Supreme Court of India in the matter of SEBI vs. Shri Ram
Mutual Fund held that “once the violation of statutory regulations is established,
imposition of penalty becomes sine qua non of violation and the intention of parties
committing such violation becomes totally irrelevant. Once the contravention is
established, then the penalty is to follow.”
19. In the context of disclosure related violations, I observe that Hon’ble SAT has
consistently held that the obligation to make disclosure within the stipulated time is a
mandatory obligation and penalty is imposed for non-compliance of the mandatory
obligation. The Hon’ble SAT in its Order dated September 30, 2014, in the matter of
Akriti Global Traders Ltd. Vs SEBI had observed that -
“Obligation to make disclosures under the provisions contained in SAST
Regulations, 2011 as also under PIT Regulations, 1992 would arise as soon as
there is acquisition of shares by a person in excess of the limits prescribed under
the respective regulations and it is immaterial as to how the shares are acquired.
Therefore, irrespective of the fact as to whether the shares were purchased from
open market or shares were received on account of amalgamation or by way of
bonus shares, if, as a result of such acquisition/receipt, percentage of shares
held by that person exceeds the limits prescribed under the respective
regulations, then, it is mandatory to make disclosures under those regulations.”
20. Thus, the violation of Regulation 13(6) of PIT Regulations, 1992 makes the Noticee
liable for penalty under Section 15A(b) of the SEBI Act, 1992, which reads as under –
SEBI Act, 1992
Penalty for failure to furnish information, return, etc.
15A. If any person, who is required under this Act or any rules or regulations made
thereunder,—
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(b) to file any return or furnish any information, books or other documents within the
time specified therefor in the regulations, fails to file return or furnish the same within
the time specified therefor in the regulations, he shall be liable to a penalty of one lakh
rupees for each day during which such failure continues or one crore rupees,
whichever is less;
Issue III) Quantum of penalty.
21. In this regard, the provisions of Section 15J of the SEBI Act and Rule 5 of the Rules,
require that while adjudging the quantum of penalty, 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.
22. With regard to the above factors to be considered while determining the quantum of
penalty, it is noted that no quantifiable figures or data are available on record to assess
the disproportionate gain or unfair advantage and amount of loss caused to an
investor or group of investors as a result of the default committed by the Noticee.
I also note that no prior default of the Noticee is available on record. I note that
securities market is based on free and open access to information, and that protection
of the interests of the investors is the prime objective of SEBI. Disclosures in respect
of the vital information of any company has been made mandatory for the protection of
the investors so as to enable them to take suitable informed investment decisions. The
objective behind such requirement is that, the investing public shall not be deprived of
any vital information in respect of their investments in the securities market. If any
person who is to make such disclosures doesn’t make it and are depriving the investing
public the statutory rights available to them, then SEBI is duty bound to ensure that the
investing public are not deprived of any statutory rights available to them. As a result
of the violation committed by the Noticee, the investors were deprived of valuable
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information which would have enabled them to take well informed decisions regarding
their investments in the company. In the present matter, I note that Noticee has
received several disclosures under the PIT Regulations, 1992 from the promoter group
entities with regards to their acquisition but it has failed to make the disclosures to BSE
and has thus violated Regulation 13(6) of PIT Regulations, 1992.
ORDER
23. Accordingly, taking into account the aforesaid observations and in exercise of
power conferred upon me under section 15 I of the SEBI Act read with rule 5
of the Rules, I hereby impose a penalty of Rs. 2,00,000/- (Rupees Two Lakh Only) on
the Noticee viz. Real Realty Management Company Limited (presently known as Real
Eco-Energy Limited) under Section 15A(b) of SEBI Act, 1992 for the violations of the
provisions of Regulation 13(6) of PIT Regulations, 1992.
24. The Noticee shall remit / pay the said amount of penalty within 45 days of receipt of
this order either by way of Demand Draft in favour of “SEBI - Penalties Remittable to
Government of India”, payable at Mumbai, OR through online payment facility available
on the website of SEBI, i.e. www.sebi.gov.in on the following path, by clicking on the
payment link:
ENFORCEMENT Orders Orders of AO PAY NOW.
25. The Noticee shall forward said Demand Draft or the details / confirmation of penalty so
paid to “The Division Chief (Enforcement Department - DRA-III), Securities and
Exchange Board of India, SEBI Bhavan, Plot No. C – 4 A, “G” Block, Bandra Kurla
Complex, Bandra (E), Mumbai – 400 051.”. The Noticee shall also provide the following
details while forwarding DD / payment information:
a) Name and PAN of the Noticee
b) Name of the case / matter
c) Purpose of Payment – Payment of penalty under AO proceedings
d) Bank Name and Account Number
e) Transaction Number
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26. In the event of failure to pay the said amount of penalty within 45 days of the receipt of
this Order, SEBI may initiate consequential actions including but not limited to recovery
proceedings under section 28A of the SEBI Act, 1992 for realization of the said amount
of penalty along with interest thereon, inter alia, by attachment and sale of movable
and immovable properties.
27. In terms of rule 6 of the Rules, copy of this order is sent to the Noticee and also to
Securities and Exchange Board of India.
Date: August 06, 2019 G Ramar
Place: Mumbai Adjudicating Officer
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