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BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA
[ADJUDICATION ORDER NO. CFD-DCR/ WIL/AO/DRK-DS/EAD3- 577-578/121-122 -2014]
______________________________________________________________________
UNDER SECTION 15 I OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT,
1992 READ WITH RULE 5(1) OF SECURITIES AND EXCHANGE BOARD OF INDIA
(PROCEDURE FOR HOLDING INQUIRY AND IMPOSING PENALTIES BY
ADJUDICATING OFFICER) RULES, 1995
In respect of:

Sr. No. Name of the Entity PAN No.
1 Hooghly Mills Project Ltd. AAACH7668G
2 Hooghly Stocks & Bonds Pvt. Ltd. AAACH6468A

Having address at:
76, Garden Reach Road,
Kolkata 700 043

(In the matter of Waverly Investments Ltd.)
______________________________________________________________________


FACTS OF THE CASE IN BRIEF

1. Securities and Exchange Board of India (hereinafter referred to as 'SEBI'), while
examining the offer document filed by Franktex Enterprises Pvt. Ltd. and
Goodfaith Commercial Pvt. Ltd. to acquire 20% shares of Waverly Investments
Ltd. (hereinafter referred to as "WIL/ Company") observed certain non
compliances by the promoters of the company. The shares of the company were
listed at Calcutta Stock Exchange Limited (CSE).

APPOINTMENT OF ADJUDICATING OFFICER

2. I was appointed as Adjudicating Officer under section 15 I of the Securities and
Exchange Board of India Act, 1992 read with Rule 3 of the Securities and
Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties
by Adjudicating Officer) Rules, 1995 (hereinafter referred to as Rules) to inquire
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into and adjudge under Section 15H (ii) of the SEBI Act, the violation of
Regulation 11(2) read with Regulation 14(1) of SEBI (Substantial Acquisition of
Shares & Takeover) Regulations 1997 (hereinafter referred to as SAST
Regulations) alleged to have been committed by Hooghly Mills Project Ltd.
(hereinafter referred to as "HMPL"/ "Noticee 1") and Hooghly Stocks & Bonds
Pvt. Ltd. (hereinafter referred to as "HSBPL"/"Noticee 2") and collectively referred
to as "Noticees".

SHOW CAUSE NOTICE, HEARING AND REPLY

3. A common Show Cause Notice no. A&E/EAD-3/DRK/CS/14033/2014 dated May
16, 2014 (hereinafter referred to as 'SCN') was served on the noticees in terms of
the provisions of Rule 4 of the Rules, requiring the noticees to show cause as to
why an inquiry should not be held against them and why penalty, if any, should
not be imposed on them under Section 15H(ii) of the SEBI Act for the alleged
violation of Regulations 11(2) read with Regulation 14(1) of the SAST
Regulations. The said SCN was sent through Speed Post Acknowledgement Due
(SPAD) and was served on the noticees.

4. It was alleged in the SCN that on April 15, 2009 the Noticees being the promoters
of the company had acquired 12,300 (2.46%) and 20,000 (4%) shares. Due to
this acquisition the shareholding of the promoters increased from 60.46% to
66.92% which was in violation of regulation 11(2) read with 14(1) of the SAST
Regulations. At this juncture, as per regulation 11(2) read with regulation 14(1) of
the SAST Regulations, Noticees were required to make a public announcement
within four working days of such acquisition. However, Noticees have failed to do
so. The details of the transaction are as follow:
Name of the acquirer
Date of the
transaction
Purchase
Total shareholding of promoters in
Pre-
acquisition
Post acquisition
Hooghly Mills Projects Ltd.
15.04.2009
20,000
(4%)
60.46 64.46
Hooghly Stocks & Bonds Pvt.
Ltd.
12,300
(2.46%)
64.46 66.92

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5. Noticees vide their letters dated May 29, 2014 sought additional 15 days time to
file reply. Subsequently, Noticees vide their similarly worded letters dated J une
13, 2014 made the following submissions:

a. During the Financial Year 2009-10, our Company had acquired 20,000
shares representing 4.00% (Noticee 1) and 12,300 shares representing
2.46% (Noticee 2) of the equity and voting share capital of WIL through
Off market mode. Pursuant to the aforesaid acquisition, the shareholding
of the Promoters/Promoter Group of WIL had increased from 60.46% to
66.92% of WIL.
b. Prima facie it appears that the acquisition of 20,000 equity shares (Noticee
1) and 12,300 equity shares (Noticee 2) through Off Market resulted in
violation of Regulation 11(2) of the SAST Regulations.
c. The said violations were unintentional and occurred only due to lack of
proper interpretation of the Regulations. The alleged violation was totally
technical in nature and without any malafide as there was no change in
control of WIL pursuant to the such acquisition. It is needless to say that
acquisition of this meager quantity of shares had in no way jeopardized
the interest of the shareholders of WIL in any manner whatsoever.
d. Please note that that acquisition made by us pertain toprovide exit
opportunity to a shareholder pressing hard to the Promoters due to
absence of trading at any of the Stock Exchanges where shares of the
company were then listed.

6. As requested by the noticees, vide common hearing notice dated J une 25, 2014
the noticees were provided an opportunity of being heard and were advised to
attend the hearing on J uly 15, 2014 at SEBI Bhavan, Mumbai. The said common
hearing notice was sent through RPAD and was served on the noticees. Vide
letter dated J uly 07, 2014, the noticees authorised Shri. Shashi Kumar Shah -
FCA as Authorised Representative (AR).

7. The AR of the noticees appeared for the hearing on J uly 15, 2014 and made the
following submissions:

a) The AR has reiterated the submissions made vide their reply dated June
13, 2014 for the noticees.
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b) AR has stated that the violation was unintentional and had occurred due to
lack of proper interpretation of the erstwhile regulations. AR has further
stated that the shares of Waverly Investments Ltd. were delisted from CSE
on November 2013. AR has stated that Hooghly Stocks & Bonds Pvt. Ltd.
is not registered with SEBI in any category.
c) AR has requested to not to levy any penalty as the violation was technical
in nature and without any malafide as there was no change in control. AR
has stated that he has no further submissions to make.

CONSIDERATION OF EVIDENCE AND FINDINGS

8. I have taken into consideration the facts and circumstances of the case, and the
material made available on record.

9. It was alleged in the SCN that the noticees had failed to make public
announcement as required under Regulation 11(2) read with14(1) of the SAST
Regulations.

10. As per the requirements of Regulation 11(2) read with14(1) of the SAST
Regulations, the noticees were required to make public announcement within
four working days of entering into an agreement for acquisition of shares or
voting rights or deciding to acquire shares

11. The noticees have admitted that they have violated the aforesaid Regulations
and submitted that the said violation is unintentional and occurred due to lack of
proper interpretation of the Regulations. Therefore, it is concluded that the
noticees had failed to comply with the provisions of Regulation 11(2) read with
Regulation 14(1) of the SAST Regulations. The text of the said provisions is
reproduced below:-

"11.(2) No acquirer, who together with persons acting in concert with him holds, fifty-five
percent (55%) or more but less than seventy five percent (75%) of the shares or
voting rights in a target company, shall acquire either by himself or through persons
acting in concert with him any additional shares or voting rights therein, unless he
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makes a public announcement to acquire shares in accordance with these
Regulations:
Provided that in case where the target company had obtained listing of its shares by
making an offer of atleast ten percent (10%) of issue size to the public in terms of
clause (b) of sub-rule (2) of rule 19 of the Securities Contracts (Regulation) Rules,
1957, or in terms of any relaxation granted from strict enforcement of the said rule,
this sub-regulation shall apply as if for the words and figures 'seventy-five percent
(75%), the words and figures 'ninety per cent (90%) were substituted.
14.(1)The public announcement referred to in regulation 10 or regulation 11 shall be made
by the merchant banker not later than four working days of entering into an
agreement for acquisition of shares or voting rights or deciding to acquire shares or
voting rights exceeding the respective percentage specified therein:"

12. The aforesaid failure to make public announcement makes the noticees liable for
penalty under Section 15H(ii) of the SEBI Act which is reproduced below:

15H. If any person, who is required under this Act or any rules or regulations made
thereunder, fails to,-
(ii) make a public announcement to acquire shares at a minimum price; or
(iii).
(iv)
he shall be liable to a penalty of twenty-five crore rupees or three times the amount of
profits made out of such failure, whichever is higher."

13. 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.

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14. 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 noticees or loss caused to the investors as a result of the failure on the part
of the noticees to make the public announcement are not available on record.
Further, it may also be added that it is difficult to quantify the unfair advantage
made by the noticees or the loss caused to the investors in a default of this
nature.

15. At this juncture, I would like to quote the judgement of the Honble Supreme
Court of India in the matter of SEBI Vs. Shri Ram Mutual Fund [2006] 68 SCL
216(SC) wherein it was 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.
16. Having considered the facts and circumstances of the case, submissions made
by the noticees and after taking into account the factors under section 15J of the
SEBI Act, 1992, I find that a penalty of ` 50,00,000 [Rupees Fifty Lakhs Only] on
the noticees would commensurate with the failure on the part of the noticees to
make public announcement.

ORDER
17. In exercise of the powers conferred under Section15 I of the Securities and
Exchange Board of India Act, 1992, and Rule 5 of Securities and Exchange
Board of India (Procedure for Holding Inquiry and Imposing Penalties by
Adjudicating Officer) Rules, 1995, I hereby, impose a penalty of ` 50,00,000
[Rupees Fifty Lakhs Only] on the noticees viz. Hooghly Mills Project Ltd. and
Hooghly Stocks & Bonds Pvt. Ltd. in terms of the provisions of Section 15H(ii) of
the Securities and Exchange Board of India Act,1992 for the failure to comply
with the provisions of Regulation 11(2) read with Regulation 14(1) of the
Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeover) Regulations, 1997. In the facts and circumstances of the case, I am of
the view that the said penalty is commensurate with the failure of the noticees to
make the public announcement. The Noticees shall be jointly and severally liable
to pay the said monetary penalty.
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18. The penalty shall be paid by way of Demand Draft drawn 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 shall be forwarded to the Chief
General Manager, CFD-DCR, Securities and Exchange Board of India, Plot No.
C4-A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400 051.

19. In terms of the provisions of Rule 6 of the Securities and Exchange Board of
India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating
Officer) Rules 1995, copies of this order are being sent to the noticees viz.
Hooghly Mills Project Ltd. and Hooghly Stocks & Bonds Pvt. Ltd. and also to the
Securities and Exchange Board of India, Mumbai.




Place: Mumbai D. RAVI KUMAR
Date: August 13, 2014 CHIEF GENERAL MANAGER &
ADJUDICATING OFFICER
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