Adjudication Order Against SNS Diagnostics LTD in Matter of Non-Redressal of Investor Grievances

BEFORE THE ADJUDICATING OFFICER
SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. AO/VKV-DL/62/2016]
UNDER SECTION 15-I OF SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992
READ WITH RULE 5 OF SEBI (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING
PENALTIES BY ADJUDICATING OFFICER) RULES, 1995
In respect of:
M/s. SNS Diagnostics Ltd
(PAN: Not Available)
Room No.106, First Floor, 2162/T-10 A,
Guru Arjun Nagar, Main Patel Road,
New Delhi - 110008
In the matter of Non-redressal of investor grievance(s)
BACKGROUND
1.
Securities and Exchange Board of India (hereinafter referred to as "SEBI") came out
with a Circular dated June 03, 2011 dealing with the processing of investor complaints
against listed companies through SEBI Complaints Redress System (hereinafter referred
to as "SCORES"). In terms of said Circular, all listed companies were inter alia required
to view the complaints pending against them, redress them and submit Action Taken
Reports (hereinafter referred to as "ATRs") electronically in SCORES. As the SCORES is
online electronic system, therefore, for the purposes of accessing the complaints of the
investors against them, as uploaded in the SCORES, listed companies were required to
login to SCORES system electronically through a company specific user id and password,
to be provided by SEBI. For the purpose of generating said user id and password, listed
companies which were yet to obtain SCORES user id and password, were required to
submit the details for authentication to SEBI, in the format annexed to the said Circular.
It was observed that "M/s SNS Diagnostics Ltd (hereinafter referred to as ("Noticee/
the Company") did not submit the details to SEBI which were required to be furnished
in terms of the said Circular.
Adjudication order in respect of M/s SNS Diagnostics Ltd

March 16, 2016
Page 1 of 6
2.
In order to further remind the Noticee about the compliance with the requirements as
laid down in the SEBI Circular dated June 03, 2011, letter dated January 11, 2012 was
sent to the Noticee informing about the commencement of processing of investor
complaints in a centralized web based complaints redress system SCORES in terms of
the Circular and advising the Noticee to send the information (i.e. details for
authentication) as required in the Circular, at the earliest.
However, same was
undelivered.
3.
Subsequently, one more undated letter was sent to the Noticee reminding the Noticee
that it has not submitted the authentication details required by the said Circular and the
aforesaid letter dated January 11, 2012 for implementation of SCORES. The letter
advised the Noticee to submit the said information as per the format in the Annexure
enclosed with the said Circular within 7 days. The information was necessary to create
user name and password which would have enabled the Noticee to view and resolve
investor grievance in SCORES. The letter also advised the Noticee to email soft copy of
its reply to [email protected] . The letter clearly informed that in order to process the
investor grievance on SCORES, the Noticee was required to submit the aforementioned
information, failing which, SEBI may initiate appropriate action including initiation of
Adjudication Proceedings, debarment from accessing capital markets, prosecution
proceedings against the Noticee and its directors. The letter also clearly specified that
investor grievance lodged in SCORES would be considered for closing in the system only
upon uploading the ATR in SCORES.
4.
As observed from the contents of the Circular, SCORES introduced electronic dealing of
the complaints of the investors, by the respective companies. Thus, once a complaint
against a company was uploaded by SEBI in the SCORES, it amounted to calling upon by
SEBI to such company to redress the investor grievance. Accordingly, it was incumbent
upon such company to redress the investor complaint. It was observed that one (01)
investor complaint was pending against the Noticee as on July 22, 2012.

March 16, 2016
Page 2 of 6
5.
It was alleged that by not submitting the details for authentication as required by the
Circular and further required by the two letters, Noticee did not obtain the user id and
password which was essential for accessing the complaints pertaining to it, as uploaded
on the SCORES for redressing the investors grievances and subsequent redressal
thereof, within specified time. Thus, it was alleged that Noticee had failed to redress the
investor grievances which renders the Noticee liable for imposition of penalty under
Section 15C of the Securities and Exchange Board of India Act, 1992 (hereinafter
referred to as 'SEBI Act, 1992').
APPOINTMENT OF ADJUDICATING OFFICER
6.
Shri Ram Mohan Rao was appointed as the Adjudicating Officer vide order dated August
22, 2012 under section 15-I of SEBI Act and Rule 3 of SEBI (Procedure for Holding
Inquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995 (hereinafter
referred to as Adjudication Rules) to inquire and adjudge under Section 15C of the
SEBI Act, 1992, the alleged violations committed by the Noticee. Subsequent to the
transfer of Shri Ram Mohan Rao, the undersigned was appointed as Adjudicating Officer
vide order dated June 25, 2013.
SHOW CAUSE NOTICE, REPLY AND HEARING

7.
A Show Cause Notice (hereinafter referred to as SCN) was issued to the Noticee under
rule 4 of SEBI (Procedure for Holding Inquiry and imposing penalties by Adjudicating
Officer) Rules, 1995 (hereinafter referred to as Adjudicating Rules) to show cause as
to why an inquiry be not held against it in terms of rule 4 of the Rules read with section
15I of SEBI Act, 1992 and penalty be not imposed under section 15C of SEBI Act, 1992
for the violations alleged to have been committed by the Noticee.
8.
The said SCN bearing No. SEBI-NRO/AO/VKV/DL/HN/239/2016 dated February 09,

2016 was sent at the last known office address(s) at Room No.106, First Floor,2162/T-

March 16, 2016
Page 3 of 6
10 A, Guru Arjun Nagar, Main Patel Road, New Delhi - 110008 of the Noticee through
Postal Department.
9.
In the interest of natural justice and in order to conduct an inquiry in terms of Rule 4(3)
of the Adjudication Rules, the undersigned issued a notice of hearing vide hearing notice
no. SEBI-NRO/OW/AO/VKV/DL/HN/345/2016 dated February 22, 2016 to the Noticee.
The said Notice of hearing along with a copy of SCN dated February 02, 2016 to attend
the hearing in the matter on March 02, 2016 at SEBI Northern Regional Office (NRO),
New Delhi was sent through Department of Post.
10. Considering the facts and circumstances of the case including the fact that the Noticee
has not availed the opportunity of hearing before the previous Adjudicating Officer, the
undersigned is of the opinion that no prejudice would be caused to the Noticee in the
given matter if another opportunity of hearing under Rule 4 (3) of Adjudication Rules is
not provided to it.
CONSIDERATION OF ISSUES
11. After perusal of the material available on record, I have the following issues for
consideration, viz.,
a) Whether the Notice has failed to resolve investor grievances?
b) Does the violation, if any, on part of the Noticee attract monetary penalty under
Section 15 C of SEBI Act?
c) If so, what would be the quantum of monetary penalty that can be imposed taking
into consideration the factors mentioned in section 15J of the SEBI Act as well as
internal guidelines of SEBI issued from time to time in this regard?
FINDINGS
12. On perusal of the material available on record and giving regard to the facts and
circumstances of the case, I record my findings hereunder.
March 16, 2016
Page 4 of 6
ISSUE 1: Whether the Noticee has failed to resolve investor grievances?

13. As already observed, SEBI introduced an online electronic system for resolution of
investor grievances, i.e., SCORES in 2011. For the purposes of accessing the complaints
of the investors against them, as uploaded in the SCORES, listed companies were
required to login to SCORES system electronically through a company specific user id
and password, to be provided by SEBI. In this regard, I note that Noticee had obtained
details for authentication for SCORES user id & password. With regard one (01)
pending investor complaint alleged in the SCN, SEBI has confirmed (screenshot of
SCORES is present on record) that the Noticee had obtained SCORES authentication
and had resolved the pending investor grievance (as mentioned in the SCN).
14. Since, the Noticee had obtained SCORES authentication and had taken necessary steps
of resolving the pending investor grievance(s); I hold that the allegation of not
resolving investor grievances, as alleged in the SCN, does not stand established.
ISSUE 2: Whether the Noticee is liable for monetary penalty under Section 15C of the
SEBI Act, 1992?
15. The provisions of Section 15C of the SEBI Act, 1992, read as under:
15C Penalty for failure to redress investors' grievances: If any listed company or
any person who is registered as an intermediary, after having been called upon by the
Board in writing, to redress the grievances of investors, fails to redress such grievances
within the time specified by the Board, such company or intermediary 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.
16. Since the allegation against the Noticee of not resolving the investor grievance pending
against it has not been established; therefore, the Noticee is not liable for monetary
penalty under Section 15C of the SEBI Act, 1992.

March 16, 2016
Page 5 of 6
ISSUE 3: What quantum of monetary penalty should be imposed on the Noticee taking
into consideration the factors mentioned in Section 15J of the SEBI Act, 1992?
17. Since, the Noticee is not liable for monetary penalty in the instant matter, this issue
deserves no consideration.
ORDER
18. In view of my findings noted in the preceding paragraphs, I hereby dispose of the
Adjudicating Proceedings initiated against M/s SNS Diagnostics Ltd. vide Show Cause
Notice dated February 09, 2016.
19. In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding Inquiry and
Imposing Penalties by Adjudicating Officer) Rules 1995, a copy each of this order is
being sent to M/s SNS Diagnostics Ltd. and also to Securities and Exchange Board of
India.
Date: 16.03.2016
Vijayant Kumar Verma
Place: New Delhi
Adjudicating Officer

March 16, 2016
Page 6 of 6

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BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

Adjudication order in respect of M/s SNS Diagnostics Ltd

However, same was

Adjudication order in respect of M/s SNS Diagnostics Ltd

SHOW CAUSE NOTICE, REPLY AND HEARING

The said SCN bearing No. SEBI-NRO/AO/VKV/DL/HN/239/2016 dated February 09,

Adjudication order in respect of M/s SNS Diagnostics Ltd

ISSUE 1: Whether the Noticee has failed to resolve investor grievances?

Adjudication order in respect of M/s SNS Diagnostics Ltd

Vijayant Kumar Verma

Place: New Delhi

Adjudication order in respect of M/s SNS Diagnostics Ltd

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