Appeal No. 158 of 2010. Case: Add Life Pharma Limited Vs Securities and Exchange Board of India. Securities and Exchange Board of India

Case NumberAppeal No. 158 of 2010
JudgesN.K. Sodhi, J. (Presiding Officer) and P.K. Malhotra, Member
IssueCompany Law
Judgement DateOctober 27, 2010
CourtSecurities and Exchange Board of India

Order:

N.K. Sodhi, J. (Presiding Officer)

  1. This appeal is directed against the order dated June 21, 2010 passed by the adjudicating officer imposing a monetary penalty of ` 20 lacs on the appellant under Section 19D of the Depositories Act, 1996 for its failure to dematerialise the securities of its investors within the period stipulated by law.

  2. The appellant is a company incorporated under the provisions of the Companies Act, 1956 and its shares are listed on the Bombay Stock Exchange Limited (BSE), Ahmedabad Stock Exchange Limited and Vadodara Stock Exchange Limited. The fact that there has been inordinate delay in processing the requests of the shareholders for the dematerialisation of their securities is not in dispute. Both the depositories namely, National Securities Depository Limited (NSDL) and the Central Depository Services Limited (CDSL) furnished the details of the requests made to the issuer company for dematerialisation and they remained pending for more than 30 days. The figures are quite alarming. 2025 requests from the shareholders for dematerialisation of 3,87,651 shares were pending in regard to the shares with NSDL and Anr. 576 requests for 91,100 shares remained pending in regard to the shares with CDSL. The delay in dematerialising these shares is for more than 5 years and we are informed that these shares have not been dematerialised so far. The only explanation furnished by the appellant for this inordinate delay is that it had changed its Registrar and Transfer Agent as a result whereof the data base could not be shifted to the new agent on account of lack of coordination between the two. This explanation, to say the least, is unconvincing and we are satisfied that the appellant is guilty of culpable negligence in dealing with the requests from the investors. We cannot lose sight of the fact that the shareholders of the company were denied the right to trade in the shares for no fault of theirs which is indeed a serious matter. The learned Counsel for the appellant informs us that the trading in the scrip of the company had been suspended by BSE w.e.f. May 19, 2004 and, therefore, the investors thereafter did...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT