Adjudication Order in Respect of Sendhaji J Thakor in The Matter of SEL Manufacturing Co LTD

BEFORE THE ADJUDICATING OFFICER
SECURITIES AND EXCHANGE BOARD OF INDIA

(ADJUDICATION ORDER NO: IVD-ID-4/EAD-3/AO/DRK-VB/715/40-2015)
_____________________________________________________________
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
Shri Sendhaji J Thakor
Chhogia,TA-Visnagar,
Mehsana, Gujarat-384315
PAN NO. (AFNPT9694P)
In the matter of SEL Manufacturing Co Ltd
____________________________________________________________
FACTS IN BRIEF
1. Securities and Exchange Board of India ( hereinafter referred to as "SEBI")
has conducted an investigation into the alleged irregularity in the trading of
the
shares of SEL Manufacturing Co Ltd (hereinafter referred to as
"Company / SEL"). The shares are listed at the National Stock Exchange of
India Limited (hereinafter referred to as "NSE") and at The Bombay Stock
Exchange Ltd.(hereinafter referred to as "BSE") and the period of
investigation is from August 21, 2007 to August 27, 2007 (hereinafter referred
to as the `Investigation Period / IP').
APPOINTMENT OF ADJUDICATING OFFICER
2. I was appointed as the Adjudicating Officer vide the proceedings of the Whole
Time Member appointing the Adjudicating Officer dated May 03,2012 under
Section 15-I of the Securities and Exchange Board of India Act,1992
(hereinafter referred to as the "SEBI Act,1992") read with Rule 3 of
Securities and Exchange Board of India (Procedure for Holding Inquiry and
Imposing Penalties by Adjudicating Officer) Rules,1995 (hereinafter referred
to as Adjudication Rules) to inquire into and adjudge under Section 15A(a)
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Page 1 of 7
of the SEBI Act alleged to have been committed by Shri Sendhaji J Thakor
(hereinafter referred to as the "noticee").
SHOW CAUSE NOTICE, REPLY AND HEARING
3. A Show Cause Notice No.EAD-3/DRK/DS/19974/2012 dated the August
31, 2012 (hereinafter referred to as SCN) was served on the Noticee to
show cause as to why an inquiry should not be held against the Noticee and
penalty be not imposed on the Noticee, in respect of the violations
alleged to have b een committed by the Noticee under S ection
15A(a) of t h e SEBI Act,1992.
4. The following are the summonses the Noticee failed to comply with :Date of
Sr.No. Summons
Date of
Information
Appearance and
Summons and the timeline to
Time
provide for the same
sought
in
the
1. Details of your trading in the

shares of SEL during the period
August 21, 2007 to August 27,
1.
10/05/2011 25/05/2011
2007.
2. Confirm
whether
you
were
allotted any shares of SEL in

IPO.If yes, provide details i.e
number of shares allotted, details
of payments etc.
3. Copy of your bank statement for

the period May 01, 2007 to
October 31,2007 explaining the
transactions
Rs.5,00,00,000
Explanation
having
value
or
more.
should
include
details of counterparty also.
4. Copy of your demat statement

for the period June 01, 2007 to
September 30, 2007.
5. PAN in original.
2.
09/08/2011 22/08/2011
Page 2 of 7
All the above mentioned details
5. It was, inter alia, stipulated in the summons that " Please take notice that, in
default of your appearance on the above-mentioned date, investigation
proceedings would be continued in your absence. Further, take notice that
without prejudice to the provisions of any other law for the time being in force,
if you omit to attend and give evidence or to produce the books of accounts
and / or documents as required, SEBI will initiate adjudication proceedings
against you under which you could be levied a penalty of one lakh rupees for
each day during which such failure continues, or one crore rupees, whichever
is less, as provided under section 15A of SEBI Act,1992. Further, criminal
prosecution may also be launched against you under Section 11C(6) which
provides for a punishment with imprisonment for a term which may extend to
one year or with fine which may extend to rupees one crore, or with both, and
also with a further fine which may extend to five lakh rupees for each day
after the first, during which the failure or refusal continues."
6. Based on the IR, it was alleged in the SCN that the Noticee had neither
appeared before the IA nor provided documents / information / records as
sought
during
the
investigation
within
the
stipulated
timeline.
The
Investigating Authority (IA) had served summonses on the Noticee to appear

before
him
and
submit
books
of
accounts
documents
reports/information/records. However, the Noticee failed to comply with the

same. The said non-appearance before IA and non furnishing of the
information/documents resulted in violation of the provisions of Section
11C(3) and Section 11C(5) of the SEBI Act,1992.
7. The Noticee vide his reply dated October 16,2012 submitted that the notice
was received late by him due to hospitalization of his relative and further
sought a period of 21 days to submit the reply. Since there was no reply from
the noticee, vide personal hearing notice dated January 18, 2013, an
opportunity of hearing was granted to the Noticee to appear on February 15,
2013 at SEBI Bhavan, Mumbai. The hearing notice was served on the
Noticee by Registered Post Acknowledgement Due (hereinafter referred
to as RPAD) and proof of service of the same is on record. The
Noticee failed to appear for the said hearing without furnishing any reason.
Thereafter, vide hearing notice dated August 08, 2013 the noticee was
granted the final opportunity to submit reply to the SCN on or before August
20, 2013 and granted an opportunity of personal hearing on August 23, 2013.
Page 3 of 7
The noticee again failed to avail this personal hearing as well without
furnishing any reason.
8. Subsequently, vide final hearing notice dated December 23,2014, the Noticee
was granted final opportunity of personal hearing on January 23, 2015 at
SEBI Bhavan, Mumbai. The hearing notice was served on the Noticee by
RPAD and proof of service of the same is on record. However, the noticee
failed to appear for this hearing as well without giving any reason.
9. From the records it is noted that the noticee has neither replied to the SCN
nor has attended any of the personal hearings granted to him inspite of
service of the notices as stated above. In the light of this fact, I am convinced
that the Principles of Natural Justice have been complied with and I am
compelled to pass an ex-parte order against the noticee.
CONSIDERATION OF EVIDENCE AND FINDINGS
10. I have taken into consideration the facts and circumstances of the case and
the material made available on record. The allegations against the noticee
were that the noticee had failed to appear before the IA and also failed to
produce the books of accounts / documents/ records / reports and information
as sought by the IA.
11. From the records made available, it is noted that though the first summons
dated April 29,2011 was sent to the noticee, the next two summonses dated
May 10,2011 and August 09,2011 were served on the noticee and the proof
of service of last two summonses is on record.
12. From the records it is also noted that the summons dated May 10,2011 was
served on the noticee for personal appearance on May 25, 2011 and also to
produce the books of accounts/ documents/ information records / reports. The
noticee has neither appeared before the IA nor produced the books of
accounts/ documents / information records / reports, thereafter, third
Summons dated the August 09,2011 was served on the noticee for personal
appearance before the IA on August 22,2011 and also to produce books of
accounts / documents / information records / reports on the same day.
13. It is also noted from the IR that even though these two summonses were
served on the Noticee, the noticee neither appeared before the IA nor
produced the books of accounts / documents /information to the IA which
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resulted in violation of the provisions of Section 11C(3) and Section 11C(5) of

the SEBI Act,1992. Inspite of service of summonses the noticee failed to cooperate with the IA.
14. The text of the provisions of Section 11C(3) and 11C(5) of the SEBI Act,1992
are reproduced as below :
Section 11C
(1) .....
(2) .....
(3)The Investigating Authority may require any intermediary or any persons
associated with securities market in any manner to furnish such information
to, or produce such books, or registers, or other documents, or record before
him or any person authorised by him in this behalf as he may consider
necessary if the furnishing of such information or the production of such
books, or registers, or other documents, or record is relevant or necessary
for the purposes of its investigation.
(4)....................
(5) Any person, directed to make an investigation under sub-section (1), may
examine on oath, any manager, managing director, officer and other
employee of any intermediary or any person associated with securities
market in any manner, in relation to the affairs of his business and may
administer an oath accordingly and for that purpose may require any of those
persons to appear before it personally.
15. In view of the above facts / records, it can be concluded that the noticee has
failed to comply with the provisions of Sections 11C(3) and 11C(5) of the
SEBI Act,1992.
16. At this juncture, I would like to quote the judgment of the Hon'ble SAT in the
case of Asian Films Production and Distribution Ltd. (earlier known as
K.C.Bokadia Films vs. SEBI (Appeal No.203 of 2010, Date of Decision
:19.01.2011) wherein it has been held that :
" Non-compliance with the summons is, indeed, a serious matter and cannot
be viewed lightly. The respondent Board is the market regulator and has to
regulate the securities market and the law provides that every person
associated with the market in any manner should cooperate in the matter of
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carrying out investigations. In the year 2002, the provisions of the Act were
amended and penalty for non-compliance with summons was enhanced
considerably to make it more deterrent. Market players who do not cooperate
with the regulator in the matter of investigations commit a serious wrong
which can have serious repercussions in the market."
17. Further, I would like to quote the judgment of the Honble Supreme Court of
India in the matter of SEBI Vs.Shriram Mutual Fund [2006] 68 SCL 216(SC)
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....".
18. The aforesaid violations by the noticee attract penalty under Section 15A(a) of
the SEBI Act which provides that:
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; (a) to furnish any document, return or report to the Board, fails to furnish the
same, 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;"
19. 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
20. 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 investor as a result of
the default / failure of the noticee are not available on record. Further, it may
also be added that it is difficult to quantify the unfair advantage made by the
noticee or the loss caused to the investor by not co-operating with
Page 6 of 7
Investigation Authority. It is further observed from the records that the noticee
has also not co-operated in the current Adjudication proceedings.
21. Having considered the facts and circumstances of the case 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 Lakh only) on the Noticee for violation
of Section 11C(3) and also a penalty of ` 50,00,000/- (Rupees Fifty lakh only)
for violation of Section 11C(5) of the SEBI Act,1992 would be commensurate
with the violations committed by the noticee in terms of the provisions of
Section 15A(a) of the Securities and Exchange Board of India Act, 1992.
ORDER
22. In exercise of the powers conferred under Section 15-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 consolidated penalty of
` 1,00,00,000/- (Rupees One Crore only) on the noticee Shri Sendhaji J
Thakor (PAN AFNPT9694P) in terms of the provisions of Section 15A(a) of
the Securities and Exchange Board of India Act, 1992 for violation of
provisions of Section 11C(3) and Section 11C(5) of the SEBI Act,1992.
23. 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
Chief General Manager, Enforcement Department, Securities and Exchange
Board of India, SEBI Bhavan, Plot No. C4-A, G Block, Bandra Kurla
Complex, Bandra (E), Mumbai 400 051.
24. 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 Noticee Shri
Sendhaji J Thakor at his address Chhogia, TA-Visnagar, Mehsana, Gujarat 384315 and also to the Securities and Exchange Board of India, Mumbai.
Place: Mumbai
Date : 25.03. 2015
D. RAVI KUMAR
CHIEF GENERAL MANAGER&
ADJUDICATING OFFICER
Page 7 of 7

Adjudication Order in Respect of Sendhaji J Thakor in The Matter of SEL Manufacturing Co LTD

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BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

1992 READ WITH

EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING INQUIRY

shares of SEL Manufacturing Co Ltd (hereinafter referred to as

Summons and the timeline to

provide for the same

1. Details of your trading in the

allotted any shares of SEL in

3. Copy of your bank statement for

details of counterparty also.

4. Copy of your demat statement

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All the above mentioned details

Investigating Authority (IA) had served summonses on the Noticee to appear

reports/information/records. However, the Noticee failed to comply with the

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resulted in violation of the provisions of Section 11C(3) and Section 11C(5) of

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