BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

ADJUDICATION ORDER NO. JJ/AM/AO23/2015

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. Mideast (India) Limited
(PAN AAACM0319F)
In the Matter of: Mideast (India) Limited
_____________________________________________________________________________________________
BACKGROUND
1. Securities and Exchange Board of India (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
(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 (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. However, it was observed that
Mideast (India) Limited (Noticee) did not submit the details to SEBI
which were required to be furnished in terms of the said Circular.
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,
letters dated November 14, 2011 and January 18, 2012 were sent to the
Noticee informing about the commencement of processing of investor
complaints in a centralized web based complaints redress system
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SCORES in terms of the Circular and advising the Noticee to send the
information (i.e. details for authentication) as required in the Circular.
3. 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
fifteen investor complaints were pending against the Noticee as on
August 27, 2012. However, it was alleged that the Noticee failed to
redress pending investor grievances and also failed to obtain SCORES
authentication in spite of being called upon by SEBI to do so thereby
violating the provisions of Section 15C of the SEBI Act, 1992.
4. Shri Praveen Trivedi was appointed as the Adjudicating Officer to inquire
and adjudge under Section 15C of the SEBI Act, 1992, the alleged
violations committed by the Noticee. Pursuant to the transfer of Shri
Praveen Trivedi, the undersigned was appointed as Adjudicating Officer
vide Order dated December 18, 2013.
SHOW CAUSE NOTICE, HEARING & REPLY
5. Show Cause Notice (SCN) in terms of the provisions of Rule 4(1) of SEBI
(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating
Officer) Rules, 1995 (Adjudication Rules) was issued to the Noticee on
September 17, 2013, calling upon the Noticee to show cause why an
inquiry should not be held against it under Rule 4(3) of the Adjudication
Rules read with Section 15I of the SEBI Act, 1992 for the alleged
violations.
6. The aforesaid SCN was duly delivered to the Noticee through the
Department of Post. Vide letter dated November 21, 2013 the Noticee
inter alia made the following submissions:
Vide order dated 28.7.1999, the Company was referred to BIFR and various
proceeding in this regard was initiated. Then vide order dated 2.11.1999
passed in C.P. No. 258 of 96, the Honble High Court of Delhi adjourned sine die
all the proceedings against the Company.
Thereafter vide order dated 31.01.2003 passed in CP No. 455 of 1998, the
Honble High Court of Delhi appointed the Official Liquidator (OL) as
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Provisional Liquidator of the Company, and as such effectively the control of

the Company vested in the OL.
Due to persistent efforts to revive the Company, most of the creditors were paid
and settled. Then, vide order dated 24.07.2003, the Honble High Court of Delhi
recalled the order of appointing the Provisional Liquidator. However, the
Registrar of Companies, Delhi till date has not updated its records.
At this stage, it is relevant to mention that due to the circumstances as briefly
explained herein above, no business could be undertaken by the Company. It
was only on receipt of the letter dated 29.08.2013 from the office of Official
Liquidator, Delhi, it could be known that the Company is now free to transact
its business. However, the fact remains that due to multifarious proceedings
initiated against the Company, the Company remained standstill and nothing
could be done on behalf of the Company due to the reasons beyond the control
of the Company because of which the Company could not at all perform. In the
circumstances as explained herein, all most all employees left the Company and
the accounts of the Company remained inactive because no business could be
transacted by the Company since February 1997.

7. Subsequent to the appointment of the undersigned, vide Notice dated

December 09, 2014 the Noticee was given an opportunity of personal
hearing on January 06, 2015. On the scheduled date of personal hearing,
Ms. Shweta Priya, appeared as Authorised Representative (AR) of the
Noticee and while making submissions vide letter dated January 06, 2015
stated that the Noticee had not taken SCORES authentication till date and
since the Noticee had not taken SCORES authentication, the status of
pending complaints was not known. The Noticee, vide letter dated
January 06, 2015, inter alia, made the following submissions:
In the aforesaid matter the Honble High Court of Delhi had issued an order for
appointment of provisional liquidator vide its order dated 31.01.2003, which
was subsequently, stayed by the Delhi High Court vide its order dated
17.03.2003 as the Company had paid its outstanding dues to the Creditor, M/s
Asta Tours and Travels. Finally, the Honble High Court of Delhi had disposed of
the said matter in favour of the Company, on 24th July, 2003 quoting that the
dues of the M/s Asta Tours and Travels were paid off and there was no
occasion for the Official Liquidator to take any action with respect to the asset
of the Company.
It is pertinent to mention herein that despite the Company Petition 455 of 1998
being disposed off by the Honble High Court of Delhi on 24.07.2003, the office
of Official Liquidator, Delhi issued a letter dated 14.02.2004 to Delhi Stock
Exchange wherein a list was annexed for the Companies, which are under
liquidation process, wherein at serial number 372 of the said list, the Company
was shown under liquidation by virtue of Company petition no. 455 of 1998
filed by M/s. Asta Tour and travels against the Company in Honble Delhi high
Court.
It was only on receipt of letter dated 29.08.2013 from the Official Liquidator,
Delhi, it could be known that the Company is free to transact its business and
that the OL had been discharged in the matter. It is pertinent to note that the
Company remained under liquidation for almost 11 years and the Official
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Liquidator took the charge of the Company and represented the Company (in
liquidation) and not the erstwhile management/ ex-directors which has also
been affirmed as per the mandate of law laid down in Dr. V.P. Mainra v.
Dawsons Leasing Ltd. [2005(2) AD (Delhi) 47].therefore, it will not be out of
place to mention that till December 2013, the OL was incharge of the Company
and it puts an end to the powers of the Directors of making calls and it
operates as a discharge of all officers of the Company including Directors and
employees under Section 445(3) of Companies Act.
All the matter relating to shares were done in-house by the Company, however
due to various reasons beyond the control of the Company all the staff in the
secretarial department and senior officer of finance department left the
company during 1998-99. Accordingly there were no personnel to take over the
records or statement of affairs from them. However since the year 2003 till
December 2013, as the Company was under liquidation, and the OL was
incharge of the Company, hence we wish to state that delay in resolving the
above complaints made during the period of 2008-2012 were beyond our
control thus we state that it was neither intentional nor deliberate. We humbly
pray the delay to be condoned. Despite acute shortage of resources company
has appointed RTA for resolution of the grievances of the shareholders at the
earliest and has also enquired about the above mentioned grievances. It would
be kind enough for expeditious resolving of the shareholders grievances that a
copy of the complaints may please be granted to us.
In the premises, it is submitted that it was due to the reasons beyond the
control of the Company as elucidated hereinabove that the Company could not
register under SCORES. We would like to draw your attention to doctrine of
impossibility of performance (lex non cogit ad impossibilia) laid down by the
Honble Supreme Court of India in catena of cases including in State of
Rajasthan v Shamsher Singh [985 (Supp) SCC 416] and in Standard Charted
bank v Director of Enforecemnet [2005 (4) SCC 530] wherein it is stated that
impossible of compliance that would be sufficient defense for non-compliance,
particularly when it is a question of the time factor. Thus in our scenario we
were unable to process any grievances since the charge of the company was
vested in the hands of OL.

8. Subsequently, vide letter dated January 08, 2015 the Noticee forwarded a
copy of its Income Tax PAN card and SCORES Authentication Form. Vide
email dated January 14, 2015 the Noticee was informed to forward its
SCORES Authentication Form to the appropriate department , i.e., Office
of Investor Assistance and Education; as per appropriate SEBI Circular
since the details of where the hard copy needs to be forwarded was
clearly mentioned in the form regarding Authentication For SCORES.
ISSUES FOR CONSIDERATION
9. After perusal of the material available on record, I have the following
issues for consideration, viz.,
A. Whether the Noticee has failed to resolve investor grievances?
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B. Whether the Noticee is liable for monetary penalty under Section 15C
of the SEBI Act, 1992?
C. 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?
FINDINGS
10. On perusal of the material available on record and giving regard to the
facts and circumstances of the case, I record my findings hereunder.
ISSUE 1: Whether the Noticee has failed to resolve investor
grievances?
11. 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. By not submitting the details for authentication as
required by the Circular, the Noticee did not obtain the user id and
password which was essential for accessing the complaints pertaining to
the Noticee, as uploaded on the SCORES for redressing the investors
grievances and subsequent redressal thereof. Vide letters dated
November 14, 2011 and January 18, 2012 the Noticee was once again
advised to obtain the SCORES authentication. However, the Noticee failed
to obtain the SCORES authentication. From the SCN I also note that the
Noticee did not resolve 15 (fifteen) investor grievances pending against it
as on August 27, 2012.
12. The Noticee in its reply has submitted that in 1999 it was referred to
Board of Industrial and Financial Reconstruction (BIFR). The Noticee also
submitted that vide order dated January 31, 2003 the Honble High Court
of Delhi had appointed the Official Liquidator (OL) as Provisional
Liquidator of the Noticee and as such effectively the control of the Noticee
vested in the OL. The Noticee further submitted that vide order dated July
24, 2003 the Honble High Court of Delhi had had disposed of the matter
in favour of the Noticee. However, the Noticee has submitted that only on
receipt of letter dated August 29, 2013 from the OL, the Noticee came to
know that it was free to transact its business and that the OL had been
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discharged in the matter. Noticee has also submitted that since it was
under liquidation from 2003 to 2013 and the OL was incharge of the
Noticee, the delay in resolving the investor complaints made during the
period 2008-2012 (i.e., the investor grievances mentioned in the SCN)
were beyond the control of the Noticee. In order to strengthen its
submission, the Noticee, in its submissions, also invoked the doctrine of
impossibility of performance and stated that the Noticee was unable to
process any investor grievances since the charge of the Noticee was
vested in the hands of the OL.
13. I have carefully perused the submissions of the Noticee and the various
orders and judgements of the Honble High Court of Delhi and the Honble
Supreme Court of India submitted by the Noticee. I note that though vide
order dated January 31, 2003 the Honble High Court of Delhi had
appointed OL as the Provisional Liquidator with effect from February 20,
2003; vide order dated March 17, 2003 Honble High Court of Delhi had
stayed the order appointing OL as Provisional Liquidator. Subsequently,
vide order dated July 24, 2003 Honble High Court of Delhi while
disposing of the matter in favour of the Noticee, had categorically stated
that there was no occasion for the OL to take any action in respect of the
assets of the Noticee. The Noticee has submitted that only on receipt of
letter dated August 29, 2013 from the OL, the Noticee came to know that
it was free to transact its business and that the OL had been discharged in
the matter. However, I note that the said letter was issued in August 29,
2013 because the Noticee had approached the office of the OL vide its
letter dated April 15, 2013 requesting for a confirmation letter to the
office of Registrar of Companies (RoC) for change of status from
liquidation to active as the Noticee was not able to file any forms, returns,
etc. on MCA21. Further, I note that the letter dated August 29, 2013,
issued by the Assistant Official Liquidator clearly stated that the matter
had already been disposed earlier by the Honble Court vide order dated
July 24, 2003. From the aforesaid, it is clear that had the Noticee
approached the office of the OL before, it could have got such a letter
much before 2013. Hence, I do not agree with the contention of the
Noticee that since the OL was in-charge till December 2013, the Noticee
could not take SCORES authentication and take steps to resolve the
grievances of the investors.

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14. From the Company Status Information available on the website of BIFR
(www.bifr.nic.in), I note that the Noticee was referred to BIFR on four
occasions, i.e., in 1999 (Case No. 94/1999), 2001 (Case No. 247/2001),
2004 (Case No. 97/2004) and 2007 (Case No. 11/2007) and all the cases
were dismissed as non maintainable. Further, as per the website of BIFR
the date of last order is 01/04/2010. Hence, when the SEBI Circular dated
June 03, 2011 was issued, the Noticee was not within the purview of
BIFR. As the Noticee was not under the purview of BIFR and could have
easily obtained confirmation letter from the OL much before 2013,
therefore, I hold that doctrine of impossibility of performance cannot
save the Noticee on this count. I am of the considered opinion that the
Noticee cannot be allowed to ignore the process of redressing the
grievances of investors for reasons of its own inaction.
15. I also note that till January 06, 2015 the Noticee had not taken SCORES
authentication. Though vide letter dated January 06, 2015 the Noticee has
stated that it has appointed RTA for resolution of investor grievances; I
note that the Noticee had failed to obtain SCORES authentication and had
failed to resolve the investor grievances despite being called upon to do
so by SEBI. The SEBI Circular dated June 03, 2011 clearly states that all
listed companies are required to view the complaints pending against
them and submit ATRs alongwith supporting documents electronically in
SCORES and failure to update the ATR in SCORES will be treated as non
redressal of investor complaints by the company. Further, Honble
Securities Appellate Tribunal in S. S. Forgings & Engineering Limited &
Others v SEBI, Appeal No. 176 of 2014 (decided on August 28, 2014) has,
inter-alia, observed that Undoubtedly, an obligation is cast
upon every listed company to redress investors grievances in a time bound
manner as may be prescribed by SEBI from time to time. This
Tribunal has consistently held that redressal of investors grievances is
extremely important for the Regulator to regulate the capital market. If the
grievances are not redressed within a time bound framework, it leads to
frustration among the investors who may not be motivated to further invest
in the capital market. Hence the importance of complaints redressal system
initiated by SEBI in June, 2011 cannot be undermined and its sanctity has to
be maintained by all the listed companies.. Therefore, I hold that the
Noticee has failed in its duty of resolving the investor grievances pending
against it as alleged in the SCN.
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ISSUE 2: Whether the Noticee is liable for monetary penalty under

Section 15C of the SEBI Act, 1992?
16. 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.
17. In the matter of SEBI Vs. Shri Ram Mutual Fund [2006] 68 SCL 216 (SC), the
Honble Supreme Court of India has 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 regulation is established and hence the
intention of the parties committing such violation becomes wholly
irrelevant.
18. A listed company is expected to comply with the extant regulatory and
statutory requirements. As already observed, the Noticee failed in
resolving the investor grievances pending against it, despite being called
upon to do so by SEBI. Therefore, the Noticee is also liable for monetary
penalty under Section 15C of the SEBI Act, 1992.
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?
19. While imposing monetary penalty it is important to consider the factors
stipulated in Section 15J of the Act, which reads as under:
15J - Factors to be taken into account by the adjudicating officer
While adjudging quantum of penalty under section 15-I, 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. In the absence of material on record, the amount of disproportionate gain
or unfair advantage made as a result of the default and the amount of loss
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caused to the investors due to the said default cannot be quantified.

However, the fact remains that the Noticee, being a listed company, failed
to fulfil its duty of complying with SEBI Circulars. It is the duty of SEBI to
ensure speedy resolution of investor grievances and to further the cause
SEBI has come out with SCORES which is a centralized web based
complaints redress system that enable investors to lodge and follow up
their complaints and track the status of redressal of such complaints from
anywhere. After introduction of SCORES, all listed companies are
required to view the complaints pending against them and submit ATRs
alongwith supporting documents electronically in SCORES and SEBI
Circular dated June 03, 2011 clearly states that failure to update the ATR
in SCORES will be treated as non redressal of investor complaints by the
company. However, listed companies like the Noticee which do not obtain
SCORES authentication and do not resolve investor grievances and
upload ATRs in SCORES despite SEBI Circulars frustrate the entire
process. It is of utmost importance that every listed company assigns high
priority to investor grievances and takes all necessary steps to redress
the grievances of investors at the earliest, which the Noticee has failed to
do. Hence, the omission on part of the Noticee is detrimental to the
interest of investors in securities market.
21. In view of the aforesaid paragraphs, it is now established that the Noticee
failed to resolve investor grievance and therefore I find that imposing a
penalty of ` 4,00,000/- (Rupees Four Lakhs only) on the Noticee would be
commensurate with the violation committed.
ORDER
22. Considering the facts and circumstances of the case, in terms of the
provisions of SEBI Act, 1992 and Rule 5(1) of the Adjudication Rules, I
hereby impose a penalty of ` 4,00,000/- (Rupees Four Lakhs only) under
Section 15C of the SEBI Act, 1992, on Mideast (India) Limited.
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 the Regional Director, Northern Regional Office, Securities
and Exchange Board of India, 5th Floor, Bank of Baroda Building, 16,
Sansad Marg, New Delhi 110001.
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24. In terms of the provisions of Rule 6 of the SEBI (Procedure for Holding
Inquiry and Imposing Penalties by Adjudicating Officer) Rules 1995,
copies of this Order are being sent to the Noticee and also to Securities
and Exchange Board of India.

Date: February 16, 2015

Place: Mumbai

Jayanta Jash
Adjudicating Officer

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