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BEFORE THE ADJUDICATING OFFICER


SECURITIES AND EXCHANGE BOARD OF INDIA

[ADJUDICATION ORDER NO. EAD-2/DSR/RG/PU/172/2014]
________________________________________________________________
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
CAPITAL TRADE LINKS LIMITED
[PAN AAACC0222H]
________________________________________________________________
Background
1. Securities and Exchange Board of India (hereinafter referred to as
SEBI) conducted an examination into the draft letter of offer
filed by Krishan Kumar & Sons (HUF) and Neeraj Kumar & Sons
(HUF) (acquirers) to acquire 26% shares of Capital Trade Links
Limited (hereinafter referred to as the Noticee/CTLL), a
company listed on the Delhi Stock Exchange (DSE). Upon
examination, it was, inter alia, observed that the Noticee had
failed to make disclosures to the Stock Exchange within the
prescribed timeline, as required under Regulation 8 (3) of SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations,
1997 (herein after referred to as the Takeover Regulations).
Appointment of Adjudicating Officer
2. SEBI has, therefore, initiated Adjudication proceedings against
the Noticee and I have been appointed as the Adjudicating
Officer (AO), vide order dated April 02, 2014 under Section 15 I of
the Securities and Exchange Board of India Act, 1992 (hereinafter
referred to as 'SEBI Act') read with Rule 3 of the SEBI (Procedure
for Holding Inquiry and Imposing Penalties by Adjudicating
Officer) Rules, 1995 (hereinafter referred to as 'said Rules') to
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inquire into and adjudge under Section 15A(b) of the SEBI Act,
the alleged violation of the provisions of law by the Noticee.

Show Cause Notice, Reply and Personal Hearing
3. A show cause notice dated May 20, 2014 (hereinafter referred to
as 'SCN') was issued to the Noticee under Rule 4(1) of the said
Rules to show cause as to why an inquiry should not be held and
penalty should not be imposed on it under Section 15A (b) of the
SEBI Act for the alleged violation of the provisions of law.

4. The Noticee submitted its reply to the SCN vide letter dated June
09, 2014. Thereafter, in order to conduct inquiry, an opportunity
of personal hearing was granted to the Noticee on July 04, 2014
vide notice dated June 23,2014. The authorized representative,
Shri Balveer Singh Choudhary, appeared on behalf of the Noticee
on the scheduled date and reiterated the written submission
made by the Noticee in its reply dated June 09, 2014.

Consideration of Issues, Evidence and Findings
5. I have carefully perused the charges leveled against the Noticee
as mentioned in the SCN, written submissions made and all the
documents available on record. In the instant matter, the
following issues arise for consideration and determination:

a. Whether the Noticee has violated the provisions of
Regulation 8 (3) of the Takeover Regulations?
b. Whether the Noticee is liable for monetary penalty
prescribed under Section 15 A (b) of the SEBI Act for the
aforesaid violation?
c. If so, what should be the quantum of monetary penalty?

6. Before proceeding further, I would like to refer to the relevant
provision of the Takeover Regulations which read as under:
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Takeover Regulations

8 (3) Every company whose shares are listed on a stock exchange, shall
within 30 days from the financial year ending March 31, as well as the
record date of the company for the purposes of declaration of dividend,
make yearly disclosures to all the stock exchanges on which the shares of
the company are listed, the changes, if any, in respect of the holdings of
the persons referred to under sub-regulation (1) and also holdings of
promoters or person(s) having control over the company as on 31st
March.


7. I find that it has been alleged in the SCN that the Noticee had failed
to make yearly disclosures to the Stock Exchange in the prescribed
timeline, as required under Regulation 8 (3) of the Takeover
Regulations between the years 2002 to 2011. The details of the said
delayed disclosures are as under:

Regulation Due date of
compliance
Actual date of
compliance
Delay- in number
of days
8 (3) 30/04/2002 01/09/2009 2708
8 (3) 30/04/2003 01/09/2009 2343
8 (3) 30/04/2004 01/09/2009 1978
8 (3) 30/04/2005 01/09/2009 1613
8 (3) 30/04/2006 01/09/2009 1248
8 (3) 30/04/2007 01/09/2009 885
8 (3) 30/04/2008 01/09/2009 518
8 (3) 30/04/2009 01/09/2009 153
8 (3) 30/04/2010 01/10/2013 1249
8 (3) 30/04/2011 01/10/2013 884

8. The Noticee vide its reply dated June 09, 2014 submitted that it was
incorporated as a public limited company on December 19, 1984 and
the authorized share capital of the company is ` 5,00,00,000/- while,
the issued, subscribed and paid-up equity share capital of the
company is ` 4,99,80,000/-. It deals in financing and lending money
to other Business & Industrial Enterprises as well as investing &
dealing in the securities market. It is listed on DSE, however, the
shares of the Noticee haven't been traded on DSE for the last decade
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or longer. It has complied with all the formalities of the listing
agreement prescribed by DSE i.e. quarterly, half yearly and annual
publication of financial results and board meeting notices etc,. The
Noticee further submitted that the delayed disclosures under
Regulation 8 (3) of the Takeover Regulations for the years between
2002 to 2009 and for the years 2010 & 2011, have been filed on August
08, 2009 and August 30, 2013, respectively. The alleged violations are
purely technical in nature as no loss/ financial gain has accrued to
anybody. They were unintentional and have not affected any
investors / stake holders of the company.

9. The Noticee further submitted that there was no change in the
control of the company during the relevant period when the alleged
violation was committed. Also, the shares of CTLL have not been
traded on DSE during this period and the delayed corrective action
had not adversely affected the interests of any stake holders of the
company.

10. I find that the Noticee is listed on the DSE. Further, the acquirer,
Krishan Kumar & Sons (HUF) and Neeraj Kumar & Sons (HUF), had
filed a draft letter of offer for issuing Public Announcement on
December 03, 2013 in order to acquire 26% shares in the Noticee in
compliance with the Takeovers Regulations, 2011. I find from the
Noticee's reply dated June 09, 2014 that the shares of CTLL were not
traded on the stock exchange for more than a decade. I note from the
submissions made by the Noticee that it has admitted that it had filed
the necessary disclosures with a delay. However, the Noticee stated
that it filed the said disclosure on August 08, 2009 for the years 2002
to 2009 and on August 30, 2013 for the years 2010 & 2011, which is
contrary to the evidence provided by the Merchant Banker to SEBI. I
further note that the Noticee has not provided any documentary
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evidence in support thereof. Therefore, in my view, the submission
to that extent cannot be accepted.

11. As per the available records, the said disclosures were made only in
September 01, 2009 for the years 2002 to 2009 and in October 01, 2013
for the years 2010 & 2011, thereby frustrating the very purpose of
Regulation 8(3) of the Takeover Regulations. Further, the violation of
the said disclosure requirement on the part of the Noticee had
continued over a period of 10 years.

12. The disclosure made under Regulation 8(3) of Takeover Regulations
by a company is made public only through Stock Exchange. It is with
this end in view that the Regulations require the making of
disclosures so that investing public is not deprived of vital
information. The disclosures made by companies listed on the stock
exchanges are the means to attain such end and therefore,
dissemination of complete information is required. However, the
Noticee has neglected its duty of making the disclosures in
compliance with Regulation 8(3) of the Takeover Regulations since
2002 and the same continued till 2011, thereby demonstrating the
casual and unbecoming attitude on the part of the Noticee in
fulfilling statutory obligations.

13. In view of the above and based on the documents available on
record, I find that admittedly, the Noticee did not comply with the
provisions of Regulation 8 (3) of the Takeover Regulations for a
period of 10 years for which it is liable for monetary penalty under
Section 15 A (b) of the SEBI Act, which reads as under:

15A. Penalty for failure to furnish information, return, etc. - If any
person, who is required under this Act or any rules or regulations made
thereunder,-
..
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(b) to file any return or furnish any information, books or other documents
within the time specified therefor in the regulations, fails to file return or
furnish the same within the time specified therefor in the regulations, 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;

14. In Appeal No. 66 of 2003 - Milan Mahendra Securities Pvt. Ltd. Vs SEBI
the Honble SAT has observed that, the purpose of these disclosures is
to bring about transparency in the transactions and assist the Regulator to
effectively monitor the transactions in the market.

15. At this instant, it is important to quote the observations of the
Honble Supreme Court of India in the matter of SEBI v. Shri Ram
Mutual Fund [2006] 68 SCL 216(SC) wherein, the Hon'ble Court, inter
alia, held: 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. While imposing monetary penalty it is important to consider the
factors stipulated in section 15J of SEBI 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.

17. I observe that, from the material available on record, any quantifiable
gain or unfair advantage accrued to the Noticee or the extent of loss
suffered by the investors as a result of the defaults cannot be
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computed. However, I find that the violation is repetitive in nature
inasmuch as the same had continued for 10 years, i.e., every year
since 2002 to 2011, as evident from the table mentioned in Para no. 7
of this order.

ORDER
18. In view of the above, after considering all the facts and circumstances
of the case and exercising the powers conferred upon me under
section 15-I (2) of the SEBI Act read with Rule 5 of the said Rules, I
hereby impose a penalty of `10,00,000/- (Rupees Ten Lakh Only) on
the Noticee i.e. Capital Trade Links Ltd.under Section 15 A (b) of the
SEBI Act. In my view, the penalty imposed on the Noticee is
commensurate with the defaults committed by it.

19. The above penalty amount shall be paid by the Noticee through a
duly crossed demand draft drawn in favour of SEBI Penalties
Remittable to Government of India and payable at Mumbai within
45 days of receipt of this order. The said demand draft shall be
forwarded to The Division Chief, Corporate Finance Department -
DCR, Securities and Exchange Board of India, Plot No. C4-A, G
Block, Bandra Kurla Complex, Bandra (E), Mumbai 400 051.

20. In terms of the Rule 6 of the said Rules, copy of this order is sent to
the Noticee and also to Securities and Exchange Board of India.



Date: August 07, 2014 D. SURA REDDY
Place: Mumbai ADJUDICATING OFFICER
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