ORDER : BEFORE THE ADJUDICATING OFFICER SECURITIES AND EXCHANGE BOARD OF INDIA [ADJUDICATION ORDER NO. PM/NK/2019-20/3769] 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 Lexicon Commercial Enterprises Limited (PAN: Not Available) In the matter of Non- Obtaining of SCORES Authentication FACTS OF THE CASE IN BRIEF 1. Securities and Exchange Board of India (hereinafter referred to as SEBI), vide various circulars directed all listed companies including M/s Lexicon Commercial Enterprises Limited (hereinafter referred to as the “Noticee/Company/Lexicon”) to obtain SEBI Complaints Redressal System (hereinafter referred to as SCORES) authentication and also redress any pending investor grievances in the SCORES only. Further, SEBI vide circular CIR/OIAE/1/2013 dated April 17, 2013 inter alia directed all companies whose securities were listed on stock exchanges to obtain SCORES authentication within a period of 30 days from the date of issue of this circular and also to redress the pending investor grievances within the stipulated time period. 2. Further, SEBI vide its letter dated December 02, 2013 observed that the Noticee had failed to obtain SCORES authentication and inter-alia advised the Noticee, as a final opportunity to obtain the SCORES user Id and Password latest by December 18, 2013 failing which SEBI would be constrained to initiate enforcement actions as per SEBI Act, 1992, as deemed appropriate. It was alleged that the Noticee failed to obtain SCORES authentication despite being called upon by SEBI to do so. 3. It was, therefore, alleged that the Noticee’s failure to obtain SCORES authentication within the time specified by the Board, despite being called upon to do so, makes the Noticee liable for penalty under section 15 HB of SEBI Act, 1992. APPOINTMENT OF ADJUDICATING OFFICER 4. Securities and Exchange Board of India vide order dated April 10, 2014 appointed Mr. Amar Navlani as the Adjudicating Officer, to inquire and adjudge 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 “Rules”) to enquire into and adjudge under section 15HB of SEBI Act,1992 for failing to obtain the SCORES authentication by the Noticee in spite of being called upon by SEBI to do so. Pursuant to the transfer of Mr. Pursuant to the transfer of Mr. Amar Navlani and reallocation of works, the undersigned was appointed as the Adjudicating Officer vide order dated January 8, 2019. SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING 5. A Show Cause Notice No. AO/AN/SCN/5601/2016 dated February 26, 2016 (hereinafter referred to as “SCN”) was issued to the Noticee under rule 4 of the Rules to show cause as to why an inquiry should not be held against them in terms of rule 4 of the Rules read with section 15-I of the SEBI Act, 1992 and penalty be not imposed under Section 15HB of the SEBI Act, 1992 for the alleged violation of not obtaining of SCORES authentication by the Noticee in spite of being called upon by SEBI to do so. 6. The Noticee replied to the SCN vide letter dated March 15, 2016. The Noticee in its reply submitted that it had applied for the SCORES User Id and Password for SCORES Authentication vide letter dated December 12, 2013 and that in response to the same they have been allotted the user Id and Password by SEBI. Further, they have logged into SCORES and the user id and password were active. The Noticee also submitted that it had sent the documents and other records as required. 7. An opportunity of personal hearing was granted to the Noticee on December 18, 2017 vide letter dated December 7, 2017 by the erstwhile AO. The Noticee requested for Adjournment which was acceded to. Subsequently, another opportunity of personal hearing was granted on January 23, 2018 vide letter dated December 28, 2017. The Authorised Representatives of the Noticee appeared for the personal hearing and reiterated the submissions of letter dated March 15, 2016. The Authorised Representatives of the Noticee requested time for submitting additional documents in the matter which was acceded to. The Noticee submitted additional reply vide letter dated January 25, 2018 which is taken on record. 8. Subsequently, upon appointment of the undersigned as the AO in the present matter, another opportunity of personal hearing was granted to the Noticee on July 23, 2019 vide letter dated June 28, 2019. The Noticee submitted additional reply vide letter dated January 25, 2018 which is taken on record. 8. Subsequently, upon appointment of the undersigned as the AO in the present matter, another opportunity of personal hearing was granted to the Noticee on July 23, 2019 vide letter dated June 28, 2019. The Noticee vide letter dated July 14, 2019 submitted that SEBI vide letter dated December 2, 2013 had granted a final opportunity to the companies which had not obtained SCORES Authentication in accordance with the SEBI Circular CIR/OIAE/1/2013 dated April 17, 2013, to comply with same within December 18, 2013 failing which SEBI would initiate enforcement actions as per SEBI Act, 1992. The Noticee in its reply submitted that it had submitted its application for obtaining SCORES Authentication vide its letter dated December 12, 2013 and therefore complied with the aforesaid SEBI Circular. 9. For the reasons mentioned above, I am of the opinion that the Noticee was provided with adequate opportunities of replying to the SCN and of being heard. The Noticee did not appear for the personal hearing. Therefore, I am proceeding with the inquiry taking into account the material available on record. CONSIDERATION OF ISSUES AND FINDINGS 10. I have carefully perused the documents available on record. It is observed that the allegation against the Noticee is that they have failed to obtain SCORES authentication. The issues, therefore, that arise for consideration in the present matter are: (a) Whether the Noticee failed to obtain SCORES authentication and thereby violated the provisions of SEBI Circular No. CIR/OIAE/1/2013 dated April 17, 2013? (b) Does the violation, if any, on the part of the Noticee attract monetary penalty under Section 15 HB of the SEBI Act? (c) If so, what would be the monetary penalty that can be imposed duly taking into account the factors mentioned in Section 15J of SEBI Act? 11. The first issue for consideration is whether the Noticee failed to obtain SCORES authentication and thereby violated the provisions of SEBI Circular No. CIR/OIAE/1/2013 dated April 17, 2013. I find from the material available on record that as per SEBI circular no. CIR/OIAE/2/2011 dated June 03. 2011, it was obligatory on the part of the all listed companies including Noticee to obtain SCORES authentication. This was followed by reminder circular no. CIR/OIAE/1/2012 dated August 13, 2012. SEBI again followed with another reminder circular no. I find from the material available on record that as per SEBI circular no. CIR/OIAE/2/2011 dated June 03. 2011, it was obligatory on the part of the all listed companies including Noticee to obtain SCORES authentication. This was followed by reminder circular no. CIR/OIAE/1/2012 dated August 13, 2012. SEBI again followed with another reminder circular no. CIR/OIAE/1/2013 dated April 17, 2013, pointing out that if SCORES authentication was not obtained within 30 days, it would not only be deemed as non-redressal of investor grievances, but, also indicate wilful avoidance of the same. 12. I find from material available on record that SEBI vide letter dated December 2, 2013 had granted a final opportunity to the Noticee to obtain SCORES Authentication in accordance with the SEBI Circular CIR/OIAE/1/2013 dated April 17, 2013 within December 18, 2013, failing which SEBI would initiate enforcement actions as per SEBI Act, 1992. I find that Lexicon had applied for the SCORES Authentication vide letter dated December 12, 2013 as per the prescribed format in response to the SEBI letter dated December 2, 2013. I further note that SEBI had acknowledged the aforesaid application on December 16, 2013. Further, SEBI vide email dated January 3, 2014 had issued the Log-in Id and Password to Lexicon. I also find from the material available on record that the Noticee had continuously followed with SEBI after submitting its application for the Log-in Id and Password in accordance with the aforesaid SEBI circular. 13. I note that the last date for obtaining the Log-in Id and Password as per the SEBI letter dated December 2, 2013 was December 18, 2013 and the Noticee had submitted its application almost a week ahead of the approaching penultimate date. Further, the application of the Noticee was complete in all respect which resulted in the Noticee getting the Log-in Id and Password in accordance with the aforesaid SEBI Circular. 14. From all of the above, I find that even though the Noticee received the Log-in Id and Password after the penultimate date i.e. December 18, 2013, the Noticee had, in spirit, complied with the said SEBI Circular dated April 17, 2013 and Notice dated December 2, 2013. 14. From all of the above, I find that even though the Noticee received the Log-in Id and Password after the penultimate date i.e. December 18, 2013, the Noticee had, in spirit, complied with the said SEBI Circular dated April 17, 2013 and Notice dated December 2, 2013. Further, from the material available on record, I do not find any wrongdoing or any harm caused to any one including the investors during the intervening period between the submission of the application (December 12, 2013) by the Noticee and the grant of the Log-in Id and Password (January 3, 2014) by SEBI. 15. In view of all of the above, I find that the Noticee’s act of applying for the Log-in Id and Password before the penultimate date mentioned in the SEBI Notice dated December 2, 2013 was in compliance with the SEBI Circular dated April 17, 2013. Therefore I do not find it a fit case fit case to impose monetary penalty on the Noticee. Since the alleged violations are not established against the Noticee, Issues b. and c. of Para-10, require no further consideration. ORDER: 16. 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 of the SEBI Act and Rule 5 of the Adjudication Rules, I hereby dispose of the Show Cause Notice No. AO/AN/SCN/ 5601/2016 dated February 26, 2016 issued to the Noticee, Lexicon Commercial Enterprises Limited without imposing any penalty. 17. In terms of rule 6 of the Adjudication Rules, copies of this order are sent to the Noticee and also to SEBI.