BEFORE THE ADJUDICATING OFFICER

SECURITIES AND EXCHANGE BOARD OF INDIA

(ADJUDICATION ORDER NO: AO/SBM-ASR/EAD-3/26/2016)
________________________________________________________________
UNDER SECTION 15- I OF THE SECURITIES AND EXCHANGE BOARD OF
INDIA ACT, 1992 READ WITH RULE 5 OF THE SECURITIES AND EXCHANGE
BOARD OF INDIA (PROCEDURE FOR HOLDING INQUIRY AND IMPOSING
PENALTIES BY ADJUDICATING OFFICER) RULES, 1995.
In respect of:
Datar Switchgear Limited
Datar Apartment
Vakilwadi,
Nasik - 422010
_________________________________________________________________

FACTS OF THE CASE

1. Securities and Exchange Board of India (hereinafter referred to as SEBI)

observed that Datar Switchgear Limited (hereinafter referred to as the Noticee /
the Company), which was listed on the Bombay Stock Exchange (hereinafter
referred to as BSE) had failed to redress one investor complaint pending
against it, failed to submit the Action Taken Report pertaining to the complaint (
hereinafter referred to as ATR) and also failed to furnish the Authentication
details for implementation of the SEBI Complaints Redress System (hereinafter
referred to as SCORES). Vide letters dated January 11, 2013 and February 15,
2013, SEBI had advised the Noticee to furnish the Authentication details for
implementation of SCORES and to take appropriate steps to redress the
pending complaint and to submit the ATR in this regard. However, it is alleged
that the Noticee had failed to redress the pending complaint and also failed to
submit the Authentication details for implementation of SCORES. Therefore,
adjudication proceedings were initiated against the Noticee under the provisions
of Sections 15 A (a) and 15 C of the SEBI Act, 1992 (hereinafter referred to as
SEBI Act) for its failure to redress the complaint, failure to submit the ATR and
also the failure on the Noticees part to furnish the Authentication details for
implementation of SCORES.

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2. As per the information submitted by the concerned department of SEBI, the

pending complaint against the Noticee was filed by Shri Bharat R. Oza
(hereinafter referred to as complainant) and the same was received by SEBI
on April 19, 2010. The nature of complaint furnished by the concerned
department was regarding non-receipt of dividend/warrants from the company.
APPOINTMENT OF ADJUDICATING OFFICER

3. Shri D. Ravikumar was appointed as Adjudicating Officer, vide Order dated April
01, 2013 under Section 15-I of the SEBI Act read with Rule 3 of SEBI
(Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Officer)
Rules, 1995 (hereinafter referred to as Adjudication Rules) to inquire into and
adjudge under the provisions of Sections 15 A (a) and 15C of the SEBI Act for
the alleged failure on the part of the Noticee to redress the pending complaint,
failure to submit the ATR and also the failure to furnish the authentication details
regarding SCORES. Subsequently, upon the transfer of Shri D Ravikumar, I
have been appointed as Adjudicating Officer in the present matter, vide Order
dated June 22, 2015.
SHOW CAUSE NOTICE, REPLY AND PERSONAL HEARING
4. Show Cause Notice ref No. A&E/EAD- 3/DRK-VVK/18872/2013 dated July 30,
2013 (hereinafter referred to as SCN) was issued to the Noticee under the
provisions of Rule 4 (1) of the Adjudication Rules, to show cause as to why an
inquiry should not be held against the Noticee and penalty, if any, should not be
imposed on the Noticee under the provisions of Sections 15A (a) and 15 C of
the SEBI Act. The SCN issued to the Noticee inter alia mentioned the following:
a. It was alleged that the Noticee had failed to respond to SEBI letter dated
January 11, 2013 seeking the authentication details for implementation of
SCORES, which would enable the Noticee to view and redress the investor
grievances received against it in SCORES. The Noticee was also advised vide
letter dated January 11, 2013 that failure on its part to redress the complaint
and furnish the information sought regarding authentication details within the
time frame specified would attract penalty and debarment from accessing
capital market.

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b. Since the Noticee had failed to take necessary steps to redress the complaint,
SEBI sent another letter dated February 15, 2013 to the Noticee with
instructions issued to the Noticee to redress the complaint pending against it
and submit the ATR for the corresponding complaint.
c. It was alleged that Noticee had failed to adhere to the instructions issued to it
vide the aforementioned letters of SEBI. It was further alleged that as on the
date of initiation of the present proceedings, one complaint was pending to be
resolved by the Noticee and no ATR was filed by the Noticee in this regard.
Thus, it was alleged that the Noticee had failed to redress the complaint
pending against it, failed to submit the ATR, failed to furnish the authentication
details for SCORES authentication and also failed to respond to the SEBI
letters dated January 11, 2013 and February 15, 2013.
d. The details of the complaint received from the complainant along with other
details were forwarded to the Noticee along with the SCN. Further, it was
alleged that the Noticee had failed to activate the SCORES authentication,
which has resulted in the non-compliance with the provisions of the SEBI
Circular No. CIR/OIAE/2/2012 dated August 13, 2012 by the Noticee.
5. The SCN which was issued to the Noticee was acknowledged by DSL
Enterprises Private Ltd (hereinafter referred to as DSL) on August 6, 2013.
Since the Noticee failed to respond to the SCN, in the interest of natural justice,
an opportunity of personal hearing was granted to the Noticee on October 28,
2013 vide letter dated October 9, 2013. In response to the letter dated October
9, 2013, a letter dated October 15, 2013 was received from DSL.

It was

mentioned by DSL that in terms of the BIFR Order dated December 5, 2006,
Noticee has been dissolved without winding up. DSL also enclosed a copy of
the BIFR Order dated December 5, 2006 in this regard. On behalf of the
Noticee, DSL in its letter dated October 15, 2013 also mentioned that since the
Noticee i.e. Datar Switchgear Ltd as an entity does not exist in view of the BIFR
order, no reply to the SCN can be given on behalf of the Noticee. DSL also
submitted another letter dated May 3, 2014 in the said matter.
6. The salient points mentioned by DSL in its letters dated October 15, 2013 and
May 3, 2014 are as under :

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a. The Noticee is no more in existence as vide order dated December 05, 2006
of BIFR; Noticee was dissolved without winding up. A copy of the aforesaid
order of BIFR was also enclosed by DSL.
b. SEBI can no longer exercise jurisdiction over the Noticee as it cannot pass an
order in respect of a non-existing entity as all causes and action pertaining to
the Noticee have been subsumed in the BIFR proceedings.
c. Further, DSL mentioned that it is not a public limited company and therefore
SEBI has no jurisdiction over DSL.
d. DSL also mentioned that the proceedings initiated against the Noticee vide the
SCN dated 30th July 2013 may be withdrawn in view of the above.
CONSIDERATION OF ISSUES AND FINDINGS:
7. I have taken into consideration the facts and circumstances of the case and the
material made available on record. I have also carefully perused the reply
submitted by DSL in response to the SCN issued to the Noticee. I find that the
present proceedings have been initiated against the Noticee for its failure to
redress the complaint of Shri Bharat Oza, failure to file ATR in respect of the
said complaint and also the failure on the part of the Noticee to furnish the
authentication details for activating the SCORES.
8. Before moving forward, it is pertinent to mention the following issues with regard
to the status of the Noticee.
a. Noticee was incorporated in the year 1984 and was engaged in the
manufacture and marketing of electrical engineering products and solutions.
The Noticee came out with an Initial Public Offer (IPO) in the year 1994 and
the company was listed on the BSE.
b. Noticee suffered from continuous financial losses and was in serious
financial crunch. The net worth of the Noticee also got eroded due to
financial sickness. The Noticee was declared as a sick company u/s 3 (1)
(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA)
in the hearing of the BIFR held on July 31, 2002. IDBI was appointed as the
Operating Agency under the rehabilitation scheme of the company.

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Subsequently, ICICI was appointed as the Operating Agency in place of

IDBI.
c. Noticees business activities had functioned under two business segments,
viz. Electrical Business and Electronic Business. As part of the rehabilitation
proposal of BIFR, it was decided that Larsen & Toubro Limited would
acquire the Electrical Business of the Noticee by way of amalgamation and
the Electronics business along with certain other items of the Noticee would
be transferred to a new entity, viz. Resulting Company by way of demerger.
d. On December 05, 2006, BIFR passed an order with respect to the Noticee.
The salient observations brought out in the BIFR Order dated December 5,
2006 are as mentioned below;
e. ..........
8.2)

The electronic business along with certain other items will be

transferred to a new company (Resulting Company) by way of
demerger.

After the demerger, the residual Datar Switch gear Ltd, comprising of
the electrical business and certain assets and liabilities will be
transferred to the Transferee company by way of amalgamation.

f. ...
9.) Reliefs & Concessions
9.11) In respect of matters pertaining to the SEBI Act, 1992 and listing
Agreements with the Stock Exchanges, to exempt the Demerged Company
(Datar Switch Gear Ltd), Resulting Company (to the extent they relate to the
De-merged Company) and the Transferee Company (to the extent they
relate to the De-merged Company) from penal/default interest, penal action,
proceedings, penalties and such other levies (as applicable ) in respect of
matters pertaining to the Demerged Companies prior to the Effective Date.
14 .xviii) On the effective date, after its merger with L&T Ltd, the de-merged
Datar Switch Gear Ltd shall stand dissolved without winding up and all
necessary steps be taken by the transferee company and resulting
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company as applicable to get its name struck off from the Registrar of
Companies maintained by the concerned Registrar of Companies and any
other Authority. Further, certified copy of the BIFRs Order sanctioning the
scheme shall be filed by the transferee company with the Registrar of
companies, Maharashtra, within one week of the receipt of the same for
necessary action, including striking off the name of the de-merged company
from Registrar of Companies.. .
9. I find from the Annual Report of Larsen & Toubro Ltd for the Financial Year
2006-07 that it contained an observation that the electrical business of Datar
Switchgear Ltd (i.e. the Noticee) was acquired by L&T by way of amalgamation,
w.e.f. April 1, 2005 (transfer date) under the scheme of Rehabilitation of Datar
Switchgear Ltd sanctioned/approved by BIFR. It was further mentioned in the
Annual Report of L & T that the amalgamation was given effect on October 3,
2006 (which was also referred as the effective date) consequent upon the
compliance with the requirements of the BIFR scheme. I also observe that in
line with the rehabilitation proposal of the Noticee, which was sanctioned by
BIFR, the electronics business of the Noticee was transferred to a newly created
company i.e. DSL Enterprises Ltd (Resulting Company) by way of demerger.
Thus, in view of the above developments arising out of the BIFR order, the
status of the Noticee as an independent legal entity ceased to exist. It is also
well settled that when two companies amalgamate and merge into one, the
transferor company loses its identity as it ceases to have its business. The
corporate status of the transferor company (i.e. the Noticee) also ceased to exist
w.e.f. the effective date of amalgamation, which has been mentioned above.
10. I observe that SEBI had issued circulars dated June 3, 2011, August 13, 2012
and April 17, 2013 regarding commencement of SCORES and had advised all
companies whose securities are listed on the stock exchanges to comply with
the provisions of the aforementioned circulars on SCORES. In view of the above
mentioned reasons, I observe that the Noticee was not in existence when the
SEBI Circulars on SCORES were issued. Therefore, the question of Noticee not
furnishing the authentication details w.r.t SCORES activation, not filing ATR etc
does not arise. Further, the complaint of Shri Bharat Oza was received by SEBI
on April 19, 2010 when the Noticee was not in existence.
11. I also observe from the complaint filed by Shri Bharat Oza that the same was
regarding non-receipt of dividend. I note from the website of BSE that the
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Noticee had last issued dividend to its shareholders in the year 1998. Further,
as already mentioned above, Noticee had suffered from continuous losses and
was declared as a sick company by the BIFR. In any case, the decision to
declare dividend or to retain the same is the prerogative of the Board of
Directors/Management of the Company. I am therefore of the view that the
grievance of Shri Oza with respect to non-receipt of dividend is without any
merit and not sustainable.
ORDER:

12. In light of the above factual position, the alleged violation of the provisions of
Sections 15 A(a) and 15C of the SEBI Act, 1992 by the Noticee could not be
established and the proceedings initiated against the Noticee vide SCN dated
July 30, 2013 is accordingly disposed of..
13. In terms of the provisions of Rule 6 of the Adjudication Rules, copies of this
order are being sent to the Larsen & Toubro Limited (Transferee company),
DSL Enterprises Ltd (Resulting

Company) and also to the Securities and

Exchange Board of India.

Place: Mumbai
Date: 10.05.2016

SURESH B. MENON
ADJUDICATING OFFICER

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