EFFECTIVENESS OF SCORES

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Prerna Upadhyay , B.A.L.L.B , School of Law, Gautam Buddha University

Introduction

SCORES (SEBI Complaints Redress System) was launched by the Securities and Exchange Board of India (SEBI) via a circular dated June 3, 2011. The system aims to facilitate grievance redressal for investors against listed companies and SEBI-registered intermediaries. A master circular dated December 18, 2014, replaced earlier guidelines, mandating listed companies and intermediaries (except stock brokers, sub-brokers, and depository participants) to obtain SCORES authentication within 30 days and resolve any pending grievances.

Direct Complaint Mechanism and Limitation Period

Prior to 2018, investors frequently bypassed companies and filed complaints directly on SCORES. To streamline the process, SEBI issued a circular dated March 26, 2018, requiring investors to first approach the listed company or intermediary before using SCORES. The following conditions now apply:

Limitation Period: A complaint must be filed on SCORES within 3 years from the cause of action, provided that:
- The investor first approached the concerned listed company/intermediary.
- The complaint was rejected, not responded to, or inadequately resolved.

Failure to meet this timeline disqualifies the complaint on SCORES, though the investor may seek legal recourse elsewhere.

Procedure for Lodging Complaints on SCORES

From August 1, 2018, registration on SCORES became mandatory for lodging complaints. The process involves:

Visit SCORES Portal.
Click on “Register here” under Investor Corner.
Fill in the mandatory details:
- Name
- Address
- Email ID
- PAN
- Mobile number
Upon registration, credentials will be sent to the registered email ID.
Log in and select “Complaint Registration”.
Choose:
- Correct complaint category
- Entity name
- Nature of complaint
Write complaint (up to 1000 characters).
Option to upload supporting documents in PDF format.

A unique complaint registration number is generated and shared via SMS/email. Investors can log in anytime to track their complaint status. The system ensures transparency via an audit trail.

Procedure for Handling Complaints

A. Where complaint is not first filed with the company/intermediary:

Complaint is routed to the entity with a 30-day deadline to reply.
If no reply, complaint is escalated to Designated Stock Exchange (DSE).
If the response is unsatisfactory, investor can seek “Complaint Review” within 15 days.
If resolved or review is not filed, the complaint is closed.

B. Where complaint is first filed with the company:

Details such as event date, complaint date, and communication address must be submitted.
DSE forwards the complaint to the listed company.
Company has 30 days to respond and submit an Action Taken Report (ATR).
If not resolved, DSE issues a reminder for redressal within another 30 days.

Legal Implications and Key Case Laws

1. Penalty for Failing SCORES Authentication

In M/s Vidarbha Industries Ltd. v. SEBI, the Securities Appellate Tribunal (SAT) held that failure to obtain SCORES authentication violates SEBI directions and attracts Section 15HB of the SEBI Act, 1992. Penalty: ₹1 lakh – ₹1 crore.

Reaffirmed in Port Shipping Company Ltd. v. SEBI.

2. Reduction of Penalty

In Shikar Advisers Ltd. v. SEBI, penalty of ₹8 lakhs was reduced to ₹1 lakh due to:

Trading suspension since 2003
New management in 2016
Immediate compliance upon receiving show-cause notice in 2017

3. Pending Grievances Not a Precondition

In Rencal Chemicals India Ltd. v. SEBI, the SAT clarified that absence of pending grievances doesn’t exempt a company from obtaining SCORES authentication.

4. Failure to Respond Equals Admission

In Sanjay Kumar Tayal & Others v. SEBI, SAT ruled that not replying to a show-cause notice and failing to appear for a personal hearing amounts to admission of charges.

Conclusion

SCORES has significantly simplified investor grievance redressal in the securities market. The transition from manual complaints to a digital interface, including mobile applications, has reduced costs, improved transparency, and ensured faster resolution. It stands as a one-stop platform for resolving investor issues efficiently.