TMI Blog2010 (5) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... is in turn led to the increase in the price of its scrip in the market and when this happened, the promoters/directors and other associated en tities off-loaded their shares thereby unduly enriching themselves. This is, in a nutshell, the case set up against the company and its promoters. It is not in dispute that the company declared its financial results for the quarters ending June 30, 2003 and September 30, 2003 and information in this regard was furnishe d to the stock exchanges on August 2, 2003 and October 6, 2003 respectively. It is also not in issue that th e financial results were not accurate and that the company had inflated its profits to the tune of 33 percent by not making any provision for tax payment. For the quarterly results ending June 2003, there was no provision fo r tax payment whereas in the unaudited results for the quarter ending September 2003 the provision made was far less than what it ought to be. Apart from inflated profits, the company had also appended some notes to the quarterly financial results by which it made corporate announcements to the public which were price sensitive in nature. This is what the company said in the notes appended to the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 12, 2003 and closed at Rs .2.19 on August 13, 2003. It is common case of the parties that one Vikramsingh J. Rajput sold 95,25,000 shares between August 6 and August 12, 2003 after acquiring 30 lac shares from Panchariya Textile Industries Limited (for short the textile comp any) in off market transactions. The whole time member has found that the text ile company is an associate of the appellant. This fact is disputed by th e learned authorised representative of the appellant. The learned counsel for the Board has placed before us copies of a number of delivery instruc tion slips by which the shares were transferred by the textile company to different persons/entiti es including Vikramsingh J. Rajput. All these delivery instruction s lips have been signed by Arun Panchariya, a promoter of the company and an appellant in App eal no. 276 of 2009. All these delivery instruction slips were signed on August 12 and August 13, 2003 and Arun Panchariya signed on behalf of the text ile company after the transaction was complete i.e. when the shares had been tr ansferred. These instruction slips have a note thereon that the transaction had been confirmed with Arun Panchariya. These deliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, therefore, satisfied that th e textile company was an associate company and, in any case, it was connected with the appellant company and the shares were admittedly off-loaded on the instructions of Arun Pancha riya. At this stage, we may take note of an order dated Novemb er 3, 2009 passed by the adjudicating officer on which reliance is sought to be placed by the appell ants and they contend that it has been found therein that the textil e company had no connection with the Panchariya group. We have gone though this order and do not find that it supports what is now sought to be argued. That was a case initiated against the textile company for non compliance of summons issued by the respondent Board and it was absolved on the ground that the summons had been served on a wrong address. It was contended before the adjudicating officer that the textile company had ch anged its name to Asian Granito on November 25, 2002 and the re gistered office had shifted to another place in October 2002 and the adjudicating officer found that the summons had been served on the earlier addre ss. There is no finding record ed in the order that the Panchariyas were not connected or had no li nk w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnouncements and manipulation in the scrip whereas another sum of ₹ 2 lacs has been imposed on Satish Panchariya (appe llant in Appeal no. 277 of 2009) for non compliance with the summons during the course of the investigations and a sum of ₹ 1 lac on Arun Panchariya (appellant in Appeal no. 276 of 2009) also for non compliance with the summons and r ecorded his reasons as under:- 43. From the material available on record, I find that the Promoter Group , as a whole, ha d a net sale of over 2 crore shares of AIL and realized proceeds over ₹ 1 crore. I also find that the promoters/their related entities/PACs/other entities have collectively sold more than 18 crore shares and realized proceeds over ₹ 12 crores. The Promoter Group also traded off market amongst one another and with CSL. CSL further traded with other major sellers/buyers in the market. Due to the manipulati on that took place in the scrip of AIL, genuine investors were attracted to trade in the shares of AIL. I am of the view that the interest of securities market and of the investors requires th at the persons who involve or engage in manipulative, unfair and fraudulent practices are not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n be seen from the notes to the financial results for the quarters endi ng June and September 2003, the company informed the shareholders and the public th at it had started exporting Terry towels and garments to Gulf countries. Again, the public was informed that the Board of Directors of the company had decided to double the installed production capacity in the next two years by the acq uisition of two units. Apart from the fact that this information was misleading, we wonder how such non accounting information could form part of the financial results which ever y listed company is requ ired to declare. It is axiomatic that notes to the financial results are an integral part thereof and, as we understand, the same are nece ssary to present a true and fair view of the financial position of the company as on that date. When we pointed out to the authorised representative of the appe llants as to how such non ac counting information could form part of the financial results, he st ated that it was a common practice among the listed companies to do so. We are not awar e of any such practice or convention. However, this is a matter which needs to be looked into by the Board as a market ..... X X X X Extracts X X X X X X X X Extracts X X X X
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