SEBI Vs. MANDU INDUSTRIES LTD
SECURITIES APPELLATE TRIBUNAL
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(1.) MANDU Industries Ltd.(herein after refer as 'MIL') having its registered office at 147-151-A, Sector F, Industrial Area, Sanwer Road, Indore - 452003 came out with a public issue of 53,62,500 equity shares of Rs.10/- each for cash at par on April 22, 1996. As per the prospectus, the company was promoted by Shri Madhusudan Jain and his uncle Shir Himmatlal Kakrecha,. Shri Madhusudan Jain was the Managing Director of MIL. Shri Basanti Lal Kakrecha was the Chairman of MIL and his uncle Mr. Madanlal Jain was the Chief Executive Officer of MIL
(2.) Pursuant to complaints received in respect of alleged price manipulation in the scrip of MIL, investigations were initiated in the scrip by the Securities and Exchange Board of India (hereinafter referred as SEBI) vide order dated January 07, 1998. The investigations revealed that Shri Basanti Lal Kakrecha was involved in creating false market in the shares of MIL.
A show cause notice was issued to Shri Basanti Lal Kakrecha, vide letter dated 30th March 2001, calling upon him as to why directions under Section 11B of SEBI Act, 1992 read with Regulation 11 and 12 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 should not be issued. The findings of investigations were communicated along with the documents relied upon by SEBI in the aforesaid show cause notice.
(3.) MR. Basanti Lal Kakrecha vide his letter dated 5/5/2001 replied to the above show cause. He has stated as follows.
1. "Mandu Industries Ltd (MIL) had advanced Short Term Intercorporate deposits amounting to Rs.85 lacs to Shreyas Securities & Finance Ltd (SSFL). These ICDs have been fully repaid by cheques and the same were accounted for before 31st December, 1995 prior to three months of the Public Issue of MIL and thus it is unfair to judge that SSFL subscribed in the Public Issue of MIL through their investors with the money of MIL. It is false that I have transacted in the script of MIL with the help of SSFL and my family members are also involved.
2. My brother MR. Madan Lal Jain left MIL before his transactions took place with SSFL. This has already been recorded in the statements of my son and MR. Madan Lal Jain. Further there had never been monetary transactions between my brother and my family.
3. It is denied that I had approached MR. Yogesh Tiwari for off loading MIL shares. In fact MR. Yogesh Tiwari approached me to purchase shares of MIL and he was directed by me to meet MR. Nuwal since MR. Nuwal had approached me for selling his shares. No deal was struck with MR. Talati and his statement is totally false. Also no money transaction had taken place and this can also be inspected from the pass books of all our family members. Had MR. Talati sold 50000 shares he must have definitely received payments and the same may well be verified with his books of accounts and bank statements.
4. My son had admitted having met MR. Talati in the office of M/s. D.S. Sancheti Securities & Financial Services Ltd (DSSSFSL). He had also admitted that some of the deliveries from the market had been taken by MR. Talati and the same were transferred in Talati's name.;
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