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Issues Involved:
1. Whether the announcement regarding the export order was deliberately made to mislead investors. 2. Whether the price of the scrip increased solely due to the announcement regarding the export order. 3. Whether the company promptly informed the public about the non-materialization of the export order. 4. Whether the promoters violated regulations by selling their shares after the announcement. Summary: Issue 1: Misleading Announcement The precise charge against the appellants was making a false/misleading corporate announcement about an export order, leading to an increase in the price and volumes of the scrip of M/s. Vijay Textiles Limited. The adjudicating officer concluded that the appellants falsely informed the BSE about the receipt of the export order, which was just an intent to purchase and not an actual order, thus violating Regulations 4(1), 4(2)(e), and (r) of the Securities and Exchange Board of India (Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations 2003. However, the Tribunal found that the announcement was not misleading and that the company treated the letter of intent as an order based on subsequent communications with Simran Enterprises. Issue 2: Price Increase Due to Announcement The adjudicating officer concluded that the price of the scrip increased due to the misleading announcement, and the promoters sold their shares making huge profits. The Tribunal disagreed, stating that the price increase could not be attributed solely to the export order announcement. The company had made several other price-sensitive announcements around the same time, including financial performance improvements, dividend declarations, and bonus issues, which were primarily responsible for the price increase. Issue 3: Public Information on Non-Materialization The Board argued that the company did not promptly inform the public about the non-materialization of the export order. The Tribunal found that the company had informed the public through BSE and a newspaper announcement, and it was reasonable for the company to wait before concluding that the order had not been finalized. The Tribunal held that the announcement was made in a manner that prominently brought the information to the public's notice. Issue 4: Promoters' Share Sales The Board contended that the promoters sold a substantial part of their holdings when the price went up, violating the Regulations. The Tribunal found no fault with the sales, noting that the promoters had been selling their stocks before and after the public announcements regarding the export order. The Tribunal held that the price increase was due to other corporate announcements and not the export order announcement. Conclusion: The appeals were allowed, and the impugned orders were set aside. The Tribunal concluded that the company did not deliberately make a misleading announcement and that the price increase was due to other corporate announcements. The Tribunal also found that the company had informed the public about the non-materialization of the export order in a reasonable manner and that the promoters' share sales were not in violation of the Regulations.
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