Bona fide corporate announcements and market manipulation findings sustained where repeated proposals were used to inflate share prices.

SAT upheld the securities market restraint after finding that repeated, unimplemented corporate announcements lacked bona fide business purpose and were used to inflate the scrip price. The preferential allotment proposal, proposed land acquisition and proposed amalgamation were not pursued with due seriousness, remained unimplemented for years, and were abandoned only belatedly. Coordinated trading and the resulting artificial price rise, together with the promoter group's share offloading, reinforced the inference of fraudulent intent. The restraint order was therefore sustained on the basis that the impugned announcements were not genuine and were made to influence the market.

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Issues: Whether the unimplemented corporate announcements were made bona fide or were intended to inflate the scrip price and facilitate offloading of shares at inflated prices.

Analysis: The securities market restraint was sustained on the basis that the preferential allotment proposal, the proposed acquisition of land and the proposed amalgamation were not pursued with due seriousness and were not implemented for years. The repeated failures to comply with preconditions, the delayed or belated abandonment of proposals, and the surrounding trading pattern supported the finding that the announcements were not genuine business proposals but were used to influence the market price. The conclusion was also reinforced by the evidence of coordinated trading and the resulting artificial price rise while the promoter group offloaded shares.

Conclusion: The finding that the impugned announcements were not bona fide and were made with fraudulent intent was upheld, and the restraint order was sustained against the appellants.

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