Sebi, in its investigation report on allegations of insider trading on TFL, found prima facie violations committed by Dilip S Pendse and his relatives, associates and friends.
TFL had filed a complaint with Sebi alleging irregularities and violations committed by Mr Pendse relating to disclosures in the Letter of Offer dated March 30, 2001, for the rights issue of nine per cent cumulative convertible preferential shares of TFL and alleged insider trading. TFL made allegations in respect to breach of prudential norms and unlawful payment of dividend cheating, circular transactions, cheating, criminal breach of trust and falsification of accounts, mis-statements in an offer document and the resultant exposure under securities laws.
The TFL reply to the application of Economic Offences Wing (EOW) of the Mumbai Police for closure of the case is expected to raise the issue as to why facts regarding the falsification of accounts at TFL were suppressed from the board and public at large.
TFL is challenging the EOW report which did not find evidence against Mr Pendse.
TFLs reply is expected to reiterate the fact that TFL incurred a wrongful loss of Rs 453 crore in the issue of inter-corporate deposits (ICDs) which were sanctioned by Mr Pendse in favour of TFL subsidiary Niskalp in September-December 2000.
According to TFL legal counsel PR Vakil, the undisputed fact is that not a single rupee has been returned to the company by Niskalp, and there was breach of the contract committed dishonestly, causing wrongful loss to TFL.
The only question that remains is whether it was a criminal breach of contract, or a civil, he added.
Mr Vakil said that while at this stage when the matter is pending decision in the criminal court, it will not be proper for him to say anything, lest it is interpreted to mean that he tried to influence the courts decision. The matter is coming up for hearing in the 19th Metropolitan Magistrate Court in Mumbai on October 23.
TFL is said to have adopted the view that all individuals connected with the mismanagement that led to the TFL fiasco, be taken up.
In connection with the contract notes and transactions in September 2000, TFL had stated in its FIR filed in October 2001 to the Joint Commissioner of Police, Crimes: The distinguishing feature is that the contract note and bills represent that the transactions were done during the settlement period from 1st September, 2000, to 15th September, 2000, and from 9th September, 2000 to 16th September, 2000, when in fact all the said shares were purchased in 31st March, 2001. It is also evident that why the dates of 15th and 16th September, 2000, were chosen for making these documents. In September, 2000, the market price of this scrip was about Rs 91 per share, the rate at which payment has been made for the purchase of the shares on 30th and 31st March, 2001. It is there clear that false ante-dated contract note and bills were made by both brokers and used by them with intent to support their claim for payment at the excessive rate and thereby they caused wrongful loss to IECIL (India Emerging Companies Investments Ltd).
TFL had also filed a civil case against Mr Pendse and others, seeking damages of Rs 424.5 crore. Prime defendant in the civil suit against 25 individuals and organisations, Mr Pendse has already filed his affidavit, giving his side of the story to the courts.