The inquiries by the department revealed that the issue was subscribed mainly through applications accompanied with stock invests which were marked to `Vijaya Bank A/c G S Organics'. Out of the 2029 applications, 99.73 per cent of the applications (2014 applications) were through Power of Attorney holder, Phi-Alpha Investments.

Only 15 applications were accompanied by cash/cheques. Further investigations revealed that the company did not receive the minimum subscription as stockinvests worth Rs 2 crore comprising 99.73 per cent of the total issue were not encashed.

These stock invests were issued against funds provided by Viswapriya Financial Services & Securities for getting the issue subscribed. Under Section 69 of the Companies act, SEBI Guidelines on Disclosure and Investor Protection (June 18, 1992) and the terms and conditions of the Prospectus, the company cannot allot the shares unless it receives the minimum subscription. However, G S Organics went ahead and allotted shares to some of the investors without receiving minimum subscription.

The company could got listing only at Jaipur Stock Exchange and not at the four Stock Exchanges mentioned in the Prospectus. Madhya Pradesh Stock Exchange has refused listing to the company.

Considering the aforesaid violations of Sebi rules and guidelines, the market regulator came to the conclusion that GSOL violated the provisions of Section 69 and 73 of the Companies Act, SEBI Guidelines and the terms and conditions of theProspectus. The market regulator has, therefore, directed the issuer company under Section 11 B of the SEBI Act, to refund the subscription amount collected in the public issue, alongwith interest to all those to whom no shares have been allotted. The company has also been directed to refund the face value of the shares alongwith interest to those applicants who had been issued shares.