According to investigation by the enforcement and surveillance department of Sebi, the subscription was arranged with the understanding that the applications will be withdrawn before allotment.

The investigation has established that the public issue of YFL was subscribed only to the extent of 6.5 per cent of the total public issue of Rs 6 crore. YFL had arranged the balance subscription of 93 per cent after the closure of the issue from the financier, in order to meet the minimum subscription requirements.

The applications for 93per cent of the public offer (which have been arranged by the financier) were withdrawn before allotment, which was duly accepted by the issuer company. The probe concludes that if these applications (93 per cent) were received after the closure of the issue and were withdrawn before the allotment are not taken into account, then the issue failed to get the minimum subscription of 90 per cent.

Sebi has reached this conclusion after considering the facts on record, reply given by YFL and submissions made during personal hearing. The investigations also revealed that the promoters of the company had concealed that the issue had failed get 90 per cent subscription from Sebi, stock exchanges and general public. ``The promoters, thereby, committed a fraud under the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995,'' said Sebi.

On completion of investigations, a show cause notice was issued to the managing director of YFL calling upon him to show causeas to why directions U/S 11 B of Sebi Act, to refund the subscription amount collected in the public issue, should not be issued.

Surat-based Yogiware Fabrics Ltd had tapped the public with its maiden equity issue of 60.49 lakh shares of Rs 10 each for cash at par in March 1996.