Statememts of facts

1.Mars Air Comditioners Limited (hereinafter referred as the company) is incorporated with the
object of manufacturing ACs and refrigerating units having its registered office at Pune and its
manufacturing unit is situated at Visakhapatnam.

2.The company is listed on the Bombay Stock Exchange (hereinafter referred to as BSE) had a
market share of 35-40 percent in India during 2006-2014 and also had a market share of 5
percent in ASEAN countries.

3.In 2010, the company’s Research and Developing wing (hereinafter referred to as R & D
Wing) developed a software to be installed in ACs in order to reduce the power consumption
and to enhance the performance of the ACs. However, the software helped the company to
indicate a lower emission of HFCs( hereinafter referred to hydrofluorocarbons). All the related
documents of the company were submitted to the registrar of companies , Stock Exchanges and
the Securities Exchange Board of India ( hereinafter referred to as SEBI)

4.NAJAAN Watch, an NGO registered in Visakhapatnam, Andhra Pradesh (hereinafter referred

to as NAJAAN) submitted a detailed report elaborating HFCs’ effect on the eco system to the
Ministry of Environment, Forest and Climate Change, Ministry of Science and Technology,
Ministry of Health and Family Welfare, and Ministry of Corporate Affairs and in this report
highlighted the company as one of the major violaters of HFCs emission.

5.The Government of India ordered an investigation against the company. The Central Pollution
Control (hereinafter referred to as CPCB) inspected the manufacturing unit the R & D Wing of
the company and submitted report to Government of India revealed that the company had
interfered with the software , indicating a lesser level of emissions of HFCs and also revealed
that the ACs manufactured by the company were causing emission level at 780 and 800 million
tons of carbon dioxide, equivalent from its different models.

6.Once the CPCB report was published, Mr. Rakesh and Mr. Sukumar, the Directors of the
company and Ms. Sumana , an independent director of the company , expressed their pain and
hence, resigned from the Board.

7. On 25th February, 2018, the Government of Andhra Pradesh prosecuted the company for
manufacturing, testing, distributing and selling the affected ACs. The Central Bureau of
Investigation (hereinafter referred as CBI) held an inquiry against the company and charged the
company for violation of various statutory provisions and also charged the company with acts
of frauds against its customer and for engaging in unfair practices, and sought conviction under
the Companies Act, 2013, Indian Penal Code, 1860 and various other statutes.

8. On 25th December, 2017, the Ministry of Corporate Affairs had ordered an investigation by
the Serious Fraud Investigation Office (hereinafter referred to as SFIO). The Director of SFIO
conducted an investigation and submitted a report and prosecuted the company before the
Designated Court of Maharashtra and charged the Company and the officers under Sections
447, 448, 449, and 451 of the Act read with the provisions of the Indian Penal Code, 1860
(hereinafter referred to as IPC).

9. On 14th March, 2018 Eight Institutional Investors filed a petition against the company before
SEBI for claiming damages of Rs. 600 crores and sought criminal action against the
Management and Key Managerial Personnel and prayed for appointment of an administrater.

10. NAJAAN filed petition before the Supreme Court against SEBI and other investigating agency
for inactions against such serious frauds and prayed for an order to set up a Special
Investigation Team (hereinafter referred to as SIT ) to work under court supervision for all the
fraudulent activities and to hold the company and its officers liable under various provisions of
the Companies Act 2013, the Securities Exchange Board of India Act, 1992 and the Securities
Contract Regulation Act, 1956. It also filed complaint before State Commission, Andhra Pradesh
under the Consumer Protection Act, 1986 representing all the consumers against the company
for fraudulent concealment, false advertisement and violation of various customers rights, and
for an order of reimburse its customers 25 percent of the price for each unit.

11. In reply to allegations , the company contends that they have lack of knowledge regarding
software and pleaded hat emissions were minimal and they haven’t violated the international
standards . The company also filed an affidavit before the court and deposing that it never
authorized the Management to conduct such an act and the officers have concealed such facts
and discharged Mr. Rakesh, Mr. Sukumar and Ms. Sumana from liability.

12. In December 2017, the company recalled the defective ACs and prayed that they owed no
financial liability towards their customers. It also contends that petition is without merit as its
Management Board has duly fulfilled its disclosure obligation under the Securities Laws.

13. On June 19th 2019, The designated Court of Maharashtra passed an injunction order
preventing further manufacturing of ACs and ordered the company for reimbursement of 25
percent of the price of the affected ACs to the consumers within a period of 3 months. It also
held that the company shall not participate and promote its product in any advertising
company and prohibited company to sponsor any events organized in India.
14. It had convicted all the officers of the company and gave them 5 years of imprisonment. The
Chief Executive Officer, the Management and Board Members were held liable for a fine of Rs.
five lakhs including Mr. Rakesh and Mr. Sukumar and also convicted Ms. Sumana for
imprisonment of one year with a fine of Rs. two lakhs.

15.The company and the officers appealed to the High Court of Bombay, Mumbai against their
conviction but their appeal got rejected and confirmed the Designated Court’s order.

16. On May 23rd, 2018, the CBI judge convicted the CEO and the Key ,Managerial Personnel
under Sections 278, 417 and 427 of IPC for one year simple imprisonment an fine of Rs. Five
lakhs and convicted Mr. Rakesh, Mr. Sukumar and Ms. Sumana with a fine of Rs. two lakhs
each but discharge the company from liability. The conviction was appealed before the High
Court of Andhra Pradesh. CBI also appealed for the conviction of company.

17. SEBI has ordered de-listing of the company from BSE and NSE and also ordered the
company to pay Rs, five hundred crore to the investors and further passed an interim order to
deposit two hundred and fifty crores within fifteen days.

18. The company, the CEO, the officers of the company and the Directors including Mr. Rakesh,
Mr. Sukumar and Ms. Sumana, have filed an appeal before the Supreme Court and all the
appeals are heard together for disposal.