MUMBAI: In a path-breaking order against a collective investment scheme (CIS) run by PACL Ltd, the Securities and Exchange Board of India (SEBI) ordered the closing of the scheme that had collected Rs 49,100 crore over the years, and told it to refund the amount within three months.
PACL said it mainly deals in the sale and purchase of agricultural land and development of the land.
The company had earlier challenged SEBI’s jurisdiction saying its transactions are in the nature of sale and purchase of agricultural land and thus outside the purview of the securities market.
The scheme being run by PACL had mobilised about 5.85 crore customers, many of which were not allotted any land. “It turns out that the schemes and plans of PACL are nothing but a money mobilisation scheme,’’ the stock market watchdog said in its 92-page order.
SEBI is also initiating proceedings against the nine promoters of the company for frauds and unfair practices.
The capital market regulator first initiated action against the company in 1998, when PACL challenged SEBI’s authority to regulate its schemes.
According to the stock market regulator, the company has only lands worth Rs 11,706.96 crore out of which it has not only to satisfy the claim of 4.63 crore customers who have deposited Rs 29,420 crore with it but also to satisfy 1.22 crore customers to whom the land has been allotted but sale deeds have not been executed. Further, PACL has also not given the complete details of the land it claims to hold, the order said.
PACL and its directors, including Tarlochan Singh, Sukhdev Singh, Gurmeet Singh, Subrata Bhattacharya, Anand Gurwant Singh, Nirmal Singh Bhangoo, Uppal Devinder Kumar, Tyger Joginder and Gurnam Singh shall immediately be restrained from accessing the securities market and would further be prohibited from buying, selling or otherwise dealing in securities market till all CIS of PACL are wound up and all the monies mobilised through such schemes are refunded to its investors with returns which are due to them, the SEBI order said.
The promoters and directors including Tarlochan Singh, Sukhdev Singh, Gurmeet Singh and Subrata Bhattacharya, shall abstain from collecting any money from investors or launch or carry out any Collective Investment Schemes including the schemes which have been identified as a CIS in this order, SEBI said.
SEBI plans to charge PACL, its promoters, directors and its managers and persons in-charge of the business and its schemes, for offences of fraud, cheating, criminal breach of trust and misappropriation of public funds; and would recommend to the Ministry of Corporate Affairs, to initiate the process of winding up of the company.