The Securities and Exchange Board of India (SEBI) has directed Green Ray International Limited (GRIL), allegedly involved in multi-crore chit-fund scam, to stop collecting money from investors and launch or carry out any scheme which has been identified as a collective investment scheme as per its guidelines.
In its February 3 order, the apex regulating body for the securities market in the country has asked GRIL managing director Mir Shahiruddin, directors Mir Tahiruddin, Ayub Saha and Khalik Saha to wind up existing collective investment schemes and refund the money collected by the company under the schemes with returns which are due to its investors as per the terms of offer within three months.
The order came in the wake of an inquiry conducted by SEBI following a series of investigating reports on fraudulent activities of GRIL in this paper to ascertain whether the schemes floated by the company were actually CISs.
The company has also been ordered to submit a winding up and repayment report to SEBI in accordance with the SEBI Collective Investment Schemes (CISs) Regulations, 1999.
On default, SEBI has warned to initiate prosecution proceedings under Section 24 and adjudication proceedings under Chapter-VI of the SEBI Act, 1992 against GRIL and its directors.
“The State Government or local police will be asked to register a civil/criminal case against the company, its directors, managers/persons in-charge of the business and its schemes for offences of fraud, cheating, criminal breach of trust and misappropriation of public funds. SEBI would also make a reference to the Ministry of Corporate Affairs to initiate the process of winding up the company,” the order stated.
Meanwhile, the company and its promoters have been restrained from accessing the securities market and prohibited from buying, selling or dealing in securities market till all the collective investment schemes are wound up and money mobilised through the schemes are refunded to its investors with returns.
It was alleged that the company through its six schemes - Real Gold Plan, Ever Green Plan, Marriage Plan, Tycoon Plan, Happy Nation Plan and Green Line Plan - was engaged in fund mobilising activity from the public by floating, sponsoring or launching CISs without obtaining a certificate of registration from SEBI for operating CISs.
Even as the company claimed that it did not take deposits and carried on the business of sale and purchase of gold/silver coins through its various plans which are only for reference purposes of its employees, the SEBI observed that the company did not at all provide coins to the customers physically.
“All that the company appears to do is to make entries in its books for having sold and purchased back the gold/silver coins. The company collects money in a manner which is akin to a bank recurring deposit. Therefore, it appears to be a money mobilising activity by the company in the guise of sale/purchase of gold/silver coins. It has mobilised money from public under its plans which are in the nature of CISs in contravention of the statutory provisions of SEBI,” the order read.
Although citing the balance sheet as on March 31, 2011, the company stated that its total current asset was `45 crore which included loans, advances and deposits to the tune of `23.8 crore and inventories (gold and silver coins) worth `9 crore, the State Crime Branch estimated that the fund mobilisation by GRIL till 2013 would be not less than `700 crore.
The company through an affidavit had also informed the High Court that it had collected nearly `225 crore from 1,25,350 credit customers across the State in 2011-12.
GRIL has 41 branches in the State and 67 branches in 13 other States besides its international branch in Bar Dubai.