The Securities and Exchange Board of India has asked Pearls Agrotech Corporation Limited (PACL Limited), an organisation it found to have acted as a collective investment scheme mobilising almost Rs 50,000 crore, to refund investors and wind up operations.
This is the biggest-ever crackdown on a large-scale illicit money pooling scheme. At Rs 49,100 crore, it is twice the amount collected by the Sahara group which is said to have mobilised Rs 24,000 crore.
The refund is to take place within three months, with a winding up and repayment report to be submitted to Sebi within another 15 days, according to a 92-page order passed by Sebi Whole Time Member Prashant Saran.
The Sebi order noted that the company had mobilised Rs 44,736 crores till March 31, 2012 and another Rs 4,364.78 crore between February 26, 2013 to June 15, 2014.
“The total amount mobilised comes to a whooping 49,100 crore. This figure could have been even more if PACL would have provided the details of the funds mobilised during the period of April 01, 2012 to February 25, 2013,” it said.
In February this year, the Central Bureau of Investigation (CBI) had registered a case against the promoters of PACL and its sister firm PGF Ltd. The move was after the agency conducted an inquiry on the directions of the Supreme Court to look into allegations of collections of huge deposits form public at large. “The said inquiry resulted into criminal case against them and their associates for criminal conspiracy and cheating,” the CBI spokesperson was quoted as saying in February.
The company claimed that it was in the business of purchasing and developing land. The developed land is transferred to investors who can sell it for gains. The company is said to have paid commission of Rs 7,893.80 crores up to March 2012. It had 5.85 crore customers, or more than twice the number of 2.2 crore demat accounts in the entire country. Of these, the company was yet to allot land to 4.63 crore investors.
“It is difficult for me to believe that a person in Uttar Pradesh will purchase 100-150 yds. of agricultural land 2,000 kilometers away. The lack of maintenance of proper records/ data is a clear indication that the activities of PACL are in the nature of ponzi scheme,” it said.
The order also noted that out of a sample of 500 randomly selected customers, not a single one had received the land even after eight years.
The company operated through a network of 250 associate companies in a bid to circumvent state laws on land ownership, said the order.
“PACL Limited, its promoters and directors including Mr. Tarlochan Singh, Mr. Sukhdev Singh, Mr. Gurmeet Singh and Mr. Subrata Bhattacharya, shall wind up all the existing Collective Investment Schemes of PACL Limited and refund the monies collected by the said company under its schemes with returns which are due to its investors as per the terms of offer within a period of three months,” it said.
The company is also to submit the trail of funds claimed to be refunded, bank account statements indicating refund to the investors and receipt from the investors acknowledging such refunds.
* March 04, 1998, Sebi first writes to PACL about its schemes
* March 23, 1998, replied to the SEBI and challenged the jurisdiction of SEBI
* May 26, 1999,Delhi High Court directed SEBI to appoint auditors for ascertaining the genuineness of the transactions executed by PACL.
* February 22, 2000 Report submitted highlighting deficiencies/ discrepancies
* November 16, 2000, Delhi High Court appointed Justice K. Swamidurai to physically verify genuineness of transactions
* June 24, 2002 SEBI passes order saying PACL schemes fall under CIS
* November 28, 2003 High Court of Judicature for Rajasthan at Jaipur says PACL schemes not CIS
* February 26, 2013 Supreme Court sets aside High Court order
August 22, 2014 Sebi passes order asking company to refund Rs.49100 crore with promised returns