Supreme Court panel to sell Pearl assets to refund investors

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Updated: February 3, 2016 1:37:58 AM

The Supreme Court on Tuesday appointed a committee under former chief justice R M Lodha to sell assets of PACL and refund R49,000 crore to the public who had invested in the firm’s collective investment scheme (CIS) that was deemed illegal by the Securities and Exchange Board of India (Sebi).

pacl, pacl ltd, pacl latest news, pacl ltd latest news, pacl vs sebi, Securities Appellate Tribunal, Securities and Exchange Board of India, SEBI, SAT, newsThe market regulator Sebi on December 11 had initiated recovery proceedings against PACL and its promoters and directors for their failure to refund Rs 49,100 crore to investors.

The Supreme Court on Tuesday appointed a committee under former chief justice R M Lodha to sell assets of PACL and refund R49,000 crore to the public who had invested in the firm’s collective investment scheme (CIS) that was deemed illegal by the Securities and Exchange Board of India (Sebi).

As PACL was showing no signs of repaying its investors, a bench headed by justice Anil R Dave, while appointing the committee, ordered the CBI to hand over all documents including title deeds of PACL properties to Sebi, which will take appropriate steps to ensure the sale of land for the purpose of refunding money to 5.85 crore investors. It also directed the panel to decide on the modalities of sale, but hinted it would be via auction.

The court also restrained the company from collecting any more money and said no court can entertain any plea with regard to the sale proceedings. The next date of hearing is August 2.

The money was allegedly collected by the Nirmal Singh Bhangoo-managed group through two companies — PACL and Pearls Golden Forest — in a Ponzi scheme under the garb of sale and development of agricultural land. The Pearls Group chairman-cum-managing and its three other directors were arrested on January 8, after two years of a CBI probe ordered by the Supreme Court, in connection with the alleged swindling of R45,000 crore.

Last month, another apex court bench reconstituted the special committee under the chairmanship of justice Vikramjit Sen to probe PGF, another company of the Pearl Group, and also cleared the decks for the sale of more than 10,000 properties of the group’s companies. These investors are spread across states like Punjab, Haryana, Rajasthan and Delhi.

The market regulator Sebi on December 11 had initiated recovery proceedings against PACL and its promoters and directors for their failure to refund Rs 49,100 crore to investors.

Sebi had alleged that the company was trying to delay implementation of its orders that directed the company to wind up its CIS and to refund the money. The purpose of regulating the entities running CIS is to protect the interest of gullible investors therein who have lost/likely to lose their life savings by the misdeeds of unscrupulous elements and fly-by-night operators, senior counsel Arvind Datar, appearing for Sebi, argued.

Sebi on August 22, 2014, had asked PACL to wind up its schemes and refund the money collected from investors as the CIS run by it was in violation of the Sebi Collective Investment Scheme Regulations, 1999. This was challenged by the company before the Securities Appellate Tribunal, which on August 12 last year upheld the Sebi order.

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