Bigger than Sahara: PACL booked by Sebi in Rs50,000-cr 'chit' scam
23 August 2014
In a crackdown on money-pooling schemes that dwarfs the Sahara case, the Securities & Exchange Board of India on Friday ordered immediate closure of unauthorised collective investment schemes run by Jaipur-based real estate developer Pearl Agrotech Corp Ltd (PACL).
It further ordered PACL to refund investors' money (estimated at Rs50,000 crore) within three months.
The capital market regulator said it is initiating further proceedings against the company and its nine promoters and directors for fraudulent and unfair trade practices, as also for violation of Sebi's collective investment schemes (CIS) Regulations, among others, as per a direction from the Supreme Court of India.
In a 92-page order, Sebi says the total amount mobilised by the company, "by its own admission", comes to Rs49,100 crore; and "this figure could have been even more if PACL would have provided the details of the funds mobilized during the period of 1 April 2012 to 25 February 2013".
The number of customers through which the money could have been collected is estimated at around 5.85 crore, which includes the customers who are said to have been allotted land and who are yet to be allotted the land, Sebi.
This is the biggest ever amount, as also the largest number of investors, so far involved in a case found to be an unauthorised 'collective investment scheme' under Sebi regulations.
Among others, PACL and its top executives, including Nirmal Singh Bhangoo, are being probed by the Central Bureau of Investigation (CBI) as well.
This is one of the longest-running cases under the SEBI scanner, which had first intimated PACL more than 16 years ago way back in February 1998, that it could "neither launch any new schemes nor continue raising funds under its existing schemes."
While the company maintained that it was not running any illicit scheme and was in fact engaged in the business of sale and purchase of land, SEBI issued a notice in November 1999 to PACL saying that it was ''operating CIS wherein the funds of the investors were pooled and utilized towards the cost of land, registration expenses, developmental charges and other incidental expenses".
The case went to courts, and the Supreme Court passed an order in February last year directing SEBI to determine whether the business of PACL fell within the purview of CIS or not and accordingly take further action in accordance with the law.