Pearls ponzi scheme: SC panel to oversee sale of assets and refund to investors
03 February 2016
The Supreme Court on Tuesday set up a committee under former Chief Justice of India RM Lodha to oversee the sale of assets of PACL and the process of refund of Rs49,000 crore the Pearls Group allegedly collected illegally from the public for a collective investment scheme (CIS), also known as ponzi scheme.
Group entities Pearls Agrotech Corporation Ltd (PACL) and Pearls Golden Forest Ltd (PGFL) had allegedly collected over Rs45,000 crore, from around 60 million investors, in Delhi, Punjab, Haryana, Rajasthan, Kerala and other states, on the promise of allotting agricultural land to them.
Market regulator Securities and Exchange Board of India (Sebi) had on 11 December 2015, initiated recovery proceedings against PACL and its promoters and directors for failure to refund Rs49,100 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).
A bench of Justices Anil R Dave and AK Goel also directed the Central Bureau of Investigation (CBI) that investigated the case to hand over title deeds of the companies' landed assets to the Sebi, which will take appropriate steps to ensure their sale for the purpose of refunding investors.
The bench also restrained other courts from interfering with the sale proceedings. Sebi has been asked to assist the Justice Lodha Committee with the refund process.
The orders came on a batch of petitions, including that of PACL Customers and Employees Association represented by Supreme Court advocates Vipin Nair, PB Suresh and Prithu Garg. Senior advocate Arvind Datar appeared for the Sebi, while senior advocates Anil Diwan, Kapil Sibal and Aryaman Sundaram appeared for PACL Group companies.
The CBI had recently arrested Pearls Group chief Nirmal Singh Bhangoo and his three colleagues in connection with the scam (See: Pearls Group chairman, top executives arrested).
PACL and PGFL had launched a ponzi scheme by the name of Collective Investment Schemes (CIS). However, following various complaints of fraud and serious irregularities filed by investors in Haryana, Punjab, Maharashtra, New Delhi, etc, local police, CBI and Sebi initiated investigations into the schemes of the group.