Sebi slaps Rs7,269-cr fine on PACL for illegally raising Rs49,100-cr funds
23 September 2015
Market regulator Securities and Exchange Board of India (Sebi) has imposed a Rs7,269.5 crore penalty on PACL Ltd and its four directors for illegal and fraudulent mobilisation of funds from the public.
The penalty, the biggest-ever, imposed by Sebi, comes after the regulator last year asked the realty firm to refund Rs49,100 crore it had collected through illicit schemes over a 15-year period.
Announcing the penalty, Sebi on Tuesday said PACL deserved "maximum penalty" for such large-scale duping of the common man.
The Securities Appellate Tribunal had also, last month, upheld the refund order after PACL filed an appeal against the Sebi order.
Sebi said the huge illegal mobilisation of money had helped PACL make a huge profit of over Rs2,423 crore in a short span of less than a year.
"Keeping in view the entire facts and circumstances of the case... there cannot be a better case than this which deserves the maximum penalty," Sebi stated in its order.
"In the recent past, the country has suffered a lot in the hands of entities who indulge in such illegal money mobilisation under various schemes, wherein hard earned money of the common man has been duped," Sebi said.
"Thus, imposition of deterrent penalty is the need of the hour," Sebi said, while adding that its Prevention of Fraudulent and Unfair Trade Practices Regulations provide for "severe to severe penalties" for dealing with such violations.
Under Sebi norms, it can impose a penalty of Rs25 crore or three times of the profit made by indulging in fraudulent and unfair trade practices and in the present case the regulator has imposed a fine equivalent to three times of the illicit gains.
Sebi said that its probe revealed that PACL and its four directors – Tarlochan Singh, Sukhdev Singh, Gurmeet Singh and Subrata Bhattacharya – had mobilised funds from the general public through illicit collective investment schemes including in the name of purchase and development of agriculture land.
PACL had launched 27 schemes on 30 May 1996, which it discontinued for some time before launching other schemes. The schemes, under which land was allotted to investors, had two payment plans - installment payment plan and cash down payment plan.
On 18 December 1997, Sebi issued a public notice directing the existing schemes to get registered with it as a collective investment scheme. With PACL not complying, Sebi, in March '98 told the company it was not eligible to launch new schemes.
PACL, formerly Pearl Agrotech Corporation, is in the business of realty and land development.