SC directs PGFL to obey Sebi orders, return investors' cash

The Supreme Court today directed Chandigarh-based PGF Ltd (PGFL), a limited company banned by Sebi for implementing investment schemes without its approval, to return investors' money in accordance with the market regulator's orders.

A Bench headed by Chief Justice S H Kapadia said that PGFL would have to return the money to all its investors, as prescribed under Regulation 73 of Sebi's guidelines for existing collective investment schemes.

"You first file the financial memo and comply with Regulation 73 of the Sebi," the court said, giving 12 weeks' time to the company.

During the proceedings, Attorney General Goolam Vahanvati -- appearing for Sebi -- said that the company had not paid the money.

"They are only showing some payment to some people... Let the matter go back to Securities Appellate Tribunal (SAT) and let them decide on it," the Attorney General said.

However, the court disagreed and said, "We want to see that you have paid to each and every investor that has put money in your firm, then only we would go ahead."

The court's direction came during the hearing of a petition filed by PGFL, which had challenged SAT orders upholding Sebi's ban on it.

Sebi had banned the firm in 2002 after finding that it was running investment schemes without fulfilling the mandatory requirement of getting registered with it. The regulator had then directed that the money be returned to the investors.

In 2008, Sebi found that money was not allegedly paid by the firm. Following this, the market regulator banned PGFL and its directors from accessing the stock market for 10 years.

It also stopped PGFL's second investment scheme, based on the sale, purchase and development of agricultural land.