SAT gives extension to Sumangal till Jan 2015

Sebi opposes as appellant has already started refunding money to the investors

The Securities Appellate Tribunal has given Sumangal Industries extension till January next year to refund all the money it had raised through an unauthorised investment scheme involving purchase and sale of potatoes.

Observing that the company has already started refunding the money to investors, SAT said "no prejudice would be caused" by giving an extension.

The tribunal has accordingly granted Sumangal time till January 31, 2015 to refund the investors.

In July last year, Securities and Exchange Board of India had directed the Kolkata-based company, its promoters and directors to wind down the schemes and refund investors' money in 3 months.

Subsequently, Sumangal had approached SAT seeking an extension of time for completing the process.

In an order dated February 3, SAT said: "Although counsel for respondent (Sebi) opposes extension of time, since appellant (Sumangal) has already started refunding money to the investors, no prejudice would be caused if appellant is granted extension of time as claimed (January 31, 2015)".

However, SAT added that "extension of time is granted, subject to appellant furnishing quarterly report as to the progress made in the winding up of CIS (Collective Investment Scheme) and refund of the amount to the investors till date and furnishing further quarterly reports from time to time till January 31, 2015".

Sebi had initiated a probe against Sumangal after it came across a newspaper advertisement in Kolkata wherein the company was soliciting funds from the public under a "Flexi Potato Purchase Scheme".

It was found that Sumangal was promising investors 20-100% return on their investments within 15 months through a scheme involving purchase and subsequent sale of potatoes.

Sebi had also restrained the firm from the securities markets till the time entire money is refunded and all its collective investment schemes are wound up.