PACL's Bhangoo approaches SAT against Sebi's recovery order

Facing heat from multiple agencies in the country's biggest illegal fund-mobilisation case involving nearly Rs 60,000 crore, PACL's Nirmal Singh Bhangoo today approached Securities Appellate Tribunal (SAT) against Sebi's recovery proceedings to collect funds due to investors.
As the Tribunal is in vacation and its Presiding Officer is on leave, the plea was taken by a single member, who listed the matter for hearing on Friday, January 1, and asked Sebi to reply by that day.
SAT would continue to remain in vacation till that day and the case is again likely to be heard by the single member.
Earlier on Monday, PACL also filed a writ petition before Delhi High Court seeking a stay on Sebi's recovery proceedings which the regulator initiated earlier this month against PACL, Bhangoo and others to recover funds totalling more than Rs 60,000 crore that they were asked to refund to investors.

While PACL is being probed by multiple agencies including CBI and ED, Sebi found it to have collected money from crores of investors through unauthorised collective investment schemes in the name of real estate projects. It is also said to have been involved in agriculture land related schemes.
However, the court has not granted any stay and the matter is likely to be heard further next month.

Interestingly, SAT has previously rejected a plea by PACL against Sebi's earlier refund order asking the company and its promoters and directors to refund Rs 49,100 crore along with applicable returns and interest to the investors.

The company had also approached Supreme Court, which has not granted any stay on the matter. After hearing another plea earlier in 2013, the apex court had directed Sebi to probe the matter involving PACL's fund-collection schemes and take appropriate actions.
An earlier plea by Bhangoo, who is considered to be one of the main promoters of PACL group, which includes companies like including Pearls Agrotech Corporation Limited and Pearls Golden Forest Limited (PGFL), is already pending before SAT.
Earlier this month, the government said that instructions have also been issued to Registrar of Companies to file prosecutions against PACL for non-compliance of provisions of the Companies Act and accounting standards.

Replying to a question in Rajya Sabha, Minister of State for Finance Jayant Sinha had said that the government had received various complaints with regard to collection of deposits by PACL India alleging non-payment of amounts advanced to the company for purchase of land, money laundering and non-settlement of accounts in respect to transfer of land.
This month itself, capital markets regulator Sebi ordered attachment of all bank and demat accounts of PACL Ltd and its nine promoters and directors for failure to refund more than Rs 60,000 crore due to investors.
PACL had raised Rs 49,100 crore from nearly 5 crore investors that it needs to refund along with promised returns, interest payout and other charges, which take the total amount due to more than Rs 55,000 crore, as per Sebi's order.

Besides, PACL has another group firm PGFL which has "illegally mobilised more than Rs 5,000 crore and failed to refund the same in spite of directions of Sebi and SAT", the regulator had said while initiating the recovery proceedings.
Sebi had asked them to refund the money in an order dated
August 22, 2014. The defaulters were directed to wind up the schemes, and refund money to the investors within a period of three months from the date of the order.
Sebi also filed criminal complaints before Tis Hazari Court on November 17, 2015 against the company and its directors. The mobilisation of funds by PACL Ltd traces back to 1990s.

Upon receipt of a complaint, Sebi had first issued letters in November-December 1999 to PACL, advising it to comply with the provisions of the Sebi's CIS Regulations dealing with Collective Investment Schemes.
PACL challenged the letters before the High Court of Rajasthan, claiming that its scheme does not fall under the definition of CIS. PACL had also challenged the constitutional validity of the CIS Regulations.
The Court in its order dated November 28, 2003, held that PACL's schemes were not CIS as defined under Sebi rules and quashed Sebi's directive to PACL.
However, Sebi appealed before the Supreme Court, which in an order dated February 26, 2013 upheld the constitutional validity of CIS Regulations, and directed Sebi to investigate the matter and take appropriate actions.

After conducting further inquiry, Sebi passed the order dated August 22, 2014, wherein, inter-alia, PACL Limited, its promoters and directors were directed to wind up all the existing CIS of PACL Limited and refund the monies returns which are due to its investors.
PACL had again approached the Securities Appellate Tribunal (SAT) against Sebi's order of August last year. The Tribunal however dismissed the appeal on August 12 this year and directed the defaulters to refund the money within a period of three months.
In its recovery order, Sebi had said, "In spite of the directions, PACL has not taken any steps to refund money to the investors. Therefore, the defaulters are likely to conceal, remove or dispose of the whole or any part of movable assets namely money in the banks, securities in demat accounts, mutual fund investments and etc, which are liable to be attached in the proceedings.

"Consequently recovery proceedings may be delayed or obstructed by the defaulters."
The regulator also said there are a number of news reports that the investors across the country are raising voice against the defaulters for their failure to refund money, while "lot of complaints were received from general public regarding non-payment/non-refund by PACL".
"There is a lot of hue and cry as number of investors are around 5 crores," Sebi said while adding that "in order to protect the assets from any sort of alienation, it is necessary to attach the bank, demat and mutual fund accounts to prevent the defaulters from removing/concealing the same".