The Calcutta High Court today restrained Alchemist Group from transferring money to any foreign entity without its permission and asked the business house and its Chairman K D Singh to respond to market regulator Sebi's plea for a probe into their alleged attempts to siphon off funds to a tax haven.
Passing an interim injunction, the court also restrained Alchemist Group and Singh from entering into a business contract with any foreign entity without its permission.
A division bench comprising justices Joymalyo Bagchi and R Bharadwaj directed the Group and Singh to file an affidavit with regard to the plea by the Securities and Exchange Board of India (Sebi) within four weeks and asked the capital market regulator to file its affidavit in opposition in another two weeks after that.
The matter will come up for hearing after six weeks, the court said.
Seeking directions for a thorough probe, Sebi had told the bench that Singh was allegedly trying to siphon off around USD 100 million from the money deposited by gullible investors to tax havens, including for buying strip clubs and vacation homes abroad.
Sebi's counsel Hirak Mitra submitted before the division bench that the regulator was not legally competent to conduct such a probe and sought the court's direction to competent agencies to investigate the matter.
In its application, Sebi said, "K D Singh is in the process of siphoning off around USD 100 million, earned by way of duping innocent public in the guise of fake deposit scheme, in buying companies abroad via tax havens."
The regulator said Singh was allegedly trying to siphon off the money in association with the business head of a Mumbai-based family owned group with international presence, whose name it would disclose during hearings.
Sebi alleged that Singh, through this business man, has entered into a deal with a Greek business owner whereby a new entity is being created in Cyprus and 10 million euro has been kept in an escrow account till the Greek company's ownership is transferred to Cyprus.
The regulator also alleged that Singh was in process of buying real estate in Mykonos Island of Greece to construct 'safe' vacation homes and was also acquiring pubs, restaurants and strip clubs in Athens which he is planning to combine with his vacation homes to create a 'private party' club worth 5 million euro.
The Sebi application further stated that shares of a Kolkata-based private company were recently acquired as benami from one minority shareholder and process of acquiring shares of another minority shareholder worth Rs 250 crore is on through a similar route.
"Also, in December, a benami property was sold in India and funds were received in the UAE as an operating income from a customer on fake invoices," Sebi said.
It also said around 10 entities located in various jurisdictions are being used for moving funds around through different banks.
The regulator said it has been informed of all these assets and the nature of their dealings, but "it (the regulator) is neither authorised nor legally competent to make investigation in this regard and also not competent to recover assets as it involves flow of funds abroad and assets in foreign jurisdictions, if the information is correct."
It said that the volume of assets of the company as enumerated is such that the amount if received from it could possibly satisfy the claim of a substantial portion of depositors of the Alchemist Group.
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