Pulling the plug on illegal mobilisation of funds worth more than Rs 7,000 crore, markets regulator Sebi today ordered Pancard Clubs to refund the money raised from public within three months.
Besides, the firm and its directors have been barred from the capital market for four years. Further, they have also been restrained from money from investors by launching any collective investment schemes (CIS).
The regulator found that Pancard Clubs mobilised Rs 7,035 crore from 51,55,516 investors from 2002-03 to 2013-14 through its various holiday schemes.
The latest order comes after Securities and Appellate Tribunal (SAT) in September 2014 had asked Sebi to pass a fresh order after examining all documents. The tribunal had also set aside Sebi's interim order that had barred Pancard Clubs from raising funds from public as well as launching any new scheme.
In an order passed today, Sebi said, "The present case involves a company that has mobilized public funds from gullible investors through its unregistered CIS."
The regulator directed Pancard Clubs and its directors -- Sudhir Shankar Morvekar, Shoba Ratnakar Barde, Usha Arun Tari, Manish Kalidas Gandhi, Chandrasen Ganpatrao Bhise and Ramachandran Ramakrishnan -- to wind up the existing CIS and refund the money collected by the firm under the schemes with returns which are due to its investors within three months.
Thereafter within a period of 15 days, the firm will have to submit a winding up as well repayment report to Sebi.
In addition, the company and its directors have been barred from selling any assets of the company, except for the purpose of making refunds to its investors.
In case the firm fails to comply with the order, the entities will continue to be barred from the market, even after the completion of four years of restrictions imposed on them "till all the collective investment schemes are wound up and all the money mobilized through such schemes are refunded to its investors with returns which are due to them."
Further, it would make a reference to state government/ local police and register a civil/criminal case against the company and would make a reference to Corporate Affairs Ministry to initiate the process of winding up of the firm.
SAT, in September 2014, had asked Sebi to pass a fresh order after examining all documents.
According to SAT, Pancard Clubs has been knocking on the doors of Sebi since 2001 by seeking its decision on the question as to whether the time sharing business carried on by the company is covered under CIS or not, although no formal order was issued in the year 2001.
"It is now admitted by counsel for Sebi that since the very beginning Sebi was of the opinion that time sharing business is not covered under CIS."
"In fact, in 2010, Sebi once again scrutinized the documents relating to the business carried on by the appellant and it is evident from the letter addressed by Sebi to a Member of Parliament (MP) on October 21, 2013 that even after scrutiny of documents furnished by appellant in 2010 Sebi was of the opinion that the time sharing business carried on by the appellant was not covered under CIS," SAT had said.
The Securities and Exchange Board of India (Sebi), in July 2014, had asked the company and its directors --"not to collect any fresh money from investors under its existing scheme and "not to launch any new schemes or plans or float any new companies to raise fresh money.
