Since PACL and its promoters-directors failed to refund money
to investors as per the directions of SEBI and SAT, the market regulator
said it has initiated the recovery proceedings
Market regulator SEBI said as part of its recovery proceedings, it has
attached all bank and demat accounts, mutual fund portfolios of
PACL Ltd
and it eight directors and promoters with immediate effect.
In a release, SEBI said, the recovery proceedings have been initiated
for their failure to comply with its order issued on 22 August 2014
directing, PACL and its directors and promoters to wind up the schemes,
and refund Rs49,100 crore to the investors within three months from the
date of the order. This amount is excluding further interest and all
costs, charges and expenses incurred in the recovery proceedings.
Besides PACL, its promoters and directors against whom SEBI has
initiated the proceedings, are Tarlochan Singh, Sukhdev Singh, Gurmeet
Singh, Subrata Bhattacharya, Nirmal Singh Bhangoo, Tyger Joginder,
Gurnam Singh, Anand Gurwant Singh and Uppal Devinder Kumar.
The mobilisation of funds by PACL traces back prior to 1997. Upon
receipt of a complaint, SEBI on 30 November 1999 and 10 December 1999
issued letters asking PACL to comply with the provisions of the
collective investment scheme (CIS) Regulations.
PACL challenged these letters before the High Court of Rajasthan in
December 1999, claiming that its scheme does not fall under the
definition of CIS as defined under the CIS Regulation and SEBI Act. PACL
also challenged the constitutional validity of the CIS Regulations.
The Rajasthan High Court on 28 November 2003, held that PACL's schemes
were not CIS as defined under Section 11AA of the SEBI Act. The HC also
quashed SEBI's letters issued to PACL.
SEBI filed an appeal before the Supreme Court against the order of
Rajasthan HC. The SC on 25 February 2013, while allowing the appeal
upheld the constitutional validity of CIS Regulations, and directed SEBI
to investigate the matter and take appropriate actions.
After conducting inquiry, SEBI on 22 August 2014, issued an order
directing PACL, its promoters and directors to wind up all the existing
CIS and refund the monies collected by the company to investors as per
the terms of offer within a period of three months from the date of the
Order.
PACL filed an appeal before the Securities Appellate Tribunal (SAT),
which was dismissed on 12 August 2015. The SAT directed PACL and its
promoters-directors to refund the money within three months. Since the
company and its promoters-directors failed to refund the money to the
investors as per the directions of SEBI and SAT, the market regulator
said it has initiated the recovery proceedings.