Yatish Yadav By

NEW DELHI: A ponzi scandal, much bigger than the Saradha scam that is shaking the whole of eastern India, is waiting to explode. “The total amount mobilised comes to Rs 49,100 crore. This figure could have been even more if the company had provided the details of funds collected during April 1, 2012, to February 25, 2013—the 11 months period missing from the record,” the Sebi said.

The regulatory body said plot of land is not identified either in the application form-cum-agreement or in the registration letter which are the primary documents and PACL has designed the schemes in such a way that the customers will never ask for the possession of its plot of land from the company. As per Sebi’s Collective Investment Schemes regulations notified on October 15, 1999, “No person other than a collective investment management company which has obtained a certificate under regulations shall carry on or sponsor or launch a collective investment scheme.”

Sebi said the ponzi firm had refused to comply with its directive and a show-cause notice was issued on June 14, 2013. Subsequently on August 22, 2014, Sebi directed the PACL to wind up all existing schemes and refund the monies collected from the investors with the return which are due to its investors within three months.

Order issued by Sebi whole-time member Prashant Saran said, “Not a single applicant out of the 500 samples selected has registered a sale deed of the land he had proceeded to purchase in the first instance. This gives rise to a clear conclusion that the real estate business that the Company proclaims to carry on is a facade and sham to camouflage their activity as collective investment scheme... Sebi would make a reference to the Ministry of Corporate Affairs, to initiate the process of winding up of the company”

A Sebi official said instead of complying with the order, PACL challenged it in the SAT which in its order on August 12, 2015 upheld the market regulator’s position.

SAT in its order said the company was liable to refund the money collected in unauthorised manner within three months from August 12, 2015. It further noted that permitting PACL to operate collective investment scheme by seeking registration under CIS Regulations would have be travesty of justice.

“The period of three months expired on November 11, 2015, however they have not refunded even the monies collected forget about the promised return. In such a situation Sebi had no other option but to move to the court seeking justice for investors,” said the Sebi official.

The offence under Section 24 of Sebi Act is punishable with imprisonment for 10 years or with fine which may extend to Rs 25 crore. The regulator would also “make a reference to the state government local Police to register a civil and criminal case against PACL, its promoters, directors and its managers in-charge of the business and its schemes, for offences of fraud, cheating, criminal breach of trust and misappropriation of public funds,” said the Sebi order.