India's market regulator Sebi said it has attached the assets of PACL, its promoters and directors for failing to refund about £6 billion that the company had been raising illegally from five crore investors since 1997. PACL's illegal fund mop-up is the biggest collective investment scheme (CIS) in the country that has come under the Sebi scanner. The regulator has attached bank and demat accounts, mutual fund investments and other assets of the company and its promoters.
Sebi said it has started recovery proceedings against Chandigarh-based PACL and its promoters and directors who include Nirmal Singh Bhangoo, Tarlochan Singh, Sukhdev Singh, Gurmeet Singh, Subrata Bhattacharya, Tyger Joginder, Gurnam Singh, Anand Gurwant Singh and Uppal Devinder Kumar, after they failed to comply with its order. On August 22, Sebi had directed the company and its promoters and directors to wind up their schemes and refund money to the investors within three months from the date of the order. The order was challenged at Securities Appellate Tribunal (SAT) which upheld the regulator's decision against PACL.
According to Sebi, PACL had raised about £4.91 billion till Sebi ordered it to stop collecting money. The company needed to refund the funds raised along with promised returns, interest payout and other charges to its investors. Together the total amount comes to about £5.50 billion. In addition, a PACL subsidiary had also raised about £500 million through illegal CIS which had to be returned to investors.
The Sebi case against PACL dates back to 1999, when acting on a compliant, the regulator ordered the company to comply with its CIS regulations. Subsequently, Sebi's jurisdiction to pass such an order was challenged in the Rajasthan high court which quashed the regulator's order. Sebi moved the Supreme Court which set aside the Rajasthan high court order and agreed with the regulator's stand. Sebi passed an order to refund PACL to stop fund mobilisations under CIS and refund the money to investors with interest. The attachment of assets order came after PACL failed to comply with Sebi's orders.
