PACL which has raised Rs55,000 crores, seeks stay from Delhi HC against SEBI’s recovery order
PACL, despite its similar request pending before the Supreme Court, has approached the High Court seeking stay on SEBI's proceedings to recover the money
PACL Ltd, formerly known as Pearl Agrotech, has appealed to the Delhi High Court for a stay order against recovery proceedings initiated by market regulator Securities and Exchange Board of India’s (SEBI) against the company, says a report.
According to the report from CNBC TV18, the market regulator had maintained that since PACL's similar request is pending before the Supreme Court, there was no need for the company to approach the High Court. The next hearing of the case in Delhi HC is scheduled on 4th January, the report says. On the other hand, PACL told the HC that SEBI wants the money to be transferred to itself and the market regulator cannot act like an intermediately.
Earlier, SEBI, as part of its recovery proceedings, attached all bank and demat accounts, mutual fund portfolios of PACL and it eight directors and promoters. 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.
According to SEBI, the amount due to investors of PACL would be over Rs55,000 crore. This includes promised returns, further interest, all costs, charges and expenses incurred in respect of all the proceedings taken for recovery of Rs49,100 crore from PACL.
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 an 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.
AIPIA is also requesting investors to submit filled forms for claims at its offices. Here is the address of its Mumbai office...
All India PACL (Pearls) Investors Association
C/O Maharashtra State Bank Employees Federation,
Dadyseth House, 1st Floor, (Rear), Nanabhai Lane,
Fort, Mumbai- 400 023