In 2011 The Economic Times had a front page report saying PACL had raised a whopping Rs20,000 crore. Who allowed it to continue raising additional funds and double the collection? It clearly requires a separate investigation

The Securities & Exchange Board of India (SEBI) last week, while asking Delhi-based PACL Ltd (formerly Pearls Agrotech Corporation), to refund Rs49,100 crore to investors within three months also barred its promoters and directors from raising any money from investors. In pure rupee terms, the amount PACL is asked to refund is more that double of what Sahara group has been asked to return to investors by the Supreme Court.

However, what is surprising in this matter is SEBI took more than 16 years to take action against PACL, which allowed the company to grow many folds. Worse, as recently as 28 June 2011, The Economic Times had reported how PACL had raised a whopping Rs20,000 crore and claimed a land banks larger than the size of Bengaluru city.

The ET report said, “While the dispute waits to be resolved by the Supreme Court, PACL has grown a 100-fold, aided by customers, who have given money to the company ostensibly to book a plot of land they can't see or choose. Deposits with PACL—the company calls them 'customer advances'-- have ballooned to Rs20,000 crore. It has used the money to buy land in various parts of the country, including barren desert land. Its land bank, PACL said in a filing with the Registrar of Companies (RoC), is 1.85 lakh acres, roughly the size of Bangalore (in comparison, large reality firm such as DLF or Unitech typically own 12,000-15,000 acres).”

At that time, Moneylife investigations had revealed that the promoters of PACL had rushed to a trustee company to create documentation and put its house in order.  It had also approached on of the most expensive Supreme Court advocates to act on its behalf. The news of a completely unknown company raising such large sums of money from very poor people, who believed they were buying small parcels of land, ought to have been sensational enough to prompt the Ministry of Corporate Affairs (MCA) to swing into action. But this was one of thousands of shady ponzi, pyramid and money collection schemes that the MCA refused to investigate, allowing people to continue to be swindled out of their savings.

In its order, the market regulator said, "The total amount mobilised (by PACL) comes to Rs49,100 crore. This figure could have been even more if PACL had provided the details of the funds mobilised during the period of 1 April 2012 to 25 February 2013."

"PACL Ltd and its directors, including Tarlochan Singh, Sukhdev Singh, Gurmeet Singh, Subrata Bhattacharya, Anand Gurwant Singh, Nirmal Singh Bhangoo, Uppal Devinder Kumar and Tyger Joginder shall immediately (on expiry of the three months period available for making refunds) be restrained from accessing the securities market and would further be prohibited from buying, selling or otherwise dealing in securities market till all the collective investment schemes of PACL Ltd are wound up and all the monies mobilised through such schemes are refunded to its investors with returns which are due to them," SEBI said.

SEBI also said it would make a reference to the state government and local police to register a civil/criminal case against the company and its promoters, directors as well as managers and persons-in-charge of its business and schemes.

In addition, the market regulator said it would make a reference to the Ministry of Corporate Affairs (MCA) to wind up PACL and also start attachment and recovery proceedings.
According to SEBI, PACL had 4.63 crore customers as of 31 March 2014, who have not been allotted land. The outstanding dues to such customers as on 31 March 2014 is Rs29,420.65 crore and the value of total lands in the form of 'stock-in trade' as on March 2014 is Rs11,706.96 crore.

PACL said it will approach the Securities Appellate Tribunal (SAT) to challenge SEBI's order.
On 25 January 2010, the Times of India has reported about PACL's land buying. "Why is a little known agricultural land development company buying thousands of acres of desert land in a highly sensitive border district where nothing grows and no one lives? The question itself is enough to give a headache to security experts. But what complicates matters further is that the company has gradually accumulated 20,311 bighas (about 10,000 acres) of land near the India-Pakistan border in Rajasthan's Barmer district--not in a single transaction but in 681 separate purchase deals which started in 2002 and 2003," the reports says. The company was none other than PACL.

"What is intriguing is that although PACL claims that its basic operations are concerned agricultural activities, the nearly 400 sq km of land that it has bought is entirely in the Thar desert," the newspaper reported in another article.

However, there was no action either from any regulator or the government.

Earlier, on 24 June 2002, SEBI held that the schemes floated by PACL were in the nature of collective investment scheme (CIS) and directed the company to comply with the provisions of SEBI (CIS) Regulations. However, PACL challenged SEBI's order before the Rajasthan High Court, which ruled that PACL's schemes did not fall within the definition of CIS.

Even before that in March 1998, SEBI had asked PACL to stop collecting money under its schemes. Pearl Agrotech, at that time had two units, one PGF operating from Punjab and PACL from Rajasthan. While the Rajasthan High Court ruled in the company's favour, it was not so luck in Punjab and had to wind up its schemes in that state.

SEBI challenged the High Court order in the Supreme Court. The apex court asked SEBI to take a final decision in the matter. SEBI then issued an order asking PACL to refund money to its investors.