The Justice RM Lodha (retd) Committee appointed in the PACL Ltd matter has decided to allow investors or applicants with claims of up to Rs5000 to rectify deficiencies found in their applications. The Committee, however, has not given any date or more details about the rectification process. Moneylife would inform on this process when the Committee shares details. In addition, there is no word on allowing claims to be submitted by investors who could not file it by 31 July 2019.
In a release, market regulator Securities and Exchange Board of India (SEBI) says, the Justice Lodha Committee has paid refunds of up to Rs5000 to 2.77 lakh investors and applicants. This was the second refund process carried out during 8 February 2019 to 31 July 2019.
However, it says, certain applications having claim amount up to Rs5,000 could not be processed further due to one or more deficiencies. (see below)
"The (Justice Lodha) Committee, from a date to be notified shortly, will provide an opportunity to all investors or applicants with claims up to Rs5,000 to make good deficiencies as may be applicable to their claims, so as to enable their claims to be processed," the release says.
Following regulatory action, investors were asked to submit refund claims for which the cut-off date was 31 July 2019. On 26 April 2019, the Justice Lodha committee, appointed by the Supreme Court (SC), in the PACL matter had decided to extend the last date for receiving claim applications till 31 July 2019.
The Justice Lodha committee is supervising the SC-ordered process of selling PACL's assets across the country and refunding Rs49,100 crore collected from over 55 million investors.
Last year in September, the Enforcement Directorate (ED) had filed a charge-sheet against PACL and it chief Nirmal Singh Bhangoo in connection with a Ponzi scam involving over Rs49,100 crore, which was collected allegedly by two companies from millions of investors. The ED, which started the probe after lodging an first information report (FIR) in 2015 based on the Central Bureau of Investigation (CBI)'s case, had in January 2018 attached Australia-based assets of the Pearls group and Mr Bhangoo worth Rs472 crore.
Mr Bhangoo, his companies PACL and Pearls Golden Forest Ltd (PGFL), as well as several thousands of his commission agents were accused of cheating 55 million investors on the pretext of sale and development of agriculture land.
The companies made false allotments of land to investors. However, the companies never owned any land in their own name.
Mr Bhangoo and his companies promised the investors that allotment would be done on their investment between 90 and 270 days and, if not, handsome returns would be paid.
The mobilisation of funds by PACL goes 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.