MUMBAI: Securities Appellate Tribunal (SAT) on Monday upheld an order by market regulator Sebi against Jaipur-based real estate major PACL Ltd and directed it to refund Rs 49,100 crore that the company had collected through what the tribunal termed as 'sham collective investment scheme (CIS)'. This was the largest CIS in the country so far — in terms of money collected as well as the number of investors involved — against which Sebi had passed an order.
Exactly a year ago, Sebi had ordered PACL to wind up its illegal CIS and refund all the money it had collected from investors within three months. Subsequently PACL had challenged Sebi's order in SAT.
According to the Sebi order, PACL was running a land purchase scheme, collecting money from investors by promising that the investments in the company's schemes were highly profitable. Sebi had found out that through its unauthorized CIS that was running for 15 years, PACL had collected Rs 49,100 crore from 5.85 crore investors. Of these many customers, PACL had issued sale deeds to only 19,284 investors.
The SAT order also noted that although PACL had collected Rs 49,100 crore, the total value of the lands that PACL held in the form of stock in trade was Rs 11,707 crore. The order pointed out that amount of land held by PACL was wholly disproportionate to the amount of money collected from investors. It also noted that there was nothing on record for the company to suggest that PACL had any other assets.
"In such a case, permitting PACL to operate CIS by seeking registration under CIS Regulations would have been travesty of justice. Accordingly, no fault can be found with the decision of Sebi in directing PACL to wind up all existing schemes and refund the monies collected from the investors with the return which are due to its investors," SAT noted.