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Australian courts directs refund of money to duped Indian investors

by Raju Vernekar
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IT Correspondent
Mumbai, June 20:

The Federal court of Australia (FCA), has directed the promoters of a ponzy investment scheme-”Pearls Agrotech Corporation Limited (PACL), to immediately deposit  US $79 million (Rs 427 crore) in R. M. Lodha Committee’s account in Australia, to facilitate refund of money to over 6 crore investors across India, cheated in a Rs. 49,100 crore scam.
The committee headed by former Justice R. M. Lodha appointed by the Supreme Court of India(SCI), to sell the assets of PACL and refund the money invested by the investors has been monitoring the refund process.
The story of the ponzy scheme dates back to 1982, when Nirmal Bhangoo and his three colleagues collected over Rs. 49,100 crore from the investors, in the name of PACL, by promising them land at cheaper rate although they did not possess even an inch of land. PACL offered many money doubling schemes to the investors. They also roped in Australian cricketer Brett Lee as its brand ambassador and invested millions of dollars in Australia in 2010, through shell companies.
Now in his order dated 3 June 2020, Justice Lee of the FCA has directed the “McCullough Robertson”, a trust set up by it, to deposit the amount collected from the sale of PACL’s property in Australia, including the Hotel Sheraton Mirage at Gold Coast, Sydney,  in the bank account operated by Securities and Exchange Board of India (SEBI) in Australia, pursuant to the SCI’s order dated 2 February 2016. These directions were given while dealing with a petition (No: QUD147/2017) filed by SEBI on 17 March,2017 against the Miiresorts Group 1 Pty Ltd, a venture of Pearls Australasia Mirage 1 Pty Ltd
FAC also ruled that, out of the balance of $1,510,000 held on trust by it, the “McCullough Robertson”, be permitted to pay the sum of $10,000 to the solicitors for the intervener and the balance be retained on trust pending further order of the Court.
Going by its history, PACL after duping investors, went into red. SEBI found that till March 2012, it had mobilized public funds worth Rs. 44,736 crore. Later, between 26 February 2013 and 15 June 2014, PACL admitted to having collected an additional Rs4,364.78 crore from estimated four million customers. 
SEBI on 22 August 2014, ordered immediate wind up of the scheme and to refund money to the investors within three months. Since PACL failed to comply with its order, SEBI attached PACL’s bank accounts. Then PACL filed an appeal before the Securities Appellate Tribunal (SAT) of SEBI, which was dismissed on 12 August 2015.
Subsequently, the CBI registered a case against PACL and the Enforcement Directorate (ED) registered the first information report (FIR) against PACL in 2015. In January 2016 CBI arrested four PACL officials- Nirmal Singh Bhangoo, CMD, Sukhdev Singh, MD and promoter-director and two executive directors Gurmeet Singh and Subrata Bhattacharya in multi crore rupees collective investment scam. 
On 11 December, 2016, SEBI initiated recovery proceedings against PACL and its promoters and directors, including Tarlochan Singh, Sukhdev Singh, Gurmeet Singh, Subrata Bhattacharya, Nirmal Singh Bhangoo, Tyger Joginder, Gurnam Singh, Anand Gurwant Singh and Uppal Devinder Kumar, for their failure to refund money to the investors.
On 6 September 2017 SEBI imposed a fine of Rs 2,423 crore on PACL Ltd and its four directors for illegal fund mobilisation through various schemes. In September 2018, the ED filed a charge-sheet against PACL and attached Australia- based assets of PACL. In the same year, SEBI filed a claim petition in FCA, to recover crores of rupees stashed away by the PACL using several shell entities and sought repatriation of the assets or the proceeds thereof.  On 23 July 23, FCA passed order accepting SEBI’s claim.
In the meanwhile Vishal Mhetre, Secretary of the “Jan Pratisthan”, has filed an intervention  before the RM Lodha Committee, stating that he is one of the interveners in cases (QUD 528/2016) and (QUD 147/2017-SEBl) in the FAC, and is willing to give an affidavit to ensure that the funds procured in Australia, are brought back and distributed among duped investors through the RM Lodha Committee. Till now SEBI has been able to refund only Rs 204 to the duped investors. Besides, although FAC has allowed to SEBI to recover legal cost incurred by it, the investors are yet to get their share.  

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