Home » The Lodha Committee invites claims for refund from duped investors; Rs 57,927 crore are required to refund the money to 5.79 crore investors

The Lodha Committee invites claims for refund from duped investors; Rs 57,927 crore are required to refund the money to 5.79 crore investors

by Raju Vernekar
0 comment 7 minutes read

By Raju Vernekar
Mumbai, March 29:

Justice (retired) R M Lodha Committee, set up by the Securities and Exchange Board of India (SEBI), to sell the assets of the defunct Pearls Agrotech Corporation Limited (PACL) and refund money to nearly six crore duped investors across India, has invited claims from the investors by June end.
The Nodal officer-cum-secretary, of the Committee, vide Public notice dated March 27,2022 has asked eligible investors with claims between Rs 10,001/- to Rs 15,000/- to submit their original certificates issued by PACL, for refund. To this end the SMS shall be sent to the original investors asking them to submit original PACL registration certificates, the notice stated.
“The PACL investors who receive SMS from the committee requiring submission of original certificates issued to them by PACL, are requested to forward the same too: Post Box No 66, Belapur Post Office, Navi Mumbai -400614. The investors should send only original PACL certificates in the envelope and certificate number should written on top of the envelope”.
“The window for accepting original certificates shall remain open from April 01,2022 to June 30,2022. They should ensure that the original PACL registration certificates should reach the address referred above on or before 5.00 pm of June 30,2022. Further, investors are cautioned against parting with their original PACL registration certificates unless SMS is received from the committee, requiring submission of original certificates”, states the notice.
However according to Vishal Mhetre, Secretary of the Janhit Association, spearheading the cause of the duped investors, the invitation to submit original PACL certificate is fraught with infirmities. The committee is yet to declare the details of the money refunded by it to the investors till now. Besides, its process of auctioning PACL’s attached properties is very slow and it does not serve as a deterrent against the PACL, which has already sold some of its properties despite the committee attaching them. Also the committee has not declared the updated details of the amount recovered from the sale of PACL’ s properties.
As per SEBI, out of 1.50 crore claims, it refunded Rs. 438.34 crore to 12,70,849 eligible applicants as of March 31,2021.
Now the Committee has asked for the original PACL certificates that to through a post office. No one knows who will bear the responsibility- SEBI, Lodha Committee or Supreme Court, if the original certificates are lost in transit. The Committee has apparently entrusted the job of certificate collection to an outside party as it had done in Chennai in 2017. As such abundant precaution is required in the certificate collection, Mhetre said.
But most important aspect is whether the committee has enough funds to manage the refunds. Because the amount required to refund investors’ money is mind-boggling. The Committee in its report submitted to the Supreme Court in 2016 had stated that Rs 47,154 crore would be required to refund 2,21 crore investors falling under Rs 10,000 and above category alone.
The money to be refunded
The Committee has enlisted the refund expenditure as: Re 01-Rs 1500 investment –the number of investors-1.07,87.560—amount required Rs 832,76,79,808 (Rs 832 crore), Rs 1501-Rs 2500 investment –the number of investors-35,14,464—amount required Rs 717,26,30,940 (Rs 717crore), Rs 2501-Rs.5000 investment –the number of investors-58,59,211—amount required Rs 21,15,53,86,880 (Rs 2115 crore), Rs 5001-Rs.7500 investment –the number of investors-46,18,007—amount required Rs 28,91,45,78,384 (Rs 2891crore), Rs 7501- Rs.10,000 investment –the number of investors-45,78,735—amount required Rs 42,15,71,62,382 (Rs 4215 crore) and Rs 10,000 and above investment –the number of investors-2,21,43,059—amount required Rs 4,71,54,54,58,130 (Rs 47,154 crore). Total number of investors- 5,15,01,036 -the amount to be refunded – Rs 5,79,27,28,96,523.50 (Rs 57,927 crore).
Under these circumstances the speedier disposal of PACL’s properties is the only solution. As against this, due to lack of supervision the attached properties are being sold clandestinely by those associated with PACL keeping the Committee in the dark. Some of the properties have been leased out to third parties, Mhetre said.
Hearing in the Supreme Court
In another development different appeals, interlocutory applications and petitions, including the report on the sale of PACL properties submitted by the Lodha Committee, are scheduled for hearing on March 31, 2022 in the Supreme Court. They include: Civil appeal (No 13301/2015) Subrata Bhattacharya Vs SEBI and (appeal No 13394/2015) PACL Vs SEBI.
Sale of PACL Properties and revenue earned
As per SEBI’s records, the R M Lodha Committee has been able to recover Rs 937.65 crore from PACL from different modes, including the sale of its properties. The PACL’s property worth Rs 27,000 crore spread across the country, is being sold in different stages by the SEBI. The Committee has attached the bank/ Demat accounts of 640 associate companies of PACL. It realized Rs 98.45 crore from the FDRs of PACL and its associates and also recovered Rs.308.04 crore lying in PACL’s bank accounts. In addition the Committee received Rs.52,77,597/- from the Collector Land Acquisition, Punjab, as compensation towards to acquisition of properties of PACL. Of 27500 properties of PACL, the Committee was able to sell only 113 properties (although the auction process was completed for 872 properties) and could generate Rs. 89 Crore. Also, the Committee realized Rs. 14.64 crore, by auction of 75 PACL vehicles.
Australian connection
Besides, Justice Lee of the Federal Court of Australia (FCA) on 03 June 2020, directed the McCullough Robertson, a trust set up PACL, to deposit US $ 79 million (Rs 427 crore) (realized from the sale of its assets in Australia), into the R M Lodha’s Committee’s account in Australia. The directions were given in response to petition (No QUD No 147/2017) filed on March 17,2017 by SEBI against Miiresorts Group 1 Pty Limited, a venture of Pearls Australasia Mirage 1 Pty Limited.
Amount refunded so far
As per SEBI, out of 1.50 crore claims, it refunded Rs. 438.34 crore to 12,70,849 eligible applicants as of March 31,2021.
PACL’s History
PACL was incorporated on February 13, 1996, in Jaipur (Rajasthan). In response to investors’ complaints, the SEBI asked PACL to wind up on August 22, 2014 and refund investors’ money within three months. Simultaneously the CBI filed an FIR against PACL in 2014. The SEBI attached the PACL’s properties on December 11, 2015. The CBI arrested PACL CMD Bhangoo, promoter-director Sukhdev Singh, directors- Gurmeet Singh, and Subrata Bhattacharya in January 2016 and filed a charge sheet under Section 120B and 420 of IPC, in April 2016. In response, Subrata Bhattacharya moved the Supreme Court.
In 2015, the Enforcement Directorate (ED) filed the Enforcement Case Information Report (ECIR) against Bhangoo and others who included the directors of PACL and the Pearls Golden Forest Ltd (PGFL) ( another firm floated by them and collected 5000 crore from the investors). On December 11, 2016, SEBI initiated recovery proceedings and on September 06, 2017, imposed a fine of Rs 2,423 crore on PACL and its directors for non-compliance with its orders.
In September 2018, the ED filed a charge-sheet against PACL and attached its Australia- based assets worth Rs.472 crore. In the same year, SEBI filed a petition in the Federal Court of Australia (FCA), to recover the money stashed away by the PACL using shell entities in Australia and also sought repatriation of the assets. The Federal Court passed order on July 23, 2018 accepting the claim petition filed by SEBI.
Imprisonment
In the meanwhile as of now, 17 persons including Bhangoo, his wife Prem Kaur, daughters Sukhwinder Kaur and Barinder Kaur and sons-in-law- Gurpartap Singh and Harsatinder Singh continue to be lodged in Tihar jail.

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