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Jan 12, 2018 04:43 PM IST | Source: Moneycontrol.com

Supreme Court stays NCLT proceedings against two Ponzi schemes: Report

SC observed that prima facie, this seemed to be a case in which there was some kind of collusion between the promoters of the schemes and the petitioners who filed pleas in the NCLT’s Mumbai bench.

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supreme court of india (Reuters)
supreme court of india (Reuters)

The Supreme Court has stayed the proceedings of the National Company Law Tribunal’s Mumbai bench related to the insolvency resolution process against Citrus Check Inns and Royal Twinkle Star Club.

According to a report by DNA, the decision came after a group of investors moved the apex court against liquidating Citrus and Royal Twinkle, two timeshare and collective investment schemes in which over 18 lakh investors had collectively invested around Rs 7,500 crore from their savings.

While staying the NCLT proceedings on January 8, the Supreme Court observed that prima facie, this seemed to be a case in which there was some kind of collusion between the promoters of the schemes and the petitioners who filed pleas in the NCLT’s Mumbai bench.

“We have been informed that this ongoing investigation is not complete yet. It has been pointed out to us that the entire objective of the present exercise under the insolvency code is a collusive effort between the parties concerned as is evident from the fact that the respondent 2 did not oppose the appointment of an insolvency professional and is reflected in the order dated 2/5/2017,” the court said.

“We are therefore of the view that prima facie this seems to be correct and the proceedings under the insolvency court are stayed forthwith,” the apex court said.

The insolvency resolution professional appointed for the case, Devendra Jain, has now been directed to file a report in court about what he has done on the case so far. When the newspaper contacted Jain, he said that the report would be filed by February 9.

This is the second such instance of the Supreme Court intervening on behalf of lakhs of investors in recent months with the Jaypee Infratech case being the first.
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