Proceedings to continue against 2 persons in PACL case: SEBI

Securities and Exchange Board of India (SEBI) has said proceedings will continue against two individuals, whose bank accounts were attached for allegedly being used by an associate company of PACL for siphoning off funds.

The bank accounts of Upma Garg and Rashmi Garg were attached in January this year after SEBI prima facie found that PACL's group firm Pearls Infrastructure Projects Ltd (PIPL ) diverted Rs 3 crore to their bank accounts in violation of the attachment directions.

PACL, which had raised money from public in the name of agriculture and real estate businesses, was found by SEBI to have collected over Rs 49,100 crore through illegal collective investment schemes.

After considering the submissions made by the two individuals, the regulator decided to disallow their claims/ objections on attachment of the bank accounts.

"In compliance with the Supreme Court order dated July 25, 2016 the attachment proceedings in respect of the bank accounts of Upma Garg and Rashmi Garg to the extent of Rs 3 crore as transferred by PIPL, shall remain in force," Sebi said in an order dated August 18.

The regulator said that Gargs have "failed to produce any evidence to show that they had some interest in the funds lying in PIPL's bank accounts. In fact, it is evident that the funds on the date of attachment notice were in possession of PIPL on its own, not on accounts of the transferees".

PIPL had allegedly entered into an agreement with Gargs on September 14, 2016 for sale of agricultural land for Rs 15 crore. Of the total, 20 percent of sale consideration, or Rs 3 crore was credited to their banks accounts and the remaining 80 percent was to be received before getting the sale deed registered in favour of PIPL.

The company entered into the pact after SEBI initiated recovery proceedings against PACL its promoters and associate firms (which includes PIPL) to recover investors' money on September 7, 2016. It had attached the bank, demat acounts and mutual fund folios of the defaulters.

"It seems, the purported agreement to sell between PIPL and transferees is mere after-thought and an attempt by PIPL to siphon off the funds available in the bank accounts to defeat the purpose of the attachment directions issued by SEBI.

"The unfair practises adopted by PIPL by entering into an agreement with the transferees post issuance of the attachment directions and subsequently transfer of Rs 3 crore under the garb of some sale transactions, made necessary on the part of SEBI to protect the money from further diversion of in the interest of investors," Sebi said.

In September last year, SEBI initiated recovery proceedings against PACL, its promoter and associate companies "for their failure to refund an amount of Rs 49,100 crore with return due to investors, along with further interest and all costs, charges and expenses incurred in the recovery proceedings".

SEBI had asked them to refund the money in an order dated August 22, 2014. The defaulters were directed to wind up the schemes and refund money to the investors within three months from the date of the order.