20 Years On, 5.6 Crore Investors Wait For Rs 49,100 Crore Refund In PACL Chit Fund Scam
While Chief Minister of West Bengal, Mamata Banerjee currently is in loggerhead with the central government over attempt of arrest of the Police Commissioner of West Bengal by the Central Bureau of Investigation (CBI) in connection to the Saradha Chit Fund Scam, the national capital just saw a massive protest against another chit fund scam called Pearl Agrotech Corporation Limited (PACL) scam. The protest was on February 2, 2019.
On Saturday, Delhi witnessed over 5000 people joining hands together on parliament street to ask for their hard earned money that they invested in PACL before it shut down in 2014 reported the Newsclick. People invested lakhs of money to this company in which Finance Minister Arun Jaitley was the legal advisor, but they never received any refund as of date. To recover funds, the Supreme Court, last year on February 19, 2018, permitted PACL Ltd to sell their property under the supervision and approval of the Lodha committee and the Securities and Exchange Board of India (SEBI), reported the Live Mint. This move was expected to give some respite to the victims.
What is PACL Scam?
The PACL scam amounting to approximately Rs 49,100 crore is considered to be one of the biggest chit-fund scams of our country. The fraud has affected nearly 5.6 Crore Investors who are yet to receive their money. The company was started in 1982. For 18 years, PACL and Pearls Golden Forest Limited(PGFL) illegally raised money from the poor on the pretext of sale and development of agriculture land. The company managed to tout false allotments of land to investors.
The company first came under the radar of SEBI in 1997, as PACL was running a Collective Investment Scheme (CIS) without SEBI’s permission. In 2003, the company won the case in Rajasthan High court. In 2013, the apex court overruled Rajasthan HC’s verdict and asked SEBI to start a fresh investigation against PACL. SEBI found that without approval the company ran a collective savings scheme and frauded 5 crores 60 lakh common people. In August 2014, the SEBI ordered PACL to refund the money to their investors within a span of 3 months. To this, the company went to Securities Appellate Tribunal (SAT) against the Board. In 2015, SAT supported SEBI’s order. However, government inaction along with strong political connection, the money failed to be delivered.
Reportedly, PACL had 70 lakh agents to run the scheme who were also not aware of the fraud nature of it. On 2nd February 2016, Supreme Court ordered to auction company’s properties and refund the money to the investors.
In 2016, SEBI started recovery proceedings against PACL and its promoters and directors for the failure to refund Rs 49,100 crore to investors. In 2018, Lodha panel shortlisted four firms to sell off the company. PACL also proposed a plan to sell off assets that could recover Rs 15,000 crore.
According to Justice Lodha committee, the company has Rs 1.86 lakh crore of assets, but hinted that the amount could be four times amidst the current discovery of assets and the company’s assets are being discovered from Australia.
On 2 February 2019, 3 year anniversary of Supreme Court Judgment ordering the money to be refunded, the victims of PACL scam from across the country came to Delhi and assembled on Parliament Street. CB Yadav, who is an activist working with the protesters said that the victims are poorest of poor and many have committed suicide waiting for money to be refunded.
Former Rajya Sabha member Sharad Yadav and Gujarat MLA and activists Jignesh Mevani joined the protesters. The protests also contained agents of the company who themselves have not received the money but are facing the wrath of who have invested in the firm.
The Federal Court in Australia last year found that the money lured by PACL from investors was used for acquiring certain assets in Australia. The Justice RM Lodha Committee directed the SEBI to file claim petition in the Federal Court of Australia to plead repatriation of the assets, or the proceeds thereof, on behalf of all the investors in PACL.