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Friday, September 17, 2021

SEBI Directs Banks To Attach The Accounts Of Nirmal Singh Bhangoo

The Main Accused In The Multi-Crore Rupees Ponzi Scheme

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Raju Vernekar
Raju Vernekar
I am a mumbai based journalist having worked with many daily newspapers.

INDIA. Mumbai: The Securities and Exchange Board of India (SEBI) has directed all the banks to attach bank accounts and lockers of Nirmal Singh Bhangoo, the chief promoter of the Pearls Agrotech Corporation Limited (PACL), who duped over 6 crore investors across India, to the tune of Rs. 49,100 crore, by promising them land at a cheaper rate although he and co-promoters of PACL did not possess even an inch of land.

SEBI has directed the banks to deposits the accumulations lying in the accounts of Bhangoo, in its account in Canara Bank, BKC branch, Mumbai by August 25. The SEBI’s order dated August 18 states that although the attachment notice (No 2386/2015) dated December 11, 2015, was issued against the bank accounts of the other promoters, Bhangoo was not issued the notice at that time. Now the attachment order has been issued under section 28 A of the SEBI act of 1992 read with section 226(3) of the Income Tax Act 1961.

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Besides Bhangoo, Tarlochan Singh, Sukhdev Singh, Gurmeet Singh, Subrata Bhattacharya, Tiger Joginder, Gurnam Singh, Anand Gurwant Singh, and Uppal Devinder Kumar are involved in the multi-crore investment fraud.

The principal recoverable amount related to PACL which was Rs 49,100 crore, has now swelled to Rs 55,000 crore, with interest and other costs. In addition, Bhangoo and others had also collected over Rs 5000 crore from the investors, in the name of the Pearls Golden Forest Ltd (PGFL), another firm floated by him.

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The SEBI had issued an order (No. WTM/PS/30/CIS/NRO/AUG/2014) dated August 22, 2014, to recover the investors’ money from the PACL. Since its order was not complied with, the attachment order was issued by SEBI on December 11, 2015. The order to attach the bank accounts was issued since the defaulters were likely to conceal, remove, dispose of their assets including money in the banks, securities in Demat accounts, mutual fund investments, etc. 

Now along with an order to the banks, the directions have also been given to the National Securities Depository Limited and the Central Depositories Services India Limited, to attach Bhangoo’s accounts.

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PACL was incorporated on February 13, 1996, with the registrar of companies, Jaipur (Rajasthan), with its corporate office in New Delhi. In response to complaints from the investors, on November 30, 1999, and December 10, 1999, SEBI directed PACL to comply with the collective investment scheme (CIS) regulations. However, the PACL challenged the directions. On February 25, 2013, the Rajasthan High Court upheld the constitutional validity of CIS Regulations and directed SEBI to investigate the matter and take appropriate action. 

Given the high court directions, SEBI on August 22, 2014, ordered immediate wind up of the scheme and asked the PACL to refund money to the investors within three months. Then PACL filed an appeal before the Securities Appellate Tribunal (SAT) of SEBI. But the appeal was dismissed on August 12, 2015.

Subsequently, the CBI registered a case against PACL and the Enforcement Directorate (ED) also filed the first information report (FIR) in 2015. In January 2016, CBI arrested four PACL officials- PACL CMD Nirmal Singh Bhangoo, PACL MD and promoter-director Sukhdev Singh, and two executive directors Gurmeet Singh and Subrata Bhattacharya.

On December 11, 2016, SEBI initiated recovery proceedings against PACL. On September 06, 2017, it imposed a fine of Rs 2,423 crore on PACL and its four directors. In September 2018, the ED filed a charge-sheet against PACL and attached its Australia- based assets. In the same year, SEBI filed a claim petition in the Federal Court of Australia(FCA), to recover the money stashed away by the PACL using several shell entities in Australia and also sought repatriation of the assets or the proceeds thereof.  

In the intervening period, a committee headed by Justice (retired) R. M. Lodha was appointed by the Supreme Court of India (SCI), to sell the assets of PACL and refund the investors’ money. Similarly the Justice (Retired) Vikramjit Sen committee was appointed for the supervision of refund of money to the investors of the PGFL. In June 2020, the FCA directed the promoters of PACL to deposit US $79 million (Rs 427 crore) in R. M. Lodha Committee’s account in Australia, to facilitate refund of money to the investors across India.

The PACL’s property worth Rs 27,000 crore spread across the country, has already been offered for sale by SEBI and it is being sold in different stages. However, the SEBI has been able to recover only a limited amount till now.

Bhangoo, his daughter, and his son-in-law are in jail. However, in a major development, the special CBI court in Delhi on August 06, ordered the Punjab prison authorities to shift Bhangoo to Tihar Jail, since he was admitted to Ivy Hospital, Mohali for 1,177 days in the last four years ( more than 3 years) on the pretext of some illness. 

In the meanwhile, according to Vishal Mhetre, Secretary of the “Jan Pratisthan”, the investors’ forum, Bhangoo has already sold properties in Chandigarh, which stood in the name of his relatives and third party. The process of recovering investors’ money is going on at a snail’s pace. Also, it is not clear why the SEBI did not take prompt action to attach all the properties of Bhangoo and freeze his bank accounts earlier.

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