New Delhi: In a recent development in the litigation saga in the PACL case, better known as the alleged Pearl Group scam, the Securities Appellate Tribunal (SAT) has set aside SEBI’s order imposing penalties of over Rs 7,000 crores against the company and four directors and has passed strict orders to the regulator SEBI to reconsider the matter afresh and follow the mandate of law contained in the SEBI Act, 1992.
The SAT, in its order dated October 27, 2016, stated, “Accordingly, the impugned orders are set aside and SEBI is directed to pass fresh order on merits and in accordance with law.”
The counsel for PACL, Sameer Rohatgi, submitted that the ingredients of Section 15HA were not satisfied by the Adjudicating Authority (AO) of SEBI and therefore the order was bad in law. He further submitted that the AO had not computed the profit, if any, made out of such practices, which was required as per law.
The legal arguments forwarded by Advocate Sameer Rohatgi, the SAT held as follows, “It is submitted that in the present case, without computing the profit, if any, the AO (Adjudicating Officer) has imposed penalty on the appellants which is bad in law.”
Further, the submission made by SEBI’s counsel and senior advocate Shyam Mehta, the regulator “is willing to reconsider the matter afresh”. The Tribunal said that “all the contentions of both parties are kept open” and that “SEBI is directed to pass fresh order on merits and in accordance with law”.
SEBI had imposed its biggest ever fine of Rs. 7,269 (seven thousand two hundred and sixty nine crores), in September 2015 on PACL Ltd and its four directors for illegal and fraudulent mobilisation of funds, stating that the company deserves to be fined for “maximum penalty” in view of the illegal land sale and development schemes run by them.
In an earlier order passed by SEBI in 2014 and SAT in 2015, PACL has been asked to refund Rs 49,100 crore it had collected over the last 15 years since 1996. PACL has since filed an appeal before the Supreme Court which is currently pending.
SEBI had probed PACL and its four directors – Tarlochan Singh, Sukhdev Singh, Gurmeet Singh and Subrata Bhattacharya – and come to the conclusion that the company and its directors had raised funds from the general public through “collective investment schemes”, without registering these schemes under the SEBI Act, pertaining to sale purchase and development of real estate all across the country. It is believed that the total landholding of PACL extends to more than 1 lakh acres across the entire country.
Copy of the Securities Appellate Tribunal (SAT) order: