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Two such defaulters, Rose Valley and MPS Group, were summoned by Justice Shyamal Sen Commission, which was formed to probe the Saradha scam last year. While Saradha had defaulted on payments to the tune of Rs 2,400 crore to 1.25 million depositors, MPS and Rose Valley together owe Rs 5,860 crore to their investors.
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Things took a dramatic turn on Friday, when the Commission gave orders to detain P Manna, the owner of MPS Greenery. According to a representative of MPS investors’ forum, who was present during the hearing at the Commission, MPS’ outstanding dues were Rs 1,860 crore. Representatives of the Securities Exchange Board of India (Sebi), the Central Bureau of Investigation, Enforcement Directorate and Serious Frauds Investigation Office were also present during the hearing.
Rose Valley’s default stands at Rs 4,000 crore, according to a company spokesperson. About 1,500 bank accounts of the firm, which runs a clutch of resorts and hotels across India, were sealed last year on the directions of the Economic Offences Wing (EOW) of Odisha police. Subsequently, each of its 1,000 branches opened new bank accounts, which were also frozen a couple of days ago. Now, all 2,500 bank accounts of the company stand sealed.
Rose Valley had reportedly raised about Rs 10,000 crore from investors in a span of 18 years.
The firm had nearly Rs 1,500 crore deposits in the accounts, apart from a land bank of Rs 5,000 crore at fair valuation, a company official said. The land and properties owned by Rose Valley are embargoed for sale by authorities such as Sebi and the state government. Sebi had put an embargo on the sale of real estate by Rose Valley since January 2011. The company used to raise money as advances for real estate projects.
In the past year, Rose Valley has been focusing on its time-share business for booking hotel rooms. Time share is a common scheme in the tourism sector, through which hotels and resorts give long-term membership, or use rights, against a lump-sum amount.
According to a Rose Valley spokesperson, the company is still running the time share business, with a monthly collection of Rs 50 crore. The company had issued cheques worth Rs 150 crore to depositors ahead of the festive season, which would now bounce because the accounts are sealed, he added.
Another company, Pailan Group, has defaults payments to the tune of Rs 343 crore to 42,000 investors since July 2013. This apart, investors of Suraha Microfinance claim the company has defaulted payments of Rs 2,000 crore.
The management of MPS, Pailan and Suraha could not be contacted for comments.
Over the past three years, some of the companies against which Sebi had issued orders to wind up schemes include Vibgyor Allied Infrastructure, Prayag Infotech Hi-Rise, Rose Valley Real Estate and Construction, Alchemist and MPS Greenery Developers.
During the Saradha probe itself, the Sen Commission received 1.7 million applications. Although most of these had deposited money in Saradha, investors of other companies such as Amazon Capital, Suraha Microfinance, Sunmarg, ICore, Rose Valley and Alchemist have also registered complaints with the Commission.
