The Supreme Court today ordered Chandigarh-based PGF, a company which collected money from the public for investment schemes without registering itself with Sebi, to return the sum appropriated from investors.
A Bench headed by Chief Justice S H Kapadia said PGFL will return the money to investors. "You should pay to the investors... The investors would come and prove their claim and you should pay," said the Bench.
The Securities and Exchange Board of India (Sebi) had banned the firm in 2002 after finding that it was running investment schemes without mandatory registration and directed PGFL to return investors' money.
Later, in 2008, Sebi found that the money was allegedly not paid back by the firm, following which the market regulator banned PGFL and its directors from accessing the stock market for 10 years. It also stopped PGFL's second investment scheme based on the sale, purchase and development of agricultural land.
The court's direction to return investors' money came during hearing of a petition filed by PGFL, which had challenged the orders of the Securities Appellate Tribunal upholding Sebi's ban on the company.
The court wanted to know the nature of the firm's business, so that it could take a decision on Sebi's directive.
"We want to know that what is the type of company. You are commencing business of what," asked the bench, which also comprised Justice K S Radhakrishnan and Swatanter Kumar.
The court further said, "You (PGFL) were not registered with Sebi. You were doing business at what capacity? Show us the constitution of your company... What is your exact business. Are you governed by RBI?"
The Apex Court directed the firm to suggest some modalities in three weeks by which it would pay back the money to its investors.
During the proceedings, senior advocate Harish Salve, appearing for the firm, said that PGFL was ready to pay and the firm was only concerned with its second scheme.
