Kolkata: The Serious Fraud Investigation Office (SFIO) has filed an application with the Kolkata bench of the National Company Law Tribunal (NCLT) seeking its permission to wind down enterprises of the now defunct Saradha Group, which ran ponzi schemes in West Bengal and other eastern Indian states.
The aim is to liquidate assets seized from the group and repay creditors, but assets worth only about Rs250-300 crore may have been recovered. Various arms of the group had collectively raised Rs2,500-3,000 crore in public deposits, according to estimates of central agencies such as the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED).
The first winding up petition has been filed against Saradha Realty India Ltd, according to Moti Sagar Tiwari, the legal counsel for SFIO in Kolkata.
Similar petitions are to be filed for winding down and liquidation of assets of 13 other companies of the group.
The petitions have been filed under sections of the Companies Act 2013, which deal with government action against delinquent and fraudulent companies, said Tiwari.
Under section 326 of the Companies Act, claims of secured creditors and workers have priority over unsecured creditors—or depositors in this case—at the time of distribution of proceeds of liquidation. So depositors may not stand to gain much from the liquidation of the Saradha Group enterprises.
The ED, which has been investigating the Saradha Group since 2013, has so far attached properties conservatively estimated at Rs250 crore, according to officials of the agency, who asked not to be identified. There are assets worth Rs25-30 crore which have not been attached yet, according to these officials.
The attachment of properties by the ED was done under the Prevention of Money Laundering Act 2002, or PMLA, according to these officials, who said the Act prevails over other laws such as the Companies Act. The agency may not have to transfer the properties for liquidation by the SFIO because the attachments made by the ED have already been vetted by a court under the PMLA, they said.
Liquidation of assets under PMLA could be beneficial for the depositors compared with liquidation under the Companies Act, according to the ED officers. Under the PMLA, the formula for distribution of proceeds of liquidation is different. But it is going to be a long-drawn court process to determine who gets how much, they added.
The tribunal has directed the SFIO to publish advertisements in newspapers because notices couldn’t be served to the defunct companies themselves, according to Tiwari. The advertisements are intended to give stakeholders an opportunity to take part in the process or oppose it.
The Saradha Group ran aground in early 2013 after being in operation for at least three years. Its chairman Sudipta Sen is still in custody, pending trial. Though estimates of central agencies vary, it is estimated that the Saradha Group duped at least 1.5 million depositors. The group had invested in various businesses such as real estate, media and automobile manufacturing, but none took off.