PremiumThe Mumbai bench of National Company Law Tribunal ordered initiation of Corporate Insolvency Resolution Process against Pancard Clubs Ltd on Friday after the company defaulted on repayments to investors
Listen to this article |
The Mumbai bench of National Company Law Tribunal on Friday ordered initiation of Corporate Insolvency Resolution Process against Pancard Clubs Ltd after the company defaulted on the repayment of monies invested by investors.
A bench led by Justice Pradeep Narahari Deshmukh and Shyam babu Gautam said “It clearly shows that the corporate debtor (Pancard Clubs) is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor"
The bench appointed Rajesh Sheth as the interim resolution professional to look after the day to day affairs of the cash-stripped company.
The present petition was filed before the tribunal on the ground that Pancard had defaulted in repayment of monies to the extent of ₹1.55 crore invested by nearly hundreds of petitioners (investors).
As per the order the financial debt of the company had risen in respect of investments of nearly ₹1.55 crore were made by the petitioners in a Collective Investment Scheme (“CIS") operated by Pancard Clubs under the guise of time share business.
In fact, the case dates back to 2016, wherein the Securities and Exchange Board of India directed Pancard Clubs to refund monies to the extent of ₹7,035 to the investors of its CIS scheme within three months while also directed the CIS to be wound up.
The company then challenged the Sebi order before the Securities Appellate Tribunal.
The Securities Appellate Tribunal, however upheld the SEBI’s order that Pancard Clubs Ltd (PCL) is a collective investment scheme (CIS), which needs to be wound up and the Rs7,035 crore that the company had collected, should be refunded to investors across the country.
Based on the order, the petitioners (investors) stated that on pursuing the orders passed by Sebi and tribunal it was clear that investment made by over ₹50 lakh investors was accepted by Pancard Clubs under the guise of time share scheme used for purchasing room nights in various properties and resorts owned by the debt-laden company.The scheme was made by the company for the purpose of getting returns on their investments against a consideration for time value of money, the petition said.
The matter assumes importance since many investors are duped in such collective investment schemes across the country.
Following which recovery proceedings were initiated by Sebi against the company for which e-auction notices were sent to the company by way of e-auction. A Bombay High Court order had, however, stayed the auction of these properties.