HT Explainer: Why investors are up in arms against Pearl group

Hindustan Times, Chandigarh | By, Chandigarh
Apr 26, 2017 11:36 AM IST

Read on for all details of Pearls group scam.

Read on for all details of Pearls group scam:

Nirmal Singh Bhangoo(HT File)
Nirmal Singh Bhangoo(HT File)

Know the scam

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In 2003, Securities and Exchange Board of India (SEBI) and investors filed a case in the Supreme Court against Pearls Agrotech Corporation Limited ‎(PACL) group, accusing it of fraudulently raising 45,000 crore from 5.5 crore investors via collective investment schemes.

In February 2013, the Supreme Court directed the Central Bureau of Investigation (CBI) and SEBI to investigate and scrutinise the PACL. A year later, the CBI in February lodged a case against two Pearls Group real estate firms for allegedly fraudulently raising 45,000 crore from the investors. Besides, 76 FIRs were registered against the groups’s chairman-cum-managing director (CMD) Nirmal Singh Bhangoo, 65.

Must read | In a fix: Harried Pearl City residents seek GMADA’s intervention

After two years of investigation, the CBI in January 2016 arrested four of the group’s top officials, including Bhangoo, who was the CMD and promoter-director of the group’s Delhi-based firm — Pearls Golden Forest Limited (PGF), and a former chairman of the group’s Australia-based firm — Pearls Australasia Private Limited.

Formation of Lodha Committee

On February 2, 2016, the Supreme Court appointed a committee headed by of former chief justice of India RM Lodha to oversee the refund of 49,000 crore to 5.5 crore investors in the Pearl Group scam. The committee attached all assets of PACL and started auctioning the properties in March 2016.

Properties owned by PACL

According to the Enforcement Directorate, the PACL owns 1,354 properties, with the maximum being in Hoshiarpur at 330. Other questionable properties are in Nawanshahr (281), Rajpura (181), Mansa (117), Ferozepur (87), SAS Nagar (68), Gurdaspur (50), Ludhiana (41) and Fatehgarh Sahib (36). As per the CBI, PACL owns 68 offices in India and abroad, 553 acres in Delhi, and two big housing projects in Bathinda and SAS Nagar.

Bhangoo: From milkman to real-estate giant

Bhangoo, who is at present lodged in a Bathinda jail, hails from Bela village in Chamkaur Sahib of Rupnagar district. Having started as a milkman, he joined an insurance company, Pearless, as an agent in the early 1980s. However, he was told to leave after being accused of huge embezzlement of funds. He then moved to SAS Nagar and opened an investment company from a booth in Phase 7. Thereafter, he worked as an agent with Golden Forest India Limited, leaving it to start his own company, Pearls Green Forest Limited, in the late 1980s. He went on to acquire a wide-ranging portfolio with business interests in infrastructure, property development, hospitals, educational institutes, insurance, media and entertainment industry in India and abroad.

The CBI had in 2011 filed a chargesheet against him and former Medical Council of India president Ketan Desai for allegedly orchestrating an irregular grant of recognition to his Patiala-based medical college through the payment of a 2 crore bribe.

Where does the case stand now

Lodha Committee has hired three agencies namely HDFC Realty Limited, UTI Infrastructure Technology and Service and SBI Capital Markets Limited to sell the properties of PACL. The process is underway.

Investors’ take

Investors of properties in Sector 100 and 104 are demanding that since people have already invested around 600 crore, GMADA and Punjab government should intervene in the matter and liaise with Lodha Committee to save the interest of allottees and residents.

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