SEBI Orders Saradha Realty India to Refund Money in 3 Months

The Securities and Exchange Board of India (Sebi) on Tuesday ordered Kolkata-

based Saradha Realty India to wind up existing schemes and refund money to investors within three months.

Sebi also barred promoter Sudipta Sen from accessing the capital market to raise money until his company repays money to investors. Sebi has submitted a proposal to the ministry of corporate affairs to wind up Saradha Realty India if its orders are not executed in three months. The regulator also warned of launching a criminal case for “fraud, cheating, and criminal breach of trust and misappropriation of public funds.”

Investigations are on by Sebi against some other entities of Saradha Group for similar violations of its CIS regulations.

The Sebi order against Saradha Realty follows an investigation launched about three years ago by it after a reference was received from the Director, Economic Offences Investigation Cell, and government of West Bengal in April 2010. Sebi found that the company was collecting money from public in the range of. 10,000-100,000 for 15 months to 120 months, with a promise of returns of 12-24%.

Meanwhile, the Jammu & Kashmir police arrested the group chairman and two of his close associates from Sonmarg on Tuesday. Bidhannagar police commissioner Rajeev Kumar said late on Tuesday that two associates of Sen — Debjani Mukherjee and Arvind Singh Chowhan — were also detained. The trio will be produced before a J&K court on Wednesday and brought to Kolkata in the evening. A black SUV with a West Bengal registration was also seized.

Sen had gone underground immediately after the Saradha chit fund scam came to light and complaints against him and his company were filed with Bidhannagar Police by people who had invested in a number of companies run by him. Preliminary interrogation reveals that Sen had left Kolkata in a car on April 10 and reached J&K on Sunday via Jharkhand, Bihar, Uttar Pradesh and Punjab.

There has been considerable tension within the ruling party after names of one of its MPs and some ministers surfaced for their alleged links with the group and its chairman Sen.

The chief minister is also on a sticky wicket as her government had distributed some ambulances in Jangalmahal sponsored by the Saradha Group. Meanwhile, Opposition leader Surjya Kanta Mishra has advised the government to “seize all assets and properties of Sen and sell them to recover the dues of investors.”

One of its MPs, Kunal Ghosh, used to run the media group of the company and had played a key role in maintaining links between the group and Trinamool Congress. Names of some ministers including sports and transport minister Madan Mitra have also surfaced after the Saradha Group scam.

West Bengal Pradesh Congress Committee president Pradip Bhattacharjee has demanded a CBI inquiry to find out the nexus between Saradha Group and Trinamool Congress.

Saradha Realty’s name figured in a list of companies presented by corporate affairs minister Sachin Pilot in the Lok Sabha last month against whom complaints of fraudulent fund raising activities have been received by the ministry.

There were a few more Saradha Group companies in that list. During the Sebi inquiry, the noticee had submitted that it had properties mostly in the states of West Bengal and Assam, but it neither provided any details regarding the total quantity and valuation of its land bank nor was that mentioned in the annual statements of accounts.

“It was prima facie observed that under the scheme of the noticee the real objective is to mobilise fund from public by showing some real estate projects to the investors and the noticee indirectly promises return of funds with high interest rates,” Sebi order noted.

Sebi said Saradha Realty “launched/sponsored/operated” the collective investment schemes without obtaining registration from the market regulator. Following that, Sebi issued a show cause notice seeking explanation from Saradha Realty asking it as to why suitable action should not be initiated against it for violation of rules.

Contending that it is receiving money by way of sales and bookings advance with the help of brokers, the company had claimed that its brokers had adopted fraudulent practices and created false and dummy codes and generated false money receipts without any authorised signature.