The Telegraph
Friday , July 4 , 2014
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HC tells Sebi to sell fund firm assets
- Lawyers see precedent in order to auction properties of fraud company to refund depositors

Calcutta, July 3: Calcutta High Court today told Sebi to auction two buildings owned by the Tower Group, a deposit-mobilising company like the Saradha Group, and distribute the proceeds from the sales among depositors and debenture holders.

“The Sebi is directed to sell off the main office building of the Tower Group at Ananda Palit Road in Calcutta and a hotel at Egra in East Midnapore by July 29 and refund the money of petitioner depositors and debenture holders from the sale proceeds,” Justice Dipankar Dutta said.

The order is significant because this is the first time that the high court has directed the market regulator to liquidate assets of an illegal deposit-mobilising company and refund money to investors, who had taken legal recourse.

“Till date, not a single depositor has got money back from sales proceeds of assets of the fund-mobilising companies. The state had returned the money of some depositors from its exchequer. So, Justice Dutta’s order should be welcomed as it will become a precedent when depositors duped by other companies move court,” said advocate Udayshankar Chatterjee.

“The order assumes significance also because the court has asked Sebi to liquidate the assets while the state government had entrusted the same responsibility to Justice Shyamal Sen Commission,” a lawyer said.

In the case of the Saradha default, chief minister Mamata Banerjee had announced a Rs 500-crore fund to pay back depositors.

According to the Sen commission sources, of the over 12 lakh applications of the Saradha Group, 3.95 lakh depositors have been refunded after the claims were verified by the commission. Over Rs 166 crore has been repaid to the Saradha investors till now.

Although the commission is trying to auction Saradha assets, it has not been able to do so till now and the refunds have largely been made using public money.

The Tower Group featured on the list of 73 sham companies that the ministry of corporate affairs published following the Saradha default.

Owned by Ramendu Chattopadhyay, the Tower Group was engaged in several businesses — information technology, hospitality, solar two-wheelers and even a newspaper. One of the group’s companies, Tower Infotech, was engaged in mobilising deposits from the public through various financial instruments.

Around 70-odd depositors and debenture holders had moved court in April accusing the Tower Group of duping them after promising high returns on daily deposit schemes and investments in real estate.

In November last year, Sebi had moved an application in the Saradha default case before a division bench headed by Justice Asim Bannerjee of the high court and challenged the state government’s decision to set up a commission to refund money to depositors.

The division bench had turned down Sebi’s application in which the market regulator had claimed that liquidation of assets was its prerogative.

During the hearing of the case, the counsel appearing on behalf of the Tower Group had said in court that the company itself was in a position to refund money to all depositors and debenture holders if the court allowed it to sell its assets.

Justice Dutta asked Sebi to find out the asset value and amount to be paid to the depositors.