Lok Sabha Question No. 315 (UNSTARRED), answered on 2019-06-24
Subject: Financial Fraud by Pan Card Clubs Limited
Ministry: FINANCE
Asked by: Pritam Gopinath Munde, Shrirang Appa Barne, Shrikant Eknath Shinde

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION NO. 315 TO BE ANSWERED ON MONDAY, JUNE 24, 2019/ASHADHA 3, 1941 (SAKA) FINANCIAL FRAUD BY PAN CARD CLUBS LIMITED

## 315.  DR.  PRITAM GOPINATHRAO MUNDE; SHRI SRIRANGA APPA BARNE; DR. SHRIKANT EKNATH SHINDE:

Will the Minister of FINANCE be pleased to state:

- (a) Whether more than 5 million investors from across the country have invested more than Rs 7,000 crore in Pan Card Clubs Limited;
- (b) If  so,  whether  the  Company  had  been  running  illegal  collective  investment schemes and purchased the properties by using investor's  funds,  and  if  so,  the details thereof;
- (c) Whether the Government has investigated the fraud committed by the Directors of the Pan Card Clubs Limited, and if so, the outcome thereof and the action taken against the culprits erring officers;
- (d) Whether it  is  a  fact  that  the  Company  has  84  properties  in  India  and,  if  so,  the details thereof; and
- (e) Whether there are a few hotel and resorts owned by the Company which are still open and doing business since 2014, and if so, the details thereof along with the corrective steps taken by the Government of India to ensure refund of investors' money?

## ANSWER

## FINANCE MINISTER (SHRIMATI NIRMALA SITHARAMAN)

(a): Yes, Sir. The Economic Offences Wing (EOW), Mumbai Police has informed that as per  the  Report  of  Statutory  Auditor,  Pan  Card  Clubs  Limited  (PCL)  had  collected investments of Rs. 7,034 crores from 51 lakh investors across the country.

(b): As informed by EOW, Mumbai Police, the company and its directors, without having any permission from the Securities and Exchange Board of India (SEBI) or the Reserve Bank of India (RBI), floated various investment schemes of different duration ranging from 3 to 9 years with a promise of hotel discounting, accidental insurance and high rate of returns, and purchased properties by using investor's funds. SEBI has informed that after issuing a show cause notice and grant of personal hearing to PCL, SEBI held that PCL was operating an unregistered Collective Investment Scheme (CIS).

(c): The Ministry of Corporate Affairs (MCA) has informed that the Ministry has ordered investigation into the affairs of Pan Card Clubs Limited and has assigned it to SFIO for investigation.

The Economic Offences Wing (EOW) of Mumbai has informed that an FIR has been registered against PCL and its Directors for committing the offence under Sections 406, 409, 420 and 34 of the IPC read with Sections 3 and 4 of the Maharashtra Protection of Interests of Depositors Act, 1999.

SEBI has passed an Order dated 29.02.2016, directing PCL and its Directors, inter alia, to  refund  the  money  collected  under  the  schemes  with  returns  which  are  due  to  its investors as per the terms of offer within a period of 3 months and submit a report within 15  days  thereafter  in  terms  of  SEBI  (Collective  Investment  Schemes)  Regulations, 1999.  The Securities Appellate Tribunal (SAT), vide its order dated 12.05.2017 upheld the  aforesaid  order  of  SEBI  and  dismissed  an  appeal  against  the  order.  SEBI  also initiated  recovery  proceedings  against  PCL  and  its  Directors  and  simultaneously attached bank accounts, demat accounts, mutual fund folios, etc.   SEBI also attached shareholdings  of  PCL  and  its  Directors  held  in  subsidiaries  and  sister  concerns including Panoramic Universal Ltd. (PUL) and immovable assets of PCL and its CMD. SEBI has recovered Rs.1.08 crore from the bank accounts and sale of shares. SEBI has  also  launched  prosecution  against  PCL  and  its  directors  for  violation  of  Section 12(1B) of  the  SEBI  Act,  1992  read  with  Regulation  4  of  the  SEBI  (CIS)  Regulations, 1999.

(d): Properties  have  been  acquired  by  PCL  out  of  the  amounts  invested  in  the  said illegal CIS. 94 properties of PCL, its Chairman & Managing Director, and subsidiaries of PCL have been attached by SEBI. Of these, 79 attached properties are located in India.

(e): Yes, Sir. The details are as follows:

|   Sr. No. | Description of the asset         | Status   | Lease till     |
|-----------|----------------------------------|----------|----------------|
|         1 | United 21, Jungle Resort, Pench  | Sold     | -              |
|         2 | United 21, Resort, Mahabaleshwar | Sold     | -              |
|         3 | United 21, Emarald Goa           | Sold     | -              |
|         4 | United 21, Mysore                | Unsold   | July 02, 2020  |
|         5 | United 21, Kanha                 | Unsold   | April 30, 2020 |
|         6 | United 21, Lonavala Resort       | Unsold   | June 21, 2020  |

| 7   | United 21, Unsold July   |
|-----|--------------------------|

Out  of  the  unsold  properties,  property  at  Mysore  at  Sr.No.4  in  the  table  above  is generating an income of Rs. 4 lakh per month which is remitted to SEBI.  However, the remaining Hotels were let out by PCL illegally and proceedings were initiated against PCL and its directors.

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