National company law appellate tribunal (NCLAT) has dismissed market regulator Securities and Exchange Board of India’s plea to block insolvency proceedings of Pancard Clubs, as per a court order reviewed by ET.
Sebi had approached the appellate court for quashing of the insolvency proceedings because it has been investigating the company for running an unregistered collective investment scheme and has attached its properties.
National Company Law Tribunal had admitted Pancard Clubs for insolvency proceedings on 9 September and appointed Rajesh Sheth as the company’s resolution professional after about hundred aggrieved investors in the scheme approached the court claiming they had been duped.
Sebi has started auctioning 14 of the company’s properties so that it can refund money to the investors. The regulator claimed at NCLAT that its efforts to refund the investors money would get hindered if insolvency proceedings were allowed to continue.
NCLAT ruled against Sebi and ordered that the attached properties be handed over to Pancard Clubs’s resolution professional.
Sebi could not be reached for comment.
Mumbai-headquartered Pancard Clubs founder and promoter passed away in 2017. The company’s other directors are senior citizens and are said to be absconding.
The investment scheme they launched was marketed as a club membership program which allowed access to members to use the company’s resort properties for vacationing. Members were promised a fixed return on the fees paid to join the club giving the membership the character of a financial instrument.
Pancard Clubs resolution professional was represented by advocate Sumesh Dhawan.
The aggrieved investors were represented by senior counsel Krishnendu Datta. Surekha Raman represented Sebi.