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The Securities Appellate Tribunal will tomorrow hear Alchemist Infra Realty’s appeal against a SEBI order that barred the company and its directors from the capital market for allegedly running fraudulent investment schemes.
Last week, the Securities and Exchange Board of India (SEBI) had directed Alchemist Infra Realty to wind up all its collective investment schemes and refund the money collected from public investors within three months. This amount could be more than Rs 1,000 crore.
Besides, the company and its five directors - Brij Mohan Mahajan, Narayan Madhav Kumar, Balvir Singh, Chandra Shekhar Chauhan and Sunil Kanti Kar - had also been barred from the securities market till the time all its schemes are wound up and the money is refunded to investors.
According to SAT, the plea is at the “admission” stage. Senior Advocate Janak Dwarkadas is the counsel for Alchemist Infra Realty.
A SEBI probe had also found that the company had mislead investors by contending in its application form to be a part of ‘Alchemist Group’, which was engaged in diverse activities such as steel, IT, healthcare, aviation, realty, among others, with an asset base of over Rs 5,000 crore.
The said ‘Alchemist Group’ is headed by industrialist K D Singh, a Rajya Sabha MP of Trinamool Congress from Jharkhand.
In 2011, SEBI had begun its probe on Alchemist Infra Realty after receipt of an anonymous complaint about the firm mobilising money from the public investors in breach of norms.
The regulator later found that the company was running ’collective investment schemes’ in the name of real estate business and had garnered Rs 1,087 crore as on March 31, 2011.
The firm was charging up to 75 per cent as ‘development charges’ from the money collected from investors towards purchase of land.
Meanwhile, Alchemist Infra Realty had also sought to settle the case through SEBI’s consent mechanism, but its plea was rejected by the regulator.
The firm and its directors face prosecution proceedings by SEBI, among other things, in case they fail to comply with the regulator’s orders.
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