TaxTMI 
TaxTMI 
2014 (4) TMI 1316
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....td introduced a number of investment schemes promising handsome returns lured investors and depositors, and in 9-10 years collected several hundred crores of rupees. Huge tracts of lands and property were acquired by it; likewise a large number of properties were acquired in the name of Golden Tourist Resorts and Developers Ltd and others in the name of Himachal Country Resorts Ltd and some other companies. 3. The GFIL group were controlled controlled by a family consisting of A. L. Syal, R. K. Syal, Neena Syal, Pamila Syal, Bimla Syal (since dead), H. K. Sinha (Brother in Law of R. K. Syal). In 1997, the Securities Exchange Board of India (SEBI) inquired into the activities of GFIL group and a two member Committee was constituted. Its report was submitted on 21-04-1998. The report highlighted financial and other irregularities committed by the company. A writ petition was filed in the Bombay High Court by SEBI in which an order was passed against GFIL restraining it from alienating the properties; a similar order was passed by this High Court in the same year. SEBI on 09-01-1998 made an order prohibiting the company from alienating its properties. Justice M. L. Pendse (Retired)....
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....s of Golden Forests (India) Ltd by advertisement dated 25.10.2004. As required by the Supreme Court, the period for the receipt of the claims from the investors and creditors was extended by 3 months and this information was widely advertised in leading vernacular newspapers, in all States. Advertisements were published and the period was extended from 19.2.2005 to 20.5.2005. The period fixed in the first advertisement expired on 24.1.2005. Nevertheless, the Committee continued to receive the claims even after the expiry of that period and later the claims were received during the extended period. The Supreme Court in its order dated 05.09.2006 fixed 10.08.2006 as the cut-off date for receiving claims. Since claims from the depositors of GFIL continued, the Supreme Court directed that no deposit accepted by an Agent after 1st January 2001 is to be considered as GFIL had closed business in December 2000 and the Directors of the company were in the Jail in December 2000. The Court also directed that there should be clear proof of deposit of money with GFIL or its group. The relevant part of the Supreme Court's order of 5-9-2006 is extracted below:- "The committee should acce....
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.... to take action against the illegal encroachments and construction adjoining the Resort at Billa. Revenue authorities of the respective States are also directed to help in removal of such illegal encroachments. C. Directions regarding sale of properties: 36. Directions for sale are sought in respect of the properties at Jharmari, lands at Village Kot Billa, Jaswant Garh and other adjoining villages and a Resort at Nalagarh, and the mode and procedure for the sale of the properties of GFIL, possession of which has been taken. 37. The Committee is put at liberty to put to sale the properties at Village Jharmari, lands at Village Kot Billa, Jaswant Garh and other adjoining villages and a Resort at Nalagarh and other properties of GFIL, possession of which has already been taken by the Committee, by auction after due publicity. The sale shall be subject to the confirmation by this Court. After the properties are put to sale, the Committee shall report to this Court about the auction sale effected which shall be subject to the final orders of this Court. D. Setting aside sale of immovable properties: 38. The Committee has sought the following....
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....to be made after the properties were sold and payment shall depend on the realization of proceeds of sale. The Committee states that there are about 15 Lakh investors who have not been paid. On 15.10.2008 the Supreme Court made the following order: "........As regards the sale of properties is concerned, the Committee may make appropriate publication regarding the sale and sufficient notices be issued to the prospective purchasers by publishing the same in the local newspapers having wide circulation in the area where the property is situated. Any sale conducted by the Committee shall be based on valuation made by either by the Committee or by other approved valuer and upset price is fixed before sale is finalized. The sale is, however, subject to the confirmation by this Court. As soon as the sale is over, the details including the purchase price and all the details shall be made over to this Court for the purpose of confirmation. As soon as the bid is over the applicant/the prospective purchaser shall deposit 20% of the amount in a nationalized bank in the account maintained by the Committee. If there is any difficulty in getting the possession of any property owned by t....
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....re the High Court on 15th March, 2010 and thereafter the High Court is requested to pass appropriate orders in these cases." 8. The applicant relies on an order of this Court, made on 17.01.2012. The said order reads as follows: "CM NO. 20351/ 2011 This application is dismissed as not pressed in view of the statement made by learned counsel for the respondent Chairman, Committee of Golden Forests Ltd. & Others, that more than Rs. 400 crores have already been collected by the Committee on disposal of various assets of the company. He further informs that another property is sold for Rs. 98 crores approximately and the amount shall be realized soon and with this, the collection would swell to about Rs. 500 crores. There is a proposal to devise a scheme vide which the Committee shall now start disbursing the said amount to various small investors. It is assured that all these aspects shall be pointed out in the main petition to seek appropriate orders from the Court. The petitioner is satisfied with the proposal. The application is dismissed as not pressed. Acting Chief Justice Rajiv Sahai Endlaw" 9. After notice was issued on the app....
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....ely equitable. The Court directed the Committee-GFIL as follow:- "This is to ensure that the amount lying with the Committee are equitably distributed in accordance with non-discriminatory principle. It is, of course, open to the Committee to adopt an approach for reimbursing the depositors beyond Rs. 5,000/- or having regard to the quantum of deposits made by them and give a preferential treatment to the small investors. In other words, this Court feels that before sanctioning the scheme which has been proposed, the Committee should work out another scheme which envisions the disbursement by adopting a slab or some such device so that all investors are treated alike in terms of the amounts deposited by them and proportionate, as the case may be." 11. The above revised scheme for disbursement of monies to depositors of the GFIL or its group companies made on 20.05.2013 was further revised; on 20.08.2013, the Committee in its second revision proposed several alternatives. In this proposal, the Committee disclosed that as on 31.03.2013, it had fixed deposits to the tune of Rs. 4,33,41,58,613/-. In the scheme proposed, the Committee states as follows: "2. The Comm....
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....and above 612261 183.68 0% 0.00 183.68 Total 1473915 280.54 29.06 309.60 Note: i. The Committee -GFIL is having Rs. 433,41,58,613/- available as on 31 March 2013 in the shape of FDR in its Bank Accounts. ii. There are certain properties of the value Rs. 138 crores (actual Bid amount received without interest accrued thereon), sale of which are incomplete, therefore, this amount has to be kept aside in calculating the available funds. So, the Committee is left with Rs. 302 crores only. However, the Committee is expecting Rs. 10 crore approx. to be added as interest. Financial Status and mode of distribution: 5. The Committee (GFIL) as on 31.03.2013 has in the Fixed Deposit Rs. 433,41,58,613/-. We have in our earlier scheme made certain recommendations, namely for appointment of Disbursing Agency either SEBI or Reserve Bank of India or any other suitable agency for payment of money slab wise, that is, upto Rs. 1000/- thereafter, upto Rs. 2000/- and so on. The Committee fears that a large number of cheques may be received back undelivered and arrangement shall have to be made for their being dealt wit....
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....rs (without interest) Amount deposit - SLAB No. of investors Principal Amt./Part Payment (Rs. In crore) Interest Rate Interest Amount Total Amount to be paid (Rs. In crore) 1 to 4000 897563 110.50 30% 33.15 143.65 4001 and above 576352 230.54 0% 0 230.54 Total 1473915 341.04 0 33.15 374.19 Calculation-5 Final payment to investors upto Rs. 5000/- with one time 30% interest and interim payment of Rs. 5000 to rest of the investors (without interest) Amount No. of Principal Interest Interest Total deposit - SLAB investors Amt./Part Payment (Rs. In crore) Rate Amount Amount to be paid (Rs. In crore) 1 to 5000 1110098 216.25 30% 64.88 281.13 5001 and above 363817 181.91 0% 0 181.91 Total 1473915 398.16 0 64.88 463.03 PROPOSALS ON THE BASIS OF CALCULATION NO.3 AS CONTAINED IN ANNEXURE A-1 Proposal-1 Final payment to investors upto Rs. 3000/- with one time 30% interest and interim payment of Rs. 3000 to rest of the investors (without interest) Amount deposit - SLAB No. of investors Principal Amt./....
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....the amount to which the Committee may not have been fully entitled to possibly refund, claims, transactions, sales not confirmed etc. In response to this order, a detailed affidavit was filed on 23.10.2013, articulating certain limitations on the part of the Committee which alleged that the GFIL had not cooperated in disclosing the full expenditure of assets owned by it. It was submitted that the valuation report prepared by one Dr. Namvati was the main source of information with respect to the assets of the companies. That report was in 10 volumes and based upon its reading, the Committee prepared state-wise report of assets. Annexure A-4 to the affidavit of 23.10.2013 of Sh. H.L. Randev, a member of the Committee shows that a total of 6323.9 acres spread over five different States belong to the GFIL. The Committee also stated that apart from the information, it had collected further information with respect to assets not included in the valuation report spread over seven states, i.e. Punjab, Odisha, Karnataka, Andhra Pradesh, Madhya Pradesh, Delhi and Himachal Pradesh otherwise to the extent of 3520.90 acres. Thus, according to the information received by the Committee, the total....
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....e Court, the Committee disclosed that the status of funds as on 31.12.2013 was that a total amount of Rs. 400 crores was lying in fixed deposits in three bank accounts, i..e in State Bank of Patiala, Oriental Bank of Commerce and UCO Bank. The Committee also disclosed that various sale transactions that were incomplete and in respect of which amounts had been received were four in number and that Rs. 65.75 crores had been deposited with auction purchasers. The Committee was of the opinion that such amounts had to be kept aside in case the Court required their refund. Thus, the total funds as on 03.03.2014 available with the Committee stood at Rs. 334.25 crores. 14. The applicant in its response and in the submissions urges that a complete picture as to the assets of the GFIL and its group companies has always remained unclear and that in these circumstances, it would be appropriate that an Advisory Board ought to be constituted which consists of one member of SEBI, a member of RBI and a representative of one of the investors. The Board should identify and ascertain the exact number of properties of the company spread throughout the length and breadth of the country and thereafte....
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....ores. During the pendency of these applications itself, the availability of funds with the Committee, the Court notices, has fluctuated. From a high of Rs. 441 crores, the Committee today states that 433.5 crores would be available for disbursement. 16. The Committee has detailed figures of the amounts invested from depositors in the GFIL and its group companies from different States. According to the figures made available to the Court, the total number of investors whose claims have been verified is roughly 15 lakhs. Of these, those who have invested upto Rs. 1000/- are 652088 and those who have invested between Rs. 1000 and 2000/- are 139896 in number. 65243 investors deposited between Rs. 2000/- and Rs. 3000/- and 35762 deposited amounts ranging between Rs. 3000/- and 4000/-. Those who invested in the slab of Rs. 4000/- and Rs. 5000/- are 211761. 17. Given the constraints and limitation as well as the uncertainities associated with the task of applying a uniform principle to ensure fairness to investors, the Court had heard submissions on behalf of the Committee, the SEBI and the representatives of investors. Initially, the suggestion of the Committee to make slab-wise di....