MUMBAI, May 26: In what transpires to be a classic case of robbing Peter to pay Paul, a few plantation companies have expressed their inability to refund the invested money in their schemes since they cannot raise fresh money. A SEBI diktat states that plantation companies cannot raise fresh deposits till they get their schemes rated by credit rating agencies. Instead, investors are now being told that their money have been invested in other schemes.
Sources said complaints to this effect have been received by SEBI. The regulator said that a few companies have written to SEBI about their inability to refund the money and their decision, therefore, to divert funds to other schemes.
While letters from the plantation companies has been received by only few investors, the decision to route the funds to other schemes has been taken with regard to all investors. The reason cited is that investors did not respond to the missive sent by the plantation firms. Investors are therefore unlikely to get a refund andsee their money invested in other schemes.
SEBI is receiving a number of complaints against small-time plantation companies which have refused to pay back the money to investors even after the completion of the maturity period. They have cited SEBI's recent directive on compulsory credit rating as the main reason as it prevents them from conducting their regular business activities. A few plantation companies have also gone to the extent of issuing public notices regarding their inability to redeem deposit amounts.
SEBI has, however, clarified that while all fresh funds could be raised following credit rating, the existing business can be carried out as usual and that the SEBI order does not prevent any company from making any payments to investors with regard to refunds. The market regulator at present cannot take action against companies which are siphoning off funds collected from investors since the regulations are not yet in place.
Many plantation companies have also filed writ petitions againstthe SEBI directive. As many as six companies have also moved the appellate authority in the finance ministry against the directive. In the appeal filed by Timberworld Resorts & Plantation, the appellate authority has upheld SEBI's decision to ask all plantation companies to get their schemes rated.
The Investor Grievances Forum has also made representations to the regulatory body to rein in these plantation companies and bring them under SEBI's ambit as soon as possible so that they do not divert the funds to other group companies.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
