NCLT orders insolvency process against Pancard Clubs

Case: Nitin Suresh Satghare v. Pancard Clubs Limited

Bench: Judicial member PN Deshmukh and technical member Shyam Babu Gautam

The National Company Law Tribunal (NCLT), Mumbai admitted a petition initiating the Corporate Insolvency Resolution Process (CIRP) against Pancard Clubs Limited. 

The joint petition was filed by 100 shareholders. Rajesh Sureshchandra Sheth is the Interim Resolution Professional (IRP) in the matter. The plea was filed on the ground that Pancard defaulted in repayment of monies to the tune of ₹1,55,12,880 invested by shareholders. The debt arose in regards to the investments made by the petitioners in a collective investment scheme (CIS) operated by the company under the guise of a time-share business.

In an order dated February 29, 2016, the Securities Exchange Board (SEBI) ordered the company to refund investors' monies amounting to 7,035 crores within 3 months of passing the order. The same was upheld by the Securities Appellate Tribunal (SAT).

Advocate Nausher Kohli, appearing for the shareholders, said that the above-mentioned orders indicate that the company accepted the investments of over 50 lakh investors under the guise of a time-share scheme in exchange for the purchase of room nights at various hotels and resorts owned by the company.

According to SEBI, establishing CIRP would undermine recovery proceedings for violations of the SEBI Act already initiated by the regulator.

However, NCLT ignored this submission since it deemed that the order of SEBI did not bar the initiation of CIRP against the company. As a result of the documents annexed to the petition, the court concluded company breached the contract, resulting in the repayment amount being in default.