The Division bench of Delhi HC consisting of Hon. Mr. Justice Anil Dev Singh and Hon Mr. Justice Mukul Mudgal today passed sweeping order in a public interest litigation for regulating the activities of plantation companies and Collective Investment Schemes.

On behalf o the petitioners Mr. Sanyal, Sr. Advocate pointed out that hundreds of crores of investors funds have been locked up in various schemes floated by plantation companies promising huge returns. Most of these companies are in no position to honour their commitments and immediate action should be taken to protect the investors’ interests.

At the hearing it was pointed out by Shri Kirti N Raval, Additional Solicitor General of India, appearing on behalf of SEBI that after the Central Govt. clarified in 1997 that SEBI should regulate Collective Investment Schemes, including schemes of plantation companies, SEBI has initiated action immediately. It had asked the plantation companies to get themselves credit rated by recognised Credit Rating Agencies before mobilising further funds from investors. SEBI had also filed a petition in Bombay High Court for directions for regulating the activities of plantation companies and protecting investors’ interests. So far only 27 companies have got themselves rated by Credit Rating Agencies and all of them have been rated as below investment grade. Strong exception was also taken to the allegations against SEBI and its officers.

After hearing the parties, the High Court has passed an order directing all the plantation companies which are stated to be 591 in number to get themselves credit rated by SEBI recognised Credit Rating Agencies, to give complete list of their assets and liabilities and also a complete list of its directors and their personal assets with the dates of acquisition. The HC has further directed that any further mobilisation of funds must strictly comply with the SEBI directives issued from time to time and restrain the plantation companies from alienating their assets. The High Court has also clarified that this order will not come in the way of the plantation companies giving any refunds to their investors if they so desire. The next date of hearing has been fixed on October 29, 1998 for further directions. In the meanwhile SEBI has been directed to issue a public advertisement giving a gist of this Order.