Sebi orders Sumangal Industries to wind up potato purchase scheme

In a crackdown on illegal fund collection,the Securities and Exchange Board of India (Sebi) on Tuesday banned Sumangal Industries Limited from collecting funds through its collective investment scheme. It also ordered the company and its promoters and directors,including its MD Subrata Adhikary,to wind up its potato purchase scheme and refund money with interest to the investors within three months. While the Sebi order does not mention the amount that the company has collected under the scheme,it says that if the company fails to wind up the scheme and refund the money it will initiate prosecution proceedings against the company and its promoters and directors. In September 2012,the company had advertised its potato purchase scheme in a newspaper. Sebi had asked for the details of the scheme in October 2012 and had passed an interim order in April 2013 asking the company not to collect any money from investors,not to dispose of any of the properties or alienate the assets of the scheme and not to divert any fund raised from the public. Sumangal Industries,however,approached the Calcutta High Court and filed a writ petition in the matter. However in the absence of a stay on Sebi’s order,the regulator went ahead with its proceedings. Sebi has also restrained the company from accessing the securities market.