An Indian appeals tribunal has upheld a decision by the market regulator ordering property developer PACL to return $7.5 billion (Rs 49,100 crore) to investors, in a case seen as a test of the watchdog's ability to clamp down on unregulated investment products.
PACL had appealed an order from the Securities and Exchange Board of India (SEBI) last year that deemed the company's investment products illegal for not complying with rules on so-called collective investment schemes.
In its order, SEBI said PACL was selling fixed-return investment products disguised as land-for-fund schemes. It told the firm to return 491 billion rupees ($7.52 billion) it raised from 58.5 million customers.
PACL argued it sold land to customers and not investment products.
But the Securities Appellate Tribunal, in an order published on Tuesday, backed the regulator.
SEBI has stepped up its scrutiny of unregistered investment products over the past two years, plugging regulatory loopholes that had long allowed unregulated entities to raise billions of dollars from small investors. Many ended up losing their life savings in pyramid schemes.
In 2015 alone, SEBI has passed 91 new orders closing down unregulated funds and demanding refunds for investors.
However, critics still question the regulator's ability to enforce its directives, citing the example of Indian conglomerate Sahara, which has yet to pay back $5.7 billion to investors despite the Supreme Court upholding SEBI's case two years ago. Sahara, whose founder is in jail, says it has reimbursed investors.