Alchemist Infra Realty Ltd, part of the Member of Parliament KD Singh's Alchemist Group, has been directed to close its collective investment scheme and refund the already collected money to investors.

The company has three months to wind up the investment scheme, through which it gathered more than Rs 1,000 crore in the past five years from a huge number of small investors.

KD Singh, an MP from West Bengal chief minister Mamata Banerjee's Trinamool Congress (TMC), is the chairman of Alchemist Group.

Capital market regulator Securities & Exchange Board of India (SEBI) had asked the company to close the scheme on June 21.

Sushanta Polen, a farmer from West Bengal, said he was lured to invest Rs 10,000 in the scheme in 2009, with a promise that the company would use the funds raised from small investors to buy a plot of land in Northern India, and that they would get 200 per cent returns on their investments in eight years.

Neither KD Singh nor his party commented on the development, but Alchemist Group claimed in a statement that it had never defaulted in making repayments to its investors.

Around two months back, a massive chit-funded group Saradha in Bengal collapsed, throwing thousands of investors into bankruptcy.