Sahara must refund Rs 24,000 crore to investors: SAT
The Securities Appellate Tribunal (SAT) has upheld a regulatory order directing the Sahara group to refund Rs 24,000 crore — equivalent to the country's second-biggest lender ICICI Bank's deposit growth last fiscal — for violating securities laws. The refund by two group companies — Sahara India Real Estate and Sahara Housing Investment Corp — with a 15% interest to nearly 3 crore investors should be done within six weeks, the order said. Sahara said it would appeal against the order in the Supreme Court.
"Any offer or invitation to subscribe to shares or debentures if made to 50 persons or more shall be treated as a public issue and all provisions of law relating to public issues shall apply," said the order by the Securities Appellate Tribunal. "The company withheld from the investors/public all the necessary information that is required to be disclosed to them in a public issue. This concealment is indeed very significant and goes to the root of the controversy."
Lucknow-based Sahara group appealed to the tribunal against the Securities & Exchange Board of India's order in June that Sahara India Real Estate, now Sahara Commodity Services, and Sahara Housing Investment Corp refund money to subscribers for not following public issue guidelines in the sale of optionally fully convertible debentures, or OFCDs.
Sahara India Real Estate owes Rs 17,656 crore to 22.1 million investors and Sahara Housing Rs 6,373 crore to 7.5 million investors, the group's affidavit shows. "It is unbelievably shocking that in an exactly similar case, a Mumbai-based Company, Citicorp Finance India Ltd, had issued debentures in private placement to thousands of investors," said a statement from Sahara. "This company was unlisted as is the exact case with Sahara. Such a contradictory act by a responsible regulator can only happen in our system."
Sebi said the two Sahara firms were collecting sizeable amounts of money from the public without proper disclosures and adherence to investor protection norms governing public issues. So, it restrained the company from mobilising funds till repayments were made to the investors.
In July, the Supreme Court had referred the case to the tribunal to examine whether the optionally fully convertible debentures were public issues required to be compulsorily listed on a stock exchange and whether these were securities as defined in the Securities Contracts Regulation Act,1956. Also, whether Sebi had jurisdiction to regulate them.
"OFCDs issued by the company are securities and the issue was a public issue requiring mandatory listing and Sebi has the jurisdiction under the Sebi Act to deal with all kinds of securities and companies, whether listed or not," Justice NK Sodhi said in his order.
Source: Economic Times
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