In a huge setback to the Sahara group, the Supreme Court on Friday directed it to return Rs.
24,000 crore, plus 15% interest, to millions of investors. And if the group fails to comply with the order, its properties would be attached and bank accounts
Market regulator Securities and Exchange Board of India (Sebi) contended that two real estate companies of the group violated the Companies Act by collecting money through optionally fully convertible unsecured debentures (OFCDs).
The two companies — Sahara India Real Estate Corporation Ltd and Sahara Housing Investment Corporation Ltd — issued prospectuses on March 13, 2008 and October 16, 2009. On November 24, 2010, Sebi restrained them from selling the bonds after they refused to provide details of investors.
Although the judgment said as much as Rs. 40,000 crore had been raised by the two companies, Sebi counsel Pratap Venugopal told HT: “Following today’s verdict, the two companies would have to refund over Rs. 24,000 crore."
Upholding Sebi’s contention that OFCDs were publicly issued debentures — and not privately issued papers to persons associated with it, as claimed by the companies — the court directed the group to furnish details of its subscribers, including their application forms, in 10 days.
And if Sebi “is unable to ascertain the whereabouts of all or any of the subscribers”, the court said the amount the non-existent subscribers accounted for would be sent to the central government.
A bench of Justice KS Radhakrishnan and Justice KS Kehar gave three months to the group for paying back the money. The interest will be calculated from the date of receiving subscriptions till the date of repayment.
The court appointed Justice BN Agarwal, a retired SC judge, to supervise the refund process and ordered that SEBI would pay Rs. 5 lakh a month to him and would recover the amount from Sahara. The company will also bear the cost of Justice Agarwal's support staff.
The court gave liberty to SEBI to engage investigating officers, experts in finance and accounts and other supporting staff to implement its directions. The expense is to be borne by Sahara Group.
In a statement, Sahara Group assured its depositors and investors: “You need not worry about anything and be at absolute peace ... and by the grace of God, we are so healthy with all-round strength that there cannot be even one day delay in any payment commitment of Sahara.”
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