After cautioning general public against dealing with two Sahara group firms and their top executives due to an order for attachment of their assets, Sebi has asked hundreds of institutions including banks, other financial services firms and even government departments to be cautious in their business with these Sahara entities.
Close on the heels of ordering attachment of bank accounts, investments and all other assets of two Sahara group firms and their promoters, including group chief Subrata Roy, market watchdog Securities and Exchange Board of India (Sebi) last month cautioned the investors and general public against transacting with these companies and persons.
Now, Sebi has advised banks, mutual funds, capital market entities and government departments dealing in property matters to stay cautious about the entities facing attachment orders, as any dealings involving the assets ordered to be frozen or attached could be tantamount to breach of regulatory directions issued as per the Supreme Court orders, a senior official said.
Sebi has already issued hundreds of such advisories and many more are being sent to various entities, the official said, while adding that the regulator is also seeking help of banks, RBI and other agencies with regard to recovery of over Rs. 19,000 crore from the two Sahara companies towards refund to investors.
Saharas have paid Rs. 5,120 crore to Sebi so far and claim that this amount itself is more than the total outstanding liability towards the bondholders of the two companies. The two firms were ordered by Supreme Court on August 31, 2012 to refund over Rs. 24,000 crore to investors and Sebi was asked to facilitate the refund.
After the Supreme Court told Sebi that it can attach properties and freeze accounts if the companies were not paying the money, the regulator last month passed the attachment orders.
Subsequently, Sebi said in a public notice: "Anyone transacting with them (Sahara India Real Estate Corp Ltd, Sahara Housing Investment Corp Ltd and their three promoters and directors) would be doing so at their own peril."
The regulator said that in furtherance to a Supreme Court order directing refund of investors' money collected by these Sahara firms, it has ordered "attachment of all moveable and immovable properties, bank accounts and demat accounts of these two companies and that of its promoters and directors namely Subrata Roy Sahara, Vandana Bhargava, Ashok Roy Choudhary and Ravi Shankar Dubey."
"Investors and general public are advised to exercise caution and take note of the said orders before transacting with the aforesaid entities/persons in any manner whatsoever," it said in the public notice.
On February 13, Sebi passed two separate orders, together running into 160 pages, directing attachment of properties and freezing of accounts.
It was after the Supreme Court said that the regulator was free to freeze the accounts and attach properties if Sahara firms were not complying with the apex court's earlier orders of August 2012 towards refund of investors' money totaling over Rs 24,000 crore.
The assets ordered to be attached included those related to the group's Aambey Valley resort town near Pune, other real estate assets in Delhi, Mumbai and at other places across the country, shares, mutual funds and various other investments.
Passing the attachment orders, the market regulator said that the two companies had raised Rs. 6,380 crore and Rs. 19,400 crore, respectively from bondholders and "various illegalities" were committed in raising of these funds.
With regard to Subrata Roy and three other directors, namely Vandana Bhargava, Ravi Shanker Dubey and Ashok Roy Choudhary, Sebi ordered freezing of all bank and demat accounts of these four persons, as also attachment of all moveable and immovable properties in their name with immediate effect.
Subsequently, the Sahara Group claimed that the actions taken by Sebi were based on "old facts" and the orders for attaching assets of individuals is incorrect on part of the market regulator.
Later, the group also ran a major advertisement campaign in newspapers with claims that "Sahara has nothing to pay (and) rather Sahara shall soon be eligible to take a big refund from Sebi" and it was submitting to Sebi the provisional balance sheets of two companies as on December 31, 2012 for more clarity on the matter.
In an unusual development last week, Sahara group also claimed that it fears income tax raids on it at the behest of Sebi and the regulator was working with a vengeance against it.
The Supreme Court on August 31, 2012 had asked Sahara group firms to refund the money with 15% interest and had asked Sebi to facilitate the refund.
However, the group in December, 2012 was allowed to pay the money in three instalments, including an immediate payment of Rs. 5,120 crore, followed by an installment of Rs. 10,000 crore in the first week of January and remainder by the first week of February 2013.
Sebi in its attachment orders, however, said that neither of the two instalments was paid and therefore it is constrained to take necessary action as per the Supreme Court orders.