Market regulator Sebi has begun prosecution proceedings against two Sahara firms and their top officials, while accusing them of failing to provide documents related to three crore investors as per a Supreme Court order.
The prosecution proceedings have been launched against Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation Ltd (SHCIL), as also their promoter/directors -- Ashok Roy Choudhary, Ravi Shankar Dubey, Vandana Bhargava and Subrata Roy Sahara, Sebi said.
The market regulator further said that "as Saharas did not submit the documents as per the order dated August 31, 2012 of the Supreme Court, Sebi has filed contempt application before the Supreme Court."
While the Sahara Group spokesperson did not offer any comment on the Sebi move, the companies last week approached Securities Appellate Tribunal seeking time till January 31, 2013 for submission of documents.
The apex court had asked SIRECL and SHCIL to refund an estimated Rs. 24,000 crore collected from about three crore investors, through red herring prospectuses (documents for raising public funds) in March 2008 and October 2009, along with 15% annual interest to Sebi by November 30, 2012.
The Sahara companies were also asked to furnish within ten days all documents in their custody, particularly the application forms submitted by subscribers, the approval and allotment of bids and all other documents to Sebi so as to enable it to ascertain the genuineness of the subscribers as well as the amounts deposited.
The Supreme Court had also asked Sebi to identify the subscribers who had invested the money on the basis of the two RHPs and refund the amount to them with interest on their production of relevant documents providing payments and after counter-checking the records produced by Sahara firms.
Sebi further said in a public notice that it has been receiving "complaints from investors that they are being forced by Saharas/their agents/officials to switch-over their investments to other schemes in Sahara Group Companies like Sahara Q Shop Unique Products Range Ltd, Sahara Credit Cooporative Society Ltd, etc.
"Some investors have also complained that their investments have been switched over to the said schemes of Sahara Group Companies without their consent," Sebi said.
The regulator said that the act of any such person forcing the bondholders of SIRECL and SHCIL to switch over to other schemes of Sahara Group Companies "is not in accordance with the order of the Supreme Court".
Sebi has asked the bondholders to "hold on to the original documents relating to their investments in bonds and produce the same to Sebi when called for and not to yield to any pressure from any person, including Saharas or their agents for converting or switching over their existing investments in the bonds to any of their other schemes like Sahara Q-Shop."
The regulator has also asked investors to inform it about any pressure tactics in this regard.
SEBI extends bid deadline
Sebi has extended the deadline by one month for submission of bids by public sector banks and KYC Registration Agencies (KRAs) to conduct “in-person verification” of about 3 crore investors in Sahara case to ascertain their genuineness.
SEBI had floated a tender in this regard on November 2 and had earlier asked the public sector banks and KRAs to submit their applications by November 22.
However, SEBI has now decided to extend the deadline for bid submission to December 21 and would open the technical bids on the same day.
The selected ‘In-Person Verification (IPV) Agency’ would be mandated to interact “face-to-face” with all investors.