The Apex court Friday directed Sahara Group firm Sahara India Real Estate Corp to approach the Securities Appellate Tribunal (SAT) against market regulator SEBI's order directing the return of money collected from investors for OFCD, a particular bond scheme within a period of three weeks.
Optionally Fully Convertible Debentures (OFCDs) are a type of bond with the option to fully convert them into equity at a rate decided by the company.
The issue relates to SEBI's finding in November that two Sahara Group firms -- Sahara India Real Estate Corporation and Sahara Housing Investment Corporation -- were raising funds from the public through an OFCD scheme without conforming to prudent disclosure and other investor protection norms.
A three-member bench headed by Chief Justice S H Kapadia directed the Securities Appellate Tribunal (SAT) to decide Sahara India Real Estate Corp's appeal against SEBI within a period of eight weeks. "We are of the view that keeping in mind interest of the investors... better option would be to give an opportunity to the petitioner (Sahara) a hearing before SAT," the bench observed.
Following the orders of the Supreme Court, the SEBI had on June 23 directed the two Sahara Group firms to refund the money, along with 15% interest, raised through its OFCD scheme for violating regulatory norms.
Sahara Group had contested SEBI's authority to look into the issue in the Supreme Court, asserting that it was a privately held company and not listed and therefore, was under the jurisdiction of the Ministry of Corporate Affairs (MCA).
Meanwhile, Senior advocate Fali S Nariman appearing for Sahara Group firm submitted that till the final order of the SAT, it will not invite any fresh deposit in the OFCD scheme.
The SC also said that the interim order of SEBI would not be operational till the appeal is decided by SAT.
In addition, the apex court directed the Sahara Group firm to withdraw its petition filed against SEBI in the Allahabad High Court.
The apex court said that SAT will take a decision irrespective of SEBI's interim order and the remarks passed by the Allahabad High Court in this issue.
The apex court also directed the Sahara Group firm not to take any adjournments before SAT.
Earlier, on June 27, a vacation bench of the apex court comprising Justices P Sathasivam and A K Patnaik had declined to hear the plea of Sahara India Real Estate Corp and asked it to list the matter before the Chief Justice, who has been hearing the case.
As per SEBI's order, the two companies, promoter Subrata Roy Sahara and directors Vandana Bhargava, Ravi Shankar Dubey and Ashok Roy Choudhary, jointly and severally, shall refund the money.
Besides, the regulator had also restrained the entities from accessing the securities market for raising funds till the time payments are made to the satisfaction of the SEBI.