Sahara chief Subrata Roy's arrest on Friday is a culmination of a nearly four-year account of alleged irregularities in fund raising schemes by two Sahara Group firms. HT connects the dots:
A pin drops
• In 2010, Roshan Lal, a chartered accountant based out of Indore, sent a letter requesting the National Housing Bank (NHB) to investigate housing bonds issued by Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC).
• The letter was forwarded to the market regulator Securities and Exchange Board of India (Sebi).
Regulator in action
• The Sebi ordered an investigation based on Lal's letter.
• Investigations hit a hurdle as SIREC and SHIC were not listed on stock exchanges.
A few shreds of evidence
• Luckily for the Sebi, Sahara Prime City, a real estate arm of the Sahara Group, had filed a draft red herring prospectus (DHRP) for an IPO.
• The Sebi reviewed information regarding the bond issued by the two companies in question, which was mentioned in the DRHP itself.
• The Sebi concluded that SIREC and SHIC violated the Companies Act by collecting money through optionally fully convertible unsecured debentures (OFCDs) and ordered the company not to raise any further funds using these instruments.
Courtroom battle begins
• The Allahabad high court stayed the Sebi order and the SC also turned down Sebi's plea to stop the two firms from raising money from investors
• The SC, however, empowered the regulator to seek information
Out in the open
• The Sebi issued a public notice cautioning investors against buying bonds issued by SIREC and SHIC
• Lucknow bench of Allahabad high court vacated earlier stay on the Sebi order
• The Sebi then alerted investors about a ban on fund raising schemes by the two Sahara companies
• Sahara challenged the Allahabad high court order in Supreme Court; the SC told Sahara to share details of investors and asked the company to approach the Securities Appellate Tribunal (SAT).
• The SAT ruled in Sebi's favour, upholding the order and asking the company to refund the money.
• The Sahara Group accused the Sebi of refusing to accept documents of the investors, which the company was required to submit to the market regulator to meet the deadline set by the SC
• Sahara alleged that the trucks carrying documents were waiting since the evening of September 10 outside Sebi headquarters but not allowed inside
• In August 2012, the SC ordered the Sahara Group to return Rs 24,000 crore, plus 15% interest, to millions of investors, within three months
• In newspaper advertisements, Sahara said it would return the money to investors. "You need not worry about anything and be at absolute peace as Sahara is the most dutiful and absolute honest custodians of your money," it said.
The final move
• In December, 2012, the company was allowed to pay the money in three installments, 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 2012.
• The Sebi said neither of the latter two installments were paid
• The SC allowed the Sebi to freeze accounts and seize properties of Sahara Group's two companies for defying court orders
• The properties being attached by the Sebi included the land owned by Sahara Group firm Aamby Valley near Pune and land in Mumbai, Delhi and Gurgaon.
• The Sebi also ordered freezing of all bank and demat accounts as well as attachment of properties of Roy and three directors.
• The Lucknow Police took Sahara Group chief Subrata Roy into custody from his home in Uttar Pradesh capital Lucknow.