Big blow to Sahara group as SC orders refund of Rs 24,000 cr to investors

Jolting the Sahara Group, the Supreme Court today ordered two of its companies to refund Rs 24,000 crore, along with 15 per cent interest, to more than two crore small investors who had invested in their optionally fully convertible debentures (OFCDs) between 2008 and 2011.

Holding Sahara India Real Estate Corporation (now known as Sahara Commodity Services Corporation Ltd) and Sahara Housing Investment Corporation "legally liable" to pay back the money in three months, the court ruled that "Saharas had violated the listing provisions and collected huge amounts from the public in disobedience of law".

The Group could end up paying around Rs 38,000 crore which will include the principal amount of Rs 24,000 crore and interest of Rs 14,000 crore.

The bench of Justices K S Radhakrishnan and K S Khehar asked the Securities and Exchange Board of India (SEBI) to examine the issues relating to genuineness of investors and refund while also giving it the liberty to attach the companies' properties and freeze their bank accounts, besides other legal actions, if they failed to pay back.

It also appointed retired Supreme Court judge Justice B N Aggarwal to oversee the action taken by SEBI against the Sahara firms and "ensure effective and proper implementation" of its directions.

These two companies had moved the apex court against the orders by SEBI and the Securities Appellate Tribunal (SAT) passed last year. The SEBI had indicted them for raising funds from the public through the OFCD scheme without adhering to prudent disclosure and other investor protection norms governing such public issues.

The SAT subsequently upheld this order while brushing aside their objection over SEBI's jurisdiction to regulate OFCDs and also to regulate their 'hybrid' securities. Sahara had maintained that SEBI had no jurisdiction over unlisted public companies and only the Ministry of Corporate Affairs could regulate them.

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