SC tells Sahara to refund Rs 24,000 cr to investors

In a jolt to the Sahara Group, the Supreme Court on Friday 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 the years 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 violated the listing provisions and collected huge amounts from the public in disobedience of law".

The Sahara group could end up paying 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 J S Khehar asked the Securities and Exchange Board of India (SEBI) to examine issues relating to the 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 refund.

It also appointed retired Supreme Court judge Justice B N Aggarwal to oversee the action taken by the markets regulator.

The Sahara companies had moved the apex court against orders by SEBI and the Securities Appellate Tribunal (SAT) passed last year. The SEBI 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 the objection over SEBI's jurisdiction to regulate OFCDs and also to regulate their 'hybrid' securities. Sahara had taken the stand that SEBI had no jurisdiction over unlisted public companies and only the Ministry of Corporate Affairs could regulate them.

... contd.

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