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Sebi cracks whip on Sahara

Banks told to freeze accounts; properties of Sahara Real Estate, Sahara Housing to be seized

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A week after the Supreme Court pulled up the market regulator for not taking action against two group firms for defying the court’s August 2012 order directing refund of Rs 24,000 crore to investors, the Securities and Exchange Board of India (Sebi) has swung into action.

on Wednesday asked banks to freeze accounts and seize properties of Sahara India Real Estate Corporation (SIREC) and Investment Corporation (SHIC). It also asked the group to deposit SHIC’s cash and bank balance, worth Rs 309.19 crore, and SIREC’s, worth Rs 1,655 crore, with it. The real estate firm was also directed to deposit share certificates worth Rs 5,207 crore of Aamby Valley, while the housing firm was asked to recover its investments in partnership firms and loans and advances, to the tune of about Rs 103 crore, and deposit those. (Read the full order here)

The Supreme Court had directed the two Sahara firms, which had raised money from 29.6 million investors through optionally fully convertible debentures (OFCDs), to refund around Rs 24,000 crore with 15 per cent annualised interest to the investors. The first instalment of Rs 10,000 crore had to be paid by the first week of January and the remaining by the first week of February.

“SIRECL and SHICL did not comply with the apex court directions,” the Sebi order, passed by whole-time member Prashan Saran, said.

In December, the Supreme Court had given more time to Sahara to complete the refund. A bench headed by Chief Justice Altamas Kabir had on December 5 directed the two companies to immediately hand over a demand draft of Rs 5,120 crore to Sebi and the remaining amount in two instalments by early February.

However, Sahara had later said the liability of both the companies towards the outstanding was just Rs 2,620 crore as on November 30. It offered to pay orders of Rs 2,620 crore and a buffer amount of Rs 2,500 crore “subject to certain verification of some ending/continuing at the company’s end.”

Sebi’s contention was, given the number of investors, the bond issuance was a public offer rather than a private placement of securities. The regulator’s orders were then endorsed by the Supreme Court in August last year. It directed the group to deposit the entire sum with Sebi, which, in turn, would refund it to investors. It had given Sebi the power to freeze Sahara’s bank accounts and seize its properties.

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