Sahara moves HC challenging Sebi ban on raising funds

A Sahara firm today moved the Allahabad High Court challenging market regulator the Securities and Exchange Board of India's (Sebi) order barring some group entities and its promoters, including Chairman Subrata Roy, from raising funds from public for non-disclosure of information.

Taking note of the petition, filed by Sahara India Real Estate Corporation, the Lucknow Bench of the High Court decided to hear the case on December 1 and allowed the petitioners to serve notices to Sebi and Registrar of Companies through fax or personally.

The petition was being considered by a division Bench comprising Justice Devi Prasad Singh and Justice V K Dixit.

Earlier, Sahara group had come out with a major advertisement campaign in the national dailies saying it would challenge the Sebi's Thursday order which was dubbed as "irresponsible" and reflected "malice and bias" on the part of officials.

Apart from banning Sahara India Real Estate Corporation (SIRECA), Sahara Housing Investment Corporation (SHICL) and their promoters -- including Roy -- from raising money from the public, Sebi said in its order on Thursday that there was a need for lifting the veil on corporate fund raising. It also sent a recommendation to the government for taking appropriate action under the Companies Act.

Questioning the Sebi jurisdiction, the petitioners said that only the central government may pass such an order and not the Sebi which has issued an order to this effect without providing an opportunity to the company to put forth its viewpoint.

Earlier in its campaign the group had said that "Sebi has pushed us against the wall, that is why in the interest, image and goodwill of entire Sahara India Pariwar, we have been forced to come out with all the details... Now we shall soon appeal against Sebi's action at an appropriate forum.

"...Certain individuals occupying their office (Sebi officials) act with malice and biased approach which serve no public good and earn only a bad name."

In this context, Sahara, a privately held group that had sought to raise money through optionally fully convertible debentures from a close associate to keep out of the purview of Sebi, also sought to demonstrate its financial strength.

Questioning the contention that it has raised Rs 4,000-7,000 crore through the debenture instrument, Sahara said it was bringing out details about the group's financials.

Against a liability of Rs 34,328 crore as on June 30, 2010, the market value of Sahara Group companies was Rs 1.09 lakh crore, it said.

It may be mentioned that the value of the assets of Mukesh Ambani-led RIL was placed at Rs 2.51 lakh crore, as per the latest balance sheet, while that of the Tata Group is Rs 2.50 lakh crore. The assets of the Anil Dhirubhai Ambani Group (ADAG) companies are estimated to be worth Rs 1.15 lakh crore.