SC questions Sahara on fund-raising

Counsel for the Sahara group of companies came in for some uncomfortable queries from the Supreme Court on Monday on its appeal against the bar on its recent fund-raising schemes.

The Securities and Exchange Board of India (Sebi) had first barred two group entitites and their promoters from raising money. The Allahabad high court had, last month, declined to interfere with the order, also rapping the Sahara group in the process.

The SC on Monday asked Sahara India Real Estate Corporation to produce before it on Thursday the proforma in which investors were asked to apply for debentures. A bench headed by Chief Justice S H Kapadia also asked the corporation to produce the list of its agents employed to raise money.

The court said it was not clear about the concept of the Optionally Fully Convertible Debenture through which the firm said it was raising the money. It asked Soli Sorabjee, counsel for the Sahara group, to explain it, but he was unable to. “If you don’t understand it, how can rural people understand it?” asked the court.

Sebi had demanded full details on applicants for the scheme and said it was issuing the stop-order due to non-compliance. Sorabjee argued the company shouldn’t be held responsible if investors gave false addresses and like particulars. Sahara is also protesting at Sebi’s public advertisement on the matter, telling investors to keep away, as having given it a bad name and helping its competitors.

The Allahabad HC had dismissed the plea regarding OFCD schemes floated by Sahara India Real Estate Corporation Ltd and Sahara Housing Investment Corporation Ltd.