Central Registrar notice to Sahara multi-state cooperatives

The societies, which have invested in Aamby Valley, did not submit documents sought from them

The Central Registrar of Cooperative Societies (CRCS), under the Union Ministry of Agriculture, has issued notices to two multi-state cooperative societies associated with the Sahara group because they allegedly did not submit books of accounts and other documents sought from them after an inspection.

Both societies have a significant exposure to Aamby Valley, on which the Supreme Court gave an order of attachment on Monday in connection with the group’s legal tussle with the Securities and Exchange Board of India.

The notices were issued in the last week of January to Lucknow-based Sahara Credit Cooperative Society (SCCSL) and Bhopal-registered Saharayn Universal Multipurpose Society (SUMSL). “Non-submission of these documents even after nearly two months” since the conduct of the inspection “has been viewed seriously,” the separate notices dated January 23 said.

Both SCCSL and SUMSL were floated around the time the group ran into trouble with regulators such as the Reserve Bank of India and Securities and Exchange Board of India. While SCCSL was registered in March 2010, SUMSL was initially floated as Saharayn e-multipurpose society in January 2014, before changing its name in 2015. Both societies have significant investments in Aamby Valley Ltd, according to the company filings. SCCSL owns 103.91 million preference shares of Rs 100 each, amounting to about Rs 1,039 crore. SUMSL owns 45.5 million preference shares worth some Rs 455 crore. In addition, about 220 million equity shares, forming nearly 40 per cent of Aamby Valley, belongs to SCCSL, but could not be transferred because of restraint orders of the statutory authorities, these filings said.

In December 2014, the Economic Times had reported that liabilities of SCCSL had touched Rs 36,000 crore at the time. It had some 26 million nominal members and 9.2 million regular members with voting rights.

In the case of SCCSL, the registrar wanted the detailed audited statements of accounts, namely the balance sheet and P&L accounts for three financial years – 2013-14, 2014-15 and 2015-16. The notice also sought a detailed report on investments made by the society in these three years. Referring to earlier communications regarding this in January, the notice added that in a communication received from the society following the inspection, the financial statements of 2015-16 “were not enclosed, even though it is mentioned as enclosed”.

This appears to have been done intentionally, it added. In response to an email seeking comments on the notice, SCCSL said, "We are a law-abiding society and submitted our annual returns along with audited accounts for the financial year 2015-16 as per the provisions of section 120 of the Multistate Cooperative Societies Act, 2002 on due date. However, the Central Registrar again asked the Annual Audited statements for 2013-14 to 2015-16, the same has been again submitted on 27.01.2017."

In addition to the financial statements and investment details, SUMSL was asked to give copies of brochures and other promotional documents about products and services offered by the society. It also sought copies of minutes of board meetings since the registration.

In a separate response, SUMSL said, " During course of inspection of the authority, society has provided all data and records and cooperated with inspecting authorities, though he asked some papers/ records other than inspected was sent through speed post dated 19/01/2017 immediately after inspection as per time given by them." It added in the statement that," the society has sent some more papers when it is desired by registrar officials through special messenger on given time. Our society always believes in law of land and respect our regulator's instructions by our registrar."