Sahara can raise funds, but Sebi can seek details

The Supreme Court today declined to interfere in the dispute between the Securities and Exchange Board of India (Sebi) and the Sahara group and has allowed the company to raise funds from investors. It has, however, said that the market regulator can seek relevant information from Sahara directly.

The bench headed by Chief Justice S H Kapadia in its order said the court did not find reason to interfere, but in view of the stakes involved and to protect the interest of investors, it asked the Allahabad High Court to hear the petition of Sahara on a day-to-day basis from January 12 without adjournment. It also declined to stay the order of the Allahabad High Court, which allowed the companies to raise funds.

Sahara India Real Estate Corporation and Sahara Housing Investment Corporation had been raising funds from the public through optionally fully convertible debentures (OFCD). The process was stalled by Sebi when the company refused to provide information the regulator required. Sahara then moved the high court seeking liberty to continue with the debenture issue. It allowed Sahara to do so. At the same time, the high court allowed Sebi to conduct inquiries about the investors and other details. Sahara resisted giving information about the investors and their names during the investigation.

On Monday, Sebi had moved the Supreme Court against a High Court order staying the market regulator’s ban on a Sahara group firm to raise funds from the public. Earlier on December 13, the Allahabad High Court had stayed an order of Sebi restraining Sahara India Real Estate Corporation from accessing public funds.