The hope of some 30 million investors hangs in balance as market regulator Securities and Exchange Board of India (Sebi) and Sahara India Parivar have opened new fronts over the past few days in their protracted legal battle over optionally fully convertible debentures(OFCD).
As the Supreme Court set November 30 deadline draws to a close, Sebi chairman UK Sinha said the regulator is on course. “All I can say is that there are certain directions from the honourable Supreme Court and we are working to implement those directions,” Sinha said in the sidelines of a conference in Mumbai.
He declined to give further details saying that he cannot talk to media on quasi judicial matters that have “not reached their finality.”
Sahara group firms Sahara India Real Estate Corporation and Sahara Housing Investment Corporation raised over Rs 24,029 crore from 30 million investors by issuing Optionally fully convertible debentures (OFCDs). Sebi found these to be in violation of its public issue rules and ordered a refund.
On August 31, the Supreme Court upheld the Sebi decision and directed the firms to deposit the entire money alongwith an interest of 15%. It entrusted with Sebi to oversee a process wherein this money is refunded to the eligible investors. In case, these investors are not traceable the money should go to the government coffers, the court had said. Sahara was also directed to submit all the necessary documents within ten days and the entire refund operation was to be completed by November 30. However, much of the past three months has been spent in statements, petitions and counter petition. Neither the documents nor the money has come out from Sahara group leading Sebi whole time member Prashant Saran to say, "“Let the money and documents come. The time to return the money would depend upon the nature of the documents,” in Bhubaneswar recently.
The group did not adhere to the deadline leading Sebi to file a contempt petition with the Supreme Court. Meanwhile, Sahara firms filed a review petition with the apex court, which is likely to come up for hearing early next month.
Separately, the group has moved the Securities Appellate tribunal against Sebi’s refusal to take documents beyond the 10-day deadline set by Supreme Court
Experts see the desperate move as a bid to buy time. MS Sahoo, former Sebi member and advocate, “They have gone to SAT on some technical grounds.”
Earlier reports said Sebi has moved the local court in Mumbai to initiate criminal proceedings against Sahara group promoter Subrata Roy Sahara and directors of the two group companies that raised money. While experts fear this may further lead to time-consuming legal battle, Sebi has to follow procedures.
Sahoo said,”Supreme Court has allowed Sebi to initiate criminal proceedings. They have to follow due procedure in doing so, which is why they have moved court.”
Another lawyer, who did not want to be identified said, “The Sebi move may not affect the Sahara chief as he is not a director in either of the two firms. Instead Sebi should initiate action against the agents of Sahara who collect these deposits from small investors in the hintedland.”