Sebi files petition with Supreme Court against Sahara firms

Market regulator, the Securities and Exchange Board of India, on Wednesday filed a petition with the Supreme Court seeking action against the Sahara Group for not complying with the court’s orders.

The Supreme Court had on August 31 directed two unlisted Sahara group companies—Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC)—to refund around Rs. 24,000 crore to investors from whom the group had collected money.

The court had also directed the group to hand over all documents submitted by the investor to Sebi within 10 days to verify the genuineness of the investors. The deadline expired on September 10.

The court had appointed retired judge, Justice B.N. Aggarwal, to oversee this. Mr. Aggarwal has already submitted his status report to the court saying that Sahara failed to hand over the documents.

However, the group failed to hand over the documents, prompting the market regulator to approach the apex court.

According to some media reports, the Sahara group had dispatched two truck-loads of documents to Sebi's headquarters, but this was not confirmed by Sebi or Sahara officials.

The case is likely to be taken up on Friday.

Sebi had last year ordered the companies to refund the money, with 15 per cent annual interest, after it found that the fundraising process did not comply with its rules. An appellate tribunal upheld the regulator's order. Sahara then moved the apex court challenging the tribunal’s decision. The court ruled against Sahara.

Sahara investors: Supreme Court not convinced by name and addresses given by company

MUMBAI: Who is Kalawati? Does she exist? What's her real address? These are questions that India's highest court has pondered over to stoke an old suspicion that millions have harboured about Sahara.

''Kalawati' is a name that figures in the long list of investors who subscribed to convertible debentures issued by the Sahara companies that are under scanner.

She is a 'resident' of Uchahara, SK Nagar, UP, and the agent who brought in the investment of Rs 1,600 is Haridwar of Bani Road, Sant Kabir Nagar. The innocuous information appears on the first page of the voluminous compilation of Sahara's investor details that was presented to the Supreme Court.

But the court was not convinced to go beyond page 1.

Instead, the court, while directing two Sahara companies to refund thousands of crores, has made some obvious observations: it's unclear whether Kalawati is a member of the Sahara group or its associates, or related to Sahara employees; her parentage and husband's name is not disclosed; and the address is of general description with no street name or door number. Also, as a name, 'Hardiwar' is incomprehensible: in India, cites do not constitute the basis of individual names, said the court.

It's a suspicion that Sahara has to counter if it has to survive. This could well be the reason that drove the group to come out with full page advertisements over the weekend. Mentioned in capital letters, the ad claims that "there is not a single benami money and this statement is Sahara's challenge to all authorities of our country". Two Sahara companies have been asked to pay back Rs 17,400 crore along with 15% interest, failing which the capital market regulator Sebi can initiate legal proceedings to seize Sahara's assets and freeze bank accounts to recover funds.

"One would not like to make any unrealistic remark, but there is no other option but to record, that the impression emerging from the analysis of the single entity extracted above is that the same seems totally unrealistic and may well be fictitious, concocted and made up," said the court. It felt that many transactions are not expected to be casual, certainly not in the manner expressed by the two companies.

Interestingly, Sahara India Real Estate Corp, which raised bulk of the funds, had cash and bank balances of Rs 6.7 lakh and net current assets of Rs 6.54 lakh as on 31 December 2007. Together with Sahara Housing Investment Corp - the company that has been asked to refund investors - have raised as much as Rs 40,000 crore so far through issuance of optionally fully convertible debentures. Till August 2011, the two entities had collected 24,029 crore (net of premature redemptions) from 2.9 crore investors. Now, Sebi has the humongous task of ascertaining the genuineness of the investors as well as the amount deposited by them.