The Telegraph
Friday , November 30 , 2012
Since 1st March, 1999
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Sahara suffers fresh jolt

Mumbai, Nov. 29: The Securities Appellate Tribunal (SAT) today threw out an appeal filed by the Sahara group accusing the Securities and Exchange Board of India (Sebi) of malafide intent in refusing to accept documents providing information on the investors who had subscribed to bonds floated by two group companies more than four years ago.

On August 31, the Supreme Court had struck down the bond flotations made by two unlisted companies and ordered Sahara group to repay Rs 17,400 crore along with 15 per cent interest to 2.96 crore investors.

The apex court had also asked two group entities to submit details of the concerned investors to Sebi by September 10. The market regulator had subsequently approached the apex court with a contempt petition after the Sahara group missed the deadline.

This month, the two Sahara group companies — Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation Ltd (SHICL) — had moved the tribunal against Sebi. They contended that the market regulator deliberately refused to accept the documents containing information on investors and wrongly proceeded on the basis that the Sahara group had not complied with the directions made by the Supreme Court.

The two group companies also expressed the apprehension that Sebi might not accept the payments made in accordance with the orders of the Supreme Court.

They urged SAT to direct its registrar to accept custody of the amount to be paid to Sebi by November 30. The also wanted the tribunal to direct the market regulator to provide the time frame within which Sebi would repay the amount to the bond holders and also clarify the process for the refunds.

During the hearing, Gopal Subramaniam, senior counsel, appearing for the appellants (SIRECL and SHICL) argued that they were forced to approach the tribunal because of Sebi’s refusal to accept the documents tendered by the Sahara entities.

He also expressed the apprehension that a pay order of Rs 5,120 crore to repay the amount to the investors who subscribed to the optionally fully convertible debentures (OFCDs) would not be accepted by Sebi.

There was no clarity on how the Sahara group had arrived at the sum of Rs 5,120 crore when the Supreme Court had directed it to refund Rs 17,400 crore along with 15 per cent interest. This may suggest that it has been able to cull information on only a smaller number of investors than estimated. The Supreme Court had said in its order that there were ground to suspect that there were a large number of fake investors.

The apex court also said that if the whereabouts of all or any of the subscribers cannot be established, then the amount collected from such subscribers would go to the government’s coffers.

Subramaniam maintained that as the last date for depositing this amount is November 30, it mightt amount to violation of the order passed by the Supreme Court if the payment is not accepted.

In an order passed today, SAT said it had no jurisdiction in the matter and asked the Sahara group to approach the Supreme Court in this regard.

“We fail to understand how this tribunal gets the jurisdiction to entertain this appeal when the parties are supposed to take action in accordance with the directions given by the Supreme Court,” the tribunal said.

SAT added that the cause of action, if any, would arise only if the money is tendered by the appellants according to the directions of the Supreme Court and it was not accepted by Sebi.

“We see no reason how this tribunal gets jurisdiction to entertain the appeal or give any further directions in the matter. We are, therefore, of the view that any further direction or modification in the directions issued by the Supreme Court can be sought for and granted by that Court alone. We, therefore, find the appeal premature as well as non-maintainable,” it said.