OTHERS
| SC tells Sahara to repay Rs 27,000 cr Sat, 01 Sep 2012 00:11:00 +0530 |
| Business Standard Economy Policy News Over four years ago, when a Sahara group firm was asked to stop taking deposits and repay depositors immediately by the Reserve Bank of India, the Supreme Court had directed the central bank to reconsider the decision. After that, the group was given a seven-year time frame to bring down liabilities to zero in a phased manner. But, Sahara did not get any such luxury this time. Today, the apex court reinforced a similar 14-month-old order passed by the Securities and Exchange Board of India (Sebi) against two Sahara group firms by adding stringent timelines and appointing a retired Supreme Court judge to monitor the refund process. The court directed Sahara India Real Estate Corp (SIRECL) and Sahara Housing Invest Corp (SHICL), to refund over Rs 24,029 crore collected between them to the 29.6 million investors the companies claimed to have raised the sum from. According to affidavits filed with the Securities Appellate Tribunal (SAT) last year, SIRECL had an outstanding amount of Rs 17,656 crore from 22.1 million investors as of August 31, 2011. SHICL had Rs 6,373 crore outstanding from 7.5 million investors on the same date. Interest at the rate of 15 per cent per annum would be payable on the sum, which was collected by issuing optionally fully convertible debentures (OFCDs). Assuming a minimum one-year interest on the entire portfolio, the firms will have to shell out not less than Rs 3,604 crore on the interest account alone, taking the payout to over Rs 27,633 crore. “Saharas have no right to collect Rs 27,000 crore from three crore investors without complying with any regulatory provisions contained in the Companies Act, SEBI Act, Rules and Regulations,” Judge K S Radhakrishnan said in his order. Sahara raised the money using a million-strong agent network operating in over 2,500 centres across the country. The network, originally raised as a deposit-collecting force of the company’s para-banking arm Sahara India Financial Corp, was deployed by the above two firms to sell OFCDs. Sahara Chairman Subrata Roy said in a recent Business Standard interview that he was moving to the retail sector “due to the increasingly stifling regulations in the financial sector”. In June 2011, the Sebi had directed these companies to refund, saying the entire money-raising activity was illegal. Sahara had contended it was a private placement done to friends, relatives and associates and the Sebi did not have jurisdiction over such placements by unlisted companies that did not intend to list in future. But, the Supreme Court held that “Sebi, in the facts and circumstances of the case, has rightly claimed jurisdiction over the OFCDs issued by Saharas.” We’ll fight the system: Sahara In a statement after the Supreme Court order, Sahara India said there was no complaint of non-payment against it. “For seven-eight years, we have faced the onslaught of various authorities since they concluded whimsically the deposits we have received are fictitious as they feel the money with us is ill-gotten from politicians, etc,” it said. However, on the further course of action, the company said, “We shall never blame the respected judges of the honourable courts of our beloved country... We shall fight against the system and grow in our beloved country.” |
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