NEW DELHI: In a fresh crackdown on Sahara, regulator Sebi has found another group firm to have raised over Rs 14,000 crore in violation of rules and has ordered the company and its then directors including Subrata Roy to refund the money with 15 per cent annual interest.
The order, which also bars the company, Sahara India Commercial Corporation Ltd (SICCL), as well as its then directors and associated entities from the markets and from associating with any public entity, relates to collecting funds between 1998 and 2009 from nearly 2 crore investors through issuance of certain bonds.
Sebi has passed this new order when a long-running legal dispute is going on in the Supreme Court over an earlier order from the capital markets regulator asking two other Sahara firms in 2011 to refund over Rs 24,000 crore garnered by issuing similar bonds -- the optionally fully convertible debentures (OFCDs) -- to nearly 3 crore people.
While Sahara has been asked to refund the money to a special Sebi account under a Supreme Court-monitored repayment process, the group has been saying it has already refunded more than 98 per cent of the amount directly to investors and the proof for the same have been given to Sebi.
Besides, Sahara has also deposited a large amount to the Sebi account, but has alleged that the regulator has been able to disburse only a small portion to investors.
Sahara's stand has been that the investors are not approaching Sebi for refund as they have already got their money.
In case of SICCL too, the Sebi order mentioned that the company made submissions that it has already refunded the money collected from the investors in cash, barring Rs 18 crore for which the bondholders did not turn up for the refund.
But, the regulator said the company did not provide any proof for repayment through banking channels.
In her 54-page order, Sebi's Whole Time Member Madhabi Puri Buch said the repayments must be done through non-transferrable bank demand draft or pay order, while the refund amount directions would be modified for the money claimed to have been already returned to investors -- provided the payments are made through prescribed route and are certified by peer-reviewed chartered accountants.
In case of the refund to be made by Sahara group chief Subrata Roy and others party to the earlier Sebi orders against two other Sahara firms, the amount needs to be deposited in the existing Sebi-Sahara account, from which the regulator would make further refunds to concerned investors after permission from the Supreme Court.
Earlier in 2011, Sebi had ordered Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation Ltd (SHICL) to refund the money raised from investors through OFCD route.
Sebi said it came across the alleged irregularities relating to SICCL while it was investigating the other two companies.
Sebi found that SICCL had made an offer of OFCDs in financial years 1998-2009 and raised an amount of at least Rs 14,106 crore from 1,98,39,939 investors.
"I am of the view that SICCL engaged in fund mobilising activity from the public, through the offer of OFCDs and has contravened the provisions of the Companies Act," Buch said in the order dated October 31.
The company submitted that it was not a public fundraising as the money was raised through a private placement of OFCDs to an identified target group comprising of its workers, employees, friends, associates and individuals having deposits or association with group entities.
Sebi, however, rejected this submission, saying any private placement to more than 50 persons becomes a public offer.
Accordingly, the regulator has ordered SICCL, Subrata Roy, O P Shrivastava, J B Roy, A S Rao, Ranoj Das Gupta, as well as legal representatives of late D S Thapa, late P S Mishra and late Y N Saxena, to jointly and severally refund the money collected by the company through the issuance of OFCD along with an interest of 15 per cent per annum.
As per the order, all these individuals are former directors of the company and the refund amount would be for the amount raised during their directorship.
SICCL, Subrata Roy and others have also been directed to provide a full inventory of all the assets and properties and details of all the bank accounts, demat accounts and holdings of mutual fund, shares and securities if held in physical form and demat form, of the company.
"SICCL and Subrata Roy are permitted to sell the assets of the company for the sole purpose of making the refunds as directed above and deposit the proceeds in the Sebi Sahara refund account.
Such proceeds shall be utilised, with the permission of the Supreme Court, for the purpose of making refund/repayment to the investors of SICCL," the regulator noted.
In case of failure of respective entities to repay within three months, Sebi warned it would initiate its recovery proceedings.
SICCL, Subrata Roy and other former directors have been barred from accessing the securities market "till the expiry of four years from the date of completion of refunds to investors".
Besides, Sebi has barred Sahara India from the securities markets for four years.
Sahara India - a partnership firm belonging to the Sahara Group with Subrata Roy as managing partner - acted as "arranger" to the OFCD and facilitated the issue as merchant banker.