Sahara Group asked to refund Rs 17,400 cr to investors

In a major setback to the Sahara Group, the Supreme Court on Friday directed two of its companies to refund around Rs 17,400 crore to their investors within three months with 15 per cent interest.

A bench of justices K S Radhakrishnan and J S Khehar directed SEBI to take action against the companies, Sahara India Real Estate Corporation and Sahara Housing Investment Corporation, if they fail to refund the money.

The apex court allowed the regulatory body to attach properties and freeze bank accounts of the two companies if they did not comply with its order.

The bench further directed SEBI to conduct investigation against the companies to find out their actual subscriber base besides getting other relevant information.

It directed the companies to furnish all their documents and account details before the regulatory body and appointed a former apex court judge B N Aggarwal to oversee the probe by  SEBI against the two Sahara firms.

The apex court dismissed the petition filed by the Sahara Group challenging the Securities Appellate Tribunal (SAT) order directing its two companies to refund around Rs 17,400 crore raised from 2.3 crore investors through optionally fully
convertible debentures (OFCD).

The apex court also directed the regulatory body to scrutinise the documents of these two companies. The court had earlier reserved its verdict on June 14.

On January 9, the court had stayed the SAT's order and also admitted the appeal filed by the Sahara Group. In its plea, the Sahara Group had said it has sufficient
assets to protect the interests of the investors.

The group had earlier told the court that it had filed an affidavit explaining that it will protect the interests of its investors who have put in their money in the two companies.

The apex court had on November 28, 2011 asked the two companies to place before it their 2010-11 balance sheets and statements of accounts for November 2011 and had issued notices to the Central government and the SEBI seeking their
response on Sahara's plea.

The SAT's decision had come on an appeal by Sahara Group against the SEBI's June 2011 order asking the two firms to return the money collected from investors through financial instrument OFCD, on grounds of violation of regulatory norms.

The stock market regulator had also restrained the two entities from accessing the securities market for raising funds till payments were made to the satisfaction of SEBI.
The two companies, promoter Subrata Roy Sahara, and directors Vandana Bhargava, Ravi Shankar Dubey and Ashok Roy Choudhary were told jointly and severally to refund the collected money by the regulator.