The Supreme Court on Friday directed Sahara Group firm Sahara India Real Estate Corp to approach the Securities Appellate Tribunal against the order of Sebi directing the return of money collected from investors for an OFCD scheme within a period of three weeks.
A three-member bench headed by Chief Justice S H Kapadia also directed the Securities Appellate Tribunal to decide Sahara India Real Estate Corp's appeal against the Securities an Exchange Board of India within a period of eight weeks.
"We are of the view that keeping in mind interest of the investors... better option would be to give an opportunity to the petitioner (Sahara) a hearing before SAT," the bench observed.
Meanwhile, senior advocate Fali S Nariman appearing for Sahara Group firm submitted that till the final order of the SAT, it will not invite any fresh deposit in the optionally fully convertible debentures (OFCD) scheme.
"We make it clear, in the appeal which is proposed, that ministry of corporate affairs should be a party as a respondent, particularly in view of issues arising in this statutory appeal," the bench added.
The apex court also said that the interim order of Sebi would not be operational till the appeal is decided by SAT.
In addition, the apex court directed the Sahara Group firm to withdraw its petition filed against Sebi in the Allahabad high court.
The apex court said that SAT will take a decision irrespective of Sebi's interim order and the remarks passed by the Allahabad High Court in this issue.
The apex court also directed the Sahara Group firm not to take any adjournments before SAT.
The issue relates to Sebi's finding in November that two Sahara Group firms -- Sahara India Real Estate Corporation and Sahara Housing Investment Corporation -- were raising funds from the public through an optionally fully convertible debentures (OFCD) scheme without conforming to prudent disclosure and other investor protection norms.
Subsequently, Sahara Group had contested Sebi's authority to look into the issue in the Supreme Court, asserting that it was a privately held company and not listed and therefore, was under the jurisdiction of the ministry of corporate affairs.
Earlier, on June 27, a vacation bench of the apex court comprising Justices P Sathasivam and A K Patnaik had declined to hear the plea of Sahara India Real Estate Corp and asked it to list the matter before the Chief Justice, who has been hearing the case.
Following the orders of the Supreme Court, the Securities and Exchange Board of India had on June 23 directed the two Sahara Group firms -- Sahara India Real Estate Corporation and Sahara Housing Investment Corporation -- to refund the money, along with 15 per cent interest, raised through its OFCD scheme for violating regulatory norms.
As per Sebi's order, the two companies, promoter Subrata Roy Sahara and directors Vandana Bhargava, Ravi Shankar Dubey and Ashok Roy Choudhary, jointly and severally, shall refund the money.
Besides, the regulator had also restrained the entities from accessing the securities market for raising funds till the time payments are made to the satisfaction of the Sebi.
OFCDs are a type of bond with the option to fully convert them into equity at a rate decided by the company.
Image: Sahara chief Subrato Roy with his wife. Photograph: Reuters