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SC stays order to 2 Sahara firms to refund investors

Source: PTI
November 28, 2011 13:52 IST
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Law booksIn a relief to Sahara group, the Supreme Court on Monday stayed the Securities Appellate Tribunal order directing its two companies to refund around Rs 17,400 crore (Rs 174 billion) to their investors and asked for the details of their assets and liabilities.

A bench headed by Chief Justice S H Kapadia directed the two companies to file a detailed affidavit explaining as to how it will protect the interests of their 2.3 crore (Rs 23 million) investors who have put in their money in Sahara India Real Estate Corporation (now known as Sahara Commodity Services Corporation Ltd) and Sahara Housing Investment Corporation.

The bench directed the companies to place before it their 2010-11 balance sheets and statements of accounts for November 2011 by January 8, the next date of hearing.

"Net worth of the companies particularly assets against which liability has been created, financial statements, including balance sheets of 2010-11 and statements of accounts of the companies of November 2011 shall be mentioned in the affidavit," the bench said.

It also said the affidavit will also show how the firms are to secure liabilities that they have

undertaken and protect the investors.

The apex court also issued notices to the central government and to Securities and Exchange Board of India seeking their responses on Sahara group's plea challenging SAT's October 18 order, directing it to refund the money, raised through optionally fully convertible debentures to investors within six weeks.

It extended till January 8, the time limit set by SAT, which had passed the order on the Sahara group's appeal against the Sebi's June order asking the group's 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 and its promoter Subrata Roy Sahara, and the directors -- Vandana Bhargava, Ravi Shankar Dubey and Ashok Roy Choudhary -- were told jointly and severally to refund the collected money.

The company had then approached the Supreme Court which asked it to approach the Tribunal.

While dismissing the appeal, the SAT had held that the market regulator has jurisdiction over such fund-raising schemes.

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