Market regulator Sebi has begun prosecution proceedings against two Sahara firms and their top officials, while accusing them of failing to provide documents related to three crore investors as per a Supreme Court order.
In the high-profile case involving repayment of money to bondholders of two Sahara group firms, the Securities and Appellate Tribunal on Thursday dismissed a plea for extension of deadline for submitting investor documents to the market regulator Sebi.
The company is seeking more time to submit documents related to about three crore investors in the case involving two of its group companies.
The regulator, in a public notice, said investors of Sahara India Real Estate Corporation Ltd and Sahara Housing Investment Corporation Ltd should take investment decision at their own risk.
The Supreme Court has said that selling land or property is not a service under the Finance Act, 1994, so such sales cannot be charged with service tax.
Sebi's action on Sahara is showing results, but problems remain.
The undistributed funds totalling over Rs 25,000 crore lying with the capital markets regulator Sebi's account have come back into focus after the demise of Sahara Group's chief Subrata Roy. Roy passed away in Mumbai on Tuesday night at the age of 75 after battling a prolonged illness. He faced multiple regulatory and legal battles in connection with his group firms that were accused of circumventing regulations with ponzi schemes, allegations his group always denied.
The Ministry of Corporate Affairs (MCA) told a litigation court that both entities were bound by Sebi regulations, as the money raising by the erstwhile Sahara India Real Estate Corp (SIRECL) and Sahara Housing Invest Corp Ltd (SHICL) would come under the definition of public issue.
The Tribunal adjourned till Monday this matter, which was listed for 'admission' this morning.
'Two esteemed foreign investors with huge funds are coming with us in our real estate and city development businesses.'
The case related to two Sahara Group firms --Sahara Housing Investment Corporation Ltd and Sahara India Real Estate Corp Ltd -- raising more than Rs 24,000 crore (Rs 240 billion) from an estimated 3 crore (30 million) investors through issuance of certain bonds between 2008-2009.
Sebi says Sahara investors refunded over Rs 42 cr.
The apex court had also asked Sahara Group to provide it within two weeks the list of "unencumbered properties" which can be put for public auction to realise the remaining over Rs 14,000 crore
A bank account is a must to get the refund and those without it have been asked by Sebi to open an account with a scheduled bank.
The Sahara Group had earlier sought 18 months' time to repay around Rs 9,000 crore balance amount of the principal amount of Rs 24,000 crore.
The story of Sahara India Pariwar founder Subrata Roy, who died in Mumbai on November 14 aged 75, is the stuff of movies - of a spectacular rise and an equally spectacular fall. Born in Araria, Bihar, Roy was 30 when he set up Sahara in 1978. He started with a capital of about Rs 2,000, a peon, a clerk and his father's Lambretta scooter in Gorakhpur, eastern Uttar Pradesh, writes Tamal Bandyopadhyay in his 2014 book, Sahara: The Untold Story. Sahara was not his first venture.
Sebi says it will directly transfer the refund money to the bank accounts of genuine investors.
The bench asked the official liquidator, attached with the Bombay high court, to auction Aamby Valley properties, estimated to be worth Rs 34,000 crore, and directly report to it
Citing the SC order in Sahara case, Sebi has passed orders against at least five companies and 21 individuals charged with collecting thousands of crores fraudulently
Besides Roy, two other directors, Ravi Shankar Dubey and Ashok Roy Choudhary, were also arrested for the failure of two group companies.
The apex court was irked when Sebi claimed that the group had allegedly obstructed the process by writing a letter to the Pune police raising the issue of law and order at the prime property.
The apex court told Roy that his proposal of paying Rs 1,500 crore, if the auction process was halted or postponed, was unbelievable.
Excerpted from Sahara: The Untold Story by Tamal Bandyopadhyay.
Senior advocates Kapil Sibal and Mukul Rohatgi, appearing for Sahara, has sought time till August 15 for realisation of the cheque and giving a road map for depositing the remaining amount.
The apex court also asked Sahara Group to provide it within two weeks the list of 'unencumbered properties' which can be put on public auction.
Sahara has ploughed at least Rs 1,500 crore from two of its credit cooperatives into the Aamby Valley resort project
Sahara chief Subrata Roy may not come out clean in the biggest ever investment fraud that he allegedly did few years ago.
Senior advocate Kapil Sibal, representing Roy, said it was quite difficult to raise money as the properties have already been attached.
Corporate legal cases kept India Inc on its toes in 2014 as high stake matters on coal, telecom and mining came up in the Supreme Court, which also sent Sahara Group chief Subrata Roy to jail.
The second-longest serving chairman introduced quite a few measures for the primary market and implemented a new corporate governance framework.
'Around 15 crore poor people have lost their money.'
Few top honchos of India Inc did very well in 2014.
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