sahara vs sebi case summary
The last hope of Sahara group to get more time to refund Rs 24,000 crores to its investors was dashed by the Supreme Court which dismissed its plea and pulled it up for not complying court's earlier order to return the money by first week of February. The Council also reiterated that there had been a private placement of OFCD‘s. A question that has been raised by Sahara at every point along the case is whether SEBI has jurisdiction on the matter despite the fact that SHICL and SIRECL are not public listed companies and have clearly mentioned in their prospectus that they do not wish to list their securities on any stock exchange of India at any point in time in the future. Your email address will not be published. Abraham, the report has been divided into 3 parts. Supreme Court asks Sahara to approach Securities Appellate Tribunal(SAT). Thus the SAT confirmed that Sahara would have to face the consequence given in S.73 (2). S.11B of the SEBI Act- Explains the powers to issue directions to the body under investigation if found guilty. Subsequently, Sahara then appealed in Supreme Court against the SEBI orders scrutinizing their jurisdiction in the issue. The judgement was given by K.S. Funds are raised by private placement with friends, associates and group companies as such provisions of Section 67 and 73 are not applicable. [3] “securities”‖ include—shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate; [4]S.11 of the SEBI Act – Explains the function of the Security Exchange Board of India. Sahara Appeals in Supreme Court that SEBI has no jurisdiction for the proposed issue. Court asks Sahara to furnish details of assets and reserves. In the SEBI order by K.M. Thereafter SEBI filed petition to Supreme Court which directed for early disposal of the case by the High Court. SEBI has jurisdiction over companies belonging to S. 55 A (a) and S. 55 A (b). Sahara gets SEBI order stayed in Allahabad High Court. Thus we can say that OFCD‘s are marketable securities and hence included within the ambit of S. 2 (h) of the SCR Act. With respect to Part B, K.M. 'Sahara sebi case' - 1 व ड य र जल ट स निवेशकों से धोखाधड़ी : सहारा के दावों पर सेबी के सवाल? Your email address will not be published. The order provided a logical explanation that proved that OFCD‘s, even though classified as ―hybrids‖, fall under the category of debentures. Order of the Hon'ble Supreme Court in CA No. On 4th January, 2010, SEBI received a complaint from a man, RoshanLal, who alleged that ―illegal means were being used by SHICL and SIRECL in issuance of OFCD‘s.‖ Following this, SEBI launched an investigation against Sahara India, inquiring into the fund raising activities of SHICL and SIRECL along with investor information. Sahara claims to have paid off Rs. Supreme Court asks SEBI to proceed with OFCD probe. There are chances it will have another Rs 5,800 crore ( Rs 800 crore cash and Rs 5,000 crore bank guarantee) by the time Roy and Sahara India Parivar, founded in 1978 by Subrata Roy, is one of the largest conglomerates of the country. SEBI in the event of finding that the genuineness of the subscribers is doubtful, an opportunity shall be afforded to Saharas to satisfactorily establish the same as being legitimate and valid. 55A (b) – those companies that wish to be publicly listed. … In the matter of jurisdiction, SAT confirmed that under S.55A of the Companies Act, theSahara Companies would be regarded as public companies and would thus not fall under S.55A(c), but under S.55A (b). 24,400 crores has been paid by Sahara to SEBI. [10]S. 19 of the SEBI Act- Confers powers onto another authority to pass the order before it becomes actionable in certain cases. Sahara then preferred an appeal before Securities Appellate Tribunal (" SAT ") against the order of the Whole Time Member and after hearing, the SAT confirmed and maintained the order of the Whole Time Member by an order. S. 11(4) of the SEBI Act –Explains the powers conferred upon SEBI while giving an interim order and while passing a final order. The Sebi-Sahara case itself comprises staggering numbers like collection of over Rs 24,000 crore from three crore individuals, while once Sahara sent 127 trucks containing 31,669 cartons full of over three crore application forms and two crore redemption vouchers to Sebi office. The curious case of Subrata Roy: Highlights of the Sahara-SEBI story - The Supreme Court of India on Wednesday issued a non-bailable warrant against Sahara chief Subrata Roy for non-appearance despite a summon and contempt of court. The SAT order passed, validated the logic on the basis of which SEBI concluded that OFCD‘s were included in the genus of debentures and therefore fell within the scope of the definition of ―securities as given in S.2 (h) of the Securities Contract Regulation Act. It must be noted that the term ―private placement of shares‖ has been replaced with the term ―private placement of securities‖ to include a wider scope of instruments such as shares, bonds, marketable securities, etc. 24,400 crores (after including the interest and adjusting the redemption vouchers) to SEBI in 3 installments within 4 months along with investor information. The judgement was given by K.S. The Securities and Exchange Board of India (SEBI) has asked the Supreme Court to cut short the “long rope” given to the Sahara group and direct it to … Radhakrishnan, J. that a private placement is limited to 50 people receiving invitations to purchase securities. After this, Sahara appealed the SEBI order in the SupremeCourt, questioning their jurisdiction in the matter and alleging a defamatory agenda on part of SEBI to destroy the market reputation of Sahara India. As soon as the number rises beyond 50, a private placement ceases to exist and it must be verified by the SEBI, whether it is a listed or an unlisted company. 10,000 crores is deposited with SEBI in the form of cash as a demand draft. This money was to be paid off by the promotor of the company, Subrata Roy and by the directors of the company- Ravi Shankar Dubey, VandanaBhargava and Ashok Roy Chaudhary jointly and severally. While processing the prospectus, SEBI received complaint from Mr. Roshan Lal alleging that Sahara group was issuing Housing Bonds without complying with Rules/Regulations/Guidelines by RBI/MCA/NHB, SEBI also received complaint from “Professional Group of Investors Protections” which prompted SEBI to ascertain the correct factual position. Part C included K.M. The Companies Act is general and not prerogative in nature. Post verification by 2 ICAI certified Chartered Accountants; a certificate will be issued by SEBI clearing Sahara. As on March, 2014, the Sahara Parivar had a net worth of Rs. Recall of the earlier order. 17,656.53 crores (net value) between 25th April, 2008 and 13th April, 2011. ( Log Out / Case Study 1: Sahara Group Since 2009, when the Sahara Group’s activities first came under the radar of SEBI leading up to the arrest of Sahara India Pariwar founder Subrata Roy in 2014, both parties have been engaged in an 67 (3) of the Companies Act, 1956 states that if a public company sends an offer/ invitation to purchase securities to less than 50 people, it not regarded as a public offer. Securities were liable to be listed on a recognized stock exchange under the Companies Act, 1956. S.42 (10) provides that the promotors and directors have to refund the entire amount collected from investors or pay a fine of Rs. Sahara appealed the SAT order in the Supreme Court. Edit them in the Widget section of the, CASE COMMENTARY ON Tara v State,W.P. Abraham found SHICL and SIRECL in violation of S. 62[5] , S.63[6] , S. 67(3), S. 73, S.117A[7] , S.117B[8] and S.117C[9] of the Indian Companies Act, 1956. Sahara vs Sebi Case. In addition to this, the allotment of thesecurities must be completed within 60 days of collecting the money. Since the information memorandum had been circulated by 10 lakh agents and 2900 branch offices to 30 million investors, it was already established that the securities issue was a public one. SEBI claimed that in the form of Optionally Fully Convertible Debentures, Sahara India Real Estate Corporation Limited (SIRECL) and Sahara Housing Investment Corporation Limited claim to have collected deposits from general public inc… SEBI was then to distribute the money to the investors on behalf of Sahara. SEBI shall take steps with the aid and assistance of Investigating Authorities/Experts in Finance and Accounts and other supporting staff to examine the documents produced by Saharas so as to ascertain their genuineness and after having ascertained the same, they shall identify subscribers who had invested the money on the basis of RHPs dated 13.3.2008 and 16.10.2009 and refund the amount to them with interest on their production of relevant documents evidencing payments and after counter checking the records produced by Saharas. Subsequently Sahara filed an appeal … Factual Case Summary: Sahara aggrieved against the notice of SEBI moved the Allahabad High court and obtained stay. FACTUAL SUMMARY Sahara aggrieved against the notice of SEBI moved the Allahabad High court and obtained stay. A bench comprising by Justices KS Radhakrishnan and JS Khehar reprimanded Sahara for approaching Allahabad High Court against the order of the Apex Court in April, 2013. It has been amended several times since its inception to account for the changing circumstances. SaharasSIRECL&SHICL) would refund the amounts collected along with interest @ 15 % per annum to SEBI within a period of 3 months from the date of judgment, which shall be deposited in a nationalized bank. College of Legal Studfies, UPES, Dehradun. Sahara refused to give information on the grand that SEBI has no authority to call for such information. 5,120 crores of the Rs. Sahara India Real Estate Corporation Ltd ( “SIRECL”) and Sahara Housing Investment Corporation Ltd (“SHICL”) (both unlisted public companies), in March 2008 and September 2009, raised around 24,000 crores rupees from investors by issuance of Optionally Fully Convertible Debentures (OFCDS) by passing Special resolution U/S 81(1A). Also required to comply with various clauses of DIP guidelines and Securities Exchange Board of India ( Issue of Capital and Disclosure requirements) Regulations, 2009( ICDR 2009). As you’ve seen in ^this case, SAHARA’s main argument is “SEBI doesn’t have jurisdiction over our OFCD investment scheme, because this money was meant for our “unlisted” companies.” Government has decided to fix this ambiguity in the new Companies Act. S.42 defines private placement of securities as any offer of securities or invitation to subscribe securities to a select group of persons by a company (other than by way of public offer) through issue of a private placement offer letter and which satisfies the conditions specified in this section including the condition that he offer or invitation is made to not more than 50 or such higher number of persons as may be prescribed in a financial year”. [8] S.117 B of the Companies Act, 1956 provides for the appointment of debenture trustees and a debenture trust. A reading of the judgementmakes it clear that there are multiple ratio decidendi provided in the judgement. In short, both Sahara and SEBI sought adjudication. 24,400 crores (after including the interest and adjusting the redemption vouchers) to SEBI in 3 installments within 4 months along with investor information. SHICL collected Rs. The refund to investors will have to be completed within a 30 day period. The Case Study Channel 121,801 views 11:40 Exploring co2 and Ethanol Extraction - Duration: 23:26. The Securities and Exchange Board of India (Sebi) had asked Sahara to refund over Rs 20,000 crore to investors but Sahara failed to do so repeatedly. ( Log Out / Change ). Sahara-Sebi case: Two Sahara group firms have moved the Supreme Court seeking initiation of contempt proceedings against SEBI alleging that the market regulator's demand of Rs 62,602 crore from them was not only contemptuous but a mischievous attempt to overreach the directions of … The judgement upheld the SEBI order and ordered Sahara to pay Rs. The amount was reportedly collected from various bank accounts and … While ―hybrid‖ securities had been included in the definition of the term ―securities in the Companies Act through the 2003 Amendment, the corresponding changes were not made in the SEBI and the Security Contract Regulation (SCR) Act. Also there was no provision under the act that described a private placement with regard to an unlisted company. Analysis of the Supreme Court Judgement Dated 12th August, 2012. The date of commencement of issues of the debentures was 25th April, 2008 and 20th November, 2009, respectively. Order Given by the Security Appellate Tribunal (SAT)-: SHICL and SIRECL appealed the SEBI order before the Security Appellate Tribunal (also known as SAT). 50,000 or both for allowing the publication of the false statements, unless they can prove that they had no reason to believe till the time of publication that the statements were false. Since the fraud, the Companies (Amendment) Act, 2013 has been enforced. Securities Exchange Board of India v.Sahara India Real Estate Ltd. is regarded as one of the landmark cases with reference to the power and jurisdiction of SEBI in the case of corporate fundraising. Last heard, Subrata Roy was trying to liquidate his assets such as selling the prized London‘s Grosvenor Hotel to collect sufficient funds but, his freedom seems a long way off. Noncompliance with the provisions of S.42 will result in strict penalty under S.42 (10). Landmark Judgment by Supreme Court upholding SAT Order. We also make it clear that if Saharas fail to comply with these directions and do not effect refund of money as directed, SEBI can take recourse to all legal remedies, including attachment and sale of properties, freezing of bank accounts etc. SEBI issues advertisements cautioning investors. Cheques would be unacceptable. Application for the issue of the OFCD‘s wasdistributed only to the friends, family members and associates of the board members and to trusted investors by way of an information memorandum. Mar 04, 2014 New Delhi: The Supreme Court will on Thursday hear a case involving Sahara chief Subrata Roy and the Securities and Exchange Board of India (SEBI) over a dispute of returning money to its investors. Allahabad High courts vacates stay. Since the Hon‘ble Supreme Court in the order dated May 12, 2011, stated that the SEBI‘s final order will be actionable after verification by the Supreme Court, K.M.