The Securities and Exchange Board of India (Sebi) in a fresh crackdown on Sahara Group, has asked Sahara India Commercial Corporation Ltd (SICCL) to refund Rs 14,106 crore with 15 per cent annual interest to over 1.98 crore small investors.
In a 54-page order, the regulator has also barred SICCL, as well as its then directors including Subrata Roy Sahara and associated entities from the markets and from associating with any public entity for four years from the date of completion of refunds to investors. The new order of Sebi said that SICCL has collected funds from small investors between 1998 and 2009 through issuance of certain bonds in violation of norms.
“I am of the view that SICCL engaged in fund mobilising activity from the public, through the offer of OFCDs (optionally fully convertible debentures) and has contravened the provisions of … the Companies Act,” said Sebi Whole Time Member, Madhabi Puri Buch in the order.
The regulator has directed SICCL to provide a full inventory of all the assets and properties and details of all the bank accounts, demat accounts and holdings of mutual fund, shares and securities if held in physical form and demat form, of the company.
“SICCL and Subrata Roy are permitted to sell the assets of the company for the sole purpose of making the refunds as directed above and deposit the proceeds in the Sebi Sahara refund account. Such proceeds shall be utilised, with the permission of the Supreme Court, for the purpose of making refund/repayment to the investors of SICCL,” said the order.
Sebi and the Sahara Group are already locked in a legal tussle in the Supreme Court over an earlier order from the capital markets regulator asking two other Sahara firms in 2011 to refund over Rs 24,000 crore garnered by issuing similar bonds — the optionally fully convertible debentures (OFCDs) — to nearly 3 crore people.
While Sahara has been asked to refund the money to a special Sebi account under a Supreme Court-monitored repayment process, the group has been saying it has already refunded more than 98 per cent of the amount directly to investors and the proof for the same have been given to Sebi. Besides, Sahara has also deposited money to the Sebi account, but has alleged that the regulator has been able to disburse only a small portion to investors. Sahara’s stand has been that investors are not approaching Sebi for refund as they have already got their money.