SAT dismisses deadline extension plea in SEBI-Sahara case

While dismissing Sahara group's plea, the SAT said Since the Supreme Court has already given a specific direction in the matter the appeals before the Tribunal have become infructuous

Mumbai: A plea seeking extension of deadline for submission of investor documents by two Sahara group companies to market regulator Securities and Exchange Board of India (SEBI) was dismissed today by the Securities Appellate Tribunal (SAT), as the Supreme Court has already given specific directions in this high-profile case, reports PTI.


"Since the Supreme Court has already given a specific direction in the matter, the appeals before this Tribunal have become infructuous," SAT said in its order and dismissed the appeal.


"In any case, since the time limit for submitting the documents to the Board (SEBI) has been specified by the Supreme Court, any request for extension of such time should also be made before the Apex Court and not before this Tribunal," said the SAT order.


The appeal was filed on 19th November by Sahara Housing Investment Corporation Ltd (SHICL) and Sahara India Real Estate Corporation Ltd (SIRECL), after they failed to submit the investor documents to the Securities and Exchange Board of India (SEBI) within a deadline of 10th November set by a Supreme Court order of 31st August.


The appeals, seeking extension of time till 31st January for submission of investor documents to SEBI, were listed today for "admission" before the SAT.


However, the Tribunal observed that the appeal has become infructuous in light of the specific directions from the Supreme Court on 5th December, wherein the companies were asked to submit the investor documents to SEBI within 15 days. The period ended today.


Sources said Sahara group has despatched nearly 80-truck load of investor documents to SEBI, as also their details in the electronic format.


These documents include details of those investors as well to whom the group claims to have already made the outstanding payments. SEBI needs to verify the genuineness of all the investors before facilitating any refund to them.


SEBI would examine the documents for all the investors, whose number is estimated at around three crore, including those whose outstanding payments are claimed to have been cleared by the group.


SAT has said, "During the pendency of these appeals, the appellants had approached this Tribunal with another appeal praying that the respondent Board (SEBI) may be directed to accept pay order amounting to Rs5,120 crores for repaying the amount to the OFCD subscribers.


"The said appeal was dismissed by this Tribunal as premature and not maintainable. The appellant had thereafter approached the Supreme Court and the Supreme Court by its order dated 5 December 2012, has already extended the time for filing the documents in support of the refund made to any person, as claimed by the appellant, by a period of 15 days."


The Tribunal further said, "Since we are dismissing the appeals as infructuous, we are not going into the issue of maintainability as argued by the respondent Board."


In their other appeal filed on 19th November, the two firms had sought deposit of outstanding investor repayments with the registrar of SAT. However, this appeal was dismissed by the tribunal on 29th November.


Thereafter, the two companies had approached the Supreme Court against the SAT order. After hearing their appeal, the Supreme Court on 5th December directed the two companies to refund the outstanding payments to the investors with 15% interest in phases in nine weeks.


While the companies were asked to make an immediate payment of Rs5,120 crore, the court also asked them to pay the first instalment of Rs10,000 crore by the first week of January and the remaining by the first week of February.


The bench headed by Chief Justice Altamas Kabir also directed Sahara Group to supply the documents relating to investors within 15 days and warned that failure to fulfil its directive on payment of the money to SEBI will lead to attachment of assets.


The two Sahara group companies have claimed that as per the certificate of the statutory auditor, the outstanding liability of both the firms towards the outstanding OFCDs (Optionally Fully Convertible Debentures) was only Rs2,620 crore as on 30 November 2012. It has also submitted a buffer amount of Rs2,500 crore subject to certain verification of some pending/continuing at the company's end.


SEBI has already asked various banks to provide it all account details of the Sahara group as well as their promoters and directors, and has also sought help from RBI, ED and Financial Intelligence Unit as part of its inspection process to identify the genuine investors and refund their money.


SEBI has also written to Sahara group to furnish the details of bank accounts and properties held by them so as to enable it to take recourse to appropriate legal remedies as per the Supreme Court directions.


The regulator has also written to "NABARD, Enforcement Directorate, Central Economic Intelligence Committee, RBI and Financial Intelligence requesting them to share with SEBI any material/information in their possession about the Sahara group of Companies, more particularly SIRECL and SHICL".


SAT upholds SEBI's Rs8 lakh fine on Sandeep Jain in Asian Star case

SAT said if a person indulges in fraudulent and unfair trade practices relating to securities, he would be liable to a penalty of Rs25 crore or three times the amounts of profit made out, but SEBI has charged Rs8 lakh

Mumbai: The Securities Appellate Tribunal (SAT) has upheld Securities and Exchange Board of India (SEBI)'s penalty of Rs8 lakh on one Sandeep Jain for allegedly indulging in fraudulent trading practices in shares of Asian Star Company Ltd (ASCL), reports PTI.


SEBI in its probe had identified Jain as one of the persons involved in manipulative trades in ASCL shares.


In its order, SAT said that it was "fully satisfied that the adjudicating officer (of SEBI) has placed sufficient material on record to conclude that the transactions were manipulative in nature".


Jain in his letter to SEBI dated 27 January 2009 has not denied these transactions, it added.


Besides, Jain had submitted to SAT that that the penalty was "excessive" and "grossly disproportionate".


However, SAT said it observed that if a person indulges in fraudulent and unfair trade practices relating to securities, he would be liable to a penalty of Rs25 crore or three times the amounts of profit made out of such practices, whichever is higher.


"The adjudicating officer has imposed a penalty of Rs8 lakh only. We do not find it disproportionate to the allegation established against the appellant (Jain)," SAT added.


SEBI had conducted a probe in shares of ASCL and noticed a wide variation in the price of the scrip, during 10 October-20 November 2008.


The regulator found that certain entities including Jain, had indulged in circular/reversal/synchronised trades in a manner which lead of creation of artificial volume in the scrip. These entities were found to be connected to each other.


SEBI imposes Rs20 lakh fine on Biren Shah in IPO fraud case

SEBI said Biren Kantilal Shah made a total ill gotten gain of Rs24.10 lakh while dealing as key operator in the IPOs of Suzlon Energy and IDFC

Mumbai: Capital market regulator Securities and Exchange Board of India (SEBI) has imposed a penalty of Rs20 lakh on one Biren Kantilal Shah for his alleged fraudulent trade practices in intial public offerings (IPOs) of Suzlon Energy and Infrastructure Development Finance Co Ltd (IDFC) in 2005, reports PTI.


SEBI said Shah acted as a "key operator", in concert with certain other entities and was involved in the scheme of cornering of shares in the IPOs.


"It is observed on the basis of investigation report that Biren Kantilal Shah made a total ill gotten gain of Rs24.10 lakh while dealing as key operator," SEBI said in an order dated 18th December.


SEBI said Shah "had indulged in fraudulent and manipulative activities and employed deceptive device and scheme to corner the shares reserved for retail individual investors in the aforesaid two IPOs with the intention to defraud retail individual investors".


The case relates to a SEBI probe in shares of certain companies during their IPOs between 2003 and 2005 wherein it was found that certain entities had opened large number of demat accounts and bank accounts which were in the names of fictitious persons or were benami.


The entities had acquired shares of various companies in the IPOs by making applications in fictitious names with each application being of a value so as to make it eligible for allotment under the retail category.


Following the allotment, the shares from such fictitious allottees were transferred in the demat account of key operators like Shah before the listing on stock exchanges, SEBI said.


The key operators then transferred the shares through off market deals to certain entities called the "financiers".


SEBI said it noted that in some cases the key operators retained a portion of shares for themselves which were then sold in the market, earning them huge gains illegally.


As per SEBI, the scheme was designed to corner shares from the quota reserved for retail investors in the IPOs of various companies and to make profit by selling the shares.


In August 2010, SEBI had directed Shah to disgorge an amount of Rs30.61 lakh which included the Rs24.10 lakh gains he allegedly made through the illegal trading IPO shares.


Thereafter, SEBI had imposed a penalty of Rs5 lakh on Shah for his failure to disgorge the said amount.


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