SC asks Sahara group to refund Rs17,400 crore to investors in three months

The apex court while upholding SAT verdict, also asked SEBI to probe Sahara India Real Estate Corp and Sahara Housing Investment Corp and find out their actual subscriber base

In a big blow to Subrata Roy-led Sahara group, the Supreme Court on Friday asked the group to refund Rs17,400 crore collected from investors within three months with 15% interest. While upholding the verdict given by Securities Appellate Tribunal (SAT), the apex court also asked market regulator Securities and Exchange Board of India (SEBI) to conduct probe against two Sahara group companies and find out their actual subscriber base.


A bench of justices KS Radhakrishnan and JS Khehar granted three months time to Sahara India Real Estate Corp (SIRECL) and Sahara Housing Investment Corp (SHICL) to refund the amount. The Supreme Court has appointed retired apex court judge Justice BN Aggarwal to oversee the probe by SEBI against the two Sahara companies.


The bench also directed SEBI to take action against these two companies, if they fail to refund the money, while allowing regulators to attach properties and freeze bank accounts of SIRECL and SHICL, if they did not comply with its order.


Last year, SEBI had warned investors that Sahara India Real Estate and Sahara Housing Investment have been raising funds without its approval and it will not be able to redress any complaint in this regard. The two Sahara group companies have been raising funds through optionally fully convertible debentures (OFCDs), which SEBI said "were not issued in compliance with the applicable SEBI regulations..."


OFCDs are a type of bond with the option to fully convert them into equity at a rate decided by the company.


Subsequently, Sahara Group contested SEBI's authority to look into the issue in the Supreme Court, asserting that it was a privately held company and not listed and therefore, was under the jurisdiction of the Ministry of Corporate Affairs (MCA).


Earlier, on 27th June, a vacation bench of the apex court, comprising justices P Sathasivam and AK Patnaik had declined to hear the plea of Sahara India Real Estate Corp and asked to list it before the chief justice which has been hearing the case.


Following the orders of the Supreme Court, SEBI had on 23rd June passed an order and directed the two Sahara group companies to refund the money raised by them in OFCD citing violation of regulatory norms.


As per SEBI's order, the two companies and its promoter Subrata Roy Sahara, and the directors-Vandana Bhargava, Ravi Shankar Dubey and Ashok Roy Choudhary—jointly and severally, shall refund the money collected, the order said.


Besides, the regulator has also restrained the entities from accessing the securities market for raising funds, till the time payments are made to the satisfaction of the SEBI.


As per the order of the 12th May order of the apex court, the order of the SEBI order was not to take effect till its further order.


During the last hearing on 12th May, the apex court had asked SEBI to proceed with its probe into Sahara group's OFCD scheme by observing that investors may not have any knowledge about these products and might feel cheated like in the Harshad Mehta scam.


The court had also allowed Allahabad High Court to proceed with its hearing, where the Sahara group has challenged SEBI's direction to give details of its investors.


The group had earlier told the court that it has filed an affidavit explaining that it will protect the interests of 2.3 crore investors who have put in their money in SIRECL and SHICL.


According to the affidavits filed by the companies, as on August 2011, SIRECL had an outstanding of Rs17,656 crore to 22.1 million investors and SHICL had an investor base of 7.5 million and an outstanding of Rs6,373 crore.


Sahara Real Estate floated an issue of OFCDs and started collecting subscriptions from investors with effect from 25 April 2008 up to 13 April 2011. During this period, the company claimed to have collected over Rs19,400 crore, while up to 31 August 2011, the company had a total collection of over Rs17,656 crore. The amount was collected from over two crore investors. But the surprise was that Sahara claimed that it was not a ‘public’ issue as the OFCDs were offered to only its workers and persons associated with the Sahara group.




5 years ago

It's hard to believe that Sahara Group has been accused of such a
fraudulent. I'm sure this is some kind plot to spoil the image of the company.


5 years ago

Who will he pay to ?

All fake


Black Mamba

In Reply to Rakesh 5 years ago

Hon'ble Supreme Court has ordered that in case the invstors are not traceable, that portion will go to Govt. treasury.

Alongwith 'Mr. SAHARA' a lot of his political crony capitalists will bear the brunt.

Hail Apex Court.

Black Mamba

5 years ago

बहोत हो गया इन भ्रष्ट नेता-बाबु-सेठ का तमाशा
Must be a lot of BENAMI. Hon'ble Supreme Court should also order checking the antecedents of the investors and if BENAMI thing comes out in the investigation, that part of the money should be deposited in Govt Treasury by Sahara group.

Black Mamba

5 years ago

He he he !!

I will recommend Ministry of Home Affairs to consider Mr. Subroto Roy Sahara for a Padma Bhushan Award 2013 for this achievement.

SEBI freezes Aastha shares allotted on preferential basis

SEBI investigations found that only part of the proceeds from the preferential allotment were received by Aastha and the same funds were re-circulated as the allotment consideration from the five entities

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) has ordered permanent freezing of 'illegal' shares allotted by Aastha Broadcasting Network about 12 years ago on preferential basis to five of its promoter entities, on charges of fraudulent market dealing, reports PTI.


The shares allotted to five entities -- Chneena Impex Pvt Ltd, CEEAN Impex Pvt Ltd, Smitasha Impex Pvt Ltd Prarekha Exim Pvt Ltd and Bicharshil Traders Ltd -- would remain frozen permanently, SEBI said in an order.


SEBI said the preferential allotment was 'irregular and illegal'. It added that the allotment itself was found to be 'fraudulent'.


According to the regulator, if the "illegally allotted shares" are not frozen permanently, there is every likelihood of those shares being offloaded into the market, which would disturb the equilibrium.


In 2000, the company had allotted 93 lakh shares to various entities on preferential basis. Out of the total, 51 lakh shares were given to five entities.


BSE found that Aastha issued 93 lakh shares on preferential allotment to various entities, where some of them appeared to be related to each other as well as with Aastha.


However, stock exchange BSE was not satisfied with responses of Aastha regarding queries about full consideration from the allottees in respect of preferential allotment.


Later, SEBI investigations found that only part of the proceeds from the preferential allotment were received by Aastha and the same funds were re-circulated as the allotment consideration from the allottees.


In an interim order in January, 2004, SEBI had prohibited the preferential allottees and other entities -- to whom the shares had been transferred by the allottees -- from buying, selling or dealing in securities of Aastha.


SEBI, in its final order in September 2005, prohibited Aastha and other 39 entities from dealing in securities market.


"Since these tainted shares are already dematerialised, the circulation of these shares in the market through trading or otherwise transfer can be prevented by freezing them permanently," SEBI said.


"If this is not done, the noticees who got the shares fraudulently might offload those shares in the market and reduce the value of the existing shareholders. It will also shake the investor confidence," it added.


Formerly known as CMM Broadcasting Network, Aastha broadcasts various spiritual and religious programmes. It broadcasts programmes in Hindi, Gujarati and English.


Currently, shares of Aastha are suspended on the BSE due to penal reasons.


SEBI suspends two broking entities for misleading investors

SEBI suspended registration of Rajkumar C Basantani and Kolar Sharex for allegedly misleading investors

Mumbai, Aug 30 (PTI) Market regulator Securities and Exchange Board of India (SEBI) has suspended the registration of two stock brokers for making false statements regarding issue of bonus shares of Soundcraft Industries in an alleged attempt to mislead the investors.
In separate orders, SEBI said it has suspended broker Rajkumar C Basantani, also Soundcraft Industries Ltd (SIL) promoter and chairman, for one year while brokerage firm Kolar Sharex for three months. Basantani and Kolar Sharex are registered with NSE and BSE, respectively.
The regulator, passed the two orders yesterday, after an investigation into complaints of irregularities against Soundcraft Industries as well as its promoters. The probe looked at the trading of SIL shares between 3 December 2003 to 17 August 2004 to ascertain possible violations.
During this period, the entities related to SIL or the brokers had offloaded 1.02 crore shares of the company on NSE.
SEBI found that Basantani made an announcement of bonus shares to its shareholders on 5 December 2003 and the same was approved by its shareholders on 31 December 2003.
However, SIL failed to dispatch certificates related to bonus shares. Later, when the confirmation about the dispatch of shares was sought from SIL, the company was found closed.
According to SEBI, the Serious Fraud Investigation Office (SFIO) also confirmed that physical share certificates relating to bonus shares were not dispatched.
Thus, the investors who had bought shares of SIL were cheated, at a time when the company was on the verge of closure, the fact which was known to Basantani and Kolar Sharexe and not to common investors.
The regulator said that Kolar Sharex was "instrumental in aiding and abetting SIL and Basantani in making false and misleading announcements which were inherently fraudulent, deceptive and manipulative and intended to induce investors to invest in the scrip of a loss making company." 
"Such device was orchestrated Rajkumar C Basantani who is promoter/director of the noticee (Kolar Sharex)to ensure that entities related to Rajkumar C Basantani/SIL could take advantage of the gullibility of the defrauded investors and offloaded their shares in the market," SEBI said in its order.
Prior to the announcement of bonus issue, shares of SIL were last traded on NSE on 9 September 2003.
After the false announcement of bonus shares by SIL, the trading activity in the scrip rose.


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