SEBI ban: Sahara questions SEBI's jurisdiction

New Delhi: Questioning the Securities and Exchange Board of India’s (SEBI) ban on its two entities for raising money through a debenture instrument without informing the regulator, Sahara Group said the matter is out of the jurisdiction of the watchdog, reports PTI.

“It is a ministry of corporate affairs matter,” Sahara said in a statement.

Citing the opinions for former Chief Justice of India AM Ahmadi, former presiding officer of Securities and Appellate Tribunal (SAT) C Achuthan and others, Sahara said optionally fully convertible debenture (OFCD) was “definitely out of the jurisdiction of SEBI.”

SEBI on Wednesday asked two entities of Sahara Group not to mobilise funds from equity markets or from issuance of any security to the public while restraining group supremo Subrata Roy from approaching public for raising money.

The regulator also prohibited the promoters mentioned in the prospects of these two companies—Subrata Roy, Vandana Bhargava, Ravishankar Dubey and Ashok Roy Choudury—from issuing prospectus or advertisement soliciting money in any manner from the public till further directions.

SEBI issued show cause notices to Sahara India Reals Estate Corporation (SIRECA) and Sahara Housing Investment Corporation as to why action should not be initiated, including directions to refund the money raised by them through a debenture instrument OFCD.

Perusing the balance sheets of group entities, the regulator observed Sahara India Commercial Corporation Ltd had a balance of up to Rs7,000 crore for five years ending 2009 under the head “optionally fully convertible debentures” and under “unsecured loans”.

Prima facie, these Sahara Group companies were raising massive sums in the form OFCD that was characterised by lack of transparency, SEBI said, adding these two deliberately did not give the information pertaining to the issues.

SEBI further said that it appeared that such huge funds were raised by circumventing the applicable laws.

The regulator passed the order on a complaint from Professional Group for Investor Protection alleging that no disclosure was made about one of the housing companies of the group, SIRECA, raising money by issuing convertible bonds for many months.

Examining the matter under issuance of capital and disclosure requirement, the order said, “It is very clear that the companies have conveniently omitted the necessary statutory declaration of compliance.

“If companies are allowed to go ahead in such manner and raise vast amounts funds of in the guise of private placement it would be mockery of capital market and all established mechanisms to protect investors interest.”

Sahara said it has already clarified the reason why the particular information sought by the market regulator was not furnished.

It further said that SEBI had taken a wrong action against the company with sole “allegation that we have not supplied the document they asked for”. The order is very “unreasonable and arbitrary”, it added.




6 years ago

A Declaration in the Public Regarding, SEBI vs. SAHARA
Inviting a reference to the declaration made in the public through various local and national news papers circulating in India by the Sahara India (Source: regarding “SAHARA’S RESPONSE”, published in the above said news papers on or before 28th of November, 2010, I would like to say as a respectable member in the public, that the Securities and Exchange Board of India (SEBI) is a statutory and regulatory body like RBI under an Act of parliament and established by the Govt. of India having all the delegated authority to regulate the securites market and to exercise full control and supervision over the entities dealing with the securities market for the interest and protection of the investors/prospective investors to establish the integrity of the securities matket.
Thus, such a statutory body which is functioning under the direct control and supervision so also delegation of power by the Central Govt., cannot be irresponsible and wrongful, as contended by ‘Sahara’ in the various local and national news papers, which is highly ridiculous.
I would like to draw the kind attention of the general public, that, under sections 11(1), 11(2)(e), 11(2)(ia), 11(3), 11(4)(b), 11A(1)(b), 11B, 11C(1)(a), 11C(3) of the SEBI Act 1992 read with other rules and regulations specified by SEBI from time to time, SEBI has got every power, right and jurisdiction to call for information and record, to investigate and enquire about any entity or person issuing, dealing and transacting with any of the securities and securities market for the integrity, interest and protection of the securities market and prospective/existing investors.
But, as contended by ‘Sahara’ in the news papers, it seems quite frivolous, comparing SEBI with IRDA, both are being statutory and regulatory bodies functioning directly under the Central Govt., when, ‘Sahara India’ is an unlisted public company and where as it should obey the orders of its higher authorities as per the powers delegated by the Central Govt. and respective statutes to them.
SEBI is a highly responsible and rightful authority, which must have taken all the information from the Ministry of Corporate Affairs and other respectable, responsible and affected persons regarding non-maintenance of transparency by the ‘Sahara India’ in dealing with securities market, for which legal action is initiated/taken against ‘Sahara Inida’, which is quite appropriate and correct in every respect for protection, interest and integrity of the securites market.
The Optionally Fully Convertible Debentures (OFCDs) issued by the ‘Sahara India’, by not complying with the various provisions of the Companies Act, 1956, like sections 73(1), 73(1A), 73(2), which are given in detail in the SEBI’s Order dtd. 24th November, 2010 at Mumbai by Dr. K.M. ABRAHAM, Whole-Time Member of SEBI, vide No. WTM/KMA/CFD/316/11/2010, is fully and absolutely coming under the purview and jurisdiction of SEBI and whereas the said company, being itself irresponsible and wrongful for any fraudulent purpose, totally bypassed and ignored such a statutory body like SEBI and did not maintain transparency after repeated calls by SEBI from time to time for providing information regarding the issuance of the said OFCDs in question, by the very act of which the company did not also maitain a good corporate governance.
So, from these above mentioned wrongful/fraudulent/suspicious/doubtful acts of the company, for which, each and every time, the question of non-maintenance of transparency is being sought by the Statutory Bodies like SEBI, RBI and reiterated by the Supreme Court of India on June 09, 2008, in a case pertaining to & between RBI and Sahara (SIFCL), obviously, a reasonable apprehension of doubt is evident in the general public, as to why, the company do not want/intend to list it’s securities in a recognised Stock Exchange so also do not want/intend to rate it’s securities by a registered Rating Agency such as like CRISIL or any other, when it is advisable for a company to list it’s securities on a recognised Stock Exchange and rate it’s securities through a registered Rating Agency, for the investors to invest safely in the Securities Market, for which it becomes imperative for those statutory bodies like SEBI, RBI, etc. to take stringent action against the company, who is indulged in the fraudulent and suspicious activities, like manipulating massive funds from the public very cleverly for their own livelyhood and for the persons who are associated with and co-operating to them (either by ignoring or by bribing the responsible public authorities of the Govt.) which is prejudicial to the public interest.
In order to provide greater transparency to such issuances of debt securities on private placement basis and to protect the interest of the investors in such securities so also in exercise of the powers conferred by Sec 11(1) of the SEBI Act. 1992 and to protect & promote the development of and to regulate the securities market, SEBI issued a Circular dated No. SEBI/MRD/SE/AT/36/2003/30/09, DT. September 30, 2003, stipulating the conditions to be complied with in respect of private placement of debt securities. These conditions governed three aspects: -
(i) Issuance,
(ii) Listing and
(iii) Trading of privately placed debt securities.
The Circular provides that the company making issue of debt securities is required to make full disclosures (initial & continuing) in the manner prescribed in Schedule II of the Companies Act, 1956, SEBI (Disclosure and Investor Protection) Guidelines, 2000 and the Listing Agreement with the Stock Exchanges.
But, the company instead of complying with all these above, persistently neglected / defaulted in carrying out it’s obligations and functions under the Law, and continuously flouted the law of the land quite deliberately, which should be drastically dealt with not only by the statutory bodies/authorities but also by the Govt. of India/Central Govt., so as to, for lifting or piercing through the corporate veil, for the interest of the innocent public and the integrity of the Securities Market, to bring the company into a size.
A Respectable Member of the Public.

Thursday’s Market Preview: Global cues indicate a positive opening

The domestic market is likely to witness a positive opening on strong global cues. Wall Street ended higher in the pre-holiday session as economic data signalled an improvement in the economy. But volatile trading can be expected on account of the expiry of the November futures and options (F&O) contract today. Markets in Asia were mostly in the green on positive economic indicators emanating from the US. However, fears of China implementing additional policy tightening steps still remain. The SGX Nifty was 15 points higher at 5,875 compared to its Wednesday’s close of 5,860.

The market opened higher on Wednesday brushing aside concerns about tensions in the Korean peninsula and the global economy. Jittery trade saw the indices dipping into the red for a brief period in morning trade. They soon bounced back to touch the day's highs but range-bound trading led to a sharp decline towards the close. The decline was triggered by the CBI raids on LIC Housing Finance and some banks. Finally, the Sensex closed 231.99 points (1.18%) lower at 19,460. The Nifty was down 69 points or 1.16% at 5,865.

The US markets closed with smart gains overnight, ahead of the Thanksgiving Day holiday, on positive economic data a sign of an improvement in the economy. The Reuters/University of Michigan consumer sentiment index rose to 71.6 in November, up from 67.7 last month, beating analysts’ expectations. The Labor Department’s data revealed that the number of US workers filing new claims for jobless benefits fell by 34,000 to 407,000 in the week ended 20th November, to the lowest level since July 2008. Besides, personal income grew at a faster pace than they have for much of the year and consumer spending expanded. On the flip side, orders for durable goods decreased 2.7% in October; the steepest decline in nearly two years, and new home sales fell for the fourth time in the last six months. The US market will be closed tonight for the Thanksgiving Day holiday.

The Dow surged 150.91 points (1.37%) to 11,187. The S&P 500 gained 17.62 points (1.49%) to 1,198. The Nasdaq gained 48.17 points (1.93%) to 2,543.

The Asian pack was mostly higher in early trade today on the back of strong economic data originating from the US, a positive sign for exporters in the region. Commodity related stocks surged on a rise in crude and metal prices.

The Shanghai Composite surged 0.59%, the Hang Seng gained 0.52%, the Jakarta Composite jumped 1.07%, the KLSE Composite was up 0.56%, the Nikkei 225 rose 0.36%, the Straits Times advanced 0.58% and the Taiwan Weighted rose 0.59%. On the other hand, the Seoul Composite was down 0.12% on account of the tension between the two Koreas. The SGX Nifty was 15 points higher at 5,875 compared to its Wednesday’s close of 5,860.

Back home, the government on Wednesday said the housing finance racket unearthed by the Central Bureau of Investigation (CBI), leading to the arrest of the CEO of LIC Housing finance and some senior officials of public sector banks, is a bribery case involving some individuals and not a large-scale scam.

After all the hype about the much-talked third generation (3G) services, a survey by The Nielsen Company revealed that only one out of five urban mobile subscribers in India is expected to opt for 3G services initially, despite its high popularity among people.
Despite high degree of awareness about 3G mobile services and its capability to deliver high speed internet, it may take as long as 8-10 years before a majority of mobile users are on a 3G plan, said a study by the company.


Bihar: A lesson in development that Congress and BJP may have failed to understand

Development might have triumphed over petty caste politics in what was once a ‘backward’ state, but has the ruling party at the Centre and the NDA-led opposition learnt the right lesson?

The sweeping re-election of Bihar chief minister Nitish Kumar’s coalition government is a solid confirmation of the development he has worked to bring about in the hitherto poorly-governed, deeply caste-ridden state. The election verdict in what was once considered the poorest state in the country, will most likely reverberate across the states, ringing the warning bell for both the ruling Congress party at the Centre and the Bharatiya Janata Party (BJP), the main national opposition and the principal partner in Mr Kumar’s government.

 “This is a victory of the people of Bihar,” the chief minister declared in a victory speech on national television. “The mandate is to move forward. The people of Bihar have decided not to go back to the old, dark days. I promise that I will work hard for five years and try to do more. This is a victory for development.”
The two-month long campaign was watched closely for the old divisive caste politics that has dominated much of northern India, and kept large sections of the population in large states like Bihar and Uttar Pradesh backward for more than two decades.
It’s worth recalling a description in The Economist five years ago, when the previous government of Lalu Prasad Yadav and his wife Rabri Devi was voted out after 15 years in office. “Bihar (had) become a byword for the worst of India, of widespread and inescapable poverty, of corrupt politicians indistinguishable from mafia-dons they patronise, caste-ridden social order that has retained the worst feudal cruelties.”
Nitish Kumar may not have totally ignored caste, but his campaign focused on his efforts to improve the lot of the roughly 90 million people of the state. During his five years in office, the chief minister tightened governance by fighting crime and corruption, and took serious steps to revive long-neglected development through investments in education, healthcare and infrastructure.
The BBC appreciated the progress in a recent report titled “Where ‘backward’ Bihar leads India”, which said that the state has also made strides in the areas of women’s empowerment, judicial and tax reforms, and public safety. Between 2003 and 2008, even the inflow of foreign tourists in Bihar rose nearly six-fold from 61,000 to 3,46,000.
The measures have helped to turn the state’s economy around. According to information available, Bihar’s economy grew an average 11.35% each year between 2004 and 2009, compared with 3.5% in the prior five years and well above the national growth average. The figures are reflected in the election result.
This evening, election authorities reported that the Janata Dal (United)-Bharatiya Janata Party coalition appeared likely to win nearly 200 of the total 243 seats in Bihar’s legislative assembly, a huge jump from its previous 143 seats.
The result will be a big setback for the Congress party which is trying to rebuild in the northern states. Its leaders made a bold effort to increase the nine seats it had, but it appears that they may have lost a few instead. Clearly they didn’t get it—they criticised the chief minister without gauging the impact of the changes he has been able to make.
Already, the Congress party is embroiled in the 2G spectrum allocation scam of historic proportion, it is finding very difficult to get out of. The party rules in several states, where some of its governments are bogged down with leadership squabbles and major corruption cases, while others don’t have much of a record to boast about. Today, the chief minister of the Congress government in Andhra Pradesh said he was resigning for health reasons
It’s not a very different story for the BJP. It can boast of the progress made by its poster boy Narendra Modi in Gujarat, but it has little else to show. The result in Bihar, where it is in a coalition, may boost the party’s confidence, but it doesn’t seem to have taken the lesson from the verdict. Today, the party’s leadership decided to retain its chief minister in Karnataka, BS Yeddyurappa, who has been battling a challenge to his leadership amidst a series of land scams.
The next parliamentary election is only in 2014. But the Bihar result is a clear verdict against the policies of caste and corruption that the Congress, BJP and other political parties will be sorry not to learn from.




2 months ago

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6 years ago

Nobody in India cares for caste. It is the wily politician who manufactures divisions on caste grounds, to ensure votes. These politicians are so starved of ideas that they use the easiest trick to get votes. It is rarely that somebody like Nitish Kumar rises above such methods. Also, media should also share the blame - they are double quick to label every activity on caste grounds. They publish which caste got how many berth in each ministry! Watch for the same comments from media when Nitish forms his ministry.


6 years ago

Wow...truly unbelievable. Despite winning 90% of seats contested, BJP has received "warning bell" from the masses. And BJP with 91 seats seems to be comparable to Congress with 4 seats.

I suggest you check into a mental asylum and get treatment


Ajeya Sadashivaiah

In Reply to ss 6 years ago

Comparing numbers will not make sense, the charm of Nitish Kumar has given a life to BJP in Bihar. This doesn't mean BJP is doing good. In Karnataka BJP CM did huge amount of corruption and nepotism, it has crossed all the limits. Still BJP central committee failed to put B.S Yeddyurappa out. This shows the how powerless the top BJP leaders are even on there own state leaders. If you see meticulously RSS itself corrupted in Karnataka.

V Malik

6 years ago

There is also less low level visible corruption in Bihar, when compared to some of the "better" states, like Maharashtra for example. State and National highways are still mostly un-tolled, while it is an open racket in MH. There is no "octroi" and "jakat naka" menace. Bijlee/paani, as it gets available, is cheaper. Basic victuals like milk/cereals/veggies and other similar are far cheaper, and also available at small co-ops. The farmer has it much easier getting his produce to the consumer. And there is far more political awareness of the get your dues from your local neta, grassroots onwards, in most parts of Bihar.


6 years ago

Delisional is the word for your analysis.

What Chief Minister of karnataka has done (with denotification & nitification of land) is continuation to a much lesser extent of as abusive power that has been granted to him but to a MUCH lesser extent than all his predecessors. Remember that it was still legal. The reason his abuse of that power is coming out now is that opposition in Karnataka is scared that many fold worse abuse of that power by them in the last 15 years is about to come out in the next 1-2 years. They are trying to preempt him from doing that.

As for development, BJP is doing just that & very well not just in Gujarat but also in Madhya Pradesh & even Karnataka. Besides, BJP has won more new seats in Bihar than even JDU of Nitish Kumar in Bihar itself. This is because it is BJP that has delivered on Development Mantra more than any one else, including Congress & even its own alliance partners in NDA. Thus BJP's alliance partners ARE taking lessons from BJP & not the other way round.



In Reply to Dhananjay 6 years ago

what a joke!
nitish leant development from corrupt yedurappa!


In Reply to Dabbangg 6 years ago

"nitish leant development from corrupt yedurappa!" - That's not what I said!

I said, even BSY is engaged in development. Modi has been showing development results since before even Nitish became CM & so is Chauhan in MP.

By the way, BSY has even appointed a retired Karnatak High ourt Judge to review abuse ince 1995 of powers given to CMs .. some thing that COngress is refusing to do w/ 2G scandal by appointing JPC.

Nice attempt at twisting what I wrote. Do read it again after removing your tainted glasses.


In Reply to Dhananjay 6 years ago

"Thus BJP's alliance partners ARE taking lessons from BJP & not the other way round."

K B Patil

In Reply to Dhananjay 6 years ago

For the last 10 to 15 years, Karnataka's descent into all round corruption is clear to the citizens. Only the politicians seem to be happy about it. Just when the present CM completed 2 years in power, the Lok Ayukta, disgusted with the apathy resigned. One of the significant item of information from newspapers was that during the 2 years of his power, the CM had met the Lok Ayukta only twice. This is a clear indication of how much priority the CM gives to cleaning the state. While this is about the current CM, the previous CM it seems had, as his last act, before giving up office, gave an extension to the chief of a public utility. This chief was subsequently raided by the Lok Ayukta and the details of details of his ill gotten wealth was splashed in all newspapers. So, most citizens of Karnataka know that the choice is between the devil and the deep sea.

K B Patil

6 years ago

The way the BJP high command had to surrender to the Karnataka CM despite clear indications of poor governance is a clear indication that our two main parties are status quoist in nature. The Congress believes only in the charisma of the Gandhis and the BJP only believes that the upper castes will follow them forever. Both parties have a great opportunity to clean the system. But the indications are that neither of them is willing to change their habits. Soon, the smaller parties will come back into the limelight on account of the inertia of the two parties.

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