Sahara Pariwar: Mysterious Riches, Tall Claims and Struggle To Repay
On 29th September, I wrote about how Sahara Pariwar had apparently raised over Rs1.10 lakh crore in 10 years, during a traumatic phase where the group patriarch had been incarcerated for almost two years by the Supreme Court of India. These sensational numbers came from information put out by two regulators—the Central Registrar of Cooperative Societies (CRCS) and the Securities and Exchange Board of India (SEBI). You can read that report here:
 
A month and half later, the mystery about Sahara’s depositors and the true state of its wealth only deepen, while the government’s reluctance to act decisively gets more perplexing. 
 
Let’s start with CRCS, the apex regulator of cooperative societies. Its joint secretary, Vivek Aggarwal, called for an investigation by the serious frauds investigation office (SFIO), based on the claim that four multi-state cooperative societies of the controversial Sahara group had raised an astounding Rs86,673 crore over 10 years (from 2010)  from around eight crore depositors. This indicates that Sahara has four times the total number unique investors in the Indian market, including the mutual fund industry. Mr Aggarwal’s letter claimed that the central regulator had received 15,000 complaints in eight months from the four cooperative societies from these investors about monies due.
 
Sahara was unfazed. In an email on 6th October, Ghulam Zeeshan, deputy director, Sahara India Pariwar, admitted that there were delays in payments but claimed that all 15,000 people who had complained to the central registrar had been paid. He also said: “We are regularly making maturity (payments) and in the past two to 2.5 months, we have paid maturity of Rs3,226.03 crore (to 10,17,194 Members).” He goes on to say that “total complaint payment is only 2.81% of total payment in that period” and this forms only 0.07% of Sahara’s total investor population which, he admits, to be eight crore. He also claimed that Sahara had made maturity payments of “Rs1,40,157.51 crores to 5,76,77,339 esteemed investors” in the past 10 years. He also assures us that Sahara India has assets that are three times the liability.  
 
 
Despite these mind-boggling levels of fund raising and deployment, Sahara and its bad boy billionaire patriarch never figure among India’s biggest taxpayers, or revenue generators with significantly large noticeable businesses. Most of its operations, except the sponsorship of sporting events media outlets, are largely shadowy.
 
After a flurry of rapid hearings against the four Sahara cooperatives (Sahara Credit Cooperative Society Ltd, the Saharayn Universal Multipurpose Coop Society Ltd, the Humara India Credit Coop Society Ltd and the Stars Multipurpose Cooperative Society) all through the corona pandemic, there are no orders uploaded on its website since 24th September, after Mr Aggarwal’s letter found its way to the media and was widely reported. 
 
The good news is that Sahara claims to have processed payments for 23 investors until 5th November and has paid out a sum of Rs76,85,480. We posted the list of 23 investors on Telegram to seek confirmations. Of these, 18 investors have confirmed receiving payments, but these total up to only to Rs39,64,438. The other five have remained silent.
 
But Sahara India’s usually silent and invisible investors were vocal, this time. As we reported, many took to social media under the hashtag #JusticeForSaharaIndiaInvestors and posted videos and photographs of protests at Sahara offices across the country. One of them wrote a letter to Chief Justice of the Supreme Court, Sharad Bobde, making shocking revelations, which we have published in the article mentioned above. The apex court has not taken note of that letter either. 
 
 
Although the SFIO made no official response to Mr Aggarwal’s letter, it turns out that an investigation had already been opened into Sahara Q-Shop in 2018. In December 2018, the Lok Sabha was informed that a Sahara group subsidiary Sahara-Q Shop Unique Products Range Ltd was being probed by the SFIO following complaints by 744 people. On 29th October, SFIO suddenly turned active again and searched the Lucknow head office of the Sahara group. Business Standard reports that the SFIO has expanded the probe to nine Sahara group companies, including a gold mart and the housing company. A Google search reveals some local cases are also registered against the Sahara chief and his wife for refusing to repay investors. 
 
Moneylife Foundation’s Experiment 
 
 
We decided to follow up on the social media campaign and Mr Zeeshan’s letter to check on Sahara’s claim that investors had been paid through the same social media route, through our not-for-profit organisation Moneylife Foundation. We created a Telegram group for Sahara’s aggrieved investors and asked them to post details of their investment. 
 
This is an open group, which quickly attracted over 150 participants, who were asked to post their investment details in a certain format for easy collation and sharing with Sahara. The number has now swelled to 432. 
 
Our point was: if 15,000 investors have been paid over Rs3,226 crore so quickly, Sahara should be able to dispose a few hundred complaints in a jiffy. Also, since the central registrar claimed that Rs2,300 crore, belonging to Sahara Credit Cooperative society, was paid to SEBI after routing it as an advance to group chairman Subrata Roy, there was probably a case for appeal to SEBI to pay investors of the credit society. On the positive side, Mr Zeeshan was extremely cooperative and assured us that all members of the group would be paid their maturity amounts without pushing people to reinvest the money or transfer it to another group company. 
 
The good news is that Sahara claims to have processed payments for 23 investors until 5th November and has paid out a sum of Rs76,85,480. We posted the list of 23 investors on Telegram to seek confirmations. Of these, 18 investors have confirmed receiving payments, but these total up to only to Rs39,64,438. The other five have remained silent.
 
Our effort led to many interesting findings. 
  • First, there are, indeed, hundreds of investors clamouring for repayment of funds, but the numbers are in hundreds rather than thousands or even lakhs. 
  • Of the 432 members on the group, over 243 investors have submitted all their details and new submissions come in everyday. We sent these to Sahara India in two batches; only the first has been processed so far because some investors had not provided complete information or had mistakes in certificate numbers, etc.
  • Despite the huge effort by my colleagues to collate, clean, compile and provide information to Sahara, only 44 investors’ details are admitted to be complete in all respects so far. Moreover, some investors have received only part payment as yet, despite assurances that they will be paid in full, with interest. The slow and painstaking effort by Moneylife Foundation will continue, so long as Sahara India keeps releasing payments.  
  • We notice that many of these investors seemed to be investing like in a recurring deposit, with money collected by Sahara agents every few days or on a weekly basis. For instance, one investor, who was paid, had 34 separate investment certificates for deposits of about Rs12,000 each. Another investor claimed multiple separate investments (one had Rs40,000+ per certificates) for identical amounts on the same day. A third had maturity payments of over Rs1 lakh each due almost every week.
  • When we noticed large and repeated investments by a single investor, we asked for submission of PAN numbers when the investment was over Rs1,00,000. Many investors have readily submitted PAN and cheque details too. This would suggest that they were so confident of the Sahara group and the higher returns that were offered, that they preferred it to bank term deposits. We learn that Sahara’s network of agents also made the collection of money a lot easier. 
  • Although more investors are submitting investment details every day, what is glaringly obvious is that the numbers and the sums involved are puny compared to the numbers thrown about by Sahara itself and by the regulators. So far, under Rs1 crore. 
  • Sahara India, as a group, claims to employ 44 lakh people across India, which suggests that it would need a more efficient system of processing its monthly salary payments than the method it appears to have adopted to process maturity payments for investors.
 
The gap between perception, claims, allegations and reality is inexplicably wide. At the moment, though, we are happy that some investors are actually getting their money back. Given the poor state of grievance redress in India, where even regulators like SEBI and RBI treat complaints with utter callousness, this is no mean achievement. Wouldn’t this effort be much more efficient and better if the regulators did what we have been doing? After all, they have a legal mandate and public funds to do the work on a much larger scale than what we have done. 
 
 

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    COMMENTS

    ayushgpta798

    6 days ago

    koi adarsh credit co operative society ke baare me kyun baat nhi krta bhala. 21 lakh depositors apna paisa vaapas paane ke liye 2 saal se mar rhe hai aur sarkar so rahi hai.
    na media, na central registrar aur naa aap log. koi nhi sunn rha hai.
    please help us.

    yashpalpatel16

    1 week ago

    sir mera karvy me 202000 ts h payout abhi tak nahi aaya h samaz me nahi aa raha h keya karu

    harineem

    2 weeks ago

    MonelyLife is doing a great service. In TN we have had chit funds do this again and again and people still fall for it.RBF Nidhi was the most notorious with film actors involved and all of them silent after the implosion(includes wannabe CM Kamal Hassan), would be great if you could do a article on same.

    adityag

    2 weeks ago

    Good write up.

    sushilprasadassociates

    2 weeks ago

    This reflects another aspects of Indian financial markets too, eg, the potential for financial savings in the economy and failure of regular banking channels to tap it. Sahara is not unique in this matter - we have had a series of deposit accepting schemes from time to time. Sahara has been able to carry it off for a much longer period.

    raviforjustice

    2 weeks ago

    I can understand the effort that has gone behind this article. Given the poor state of grievance redress in India, where even regulators like SEBI and RBI treat complaints with utter callousness... No doubt, justice delivery system headed by the Supreme Court of India, no less, is not only non existent for the ordinary mortals but they actually add insult to injury for the aggrieved. Whether it is ombudsmen for local self governing bodies, insurance, banks through Human Rights, Women's, Minority, and information commissions to consumer 'courts' they have all been turned into rehabilitation centers for the blue eyed boys of the decision makers. Whatever our judges may claim, justice is a chimera for practically every citizen other than the billionaires.

    tillan2k

    2 weeks ago

    sahaa i s bold entity it was thumbing the nose to Supreme court even

    Newme

    2 weeks ago

    There are plenty of Chit funds collecting money in Tamilnadu. I request ML to do a national coverage on their operations.

    amarjitsinghgill2159

    2 weeks ago

    Iam an investor in sahara companies, please guide me where I can reach to get my amount back from sahara companies,and what documents to attach

    SAT Asks Edelweiss Custodial Services for an Undertaking to Deposit Rs212 Crore with NSE Clearing
    The Securities Appellate Tribunal (SAT) on Thursday asked Edelweiss Custodial Services Ltd to give an undertaking to NSE Clearing Ltd (NCL) that it will deposit Rs212 crore within two weeks from its final decision.
     
    In an order, the SAT bench comprising Justice Tarun Agarwala, Dr CKG Nair and Justice MT Joshi, say, "...we direct the appellant (Edelweiss Custodial Services) to give an undertaking before NCL stating therein that they will deposit a sum of Rs212 crore or such amount as directed by this Tribunal within two weeks. Such an undertaking shall be given within a week from today. The urgency application as well as the stay application are disposed of."
     
        
    Edelweiss Custodial Services, however, says, it is asked by the SAT to deposit the money only after final disposal. In an email, Edelweiss Custodial Services says, "SAT has considered our appeal and listed the matter for final disposal on 23 December 2020. On completion of the hearing and only in the event that SAT has any grounds to declare our actions improper, will they direct us to deposit the amount with NCL within two weeks of the tribunal's decision; to reiterate is two weeks from the hearing on the matter which is slated for 23 December 2020.  At present only an undertaking needs to be given and no deposit needs to be made."
     
    The bench fixed 23 December 2020 as the date for final disposal of the case. Before that, it asked the respondents to file within three weeks their replies. After that, Edelweiss Custodial will file its rejoinder next weeks.
     
    Edelweiss Custodial Services had approached the SAT against an order passed by NSE Clearing asking the services provider to return client's securities. 
     
    Edelweiss Custodial Services had invoked the bank guarantees and partly sold off the securities after it discovered that the securities pledged to it belonged to the broker’s individual clients. NSE Clearing issued a notice for reinstatement of these securities.
     
    The SAT bench observed that "One of the issues, which arises for consideration is, whether the NSE Clearing has a jurisdiction to pass such kind of an order directing reinstatement of securities of Anugrah Stock & Broking Pvt Ltd by the appellant (Edelweiss Custodial), which is alleged to be without jurisdiction and contrary to the circulars of NCL which only allows a maximum penalty of Rs1 lakh."
     
    "On the other hand, we find that the clients securities parked by Anugrah can only be utilised for meeting the respective clients’ obligations which, in the impugned order indicates that without ascertaining as to whether these clients have a negative balance, the appellant, nonetheless, sold of the securities and also without any instructions," it added.
     
    Senior counsel Janak Dwarkadas, representing Edelweiss Custodial, contended that the clearing member had called upon Anugrah Stock & Broking, a trading member, to satisfy its obligations towards clearing and settlement as permitted by law and contract and, based on the instructions, had sold securities amounting to Rs460.32 crore.
     
    Last month, investor-clients of Anugrah demanded the setting up of a multi-agency special investigation team so that the assets are consolidated and auctioned efficiently. The petition has made the NSE, the NSE Clearing Corporation and Edelweiss Custodial Services as respondents. 
     
    For the high-profile case, several hundred investors have come together to try and recover their money. The amount involved and believed to be lost exceeds Rs1,300 crore. Moneylife has covered the details of this case extensively. Our articles can be read here:
     
    The bulk of investors in Anugrah have come through an associate firm, called Teji Mandi Analytics which was apparently running a derivatives portfolio of over Rs1,000 crore like a Ponzi scheme with assured monthly returns. 
     
    On 4th September, NSE had withdrawn all trading rights of crisis-hit Anugrah Stock and Broking Pvt Ltd. Earlier on 1st September, the stock exchange had withdrawn Anugrah's trading rights in future & options (F&O), currency derivatives and commodity derivatives segment.
     
    In a circular, NSE says, "On account of the regulatory concerns observed, the relevant authority of Exchange has decided to withdraw the trading rights of the member in all segments of the Exchange with immediate effect. Accordingly, in addition to the aforementioned segments, Anugrah Stock & Broking Pvt Ltd shall also be disabled in all other segments of the Exchange from 4 September 2020 before market hours."
     
    Anugrah Stock and Broking, which won a reprieve from Securities Appellate Tribunal (SAT) on 17th August, was unable to deposit Rs165 crore with the NSE by 1st September. The Exchange then had withdrawn its trading rights and also seized its computers and books, the brokerage firm has told investors thronging to its office. 
     
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    Anugrah Scam: Bombay High Court Asks NSE To Release Some Money to Investors before Diwali
    The Bombay High Court on Tuesday directed National Stock Exchange (NSE) to release some money to thousands of investor-clients of Anugrah Stock & Broking Pvt Ltd. This may be challenged by the NSE at the next hearing of the case scheduled for 5th October. 
     
    At the hearing, advocate Yusuf Iqbal Yusuf, representing hundreds of investors of the failed brokerage firm, Anugrah Stock & Broking Pvt Ltd, had demanded that the NSE should be asked to release Rs25 lakh per investor as immediate relief from the investor protection fund (IPF) since the matter has arisen due to default of a broker. Under the current rules, Rs25 lakh is the maximum that can be paid from the IPF that too only for transactions on the Exchange. So it remains to be seen how this direction will apply to all of Anugrah’s investors.
     
    Senior counsel Rafique Dada, representing NSE, told the bench of justice SS Shinde and justice MS Karnik that it will file reply tomorrow. After hearing this, both Dr Birendra Saraf and advocate Yusuf agreed that the matter will be further argued after NSE’s response. 
     
    During the hearing, advocate Yusuf mentioned to the Court about a letter had been addressed by petitioners and other investors sharing their plight and requested the bench to take some action. He argued that the investors of Anugrah are a victim of the system and ought to be given some relief.  
     
    He further told the Court that, despite the public prosecutor’s assurance about submitting a status report on the investigation, it has not been submitted to the Court. "There has been no noticeable progress in the investigation, all the accused are still moving around free, no passports have been seized and nothing substantial has happened," advocate Yusuf asserted. 
     
    When the public prosecutor said that the report was already submitted, the bench noted that it was not sufficiently detailed. The HC then asked the public prosecutor to provide a detailed report consisting of a break up of what has the EOW (economic offences wing) and enforcement directorate (ED) have done on each day. 
     
    The petitions (CRI WPST/2876/2020 and CRI WPST/2878/2020) were listed before the bench of justice SS Shinde and justice MS Karnik of the Bombay HC. 
     
    Investors were represented by Dr Saraf of Parinam Law Associates. In his submission, Dr Saraf contended that SEBI (Securities and Exchange Board of India) has a mechanical setting to notice any fraud and non-compliance of its rules and regulations, however, no action has been taken by the market regulator in Anugrah matter. He further stated that it is essential to know when SEBI found out about the irregularities and what is the next step it proposes to take in the matter. 
     
    Last month, investor-clients of Anugrah demanded the setting up of a multi-agency special investigation team so that the assets are consolidated and auctioned efficiently. The petition has made the NSE, the NSE Clearing Corporation and Edelweiss Custodial Services as respondents. 
     
    For the high-profile case, several hundred investors have come together to try and recover their money. The amount involved and believed to be lost exceeds Rs1,300 crore. Moneylife has covered the details of this case extensively. Our articles can be read here: https://www.moneylife.in/tags/anugrah.html
     
    During the previous hearing on 29 October 2020, advocate Yusuf pushed for appointment of a committee as has been done by the high courts and Supreme Court in several other cases, and a court monitored investigation. He also pushed for release of funds from IPF of the NSE and for releasing Rs460.32 crores deposited by Edelweiss as directed by NSE Clearing to investors of Anugrah.
     
    The counsel for investors of Anugrah also ran through the important documents such as the contract notes executed at 00:00 hours and the margin statement issued by Anugrah and the corresponding CDSL (Central Depository Services Ltd) statement which showed close to NIL balance. He also went through all the import SEBI circulars, which require clearing members and brokers to have a pre-authorisation from the investor or client before conducting any trade and also that an investors' shares cannot be used towards the trading obligations of another investor. 
     
    Adv Yusuf informed the bench of justice SS Shinde and justice MS Karnik that directors of Teji Mandi had absconded to the US, where they are enjoying their ill-gotten wealth and there have been no attempts to bring them back. He also pointed out that even after two months, the EOW of Mumbai police has not made any arrest. Furthermore, he pointed out that no requisitions have been made to the ED about such a matter of grave public importance.  
     
    Sharing a grievance of one investor, Jaidev, the counsel informed the Court how the investor sold his house to invest Rs85 lakh with Anugrah just three months before the scam took place. There is not a single trade executed on the account of Mr Jaidev and his entire investment is siphoned off by Anugrah and Teji Mandi, advocate Yusuf told the bench.
     
    The counsel for investors further insisted that the order passed by NSE Clearing should be released since it was not a confidential document. However, this demand was vehemently opposed by senior counsel Virag Tulzapurkar stating that NSE Clearing was in the process of challenging the same. However, senior counsel Venkatesh Dhond, representing NSE, stated that they were ready to produce the order if the Court directs. 
     
    The bulk of investors in Anugrah have come through an associate firm, called Teji Mandi Analytics which was apparently running a derivatives portfolio of over Rs1,000 crore like a Ponzi scheme with assured monthly returns. 
     
    On 4th September, NSE had withdrawn all trading rights of crisis-hit Anugrah Stock and Broking Pvt Ltd. Earlier on 1st September, the stock exchange had withdrawn Anugrah's trading rights in future & options (F&O), currency derivatives and commodity derivatives segment.
     
    In a circular, NSE says, "On account of the regulatory concerns observed, the relevant authority of Exchange has decided to withdraw the trading rights of the member in all segments of the Exchange with immediate effect. Accordingly, in addition to the aforementioned segments, Anugrah Stock & Broking Pvt Ltd shall also be disabled in all other segments of the Exchange from 4 September 2020 before market hours."
     
    Anugrah Stock and Broking, which won a reprieve from Securities Appellate Tribunal (SAT) on 17th August, was unable to deposit Rs165 crore with the NSE by 1st September. The Exchange then had withdrawn its trading rights and also seized its computers and books, the brokerage firm has told investors thronging to its office. 
     
    Last month, the EOW of Mumbai police has registered a case of cheating against the troubled stock-broking house, Anugrah Stock & Broking Pvt Ltd, for duping an investor of Rs8 crore. As Moneylife has reported in the past, the extent of investor losses in Anugrah could be as high as Rs1,000 crore and investigators have confirmed that more complaints having been subsequently coming to the EOW.
     
    The case was registered by Ashutosh Shah at Juhu police station against the firm’s director Paresh Kariya, and Kalap Shah and Anil Gandhi of Teji Mandi Analytics and others, under criminal breach of trust and criminal conspiracy. However, no arrests have been made yet.
     
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    COMMENTS

    mailved

    3 weeks ago

    There are a lot of greedy investors who have gone to anugraha ,, the sebi has been sleeping too ,. fraud and loss of capital is penalty to greedy investors , who will penalize SEBI and agencies which sleep and dont even monitor such unscrupulous operators .. Why are the promoters and management not behind bars ?

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