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Monday, October 3, 2022

Sahara Group Blames SEBI of Blocking Investors’ Money

SEBI seeks guidelines from the Supreme Court

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Raju Vernekar
Raju Vernekar
Raju Vermekar is a senior Mumbai-based journalist who have worked with many daily newspapers. Raju contributes on versatile topics.

INDIA: In its submission before the Patna High Court, the Sahara Group blamed the Securities and Exchange Board of India (SEBI) for blocking investors’ money deposited with the capital market watchdog, for repaying investors as per the Supreme Court’s (SC) directions.

In a written response to the summons issued by Patna high court, Senior Advocate Umesh Prasad Singh, appearing on behalf of Sahara India Pariwar on Tuesday, stated that the Sahara Group has already deposited Rs 23191 crore with SEBI in response to the SC directions dated December 05, 2012. However, it has repaid only Rs 128 crore, leading to discontent among the investors waiting to get their money back. 

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Senior Advocate Pradeep Kumar appearing on behalf of SEBI stated that the SEBI has sought SC guidelines about utilizing funds. At this juncture, the court asked whether SEBI has any SC order restraining it from disbursing the investment’s money. It should be produced in court if it has such an order.

Sahara argued that there is no impediment of SC order or the order of any other court restraining SEBI from making repayment to the investors of the other companies/ societies, other than the Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corp. Ltd (SHICL), whose bank accounts have been frozen by the SEBI.

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It was also pointed out on behalf of the Sahara Group that in a writ petition filed before the Lucknow High Court, SEBI itself has undertaken that money received from Sahara shall be used for making repayment to all investors, including that of “Sahara Q shop.” If the reimbursement is not made, the only course open for SEBI is to either refund the entire amount to Sahara or repay the investors.

After hearing both sides, the Patna court asked SEBI to file its response in writing on or before March 25 and depute a responsible officer from the SEBI’s head office in Mumbai to answer all the questions posed by the court on March 28.

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It may be recalled that based on the SC directions, the SEBI had frozen all bank accounts of the SIRECL and SHICL in February 2013. SEBI took this action when the SC questioned its inaction against these firms despite having the power to freeze bank accounts and seize properties to refund the money raised by these companies through the issuance of optionally fully convertible debentures (OFCDs) to the investors.

These companies had collected Rs 25,781.37 crore from around 3.07 crore investors through the debentures dated March 13, 2008, and October 16, 2009, respectively. Following the SEBI’s action, the Sahara group deposited Rs 15,485.80 crore against the principal amount of Rs 25,781.37 crore into the designated ‘SEBI-Sahara Refund’ account, a statement issued by Sahara India Pariwar said.

Since the investors, including some employees, failed to refund their money, they staged protest demonstrations against SEBI in Mumbai and Lucknow in November 2021. In December last, similar protests were held in Delhi, Patna, and Hyderabad.

In response to the agitations, the then SEBI Chief Ajay Tyagi had told media that Sahara had yet to fully deposit the money ordered by the SC in August 2012. The group had deposited only around Rs 15,000, while the total amount due to be deposited was Rs 25,781 crore.

Having over 5000 establishments across the country with employee strength of nearly 12 lakh, Sahara Pariwar, headquartered at Lucknow in Uttar Pradesh, is involved in various sectors such as finance, real estate, sports, power, manufacturing, media and entertainment, health care, life insurance, retail, e-commerce, hospitality, etc.

Subrata Roy’s Sahara, heading over Rs 68,000 crore empire, was arrested on March 4, 2014. He was granted conditional bail on March 26, 2014. He was given his first bail in May 2017 for four weeks to perform the last rites for his deceased mother. Later the bail was extended. Since then has, bail has been extended on various grounds. 

However, the SEBI has contended that the total principal with the interest of financial irregularity has now crossed Rs 70,000 crore at 15 percent interest on the principal amount.

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Author

  • Raju Vernekar

    Raju Vermekar is a senior Mumbai-based journalist who have worked with many daily newspapers. Raju contributes on versatile topics.

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