In a major setback to Subrata Roy, SEBI has found that another Sahara group firm has raised over Rs 14,000 crore in violation of legal norms and has issued a fresh order on Wednesday to the company and its directors to refund the money to investors with 15 per cent annual interest.
The order, which bars the company, Sahara India Commercial Corporation Ltd (SICCL), as well as its then directors and associated entities from the markets and from associating with any public entity, relates to collecting funds between 1998 and 2009 from nearly 2 crore investors through through optionally fully convertible debentures (OFCD) without complying to regulatory norms.
"I am of the view that SICCL engaged in fund mobilising activity from the public, through the offer of OFCDs and has contravened the provisions of the Companies Act," SEBI wholetime member Madhabi Puri Buch said in a 54-page order passed on Wednesday.
Sahara claimed that it was not a public fund raising as the money was raised through a private placement of OFCDs to an identified target group comprising of its workers, employees, friends, associates and individuals having deposits or association with group entities. SEBI, however, rejected this submission, saying any private placement to more than 50 persons becomes a public offer.
The order states that the repayments must be done through non-transferrable bank demand draft or pay order, while the refund amount directions would be modified for the money claimed to have been already returned to investors - provided the payments are made through prescribed route and are certified by peer-reviewed chartered accountants.
SEBI said it came across the alleged irregularities relating to SICCL while it was investigating the other two companies. Earlier in 2011, SEBI had ordered Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation Ltd (SHICL) to refund the money raised from investors through OFCD route.
The new SEBI order comes at a time when the Sahara group is already struggling with the earlier case related to the capital markets watchdog asking two other Sahara firms in 2011 to refund over Rs 24,000 crore raised by illegally issuing bonds to nearly 3 crore people.
While Sahara has been asked to refund the money to a special SEBI account under a Supreme Court-monitored repayment process, the group has been saying it has already refunded more than 98 per cent of the amount directly to investors and the proof for the same has been given to SEBI. Besides, Sahara has also deposited a large amount to the SEBI account, but has alleged that the regulator has been able to disburse only a small portion to investors.
But, the regulator said the company did not provide any proof for repayment through banking channels.
Sahara's stand has been that the investors are not approaching SEBI for refund as they have already got their money. In case of SICCL too, the SEBI order mentioned that the company made submissions that it has already refunded the money collected from the investors in cash, barring Rs 18 crore for which the bondholders did not turn up for the refund.
SICCL, Subrata Roy and others have also been directed to provide a full inventory of all the assets and properties and details of all bank accounts.