The tussle between Sahara and Sebi is increasingly bordering on the theatre of the absurd. Late on Monday afternoon, a Sahara official informed the regulator that a truck carrying a partial consignment of papers was stuck at a toll collection point in Mumbai and would be late in delivering documents relating to investors who had subscribed to debentures issued by two of its unlisted firms.
Sebi officials were told that the documents would be delivered by midnight, with the complete set of papers to be delivered over the next few weeks till October.
The truck eventually landed on Tuesday morning. As a result, according to sources close to the regulator, Sahara missed the Monday deadline set by the Supreme Court to provide the documents and details relating to 30 million investors who it said had subscribed to the debentures.
The regulator has taken a view that documents running into millions of pages cannot be accepted after office hours.
The two firms have been directed by the court to refund Rs 17,400 crore along with interest to investors. The failure to refund will open up the possibility of court-directed action against the group.
Sources said even though the Sahara cargo was denied entry, the Lucknow-based group, which has had several run-ins with regulators in the past, could continue sending truckloads of documents over the next few weeks to the Sebi office. Sahara officials have also taken photographs of the truck before the Sebi office.
The August 31 judgement relates to the battle between the Sahara group and Sebi over regulation and fund-raising through optionally fully convertible debentures.
The OFCDs were issued by Sahara Real Estate Corporation and Sahara Housing Investment Corporation, the two companies in question. The court had directed the companies to provide all documents with the firms – particularly, the application forms submitted by subscribers, approval and allotment of bonds and others – to Sebi within ten days from the date of pronouncing the order. This was to ascertain – according to the court – the genuineness of the investors as well as the amounts deposited with the companies.
The two unlisted firms had between 2008 and 2011 raised over Rs 17,000 crore from thousands of investors through a private placement of debentures or bonds. Sebi had then stepped in saying that the fund-raising violated rules which stated that any offering of securities with 50 investors or more would be treated as a public offering. In November 2011, KM Abraham, a full-time member of Sebi issued an order directing the companies to refund the money to investors at 15% interest. This was challenged by Sahara in the high court and later in the Supreme Court.
Both firms have been given three months to refund the money to investors failing which Sebi can take recourse to all legal options including attachment and sale of properties and freezing of bank for realising the amount. The court has also directed the regulator to submit a status report and to seek further directions from it as and when necessary.
The regulator may now have to approach the court to seek further directions, according to two senior lawyers. Senior Sebi officials declined to comment while an ET email to a Sahara spokesman went unanswered till the time of going to press. The apex court has appointed former Supreme Court Justice DN Agarwal to oversee whether its directions were being complied with by Sebi and for effective implementation of its directions.
