Sebi Sahara case: A saga of big numbers and innocuous names
The case saw staggering numbers like collection of over Rs 24,000 crore from three crore individuals
Mar 01, 2014
Source : The Indian Express


LUCKNOW: It was an innocuous-looking complaint by one ‘Roshan Lal’ four years and four months ago that sent watchdog Sebi on trail of “various illegalities” committed by Sahara group in raising over Rs 24,000 crore from more than three crore investors.

The high-profile saga — which today saw the arrest of flamboyant Sahara group chief Subrata Roy, who calls himself “Managing Worker” of his business empire — has seen many dramatic events along the way.

There has been many emotional pitches by Sahara group, which claims to have a net worth of over Rs 68,000 crore and assets worth over Rs 1.5 lakh crore.

The Sebi-Sahara case itself comprises staggering numbers like collection of over Rs 24,000 crore from three crore individuals, while once Sahara sent 127 trucks containing 31,669 cartons full of over three crore application forms and two crore redemption vouchers to Sebi office. This apparently resulted into a huge traffic jam on outskirts of Mumbai, where the regulator is headquartered.

The case also has brought to headlines numerous financial jargons like OFCDs, DRHP and RHP, as also numerous innocuous sounding names like Kalawati, Hardwar and the famous ‘Roshan Lal’.

It all started with Sahara Prime City, a real estate venture of the group, filing a Draft Red Herring Prospectus (DRHP) with Sebi on September 30, 2009. This is an initial document that a company needs to file with Sebi to bring out an IPO or initial public offer of shares to public investors.

While going through this DRHP, Sebi sensed certain large-scale fund raising exercises by two Sahara firms — Sahara India Real Estate Corp Ltd (SIRECL) and Sahara Housing Investment Corp Ltd (SHICL).

Soon, Sebi received two complaints — one on December 25, 2009 and the second on January 4, 2010 — alleging illegal means used by these two firms in issuance of certain bonds, called OFCDs (Optionally Fully Convertible Debentures), to the public throughout the country for many months.

The second complaint was from Roshan Lal, which was received by Sebi through National Housing Bank. Based on these complaints, Sebi began seeking clarifications from the group, initially through their investment bankers Enam Securities and later directly.

Further investigations found that the funds were raised through OFCDs after filing RHPs (Red Herring Prospectus) with the Registrar of Companies, although the rules required permission from Sebi for any issuance of securities to 50 or more investors. In these cases, the number of investors ran into crores.

Eventually, Sebi passed an interim order against the two companies on November 24, 2010, asking them to refund the money collected from investors.

A final order was passed by the regulator on June 23, 2011, while the group challenged these directions before the Securities Appellate Tribunal. However, the Tribunal upheld the Sebi orders on October 18, 2011, and asked the companies to refund Rs 25,781 crore to over three crore investors.

The group then moved the Supreme Court, which also passed a historic order on August 31, 2012, asking the two companies to deposit outstanding amount of over Rs 24,000 crore with Sebi for

refund to the investors.

Sahara was also asked to deposit details of all investors to Sebi, which was mandated to refund the money after verifying their genuineness.

Sebi again moved the Supreme Court alleging non-compliance by the group to the earlier orders, pursuant to which the apex court passed another order on December 5, 2012, and asked the two firms to deposit the money in three instalments beginning with an immediate payment of Rs 5,120 crore.

While the group paid the first instalment, it failed to meet the deadline for other two payments and rather claimed to have already paid more than Rs 20,000 crore directly to the investors.

Unconvinced with Sahara’s claims, Sebi passed orders on February 13, 2013, to attach bank accounts and other properties of the group and later issued summons for personal appearance of Subrata Roy and other three directors before it.

Roy and others appeared before Sebi on April 10, 2013, after which he famously told reporters that he was not even offered tea by Sebi officials.

During the same month, April 2013, Sebi finally closed its file on Sahara Prime City, whose planned IPO had kick-started this long-running battle.

In the meantime, Sahara group continued to issue full-page and multi-page advertisements in newspapers wherein it claimed to have cleared bulk of its outstanding liabilities to bondholders.

In these advertisements, the group also claimed to have raised total funds to the tune of Rs 2,25,000 crore since inception in 1978 across various businesses and pegged its total net worth at an astonishing figure of Rs 68,174 crore and the size of its assets at Rs 152,518 crore.

Sahara also charged that Sebi was making “baseless allegations” against it and accused it of not accepting “60 truckloads of documents”, while the regulator countered these charges by saying that the documents given by them were “hopelessly mixed up”.

Sebi also issued public notices in newspapers, cautioning investors and general public against dealing with Sahara.

The regulator also asked various financial institutions including banks to freeze all accounts of the group, besides writing to district collectors and other authorities for attachment of land, real estate and other properties.

Similar letters were sent also to the tax department and other agencies like Enforcement Directorate too.

Later, Sebi began an exercise for refund to genuine investors from Rs 5,120 crore deposited by Sahara. However, not much headway appears to have been made in the process as Sebi has detected instances of multiple accounts, on which it has sought a clarity from the Supreme Court.

Following are the key developments:-

September 2009: Sahara Prime City files Draft Red Herring
Prospectus (DRHP)

October 2009: Sahara India Real Estate Corporation Ltd
(SIRECL) and Sahara Housing Investment Corporation Ltd (SHICL)
file Red Herring Prospectus with Registrar of Companies.

December 2009: Complaint received from Professional Group for
Investor Protection against Sahara group for illegalities in
fund raising SIRECL and SHICL

January 2010: Similar complaint received against Sahara group
from one Roshan Lal through National Housing Bank

November 2010: Sebi passes interim order against the two firms

June 2011: Sebi passes final order

October 2011: Securities Appellate Tribunal upholds Sebi order

August 2012: Supreme

Court passes order asking the two
companies to deposit over Rs 24,000 crore to Sebi for refund

December 2012: Supreme Court allows Sahara to deposit money in
3 installments. It deposits first installment of Rs 5,120crore

February 2013: Sebi issues attachment orders against the group
after companies failed to pay remaining two installments

March 2013: Sebi seeks arrest of Subrata Roy

April 2013: Roy appears before Sebi after summons

July 2013: Sebi moves Supreme Court against Sahara group for
non-compliance with the court’s direction

November 2013: Subrata Roy barred from leaving the country

February 20, 2014: Supreme Court asks Roy to appear personally

February 26, 2014: Supreme Court issues non-bailable warrant
after Roy’s fails to make personal appearance; Sahara chief
cites mother’s illness for non-appearance

February 28, 2014: Roy arrested by Lucknow police.

Latest Realty News

Tardy BMC to pay Rs 18 crore as property tax refund
Mar 01, 2014
MUMBAI: The tardiness of civic officials has resulted in the cash-strapped BMC paying around Rs 18 crore as interest for the delay in refunding the extra money citizens had paid as property tax.
GHMC to redress grievances of property tax payers
Mar 01, 2014
HYDERABAD: The Greater Hyderabad Metropolitan Corporation (GHMC) will organize the second 'property tax parishkaram programme' in all GHMC circle offices between 10 am and 1 pm on March 2.
Hooda announces major relief in property tax
Mar 01, 2014
HARYANA: Ahead of the Lok Sabha polls, the Haryana government has announced a major relief in the payments of property tax in municipalities. Presiding over the State Cabinet meeting on Wednesday, Chief Minister Bhupinder Singh Hooda announced one time rebate of 30 per cent for property owners who clear all their dues or arrears upto year 2012-13 by March 31, 2014.
Fliers to fill up new immigration form from tomorrow
Mar 01, 2014
DELHI: Passengers flying into India will have to fill up a new immigration form from tomorrow to declare Indian currency exceeding Rs 10,000 being brought by them, among others.
MEGA board approves fresh DPR for A'bad metro rail project
Mar 01, 2014
AHMEDABAD: After the announcement of the new route for Ahmedabad Metro, the Board of Metro-Link Express between Gandhinagar and Ahmedabad (MEGA) has approved its fresh detailed project report (DPR). The DPR has been prepared by Delhi Metro Rail Corporation (DMRC) and has now been forwarded to the Centre for further approvals.
Realtors Bet Big on City
Mar 01, 2014
HYDERABAD: Owing to the new found political stability in the state capital, builders and developers point out that it is the best time to invest in property as the prices would not remain rock bottom for a long while.
HDFC Mutual Fund to raise Rs 1,500 crore for real estate
Mar 01, 2014
MUMBAI|BANGALORE: HDFC Mutual Fund plans to raise up to Rs 1,500 crore for real estate through a newly-formed category — alternative investment funds (AIF). According to two persons familiar with the matter, the asset management company will raise the money through a new division that is likely to be called HDFC AIF.
Future of real estate seems bright in Greater Noida
Mar 01, 2014
DELHI: Despite the fact that demand in the realty sector is slow to some extent the Greater Noida Industrial Development Authority (GNIDA) has recently announced a 10.21 per cent increase in the allotment price across all categories of land in the city. The new rates will be applicable from April 1, 2014 onwards. However, this is not the first time that such an increase has taken place. The GNIDA follows this practice almost every year. For instance last year too, the GNIDA had hiked the land ra
Greater Noida West brings opportunity for retail buyers
Mar 01, 2014
DELHI: Commercial property has always been considered a huge investment and preferably a deal made for corporate houses, MNCs, big and foreign investors. Retail players or small buyers always find it too expensive due to location, size and cost. They can hardly get a small office space so they prefer to rent a small office space to run their operations. But for the first time in the NCR, Greater Noida West is offering opportunity for retail and small buyers too. Multiple projects are offering no
Kolkata forays into residential green-building league
Mar 01, 2014
KOLKATA: The city finally has a couple of environment-friendly residential apartments to feel proud of. The premium projects – Astitva by Primarc and MCK groups and Platinum by Godrej Properties – join the elite league of over 250 such projects countrywide, including a slew of projects in the National Capital Region, Mumbai, Bangalore, Chennai and Hyderabad.

Latest Realty News Of State

Realty Talk's