The ongoing legal saga involving the Sahara Group has moved one step forward with the Supreme Court on Wednesday asking the Securities and Exchange Board of India why the directions spelt out in its August 31, 2012 order against the group have not been executed. That landmark order plugged apparent loopholes in the existing law which had emboldened the group to question the capital market regulator’s jurisdiction over its massive fund raising efforts amounting to over Rs. 24,000 crore through obscure instruments known as optionally fully-convertible debentures (OFCD). The Supreme Court, while upholding SEBI’s 14-month old order holding the OFCDs illegal, directed the two Sahara companies that had issued the debentures to return the money and also furnish the identity of its investors, both within stiff timelines. Sahara had approached the highest court after failing to get relief from the Allahabad High Court and the Securities Appellate Tribunal. In almost all other cases, the Supreme Court order — backed up by stringent criticism of the conduct of the group’s promoters — would have been the final word. Not so for Sahara, which has seemingly unlimited resources to engage lawyers and acquire and operate a number of unrelated businesses. Its logo has adorned the Indian cricket team and more recently it bought iconic hotels in London and New York. In none of these cases has the source of funding ever been made public even while it flaunted its acquisitions and political connections.
Even after the Supreme Court order, Sahara’s legal avenues were, apparently, far from being totally shut. Quite inexplicably, on December 5, 2012, a three-member bench of the Supreme Court headed by the Chief Justice of India gave the group unexpected relief by giving it time till February to repay the depositors in instalments. Days after that order, the group claimed that its liabilities are only a fraction of what was estimated by SEBI. Technically in default and facing a contempt petition, the group is now suspected to have shifted large sums of money overseas to fund its hotel acquisitions. This is a matter that will have to be investigated from the angle of foreign exchange regulations and money laundering. But the latest Supreme Court observations should remind us that the bona fides of the several lakh-strong depositor base of the group need to be established first and the money returned to them without delay. This task was never expected to be easy. The Supreme Court has now told SEBI it can seize the group’s assets. Given Sahara’s known track record of artifice and opacity, however, it is not clear what the regulator will actually manage to get hold of.
Keywords: Sahara Group, legal saga, SEBI, optionally fully-convertible debentures, Supreme Court, Sahara's legal avenues, three-member bench, money laundering Act
The utmost priority has to be returning money to investors without
much delay. Considering Sahara group's political connections and its
money power, it would make every possible effort to delay the
execution of Supreme Court's judgement. Supreme Court has to take
stringent action on Sahara if the February deadline is not met. I
would like to commend the effort of Supreme Court in this case and
hope it will ensure justice to the investors.
I can't imagine how horrific this country would have been if supreme
court hadn't functioned properly!!
It is very hard to understand that despite having a notorious record in terms of fraud and lack of transparency, how every time Sahara has managed to easily come out of any controversy that beleaguers it.In fact it is hard to remember the name of any business magnate to have ever being convicted though their are myriad charges against them.All these strengthens the fact that they are the people who run the actual show and in terms of corruption they are well ahead of the politicians.The Indian judiciary must see to it that a fast and unbiased result comes out so that the common man need not resort to mass protest every time he seeks justice.
Seems like the Sahara Group used the December 2012 to Feb 2013 unexpected relief from the Supreme Court to transfer off the money abroad -- if it is true, now it is the Government which has to immediately take up the process of getting that money back. But will the Govt do it especially when Sahara is said to have political links across the spectrum?
The Sahara group of companies need to realize that long litigation and narrowing of public support needs to be reovered.In any case, it is the most precious for a company. Since the estimates of SEBI have been overlooked by the supreme court,the SEBI should also try to gain public confidence.
We are naturally very grateful to the Honorable Supreme Court for its land mark judgment showing Sahara group of companied their proper place. A sharp reminder that a company like Sahara, with all its “unlimited resources to engage lawyers and acquire and operate a number of unrelated businesses” has met their nemesis in Supreme Court, political connections notwithstanding. Reading of the judgment we are reminded of Lord Krishna saying in Bhagavad Gita 4.7 and 4.8 “Whenever virtue declines and unrighteousness rises, I manifest Myself as an embodied being. To protect the Saints and Sages, to destroy the evil-doers and to establish Dharma(righteousness), I am born from age to age.”
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