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.

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