Sahara India Real Estate Corporation Ltd said it had issued Optionally Fully Convertible Debentures (OFCDs) to over 20 million investors and collected a little over Rs 19,400 crore since the money raising began in April 2008.
After premature redemptions, the company had Rs 17,656 crore payable to some 12.1 millione investors, it said in an affidavit to the Securities Appellate Tribunal (SAT). Sister firm Sahara Housing Investment Corporation also gave an affidavit, after which the tribunal hearing was adjourned to tomorrow.
Both companies have challenged an order by the Securities and Exchange Board of India (Sebi) to refund the money collected through these issues to investors. According to the affidavit, SIRECL invested the money in real estate projects across the country. The firm invested a little Rs 6,000 crore in real estate projects, the market value of which is Rs 36,000 crore, Fali S Nariman, counsel for SIRECL told the SAT.
He said the company used nearly a million agents of another sister concern, Sahara India Financial Corporation, as “introducers” for the OFCD issue.
Nariman and Sudipto Sarkar, counsel for Sahara Housing, are expected to conclude their arguments tomorrow. SAT has already heard Sebi and the ministry of company affairs (MCA). Earlier, additional solicitor general Darius J Khambatta, counsel for MCA, said Section 55 A of the Companies Act did not limit the powers of Sebi.
The Sahara group has been arguing that Section 55A limited the jurisdiction of Sebi to listed companies and those which intended to list. SIRECL and SHICL are unlisted companies and can be regulated by the central government only, they argued.
According to Khambatta, Section 55A was only an administrative section. “It only divides and allocates responsibilities under sections of the Companies Act; 55A does not create the central government as the new mini-regulator of unlisted companies,” he added.
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The MCA counsel further argued there was no turf battle between the central government and the market regulator. “There is absolutely no conflict between the Sebi Act and Section 55 A. Both must be read together. That is very much the intent and mandate of Parliament,” he said.
Nariman accused MCA of changing its stand. He said the ministry had earlier said the companies fell within its ambit in an affidavit filed with the Allahabad high court. “A Public authority cannot keep on changing its stand. It will create confusion,” he said.