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Taking cognisance of civil and criminal complaints against two Sahara firms and their top executives in the long running Sebi-Sahara case, a Metropolitan Magistrate here has asked them to appear before it for alleged violation of various regulations.
Following the Supreme Court order against Saharas last year for refund of more than Rs 24,000 crore to their bondholders, market regulator Sebi had filed criminal complaints against Sahara India Real Estate Corp Ltd (SIRECL) and Sahara Housing Investment Corp Ltd (SHICL) and their top officials for violation of various provisions of the Companies Act and the Sebi Act.
After looking into the complaints and examining the witnesses, the Magistrate passed orders to "issue pocess" against the two companies and their top officials under various sections of the Companies Act and the Sebi Act. The matter is expected to be heard next later this month.
The 'issue process' order means that the court has taken cognisance of the complaint and has sought appearance of the accused parties before it.
The relevant sections of the Companies Act deal with the matters related to disclosures made in the prospectus or issue of shares or debentures, criminal liability for mis-statements in prospectus, penalty for fraudulently inducing persons to invest money, penalty for false statements, etc.
These complaints were filed by Sebi in November 2012 before the Additional Chief Metropolitan Magistrate at Bandra, Mumbai.
Sebi had begun a probe way back in 2008 after it received complaints alleging that SIRECL and SHICL were issuing convertible bonds to the public throughout the country without complying with the applicable statutory requirements.
It was later found that the two companies had raised funds amounting to close to Rs 25,000 crore by allotting Optionally Fully Convertible Debentures (OFCD) to more than 3 crore investors without following various statutory and regulatory requirements stipulated under the Companies Act and the relevant Sebi regulations.
Subsequently, Sebi passed an order in 2011, directing the two companies and their promoters and directors to repay the amount raised through OFCDs to the investors along with a 15 per cent interest.
The order was challenged by the companies, but it was upheld by the Securities Appellate Tribunal in October 2011 and later by the Supreme Court in August 2012.
The apex court also directed these companies to deposit the money with Sebi for further repayment to the investors. So far, SIRECL and SHICL have deposited only Rs 5,120 crore with Sebi. The regulator has initiated the process of refund to genuine investors out of the money deposited by these firms.
The firms claim they have already refunded over Rs 20,000 crore to the investors directly and their total outstanding liability is less than Rs 5,120 crore deposited with Sebi.
However, these claims have been disputed by Sebi before the Supreme Court, which is also expected to resume hearing the case this month.
