Sahara Housing Investment Corp. Ltd and Sahara India Real Estate Corp. Ltd, two firms that are part of the diversified Sahara India Pariwar group, continue to raise money from the public, defying a ban on such activity by capital market regulator Securities and Exchange Board of India (SEBI).
The ban, originally clamped by SEBI in November, came into force on 7 April after the Allahabad high court vacated a stay on the order. In its defence, Sahara said it came to know of the order only four days later.
“We have issued instructions to stop. But keeping in mind the commitments made earlier, as the order came to our knowledge late on 11 April, and 11th and 12th being holidays we need to be given reasonable time,” says a communication by Sahara. “We do not intend to…do anything in violation of the order of the honourable court. We are committed to honour the court’s verdict.”
However, agents across the country have continued to peddle a set of controversial debentures, commonly known as housing bonds and issued by the two Sahara entities, despite the ban. Several agents and investors in Uttar Pradesh (UP), Maharashtra and Gujarat said there has been no communication from the firms to stop their activities.
“It will be an absolute contempt (of court),” said R.N. Trivedi, counsel for SEBI. “There is a restraint on any kind of money-raising by Sahara. If we get proof of this, we will initiate contempt proceedings.”
Agents across the country are not aware of any ban and continue to collect money for the Sahara group firms.
Sahara India Real Estate and Sahara Housing Investment have raised at least Rs. 4,843 crore by issuing optionally fully convertible debentures to investors as of June 2009, the date of their last annual report filed with the Registrar of Companies (RoC). Though the group is yet to report official numbers for subsequent years, the corpus has grown manifold, according to some estimates.
According to SEBI, the debentures are in violation of public issue norms laid down under the companies law and the SEBI Act. SEBi’s public issue regulations prescribe eligibility criteria for accessing public money, mandate due diligence of the company and its promoters by merchant bankers, grading by credit rating agencies, and vetting of the draft red herring prospectus by the regulator against rigorous disclosures norms. SEBI said none of its norms were followed in the debenture issue.
