The Securities Appellate Tribunal (SAT) on Tuesday, September 6, rejected an application by an investor of Sahara Housing Investment Corp to become a party in the ongoing dispute between the Sahara group companies and the market regulator, the Securities and Exchange Board of India (SEBI).
The application came up during the hearing on appeals of Sahara Housing Invest and Sahara India Real Estate corp, against a SEBI order directing them to refund money collected by issuing optionally fully convertible debentures (OFCD).
Anil Upadhyay, General Secretary of Mumbai-based Investor and Consumer Guidance Society, who moved the application, alleged fraud and insufficient disclosure by Sahara Housing Invest while raising money through OFCDs. He had subscribed to these debentures. He said he wanted to support SEBI’s stand in the case and had filed complaints against the company at various fora, including SEBI and the Ministry of company affairs.
The company said it needed two weeks to file a reply. However, lawyers from both the companies and SEBI felt this would delay the proceedings beyond the timeline stipulated by the Supreme Court.
The tribunal considered options like delinking the appeal of Sahara Housing Invest from that of Sahara Real Estate and asking for an extension of four weeks from the Supreme Court, before rejecting the application.
“You are not a necessary party. You are not even a proper party in this dispute,” SAT said while rejecting the application, advising the applicant to seek remedies.
Sahara counsel Fali S Nariman continued his arguments on the issue of SEBI’s jurisdiction over OFCDs. He argued OFCDs were not “securities” under the SEBI Act. He said these were hybrid instruments and not included in the definition of term securities.
SAT’s presiding officer, N K Sodhi, questioned how OFCD was not a security, since debentures clearly came under the ambit of securities. He said: “The name itself says it’s a debenture. Debentures can take various forms, based on their security, convertibility, redeemability, etc. And, debenture is a security under the SEBI Act.”
