The Sahara Group will have to refund Rs. 17,400 crore to retail investors raised in 2008-09, the Supreme Court has ruled. The apex court had upheld the Securities Appellate Tribunal (SAT) order directing two Sahara companies to refund this amount. Former Supreme Court Judge BN Agarwal will monitor the refund to investors, the court said.
The court has ruled that the amount collected will have to be deposited in a nationalized bank with 15 per cent interest. Sebi will check the genuineness of the investors and if the investors are not traceable the amount will go to the government. If Sahara doesn’t furnish the documents it will be treated as non-compliance, the court ruled.
The court further said that in case of non-compliance Sebi can attach and sell properties of the Sahara Group.
This is a major setback for the Sahara Group, which had raised this amount from 23 million investors through two of its companies – Sahara India Real Estate Corporation (now known as Sahara Commodity Services Corporation Ltd) and Sahara Housing Investment Corporation. The amount was raised through Optionally Fully Convertible Debentures (OFCD), which are debentures which investors can convert into shares at their option.
The case dates back to June 2011 when market regulator Securities and Exchange Board of India or Sebi had ordered Sahara to stop raising money through OFCDs. The Sahara Group had then moved to the Securities Appellate Tribunal, which had upheld Sebi’s order in October saying the company must refund the money raised through OFCDs to investors within six weeks.
The Sahara Group then moved the Supreme Court, which had stayed SAT’s decision in November.
