SEBI moves Supreme Court against relief granted to managers of Sahara Group entity in OFCD case

The Securities and Exchange Board of India (SEBI) has moved the Supreme Court, partly challenging the Securities Appellate Tribunal (SAT) order granting relief to four directors and company secretary of Sahara India Commercial Corporation Ltd (SICCL).

The vacation bench of Chief Justice Surya Kant and Justice V Mohana is scheduled to hear SEBI’s plea on June 18.

On March 9, SAT upheld SEBI’s regulatory action against SICCL and dismissed objections filed by the company and its directors in connection with the alleged illegal issuance of optionally fully convertible debentures (OFCDs).

The three-member SAT bench had held that OFCDs issued by SICCL between 1998 and 2008 constituted public offers and they fell within the regulatory jurisdiction of SEBI.

Sahara mobilized ₹14,106 crore from around 2 crore investors

The court had said that SICCL had taken action in this regard. ₹14,106 crore was raised from approximately 1.98 crore investors through these bonds during the period. It was also held that such a large-scale mobilization of funds from such a large number of investors could not be considered a private placement, as the company claimed.

While the court dismissed the objections filed by SICCL and its directors, it allowed a separate objection filed by the four directors and the company secretary and held that, as employees, they could not be held responsible for the actions of the company.

He also stated that the prospectus was signed by the company secretary pursuant to a power of attorney granted by the directors who were primarily responsible for the actions of their representatives.

SEBI has now challenged this part of the decision before the top court.

The case relates to an order issued by SEBI in October 2018, directing the company to return money raised through bonds, disclose inventory details and ban certain officials from accessing the securities market.