- SEBI has just one-point
programme – to destroy Sahara
- Misleading, misinformation
campaign
- We are being singled out for
punishment’
- Raises questions that why govt. depts. are not being punished
Delhi, July 22, 2013: Hitting back at SEBI and its Chairman, Sahara India Pariwar has said that the market regulator has just one-point agenda to “destroy” the image of the diversified conglomerate.
Countering the allegations made by SEBI Chairman on the
OFCDs raised by it, Sahara said in a public notice that he has recently “mischievously
misled” the people. “Right from the beginning SEBI’s one point programme has
been to hit and destroy Sahara by mischievously misleading campaign of
misinformation though trial by media,” Sahara said.
Sahara recalled that when it promoted OFCDs for the first
time in 2001, it had obtained a written permission for its OFCD issue from the
Registrar of Companies (RoC) Kolkata under the Ministry of Corporate Affairs way
back in 2001 and submitted prospectus to the same Registrar (filing the return)
with the details of around 1.87 crore investors with their names, addresses and
amounts raised etc.
Sahara is being accused of violating the rules pubic issue
rules on the pretext that the raising of funds from more than 50 investors does
not remain a private placement. But the fact is that even after informing of
1.87 crore investors in 2007, neither RoC nor any of the government departments
raised any objection. On the contrary, in 2008, Sahara got permission from two
RoCs – Kanpur and Mumbai - for raising funds through OFCD again. Moreover, all
through these 10 years, various RoCs regularly did inspections, investigation
and regularly took Balance Sheets and returns and other documents as per Companies
Act. RoCs permitted Sahara and to that extent they were the concerned
regulators for the OFCD, Sahara argued.
Recalling the SEBI’s wavering stand, Sahara said the
regulator had forwarded a complaint against the Sahara companies - Sahara India
Real Estate Corporation Limited and Sahara Housing Investment Corporation
Limited - received in April 2010 to two different Regional Directors of
Corporate Affairs Ministry, for appropriate action.
SEBI had even said in its letter to the two Regional Directors,
who were concerned with the ROCs which permitted the OFCDs, that the issue did
not fall under the market regulator’s purview since the companies were
unlisted.
Subsequently, Sahara pointed out, the Minister of State for
Finance had informed the Lok Sabha in April 2010 itself on a question relating
to CitiCorp’s OFCD issue that in the matters of unlisted companies issuing
securities to several thousands of persons, SEBI does not exercise any
jurisdiction. This statement was based on what the Executive Director, SEBI
informed the Finance Ministry.
In November same year, however, SEBI took a complete U turn and
submitted through an affidavit in Lucknow Bench of Allahabad High Court that
SEBI is the regulator for Sahara OFCDs, Sahara said.
Sahara pointed out in its public statement that SEBI should
be severely punished for lying in Parliament or in its affidavit in the High
Court. Any other citizen would have been jailed for such an act, Sahara said.
Mr. Mohan Parasaranji, the then Additional Solicitor General
of India (and now the Solicitor General) had also expressed his opinion on the
query raised by the Ministry of Corporate Affairs that Sahara was right and
SEBI wrong.
Dr. Ashok Nigam, Additional Solicitor General of India,
appearing on behalf of the Ministry of Corporate Affairs, also submitted
through Affidavit in the Court that Sahara was right and SEBI was wrong.
Mr. Mohan Parasaranji, the then Additional Solicitor General
of India (and now the Solicitor General) had also expressed his opinion on the
query raised by the Ministry of Corporate Affairs that Sahara was right and
SEBI wrong. He mentioned in his letter, “SEBI has no jurisdiction over the
unlisted companies like the Sahara Group of Companies which are not intending
to get themselves listed.”
Dr. Ashok Nigam, Additional Solicitor General of India,
appearing on behalf of the Ministry of Corporate Affairs, also submitted
through Affidavit in the Court that Sahara was right and SEBI was wrong. He
also added, “In issuance of OFCD the petitioner company after their
registration with the Registrar of Companies has been permissible under the
law. The Central Government remains the regulating authority for the company.
It has got its own control system in place which has been under constant review
with the developments taking place in the corporate world and it has already
increased its controlling aspect of such companies and would further strengthen
the same by making keener and deeper scrutiny of private placement of
companies”.
In addition, as many as five other legal luminaries,
including two former Chief Justices of India and one ex-Chairman of Securities
Appellate Tribunal (SAT), expressed the opinion in favour of Sahara. The Law
Ministry with the signature of the then Minister Mr Veerappa Moily, officially
communicated to the Ministry of Corporate Affairs (MCA) that Sahara was right
and SEBI was wrong. MCA had, in fact, asked for the Law Ministry’s opinion, but
they never produced it anywhere. But, somehow, Sahara got the copy and produced
it in the court. SEBI has not yet reacted to it in the Court.
Contrary to its view on Sahara, SEBI took an altogether
different stand in the Kalpana Bhandari Case before the Bombay High Court that
it did not has jurisdiction over unlisted public companies that did not intend
to list their shares.
Similarly, in another case ‘Society for Consumers and
Investors Protection Vs. Union of India’ in Delhi High Court in, SEBI took a
view that it did not command jurisdiction, under Section 55A of the Companies
Act, 1956, over unlisted public companies which did not intend to get listed.
Further, in response to the Prayag Infotech Hi-Rise Ltd.,
letter dated 27th January, 2009, SEBI took a similar stand that
unlisted companies did not come under its regulatory purview.
Stating that the company is being singled out for imposing a
severe punishment, that too with a retrospective affect, Sahara asked as to why
all the government departments are not being penalized. Had they not given
repeated permissions Sahara would not have faced such a huge problem and
injustice, the statement said and asked: “Is Sahara alone supposed to be solely
responsible for the sanctity of law and legal system of the country that
everybody should be hell bent upon punishing it with retrospective effect?”
Sahara explained that almost 3 years back it had voluntarily
declared through a reputed Charted Accountant Firm that the liability, along
with interest, of these two companies was Rs. 24,000 crores.
Sahara, which apprehended public violence across the
country, began to refund the deposits much before that Supreme Court judgment
of August 31, 2012 and some payments dragged up to September 20, 2012. Thus,
Sahara’s liability was reduced to just Rs. 2,610 crores. Sahara also declared
the Rs. 2500 crores as
buffer amount subject to final verification of amounts. These figures
were also certified by the same CA firm that declared the original liability of
Rs 24,000 crores.
Following the Supreme Court order, Sahara deposited Rs 5120
crores with SEBI but the regulator is yet to pay to the investors. Is this the
SEBI way of protecting the interest of small investors?
Sahara pointed out that SEBI accepted the liability figure
of Rs. 24,000 crore as suited them and was not ready to accept the updated
figure of Rs 2610 crores. Both the figures have been provided by Sahara itself
and they are not come out as a result of any investigation by SEBI or any other
body. Moreover, SEBI is supposed to refund about Rs 2000 crore to Sahara after
refunding Rs 2610 crore to investors.
“It is important to note that there has been not a single
complaint against Sahara. Had the payments not been made, there would have been
violence and complaints throughout the country,” Sahara said and pointed out
that nothing of this sort has happened.
Sahara said that the future of over 11 lakh workers is at
stake and all that the company wants is justice.
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