New Delhi, August 31
In a jolt to the Sahara Group, the Supreme Court today directed two of its companies, Sahara India Real Estate Corporation (SIRECL) and Sahara Housing Investment Corporation (SHICL) to refund Rs 24,029 crore they had collected in 2008-09 in the form of Optionally Fully Convertible Debentures (OFCD) violating investors’ protection norms.

A bench comprising Justices KS Radhakrishnan and JS Khehar asked the two companies to return the money within three months with 15 per cent interest. While the SIRECL had raised Rs 19,400.87 crore, the SHICL had mobilised Rs 6,380.5 crore. The amounts stood at 17,656.53 crore and Rs 6,373.20 crore, respectively, as on August 31, 2011, following premature redemptions by some of the investors.

The bench upheld the June 23, 2011, order of the Securities Exchange Board of India (SEBI) that the OFCDS issued by the two companies were in fact public issues and as such the Saharas were “bound to have listed the OFCDS on a recognised stock exchange and ought to have followed the disclosure requirement and other investors’ protection norms.”

The Securities Appellate Tribunal (SAT) had endorsed SEBI’s order for the refund of the amounts raised by the companies, prompting them to approach the SC.

“The SIRECL and the SHICL would refund the amounts collected through red herring prospects (RHPs) dated 13.3.2008 and 16.10.2009 along with interest @ 15% per annum to SEBI from the date of receipt of the subscription amount till the date of repayment, within a period of three months from today, which shall be deposited in a nationalised bank bearing maximum rate of interest,” the SC ruled in a 270-page verdict.

The apex court asked SEBI to ascertain the genuineness of the 23 million subscribers to the OFCDS and directed the Saharas to furnish all the documents, particularly the application forms and allotment of bonds, to the regulator within ten days for this purpose.

SEBI would refund the amount to the investors after cross checking the RHPs with the documents provided by the Saharas.