SC monitors report flays Sahara non-cooperation

Written by Ashish Rukhaiyar | Mumbai | Updated: Oct 19 2012, 06:10am hrs
Subrata RoySubrata Roy, Sahara Group chairman
Retired Supreme Court judge BN Agrawal has pulled up the Sahara Group in a scathing report saying the diversified business entity has failed to cooperate with the Securities and Exchange Board of India (Sebi) in the matter related to the refund of close to R40,000 crore to nearly 22 million small investors.

The capital market regulator is also understood to be concerned about Saharas ability to pay up the R40,000 crore given that the valuation of the groups Aamby Valley property of R70,000 crore is way above Sebis estimate obtained from an independent valuer or just a fifth of that amount. Sahara needs to cough up the R40,000 crore by November 30.

Persons privy to the matter say Agrawals strongly-worded report will be presented to the Supreme Court on Friday along with the Sebi petition seeking the courts intervention for a quick resolution. The apex court appointed Agrawal to oversee the compliance with its order in August.

The report clearly says that Sahara is defying the Supreme Court order by delaying the process and stonewalling Sebi on every issue, said a person familiar with the development. The report adds that Sahara has not been cooperating with the regulator, which amounts to contempt of court, he added.

Sebi, say sources, suspects Sahara is delaying the process to gain time to divert depositors from the two companies to some new scheme that would fund their latest initiative Sahara Q Shop. Sebi has also decided that if money is kept under fake identities, the same would be deposited in the Consolidated Fund of India.

It is believed that the capital market regulator has already received a huge number of complaints from investors against Sahara entities regarding non-payment of their dues and the details of which would also be presented to the court on Friday.

In August, the Supreme Court directed two Sahara group companies Sahara India Real Estate Corporation and Sahara Housing Investment Corporation to refund over R24,400 crore along with 15% interest to all depositors within three months (November 30). Sahara, which has interests ranging from media and sports to financial services and housing, had raised the money between 2008 and 2011 through OFCDs (optionally fully convertible debentures), an instrument that allows investors to convert it into shares as an option.

In September, Sebi filed an application in the apex court alleging that the Sahara Group has not furnished all documents in their custody to the regulator by September 10 a deadline set by the SC.