Intervention application in SC in Sebi-Sahara case

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Jun 1 2012, 08:56am hrs
An intervention application has been filed in the Supreme Court over the alleged non-repayment of R17,400 crore collected from the public by two Sahara Group firms Sahara India Real Estate (now Sahara Commodity Services) and Sahara Housing Investment (SHIC).

This comes at a time when petitions filed by the two Sahara firms against the Securities Appellate Tribunal are being heard by a vacation Bench headed by Justice KS Radhakrishnan. Earlier, the apex court had stayed the tribunals October 2011 order that upheld the Sebi's order dated June 23, 2011, against the two Sahara Group companies. Sebi wanted the two firms to refund the entire proceeds of its optionally fully convertible debentures (OFCD) to investors with 15% interest.

One Arun Kumar Agrawal, a financial expert and a lawyer, has filed an application seeking intervention in the matter.

Seeking a direction to various authorities ministries of finance and corporate affairs, the RBI, and CBDT to take appropriate action as per law against the Sahara Group, he said the issue is the safety of the savings of around 2.3 crore marginal investors, who are often illiterate and gullible and, at times, cannot give the proof of identity, or maintain minimum balance and, hence, would, in all likelihood, not be entertained by the formal banking industry.

He has also requested the apex court to appoint a committee to ensure that all the depositors receive their invested sum with interest in a time-bound manner. The number of investors in the two companies is more than the investors in the entire stock market, which number around 1.5 crore. The amount involved is around R24,000 crore and works to around an average of R10,000 per depositor. In most cases it represented their total personal savings that they have deposited with the group, the application filed through counsel Prashant Bhushan said.

The two Sahara companies and their promoter Subrata Roy Sahara, and the directors Vandana Bhargava, Ravi Shankar Dubey, and Ashok Roy Choudhary were told jointly to refund the collected money.

Sebi had also restrained the two entities from accessing the securities market for raising funds till payments were made.

It may be noted that it was Agarwals complaint in the 2G spectrum scam that eventually led to the registration of the FIR by the CBI. Besides, he has filed various PILs against the Karnataka mining scam. Even the apex court has recently admitted his PIL against the Cairn-Vedanta deal.

According to the application, Sahara has been treated as an organistion too big to fail as happened in the West with the regulatory authorities offering compromises that they know are not viable given the losses and the liquidity of the group companies.