Sahara Group Company has to prove full compliance

Left with little option following SEBI’s order to freeze bank accounts and attachment of properties of two of its group companies, the Sahara Group is planning to move a separate application in the Supreme Court next week asking for an interim relief.

Confirming this move, Sahara counsel Kishore Lahiri told TOI, “If required, we will file a separate application in the Supreme Court asking for interim relief to get rid of the SEBI order. I am surprised how they (SEBI) can pass such an order at this point of time when they know that our interim application is pending in the court.”

Sahara’s application is expected to come up for hearing next week where Sahara would request that it be allowed to furnish security through a credible financial institution to pay the balance installments. It would also plead that since the company has already redeemed significant number of (debenture holders) any further payments to SEBI would amount to double payment, sources aware of Sahara’s next course of action said.

Experts that TOI spoke to about Sahara’s possible options said that the group has to either prove that it has already complied with the obligations or commit that the entire money it took from investors would be returned. “The company has to offer full compliance to get relief. A substantial compliance plea is not going to help. No investors should be left in the lurch,” says an expert.

Sahara has 45 days to file an application with Securities Appellate Tribunal (SAT) against the Sebi order. However finding relief seems difficult as the SEBI order was based on the Supreme Court judgment, said Ashwin Mathew, consultant with Khaitan & Co.

Companies usually file an affidavit with SEBI listing out what they have done and propose to do to comply with the orders in such cases. But Sahara has to move the SC for relief as they do not agree with the market regulator on the amount involved, say experts.

“It’s a case of first instance and sets a trend that SEBI means business and if required, it may go the extra mile. It gives the message to India Inc that compliance and regulations are to be taken seriously. It’s the key takeaway from SEBI’s move to attach properties of Sahara. As far as Sahara is concerned, they can do little than to file a writ petition or seek a stay on SEBI’s order,” Rukshad Davar, corporate partner, Majmudar & Partners, a top tier Indian law firm based in Mumbai, said.

While SEBI has stated that Sahara has to refund Rs 24,000 crore to investors with 15% interest, the company has claimed that the total liability is not likely to exceed Rs 5,120 crore, which it says has already been deposited with the market regulator. Besides, Sahara can also approach the SC urging it to appoint an independent committee of administrators to validate the actual amount to be paid to investors.

SEBI ORDER Sahara employees choose to keep mum
Lucknow: Mum was the word at the business offices of Sahara group on Thursday, a day after the Securities and Exchange Board of India (SEBI) ordered a freeze on the assets and bank accounts of two Sahara Group companies after they failed to repay over Rs 24,000 crore collected from investors.

Employees and officials of Sahara group came to their offices as usual but refused to say anything about the SEBI order.

Tight security arrangements were in place at Sahara Shehar and guards watched the movement of people around the 200-acre space that comprises guest houses, a gymnasium, an auditorium, a call center, offices of HR and corporate communication cell and the pristine white house where group chief Subrato Roy Sahara resides.

An employee said: “We have been asked not to speak to anyone.”

Another Sahara official said, “All communication will be done through the legal cell,”

The Sahara Bhawan and Sahara Tower, situated in Kapoorthala office comprising the real estate, infrastructure and media section of the business conglomerate, too, remained a picture of poise. Employees refused to react to the SEBI order. Some showed signs of apprehension but others maintained that the business and professional environment was “cool and calm”.

The business house is said to employ around 10 lakh people across the globe. This also includes agents, who work on a commission basis for the group which carries out its business activities in finance, infrastructure and housing, media and entertainment, consumer merchandise retail venture, manufacturing and information technology.

Its media wing alone comprises over a dozen publications and electronic/entertainment channels working out of 96 bureaus with a total 2,308 correspondents across the globe and over 1500 V-SATs for news collection, the group website said. The group recently entered into consumer merchandise retail venture, and engages in retail chain of consumer products.
COURTESY:
Piyush Pandey & M Allirajan TNN
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