Seeking more clarity on the Optionally Fully Convertible Debentures (OFCDs) scheme, the Supreme Court on Monday directed Sahara India Real Estate Corporation Limited (SIRECL) to submit an affidavit containing the format of OFCD scheme and the list of agents working on its behalf.
Inquiring about the format in which the scheme was made, the Bench of Chief Justice of India SH Kapadia, Justice KS Panicker Radhakrishnan, and Justice Swatanter Kumar asked, “In what format have you prescribed the scheme? Are these forms prescribed by Security and Exchange Board of India (SEBI)?”
Surprised that such complex scheme was being distributed for investment to a large number of people, the Bench asked, “How did the investors, many of whom are villager, come to know of the concept of the OFCDs scheme?”
Senior Advocate Soli Sorabjee appearing for Sahara Group, replied that there were agents who interact with potential investors and inform them about the scheme.
To this the Bench directed Sahara Group to furnish the list of all the agents along with the application format of the scheme by Thursday.
SEBI had on 24 November 2010 passed an interim restraint order against Sahara Group with respect to issuance of OFCDs. Sahara Group had moved the Allahabad High Court where a stay was granted against the SEBI order. The High Court however allowed SEBI to proceed with its enquiry on the OFCDs.
On 4 January 2011, SEBI moved a petition before the Supreme Court where it was observed that SEBI would be allowed to call for any information from Sahara Group including the names of the investors who have invested in the OFCDs to complete its investigation.
Unsatisfied with the information provided by Sahara Group, on 5 April 2011, SEBI filed an application before the High Court complaining that Sahara Group had not furnished the complete information asked by it. The High Court after taking the submission of SEBI vacated its earlier interim order putting into effect the restraint order on the issuance of OFCDs.
Sahara Group later moved the Supreme Court with the petition to recall the order of the High Court which restricted them to issue OFCDs. Sahara Group stated that they have furnished full information to SEBI such as details of the investors, their names, addresses and the amount invested. On the delay in handling the information, SIRECL had given the explanation that there were 66 lakhs investors and so the compiling of the information took time.
1 Comment
Much hue and cry has been raised by SEBI with respect to issuance of OFCDs by two unlisted public companies of Sahara Group. The litigation is ensuing in the Lucknow bench of Hon’ble High Court as well as Hon’ble Supreme Court. The matter is sub-judice and it is not appropriate for SEBI to go public by putting its order dated 23/06/2011 on its website and issuing a press note, inspite of the orders of Hon’ble Supreme Court that order of SEBI will not be given effect to. For a regulator where the matter is sub-judice, media trial is not warranted and not expected from SEBI as is being done in this case. It was expected of SEBI to simply place the order before the Hon’ble Supreme Court and maintain the sanctity of the order passed by the Hon’ble Supreme court.