Capital markets regulator Securities and Exchange Board of India (SEBI) on Friday issued a public notice alerting investors about a ban on money mobilization by two Sahara group firms.
The notice comes in the wake of Sahara India Real Estate Corp. Ltd and Sahara Housing Investment Corp. Ltd continued to raise money, one week after the ban came into force. Agents and investors across the country said they were not aware of any such ban and the money-raising activity continued.
The SEBI notice said the high court vacated its 13 December interim order on 7 April. “The investors are hereby informed that on April 7, 2011, the hon’ble High Court inter alia observed that the information furnished by the petitioners (to SEBI) in the process of inquiry cannot be said to be any information in the eyes of law, within the directives issued by the court and that they do not find any ground to continue with the interim order,” the SEBI notice said.
According to the notice, the court order followed a petition moved by SEBI on 5 April, seeking to vacate the interim order. The SEBI said it had also sought a dismissal of Sahara’s writ petition on the ground that the said interim order is not complied with and the requisite information as sought by SEBI has not been provided.
In November, SEBI had banned Sahara India Real Estate, Sahara Housing Investment and the promoters and directors of the two companies from raising any money from the public.
Sahara India Real Estate had challenged SEBI’s order in a writ petition filed before the Lucknow bench of the Allahabad high court. In an interim order dated 13 December, the high court stayed the operation of the SEBI order. The order allowed SEBI to proceed with the inquiry, but restrained it from taking a final decision.
On 7 April, Sahara had submitted a CD containing more than 6.6 million names in the court. But it refused to share further information. The court was to take up the case on Friday, but the bench could not be constituted as one judge was absent. The date of the next hearing is yet to be decided.
Prashant Chandra, counsel of the Sahara group, said the group is not ready to share any further information with SEBI. “We are not going to submit any information because SEBI in a written affidavit has not accepted our condition demanding confidentiality of the information shared with them,” he said.
The confidentiality clause has conditions restraining the regulator from reaching out to the investors, and sharing the information with other regulators and other government agencies. It also says the information cannot be made public in any other manner. This clause has become contentious as it would be a handicap for SEBI in any investigation it would want to conduct into the affairs of companies. The courts had permitted the regulator to conduct the investigations.
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.