The Securities Appellate Tribunal (SAT) has upheld an order of the Securities and Exchange Board of India (SEBI) directing a Sahara group company to refund ₹14,106 crore raised from investors through optionally fully convertible debentures (OFCDs).
The tribunal dismissed appeals filed by Sahara India Commercial Corporation Ltd (SICCL) and its directors challenging SEBI’s October 2018 order, which had directed the company to return the funds and barred certain officials from accessing the securities market.
₹14,106 crore raised from nearly two crore investors
According to the tribunal’s findings, SICCL had mobilised about ₹14,106 crore from nearly 1.98 crore investors through OFCDs issued between 1998 and 2008.
SAT held that such a large-scale fundraising exercise could not be treated as a private placement, as claimed by the company.
The tribunal noted that under amendments to the Companies Act, any offer made to 50 or more persons is deemed a public issue, which must comply with regulatory requirements such as listing approvals and disclosure norms.
Since Sahara did not obtain approval from stock exchanges or comply with SEBI regulations before issuing the debentures, the tribunal ruled that the market regulator had full jurisdiction to act in the matter.
Tribunal rejects Sahara’s repayment claim
During the proceedings, Sahara argued that most of the money raised through the debentures had already been repaid to investors and that only about ₹17 crore remained outstanding.
However, the tribunal rejected this claim, stating that the company failed to provide credible evidence to prove that the funds had actually been returned to nearly two crore investors.
SAT observed that a chartered accountant’s certificate alone was insufficient to establish that such large-scale repayments had taken place.
No unreasonable delay by SEBI
Sahara also argued that SEBI had initiated proceedings after an unreasonable delay.
The tribunal dismissed this contention, noting that the regulator had begun examining the case after reviewing related Sahara group matters and after receiving inputs from the Ministry of Corporate Affairs.
Given the large number of investors and extensive documentation involved, the tribunal held that the time taken by SEBI to initiate action was not unreasonable.
Relief for some company officials
While dismissing the appeals filed by the company and its directors, SAT allowed a separate appeal by certain managers and the company secretary, ruling that they could not be held personally liable for the company’s actions as employees.
Case background
The case relates to Sahara’s long-running dispute with SEBI over fundraising through OFCDs. Regulators alleged that the debentures were issued to millions of investors without complying with public issue norms, making the fundraising illegal under securities laws.
With the latest order, the tribunal has reaffirmed SEBI’s regulatory authority over large-scale fundraising schemes involving public investors.
About the author – Ayesha Aayat is a law student and contributor covering cybercrime, online frauds, and digital safety concerns. Her writing aims to raise awareness about evolving cyber threats and legal responses.
