SEBI headquarters in Mumbai (Photographer: Santosh Verma/Bloomberg)

Don’t Permit Sahara To Raise Rs 300 Crore From Reuben Brothers, SEBI Urges SC

Market regulator Securities and Exchange Board of India (SEBI) urged the Supreme Court on Thursday to deny Sahara permission to raise an advance of Rs 300 crore from Reuben Brothers till the company proves that it genuinely needs to raise this amount.

Sahara had moved the apex court two weeks ago seeking to raise an advance from Reuben brothers to deposit in court. The apex court had said, at the time, that Sahara does not need its permission to raise money but asked SEBI to investigate the proposal instead.

In its September 15 affidavit before the Supreme Court, SEBI reiterated that the Sahara Group, contrary to what it claims, has not repaid over Rs 22,000 crore to investors.

“Saharas ought not to be permitted to enter into the transaction of additional advance without disclosing details and satisfying this Hon’ble Court with respect to the bonafide of the same. Such transaction does not deserve sanction by this Hon’ble Court without the contemnors undertaking to fulfill the conditions laid down in Supreme Court’s 2015 order on process of refund by Sahara,” SEBI’s affidavit stated.

Saharas failed to disclose any details with respect to the present valuation of the three overseas properties, the outstanding loan amounts, transaction between Reuben Brothers and the Bank of China Ltd., constitution and other details of Kassiopeia Holdings Ltd., the reasons for the appointment of Joint Administrators Philip Bowers and Ian Wormleighton of Deloitte LLP, the total amount that would be received under the proposed additional advance to be made by Reuben Brothers and the total amount that would be deposited in the SEBI Sahara Refund Account.  
SEBI’s September 15 affidavit in Supreme Court

The apex court will hear SEBI’s stance on this ongoing case against Sahara on September 16.

In this ongoing SEBI-Sahara case, the apex Court had ordered Sahara, in August 2012, to deposit with market regulator Rs 24,000 crore which the group collected from three crore investors through the issue of bonds. Sahara informed the court in 2013 that the company has already repaid Rs 22,000 to investors but SEBI denied the same.

Sahara chief Subrata Roy was sent to Tihar jail in 2014 for non-compliance of the 2012 court order. The apex court set a condition of payment of Rs 10,000 crore, half in cash and half as bank guarantee, to secure Roy’s release from prison towards the end of March 2014. But Sahara counsels informed the court they are not in the position to pay and are negotiating with buyers for domestic and overseas properties.

In January 2015, the Court passed another order giving Sahara the option to repay Rs 36,000 crore, revised by SEBI by adding interest to the original amount of Rs 24,000 crore since 2011, in 18 installments. “Keeping in view the total liability which according to SEBI, has risen to Rs 36,000 crore (approximately), the contemnors shall deposit the balance outstanding amount within a period of 18 months commencing from the date of their release from custody in nine installments,” said the Supreme Court’s 2015 order. The Chief Justice of India-led bench also noted that if Sahara group fails to refund the full amount in 18 months the promoters would be sent back to custody.

Sahara pleaded in February 2015 before the apex court that it did not have money to repay the full amount since negotiations with U.S.-based Mirach Group to raise $1.05 billion fell flat. However, on account of Roy’s mother’s demise in May, the apex court permitted his release in May 2016. Roy got parole extensions on three occasions since June by making regular deposits of Rs 300 crore.