The Securities and Exchange Board of India (Sebi) has moved the Supreme Court against part of a Securities Appellate Tribunal (SAT) order that gave relief to four managers and the company secretary of Sahara India Commercial Corporation Ltd (SICCL). According to reports from PTI, a vacation Bench of Chief Justice Surya Kant and Justice V Mohana is scheduled to hear Sebi's plea on June 18. The regulator has challenged only the portion of the SAT ruling that held the five employees could not be made liable for the company's actions, while the wider order that upheld Sebi's action against SICCL and its directors in the optionally fully convertible debentures (OFCDs) case remains the central backdrop to the appeal.
On March 9, a three-member SAT Bench upheld regulatory action by Sebi against SICCL and dismissed appeals filed by the company and its directors in connection with the alleged illegal issuance of OFCDs. As reported by PTI, the tribunal ruled that the OFCDs issued by SICCL between 1998 and 2008 constituted a public offer, bringing them within Sebi's regulatory jurisdiction. Sahara mobilised ₹14,106 crore from nearly 2 crore investors through these debentures during the period. The tribunal rejected Sahara's contention that most of the funds had already been repaid to investors and noted that such large-scale mobilisation of funds from such a huge number of investors could not be treated as a private placement.
While dismissing the appeals filed by SICCL and its directors, the tribunal allowed a separate appeal filed by four managers and the company secretary. According to PTI, SAT held that, as employees, they could not be held liable for the company's actions. The tribunal also noted that the prospectus had been signed by the company secretary pursuant to powers of attorney granted by the directors, who remained responsible as principals for the acts of their agent. This finding is now under challenge before the Supreme Court, with the decision determining whether employee-level relief can survive in a case where the tribunal has otherwise accepted Sebi's view that the OFCD mobilisation was a public offer under securities law.
The case pertains to an October 2018 order passed by Sebi directing the company to refund the money raised through the debentures, disclose details of its inventory, and barring certain officials from accessing the securities market. As reported by PTI, the Sahara OFCD case is among India's most significant securities market disputes. In 2012, the Supreme Court directed Sahara Group companies to refund more than ₹24,000 crore collected from investors through OFCDs, holding that the fundraising exercise fell within Sebi's regulatory ambit. The matter has since seen multiple legal proceedings over recovery, investor repayments and the liability of company officials.
