THE SAHARA SCAM

03- Aditya Yadav

08- Arihant Jain
13- Avik Chattaraj
15- Chaitanya Gandhi
33- Reuben Dmello
40- Sagar Srivastava
 INTRODUCTION OF SAHARA PARIWAR:
Sahara India Pariwar is an Indian Conglomerate headquartered
in Lucknow.

It was started by Subrata Roy in 1978.

It has a business interest in finance, infrastructure and housing,

media and entertainment.

The company has an estimated market capitalisation of us$25.94

billion of march 2011.

The group is a major promoter of sports in India such as Indian

hockey team.The company owns a 42.5% stake in formula one.
 RISE OF SAHARA
The group is a major promoter of sports in India and was the main
sponsor of the Indian cricket team.

It owns a 42.5% stake in Formula One’s Force India Formula 1 Team

and also sponsors India national field hockey team.

Sahara India Pariwar Sahara Q Shop entered into the Guinness

World Records when it opened 315 outlets in 10 states of India, just
at one time on April 1, 2013
 SAHARA SCAM (BRIEF ABOUT THE CASE )

The case all began when a Chartered Accountant in Indore sent a note to the National Housing Bank, requesting
the Bank to look into the housing bonds issued by two Sahara Group Companies, Sahara India Real Estate Corp
(SIREC) and Sahara Housing Investment Corp (SHIC), having there head quarters in Lucknow. He found that the
bonds that had been issued to a large number of investors had not been issued as per the rules.

The National Housing Bank did not have the wherewithal to investigate the allegation, So it forwarded the letter
to the Securities and Exchange Board of India (SEBI) , the capital markets regulator.

Mr. Abraham who was the then Director of SEBI was reviewing the Draft Red Herring Prospectus (DRHP) to
raise equity for real estate company Sahara Prime City Ltd through an initial public offering (IPO). The DRHP
disclosed details of two associate group companies (SIREC and SHIC) that were raising huge amounts of money
from the public through optionally fully convertible debentures.
 QUESTIONS RAISED BY SEBI?

SEBI simply asked the following questions:

1 Why are you raising the money?

2 Who are the owners and investors in these

companies that are collecting money?

3 What do you Intend on doing with the collected

money?

4 Why did the OFCD Issue Open without the

DRHP being filed with SEBI?
 WHERE SAHARA WENT WRONG ???

● SIREC and SHIC raised large sum of money through OFCD.

● Sahara raised in private placement from 3 crore investors and for 2 years.

● According to SEBI rules private placement is for upto 49 investors and 6 weeks.

● SEBI was unaware of the collection, Did not seek approval from SEBI.

● Lack of transparency.

● Fake/Fictitious Investors.

● Unable to furnish details of the Investors.

 SAHARA’S CONTENTION

Issue of optionally fully convertible bonds (OFCD”s) is

legal

Issue of OFCD’s is not a public issue.

OFCD are neither shares nor Debentures Debentures but

“Hybrid” class

OFCD are “Hybrid Instruments” cannot be listed.

Serious error is committed by SEBI.

No statutory requirement to list OFCD

 SEBI’S CONTENTION
SEBI simply asked the following questions:

OFCD was public issue.

OFCD were transferable securities.

Violation of section 73 of Companies Act 1956.

The forms issued by the company did not enclose an

abridged prospectus.

Did not submit Balance sheet and P&L a/c to the concerned
ROC 11.
 WHY DOES SEBI HAS SUCH GUIDELINES?

The main reason behind SEBI Asking companies to follow the guidelines is to protect the Investor. If some random
company starts issuing stocks or bonds in the market and dupes investors, who would be responsible? Yathat’s
right SEBI. This is why SEBI has those guidelines. Plus, unregulated collection of funds from the public could
result in Money Laundering and other illegal activities which SEBI is trying to control here.
 SUPREME COURT CONTENTION
Aggrieved Sahara appealed to SAT(Securities Appellate Tribunal)
Passed order in favour of SEBI.
Aggrieved Sahara again moved towards supreme court.
Finally supreme court of India passed the judgement in Favour of SEBI.
Ordered Sahara to repay the Rs. 24000 crore with 15% interest
Supreme court allowed Sahara to pay whole amount in three instalments
5120 crore immediately, 10000 crore in january 2013 and remaining amount by february
2013
But in february they failed to pay second and third instalment.
SEBI after getting permission from supreme court froze all bank and Demat accounts and
attaches properties of chief Subrata Roy and three directors.
 CONTINUED:
On october 28, 2013 supreme court directed sahara to submit title deeds of properties worth RS 20000 crore to SEBI.

Later, supreme court banned Subrata Roy and 2 directors from leaving the country.

February 20, 2014 supreme court directed Subrata Roy to appear before it on February 26

But Subrata Roy did not appear, then on 26 supreme court issued non bailable warrant against Subrata Roy and other 2
directors.

Subrata Roy and other 2 directors were sent to thihar jail.

On 2 march 2014 they got bail by paying 10000 crore.

 CURRENT SCENARIO :
Sahara Chief Subrata Roy was asked by the Supreme Court to pay Rs. 600 crore
by February’18 if he wants to stay out of jail.

Mr Roy, who is out on parole since his mother's death in May’17 , was asked to
surrender if unable to pay the money by February 6, 2018. His parole was also
extended. The Sahara group has been engaged in a long legal battle with capital
market regulator Sebi over the refund of Rs. 24,000 crore to investors. Sahara
has paid around Rs. 11,000 crore and submitted a plan saying it will pay the rest
of the money in two and a half years.

"You had said earlier you have properties worth Rs. 1,87,000 properties. But
those don't come to your help for repaying Rs. 20,000 crores," the court said to
Sahara. Senior lawyer Kapil Sibal, representing Sahara, said the state of the
market is bad. The Supreme Court, however, shot back, "Market business is a
matter of perception. For some it is good, for some it is bad.

Sebi Gets Applications For ₹ 81 Crore Against ₹ 22,000 Crore Deposited By

Sahara
 CONCLUSION

The landmark judgment by Supreme Court is a milestone in India’s corporate Landscape

SEBI has absolute power to investigate into the matters of both listed companies and unlisted companies

It vests SEBI to investigate into any matter concerning the interest of the investors even if it pertains to companies which
are not listed

Removes grey areas relating to issue by so called unlisted companies

Forbids such unlisted companies to take advantages of legislative loopholes

Jurisdictional gap is removed between MCA and SEBI in matters of public interest
THANK YOU