Sahara Group is pushing the envelope on SC orders

A Sebi ad warns Sahara group investors from falling victim to the group's overtures to switch the money to other schemes By R Jagannathan Short of accusing the Sahara Group of openly trying to flout a Supreme Court order asking two group companies to refund Rs 24,0000000000 to investors with 15% interest, market regulator Sebi put the group in the dock once again. Incensed by the fact that the Sahara Group may be trying to repay investors clandestinely, Sebi today issued advertisements in the press titled "Don't be Forced, Don't be Fooled". The ads asked bond holders of the Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC) not to accept approaches by Sahara's agents to switch their investments to other group companies. The ads said "Sebi has been receiving complaints from investors that they are being forced by Saharas/their agents/officials to switch over their investments to other schemes in Sahara Group companies like Sahara Q Shop Unique Products Range Limited Sahara Credit Cooperative Society Limited etc. Some investors have also complained that their investments have been switched over to the said schemes of Sahara Group companies without their consent." Clearly, the fact that Sahara's actions are being fouled by Sebi in a public manner suggests that the group is desperate to try and reduce the payouts to investors in the optionally fully convertible debentures (OFCDs) issued illegally by SHIC and SIREC. If this was not the case, the group would not be risking the wrath of the Supreme Court, which was very clear that the money cannot be repaid to investors clandestinely, but has to be paid directly to Sebi, which will then be given to clearly identified investors based on correct documentation. Sebi has advised Sahara's investors to hold on to their documents and warned them "not to yield to any pressure from any person, including Saharas or their agents, for converting or switching over their existing investments in the bonds to any of their other schemes like Q Shop, etc." The Supreme Court has already rapped the group once for failing to submit the documents requested on its three0000000 investors in SIREC and SHIC to Sebi by 10 September. Sebi refused to accept Sahara's initial truckload of papers which arrived after the deadline set by the court. When the matter of the delay came up before the Supreme Court and Sahara's counsel said they had sought more time, the court ordered Sebi to take action against Sahara for the delay. The deadline of 10 days for the submission of documents could not be violated. The court said "Time limit is there for 10 days... What does this mean. Whether the two companies have placed all the information about the investors as per its directions. If not in 10 days then you (Sebi) take action in accordance with law." The bench also made it clear that the deadline was not a matter of negotiation. "It violates our order. You cannot by consent violate our order." However, the Sebi advertisement warning investors not to accept switching of their money into other Sahara schemes shows that Subrata Roy's companies are again pushing the envelope on court orders. The court For its part, the Supreme Court clearly does not trust the The Supreme Court order of 31 August, which showed very little faith in the Sahara group's intentions (read here), specified what Sahara had to do. 1)The money, with interest, will be paid "to Sebi". and this money will be deposited with a nationalised bank till it is paid out to investors. There is no provision for paying the money directly to investors, of asking them to switch to other schemes. Sebi's ad now makes it clear that this order has been violated by Sahara. 2)The court order also directs Sahara to furnish details and supporting documents on money refunded to investors. and if the documents are not found by Sebi to be "genuine and acceptable", the amount would be deemed as not paid. This is an important pointer indicating the court's inability to trust Sahara. Clearly, Subrata Roy is willing to test the limits of the court's order. This is either a sign of desperation or a disregard for what the court ordered. PS Since all bills relating to the refund will also be paid by Sahara, Roy should know that the cost of issuing ads warning investors against accepting repayments in part or through switches will also be billed to him. He is only compounding his problems.