The Sahara Group had lobbied the Ministry of Corporate Affairs for protection from penal action even before it moved the Supreme Court against a Securities and Exchange Board of India (SEBI) order on refunding Rs 24,000 crore raised from investors through a ‘private placement'.
The Chairman of the Sahara Group, Mr Subrata Roy, had written a letter to the Ministry of Corporate Affairs (MCA), requesting them to desist from taking any coercive action against the company as long as its case is pending in the Supreme Court, it is reliably learnt.
Mr Veerappa Moily, Minister, MCA, had responded to the letter promising to do his best.
Mr Roy had written the letter on November 3, a week before Sahara moved the apex court, on November 11. Mr Moily responded in a letter dated November 17.
The matter pertains to Sahara Group's dispute with the SEBI where the former was asked to refund Rs 24,000 crore to investors. Sahara raised over Rs 19,400 crore from 2.21 crore investors, terming it a “private placement”. The SEBI had asked for this money to be refunded along with 15 per cent penal interest.
Sahara then approached the apex court, which asked it to approach the Securities Appellate Tribunal (SAT).
An MCA official told Business Line , “Under law, if any matter is sub-judice, we automatically do not take any action.” The official said that there had been several instances of misuse of private placement of shares to individuals and entities such as Sahara. “Through a notification, we are trying to curb this practice,” the official added.
Earlier, too, Sahara had sought refuge under MCA's wings. In its appeal to the tribunal, Sahara had contended that the SEBI had no jurisdiction over the issue as the companies involved (Sahara India Real Estate Corporation, now known as Sahara Commodity Services Corporation Ltd, and Sahara Housing Investment Corporation) were not listed.
The company maintained that as the entities involved were privately-held, they came under the MCA's jurisdiction. The tribunal had dismissed this argument, saying it had no merit. It further directed the companies on October 18 to refund the money raised through Optionally Fully Convertible Debentures to investors within six weeks. Sahara has challenged this in the Supreme Court and has sought an interim stay.