11.8 C
New York
Thursday, November 26, 2020
Home Stories Sahara’s Subrata Roy in the dock again; SEBI demands Rs 62,600 crore...

Sahara’s Subrata Roy in the dock again; SEBI demands Rs 62,600 crore in a Supreme Court Petition

Many of us remember the famous, admired, and one of the most influential personalities in the Indian Business scene, Subrata Roy of Sahara India Parivar, who, in an investor fraud case, has been accused of cheating almost 3 crore investors of their hard-earned money. 

He was sent to jail by the Supreme Court of India in the year 2014 over the group’s failure to pay up dues estimated to be around Rs 25,781 crore to SEBI.

The regulator was to pay the money to subscribers of two schemes (the issuance of Optionally Fully Convertible Debentures) – issued by the two companies of Sahara India Pariwar. 

Sahara had then claimed that the said bonds did not fall under SEBI’s jurisdiction since they were a hybrid product. They further argued that the bonds fall under the purview of Registrar of Companies (ROC) under the Ministry of Corporate Affairs, from which the two companies of Sahara had already taken permission. 

The Rise and Rise of Sahara and Subrata Roy

At the height of success, Subrata Roy enjoyed much media limelight; having started his business from Gorakhpur in Uttar Pradesh, he became one of the country’s most influential role models. 

He cultivated personal relations with politicians, Bollywood stars, and cricketers alike. His company was also the main sponsor of the Indian National Cricket team for many years. 

He was also bestowed with several awards and titles from the government as well as non-government organizations.

The start of Sahara India Pariwar

Having started his business from small-town Gorakhpur in Uttar Pradesh, his business model was simple but effective. He relied mainly on small-time investors, concentrated primarily in villages and small towns, and around the region to raise capital for his businesses. 

He took advantage of the fact that most villagers did not have bank accounts at that time and thus no means to deposit their small savings. 

These average investor’s earnings were around 2000 – 3000 per month and would deposit 10 -20 Rs daily in their Sahara accounts. 

In return, Sahara only gave them a small interest of 1 or 2 percent but with the lack of options and because they trusted Sahara Agents since they were generally people from within or surrounding villages;

these people felt a certain sense of security for their money. They could use these sum amounts of their deposits for more significant purchases.

The Fall of Sahara and Subrata Roy

Sahara started a real estate venture group, Sahara Prime City, and thus was the start of its problems. 

The real estate venture group filed a Draft Red Herring Prospectus (DRHP) with SEBI on September 30, 2009.

DRHP, an initial document that a company needs to file with SEBI to carry out an initial public offer (IPO) of shares to public investors. 

SEBI started to receive complaints asserting unlawful means used by two firms Sahara India Real Estate Corp Ltd (SIRECL) and Sahara Housing Investment Corp Ltd (SHICL), in the issuance of certain bonds, called OFCDs (Optionally Fully Convertible Debentures), throughout the country for several months to the public. 

This was a violation of the rule that a company has to register with SEBI before going public. 

SEBI passed an interim order against the two companies on November 24, 2010, asking them to refund the investors’ money. 

Sahara challenged the SEBI order in court, but it lost the case. 

The Court directed Sahara to deposit the outstanding amount of over Rs 24,000 crore with SEBI as a refund to the investors. 

It paid the first installment of Rs 5,120 crore but failed to pay the rest of the money. 

SEBI then passed orders on February 13, 2013, to attach bank accounts and other properties of the group and later issued summons for the personal appearance of Subrata Roy and the other three directors before it. 

In April 2013, SEBI finally closed its file on Sahara Prime City, whose planned IPO started a long drawn battle.

Battle of wits between SEBI and Subrata Roy

  • 2012 – 2015 – Sahara was ordered by the court to deposit the entire amount it collected from its investors and 15 % annual interest.
  • 2014 – Subrata Roy is arrested for failing to attend a contempt of court hearing 
  • 2016 – Subrata Roy is granted bail and has been on since 
  • 2018 – SEBI sold a 75 percent stake in Sahara in New York’s most famous buildings, the Plaza Hotel, to arrange funds to pay back the investors. 
  • The other properties of Sahara were also sold to collect the funds to pay back investors.
  • The Enforcement Directorate (ED) registered a case of money laundering against Sahara as almost 95 percent of money transactions between the group companies, and the investments were made in cash, and the respective taxes were not paid. 

In the latest from the battleground, 2020, SEBI has demanded Rs 62,000 crore ($8.4 billion) due to Sahara’s investors in the Supreme Court petition.

It cited on the grounds of the fact that Sahara had failed to comply with the earlier order in 2012 and 2015 wherein it was directed to pay billions of dollars to its investors who put their money in an illegal bond scheme.

In its petition, SEBI said that Sahara’s non-compliance over eight years had caused the regulator “great inconvenience” and that those guilty of contempt should be taken into custody if they failed to deposit the amount.

The regulator said that Sahara had deposited only a part of the principal amount, and the balance with interest had expanded to more than 626 billion rupees.

“Saharas have made no efforts whatsoever to comply with the orders and directions,” SEBI told the court. “On the other hand, contemnors’ liability is increasing daily, and contemnors are enjoying their release from custody,” it said.

However, a Sahara Spesperson has said that SEBI’s amount is not correct and that the company has already deposited about 220 billion rupees with SEBI.

He also said that the regulator is “mischievously” adding interest on the entire amount to arrive at the amount demanded. 

Sahara and Subrata Roy in a tussle with Netflix 

Netflix’s series “Bad Boy Billionaire” featuring Subrata Roy and his company’s saga has been in much news.

However, predictably Subrata Roy tried to get a stay order from the court on the series on account of “Damage of Reputation.

However, Netflix released the series after the court lifted the injunction.

Sahara Group and Subrata Roy may have been the most admired and respected at one point in time. Still, the dishonesty and the swindling of its investor’s money and trust have brought him and his company to a place of disrespect. The investors hope that India’s judicial system will deliver the long-awaited justice. 

 

Many of us remember the famous, admired, and one of the most influential personalities in the Indian Business scene, Subrata Roy of Sahara India Parivar, who, in an investor fraud case, has been accused of cheating almost 3 crore investors of their hard-earned money. 

He was sent to jail by the Supreme Court of India in the year 2014 over the group’s failure to pay up dues estimated to be around Rs 25,781 crore to SEBI.

The regulator was to pay the money to subscribers of two schemes (the issuance of Optionally Fully Convertible Debentures) – issued by the two companies of Sahara India Pariwar. 

Sahara had then claimed that the said bonds did not fall under SEBI’s jurisdiction since they were a hybrid product. They further argued that the bonds fall under the purview of Registrar of Companies (ROC) under the Ministry of Corporate Affairs, from which the two companies of Sahara had already taken permission. 

The Rise and Rise of Sahara and Subrata Roy

At the height of success, Subrata Roy enjoyed much media limelight; having started his business from Gorakhpur in Uttar Pradesh, he became one of the country’s most influential role models. 

He cultivated personal relations with politicians, Bollywood stars, and cricketers alike. His company was also the main sponsor of the Indian National Cricket team for many years. 

He was also bestowed with several awards and titles from the government as well as non-government organizations.

The start of Sahara India Pariwar

Having started his business from small-town Gorakhpur in Uttar Pradesh, his business model was simple but effective. He relied mainly on small-time investors, concentrated primarily in villages and small towns, and around the region to raise capital for his businesses. 

He took advantage of the fact that most villagers did not have bank accounts at that time and thus no means to deposit their small savings. 

These average investor’s earnings were around 2000 – 3000 per month and would deposit 10 -20 Rs daily in their Sahara accounts. 

In return, Sahara only gave them a small interest of 1 or 2 percent but with the lack of options and because they trusted Sahara Agents since they were generally people from within or surrounding villages;

these people felt a certain sense of security for their money. They could use these sum amounts of their deposits for more significant purchases.

The Fall of Sahara and Subrata Roy

Sahara started a real estate venture group, Sahara Prime City, and thus was the start of its problems. 

The real estate venture group filed a Draft Red Herring Prospectus (DRHP) with SEBI on September 30, 2009.

DRHP, an initial document that a company needs to file with SEBI to carry out an initial public offer (IPO) of shares to public investors. 

SEBI started to receive complaints asserting unlawful means used by two firms Sahara India Real Estate Corp Ltd (SIRECL) and Sahara Housing Investment Corp Ltd (SHICL), in the issuance of certain bonds, called OFCDs (Optionally Fully Convertible Debentures), throughout the country for several months to the public. 

This was a violation of the rule that a company has to register with SEBI before going public. 

SEBI passed an interim order against the two companies on November 24, 2010, asking them to refund the investors’ money. 

Sahara challenged the SEBI order in court, but it lost the case. 

The Court directed Sahara to deposit the outstanding amount of over Rs 24,000 crore with SEBI as a refund to the investors. 

It paid the first installment of Rs 5,120 crore but failed to pay the rest of the money. 

SEBI then passed orders on February 13, 2013, to attach bank accounts and other properties of the group and later issued summons for the personal appearance of Subrata Roy and the other three directors before it. 

In April 2013, SEBI finally closed its file on Sahara Prime City, whose planned IPO started a long drawn battle.

Battle of wits between SEBI and Subrata Roy

  • 2012 – 2015 – Sahara was ordered by the court to deposit the entire amount it collected from its investors and 15 % annual interest.
  • 2014 – Subrata Roy is arrested for failing to attend a contempt of court hearing 
  • 2016 – Subrata Roy is granted bail and has been on since 
  • 2018 – SEBI sold a 75 percent stake in Sahara in New York’s most famous buildings, the Plaza Hotel, to arrange funds to pay back the investors. 
  • The other properties of Sahara were also sold to collect the funds to pay back investors.
  • The Enforcement Directorate (ED) registered a case of money laundering against Sahara as almost 95 percent of money transactions between the group companies, and the investments were made in cash, and the respective taxes were not paid. 

In the latest from the battleground, 2020, SEBI has demanded Rs 62,000 crore ($8.4 billion) due to Sahara’s investors in the Supreme Court petition.

It cited on the grounds of the fact that Sahara had failed to comply with the earlier order in 2012 and 2015 wherein it was directed to pay billions of dollars to its investors who put their money in an illegal bond scheme.

In its petition, SEBI said that Sahara’s non-compliance over eight years had caused the regulator “great inconvenience” and that those guilty of contempt should be taken into custody if they failed to deposit the amount.

The regulator said that Sahara had deposited only a part of the principal amount, and the balance with interest had expanded to more than 626 billion rupees.

“Saharas have made no efforts whatsoever to comply with the orders and directions,” SEBI told the court. “On the other hand, contemnors’ liability is increasing daily, and contemnors are enjoying their release from custody,” it said.

However, a Sahara Spesperson has said that SEBI’s amount is not correct and that the company has already deposited about 220 billion rupees with SEBI.

He also said that the regulator is “mischievously” adding interest on the entire amount to arrive at the amount demanded. 

Sahara and Subrata Roy in a tussle with Netflix 

Netflix’s series “Bad Boy Billionaire” featuring Subrata Roy and his company’s saga has been in much news.

However, predictably Subrata Roy tried to get a stay order from the court on the series on account of “Damage of Reputation.

However, Netflix released the series after the court lifted the injunction.

Sahara Group and Subrata Roy may have been the most admired and respected at one point in time. Still, the dishonesty and the swindling of its investor’s money and trust have brought him and his company to a place of disrespect. The investors hope that India’s judicial system will deliver the long-awaited justice. 

 

- Advertisment -

Most Popular

Country did not work at full potential earlier, says Prime Minister Narendra Modi

In a veiled attack on the previous governments, Prime Minister Narendra Modi on Wednesday said the country did not function earlier at its full...

How to Deposit Funds at A Live Casino in India?

Payment methods are one of the key factors that let the players verify how reliable a gambling destination is. Indian players usually face troubles...

Trade unions to go on nationwide strike on Thursday

Central trade unions will go on a nationwide strike on Thursday and expects participation of over 25 crore workers to protest against various policies...

“Nivar” Is Going To Turn Into “Monster” Cyclone! The Government Announces Public Holidays

Cyclone Nivar, the slow-moving cyclone storm over the tepid waters of the Bay of Bengal, is turning into a monster. On Wednesday evening, "Cyclone Nivar"...

Recent Comments

%d bloggers like this: