Sahara started the offering in 2001 and closed it in 2007. Subsequently, it submitted its prospectus giving details of 1.97 crore investors to the concerned Registrar of Companies (RoC). The number of investors, above 50, was not objected to by the authorities. Then in 2008, the two companies took permissions again from two different RoCs to raise funds through optionally fully convertible debentures (OFCDs), through the private placement route and raised money from about three crore investors, all of whom were claimed to be people associated with the Sahara group.
In 2009, when Sahara Prime City, one of the group companies approached Sebi to go public, the regulator suddenly asked SIRECL and SHICL to refund all the OFCD money to investors. That began the battle.
The Case raised some questions
If with government permission a business is done for 11 years, can the rules be changed and the entity punished with retrospective effect?
Can a regulator give one statement in Parliament and after a few months give a contradictory statement through an affidavit in court?
Can Sebi state through a letter to RoC that an entity is not under it and RoC should take action, but after seven months contradict itself and issue prohibitory orders against the same entity saying it was under its purview and not MCA, the nodal ministry for RoC?
Sahara has already redeemed significant number of OFCD Holders. Thus any further payments to SEBI would amount to double payment.