Sahara India Pariwar investor fraud case

On 26 February 2014, the Supreme Court of India ordered the arrest of Subrata Roy, Chairman & Founder of Sahara India Pariwar, for failing to appear in connection with the Rs.24,000-crore deposits his company has not refunded to its investors. He was eventually arrested on 28 February 2014 by Uttar Pradesh police on a Supreme Court's warrant, in a dispute with Market Regulator - SEBI.^[1] In a statement after the arrest, his lawyer said Mr. Roy's 92-year-old mother was in poor health and needed "her eldest son" by her side, and hence he failed to appear at the court.^[2] He was granted interim bail by Supreme Court of India for the same on 26 March 2014 on condition of depositing Rs 10,000 crore with the market regulator SEBI.^[3] As of August 2014, Roy is still in jail and is trying to sell some of his hotel properties to raise enough money.^[4]

Roy has received support from some in the public as well as celebrities.^[5][6]

Timeline of events

Events of this fraud case started in 2010 and it is still in proceeding in Supreme court of India as of March 2014.^[7][8][9]

• November 2010 - Securities and Exchange Board of India bars Sahara India Pariwar chief Subrata Roy and two of its companies – Sahara India Real Estate Corp (SIREC) and Sahara Housing Investment Corp (SHIC) from raising money from the public as they raised several thousand crores through optionally fully convertible debentures which SEBI deemed illegal.^[10]

• December 2010 - Sahara made appeal in the Allahabad High court which ordered SEBI not to take any action until a court order is passed.^[11]

• January 2011 - Delhi High court issued a warrant against Sahara India Pariwar chairman Subrata Roy and four other officials of the group on a complaint that it deceived investors in a proposed housing project of Rs.25,000 crore.^[12]

• February 2011 - Delhi High court stays proceedings against Sahara India Pariwar chairman Subrata Roy and four other officials of the group on a complaint that it deceived investors in a proposed housing project.^[13]

• May 2011 - Supreme court of India asked Sahara India Real Estate (SIREC) to furnish the format of the application for an optionally fully convertible debentures (OFCD) scheme and a list of accredited agents which raised money on company's behalf.^[14]

• June 2011 - SEBI ordered Sahara firms to immediately refund the money collected through sales of OFCDs.

• October 2011 - Securities Appellate Tribunal (SAT) ordered two unlisted Sahara Group companies to refund within six weeks about 17,656.53 crore with 15% interest which it had raised through a flotation of OFCDs.^[15]

• November 2011 - Sahara India Pariwar moved to Supreme Court against SAT's order and in favour of Sahara Group it stayed the SAT order, and asked the two companies to refund 17,400 crores to their investors and asked the details & liabilities of the companies.^[16][17]

• January 2012 - Supreme Court gives three weeks time to Sahara India Pariwar to choose between options to secure investments made by public in OFCD scheme. Either to give sufficient bank guarantee or attach properties worth the amount raised through OFCD's.^[18]

• May 2012 - Supreme court is informed by Senior counsel Fali Nariman (appearing for Sahara India Real Estate Corp) that SEBI could not have taken up this issue of Sahara Group of companies raising funds through OFCD since there was no complaint from any investor.^[19]

• June 2012 - SEBI informed Supreme Court that real estate division of Sahara India Pariwar had no right to mobilise Rs.27,000 crore from investors through optionally fully convertible debentures (OFCD) without complying norms of Market regulator - SEBI.^[20]

• August 2012 - Supreme court directs Sahara India Real Estate Corporation Ltd. (SIRECL) and the Sahara Housing Investment Corporation Ltd. (SHICL) to refund over Rs. 24,400 crore.^[21]

• In March 2015, the court had directed two Sahara group companies — Sahara Real Estate and Sahara Housing — to return around Rs 24,000 crore with interest to nearly 3 crore investors through market regulator SEBI in Aug 2012. The firms were later allowed to pay up by February 2013. So, the total dues have now gone up to Rs 40,000 crore with the accretion of interest.^[22]

• In July 2015, Sebi cancels Sahara’s mutual fund licence- Sebi directed cancellation of Sahara Mutual Fund's certificate of registration on expiry of a six-month period. ^[23]

References

1. "Subrata Roy Sahara surrenders before Police in Lucknow". IANS. news.biharprabha.com. Retrieved 28 February 2014.
2. Roy, Subrata. "Profile of Subrata Roy". Profile. BBC. Retrieved 28 February 2014.
3. "SC grants conditional bail to Sahara chief Subrata Roy". Times of India. Retrieved 26 March 2014.
4. "From Tihar jail, Sahara chief Subrata Roy tries to sell the New York Plaza". Times of India. 10 August 2014. Retrieved 20 August 2014.
5. Staff Reporter. "Bollywood celebs come out in support of Subrata Roy". The Hindu. Retrieved 11 January 2015.
6. http://timesofindia.indiatimes.com/india/Film-industry-faces-heat-while-defending-Saharas-Subrata-Roy-at-news-conference/articleshow/31290921.cms
7. "Investor fraud case: Sahara Group chief Subrata Roy grilled by Sebi over assets". Indian Express. 27 March 2014.
8. "Sahara scandal: 4-year chain of events that lead to Subrata Roy's arrest". Hindustan Times. 27 March 2014.
9. "All you need to know about the Subrata Roy case". Yahoo.
10. "SEBI Bars Subrata Roy From Raising Funds". Outlook (magazine). 24 November 2010.
11. "Allahabad High Court Stay in the SEBI-Sahara Case". India Corp Law.
12. "Warrant issued against Subrata Roy, five others". Thaindian. 24 January 2011.
13. "Delhi high court stays proceedings against Subrata Roy in cheating case". Daily News and Analysis. 8 February 2011.
14. "Apex court directs Sahara Group firm to provide details on OFCD scheme". The HinduBusiness Line. 9 May 2011.
15. "SAT upholds SEBI order on Sahara to refund money". The HinduBusiness Line. 18 October 2011.
16. "Apex court stays order on Sahara group to refund money". The HinduBusiness Line. 28 November 2011.
17. "SC stays SAT's order directing Sahara group to pay back Rs.17,400 crore to investors". India Today. 28 November 2011.
18. "SC gives Sahara 3 weeks to secure investments". Business Standard. 20 January 2012.
19. "Market regulator at fault in Sahara case, apex court told". Yahoo.
20. "Sahara firm bypassed norms to raise funds, SC told". Yahoo.
21. "SC orders Sahara to refund Rs. 24,400 crore". The Hindu. 31 August 2012.
22. http://timesofindia.indiatimes.com/business/india-business/Pay-up-Rs-40000-crore-or-well-auction-your-assets-Supreme-Court-tells-Sahara/articleshow/46559447.cms?utm_source=facebook.com&utm_medium=referral&utm_campaign=TOI
23. "Sebi cancels Sahara’s mutual fund licence". The Times of India. 28 July 2015.