SAT upholds Sebi’s case against Sahara group
March 10, 2026
₹14,106-crore were unlawfully raised from at least 19.8 million investors.
The Securities Appellate Tribunal (SAT) upheld the Securities and Exchange Board of India’s (Sebi) order against two Sahara group companies – Sahara India Commercial Corporation and Sahara India – to refund ₹14,106 crore to its investors. The matter pertains to Sebi’s finding in 2018 that this amount was illegally raised from at least 1.98 crore investors through optionally fully convertible debentures (OFCD) between 1998 and 2009.
Appearing on behalf of Sahara group, senior advocate J P Sen argued that Sebi incorrectly ordered a refund of the entire amount while most of it had already been repaid. Sen said that only ₹17-crore worth of debentures were yet to be paid. However, the Tribunal noted that the appellants have not provided any proof of refund of the amount though they were called upon to produce the same in 2015.
SAT’s ruling on offer of debentures
SAT ruled that the offer of debentures could neither be treated as a private placement nor a domestic placement as the number of investors exceeded the statutory threshold for the same. As per the Companies Amendment Act, 2000, any offer or invitation made under any circumstances to 50 or more persons shall be a public offer. Therefore, “the offer was liable to be treated as a public offer,” as per the SAT order dated Monday.
The company also did not approach any stock exchange for permission before the issuance of debentures and went ahead with raising funds without necessary regulatory approvals, violating Section 73 of the Companies Act, 1956. The Sahara group companies argued that Sebi’s regulatory authority is restricted to listed entities and not to the companies intending to list their securities.
Appellants’ allegations rejected
SAT rejected the appellants’ allegations that there was undue 17-years’ delay from Sebi’s part while initiating the proceedings. “…the time taken by SEBI in initiating proceeding is not wholly unreasonableness as SEBI was required to look into several documents running to thousands of pages.” The regulator started examining the case after reviewing cases related to the Sahara group companies in 2009 and also after getting the Ministry of Corporate Affair’s inputs.
Meanwhile, the Tribunal allowed an appeal by four managers and the company secretary of Sahara India Commercial, stating that these parties cannot be held liable for the company’s actions. “They were not the managers of the company, within the meaning of definition of ‘manager’” under the Companies Act, 1956. SAT ruled that they are not liable to refund the amount raised by the company.
In 2018, the regulator had found that the two companies violated a series of regulations such as the Sebi Act 1992, Companies Act, 1956, Disclosure and Investor Protection (DIP) Guidelines, 2000, Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2009, and Merchant Banker Regulations, 1992.
[The Financial Express]
