27 February 2014

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The story of Rs 20,000 Crore collection and Refund Scam SC Subrata Roy and NBW

Sahara Case The story of Rs 20,000 Crore collection and Refund Scam  SC Subrata Roy and NBW

The court had on February 20 come down heavily on the Sahara group for not refunding Rs 20,000 crore of investors’ money despite its order and summoned Roy, Ravi Shankar Dubey, Ashok Roy Choudhary and Vandana Bhargava, directors of its firms–Sahara India Real Estate Corp Ltd (SIREC) and Sahara India Housing Investment Corp Ltd (SHIC) to be personally present before it

The Supreme Court of India issued a non-bailable warrant against the Sahara chief Subrata Roy
After he failed to appear in court.

In past justices KS Radhakrishnan and JS Khehar said that we had already declined on Tuesday Roy’s plea seeking exemption from personal appearance.
He has not appeared even on Wednesday and we are issuing non bailable warrant returnable for March 4,”

A bench of justices K S Radhakrishnan and J S Khehar said that Sahara group has to furnish all the documents to reveal the source of Rs 22,885 crore which it claimed to have refunded to its investors.

It had on August 31, 2012 directed the Sahara group to refund Rs 24,000 crore by November end. The deadline was further extended and the companies were directed to deposit Rs 5,120 crore immediately and Rs 10,000 crore in first week of January and the remaining amount in first week of February.

The group, which had handed over the draft of Rs 5,120 crore on December 5, has failed to pay the rest of the amount.

SEBI chief UK Sinha, told to media that “There is a famous case, I need not name it, where a particular company has claimed that it has refunded more than Rs. 20,000 crore to so-called investors out of which more than 90% has been returned in cash. I would like all of you to ponder and think how feasible and how credible this story can be. That more than Rs. 20,000 crore have been refunded over a period of may be three-four months, not over a period of five years or so and that, money has been returned through cash."

The case is going on but the one man investigated this case honestly and he is trying to take the case where guilty will be punished by Supreme Court of India, that man is whole-time director of Sebi, KM Abraham

Many people think that Sahara ran a Ponzi scheme, Ponzi scheme is behind the success of Sahara

Few people say that politicians invested their blank money in Sahara

So what exactly is the case?

Let us understand Sahara Case in short

In 2008, RBI debarred Sahara India Financial Corporation from raising fresh deposits.

After that Sahara needed money to run company, they needed public money without the interference of RBI

After that Sahara found the loophole and started two new companies by issuing OFCD
For this Sahara required the permission of Registrar of Companies (ROC)
ROC gave the permission to Sahara without raising any objections

What is OFCD?
OFCDs are optionally fully convertible debentures.
These are issued by the company to potential investors in order to raise money.
OFCD holders can become shareholders of the company if they chose to do so.
They are unsecured in nature and in case of a default and liquidation of the company they will be one of the last stakeholders to be refunded.

Following are the names of two companies –

Sahara India Real Estate Corporation (SIREC) –
SIREC had an equity capital of only Rs 10 lakh and a negative net worth at the time of issuance

Sahara Housing Investment Corporation (SHIC) –
The net worth of SHIC was around Rs 10 lakh

Both the company planned to raise Rs 20,000 crore each.

Now think how one can get a permission to collect Rs. 20 000 Crore by starting a company with a deposit of Just Rs. 10 Lakh

Company capital Rs. 10 Lakh = aim to collect Rs. 20,000 Crore

But ROC allowed the Sahara Group companies to go ahead with the proposal.

Why ROC gave such permission?
Just think

As per law any company which want to collect money from more than 50 persons that company has to take the approval of Sebi

Such company has to follow all the Sebi rules and norms.
The Sahara group had sought money from nearly 30 million investors.

Normally OFCD issues are closed within six weeks but here again In fact a Sahara group company kept an issue of Rs 17,250 crore open for 10 years.

After that Sahara group decided to raise more money from stock market
Sahara decided to tap the stock markets to raise money through Sahara Prime City.

In doing so the company had to file a Red Herring Prospectus and disclose working and financials of other group companies.

This is when KM Abraham spotted SIREC and SHIC and found that the money raised through OFCDs was camouflaged as private placements.

Abraham found out that the Sahara group companies collected money they did not have proper records of the identity of its investors.
How and to whom would they then return the money?
Even professional agencies were unable to locate the investors.

The two companies, Abraham alleged, intended to rotate money between group companies.
Though the OFCD instruments were issued in the name of the two companies, cheques were sought in the name of Sahara India.

After that Sebi issued its order on the wrongdoings of the Sahara group on June 23, 2011,

Sahara group took the matter with Securities Appellate Tribunal (SAT).

But SAT held the Sebi findings to be correct.
SAT in its order said “What it (Red Herring Prospectus) did not disclose was the fact that the information memorandum was being issued to more than 30 million persons inviting them to subscribe to the OFCDs and there lies the catch
This concealment is, indeed, very significant    and goes to the root of the controversy

Sahara group then approached the Supreme Court but in August 2012, the honorable SC asked the group to repay an amount of over Rs 24,000 crore to Sebi within 90 days.

The regulator will then distribute the money to bonafide investors.

But suddenly Sahara said it had repaid most of the money over the last one year and an amount of just over Rs 5,000 crore was pending.

Just in 12 months they repaid the money to investors

After that case was going in Supreme Court of India and Sahara group was using legal ideas and loopholes to delay the case

Supreme Court of India ordered Sahara chief to appear before them but he did not appear

But finally Supreme Court of India has to issued Non Bailable Warrant against Sahara Chief so he can appear before them

What are the names of investors who got refund?

What was the method of refund?

Cheque or Cash?

From where so much money came that was refunded to investors?

But in India everyone has to bow before the money power and power of chair

Now what Supreme Court of India will do?

Issued NBW

What next

Jail or apology

Justice Delayed is Justice Denied

Justice Delayed means an opportunity to destroy the evidence

Reality views by sm –

Thursday, February 27, 2014

Tags – Sahara Case NBW Warrant


Renu February 27, 2014  

I had written about them long back when I started the blog. I fail to understand why govt l;ets the scan rise to such a huge amount..why they dont stop them when they start doing it?

deeps February 27, 2014  

our country is too vast to take all that in...