Mumbai, Feb. 13: Market regulator Sebi today ordered a freeze of all bank accounts of Sahara Group chairman Subrata Roy and the attachment of all his movable and immovable properties in an attempt to recover over Rs 25,000 crore that two unlisted group companies raised over four years ago.
In two separate orders, Sebi whole-time member Prashant Saran directed the attachment of the bank accounts and the properties owned by Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation (SHICL).
The bank accounts and properties of three Sahara Group directors 'Vandana Bhargava, Ravi Shankar Dubey and Ashok Roy Chowdhury ' have also been frozen and attached.
The order complicates prospects for several Sahara City Homes projects in the country, including those in Calcutta on the bypass road to Rajarhat (spread over 108 acres), Durgapur (18 acres), Siliguri (89 acres), Kharagpur (71 acres), Patna (63 acres), Bhubaneswar (69 acres), Guwahati (100 acres), Bokaro (66 acres) and Chennai (117 acres).
The Sebi action stems from a Supreme Court order passed on August 31 last year that ordered the two unlisted Sahara Group companies to pay back Rs 17,400 crore to about 29.6 million small investors with interest at 15 per cent a year.
Valued at $3 billion, this is India's ' and probably the world's ' biggest disgorgement exercise after controversial security flotations.
The Supreme Court verdict had seemingly marked the culmination of a two-and-a-half-year battle that market regulator Sebi had waged against the Sahara Group on the charge of violating rules that govern how companies can raise money from the public.
However, the Sahara Group had tried to stymie the recovery of money by challenging in the courts the process that Sebi was resorting to. Last December, the Supreme Court threw out the Sahara Group's challenge and ordered it to pay the amount in three phases ' an immediate payment of Rs 5,120 crore, Rs 10,000 crore by the first week of January 2013 and the remaining amount by the first week of February 2013.
The Sahara Group did not make the payment, necessitating today's order.
Saran has ordered Roy and the three group directors to furnish details of all the movable and immovable properties they own within 21 days.
SIRECL ' the bigger of the two Sahara entities ' has been restrained from operating its accounts with all branches of all banks and withdrawing any money. It has also been directed to provide details of all investments it has made within the next 21 days.
SIRECL holds a 40 per cent stake in Amby Valley Ltd ' the upscale real estate project near Lonavla where several Indian cricketers were presented with tony flats some years ago.
SIRECL has been ordered to deposit share certificates relating to the 22.05 crore shares it holds in Amby Valley Ltd valued at Rs 5,207 crore.
The real estate firm must also furnish all details of all the development rights it owns in projects spread all over the country, the names of special purpose vehicles that were established to run these projects, and provide details of the stake it holds in them within 21 days.
The Sebi order has frozen its investments in mutual funds units worth Rs 23 crore, and ordered the firm to recover the Rs 125 crore it invested in the group's partnership firms. It must also recover all loans of advances it has made to persons and entities amounting to Rs 204 crore.
SIRECL must also deposit cash and bank balances worth Rs 1,655 crore. It has been directed not to transfer any shares held by it in any company to any person.
The order also freezes the bank accounts of Sahara Housing Investment Corporation Ltd. It has been asked to furnish details of all the development rights it possesses with respect to real estate projects in which it has invested. It has also been directed to recover investments made in partnership firms within the group and deposit cash and bank balances worth Rs 309.19 crore.
"SIRECL (and SHICL) submitted documents in 127 trucks which, even according to them contained only 75 per cent of the entire documents required to be submitted… the documents that were delivered to Sebi were found to have been hopelessly mixed up whereby the application forms and the redemption vouchers appear to have been deliberately separated," Saran's order said.
The Sahara Group has always claimed that it has refunded most of the money to the investors in bond flotations made by the two entities.
Sebi said that it was "virtually impossible to correlate the debenture holders and the redemption vouchers" ' a fact that was certified by Justice B.N. Agarwal who had been appointed by the Supreme Court to oversee the refund process.
In its order issued in August last year, the Supreme Court had said that if there was reason to believe that the documents were not genuine or were suspect, Sebi should proceed "as if Sahara had not refunded any amount to the real and genuine subscribers".
If the investors cannot be traced, the apex court had directed that the sum should go to the government of India.
Old facts: Sahara
Sahara tonight said the actions taken by Sebi are based on "old facts" and the orders for attaching assets of individuals is incorrect.
"As per Sahara, the total liability is not likely to exceed Rs 5,120 crore, which amount has already been deposited with Sebi," a spokesperson said, adding that it had filed an interim application before the apex court seeking permission to furnish security for the remaining instalments.
"Since Sahara has already redeemed significant number of OFCD (optionally fully convertible debentures) holders, any further payments to Sebi would amount to double payment. The said interim application is pending and is likely to come up next week," the spokesperson said in a statement.
"Further, today's order of Sebi for attachment of the assets is based on old facts and details of assets as of January 2012. Since then, facts have changed in view of redemptions made by Sahara from time to time. This fact of redemption was known to Sebi. Hence, today's order does not take into account the changed facts and circumstances," the spokesperson added.
The group said that the liability to refund the monies is of SIRECL and SHICL and, therefore, "attachment of assets of the individuals" by Sebi is incorrect.
"Whereas not only the company has paid Sebi enough amount, which is much higher than outstanding liabilities of two companies, the fact also remains in the whole affair, Sahara is genuinely concerned for investors," the group said.