Supreme Court Takes Up SEBI Appeal in Sahara OFCD Case; All Pending Sahara Matters to Be Heard Together

Before this, on March 9, SAT had dismissed the appeals filed by the company and its directors and upheld the regulatory measure of SEBI against SICCL.

The case relates to the alleged illegal issuance of Optionally Fully Convertible Debentures (OFCDs) between 1998 and 2008. The three-member SAT bench had held that the OFCDs issued by SICCL during this period constituted a public offering and, therefore, fell within SEBI's regulatory jurisdiction.

According to the tribunal, the company had raised approximately ₹14,106 crore from approximately 19.8 million investors through these debentures. Raising funds from such a large number of investors on such a large scale cannot be considered private placement, as the company claimed. However, the SAT dismissed the appeals of the company and its directors and accepted separate appeals from four managers and the company secretary.

The tribunal held that, as employees, they could not be held liable for the company's actions. The SAT also stated that the company secretary had signed the document based on a power of attorney granted by the directors, and therefore, the ultimate responsibility rests with the directors.

SEBI has now challenged this part of the SAT order in the Supreme Court. The matter relates to SEBI's October 2018 order directing SICCL to return the funds raised through OFCDs to investors, disclose details of its assets, and ban certain officials from the securities market.