SEBI ISSUES WARNING ON
The notice said the “public issue” of debt by the two companies is not in compliance with regulatory norms, and the Securities and Exchange Board of India (Sebi) “will not be able to provide redress to any investor on any complaint” in connection with the securities.
Sahara India Real Estate, a
Prashant Chandra of Prashant Chandra and Co., the Lucknow-based legal advisers to the
Chandra said the Sebi notice was illegal and
For its part, Sebi is likely to follow the move by publishing the public notice in leading national and regional dailies across the country.
According to Chandra, the Sebi notice is in contempt of a 13 December order passed by the
Early this week, the Supreme Court turned down Sebi’s plea to stop the two firms from continuing to raise money from investors, but empowered the regulator to seek information from the companies and issue advertisements to inform investors that the matter was pending before court and that their investment would be subject to the outcome of the litigation.
On 24 November, Sebi banned several
The notice alleged that Sebi had pre-supposed certain aspects in its favour, which are yet to be adjudicated by the courts. “Your action of having pasted the said notice, barely a few days before hearing of the writ petition, amounts to blatant contempt and impeding the course of justice,” the legal notice said.
A Sebi spokesperson was not reachable.
Sebi on Friday issued a public notice on its website saying, “Investors are...advised to make their investment decisions in OFCDs (optionally fully convertible debentures) of these companies taking into account the facts and circumstances brought out above (in the notice). This public notice is issued to safeguard the interest of investors.”
Sahara India Real Estate and Sahara Housing Investment have raised at least Rs.4,843 crore by issuing OFCDs to investors.
Sebi’s regulations on public issues prescribe eligibility criteria for accessing public money, mandate due diligence of the company and its promoters by merchant bankers, grading by credit rating agencies, and vetting of the draft red herring prospectus by the regulator against rigorous disclosures norms. Sebi said none of these norms were followed in the debenture issue.