The Securities and Exchange Board of India (SEBI) has filed a partial appeal in the Supreme Court against a Securities Appellate Tribunal (SAT) order that provided relief to four managers and the company secretary of Sahara India Commercial Corporation Ltd (SICCL). The SAT had previously upheld SEBI's action against SICCL regarding illegal issuance of optionally fully convertible debentures.
This case highlights the ongoing regulatory scrutiny over financial instruments and the extent of individual liability for corporate actions. SEBI's appeal to the Supreme Court seeks to clarify the accountability of company officials in cases of alleged illegal fund mobilization.
The Securities and Exchange Board of India (SEBI) has approached the Supreme Court to partially contest a ruling by the Securities Appellate Tribunal (SAT). The SAT had previously granted relief to four managers and the company secretary of Sahara India Commercial Corporation Ltd (SICCL) in a case concerning the illegal issuance of optionally fully convertible debentures (OFCDs).
In its March 9 order, the SAT had upheld SEBI's regulatory actions against SICCL and dismissed appeals from the company and its directors. The tribunal determined that the OFCDs, issued between 1998 and 2008, constituted a public offer, thus falling under SEBI's regulatory purview. The SAT noted that SICCL had mobilised approximately Rs 14,106 crore from nearly 1.98 crore investors through these debentures.
While the SAT dismissed the company's and directors' appeals, it allowed separate appeals from four managers and the company secretary, reasoning that as employees, they should not be held liable for the company's actions. The tribunal also pointed out that the prospectus was signed by the company secretary under powers of attorney granted by the directors, who remained ultimately responsible.
SEBI is now challenging this specific part of the SAT's ruling before the Supreme Court. The original SEBI order in October 2018 had directed SICCL to refund the money raised, disclose inventory details, and debarred certain officials from the securities market.