Key facts
- SEBI is challenging a 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 regulatory action against SICCL concerning the illegal issuance of optionally fully convertible debentures (OFCDs).
- The SAT ruled that the OFCDs issued by SICCL between 1998 and 2008 constituted a public offer, falling under SEBI's jurisdiction.
- While dismissing appeals from SICCL and its directors, the SAT allowed appeals from four managers and the company secretary, stating they could not be held liable as employees.
- SEBI's plea is scheduled to be heard by a Supreme Court vacation bench on June 18.
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.