New Delhi, Jan 04 (Agencies): The Supreme Court on Tuesday refused to stay two Sahara Group firms' ongoing fund raising exercise as sought by Sebi, but allowed the market regulator to seek information about investors' details from the companies.
Two Sahara Group companies -- Sahara India Real Estate Corporation and Sahara Housing Investment Corporation – are planning to raise Rs 20,000 crore each from the market through OFCDs (Optionally Fully Convertible Debentures).
SEBI had barred Sahara Group firms from raising funds and had sought details of their investors. Sahara had challenged it before the Allahabad High Court which in an interim order stayed the ban. Sahara had argued that only the Registrar of Companies (RoC) may pass such an order and not SEBI.
Sebi moved the apex court against the high court staying the ban.
"We make it clear that the Securities and Exchange Board of India (Sebi) is entitled to call for any information which it deem to fit, including names of investors who have invested in OFCDs," a bench headed by the Chief Justice S H Kapadia said.
On the plea of Sebi's counsels Arvind Dattar and P Venugopal to restrain the Sahara group companies from raising money through debentures till the high court decides on the matter as investors may suffer, the Supreme Court said that it should be left to the investors only.
"Investors are very clever now a days... If they invest then that should be at their own risk," the bench said asking SEBI to bring out an advertisement informing investors that the matter was sub-judice.
The apex court also declined to stay the proceedings at the high court. "Since the matter is listed for hearing on January 12, 2010 at the high court, we see no reason to interfere at this stage," the bench noted.
"However, in view of the stakes involved, including protection of investors, we are directing the high court to proceed for day-to-day hearing without adjourning the matter," the apex court said. The bench also directed Sebi to file its reply before the high court by January 7.
It also asked the the Registrar of Companies (ROC) to file its response before the Allahabad High Court by January 7, where the matter is still going on.
Dattar, however argued that as per the guideline, if the number of investors cross 50, then it would have to be listed and information would have to be given to SEBI.
However, senior Advocate Soli Sorabjee appearing for the Sahara group firm questioned the stand of the market regulator and said that the information has already been given to ROC.
On this the bench said, "Under which law OFCD comes. Show us. Why it would not be listed... Have you given the names of the depositor to ROC, then give it to us".