OFCD case: SC to hear SEBI's plea against SAT relief to SICCL managers on Monday

The Supreme Court is scheduled to hear on July 13 a plea by the Securities and Exchange Board of India (SEBI) challenging a part of the Securities Appellate Tribunal order granting relief to managers and the company secretary of Sahara India Commercial Corporation Ltd (SICCL).

A bench of Chief Justice Surya Kant and Justices Joymalya Bagchi and V Mohana will hear the plea of the market regulator. Besides SEBI's plea, the top court has listed all the pending Sahara matters, including the return of monies to investors, for hearing. On June 18, the top court agreed to hear the matter and issued notices to the four officials of the Sahara group, tagging the matter with the pending cases related to the company.

The top court, while seeking their response, had asked them to file their counter-affidavits by July 13. On March 9, the tribunal upheld regulatory action by the SEBI against SICCL and dismissed appeals filed by the company and its directors in connection with the alleged illegal issuance of Optionally Fully Convertible Debentures (OFCDs).

The three-member SAT bench had ruled that the OFCDs issued by SICCL between 1998 and 2008 constituted a public offer, bringing them within SEBI's regulatory jurisdiction. The tribunal had said that the SICCL mobilised around Rs 14,106 crore from nearly 1.98 crore investors through these debentures during the period. It also held that such a large-scale mobilisation of funds from such a huge number of investors could not be treated as a private placement, as claimed by the company.

While dismissing the appeals filed by SICCL and its directors, the tribunal had allowed a separate appeal filed by four managers and the company secretary, while holding that, as employees, they could not be held liable for the company's actions. It also noted that the prospectus had been signed by the company secretary pursuant to powers of attorney granted by the directors, who remained responsible as principals for the acts of their agent.

The SEBI has now challenged that part of the ruling before the apex court. The case pertains to an October 2018 order passed by SEBI directing the company to refund the money raised through the debentures, disclose details of its inventory, and debarring certain officials from accessing the securities market.