Sahara vs Sebi Case

1647 Words Oct 5th, 2012 7 Pages
LEGAL ASPECTS OF MANAGEMENT ASSIGNMENT
SAHARA INDIA REAL ESTATE CORPORATION LIMITED AND OTHERS VS SECURITIES AND EXCHANGE BOARD INDIA AND ANOTHER

Presented by: Ateendra Mishra Section a Roll No.:48

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INTRODUCTION ABOUT THE CASE
On, 31st Aug, 2012, Supreme Court of India passed a landmark judgment wherein, the honorable court ordered business conglomerate and leading sports sponsor Sahara to refund more than $3 billion it collected from millions of small savers. It all started when in 2008 the two companies of the group Sahara India Real Estate Corporation Ltd. (SIRECL) and the Sahara Housing Investment Corporation Ltd. (SHICL) started raising funds through Red Herring Prospectus (RHPs), and had collected  Rs 17, 400 till March 13,
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The option has to be indicated in the application form itself. However, interest on FCDs is payable at a determined rate from the date of first conversion to the second / final conversion and in lieu of it, equity shares are issued. Optionally Fully Convertible Debentures where the OFCD holder (purchaser),[Generally on the discharge of the debt by the issuer entity at the specified time]gets an option to obtain equity shares of the entity issuing (selling) such OFCDs, in lieu of cash, based on the terms determined at the time of issue/sale of these instruments.

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Indian Laws relevant to the case

The following are the main points of contention between the two parties involved in the case. The points before the Judiciary were as follows:  The first relates to the nature of OFCDs themselves, and;  The second is on whether SEBI has the jurisdiction to regulate OFCDs.  Securities Contracts (Regulation) Act, 1956
Section 2(h) of the SCR Act defines the term “securities” to include (i ) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate; (ia) derivative;

(ib) units or any other instrument issued by any collective investment scheme to the investors in such schemes; (ic) security receipt as defined in clause (zg) of section 2 of the of Security Interest Act,2002; (ii) Government securities; to be securities; and

Securitisation and

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