OFCD Case: SEBI Moves SC Against SAT Relief to SICCL Managers, Company Secretary

The Securities and Exchange Board of India (SEBI) has moved the Supreme Court partially challenging a Securities Appellate Tribunal (SAT) order granting relief to four managers and the company secretary of Sahara India Commercial Corporation Ltd (SICCL).

A vacation bench of Chief Justice Surya Kant and Justice V Mohana is scheduled to hear the plea of SEBI on June 18.

On March 9, the SAT 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 ₹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.