Sahara counters market cop move

The Sahara group claimed it had strong legal opinion that buttressed its argument that market regulator Sebi had no jurisdiction over unlisted entities and was, therefore, wrong to debar Sahara group founder Subrata Roy and two group entities from accessing the capital markets.

On Wednesday, Sebi had taken the extreme step after it detected serious lapses in the draft red herring prospectus of Sahara Prime City.

The action was taken in response to complaints that two group entities —Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation Ltd (SHICL) — had issued convertible bonds to a select class of investors which wasn’t disclosed in Sahara Prime City’s prospectus.

While SIRECL had issued optionally fully convertible debentures (OFCDs) in April 2008, SHICL had floated the same instrument in November 2009. The Sahara group has claimed the issue of these bonds by unlisted companies warranted no disclosures in Sahara Prime City’s offer document. It also argued that Sebi had no jurisdiction over unlisted entities and their flotations, which came within the ambit of the ministry of corporate affairs.

The group said its strong body of legal opinion, including former Chief Justice A.M.

Ahmadi, former presiding officer of the Securities Appellate Tribunal C. Achuthan and a former Supreme Court judge, supported this stand.

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