Subrata Roy, founder of the Sahara Group passed away at the age of 75 on 14th November 2023. The government is now investigating the legality of moving the unclaimed money from the Sahara-Sebi Refund Account to the Consolidated Fund of India.
Subrata Roy’s demise, attributed to cardiorespiratory arrest after a prolonged illness, occurred at 10:30 pm at Kokilaben Dhirubhai Ambani Hospital & Medical Research Institute in Mumbai, where he had been admitted on Sunday due to a deterioration in his health.
The Sahara Group, in a statement, noted that Subrata Roy had bravely battled complications arising from metastatic malignancy, hypertension, and diabetes. Describing him as an “inspirational leader and visionary,” his legacy is remembered with deep respect and admiration.
The Sahara Case
The Sahara scam stands as one of the most significant financial frauds in the history of India, encompassing a colossal sum of money, regulatory breaches, and a compelling legal saga. The narrative unfolds with the Sahara Group, a conglomerate with diverse holdings in real estate, media, finance, and other sectors. The group adopted an unconventional approach to fund-raising by utilizing optionally fully convertible debentures (OFCDs), a financial instrument that evaded regulatory scrutiny.
From 2008 to 2011, Sahara India Real Estate Corporation Limited (SIRECL) and Sahara Housing Investment Corporation Limited (SHICL) amassed approximately Rs. 24,000 cr. from over 30 million investors through the issuance of optionally fully convertible debentures (OFCDs). These companies enticed investors with the assurance of substantial returns on their investments, leading to a substantial influx of funds from various regions across India.
The issue did not lie with the nature of the optionally fully convertible debentures (OFCDs) themselves but rather with the companies utilizing these instruments to raise funds without obtaining requisite regulatory approvals. The Securities and Exchange Board of India (SEBI) contended that the companies breached regulatory norms by not seeking permission for fund-raising through OFCDs and by inadequately informing investors. Consequently, SEBI mandated the companies to cease raising funds through OFCDs and instructed them to return the funds to investors along with interest. However, the Sahara Group contested this directive in the Securities Appellate Tribunal (SAT) and subsequently in the Supreme Court.
In August 2012, the Supreme Court upheld SEBI’s order, instructing the Sahara Group to reimburse the funds to investors in three installments with accrued interest. This decision dealt a significant blow to the Sahara Group and its investors. While the Sahara Group asserted that a substantial portion of the funds had already been repaid and the remaining amount was minimal, SEBI challenged these claims, asserting that the group had not fully complied with the court’s order.
In 2014, the Supreme Court ordered the arrest of Subrata Roy (Chairman) and sent him to jail. It was a stunning turn of events for a man who had built an empire through questionable means.
The court also appointed a receiver to sell Sahara Group’s assets to recover the money owed to the investors. The receiver managed to sell some of the assets, but it was not enough to recover the entire amount owed to the investors.
The Economic Times in its report said that in the eleven years since the refund account was created, hardly any claimants had come forward. An unidentified official was quoted in the daily as saying that the option to transfer the funds to the Consolidated Fund of India with a different account in order to reimburse investors would be explored.
