Market regulator Securities and Exchange Board of India (SEBI) on Wednesday ordered freezing of bank accounts and attachment of all properties of two Sahara group firms and top executives, including Subrata Roy.
This severe step against Sahara has been taken in the wake of the high-profile investor refund case involving over Rs 24,000 crore. According to Sandeep Parekh, founder, Finsec Law Advisors SEBI’s order is the dead end for Sahara and he sees no further relief for the group.
"SEBI's action is based out of a Supreme Court (SC) order which says that SEBI is supposed to attach bank accounts, properties, whatever is available. Beyond the Supreme Court there is only god to pray. SEBI order has kind of shown the mirror,” he told CNBC-TV18.
"Sahara is left with two alternatives now: 1) to attach properties, which they have in the Indian sub-continent 2) contempt of court. As last resort, Sahara can ask for time extension from the Supreme Court," he said.
Below is the verbatim transcript of his interview to CNBC-TV18
Q: Securities and Exchange Board of India (SEBI) has said that it has directed the freezing of bank accounts, of attaching properties of even attaching special purpose vehicle (SPVs). What do you make of this and were you surprised at all by this order?
A: I am surprised Sahara counsel has not seen the order. It is not based on some website, it’s a signed order. It is quite a bizarre assertion to say that. Just because something is upon a website it is not enforceable. If one goes by that logic all Supreme Court orders that one sees them on the website would have been not enforceable.
Q: You are categorically saying then that these properties and bank accounts have indeed been attached and have been frozen if one were to read the order that has been put up by SEBI?
A: Absolutely. No second opinion on that. It is based out of a Supreme Court order which says that SEBI is supposed to attach bank accounts, properties and whatever is available.
Beyond the Supreme Court there is only god to pray to. I don’t see any kind of further relief which can be available to Sahara. Its kind of dead end for them and the SEBI order has just shown the mirror. One cannott say that the mirror is causing me to be ugly.
Q: Are you surprised that the market regulator has gone after Sahara Group companies?
A: The prime factor is that the money has not been restricted to the two companies? They have gone to 100s of entities. One can trace and freeze that money and that’s what the Supreme Court order seems to suggest. I don’t think we can interpret a way outside the Supreme Court order.
Q: What kind of legal recourse do you believe is available now to Sahara post the SEBI order?
A: I would say two recourses, one is for SEBI to do all this work which they have done today. That is attach properties etc, whatever is in the domain of Indian sub-continent. I am sure SEBI can’t go to New York and attach properties.
The other option is contempt of court. These two are going parallel. I am not sure where they are going to land up.
Q: What can Sahara do in this situation because the SEBI order is fairly clear and we have seen what has happened in Supreme Court with the Supreme Court order. So, where does Sahara go, what can Sahara do now?
A: I think they can pray because beyond the Supreme Court there is not much in this country. They can apply to Supreme Court for extension of time but beyond that I don’t see much relief which is going to be available to them.