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Jan 09, 2013, 11.33 AM IST | Source: CNBC-TV18

Sebi may sue Sahara for non-compliance of SC's order

Sahara and Sebi continue to lock horns in Supreme Court. Sebi is likely to file a fresh suit against Sahara for failure to comply with the court's order.

Sajeet Manghat

Chief of Bureau, CNBC-TV18

Sahara and Sebi continue to lock horns in Supreme Court. Sebi is likely to file a fresh suit against Sahara for failure to comply with the court's order. However, that has not stopped Sebi from kicking off the process that will result in refunds to the people who invested in Sahara's OFCD issue. Sajeet Manghat and Ashmit Kumar of CNBC-TV18 report on the case.

Also read: SEBI, Sahara, 2G, mining, Vodafone dominated SC in 2012

Sahara has toed the Supreme Court's line atleast in part. And in a move that gives the phrase ‘buried in paperwork’ a new meaning, it has sent Sebi 127 trucks with 31,669 cartons containing about 3.04 crore application forms, 2.24 crore redemption vouchers and statutory forms. All this was done between December 10 and 20.

However, the market regulator is not backing down. It has begun, what is probably its biggest initiative so far; building a database of the people who hold Sahara's OFCDs. After verification, Sebi has stored these cartons with SHCIL. Initial information indicates that while initial scrutiny of the records has begun, Sebi is far from happy. Sebi is learnt to have written to Sahara on December 20 & 28, communicating certain deficiencies in the documents.

These deficiencies include; 'hopeless' mixing up of application forms and vouchers, documents not being arranged in a logical sequence and no proper segregation of application forms pertaining to refunds paid, from refunds pending.

In addition, Sebi has asked Sahara to furnish additional documents for verification of investors, while initiating discussions with the department of posts to carry out in-person verification of investors.

That's not all. Sebi is also considering more legal action against Sahara, including a contempt petition and an execution petition. CNBC-TV18 has learnt that Sahara has not adhered to the Supreme Court order, and still has to submit 25 percent of the documents.

Now in the December 20 deadline, Sahara had asked Sebi to be allowed to submit the remaining documents continuously, till the February 15- 20.

Sebi declined this request saying it is not empowered to accept any documents beyond the supreme court's december 20th deadline.

Also, Sebi has written to the Chief Secretaries of UP and Maharashtra to take action against Sahara for switching OFCDs with other Sahara schemes without their consent. With things as they stand, it looks like Sebi and Sahara will be pounding the pavement outside the Supreme Court for the final say. Add to that, the Herculean task facing Sebi of investors not getting their refunds anytime soon.

READ MORE ON  Sebi, Sahara, non-compliance, OFCD

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