The Securities and Exchange Board of India (SEBI) has approached the Supreme Court challenging a Securities Appellate Tribunal (SAT) verdict that granted relief to four managers and the Company Secretary of Sahara India Commercial Corporation Limited (SICCL) in the long-running Rs 14,106 crore Optionally Fully Convertible Debentures (OFCDs) matter involving nearly 1.98 crore investors.
SEBI’s appeal challenges the portion of the SAT order dated March 9, 2026, which set aside the liability imposed on the managers and the CS, while upholding the regulator’s findings and directions against SICCL, Sahara India, its promoter and directors. The matter is likely to be heard on June 18 by the Bench of Chief Justice of Indis (CJI) Surya Kant and Justice V Mohan.
The proceedings arise from SEBI’s investigation into the fund-raising activities of Sahara group entities and the regulator’s subsequent order directing SICCL, its directors, promoter and Sahara India to refund monies collected through OFCDs. The order also required disclosure of assets and inventories, publication of public notices and imposed restrictions on access to the securities market.
According to SEBI, SICCL mobilised approximately Rs 14,106 crore from nearly 1.98 crore investors through OFCD issuances between July 1998 and June 2008. The regulator concluded that the fund mobilisation exercise violated provisions of the Companies Act, 1956, and securities laws governing public issues.
SICCL had contended that the OFCDs were issued through private placements to a select group of investors and therefore fell outside the regulatory framework applicable to public offerings. The company argued that the issuances did not constitute a public issue requiring compliance with statutory disclosure and listing requirements.
SEBI disputed this position and maintained that SICCL failed to establish that the offers were restricted to specifically identified individuals. According to the regulator, the sheer scale of the fund mobilisation exercise demonstrated that the OFCD issuances were, in substance and effect, public issues attracting the jurisdiction of SEBI and the requirements of securities laws.
The SAT rejected SICCL’s defence and held that the company had issued OFCDs to nearly two crore investors. The Tribunal observed that the number of investors far exceeded the threshold prescribed under Section 67(3) of the Companies Act, 1956, thereby bringing the issuances within the ambit of a public issue.
The Tribunal further found that SICCL had neither obtained permission from a recognised stock exchange before launching the issue nor secured registration under Section 12(1-B) of the SEBI Act. In view of these violations, SAT upheld SEBI’s jurisdiction over the fund-raising exercise and affirmed the regulator’s conclusion that the OFCD issuances contravened statutory provisions governing securities markets and public fund mobilisation.
SAT also rejected SICCL’s contention that the proceedings were vitiated by delay. The Tribunal noted that SEBI came across the company’s fund-raising activities during its investigation into other Sahara group entities. It observed that the regulator initiated proceedings after receiving a report from the Ministry of Corporate Affairs identifying alleged violations and thereafter issued a show-cause notice.
The Tribunal further rejected SICCL’s claim that most of the funds raised had either been repaid to investors or converted into equity. It held that the company failed to produce sufficient documentary evidence demonstrating actual repayment to nearly 1.98 crore investors. SAT observed that a chartered accountant’s certificate by itself could not conclusively establish repayment on such a massive scale without supporting records. Consequently, the Tribunal dismissed the appeals filed by SICCL and its directors and upheld SEBI’s findings against them.
However, SAT granted relief to four managers and the company secretary. The Tribunal noted that SEBI’s whole-time member had already exonerated them from liability as officers in default under Section 73 of the Companies Act. Despite that finding, liability had subsequently been imposed upon them under Section 62 of the Companies Act relating to alleged misstatements in a prospectus.
Setting aside that part of the order, SAT held that the managers were salaried employees and could not automatically be held responsible for the acts, omissions and decisions of the company and its directors. The Tribunal further observed that the prospectus had been signed by the company secretary pursuant to powers of attorney executed by the directors. In such circumstances, the directors, as principals, remained legally responsible for the acts performed by their authorised agent.
Aggrieved by the relief granted to the managers and the company secretary, SEBI approached the Supreme Court seeking restoration of liability against them.
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