SEBI Challenges SAT Relief for Sahara Managers in Supreme Court

The Securities and Exchange Board of India (SEBI) has moved the Supreme Court, challenging a decision by the Securities Appellate Tribunal (SAT) that granted relief to four managers and a company secretary of Sahara India Commercial Corporation Ltd (SICCL) in a long-standing case concerning Optionally Fully Convertible Debentures (OFCDs). This significant legal development pertains to the alleged illegal mobilization of approximately ₹14,106 crore from nearly 1.98 crore investors through OFCDs issued between 1998 and 2008. The core of the dispute revolves around SEBI's regulatory action initiated after an investigation revealed that SICCL had issued OFCDs, which the regulator deemed a public offer, without adhering to the necessary regulatory approvals and compliances under the Companies Act, 1956, and SEBI regulations. In October 2018, SEBI had issued an order directing SICCL to refund the substantial amount raised, disclose details of its assets, and barred certain officials from accessing the securities market. Subsequently, SICCL and its directors appealed SEBI's order to the Securities Appellate Tribunal. On March 9, 2026, a three-member SAT bench largely upheld SEBI's regulatory action against SICCL and its directors, affirming that the OFCDs constituted a public offer and therefore fell within SEBI's jurisdiction. The tribunal specifically noted that given the scale of fundraising from almost 2 crore investors, the offer could not be considered a private placement, as claimed by the company. However, in a crucial aspect that SEBI is now challenging, SAT provided relief to the four managers and the company secretary of SICCL. The tribunal reasoned that these officials, acting as employees of the company, could not be held personally liable for the company's actions. SAT observed that the company secretary had signed the prospectus under powers of attorney granted by the directors, implying that responsibility for such acts ultimately rested with the directors as principals. SEBI's appeal to the Supreme Court is specifically limited to this portion of the SAT ruling, seeking to overturn the relief granted to these managers and the company secretary. The market regulator argues that their roles in the issuance process should warrant accountability, questioning the extent of executive liability in cases of securities law violations. The Supreme Court, with a vacation bench comprising Chief Justice Surya Kant and Justice V. Mohana (and later Justice Joymalya Bagchi for July hearings), agreed to hear SEBI's plea and has tagged the matter with other pending Sahara-related petitions. This case is part of a broader, long-running saga involving the Sahara Group and SEBI, which dates back over a decade. The initial dispute involved Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation Ltd (SHICL) raising funds through OFCDs, which SEBI contended were public issues requiring its regulation. The Supreme Court had previously, in 2012, upheld SEBI's jurisdiction and directed Sahara companies to refund investor money, a process that has seen various legal battles and appeals. The Supreme Court's decision in SEBI's current appeal is anticipated to have significant implications for corporate governance and individual accountability within India's securities market. It will determine the extent to which employee-level officials can be held personally responsible for actions taken under the company's directive, especially when the underlying fundraising activity has been deemed illegal. The outcome will shape future enforcement actions by SEBI and clarify the boundaries of liability for those involved in public issues of securities.

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