Sahara to take legal action against Mirach

Sahara India Pariwar went on the offensive on Thursday accusing Mirach Capital of cheating and forgery in the failed $2.05-billion loan arrangement.

As reported earlier by Mail Today, it has now initiated legal action against the US-based firm and is now working on a new deal to raise funds to secure bail for its chief Subrata Roy.

The crisis-hit group alleged that Mirach and its CEO Saransh Sharma's criminal conduct and lack of financial capabilities to honour such huge commitments led to the breaking down of its deal, leading to precious loss of time, resources and position of Sahara.

"... Sahara is now taking legal action, both of civil and criminal nature, against such gross criminal conduct of MCG (Mirach Capital Group) and their officers, both in India as well as in the US," a Sahara spokesperson said.

He said that an FIR has already been filed in this regard, while adding that the group is now working on another deal and Sahara will comply the order (of the Supreme Court) very soon.

Mirach had on Wednesday formally called off its $2.05-billion loan financing for Sahara and said it has returned the entire due diligence fees of $2.625 million to them. It also accused Sahara of being an unwilling seller for the three overseas properties - The Plaza and Dream Downtown in New York and the Grosvenor House in London.

Shockingly, on January 9, Sharma along with a woman officer was also present in the Supreme Court when Sahara's counsel presented the said letter purportedly issued by Bank of America, based on which the apex court approved the transaction and permitted Sahara to apply to the Reserve Bank of India (RBI) for getting inward remittance in India.

Later on, Bank of America branch manager Nuno Marques informed through his e-mail dated January 31, 2015 that the said letter purportedly issued by him was neither issued nor signed by him. Hence, the letter turned out to be forged.

Subsequently, Sahara sent its officer to the US to confirm the veracity of Bank of America's letter and on February 2 filed an affidavit in the Supreme Court, informing it about these disturbing developments.

Meanwhile, upon inquiry, the Sahara officer confirmed that the Bank of America's letter was a fake, not issued or signed by the branch manager concerned. Thereafter, Sahara confronted Saransh, who was not been able to confirm the veracity of the said BOA letter.

Sebi lowers Sahara case expense estimates to Rs 25.88 cr

As a prolonged Sebi-Sahara battle continues, the regulator has revised lower the expenditure it

intends to recover from the business group to Rs 25.88 crore in the current fiscal towards money spent on identifying the investors and making refunds.

   As per the court orders, Saharas were asked to bear the costs incurred by Sebi in identifying the investors and repayment of refunds to them, which has been an uphill task for the capital markets watchdog.

     In its mid-term review of budget estimates for the current financial year 2014-15, Sebi is believed to have pegged the revised estimate of 'expenses recoverable from Sahara' at Rs 25.88 crore, down from the original budget estimate of Rs 37.66 crore. The actual expenditure already made till December 31, 2014, in this financial year stood at Rs 8.75 crore.

     This downward revision has taken place largely due to a planned expenditure being revised from Rs 12 crore to Rs 4 crore for the current fiscal because of non-operationalisation of a contract given to UTI-ITSL in the Sahara case.

     Besides, the advertisement charges have been revised lower from Rs 3 crore to Rs 1.46 crore.

     The amount earmarked for in-person verification charges has also been reduced, as the same could not be spent amid subsequent developments in the courts and henceforth a total amount of Rs 1 crore has been set aside for this particular purpose.

     In this high-profile case involving refund of over Rs 24,000 crore and additional interest of 15 per cent per annum, the Supreme Court had asked Sahara in August 2012 to submit all documents and refund money to SEBI for further repayments to genuine investors after verifying the documents.

     Sahara had submitted 5.28 crore documents to Sebi, which set up a Special Enforcement Cell for the case. Sebi had awarded a contract to Stock Holding Corporation of India Ltd (SHCIL) for storage, digitisation, scanning etc, and to UTI Infrastructure & Technology Services Ltd (UTI-ITSL) for refund related activities. These two contracts were originally worth

about Rs 55 crore.

     In addition to these contracts, SEBI has incurred significant expenses under other heads also with regard to the Sahara case, including towards legal costs and the in-house refund handling expenses.

     Through one of its recent advertisements, Sebi had invited refund applications till January 31 from the eligible Sahara investors along with necessary documentary proof. Earlier, Sebi had invited refund claims to the regulator by September 30, 2014. 

Sebi makes fresh bid to find Sahara Investors

Sebi had received 4,900 refund claims during the August-September exercise from the bondholders of two Sahara companies --Sahara India Real Estate Corp Ltd (SIRECL) and

Sahara HousingInvestment Corp Ltd (SHICL), which had raised over Rs 24,000crore from about three crore investors.

While Sahara maintains it has already repaid more than 93per cent of the outstanding dues directly to the concerned bondholders and the remaining amount was just about Rs 2,500 crore, it deposited Rs 5,120 crore to Sebi in December 2012towards the investor refunds as per Supreme Court orders. Further money has been deposited by the group with Sebi subsequently and it is currently in the process of raisingmore funds to ensure release of its chief Subrata Roy from the jail.

Sebi began the refund process in May 2013, while asking eligible investors to submit their claims. However, the refunds made so far remain minuscule, although the regulator

has not so far made public the quantum of all such payments. Sahara has been maintaining that Sebi should verify the refunds made by it directly and claims to have submitted to

the regulator proof for nearly 75 per cent of refunds. It also says that the remaining 25 per cent refund proof is lying in its Mumbai godown to be given to Sebi.

Sahara also contends that bulk of its investors didn't have bank accounts and other formal financial papers, the details of which have been sought by Sebi. On the identification on Sahara's investors, Sebi has contested in the court that addresses of many investors given

by Saharas were incomplete as only village name, district and state is given without any house number or street/lane names.

On its part, Sahara has maintained that most investors are from rural India and had no house numbers or street names. In the new refund application form, Sebi had given a new

address format for rural investors, asking only village name, post office, district and state as against additional details like house number and street name for urban addresses.

In its latest annual report for the year ended March 31, 2014, Sebi had disclosed having received 3,612 refund applications involving 13,948 deposit accounts till that time in the Sahara matter.

Of those applications, Sebi made refunds in case of 445 applications involving an equal number of deposit accounts for an aggregate amount of about Rs 1.25 crore including interest

of about Rs 43.83 lakh. The other applications had deficiencies or fell under either 'mismatch' or 'multiple investment' category. "Out of the remaining 3,167 applications, in respect of

424 applications involving 1,683 deposit accounts, certain deficiencies were observed in the applications/supporting documents submitted by the applicants which were brought to

the notices of the applicants for their clarification/rectification, and replies are awaited from

them," Sebi said. Sebi also could not process 1,260 applications involving 7,159 deposit accounts as these were in multiple investment category, while 92 cases involving 92 accounts did not meet

the extant refund methodology adopted by the regulator. Besides, 1,776 applications involving 4,395 accounts could not be processed because of being 'mismatch category'.