PARLE TILAK VIDYALAYA ASSOCIATION’S

MULUND COLLEGE OF COMMERCE

(AUTONOMOUS)

SUBJECT:
ETHICS AND GOVERNANCE

PROJECT ON:
SAHARA SCAM

SUBMITTED BY:

NAME ROLL NO.

SWAPNALI CHAVAN 237340
HARSHALA MAHALA 237355

CLASS: SYBMS (A)

SUBMITTED TO:
PROF. ABHILASHA N
BMS DEPARTMENT
What is Scam?
A scam is confident trick or confident game, which is an attempt to
intentionally mislead a person or persons usually with the goal of
financial or other gain.

Introduction About The Company

Sahara India Pariwar is an Indian conglomerate headquartered in

Lucknow. The company has founded in 1978 it is a 40 years old
company. The company has an estimated market capitalization of
US$25.94 billion as of March 2011.Subrata Roy is the Managing Worker
& Chairman of Sahara India Pariwar. Business interests in finance,
infrastructure & housing, media & entertainment, consumer
merchandise, retail venture, manufacturing & information technology.
To raise funds, his company first encouraged the general public to
invest. The group employs around 1.4 million people across its more
than 5,000 establishments in India. The company is a significant sports
investor and has long served as the official title sponsor of India's
national cricket team. Sahara Stadium now known as “MCA Stadium”.

Sahara Companies Involved In The Case

▪ Sahara Prime City Ltd.
▪ SIRECL (Sahara India Real Estate Corp)
▪ SHICL (Sahara Housing Investment Corp)
About Sahara Scam
The case started when the SEBI investigation, it realised that the two
Sahara Group Companies, Sahara Housing Investment Corp (SHICL) and
Sahara India Real Estate Corp (SIREC), have raised the OFCD of Rs.24000
crore from 2 to 2.5 crore investors, without taking permission from SEBI.
Legally this process of issuing OFCD should be completed in 6 weeks, but
SHICL and SIREC kept on issuing OFCD for more than 2 years.
As soon as it was exposed, SEBI banned Sahara group from issuing new
OFCD and ordered to return the money of investors with 15% interest.
But Sahara group instead of following the orders of SEBI, filed the case
against SEBI in Allahabad High Court. First, In Dec 2010 Allahabad High
Court ceased the orders of SEBI, but later in April 2011 found that SEBI
was right. Sahara lost the case in High court, but Sahara didn't stopped
there and appealed in Supreme Court. Supreme Court suggested Sahara
to approach SAT that is Securities Appellate Tribunal. Again SAT found
that Sahara was guilty and ordered Sahara to follow the orders of SEBI
and return the money of investors with 15% interest under 3 months
and also submit all details of investors to the SEBI so that SEBI could
return the money to the investors. Following the orders of Supreme
Court, Sahara sent 127 trucks to SEBI, which were filled with documents
containing the details of investors. But SEBI rejected some trucks since
they reached after the deadline. After analysing the documents, SEBI
said that the details of investors are incomplete and unrealistic, and
hence this matter can be of Money Laundering.

*OFCD means Optionally Fully Convertible Debentures.

OFCD is a type of Debenture in which investors has the option to convert
their OFCD to Equity and become the shareholders of the company
Sahara Scam Important Dates
▪ August 31st, 2012 SC orders Sahara to repay 24,000 crore back to
its investors.
▪ October 19th, 2012 SC clears SEBI's action on Sahara.
▪ November 12th, 2012 SEBI began prosecution proceedings against
Sahara.
▪ November 30th, 2012 Sahara submits drafts worth 5,000 crore in
SC.
▪ December 5th, 2012 SC orders Sahara to pay back 24,000 crore
with 15% interest to over 30 million investors.
▪ February 6th, 2013 SC tells SEBI to freeze accounts of Sahara and
seize property of Sahara group's 2 companies for defying court
orders by not refunding 24,000 crore to investors.
▪ February 13th, 2013 SEBI freezes the accounts of Sahara February
25th, 2013 SC refuses to give more time to the Sahara Group to
refund its investor's money.
▪ March 15th, 2013 SEBI moves SC for arrest of Sahara chief.
▪ April 10th, 2013 SEBI quizzes Sahara chief and 3 other director
Sahara chief Subrata Roy.
▪ May 2nd, 2013 SC stays proceedings on pleas filed by Sahara
Group and Roy in tribunal and high court.
▪ May 8th, 2013 SEBI initiates process of refund to investors on SC's
orders.
▪ October 28th, 2013 SC says it cannot trust the Sahara Group any
more, and directs the company to submit title deeds of its
properties worth Rs.20,000 crore to SEBI within 3 weeks.
▪ November 20, 2013 SEBI says Sahara Group has its assets
overvalued and has not submitted original title deeds of
properties.
▪ November 21st, 2013 SC bars Subrata Roy, chairman of the
company and three other directors from leaving the country and
asks not to sell any of its property till further orders.
▪ January 2nd, 2014 ROY fails to get permission from SC to travel
abroad to attend his business meetings.
▪ January 9th, 2014 SC warns of a CBI probe against Sahara, if it
failed to reveal the source of Rs.22,000 crore it claimed to have
refunded to 33 million investors.
▪ February 20th, 2014 SC summons Subrata Roy on 26th February.
▪ February 26th, 2014 SC issues non-bail able arrest warrant against
Roy for his failure to appear before it in connection with the case.
 ▪ February 27th, 2014 Roy offers unconditional apology for not
appearing before the apex court, Lucknow police fails to find him
at his residence.
▪ February 28th, 2014 Roy arrested by the Lucknow Police.
▪ November 14, 2014 while Roy still in jail, Enforcement directorate
has registered a money laundering criminal case against the
Sahara group in connection with non-payment of corers of rupees
to depositors probed by capital market regulator SEBI.
▪ March 23, 2015 SC gave the Sahara group 90 days to finalize plans
to sale of properties both abroad and in India to raise the required
fund for the release of Mr. Subrata Roy.

Conclusion
Sahara scam is still ongoing, with some legal aspects and investor
refunds yet to be finalized. SEBI has absolute power to investigate into
the matters of both listed companies and unlisted companies. It vests
SEBI to investigate into any matter concerning the interest of the
investors even if it pertains to companies which are not listed.
Companies walk on a thin rope and are overtly conscious of potential
fraud as it may damage their reputation and market capitalization. This
is an encouraging sign, which indicates brighter future for corporate
governance.