Sahara Group begins mammoth task of taking back investor documents from Sebi

As it scurries to garner funds to ensure a release of jailed chief Subrata Roy, embattled Sahara Group has begun another mammoth exercise of taking back loads of investor documents it had given to the markets regulator Sebi in 128 trucks over three years ago.

The move follows Sebi getting Rs 41 crore, from interest earned on money deposited by Sahara for investor refunds, as reimbursement of expenses incurred by the regulator in this high-profile case including towards huge storage costs of these documents that are key to verification of investors.

In this long-running case, the Supreme Court had ordered Sahara in August 2012 to deposit with the Securities and Exchange Board of India (Sebi) over Rs 24,000 crore collected from nearly three crore investors through issuance of certain bonds.

Sahara was also asked to give Sebi the entire sets of investor documents for verification so that the money can be refunded to genuine investors.

Consequently, Sahara had sent 128 trucks, containing more than 31,000 cartons full of documents to Sebi, which had to hire special storage facility for their safe keeping. The regulator later digitised those documents for easier access.

The group said Sebi refused to take custody of another batch of documents, estimated at about 25% of total investor documents, that were sent by it to the regulator. As per the court orders, Sahara is to pay for the expenses incurred by Sebi towards the storage of documents and other expenditure involved in the investor refund process. Amid mounting costs associated with the storage of the documents, Sahara has now sought taking back the custody as Sebi has digitised the original papers.

The regulator has agreed to return the original documents, provided they are kept in "safe custody under the double-locking system by Sebi and Sahara", a senior official said, while adding that the Supreme Court has also given its approval for the same.

When contacted, a Sahara spokesperson confirmed that the group has begun working on an arrangement for safekeeping of these documents and the costs would be "naturally" much less. "We shall prefer to transport documents ourselves," the spokesperson told PTI in reply to queries on whether Sahara would want Sebi to transport the papers back to it and reimburse them the associated costs.

The Sahara spokesperson further said Sebi has refunded only Rs 50 crore to the Sahara investors in the last 40 months."After publishing four times through 144 newspapers in the country, Sebi could get demand of only Rs 52 crore whereas Sebi has our Rs 12,000 crore (including interest earned) in the Sebi-Sahara account," the spokesperson added.

"So, it is painful that we have to pay Rs 41 crore," he said on reimbursement of expenses incurred by Sebi. The spokesperson further said, "Sebi has not yet received around 25% of the document, for the reason best known to Sebi. After discussing with Sebi, we shall take a decision whether this 25% documents shall be kept with rest of the documents or not."

Roy and two other senior group executives have been in Tihar Jail for nearly two years, even as it claims to have refunded over 95% of the investors directly.  

Following a plea by Sebi, the Supreme Court earlier this month directed that a sum of Rs 41,44,76,410 be reimbursed to the regulator towards the expenditure incurred by it on various items in connection with the Sahara matter.

"The reimbursement shall be out of the interest amount earned by the deposit made in SEBI-Sahara account. The adjustment shall be without prejudice to Sahara's right to seek a refund if any in accordance with law," the court said.

Before the court, Sahara counsel submitted that since the entire record filed by the group has been digitised, the original documents can be returned to avoid the recurring expenditure which Sebi was incurring towards rent of the storage facility hired by it.

Sebi counsel said that the regulator has no objection to the return of the documents provided they are kept in safe custody under the double-locking system.

The court said that once Sebi was satisfied with the storage facility, Sahara was free to transfer the records.

Listing the matter for further hearing on March 29, the court said in its order dated February 2 that the "needful shall be done within six weeks".

Sebi has generated about 20 crore scanned pages of PDF documents and has created a database out of them. The total volume of this electronic data, including the PDF files, is 70 terabytes. Terabyte, wherein the prefix tera is derived from the Greek word for monster, is a measure of computer storage capacity and one TB is approximately a trillion bytes.

Late last year, Sebi had disclosed in its latest annual report that it had refunded over Rs 42 crore to the bondholders of the two Sahara firms while discrepancies were found in nearly 3,000 refund applications.

Sebi had said it received 10,456 applications and made refunds with respect to 7,296 applications for an aggregate amount of Rs 42,42,36,472 including interest of Rs 18,04,58,872, as on June 3, 2015. The total amount claimed by the 10,456 bondholders stood at over Rs 50 crore while the disputed cases involve refund claims to the tune of about Rs 7.65 crore.

The total refund had stood at Rs 1.25 crore as on March 31, 2014, including interest of Rs 43.83 lakh, relating to 445 applications. The refunds are being made from the amount deposited by Saharas with the regulator as per the Supreme Court orders.

The total amount deposited by Saharas as on March 31, 2015, stood at Rs 8,790.08 crore, Sebi had said.

Sebi had initiated the refund process on May 28, 2012, while two series of advertisements were released in August 2014 and December 2014 and a format of application for refund was put on the regulator's website.

Sebi has constituted a special enforcement cell to specifically handle work relating to the verification process of documents submitted in terms of the directions of the Supreme Court and also to handle matters connected therewith.