The Court has held that preservation of market integrity is extremely important for economic growth of this country and for national interest. Maintaining investors' confidence requires market integrity and control of market abuse. Market abuse is a serious financial crime which undermines the very financial structure of this country and will make imbalance in wealth between haves and have nots.
S.E.B.I. v. Sahara India Real Estate Corporation Ltd ., 2014 (3) SCALE 300 (SC); Decided on 3-4-2014 [K. S. Radhakrishnan and Jagdish Singh Khehar, JJ.]
Listing of securities is a legal responsibility of the company which offers securities to the public, provided offers are made to more than 50 persons. Principles of lisiting is intended to assist public companies in identifying their obligations and responsibilities, which are continuing in nature, transparent in content and call for high degree of integrity. Misleading public is a serious crime, which may attract civil and criminal liability.
Sahara India Real Estate Corporation Ltd. and Sahara Housing Investment Corporation Limited, companies controlled by the Sahara Group, having failed to make application for listing on any of the recognized stock exchange, have become legally liable to refund the amount collected from the subscribers. As observed, the two companies collected money from investors, without any sense of responsibility to maintain records. The present controversy involves contributions which approximate ` 40,000 crores, allegedly collected from the poor rural inhabitants of India through their optionally fully convertible Debentures (OFCDs). This court directed Saharas to refund the amount along with interest from the date of the subscription amount till the date of repayment, within a period of three months.
The Supreme Court has observed that no proposal is forthcoming to honour the judgment of the Apex Court dated 31-8-2012. In exercise of its powers conferred under Articles 129 and 142 of the Constitution of India, the Supreme Court has ordered detention of Directors of these companies. The Court has held that preservation of market integrity is extremely important for economic growth of this country and for national interest. Maintaining investors' confidence requires market integrity and control of market abuse. Market abuse is a serious financial crime which undermines the very financial structure of this country and will make imbalance in wealth between haves and have nots.
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