New Delhi, July 13: The Supreme Court is set to hear a significant plea filed by the Securities and Exchange Board of India (SEBI) challenging a portion of the Securities Appellate Tribunal (SAT) ruling that granted relief to four managers and the company secretary of Sahara India Commercial Corporation Ltd. (SICCL). The matter forms part of the prolonged legal proceedings concerning the company’s Optionally Fully Convertible Debentures (OFCDs), which have remained under judicial and regulatory scrutiny for several years.
A bench headed by Chief Justice Surya Kant, along with Justices Joymalya Bagchi and V. Mohana, will take up the regulator’s appeal on July 13. Alongside this petition, the apex court has also scheduled hearings in several pending Sahara-related cases, including issues concerning the refund of money to millions of investors who subscribed to the controversial debenture scheme.
The latest proceedings are expected to determine whether the officials who served as managers and company secretary during the relevant period can be held accountable under securities laws or whether responsibility rests solely with the company’s directors.
The dispute stems from a March ruling delivered by the Securities Appellate Tribunal, which largely upheld SEBI’s regulatory action against Sahara India Commercial Corporation Ltd. While confirming the regulator’s findings against the company and its directors, the tribunal distinguished the role of certain employees and ruled that they should not be personally liable for the company’s regulatory violations.
According to the tribunal, the OFCDs issued by SICCL between 1998 and 2008 qualified as a public issue rather than a private placement because of the enormous number of investors involved. SAT observed that the company mobilised approximately ₹14,106 crore from nearly 1.98 crore investors, making the fundraising exercise subject to SEBI’s regulatory oversight.
The tribunal rejected the company’s argument that the debentures were privately placed, stating that an offer extended to such a large investor base clearly fell within the definition of a public issue under securities regulations. Consequently, it upheld SEBI’s findings against the company and its directors.
However, SAT provided relief to four managers and the company secretary, concluding that they functioned only as employees carrying out administrative responsibilities. The tribunal observed that they neither exercised ultimate decision-making authority nor independently controlled the issuance of the debentures.
The order further noted that the company secretary had signed the prospectus under powers of attorney granted by the directors. In such circumstances, the tribunal held that the directors remained legally responsible for decisions taken by the company, while the officials who acted under delegated authority could not automatically be subjected to identical liability.
SEBI has challenged this limited relief before the Supreme Court, arguing that the tribunal’s findings on the accountability of these officials require judicial reconsideration. The regulator seeks restoration of its original directions against all individuals who, according to its investigation, were associated with the issuance and administration of the OFCD scheme.
The Supreme Court had earlier agreed to examine the regulator’s appeal on June 18. At that hearing, notices were issued to the four officials who benefited from the tribunal’s order, directing them to file their responses before the next scheduled hearing. The matter was also tagged with other pending Sahara-related cases to enable comprehensive consideration of the legal issues arising from the group’s fundraising activities.
The litigation traces its roots to an October 2018 order issued by SEBI after an extensive investigation into SICCL’s fundraising programme. The regulator had directed the company to refund the money collected through the OFCDs, furnish complete details regarding its assets and inventory, and imposed market access restrictions on several officials connected with the case.
SEBI maintained that the company’s fundraising exercise violated securities regulations because it involved a public issue without complying with the statutory disclosure and approval requirements applicable to listed securities offerings.
Over the years, the Sahara OFCD matter has become one of India’s most closely watched securities law disputes, involving complex questions relating to investor protection, corporate accountability, and regulatory jurisdiction. The case has also highlighted the responsibilities of company officials, directors, and intermediaries involved in large-scale capital mobilisation.
The Supreme Court’s forthcoming hearing is expected to focus specifically on whether employees acting under the directions of company directors can be held personally liable for regulatory violations committed by the company. The outcome may have broader implications for determining the legal responsibilities of managerial personnel in future corporate governance cases.
Apart from deciding SEBI’s appeal, the apex court will continue monitoring the progress of pending matters concerning the recovery and distribution of funds to investors who subscribed to Sahara’s OFCD schemes. These proceedings remain central to ensuring that affected investors receive appropriate relief under the supervision of the court.
Legal experts believe the court’s observations in this phase of the litigation could further clarify the extent of liability that attaches to company officers acting under delegated authority, while reinforcing regulatory standards governing public fundraising activities in India’s securities market.
With multiple Sahara related petitions pending before the Supreme Court, the July 13 hearing is expected to mark another important step in resolving one of the country’s longest running corporate regulatory disputes.