In a bid to provide relief to crores of depositors whose money is stuck in four cooperative societies of Sahara Group, the Centre has recently started the refund process. This move came following a Supreme Court order, on March 29, 2023, to transfer Rs 5,000 crore from ‘Sahara-Sebi Refund Account’ to the Central Registrar of Cooperative Societies (CRCS) to depositors invested in the Sahara Cooperative Societies. Depositors of Sahara Credit Cooperative Society Limited, Saharayan Universal Multipurpose Society Limited, and Hamara India Credit Cooperative Society Limited, Stars Multipurpose Cooperative Society Limited will be eligible for the refund.
The above list includes only a limited number of investors whose deposits are stuck with Sahara Group as there are many other investors who are anxiously waiting for the refund of their deposits with different Sahara entities.
Rs 1.12 lakh crore of 13 crore investors are stuck in Sahara entities
More than Rs 1.12 lakh crore funds of around 13 crore investors are stuck in several Sahara India group companies, Union Minister of State for Finance Pankaj Chaudhary informed the Parliament in August last year. With the Centre launching a refund portal for depositors of Sahara Group co-operative society, other investors are eagerly waiting to know when they will get their money back. Let’s find out.
Also Read: Sahara Refund Portal: Documents needed, other rules to know to apply for refund
As much as Rs 19,400.87 crore of 2.33 crore investors is stuck in Sahara Indian Real Estate Corporation Ltd (SIRECL) and Rs 6,380.50 crore of 75 lakh investors are stuck in Sahara Housing Investment Corporation Ltd (SHICL), Chaudhary said in a written reply to a query in the Parliament last year.
As much as Rs 47,245 crore of 4 crore investors are stuck in the Sahara Credit Cooperative Society. Besides, Rs 12,958 crore of 1.8 crore depositors are stuck in Humara India Credit Co-operative Society, Rs 18,000 crore of 3.71 crore investors in Saharayn Universal Multipurpose Society and Rs 8,470 crore (37 lakh) is stuck in Stars Multipurpose Cooperative Society, Chaudhary said.
There are three major issues concerning funds collected by Sahara Group from the public. The first is the case of Sahara India Financial Corporation Ltd (SIFCL), a Non-Banking Financial Company regulated by the Reserve Bank of India (RBI). RBI had already cancelled its license in 2015. RBI, had in 2008, barred the company from taking any deposits from the people under its chit-fund operations. SIFCL was to repay the deposits.
“The other case pertains to Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC) — two companies registered under the Companies Act which collected over Rs 17,656 crore by issuing Optionally Fully Convertible Debentures (OFCD) between 2008 to 2011 from about 3 crore investors through ‘private placement’ without complying with the requirements applicable to the public offerings of securities. In connection with this and orders passed by the Supreme Court from time to time, Sahara Group had deposited Rs 15,485 crore into the ‘Sebi-Sahara Refund’ account and SEBI had been able to refund only Rs 138.1 crore to applicants. Thus, a huge amount is still lying in this account,” said Mukesh Chand, Senior Counsel, Economic Laws Practice.
Also Read: Sahara Refund: Are you eligible to claim a refund? Check here
The third issue has arisen out of the activities of the cooperative societies which are alleged to have collected deposits from the public to the tune of over Rs 86,000 crore, various investigations are going on against such societies, and demand from the public for refunds was increasing day by day. These entities are regulated by the Registrar of Co-operative Societies, Chand explained.
Thus, the three group entities fall under different jurisdictions namely — Sahara India Financial Corporation Ltd is regulated by RBI, Sahara Housing Investment Corporation, and Sahara Housing Investment Corporation Ltd is regulated by the Ministry of Corporate Affairs and Securities and Exchange Board of India (SEBI) and it is where an amount of Rs 24,979 crore is lying unutilised in the SEBI account and this is being utilised under the supervision of the Supreme Court. The third group of entities are co-operative societies under the different Co-operative Society Acts and are regulated by the Central Registrar of the Co-operative Society namely the Central Government, Chand added. The current refund of Rs 5,000 crore is meant for investors for these co-operative societies.
Will investors of Sahara India Financial Corporation or Sahara India Real Estate Corporation or Sahara Housing Investment Corporation get a refund through CRCS Sahara Refund Portal?
The portal for refunds is only for providing refunds to genuine depositors of Cooperative Societies of Sahara Group – Sahara Credit Cooperative Society Limited, Saharayan Universal Multipurpose Society Limited, Hamara India Credit Cooperative Society Limited, and Stars Multipurpose Cooperative Society Limited, said Manmeet Kaur, Principal Associate, Karanjawala & Co.
So, investors of Sahara India Financial Corporation, Sahara India Real Estate Corporation or Sahara and Sahara Housing Investment Corporation are not eligible to claim a refund a through CRCS Sahara Refund Portal.
When will investors of Sahara India Financial Corporation get a refund?
Many investors of the para-banking arm of Sahara are yet to hear any good news about their refund process. “A huge amount of money deposited by the Sahara Group is lying unutilised. There are allegations that such money was deposited by the group by diverting the funds of different entities within the group including from para banking activities of SIFCL and deposit from the Co-operative societies,” Chand mentioned.
So, when can they expect their refund? “Sahara India Financial Corporation Ltd or Sahara para-banking was an NBFC whose license was cancelled and subsequently company by virtue of judgement dated 15.02.2019 passed by Allahabad High Court was ordered to be wounded up and the official liquidator was appointed. The investors and depositors of SIFCL, being its creditors, will receive refunds subject to the liquidation of assets as per waterfall mechanism by the official liquidator,” said Kaur.
Also Read: Sahara Refund Portal: Step-by-step guide for Sahara group depositors to claim refund
When will investors of Sahara Indian Real Estate Corporation and Sahara Housing Investment Corporation Ltd get a refund?
A significant chunk of investors belong to the Sahara Indian Real Estate Corporation and they too are waiting for the refund. Is there a ray of hope for these investors?
“While a huge amount is lying unutilised with SEBI, however, due to the involvement of different regulatory bodies under different enactments and as new cases of the groups keep on popping up every day, there is no cohesion in dealing with a refund of different entities of the group. Perhaps the solution would lie in scrapping different committees set up by Courts to deal with refund issues. Since the regulators are public bodies, they have been getting entangled in various issues requiring intervention by the Supreme Court,” Chand mentioned.
What could be the way forward for these investors to get relief on their hard-earned money? “The central government should take the initiative and approach the Supreme Court for joint exercise and also direct the regulatory bodies to draw a time-bound road map to settle claims for refunds. Since the money lying in SEBI Account has primarily been sourced from within the Sahara Group and has been lying unutilised, this could be put under an escrow mechanism and also used for drawing money from different entities of the group and settlement of claims for refund under a structured manner,” suggested Chand.
When will the investors of Sahara Group cooperative society get the rest of the refund?
Through the refund portal, initially, the payment of Rs 10,000 will be made to one crore investors who had deposited Rs 10,000 crore or more. As per the central government, the initial withdrawal of Rs 10,000 is merely a trial run and once the initial Rs 5,000 crore is disbursed effectively, it will seek release of the remaining amount, perhaps in further instalments, said Ekta Rai, Advocate, Delhi High Court.