SAHARA INDIA REAL ESTATE CORPORATION LTD. Vs. UNION OF INDIA (UOI) THROUGH THE SECY. MINISTRY OF CORPORATE

JUDGEMENT

(1.) The Petitioner, a Company, incorporated under the Companies Act, 1956 (in short the Act), possessing requisite Certificate for Incorporation issued by the Registrar of Companies for Uttar Pradesh and Uttaranchal, Kanpur, has approached under writ jurisdiction being aggrieved with the impugned order passed under the Securities and Exchange Board of India Act, 1992 (in short 1992 Act), read with Securities and Exchange Board of India (Issue of Capital and Disclosure requirements) Regulations, 2009 (in short Regulations), mainly on the ground that Securities and Exchange Board of India (in short SEBI), does not have got jurisdiction to pass the impugned order in view of the fact that the Petitioner Company is not a listed Company in the Stock exchange of India nor intending to be listed in any stock exchange hence is exempted from the provisions contained in 1992 Act and by virtue of Sec. 55A(c) of the Companies Act, 1956 the Petitioner Company was to be regulated and administered by the Ministry of Corporate Affairs, Government of India. Further ground is that the impugned order has been passed in utter disregard of principles of natural justice and also for extraneous reasons being predetermined order.

(2.) According to Petitioners counsel the Petitioner Company was initially, registered under the Companies Act with the name and title of "Sahara India 'C' Junxion Limited" and later on, its name was changed to "Sahara India Real Estate Corporation Limited' (in short SIRECL). The Board of Petitioner No. 1 in its meeting dated 29.2.2008, took a decision to raise its funds from unsecured Optional Fully Convertible Debentures (OFCDs) by way of private placement. The Extraordinary General Meeting of the Petitioner Company held on 3.3.2008, accorded approval under Sec. 81(1A) of the Companies Act, 1956 for issuance of Optional Fully Convertible Unsecured Debentures by way of private placement to near and dears of the Petitioner Company. The Red Herring Prospectus under Sec. 60B of the Companies Act, was filed with the Registrar of Companies, U.P. at Kanpur on 13.3.2008. While filing Red Herring Prospectus with the Registrar of the Company at U.P., Kanpur, it was stated by the Petitioner Company that in OFCDs, only those persons shall be eligible to apply to whom the Information Memorandum was circulated and/or approached privately, who are associated/affiliated or connected in any manner with Sahara Group of companies, without giving any advertisement in general public. According to Petitioners' counsel, in the application form also said condition was provided.

(3.) The dispute arises with the Petitioner Company from the stage when Sahara Prime City Limited, a listed Company filed its draft Red Herring Prospectus with SEBI for its IPO on 29.9.2009. It appears that after receipt of Red Herring Prospectus from Sahara Prime City Limited, SEBI wrote a letter dated 12.5.2010 (Annexure -12 to the writ petition), to the Petitioner Company SIRECL, regarding draft Red Herring Prospectus filed by Sahara Prime City Limited, with averments that SEBI received complaints alleging that SIRECL had filed prospectus with the Registrar of Companies and had allegedly issued Optional Fully Convertible Debentures, violating statutory requirements. The SEBI sought certain details regarding the OFCDs issued by SIRECL. Before the said letter, the SEBI sent letter dated 4.2.2010 (Annexure -10 to the writ petition), to M/s. Enam Securities Pvt. Ltd., calling for certain information regarding Bonds issuance by the Petitioner Company to SIRECL and Sahara Housing Investment Corporation Limited (SHICL).