New Delhi

The Securities and Exchange Board of India (SEBI) has approached the Supreme Court challenging a part of the Securities Appellate Tribunal's (SAT) order that granted relief to four managers and the company secretary of Sahara India Commercial Corporation Ltd (SICCL) in the long-running OFCD case.

A vacation bench comprising Chief Justice of India Surya Kant and Justice V Mohana is scheduled to hear SEBI's plea on June 18.

The appeal pertains to SAT's March 9 order, which upheld SEBI's action against SICCL and dismissed appeals filed by the company and its directors over the alleged illegal issuance of optionally fully convertible debentures (OFCDs).

A three-member SAT bench had held that the OFCDs issued by SICCL between 1998 and 2008 amounted to a public issue, thereby falling within SEBI's regulatory jurisdiction.

According to the tribunal, SICCL had mobilised approximately Rs 14,106 crore from nearly 1.98 crore investors through these debentures during the period. It rejected the company's argument that the fundraising exercise constituted a private placement, observing that the sheer scale of mobilisation and the number of investors brought it squarely under public issue norms.

While dismissing the appeals of SICCL and its directors, SAT had granted relief to four managers and the company's secretary. The tribunal held that, as employees, they could not be held personally liable for the company's actions.

It further observed that although the company secretary had signed the prospectus, it had been done under powers of attorney issued by the directors, who remained responsible as principals for the acts carried out by their authorised agent.

SEBI has now challenged this specific finding before the apex court, seeking to restore accountability against the officials who were granted relief.

The matter originates from an October 2018 SEBI order directing SICCL to refund the money collected through the OFCDs, furnish details of its assets and inventory, and restraining certain officials from accessing the securities market.

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The Supreme Court's decision on SEBI's appeal could have wider implications for determining the extent of liability of company officials and employees in large-scale securities law violations.