Supreme Court takes stern view of leakage of sensitive information by Sebi in Sahara case

The Supreme Court has taken a stern view of the leakage of sensitive information by market regulator Securities and Exchange Board of India (Sebi) to a television channel and has warned of strict action against the media for reporting matters that are sub judice.

"We are distressed to note that even 'without prejudice' proposals sent by counsel for the appellants (the Sahara group) to the counsel for Sebi has come on one of the TV channels," said a bench headed by chief justice S H Kapadia. "Such incidents are increasing by the day. Such reporting not only affect the business sentiments but also interfere in the administration of justice."

The bench asked counsel on both sides to make written applications to the court so that appropriate orders could be passed. The business channel and the National Broadcasters Association were also to be named as respondents. Fali Nariman, counsel for the Sahara group, had complained to the court about the leakage of the proposal sent by the business house after he sent it to his counterpart at Sebi.

The apex court had asked Sahara to provide Sebi details of its unencumbered property to guarantee the interest of about 23 million investors who had placed more than Rs17,000 crore in two group companies.

The matter had come up before the Supreme Court after the Sahara group challenged the Securities Appellate Tribunal (SAT) order, directing the two group companies to refund Rs17,400 crore to investors. The apex court stayed the SAT order on January 9, but asked the group to secure the amount, either by providing a bank guarantee, or a list of assets.

Sahara India Real Estate Corporation (now known as Sahara Commodity Services Corporation Ltd) and Sahara Housing Investment Corporation had raised the money through optionally fully convertible debentures. However, Sebi accused the two companies of violating guidelines and rules and of raising funds from the public without conforming to prudent disclosure and other investor protection norms.

The Sahara group had argued that the jurisdiction to regulate an unlisted public company was with the central government and not with Sebi.

But SAT ruled that Sebi had wider powers under the Sebi Act to issue directions even to unlisted firms, as part of its mandate to protect investors in the securities market.