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NEW DELHI: Asking the Securities and Exchange Board of India to proceed with its probe into the Sahara group's OFCD (optionally fully convertible debentures) scheme, the Supreme Court on Thursday said investors might not have any knowledge about these products and might feel cheated like in the Harshad Mehta scam.
“We are of the view that on the question of OFCD, it requires decision of SEBI. Let SEBI hear and pass an order,” the court said while hearing a case related to OFCDs issued by two Sahara group firms.
Hearing the case, a three-judge Bench headed by Chief Justice S. H. Kapadia also observed that investors were not aware of this investment scheme and later they might feel cheated as was the case with the Harshad Mehta securities scam that took place in the 1990s.
However, the bench said the order of SEBI would not be operational till the court gives further direction on it.
“The order would not apply... We want to see the order of SEBI on OFCD,” the bench added. The court also allowed the Allahabad High Court to proceed with its hearing, where the Sahara group has challenged SEBI's direction to give details of its investors.
The court, during the proceeding, also sought to know from Sahara the law under which it was running the OFCD schemes.
Though Sahara counsel tried to explain about the OFCD, the apex court was not satisfied and said: “Till today, I do not know what is OFCD. How can some investors would know. We want SEBI to decide.”
“We want to know on what basis you were calling for investment in OFCD,” the Bench asked.
The Bench mentioned that the scheme is meant for rural people and they were not aware of it.
“Investors are not aware of OFCD. At the end of the day, they would come and say that they were cheated... You know the Harshad Mehta's case, the same modus operandi was there. Investors were not aware of the scheme,” the Bench said. — PTI
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