While analysing the obligations of SEBI, Justice Jagdish Singh Khehar said: The obligation cast on SEBI to protect the interest of investors in securities, promote securities market and to regulate it by such measure as it thinks fit, remains undiluted.
Further, SEBI’s power would extend to all kinds of companies dealing with securities. The said power, as already noticed above, clearly emerges from the words “by such measures as it thinks fit” expressed in Sub-Section (1) of Section 11 of the SEBI Act, he observed.
In answering the question posed above, there seems no ambiguity that SEBI has the jurisdiction to regulate and administer the two Sahara companies.
It was submitted, that the most significant violation/ omission of the provisions of the SEBI Act, was committed by asserting that invitation to the OFCDs was made by way of ‘private placement’.
He questioned as to how the invitation was addressed to about three crore persons and was actually subscribed by about 66 lakh.
It was pointed out, that in case of an invitation to 50 or more persons, the invitation is deemed to have been issued “to the public” (under the mandate of Section 67 of the Companies Act).
The Supreme Court concurred with SEBI’s observation that the whole affair was doubtful, dubious and questionable. The consequence thereof, if correct, would be shocking.
There can, therefore, be no hesitation in accepting that the perspective raised by SEBI, to demonstrate a pre-planned attempt by the two companies to bypass the regulatory and administrative authority does seem to be real, he said.