Sahara Refunds: A Silent Regulator and a Mysterious and Confusing Supreme Court Order
On 29th March, the press information bureau (PIB) issued an unusual press release about a Supreme Court (SC) order in a public interest litigation (PIL) seeking refund of money deposited with four cooperative societies set up by the notorious Sahara Pariwar. The release declared that the SC has “ordered the refund to about 10 crore investors of four cooperative societies of Sahara Group.” It hailed this as a ‘historic decision’ by the SC, and gave credit to the prime minister (PM) and the ministry of cooperation for protecting “the interests of the poor and underprivileged.” The details of what led to the order are both, extraordinary and confusing, not to mention the fact that it does not give any numbers; the math just does not add up.
Let’s start with the positives. This order, and the press release crediting government action, is the first official cognisance of the fact that the Sahara group, which went from one controversy to another over the past two decades, is unable to pay depositors who entrusted their money to four cooperative societies—Sahara Credit Cooperative Society Limited (Sahara Credit), Saharayan Universal Multipurpose Society Limited, Humara India Credit Cooperative Society Limited and Stars Multipurpose Cooperative Society Limited. They picked up over Rs86,000 crore, even as the group was under intense scrutiny of the market regulator, the Supreme Court and the serious frauds investigation office (SFIO), the last of which continues.
Secondly, the very fact that the government is willing to use the money lying with the Securities and Exchange Board of India (SEBI) to repay Sahara depositors, who have been running from pillar-to-post for the past four years, is a positive development. However, the manner in which the decision has come about is likely to complicate the situation rather than resolve it.
Regular readers would remember that Moneylife has extensively covered the plight of Sahara investors (Read: ) over the past three years, while our non-profit entity, Moneylife Foundation, has attempted to push the cause of depositors with the market regulator, SEBI.
Providing new details, the PIB release says the central registrar of cooperative societies (CRCS) has ordered four cooperative societies to stop accepting deposits and to repay depositors. The Sahara group has not honoured the repayment orders, since it has no funds.
The release says that the CRCS has digitised 122K (thousand) claims, but a large number of payment claims continue to come in every day. Union minister of cooperation, Amit Shah, it says, has held several meetings, following which a petition was filed before the SC requesting “that Rs. 5,000 crore from the Sahara-SEBI Refund Account can be used to pay depositors of the four co-operative societies of the Sahara Group.” On 29th March, a bench headed by justice MR Shah ordered this payment to be made under the supervision of a retired judge, justice R Subhash Reddy. The PIB release assures us that a transparent process will be completed in nine months with legitimate investors being paid “through their bank accounts on the basis of proper proof of their identity and deposit.”
Now let’s look at why the order is confusing. Before this ‘landmark’ verdict by the Court, another SC bench was hearing a civil contempt petition (SEBI vs Sahara No. 412 of 2011) filed by SEBI, along with a few intervention applications including those filed by Moneylife Foundation on behalf of a few depositors of Sahara Credit—one of the four Sahara cooperatives named above. The Court had issued notices and the next hearing is posted for 18th, 19th and 20th of April 2023, to ‘complete all pending interim applications as well as the main contempt case’.
Legal circles find it highly unusual for the Sahara case to be heard by another SC bench which also handed down a very quick ‘landmark’ order. It raises questions about whether SEBI was present in Court, if it had anything to say about the payment and the modalities or even point out that there was a case pending in another bench of the SC.
The second case is the outcome of another landmark judgement of August 2012 (Read: Sahara Refunds: Did the SC Want SEBI To Sit on Rs15,448.67 Crore for a Decade?) when the SC had asked two Sahara realty companies to refund over Rs25,781 crore they had illegally raised through quasi-debentures without regulatory clearance. The process of tracing and refunding the money was to be supervised by justice BN Agarwal, a retired Supreme Court judge.
By December 2021, Sahara had deposited Rs15,485 crore into the ‘Sebi-Sahara Refund’ account and SEBI had been able to refund only Rs138.1 crore to applicants who could produce legitimate documents (Read: Sahara Investors Received Just Rs138.1 Crore from SEBI Out of Rs15,485.80 Crore Deposited by the Group).
Around that time, it came to light that the Sahara group, had brazenly set up four cooperative societies and raised had raised Rs86,673 crore from close to 100mn (million) investors and was defaulting on repayments. In August 2022, the government put the number of depositors at 130mn who had over Rs1.12 lakh crore ‘stuck’ in six Sahara group entities (Read: Sahara India Group: Rs1.12 Lakh Crore of 129.6mn Investors Remains 'Stuck', Says Govt). Complaints have been piling up before the CRCS and in various consumer courts and high courts; but the Sahara group has made no payments.  
Meanwhile, central registrar Vivek Aggarwal’s widely reported letter of 18 August 2020 mentions that Sahara Credit had provided an advance of Rs2,253 crore to Subrata Roy which he had transferred to the SEBI fund. Based on this, in December 2020, Moneylife Foundation attempted to help 240 depositors of Sahara Credit by writing to justice BN Agarwal and the then SEBI chairman, Ajay Tyagi, that these depositors had a legitimate claim to the money lying in the SEBI Fund. It was pointed out that making this payment would be in keeping with the spirit and essence of the SC judgement, since it could not have been the Court’s intention that such a large sum would remain parked with the regulator for a decade (Read: Sahara Refunds: Did the SC Want SEBI To Sit on Rs15,448.67 Crore for a Decade?), especially when depositors of the cooperative societies had been holding protests and some had even died by suicide.
SEBI did not acknowledge or respond to the Foundation’s appeal. However, a Right to Information (RTI) query revealed justice Agarwal’s view that the matter could be decided only by the SC. SEBI’s internal notes, also obtained under RTI, claimed that contrary to Vivek Aggrawal’s letter, the amount deposited with SEBI was not Rs2,253 crore but a mere Rs571.96 crore, and was deposited between 5 June 2014 and 13 June 2014. This is important and we will come to it later.
Sources close to SEBI insist that the regulator had asked the government to take charge of the SEBI-Sahara Fund but wasn’t allowed to give it up. There is nothing in the public domain to back this claim. On the contrary, SEBI was busy with pointless legal and punitive actions against a group which clearly had no money.
Contradictions and Conflicts
Now let us come to the contradictions between the original order of 2102, SEBI’s answers and the 29th March decision (in I.A. NO. 56308 OF 2023). The judgement notes that the Union government requested “directions to transfer an amount of Rs 5,000 Crores out of unutilized amount of Rs23,937 Crores” lying in the Sahara-SEBI Refund Account. It quotes solicitor general Tushar Mehta saying that Rs24,979.67 crore is lying unutilised in the same account. It is not clear which of the two figures is correct. Mr Mehta mentioned that Rs2,253 crore was submitted from Sahara Credit on account of a dispute with the group realty company and the money belongs to depositors of the cooperative society.
Moneylife Foundation had mentioned this exact sum of Rs2,253 crore in the memorandum to SEBI and made the very same argument. However, SEBI had denied the existence of this money and claimed that ONLY Rs571.96 crore was deposited with it by Sahara Credit. What then is the true figure? Since the SC order mentions a deposit of Rs2,253 crore, did SEBI discover the remaining money later? Did it point the discrepancy to the Court? Nothing is known.
Two Judges
The bigger confusion arises from the fact that two retired Supreme Court judges will now oversee the distribution. In August 2012, an SC bench appointed “Justice BN Agarwal, a retired Judge of this Court to oversee whether directions issued by this Court are properly and effectively complied with by the SEBI…” It also fixed a monthly remuneration of Rs5 lakh in addition to “travelling, accommodation and other expenses, commensurate with the status of the office held” to be borne by SEBI and recoverable from Sahara.
On 29 March 2023, SC appointed justice R Subhash Reddy, another retired SC judge, who will be paid an honorarium of Rs15 lakh per month, in addition to Gaurav Agarwal, as amicus curiae who is to be paid Rs5 lakh per month.
Did SEBI not step up and ask the SC to clarify the roles and functions of two retired judges overseeing the same Sahara repayments? In the absence of a clear demarcation of roles, will precedence between the judges be decided by seniority or by remuneration paid?
Nothing is clear, since the regulator has chosen to remain silent. With all these contradictions and confusion, how realistic is it to assume that depositors will get their money back in nine months? We are not even going into the fact that the four Sahara cooperatives have raised over Rs86,600 crore, while the amount to be disbursed is just Rs5,000 crore. Also, people who were lured to invest in Sahara Q-shops have also filed complaints which are languishing in various forums.
9 months ago
I had invested in Sahara Credit Cooperative Society Ltd. But I am not getting my MIS since Feb.2022. Is there any way to refund my invested amount + interest from Sahara Credit Cooperative Society Ltd.
10 months ago
I want to know when will i get my payment back from sahara.

11 months ago
Madam, Very aptly explained the entire episode. May be due to general election in 2024 this is a purported red herring attempt to intentionally confuse the gullible investors.
Request to let the investors know the best course of action to be taken.
1 year ago
Hi, Can you please share the process on how and where to send our details for reclaim the deposits.
1 year ago
Are the persons dealing with the issue equipped to deal with it?
1 year ago
Very sad to see the issue is getting more muddier and muddier even though it is being adjudicated by the Apex Court.
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