SAT rejects Sahara plea against Sebi order on mutual fund biz

Sebi had ordered cancellation of 'certificate of registration' of Sahara Mutual Fund in July 2015, while barring the fund house from taking any further subscription from investors, after the regulator found the group was "no longer fit and proper to carry on the business of mutual fund".

Sebi also ordered transfer of the business to another asset management company, to be followed by re-constitution of its board of trustees, failing which Sahara Mutual Fund was asked to redeem units allotted to all investors and thereafter wind up the operations. After hearing Sahara's plea against these directions, the Securities Appellate Tribunal (SAT) on Friday upheld Sebi's order saying it found "no merit in the appeal".

After the order was pronounced by the SAT, the counsel for the appellants made an oral appeal for staying the operation of the order for a period of six weeks to enable the appellants to approach the Supreme Court.

"Accordingly, six weeks stay is granted," the SAT said in its 21-page order. As per the latest data published by the mutual fund industry body AMFI (Association of Mutual Funds in India), Sahara Mutual Fund had average asset under management of about Rs 67 crore as on June-end 2017.

The Sebi order followed findings by the regulator that Sahara India Financial Corporation Ltd (sponsor for mutual fund) was not a 'fit and proper person' because its Promoter- Director was not 'fit and proper' and hence Sahara MF and Sahara Asset Management Company were no longer 'fit and proper' to carry on the business of mutual fund.

"The present appeal before us is regarding the fit and proper status of a Promoter/Director of Sahara Sponsor who holds about 80 per cent of its capital and who controls all Sahara Group Companies and hence on the fit and proper status of Sahara Sponsor to continue as Sponsor of a mutual fund in the context of Sebi/SC orders against (Subrata Roy) Sahara and two Sahara Group Companies," the SAT observed. pti