India’s Supreme Court has ordered the Sahara business group to refund more than $3bn to investors for failing to comply with financial regulations.
Sahara, which sponsors Indian cricket, will also have to pay 15% interest.
The court upheld a ruling by financial regulators that found that fundraising rules had not been complied with.
Sahara began raising the money four years ago from 22 million small investors, many of them in rural India.
The group is involved in a range of activities, including finance, housing, manufacturing and the media.
The court order said Sahara had “no right to collect” the funds “without complying with any regulatory provisions” and ordered the group to deposit the refunded money in a nationalised bank.
They collected money “without any sense of responsibility to maintain records”, one of the two judges sitting in the case, KS Radhakrishnan, said.
“One is compelled to record that the whole affair seems to be doubtful, dubious and questionable.”
There was no immediate comment from Sahara, which is run by flamboyant businessman, Subrata Roy Sahara.
He styles himself as a “worker’s friend” and has a rags-to-riches story.
He is a household name in India. Sahara also sponsors the Indian hockey team and owns a stake in Formula One racing team, Force India.
The group also has interests overseas, recently agreeing to buy a controlling stake in New York’s landmark Plaza Hotel for $570m.
The BBC’s Shilpa Kannan in Delhi says the Supreme Court ruling is being seen as landmark judgement protecting the rights of small investors in India.
Source : BBC