Sahara Group received a tough blow on Friday when the supreme court of India ordered it to refund as much as Rs 25,000 crore to investors that it had raised by "dubious" means.

Unlisted conglomerate Sahara had "illegally" collecting Rs 17,400 crore from around twenty-two million investors via a questionable issue of optionally fully convertible debentures.

The apex court of the country ordered the group to pay back all the collected funds plus annual interest of 15 per cent. As the funds were collected between March 13, 2008 and October 16, 2009, the group will have to pay around Rs 7,800 crore in interest to investors.

K. S. Radhakrishnan, one of the two judges who ruled on the case, said the verdict showed that there is need to treat financial offences with an iron hand.

Lawyer P. Venugopal, a representative of India's market regulator SEBI, described the verdict as "landmark judgement." Commenting on the versdict, he said, "It is a landmark judgment given by the Supreme Court today which gives a lot of protection to investors."

Former Supreme Court judge BN Agrawal has been appointed to supervise the whole refund operations. He will receive a monthly salary of Rs 5 lakh plus various allowances from SEBI, which will recover the money from Sahara.