SC dismisses Sahara appeal for more time to refund investors

Written by fe Bureau | New Delhi | Updated: Feb 26 2013, 07:10am hrs
The Sahara Groups last hope for an extension to refund R24,000 crore to investors by submitting the relevant documents with the Securities and Exchange Board of India (Sebi) failed, with the Supreme Court on Monday rejecting its plea for more time to comply with its December 5 order.

While dismissing the plea, a bench headed by chief justice Altamas Kabir pulled up the Sahara Group for failing to comply with its order: If you have not refunded the amount as per our order, then you have no business to come here to court and ask for extension of time. The bench further said that it had earlier granted time only once to ensure that investors get their money back.

As soon as the matter was taken up for hearing, Supreme Court Bar Association president M Krishnamani objected, stating the bench headed by the CJI should not hear the case as the order for refunding the amount to investors was passed by another bench.

As a Bar leader and officer of the court, I have to say that keeping with the tradition of this court, this bench should not have heard this matter and the matter should go to the same bench for the modification of the order. Instead of going to hear, the proper recourse would be for the other bench to hear it. I am at pains to hear different types of rumours, he said.

A furious justice Kabir asked the lawyer to refrain from making such statements without knowing anything about the case. Why are you pre-empting our right to say something, the chief justice asked Krishnamani, directing him to wait for the proceedings.

After senior counsel Ram Jethmalani insisted on giving him two minutes to make his submissions, justice Kabir further observed that its an unfortunate application and should have been dismissed with costs.

The chief justices bench in December had asked Sahara to pay R5,120 crore upfront and the balance in two instalments R10,000 crore in the first week of January and the rest in the first week of February.

However, Sahara had told the court that it has already paid R5,120 crore, although it was to pay only R2,620 crore, claiming it made an extra payment of R2,500 crore to provide buffer, if there are any miscalculations.

Another bench headed by justice KS Radhakrishnan on February 6 issued contempt notice to the two group companies of Sahara and group founder Subrata Roy and three directors Ashok Roy Choudhary, Ravi Shankar Dubey and Vandana Bhargava for non-compliance with its directions to refund R24,000 crore raised from investors through optionally fully convertible debentures (OFCDs) by November 30 last year.

It had also pulled up Sebi for failing to take action against the companies Sahara India Real Estate Corporation (now known as Sahara Commodity Services Corporation Ltd) and Sahara Housing Investment Corporation as per its August 31, 2012 directions that ordered attachment of properties and freezing of bank accounts of the companies in case of any default.

After the February 6 order, Sebi on February 13 ordered the freezing of the assets and bank accounts of two Sahara group companies, saying they had failed to obey a Supreme Court order to repay investors in a case involving more than Rs 24,000 crore. Around 100 bank accounts of the group were affected by the order.

The market regulator had also ordered freezing all bank accounts and properties in the name of Roy and three other directors of the two firms. The assets ordered to be attached included those related to the groups Aambey Valley resort town near Pune, other real estate assets in Delhi, Mumbai and at other places across the country, shares, mutual funds and various other investments.

Last week, Sebi cautioned investors and the general public against transacting with Sahara companies or persons associated with these companies. Anyone transacting with them (Sahara India Real Estate Corp, Sahara Housing Investment Corp and their three promoters and directors) would be doing so at their own peril, it said.

In a statement issued after the Sebi order, Sahara said the directives were based on old facts and had not taken into account redemptions it had made since January 2012. Besides, the group said that its total liability was unlikely to exceed the Rs 5,120 crore it had deposited with the regulator. It added that the orders for attaching assets of individuals are incorrect.