Market regulator Sebi on Thursday urged the Supreme Court against allowing Sahara group to raise additional advance from Reuben Brothers without disclosing the current valuation of its three overseas properties — Grosvenor House Hotel in London, the New York Plaza and Dream New York hotels, its outstanding loan amounts and also the transaction between Reuben Brothers and the Bank of China.
In its reply, Sebi asked the apex court not to permit the Saharas to enter into the transaction of additional advance without disclosing the details and satisfying it with respect to the bonafide of the same. “Such transaction does not deserve sanction by this court without the contemners undertaking to fulfil the conditions,” it said.
It also wants the group to disclose the constitution and other details of Kassiopeia Holdings, which is allegedly the subsidiary of Reuben Brothers and is providing the additional advance, the reasons for the appointment of joint administrators Philip Bowers and Ian Wormleighton of Deloitte LLP, the total amount that would be received under the proposed additional advance and the total amount that would be deposited in the Sebi-Sahara Refund Account.”
The Sebi’s reply came pursuant to the apex court asking the market watchdog to “thoroughly investigate with a pinch of salt” the group’s proposal to raise loans against its three hotels in London and New York whose value was estimated at over R5,000 crore by Sahara.
With regard to identification of subscribers and verification of documents raised by Sahara, Sebi said the issue stands concluded as it seeks to “review of the various judgments and orders of this court and in addition also in effect are trying to create an intra-court appeal which is neither maintainable nor permissible and merits rejection with costs”.
Besides, “the question of verification could arise only upon Sahara furnishing details of the sources of funds from which the alleged refunds were effected and till date contradictory explanations have been furnished, which have been noted by the Supreme Court and rejected,” the affidavit stated.
Pulling up the Sahara Group for its claim of having refunded the entire money, the SC had last month said it was “difficult todigest” that the group had paid the entire money in cash to millions of “duped” investors within a span of just two months.
It has asked the group to reveal the source from which it drew R24,000 crore to “distribute” amongst its investors.
According to Sebi, the claim by Sahara that the monies have been paid by Sahara Q Shop from its business cannot be true since, as per its own press release Sahara Q Shop began its business only on August 15, 2012.
Stating that the applicants have put forth various inconsistent/contradictory stands with respect to refunds effected to OFCD holders, Sebi submitted that these inconsistencies and contradictions have been rejected by various SC judgments.
As per the details provided by Sahara, they have allegedly refunded principal amount of R21,722.53 crore to R2.20 crore bond holders by cash, the affidavit said.
“…an attempt to verify the refund stated to have been made by Saharas in cash, by cross-verification of cash book revealed that no such refund could be traced in the cash book, as it does not reflect any entry to that effect. On test check of a few refunds stated to have been made by Saharas by way of cheques, it was observed that no such refunds could be traced in the bank book, as the bank book does not reflect any entry to that effect,” the reply filed through counsel Pratap Venugopal stated.
Earlier on August 3, the apex court had extended Sahara boss Subrata Roy’s parole till September 16 on a condition that he will deposit R300 crore with Sebi. The apex court had ordered the release of Roy on parole on May 6 for performing the last rites of his mother and since then he has been getting extension by promising to return specified amounts.
Roy and the two directors are in judicial custody since March 4, 2014, for not complying with the apex court’s August 31, 2012 and December 5, 2012, orders relating to refund over R24,029 crore from raised from three crore bond investors by two group firms — Sahara India Real Estate Corp and Sahara Housing Invest Corp. The apex court in 2014 had set the bail amount at an unprecedented R10,000 crore — half in cash and half as a bank guarantee.