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SC issues contempt notice to Sahara for non-compliance

Feb 07 2013, 00:40 IST
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Summary* Sebi pulled up for not taking sufficient action on refund order

The Supreme Court on Wednesday issued contempt notices to Sahara group’s two companies, seeking their explanation on alleged non-compliance of the court orders to refund by November 30 last Rs 24,000 crore it had “illegally” raised from investors through optionally fully convertible debentures.

A Bench of Justices KS Radhakrishnan and JS Khehar gave four weeks to Sahara to explain why contempt action should not be initiated against it while admitting a contempt plea by the Securities and Exchange Board of India (Sebi) against non-compliance by the group on many counts, including their failure to submit documents relating to the refund to investors and genuineness of their identities.

Besides the two companies, Sahara India Real Estate Corporation (now known as Sahara Commodity Services Corporation Ltd) and Sahara Housing Investment Corporation, the contempt petition by the Sebi has also named Sahara’s managing director Subrata Roy and three other directors as parties.

During the proceeding, the apex court also censured Sebi for not taking sufficient actions against the group as per its August 31, 2012 order, which had asked it to attach properties and freeze bank accounts of the companies on account of any lapses in complying with the verdict.

“Are you waiting for the outcome of this contempt proceeding? What action have you taken after our judgement? Practically, you have done nothing. The judgment tells you what can you do against them but you have not done anything. So now tell us who is committing contempt, you or Sahara?” questioned the court. However, Sebi counsel Pratap Venugopal told the Bench that the regulator has issued notice to the companies, started proceedings to freeze their accounts and also approached a civil court in Mumbai for execution proceedings since the Sebi Act did not give them any more powers.

“You have to execute our order. Who else will execute our orders? What will be the consequences of not following our directions are already provided in our judgment... that gives you the powers,” asserted the Bench.

While issuing the notice, the court made it clear that the proceedings pending before it on contempt plea against the companies would not come in the way of Sebi taking action against the group.

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