Subrata Roy led Sahara refunds Rs 24,000 cr to ‘duped’ investors in 2 months; SC asks ‘what’s source of money’?

By: | Published: September 3, 2016 6:03 AM

Pulling up the Sahara Group for its claim of having refund the entire R24,000 crore to the investors, the Supreme Court on Friday said it was “difficult to digest” that the group had paid the entire money in cash to millions of “duped” investors within a span of just two months.

Subrata Roy parole extendedEarlier on August 3, the apex court had extended Sahara Group chief Subrata Roy’s parole till September 16 on a condition that he will deposit R300 crore with Sebi. (Reuters)

Pulling up the Sahara Group for its claim of having refund the entire R24,000 crore to the investors, the Supreme Court on Friday said it was “difficult to digest” that the group had paid the entire money in cash to millions of “duped” investors within a span of just two months.

“Though we don’t doubt your client’s ability to distribute crores in two months to millions of investors, we find it difficult to digest,” chief justice TS Thakur said, adding that “What is the source of this money? Did you get the money from other companies? Withdrew it from bank accounts? Or sold property to get it? It should be any of the three alternatives… Money did not fall from the heavens. Show us the proof to substantiate your claims”.

The bench asked senior advocate Kapil Sibal, appearing for Sahara, to reveal the source from which it drew R24,000 crore to “distribute” amongst its investors.

The judges even offered to close the Pandora’s box if the company submitted proof of source for the refunded money.

The bench also asked Sebi 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.

While Sibal told the court that Sahara has returned about R18,000 crore of investors’ money withdrawn from various schemes, senior counsel Arvind P Dattar, on behalf of Sebi, said the regulator will accept its claims once the group show the source of its money.

However, Sibal said that Sebi should first verify the genuineness of Sahara investors. “If it’s black money, who is Sebi to investigate? It is matter of income tax,” Sibal said.

The next hearing for the Sahara case has been scheduled for September 16. Sibal said his client would provide the proof by then. Earlier on August 3, the apex court had extended Sahara Group chief 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.

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