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SC Dismisses Sahara Plea Seeking More Time

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The last hope of Sahara group to get more time to refund Rs 24,000 crore to its investors was dashed on Monday, 25 February, 2013, in the Supreme Court which dismissed its plea and pulled it up for not complying court's earlier order to return the money by first week of February.


A bench headed by Chief Justice Altamas Kabir, which had earlier extended the deadline to two companies of the group for refunding the money from November end to first week of February, refused to grant more time.


"If you have not refunded the amount as per our order then you have no business to come to court," an angry Chief Justice said adding that it had earlier granted time only to ensure that investors get their money back.


Two companies of Sahara group--Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC)--who along with Sahara Chief Subrata Roy are facing contempt proceeding in the apex court before another bench which had on February 6 allowed SEBI to freeze accounts and seize properties of its two companies for defying court orders by not refunding the money to investors.


As soon as the matter was taken up for hearing the Supreme Court Bar Association President M Krishnamani stood up and objected that 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 I have to say keeping with the tradition of this court and 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.


Justice Kabir then got angry and said that he is making statements without knowing anything about the case and asked him to sit.


"How do you know what is going to happen in the case. If something happens then you say. Kindly take your seat," he said.


A bench headed by K S Radhakrishnan had on August 31 last year directed the two companies to refund around Rs 24,000 crore to their investors within three months with 15 per cent interest per annum for raising the amount from its investors in violation of rules and regulations.


But the case was later on heard by a bench headed by Chief Justice Kabir which had on December 5 granted nine weeks time to the group to refund money to its three crore investors in its two companies, with an immediate upfront payment of Rs.5,120 crore.


At that time also SEBI and an association of investors urged the CJI to refer the case to Justice Radhakrishnan bench but Justice Kabir turned down their plea and passed the order keeping in mind "interest of investors".


SIREC had collected Rs.19,400.87 crore on March 13, 2008 and SHICL had collected Rs 6,380.50 crore. But the total balance on August 31 is Rs 24,029.73 crore after premature redemption.


The group might have to fork out around Rs 38,000 crore as of now which includes the principal amount of Rs 24,029.73 crore and interest of around Rs 14,000 crore.


The Sahara group, on the other hand, justified its stand on not refunding the amount and said that large portion of the amount has already been redeemed to investors before the judgement was delivered.


Sebi Cautions Againt Sahara
Earlier, on 22 February, Sebi had cautioned investors and public against dealings with Sahara.


"Anyone transacting with them (Sahara India Real Estate Corp Ltd, Sahara Housing Investment Corp Ltd and their three promoters and directors) would be doing so at their own peril," the Securities and Exchange Board of India (Sebi) said.


The regulator said that in furtherance to a Supreme Court order directing refund of investors' money collected by these Sahara firms, it has ordered "attachment of all moveable and immoveable properties, bank accounts and demat accounts of these two companies and that of its promoters and directors namely Subrata Roy Sahara, Vandana Bhargava, Ashok Roy Choudhary and Ravi Shankar Dubey".


"Investors and general public are advised to exercise caution and take note of the said orders before transacting with the aforesaid entities/persons in any manner whatsoever," Sebi said in a public notice.


On February 13, Sebi passed two separate orders, together running into 160 pages, directing attachment of properties and freezing of accounts.


It was after the Supreme Court said that the regulator was free to freeze the accounts and attach properties if Sahara firms were not complying with the apex court's earlier orders of August 2012 towards refund of investors' money totalling over Rs 24,000 crore.


The assets ordered to be attached included those related to the group's 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.


Passing the attachment orders, Sebi said that the two companies had raised Rs 6,380 crore and Rs 19,400 crore, respectively from bondholders and "various illegalities" were committed in raising of these funds.


With regard to Subrata Roy and three other directors, namely Vandana Bhargava, Ravi Shanker Dubey and Ashok Roy Choudhary, Sebi ordered freezing of all bank and demat accounts of these four persons, as also attachment of all moveable and immoveable properties in their name with immediate effect.


Subsequently, the Sahara Group claimed that the actions taken by Sebi were based on "old facts" and the orders for attaching assets of individuals is incorrect on part of the market regulator.


It also said that it has already deposited with Sebi an amount of Rs 5,120 crore that was in excess of its total liability towards refund to investors.


Later, the group also ran a major advertisement campaign in newspapers with claims that "Sahara has nothing to pay (and) rather Sahara shall soon be eligible to take a big refund from Sebi" and it was submitting to Sebi the provisional balance sheets of two companies as on December 31, 2012 for more clarity on the matter.


The Supreme Court on August 31, 2012 had asked Sahara group firms to refund the money with 15 per cent interest and had asked Sebi to facilitate the refund.


However, the group in December, 2012 was allowed to pay the money in three instalments, including an immediate payment of Rs 5,120 crore, followed by an installment of Rs 10,000 crore in the first week of January and remainder by the first week of February 2013.


Sebi in its attachment orders, however, said that neither of the two instalments was paid and therefore it is constrained totake necessary action as per the Supreme Court orders.


The properties being attached by Sebi include the land owned by Sahara group firm Aamby Valley Ltd, which has set up a resort village near Pune, development rights of land at prime locations in Delhi, Gurgaon, Mumbai and various other places across the country.


Besides, Sebi has also ordered attachment of equity shares held in Aamby Valley Ltd, units of mutual funds, bank and demat accounts and investments in all the branches of all banks.


Sebi has asked all the banks to transfer the amounts lying in the accounts of these entities and persons to a specially- created Sebi-Sahara Refund Account.


Sebi has also informed RBI and Enforcement Directorate as well regarding its actions against Sahara group firms.


The assets being attached include investments of SIRECL and SHICL in group companies, special purpose vehicles and partnership firms and the necessary orders for sale of all attached properties would be passed in due course after getting their full particulars, Sebi said.


(Agencies)