//
you're reading...
legal issues

Sahara = (i) The prayer for modification of the terms stipulated in our order dated 26th March, 2014 granting interim bail to the contemnors is declined and the I.As to that extent dismissed. (ii) Prayer for shifting the contemnors to a guest house for continued custody and detention till they comply with the directions of this Court for their release on interim bail is also declined and the I.As dismissed to that extent (iii) Orders dated 21st November, 2013 passed by this Court and that dated 13th February, 2013 passed by SEBI restraining sale and transfer of moveable and immoveable properties held by Saharas are modified to the following extent: (a) FDs, bonds and securities held by Sahara Group of companies may be encashed by the holders thereof subject to the condition that the maturity value/sale consideration of such FDs, bonds and securities shall be deposited in the designated bank account of SEBI referred to in the earlier part of this order and details of such maturity values and sale consideration furnished to this Court on affidavit to be filed within four weeks from the date the FDs, bonds and securities are encashed, sold and/or transferred. (b) Immovable properties owned by Sahara Group of companies situated in 9 different cities mentioned in the note filed by Dr. Dhawan and extracted in the body of this order with an estimated value of Rs.2500/- crores are permitted to be sold by the companies/other entities persons in whose names such properties are held subject to the condition that such sales are not for a price lower than the estimated value indicated in the statement filed before this Court or the circle rates fixed for the area in which such properties are situated. The seller shall furnish to this Court the details of the valuation of the properties sold and the terms of sales together with a declaration that the purchasers is not a related party qua Saharas. Needless to say that upon deposit of the sale consideration the title deeds of the property shall be released by SEBI in favour of the purchaser(s). (c) The sale consideration of the properties less transaction cost and statutory dues on the same shall be deposited with the SEBI to the extent the same is necessary to make a total deposit of Rs.5,000/- crores inclusive of the maturity value and sale proceeds of the FDs, bonds and securities etc. permitted to be encashed and sold in terms of direction (iii) (a) above. The balance/excess amount of the sale consideration shall be deposited by Saharas in a separate account to be opened in a nationalised bank which deposit shall remain subject to further orders of this Court. (d) Saharas are also permitted to charge its immovable properties situated in Aamby Valley (Pune), the details whereof are given in Annexure B to IAs No.101-103, for purposes of furnishing a bank guarantee for an amount of Rs.5,000/- crores and/or for deposit of Rs.5,000/- crores if there is any shortfall despite encashment and sales permitted in terms of (iii)(a) and (iii)(b) above. (e) In modification of the orders dated 26th March, 2014, we direct that the Bank guarantees to the tune of Rs.5000/- crores shall be furnished from a nationalised bank or a scheduled bank only. Co-operative Bank Guarantees shall not suffice. (iv) In so far as sale of the three properties situated outside the country are concerned, the question is left open to be determined after the requisite documents/information is made available by Sahara in terms of our order dated 29th May, 2014. (v) Keeping in view the importance of the issues that fall for determination in these proceedings and the ramifications that the directions issued by this Court may have as also the fact that one very important order which is sought to be enforced in these proceedings was passed by a three-Judge Bench, we refer these proceedings to a three-Judge Bench to be constituted by the Hon’ble Chief Justice of India. (vi) We are further of the view that having regard to the nature of these proceedings and the stakes that are involved, we need to appoint an amicus curiae. We accordingly, request Mr. F.S. Nariman, Senior Advocate to assist the Court as an amicus curiae. Shri Nariman shall be free to associate two juniors of his choice to brief him in the matter. (vii) We direct that the Amicus curiae shall be paid his fee @ Rs.1,10,000/- per hearing while the juniors assisting him shall be paid Rs.10,000/- per person for every hearing. The amount so due shall be paid by SEBI by debit to account Saharas. =S.E.B.I. …Appellant Versus Sahara India Real Estate Corporation Ltd. = 2014 (June Part) http://judis.nic.in/supremecourt/filename=41567

 Sahara India Real Estate Corporation Limited

(SIRECL) and Sahara Housing Investment Corporation Limited

(SHICL) (hereinafter referred to as ‘Saharas’ for short) invited

and claim to have collected deposits from general public

1including cobblers, labourers, artisans and peasants in the

form of what were described as ‘Optional Fully Convertible

Debentures’ (OFCD). On a complaint received from

Professional Group of Investors Protection, SEBI found that the

mobilisation of funds under the Red Herring Prospectus (RHP)

dated 13th March, 2008 and 6th October, 2009 issued by the

two companies was not legally permissible.  By an ad interim

ex parte order dated 24th November, 2010 SEBI directed

Saharas not to offer their equity shares/OFCDS or any other

securities to the public or invite subscription in any manner

whatsoever either directly or indirectly pending further orders.

Aggrieved by the said order Saharas approached the High

Court at Bombay but the High Court not only declined to

interfere with the directions issued by SEBI but also passed a

further order on 23rd June, 2011, directing the promoter Mr.

Subrata Roy Sahara and Directors Miss Vandana Bhargava, Mr.

Ravi Shankar Dubey and Mr. Ashok Roy Choudhary of Saharas

to jointly and severely refund the amount collected by Saharas

in terms of the RHPs issued by them alongwith interest @ 15%

p.a. from the date of the receipt of the deposits till the date of

such repayment. Pursuant thereto the SEBI ordered that the

refund of the amount shall be made only in cash through

demand drafts or pay orders. The SEBI issued further

directions including a direction that Sahara Commodity

Services Corporation Limited (earlier known as SIRECL) and

SHICL shall not access the security market for raising funds till

the time the aforesaid payments are not made to the

satisfaction of the SEBI. =

2014 (June Part) http://judis.nic.in/supremecourt/filename=41567

T.S. THAKUR, A.K SIKRI

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

I.A. NOs. 101-103

IN

CONTEMPT PETITIONS (C) NO.412 – 413 OF 2012

IN

CIVIL APPEALS NO. 9813 AND 9833 OF 2011

AND

CONTEMPT PETITION (C) NO.260 OF 2013

IN

CIVIL APPEAL NO.8643 OF 2012

 

S.E.B.I. …Appellant

Versus

Sahara India Real Estate Corporation Ltd.

& Ors. …Respondents

J U D G M E N T

T.S. Thakur, J.

1. Sahara India Real Estate Corporation Limited

(SIRECL) and Sahara Housing Investment Corporation Limited

(SHICL) (hereinafter referred to as ‘Saharas’ for short) invited

and claim to have collected deposits from general public

1including cobblers, labourers, artisans and peasants in the

form of what were described as ‘Optional Fully Convertible

Debentures’ (OFCD). On a complaint received from

Professional Group of Investors Protection, SEBI found that the

mobilisation of funds under the Red Herring Prospectus (RHP)

dated 13th March, 2008 and 6th October, 2009 issued by the

two companies was not legally permissible.  By an ad interim

ex parte order dated 24th November, 2010 SEBI directed

Saharas not to offer their equity shares/OFCDS or any other

securities to the public or invite subscription in any manner

whatsoever either directly or indirectly pending further orders.

Aggrieved by the said order Saharas approached the High

Court at Bombay but the High Court not only declined to

interfere with the directions issued by SEBI but also passed a

further order on 23rd June, 2011, directing the promoter Mr.

Subrata Roy Sahara and Directors Miss Vandana Bhargava, Mr.

Ravi Shankar Dubey and Mr. Ashok Roy Choudhary of Saharas

to jointly and severely refund the amount collected by Saharas

in terms of the RHPs issued by them alongwith interest @ 15%

p.a. from the date of the receipt of the deposits till the date of

such repayment. Pursuant thereto the SEBI ordered that the

refund of the amount shall be made only in cash through

demand drafts or pay orders. The SEBI issued further

directions including a direction that Sahara Commodity

Services Corporation Limited (earlier known as SIRECL) and

SHICL shall not access the security market for raising funds till

the time the aforesaid payments are not made to the

satisfaction of the SEBI. 

 

2. Aggrieved by the order aforementioned, Saharas filed

an appeal before the Securities Appellate Tribunal (SAT) who

concurred with the view taken by the SEBI, and while affirming

the order passed by the SEBI, directed Saharas to refund the

amount collected from the investors within a period of six

weeks.

3. Appeals No.9813 and 9833 of 2011 were then

preferred by Saharas against the above orders in which this

Court by an order dated 28th November, 2011 extended the

period for making the refund upto 9th January, 2012 but finally

disposed of the appeals by an order dated 31st August, 2012.

This Court while doing so modified the order passed by the

SEBI and the SAT and directed Saharas to deposit with the

SEBI the amount collected by them through their RHPs

together with interest @ 15% p.a. within a period of three

months. The amount when deposited was directed to be

invested in a nationalised bank to earn interest. Saharas were

also directed to furnish details with supporting documents to

establish whether they had refunded any amount to the

investors who had subscribed through the RHPs in question.

SEBI was then to examine the correctness of the details so

furnished.Failure to prove the refund of the amount by

Saharas had to give rise to an inference that Saharas had not

refunded the amount to the real and genuine subscribers as

directed by the SEBI.

 

4. It is common ground that directions issued by this

Court by its order dated 31st August, 2012 were not complied

with. Instead Appeal No.221 of 2012 was preferred by Saharas

before the SAT which was dismissed by the Tribunal as

premature. This dismissal was assailed by the Saharas in C.A.

No. 8643 of 2012 that came to be disposed of by a

three-Judge Bench of this Court by an order dated 5th

December, 2012 with the following among other directions:

“(I) The appellants shall immediately hand over the

Demand Drafts, which they have produced in Court, to

SEBI, for a total sum of 5120/-Crores and deposit the

balance in terms of the order of 31st August, 2012,

namely, 17,400/- Crores and the entire amount in-

cluding the amount mentioned above, together with in-

terest at the rate of 15 percent, per annum with SEBI

in two installments.The first installment of

10,000/-Crores, shall be deposited with SEBI within the

first week of January, 2013.The remaining balance along

with interest, as calculated, shall be deposited within

the first week of February, 2013.The

time for filing documents in support of the refunds

made to any person, as claimed by the appellants, is

extended by a period of 15 days.On the receipt of said

documents, SEBI shall implement the directions contained

in the order passed on 31 st August, 2012.In the default of

deposit of either of the two installments , the directions contained

in paragraph 10 of the aforesaid order dt. 31 st August, 2012, shall

immediately come in to effect and SEBI will be entitled to take all

legal remedies, including attachment and sale of properties, freezing of

bank accounts etc., for realisation of balance dues”

 

 

5. Pursuant to the above, Saharas deposited Rs.5120/-

crores with the SEBI but failed to pay the remaining amount.

The balance amount payable is in the vicinity of Rs.12280/-

crores, exclusive of interest payable on the same. SEBI then

filed Contempt Petitions No.412 and 413 of 2012 and,

Contempt Petition No.260 of 2013 against the contemnors for

non-compliance of the directions of this Court. Various orders

have been passed in these contempt petitions from time to

time, and those which are germane for our purpose, shall be

adverted to hereinafter at the appropriate stage. The

applications (IAs) which we are dealing with in this order, are

filed in these contempt petitions and arise out of the earlier

orders passed.

6. It is pertinent to point out at this stage that in the

course of the proceedings in the above contempt petitions

some proposals appear to have been explored by the parties

for compliance with the directions of this Court but all such

proposal were found to be unsatisfactory eventually leading to

the issue of non-bailable warrants against Mr. Subrata Roy

Sahara for his production before this Court. Three other

Directors of Saharas were also ordered to remain present

before this Court.

7. On 4th March, 2014 when the contemnors appeared

before this Court one of them in custody, this Court recorded a

finding that the directions issued by the Court by its order

dated 31st August, 2012 and 5th December, 2012 and those

issued on 25th February, 2013 in CA No.8643 of 2012 and IA

No.67 of 2013 had not been complied with, despite sufficient

opportunities to the contemnors to do so. It was also held that

contemnors had adopted dilatory tactics to delay the

proceedings before the SEBI, the High Court and even before

this Court. It was further found that no acceptable proposal

was presented to comply with the directions of this Court

which left no option for this Court except to commit three out

of the four contemnors to judicial custody. The contemnors

are, ever since the said order, in judicial custody in Delhi’s

Tihar Jail.

8. It is clear from the above narration that as per the

orders passed, a huge amount of nearly Rs.33,000/- crores is

yet to be deposited. It is also apparent that deadlines for

depositing this amount are long over. No doubt various

proposals have been given by Saharas for making payments

but none has fructified. From the tenor of orders passed

earlier, it can easily be gauged that these proposals did not

inspire confidence. In this backdrop when the matter again

came on 26th March, 2014, and the contemnors insisted on

granting bail to them, this Court passed a conditional Order

granting interim bail to the contemnors; the condition being

that they deposit Rs.10,000/- crores. Out of this a sum of

Rs.5,000/- crores had to be deposited in cash before this Court

while the balance amount of Rs.5000/- crores had to be

secured by a bank guarantee of a nationalised bank, furnished

in favour of the SEBI. Upon compliance with those conditions

the contemnors were directed to be released from the custody

and the amount deposited by them to be transferred to the

SEBI.Since we are directly concerned with this order, we may,

as well, extract the same:

“We have gone through the fresh proposal filed on

25.3.2014. Through the same is not in compliance with

our Order dated 31.8.2012 or the Order passed by the

three-Judge Bench of this Court on 5.12.2012 in Civil

Appeal No.8643 of 2012 and on 25.2.2013 in I.A. No.

67 of 2013 in Civil Appeal No.9813 of 2011 with I.A.

No.5 of 2013 in Civil Appeal No.9833 of 2011, we are

inclined to grant interim bail to the contemnors who

are detained by virtue of our order dated 4.3.2014, on

the condition taht they would pay the amount of

Rs.10,000 crores – out of which Rs.5,000 crores to be

deposited before this Court and for the balance a Bank

Guarantee of a nationalised bank be furnished in favour

of S.E.B.I. and be deposited before this Court.

On compliance, the contemnors be released

forthwith and the amount deposited be released to

S.E.B.I.

We make it clear that this order is passed in

order to facilitate the contemnors to further raise the

balance amount so as to comply with the Court’s

Orders mentioned above.”

9. Instead of complying with the above directions Mr.

Subrata Roy Sahara filed Writ Petition (Crl.) No. 57 of 2014

challenging the validity of the order of this Court dated 4th

March, 2014 on the ground that the same was void and

non-est in the eyes of law. A declaration to the effect that

continued incarceration of the petitioner Mr. Subrata Roy

Sahara in custody was illegal and a writ of habeas corpus and

directions for release of the petitioner from custody were also

prayed for. The said writ petition was heard by a Bench

comprising Hon’ble K.S. Radhakrishnan and J.S. Khehar, J.J.

and came to be dismissed vide detailed judgment dated 6th

May, 2014.

10. Having traversed in brief, the otherwise long journey

of this case, we revert back to the IAs which are the subject

matter of the instant order. In the present I.As. No.101-103 of

2014 filed in Contempt Petitions (C) No.412 and 413 of 2012

and Contempt Petitions (C) No. 260 of 2013, the contemnors

have made the following prayers:

“(a) Lift the restrictions imposed by this Hon’ble Court

vide its order dated 21.11.2013 and SEBI’s order

dated 13.2.2013, in respect of operation of the

Bank Accounts/deposits/demat accounts/sale of

securities mentioned at Annexure-A;

(b) Lift the restrictions imposed by this Hon’ble Court

vide its order dated 21.11.2013 and SEBI’s order

dated 13.02.2013 in respect of the movable and

immovable properties mentioned in Annexure B,

9on condition that net proceeds (after costs and

taxes) thereof be utilized exclusively for payment

ordered by this Hon’ble Court.

(c) pass such further or other order as this Hon’ble

Court may deem fit and proper in the facts and

circumstances of the present case.”

11. Justice K.S. Radhakrishnan having demitted office

and, Justice J.S. Khehar having recused himself from the

further hearing of the case, the applications were listed before

us for urgent hearing on 19th May, 2014 when the same were

heard in part and directed to come up for continuation on 29th

May, 2014.

12. Appearing for the contemnors, Dr. Rajiv Dhawan

made a three-fold submission before us. Firstly, he contended

that the order passed by this Court on 26th March, 2014

granting interim bail subject to the conditions stipulated in the

said order deserved to be modified as the conditions stipulated

therein were not only onerous but incapable of being complied

with in the facts and circumstances of the case. Alternatively,

he contended that compliance with the conditions stipulated by

this Court would require sale of several items of immovable

properties held by Sahara Group of companies which sales can

be finalised only if the contemnors were enlarged from custody

with a view to enable them to negotiate the sale transactions.

He submitted that keeping in view the extent and nature of the

properties which shall have to be sold as also the amounts that

have been ordered to be deposited compliance with the

conditions stipulated by this Court is extremely difficult, if not

impossible, unless the contemnors are enlarged from jail and

allowed to take steps necessary for compliance. It was further

contended by Dr. Dhawan that the restraint orders against the

sale of the moveable and immoveable properties held by the

‘Saharas’ made it impossible for them to arrange compliance

unless the embargo placed upon such sale and transfer by this

Court’s Order dated 21st November, 2013 and that passed by

SEBI on 13th February, 2013 are lifted. He argued that even if

the contemnors were not enlarged on bail till such time the

directions issued by this Court on 26th March, 2014 were not

complied with, the restraint orders would prevent the

contemnors from raising necessary funds to comply with the

directions issued by this Court. He urged that the total amount

currently lying in several bank accounts and/or invested with

banks and companies in the form of FDs, Bonds and securities

etc. came to Rs.2500/- crores approximately. The broad

details of the amounts so available have been given by

Saharas in the note submitted by Dr. Dhawan as under:

Details of approx. Rs 2500 Crores along with interest

accrued thereon to be paid by Saharas within 5

working days of lifting the embargo (Pg 39 – 54)

a) Fixed Deposits 1688.74 crores

b) Savings Account 464.44 crores

c) Current Account 18.45 crores

a) Securities & Bonds 142.86 crores

b) Government Bonds 72.33 crores

c) Bank/PSU Bond 34.85 crores

——————-

2421.67 crores

——————-

Total approx. Rs 2500 crores along with interest accrued

thereon

13. Encashment of the FDs, sale and transfer of the

bonds and securities would, argued Dr. Dhawan, help the

contemnors to partly comply with the directions regarding

deposit of Rs.5000/- crores by moping Rs.2500/- crores. A

further sum of Rs.2500/- crores approximately would have to

be raised for deposit which will be possible only by sale of the

immovable properties situated in nine different cities details

whereof were filed by Dr. Dhawan in the form of a statement

with the estimated value of such properties which is as under:

Sr. No. Properties Valuation as per Page Nos. Of

12the Valuation

Report (Rs. In

crores)

Volume I

1. Pune 575 60 – 76 @ 73

2. Ahmedabad 470 81 -98 @ 94

3. Amritsar 153.75 99 – 127 @ 111

4. Chauma 1430 128 -148 @ 140

5. Vasai 1169.72 143 – 160 @ 149

6. Ajmer 160 161 -175 @ 167

7. Bhavnagar 103 176 – 191 @ 188

8. Jodhpur 112 192 -208 @ 204

9. Bhopal 125 209 – 224 222

TOTAL 4298.47

14. It was submitted that sale of the above items of

property may also not fully satisfy the conditions stipulated by

this Court for grant of interim bail thereby leave no option for

Saharas except to sell three other items of hotel properties

situated outside the country. One of these hotels by the name

Grosvenor House is situated in London while the remaining two

hotels are in New York (U.S.A.). It was urged that the said

three items of property also need to be sold to raise the

margin money which the banks concerned insist upon to

enable them to issue a bank guarantee. It was submitted that

while the contemnors propose to mortgage Aamby Valley

properties, details whereof are given in the Annexure B to

I.As. No.101-103, the contemnors would require funds to

service any financial arrangement made with the bank/banks.

It was also contended that according to the estimate of the

contemnors, the properties situated in London and New York

would fetch an amount of Rs.5,000/- crores to the contemnors

which may be utilised in full or in part towards the margin

money necessary for obtaining the bank guarantee(s). The

estimated value of these three properties is indicated by the

contemnors as under :

Shares of

entities

owning the

following

offshore

properties

Value as per

the Valuation

report

Expected Sales

Value

Immediate

Advances

expected

Page No.

Grosvenor

House,

London

GBP 516,000,000

Rs

50,929,200,000

GBP 645,000,000

Rs 63,661,500,000

USD 50,000,000

Rs 2,900,000,000

667-Vol III

Plaza Hotel,

New York

USD

592,000,000

Rs

34,336,000,000

USD 635,000,000

Rs 36,830,000,000

USD 50,000,000

Rs 2,900,000,000

415-Vol III

Dreams

Downtown

Hotel, New

York

USD

252,000,000

Rs

14,616,000,000

USD 252,000,000

Rs 14,616,000,000

USD 50,000,000

Rs 2,900,000,000

231-Vol III

Total Rs

115,107,500,000

USD

150,000,000

Rs

8,700,000,000

Net

Realistic

Equity

Value to

Sahara in

India

Rs 50,366,156,000

15. On behalf of the respondent-SEBI it was argued by

Mr. Venugopal that he has no objection to the encashment of

the FD receipts and other securities and bonds etc. provided

the maturity value and sale consideration of such FDRs,

securities and bonds is directed to be deposited in the

designated bank account of SEBI viz. SEBI Sahara Refund

Account bearing No.012210110003740 with the Bank of India,

Bandra Kurla Complex Branch, Mumbai. As regards sale or

mortgage of properties situated in nine different cities

mentioned above, Mr. Venugopal submitted that appropriate

safeguards need be provided for such sale and transfer. Mr.

Venugopal suggested the following safeguards in this regard:

(i) Details of valuation, buyer(s) and terms of sales

together with letter (s) of intent be submitted in

advance to this Hon’ble Court;

(ii) Buyer(s) ought not to be related party/parties

qua the Sahara Group entities/Director etc. and

an affidavit of undertaking to that effect be filed

in this Hon’ble Court.

(iii) The sale proceeds be deposited by the buyer

directly to the designated Bank Account of SEBI

viz. “SEBI-Sahara Refund Account” bearing

No.012210110003740 with Bank of India,

Bandra-Kurla Complex Branch, Mumbai; and

(iv) Actual release of title deeds by SEBI to the buyer

be made only upon receipt of sale proceeds in

the aforementioned Bank Account.

16. A direction to the effect that the sale of the properties

shall not be for a price lesser than the circle rates prescribed

for the area where the properties are situated was also

suggested as an additional safeguard, by the learned counsel.

It was also submitted by Mr. Venugopal that so long as the

valuation of the assets situated outside the country is fair and

reasonable, the SEBI had no objection to the sale thereof to

enable the contemnors to raise funds necessary for compliance

with the directions of this Court.

17. We have given our careful consideration to the

submissions made at the bar. It is apparent, from the

submissions made at the bar, that these IAs have two limbs:

In the first instance, the contemnors want relaxation in the

restraint orders over the Bank deposits and immovable

properties to comply with the directions of this Court regarding

deposit of the amounts. That part of the prayer does not pose

any difficulty, as the same is in aid of compliance with the

directions of this Court. Second set of prayers is for grant of

bail or relaxation of jail conditions in the interregnum. Here,

we have our reservations. We are not inclined to modify order

dated 26th March, 2014 granting interim bail to the contemnors

upon conditions stipulated in the said order. We say so because

the background in which the contemnors came to be

committed to the jail and the finding recorded by the Court

that they have at all earlier stages tried to adopt dilatory

tactics and avoided to comply with the orders passed by the

Court does not in our view call for any modification of the

terms on which the contemnors can be released. Dr. Dhawan

pleaded, in the alternative, that the least which could be done

was to shift the contemnors from Tihar Jail to a guest house

for incarceration to enable them to take decisions that are

necessary for compliance with the directions issued by this

Court. This request was opposed by Mr. Venugopal, according

to whom similar requests made repeatedly over several

hearings in the past have been declined by this Court,

although no specific order refusing the same was recorded. In

support of that submission, our attention was drawn to the

averments made by the applicant in I.As No.2 to 4 filed by

them on 20th May, 2014 which averments clearly show that

similar prayers were indeed made in the past also.

18. Apart from the fact that the prayer now made is a

repetition of similar prayers made in the past which have not

cut any ice with the bench hearing the matter, we see no

reason to make a departure from the usual course in the

present case. The Bench has passed a conditional bail order

after due and proper consideration having regard to the

attendant circumstances including conduct of the contemnors.

The order can be modified only under very compelling

circumstances. The only reason given by the applicants is that

interim release or transfer of the contemnors to a guest house

would enable them to dispose of the properties speedily and

enable them to arrange for the requisite Bank Guarantees. We

don’t think so. It is noteworthy that the total amount to be

deposited is between Rs. 33000/- to Rs. 35000/- crores. To

show their bonafides, the contemnors have been directed to

deposit less than 1/3rd of that amount as a condition for bail.

After all, even when this part of the order is complied with and

the contemnors are set free, they will have to arrange the

deposit of the balance amount, which again is very substantial.

That apart, it is not the case of the contemnors that they or

anyone of them suffers from any medical condition that calls

for hospitalisation or an atmosphere conducive for recovery

from any disease. This Court has already issued directions

permitting visitation to those who need to visit the contemnors

in jail. That arrangement has not been found to be inadequate

as at present so to call for any change.

19. The prayer for modification of the order, accordingly,

fails.

20. We, however, find considerable merit in the

submission made by Dr. Dhawan that the restraint order

issued by the SEBI and by this Court forbidding transfer and

alienation of moveable and immoveable assets by the Sahara

Group of companies has the effect of preventing the

contemnors from complying with the directions of this Court

which require them to deposit Rs.5,000/- crores in cash

besides a bank guarantee for a similar amount of Rs.5,000/-

crores. While it is true that the contemnors stand committed

to prison for their non-compliance with the directions of this

Court, nothing should prevent them from taking steps to

comply with the said directions or the conditions subject to

which they have been granted interim bail. Restraint against

transfer of the assets by the contemnors and the companies

promoted by them precisely has the effect of doing so. The

question, however, is as to what extent should the orders of

restraint be modified. That aspect assumes importance

because of the fact that Saharas need to eventually deposit a

substantial amount which according to the current estimate

may be in the neighbourhood of Rs. 30,000 to Rs. 35,000

crores inclusive of interest accrued on the principal amount

Sale of valuable properties at a price lesser than the market

value of such assets is bound to prejudicially affect the interest

of the depositors and defeat the orders passed by this Court in

its letter and spirit. That is particularly so because according to

Mr. Venugopal, SEBI is unable to value the properties or

process the sale and transfer thereof. It was in that

background that we had indicated to Dr. Dhawan learned

counsel for the appellants that the restraint orders cannot be

lifted in toto and that Saharas should come forward with a

proposal for sale of such properties as were sufficient to

comply with the interim bail direction of this Court regarding

deposit of Rs.5,000/- crores in cash and a bank guarantee of

Rs.5.000/- in addition. Dr. Dhawan has pursuant to that

observation confined his prayer for permission to sell/transfer

only nine items of properties situated in nine different cities in

the country and disclosed the estimated value of such property

in the statement which we have extracted above. Dr. Dhawan

on instructions made a statement that although the note filed

by him mentions the names of nine different cities without

giving details of the properties situated in those cities but the

fact remains that the properties referred to in the note are

only nine in number and no more.

21. Keeping in view the total number of properties held

by Sahara Group of companies, transfer of sale and/or

mortgage of the nine items of properties situated in nine cities

mentioned in the note and extracted above should, in our

opinion, suffice to enable the contemnors to comply with the

26th March, 2014 directions of this Court. In order, however, to

ensure that the sale value is fair and reasonable, we need to

make it clear that no item of property shall be sold at a price

lesser than the circle value of the properties fixed for the area

where such property is located.

22. As regards properties situated in London and New

York we have by an interlocutory Order passed on 29th May,

2014 directed the contemnors to furnish certain additional

information necessary for permitting the sale of the said

assets. The information demanded includes

permission/approval from the Bank of China with whom the

said properties are mortgaged and shares held by Saharas for

repayment of the loans borrowed from the said bank

hypothecated/pledged. We have also directed Saharas to get

the amount outstanding towards the loan transactions qua the

said properties confirmed from the Bank of China so as to give

us a clear picture of the extent of liability that remains to be

discharged against the said assets. The fact that the valuation

reports regarding the three assets were prepared at the

instance of the Bank of China shall also have to be verified and

confirmed by the Bank of China, especially because no sale of

the assets in question can be permitted at a price lesser than

the price at which the said assets have been valued by the

valuers who are said to be valuers of repute. Directions

regarding sale of the assets outside the country can, therefore,

await the furnishing of information and verification of the facts.

23. In the result we dispose of these I.As with the

following directions:

(i) The prayer for modification of the terms

stipulated in our order dated 26th March, 2014

granting interim bail to the contemnors is

declined and the I.As to that extent dismissed.

(ii) Prayer for shifting the contemnors to a guest

house for continued custody and detention till

they comply with the directions of this Court for

their release on interim bail is also declined and

the I.As dismissed to that extent

(iii) Orders dated 21st November, 2013 passed by

this Court and that dated 13th February, 2013

passed by SEBI restraining sale and transfer of

moveable and immoveable properties held by

Saharas are modified to the following extent:

(a) FDs, bonds and securities held by Sahara Group

of companies may be encashed by the holders

thereof subject to the condition that the maturity

value/sale consideration of such FDs, bonds and

securities shall be deposited in the designated

bank account of SEBI referred to in the earlier

part of this order and details of such maturity

values and sale consideration furnished to this

Court on affidavit to be filed within four weeks

from the date the FDs, bonds and securities are

encashed, sold and/or transferred. 

(b) Immovable properties owned by Sahara Group of

companies situated in 9 different cities

mentioned in the note filed by Dr. Dhawan and

extracted in the body of this order with an

estimated value of Rs.2500/- crores are

permitted to be sold by the companies/other

entities persons in whose names such properties

are held subject to the condition that such sales

are not for a price lower than the estimated value

indicated in the statement filed before this Court

or the circle rates fixed for the area in which such

properties are situated. The seller shall furnish

to this Court the details of the valuation of the

properties sold and the terms of sales together

with a declaration that the purchasers is not a

related party qua Saharas. Needless to say that

upon deposit of the sale consideration the title

deeds of the property shall be released by SEBI

in favour of the purchaser(s).

(c) The sale consideration of the properties less

transaction cost and statutory dues on the same

shall be deposited with the SEBI to the extent the

same is necessary to make a total deposit of

Rs.5,000/- crores inclusive of the maturity value

and sale proceeds of the FDs, bonds and

securities etc. permitted to be encashed and sold

in terms of direction (iii) (a) above. The

balance/excess amount of the sale consideration

shall be deposited by Saharas in a separate

account to be opened in a nationalised bank

which deposit shall remain subject to further

orders of this Court. 

(d) Saharas are also permitted to charge its

immovable properties situated in Aamby Valley

(Pune), the details whereof are given in Annexure

B to IAs No.101-103, for purposes of furnishing a

bank guarantee for an amount of Rs.5,000/-

crores and/or for deposit of Rs.5,000/- crores if

there is any shortfall despite encashment and

sales permitted in terms of (iii)(a) and (iii)(b)

above.

(e) In modification of the orders dated 26th March,

2014, we direct that the Bank guarantees to the

tune of Rs.5000/- crores shall be furnished from

a nationalised bank or a scheduled bank only.

Co-operative Bank Guarantees shall not suffice. 

(iv) In so far as sale of the three properties situated

outside the country are concerned, the

question is left open to be determined after the

requisite documents/information is made

available by Sahara in terms of our order dated

29th May, 2014. 

(v) Keeping in view the importance of the issues

that fall for determination in these proceedings

and the ramifications that the directions issued

by this Court may have as also the fact that

one very important order which is sought to be

enforced in these proceedings was passed by a

three-Judge Bench, we refer these proceedings

to a three-Judge Bench to be constituted by the

Hon’ble Chief Justice of India.

 

(vi) We are further of the view that having regard

to the nature of these proceedings and the

stakes that are involved, we need to appoint an

amicus curiae. We accordingly, request Mr. F.S.

Nariman, Senior Advocate to assist the Court

as an amicus curiae. Shri Nariman shall be free

to associate two juniors of his choice to brief

him in the matter.

(vii) We direct that the Amicus curiae shall be paid

his fee @ Rs.1,10,000/- per hearing while the

juniors assisting him shall be paid Rs.10,000/-

per person for every hearing. The amount so

due shall be paid by SEBI by debit to account

Saharas. 

 

………………….……….…..…J.

 (T.S. THAKUR)

………………….……….…..…J.

 (A.K. SIKRI)

New Delhi

June 4, 2014

ITEM NO.1A COURT NO.3 SECTION XVII

 S U P R E M E C O U R T O F I N D I A

 RECORD OF PROCEEDINGS

I.A. No(s). 101-103 in Contempt Petition(s)(Civil) No(s). 412 &

413 of 2012 in Civil Appeal No(s). 9813 & 9833 of 2011 and

Contempt Petition(s) Civil Nos(s). 260 of 2013 in Civil Appeal

No(s). 8643 of 2012.

S.E.B.I. .. Appellant(s)

 VERSUS

SAHARA INDIA REAL ESTATE CORPORATION LTD. & ORS.. Respondents(s)

Date : 04/06/2014 These applications were called on for

pronouncement of judgment today.

For Appellant(s) Mr. Gaurav Nair, Adv.for

 M/s. K.J. John & Co.

For Respondent(s) Mr. S. Ganesh, Sr.Adv.

 Mr. Gaurav Kejriwal, Adv.

 Mr. Keshav Mohan, Adv.

 Mr. Sandeep Bajaj, Adv.

 Mrs.Shally Bhasin Maheshwari,Adv.

 Mr. Gautam Awasthi, Adv.

 Mr. Vishwa Pal Singh, Adv.

 Hon’ble Mr. Justice T.S. Thakur pronounced the judgment of

the Bench comprising His Lordship and Hon’ble Mr. Justice A.K.

Sikri.

 Keeping in view the importance of the issues that fall for

determination in these proceedings and the ramifications that

the directions issued by this Court may have as also the fact

that one very important order which is sought to be enforced in

these proceedings was passed by a three-Judge Bench, we refer

these proceedings to a three-Judge Bench to be constituted by

the Hon’ble Chief Justice of India.

 I.A.Nos.101-103 are disposed of in terms of the judgment.

(USHA BHARDWAJ) (RENUKA SADANA)

 AR-cum-PS COURT MASTER

(SIGNED REPORTABLE JUDGMENT IS PLACED ON THE FILE)

28

Advertisements

About advocatemmmohan

ADVOCATE

Discussion

Comments are closed.

Blog Stats

  • 1,730,407 hits

ADVOCATE MMMOHAN

archieves

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 1,853 other followers

Follow advocatemmmohan on WordPress.com