Vet our refund claims, says Sahara

Says informed of Sahara's premature redemptions several times; calls Sebi actions "tyranny of bureacrats"

Sahara group counsel Ram Jethmalani on Monday demanded a quasi-judicial enquiry into the group’s claims of reimbursing investors through premature redemptions of optionally fully convertible debentures (OFCDs).

Sahara’s claims have been rubbished by the Securities and Exchange Board of India (Sebi) and has met with scepticism in the Supreme Court, too.  “Neither is it the intention of Sebi nor your lordship that the investor should be paid twice. All that I am appealing is... make them sit with us, go through the documents and return a finding,” Jethmalani said, in his arguments against the contempt of court proceedings initiated by Sebi in the matter. “I have not committed fraud. I said I have paid. Kindly determine whether I am right,” he added.

Sebi had told the SC that Sahara India Real Estate Corp (SIRECL) and Sahara Housing Invest Corp (SHICL) had failed to comply with the apex court order directing refund of Rs 24,029 crore collected by issuing OFCDs. Sahara claims that even as the SC proceedings were on last year, it had directly returned a little over Rs 20,000 crore in premature redemptions and only Rs 2,620 crore was left. Sebi says Sahara had violated the SC order on refund. The next hearing is on September 2.

Jethmalani said if the inquiry didn’t bear out his claims, then “I will plead guilty to the charge of contempt and (you can) send us to jail”. He said questions arising between parties relating to the satisfaction of a decree would have to be determined by the court executing the decree and not by one of the parties.  

On Sebi saying the group had not said anything on the premature redemption, on such a scale, when the proceedings were on in the SC, the Sahara group said such a reference was made on three different occasions — an affidavit filed before the Securities Appellate Tribunal on September 14, 2011, in an affidavit filed before the SC on January 4, 2012 and a statement of redemptions filed as part of a written response in June 2012.

The Securities Appellate Tribunal and the SC judgements also referred to the premature redemptions, held Jethmalani.

He said the group made honest efforts by deploying hundreds of people, copier machines and trucks to implement the task of filing the documents needed.

In a letter dated September 2012, the Sahara companies had told Sebi it was “humanly impossible” to send documents relating to 29 million investors spread across 2,900 centres in the country within 10 days.

Jethmalani blamed Sebi for being rigid and not accepting the first truck, delayed by “bad weather” and having arrived at 7.30 pm on September 1, 2012, the date the deadline expired. “Sebi could have deputed some officials to stay back for a couple of hours and take delivery. But they did not.”

He said on October 18, 2012, when Sahara had sent a truck containing “master forms” (original documents) of some 165,000 investors, four officials of the group were detained for about four hours. “They refused to take delivery, citing a hearing on October 19. This is tyranny of bureaucrats, of the worst kind,” Jethmalani said. He suggested Sebi could instead have offered the officials a cup of tea and engaged in a gentle conversation.

He went on to say during the course of his arguments that the bureaucrats at Sebi displayed “cussedness of the worst kind”, when they were supposed to be public servants.