SC issues notice to Sahara on receivership

The Supreme Court on Monday issued notices to the Sahara group on the application of Securities Exchange Board of India (Sebi) on the appointment of a receiver for the Sahara properties.

The judges indicated that once the receiver takes over the properties, they might release Sahara chief Subrata Roy and two directors from Tihar jail, where they had been kept since March last year.

The bench headed by T S Thakur allowed four weeks to the Sahara group to reply to the Sebi application and two weeks to the regulator to file its response.

The lawyer appointed to assist the court in this matter, Shekhar Naphade, told the court that the appointment of a receiver was the only way to break the deadlock over raising Rs 10,000 crore, the condition imposed on the company to grant bail to Roy and the directors.

He said the statements of the company in various applications and documents do not tally. For instance, it was not clear whether the money raised by selling the properties would go to Sebi or to the company. Sebi claims the company owes nearly Rs 40,000 crore, including interest, for repayment of the amounts collected from lakhs of small investors by floating bonds. The bonds have been found to be illegal and Sebi has ordered return of the amounts to the investors. Roy claims most of the investors have been repaid and contests the amount claimed by Sebi.

One of the counsel for the group companies, Rajeev Dhavan, offered to sell all 72 properties in the country under the supervision of an independent auditor. The court had earlier allowed the group to sell nine prime properties. But none of the properties has been sold and the earlier proposal to sell three hotels abroad, two in New York and one in London, has fizzled out.

Sebi counsel Arvind Datar submitted that if Roy was eager to come out of the jail, he could have sold the Amby Valley project, which itself would have fetched Rs 40,000 crore. Roy needs Rs 5,000 crore to come out of the jail as he has already raised half the bail amount.

A company from Gorakhpur had offered Rs 152 crore for a property, but it wanted a firm commitment from Sahara that the titles were proper. Sahara explained its difficulty in this regard because the property was owned by eight individuals and an equal number of firms. Another firm also showed interest in the same property, but the court did not pass any comment on these offers. Yet another entity offered to buy the Choma property in Delhi, but these proposals would be taken up at the next hearing after two months.

Meanwhile, the Sahara group told the court that another foreign entity has offered to lend money to it. The documents were offered to the judges in a sealed cover. Counsel Nageswara Rao said some parties from Qatar, with business in British Virgin Islands, have offered to lend Rs 5,000 crore. He said by October 15, the amount would be brought to this country. He wanted four weeks to complete the formalities. However, the judges did not go into the offer. They said they were only interested in complying with the court order insisting on Rs 10,000 crore for the release of Roy and the directors.

RECEIVERSHIP: WHAT IS IT

• A type of corporate bankruptcy in which a receiver is appointed by bankruptcy courts or creditors to run the company
   
• The receiver has decision-making powers on how the received assets will be managed
   
• SC notice to Sahara on the market regulator’s application
   
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