SC to take up Sahara repayment proposal today

The two Sahara group companies offer another schedule for the repayment

Sahara India Real Estate Corporation and Sahara Housing Investment Corporation, the two Sahara group companies under pressure from the Supreme Court to return money to millions of investors, on Tuesday offered another schedule for the repayment. The Supreme Court will take up the new proposal on Wednesday afternoon.

The judges said the offer couldn’t be made “across the board”, without enough time to examine it.

According to the new proposal, the two firms will pay Rs 20,000 crore to the Securities and Exchange Board of India (Sebi) in instalments. The first, of Rs 2,500 crore, will be paid within three days of the restriction on operating bank accounts being lifted. The next three instalments, of Rs 3,500 crore each, will be paid after every three months; the last, of Rs 7,000 crore, will be paid by March 31, 2015.

The cumulative payment in the new proposal is Rs 3,000 crore more than in the previous offer.

The group firms sought permission from the court to give “an irrevocable guarantee at any time for any unpaid amount due then (along with the amount made available by Sebi for obtaining the bank guarantee) or for all the remaining unpaid amounts, instead of cash”. They also urged if their payment exceeded the amount due, Sebi be directed to refund the excess, as well as the bank guarantees.

According to the firms’ computation, they had raised Rs 25,781 crore via bonds. The amount deposited with Sebi after the apex court judgment is Rs 5,120 crore, while that credited to Sebi by various banks is about Rs  21 crore.

At the last hearing, Sebi, however, claimed the firms owed about Rs 34,000 crore, along with interest. It challenged the firms’ claims that they had returned the dues to investors.

The release of Sahara chief Subrata Roy, as well as that of two directors, currently lodged in Tihar Jail here, will depend upon the acceptance of the proposal by the bench comprising judges K S Radhakrishnan and J S Kehar.

On Tuesday, Ram Jethmalani, counsel for Sahara chief Subrata Roy, made a plea for the release of Roy, as well as two directors. Currently, the three are lodged in Tihar Jail here. Jethmalani said the procedures set under the Contempt of Court Act had not been followed, adding the three officials hadn’t been given a notice and an opportunity for hearing before being sent to jail on March 4. “They were taken by surprise, if not by shock,” he said. “They had much to say, but were denied a hearing.”

Jethamalani said the discretionary power of the court must be used to do “complete justice”, according to Article 142 of the Constitution, but “not according to the whims and caprice of judges”. He added the issue of contempt of court was being argued before a five-judge bench. Therefore, that judgment should be awaited and till then, the Sahara officials should not be kept in jail. Jethamalani also objected to the fact that the three officials were lodged in Tihar Jail, not in a civil prison.