Aamby Valley to go under the hammer as SC rejects Sahara plea for more time

Sahara wanted more time to deposit remaining Rs 966.80 cr out of Rs 1,500 cr by Nov 11 in Sebi-Sahara account

The Supreme Court on Monday directed the Sahara group’s Rs 37,000-crore luxury township Aamby Valley be auctioned as scheduled. 

Calling the group “an abuser of process of law”, it turned down requests to give a two-month-long extension for paying an instalment, which was due last week. Of the Rs 1,500 crore due for payment on September 7, the group had paid only around Rs 530 crore and offered post-dated cheques payable by up to November 11, for the remaining Rs 970 crore.  

“We direct without any hesitation that the auction shall be held as per the direction given by this court and the official liquidator is permitted to carry out the auction as per procedure,” a Bench of Chief Justice Dipak Misra, and judges Ranjan Gogoi and A K Sikri said. It appointed the registrar general of the High Court of Bombay as an observer “to remain personally present to oversee the physical auction at the auction venue at Mumbai.”

Sahara’s lawyer said, “Royale Partners Investment Fund Limited of Dubai, headed by Sultan Al Ahbabi has entered into an agreement with Sahara to provide loan of $1.6 billion against the security of 26 per cent of the shares of Aamby Valley. They have committed through a mutual agreement and the agreement was submitted in the last hearing of the court (10 August 2017). The same was raised in today’s hearing as well.”

The Bench said, “We are of the opinion that grant of further time to the respondent-contemnor and entertaining post-dated cheques which are dated 11 November 2017, would tantamount to travesty of justice and extending unwarranted sympathy to a person who is indubitably an abuser of the process of law.” Earlier, Kapil Sibal, senior counsel appearing for the group, said “would submit with all the vehemence as well as humility at his command,” that it was the first case where a contemnor has paid the substantial amount which may go up to Rs 16,000 crore, and though approximately Rs 8,651 crore is due, that should not be held against him. 

“The submission on a first blush may look attractive, but the proceeding that has been recorded by this court from time to time will compel one to repel the submission and extinguish the impression gathered on the first blush,” the court said. 

The dues pertain to a seven-year-old case between the group and the Securities and Exchange Board of India (Sebi). A Sebi order directing refund of over Rs 24,000 crore raised from 29.6 million investors by Sahara India Real Estate Corp and Sahara Housing Invest Corp was upheld by the Supreme Court in August 2012. 

The court had asked the regulator to collect dues with interest of 15 per cent and repay the investors. Sahara initially deposited around Rs 5,000 crore and claimed that the rest had been refunded directly to the investors. 

However, the court was not convinced by this claim and has insisted on payments. It had sent group chief Subrata Roy to jail in 2014 for non-compliance of the order.  Though Roy has since been released on parole, the group is yet to pay about a third of the principal amount, while according to the regulator, total dues have exceeded Rs 40,000 crore with interest. The auction of Aamby Valley, which the group had tried to avoid over the years, has become the last resort for the court. 

Nestled in the Western ghats on the Mumbai-Pune highway the hill city sprawls over 8000-odd acres with luxury amenities such as golf course, villas, airstrips, entertainment facilities and infrastructure facilities such as road, water and power plants. The official liquidator of Bombay High Court has been entrusted with auctioning the property. An independent valuer had earlier fixed the reserve price for auction of the city at Rs 37,392 crore. According to the timeline given to the court, the process would be complete by January 2018. 

Arvind P Datar, senior counsel along with Pratap Venugopal, counsel appearing for the Sebi contended that the auction has to proceed and this kind of “drama of procrastination” must stop.

On being asked, Shekhar Naphade, the Amicus Curiae echoed the same argument and urged that the conception “enough is enough” should be adopted by the court “and there is no reason why long rope should be given to the respondent-contemnor to play truancy and seek indulgence.”

The judges came down heavily on the conduct of the group comparing it to a comatose patient. “He, who thinks or for that matter harbours the notion that he can play with law, is under wrong impression. To quote a phrase from (Former US) Chief Justice (John) Marshal, ‘it is not a laboratory where children come to play’. We are constrained to state that the respondent-contemnor in his own way has treated this Court as a laboratory and has made a maladroit effort to play, possibly thinking that he can survive on the ventilator as long as he can. He would have been well advised that a person who goes on a ventilator may not survive for long and, in any case, a time would come when he has to be comatosed. Here comatose takes place as regards the ambitious effort made by the respondent-contemnor,” the order read.