SC adjourns Sahara case to July 17

SC directs Sebi to start refunding genuine investors

The Sahara group of companies got more raps from the Supreme Court on Wednesday, in the case against their two realty companies.

On August 31 last year, the apex court had ordered the two companies in question to transfer Rs 24,029 crore these had collected from depositors, with interest of 15 per cent, to the Securities and Exchange Board of India (Sebi), which was to then refund this to about 29.6 million investors. “Any payment made (directly to depositors) after our August 31 order…that’s not a good payment. We will not accept it,” said judge J S Khehar.

The observation came during the hearing of Sebi’s petition against Sahara India Real Estate and Sahara Housing Invest. The court adjourned the hearing of a contempt petition against the two companies to July 17.

Sahara has so far deposited only Rs 5,120 crore with Sebi and claims it had already repaid the remaining amount to the investors. Last week, Sebi had said the companies had refunded about Rs 4,748 crore directly after August 31 in violation of the court order. Sahara counsel RamJethmalani said they had to refund because some of the investors had approached for redemption before August 31. “Since there was some delay in tracing their documents, they were paid after the order,” he said. To which, the judge said, “You couldn’t have done that.”

Sahara group claimed that there were panic attacks by investors after the Sebi order. “We had to file 30 FIRs (police cases) to protect our offices. We have written to Sebi and even produced photographs,” said Jethmalani.

The Sebi counsel argued there was no panic at all and the argument had been made and rejected by another bench on two earlier occasions.

Sebi also expressed frustration over the Sahara companies’ repeated attempts to dodge moves to attach their properties. “Sebi passed an order on February 13. They don’t give any document. Sebi sets a deadline of April 30. Then also they did not submit and wanted an extension till May 7. That also has passed.”

The court directed that the details of the documents of the assets of these two companies listed in the affidavits filed with Sebi should be filed by Sahara.

The court directed Sebi to start refunding genuine depositors out of the part-payment of Rs 5,120 crore deposited by the companies. It did not pass any directions on the Sebi petition seeking civil detention of Sahara group chief Subrata Roy Sahara.

In a statement issued later in the day, Sahara counsel Keshav Mohan said, "Supreme Court also directed SEBI to comply with the direction no. 7 passed by the SC in its order dated 31.08.2012 whilst making payments to the investors and if any investor is found not to be genuine, the same must be put to Sahara for verification.  During the hearing the Advocates for Sahara also pointed out that modalities for such a verification process needs to be worked out for implementation of the order."  

Sebi counsel Arvind Datar sought to withhold repayment of those investors with multiple accounts in their names, since this had income tax and other implications. The bench allowed this. Of about 21,000 letters sent by Sebi, only about 280 investors had responded with the necessary documents. Of these, around 21 investors had multiple accounts, Sebi informed the court.