SC issues contempt notice to Sahara firms

The two firms have so far paid Rs 5,120 cr to Sebi

The Supreme Court on Wednesday slapped a fresh contempt notice on Sahara India Real Estate Corporation and Sahara Housing Investment Corporation for not complying with its order directing the deposit of over Rs 24,029 crore raised by the issue of optionally fully convertible debentures.

The Bench comprising judges K S Radhakrishnan and J S Khehar asked the companies to give a definite date by which they can pay the money. The Bench will take up the matter again on July 30. The two companies have so far paid Rs 5,120 crore to the Securities and Exchange Board of India (Sebi). According to the original calculations, the firms would have to pay over Rs 20,000 crore more.

The latest notice comes for not complying with the orders of another Bench headed by the chief justice, which directed the companies to pay up the money in two instalments ending in February 2013.

In August 2012, the Radhakrishnan and Khehar Bench had ordered the two companies to deposit the entire amount raised to Sebi, with a 15 per cent interest. The regulator was supposed to complete the job of refunds to nearly 30 million investors in three months ending November 30, 2012.

However, towards the end of this deadline, Sahara offered to pay Rs 5,120 crore as full settlement, claiming it had directly refunded the remaining amount to the investors. As Sebi did not agree to this, Sahara moved the Securities Appellate Tribunal and then the bench headed by chief justice, which gave a fresh timeline. Even this timeline was not adhered to.

In a separate development, former chief justice Altamas Kabir, who retired last week, has issued a press statement explaining the rationale for his Bench’s decision to give more time to Sahara in December.

“We were faced with a situation where there were a large number of depositors who had not been paid their dues. Since the matter had already been disposed of with a direction for payment of dues in instalments and since one instalment had already been deposited by Sahara and it only wanted extension of time to deposit the second instalment, we felt it to be in the interest of the depositors to extend the time for depositing such instalments by a short period, as that would give them a chance to recover the dues quickly, instead of having to wait till Sebi attached and sold the properties of Sahara, which could turn out to be a long drawn affair.”

Kabir said the decision to extend the time for depositing the instalments was the joint decision of the Bench upon consultation. Kabir’s press release was in response to several articles in the media criticising some of his recent decisions.