Sebi Vs Sahara: This saga enters another chapter

Kapadia ensured appeal was disposed of quickly by posting it to the vacation bench

It has been over six years since the tussle between the Securities and Exchange Board of India (Sebi) and the two Sahara group entities Sahara India Real Estate Corp and Sahara Housing Invest Corp came to the Supreme Court. In these years, it has seen six chief justices, of which at least four have directly dealt with the case and left a mark. 

In November 2010, Sebi had held that the money raising activity by these two firms by issue of optionally fully convertible debentures (OFCDs) were illegal and passed an interim order asking them to stop the activity. But in December 2010, the Lucknow bench of the Allahabad High Court stayed the order as Sahara questioned the regulator's jurisdiction.

On January 4, 2011, a bench headed by then chief justice Sarosh H Kapadia reopened the doors for Sebi, which had been shut out by the stay order.

"We make it clear that Securities and Exchange Board of India (SEBI) is entitled to call for any information which it deem to fit including names of the investors who have invested in OFCDs," the bench said.

Though Sebi would wait several months and cross several hurdles to finally get the details it wanted.  When Sebi's final order was upheld in the Securities Apellate Tribunal and Sahara moved the apex court in appeal, bench headed by Kapadia took another important step. It first asked the two firms to file updated balance sheets and asked for encumbered property as security so that investors' money is secure even as the appeal was being heard. 

Kapadia also ensured the appeal was disposed of quickly by posting it to the vacation bench to facilitate daily hearing. A month before he demitted office in September 2012, the landmark final order asking the companies to refund all the money in three months was passed by bench of KS Radhakrishnan and JS Khehar, the current chief justice. 

When the three-month deadline came to a close, Sahara said it owed only Rs 2,620 crore to investors and claimed to have repaid the rest of some Rs 24,029 crore directly to investors. Chief Justice Altamas Kabir gave the first extension of the deadline by giving the firms a three-month extension to repay the money. The decision was subsequently criticised by the bar council saying any modification of the original order should have gone to the same bench that passed the order. 

As the matter went back to the original bench, Kabir's successor P Sathasivam did not directly come into play until the major event of Sahara chief Subrata Roy was sent to Tihar jail for non-compliance of the court order in March 2014. Senior advocate Ram Jethmalani moved a Habeas Corpus writ before the bench headed by Sathasivam. 

As the matter went back to the original bench, in May 2014 it passed a stinging order deprecating tactics followed by the group and rejected allegations that principles of natural justice was not followed while sending Roy to jail. While Radhakrishnan retired soon after, Khehar recused himself from further hearing the case. 
 

A new bench under TS Thakur, who also went on to become the CJI, was constituted and this heard the matter for over two years. The bench released Roy on parole on a humanitarian basis to attend the funeral of his mother in May 2016. Though it set a condition to deposit of sum of a few hundred crores for every extension of the parole, the group has met only part of Sebi's claims. All along, the CJIs have dealt with the challenging case in creative ways, but have stopped short of closing it. Let us hope under the new CJI, who comes with first-hand knowledge and understanding of the case's facts and history, the court inks the last chapter of this saga.