SC allows Sahara to raise additional $650 mn loan for Roy's release

The Supreme Court Friday permitted Sahara group to raise a "junior loan" of 650 million from Mirach Capital Group for the payment of Rs.5,000 crore cash and bank guarantee of same amount towards the part payment of investors money that it had raised in 2008-2009 - a condition for the release of Subrata Roy and two directors from custody.

A bench of Justice T.S.Thakur, Justice Anil R. Dave and Justice A.K.Sikri, while allowing Sahara to raise additional loan against its three overseas hotels located in London and New York, said the money would come to Aamby Valley (Mauritius) Ltd. and only go to market regulator Securities and Exchange Board of India (SEBI).

Aamby Valley (Mauritius) is wholly owned subsidiary of Sahara group's India based Aamby Valley Limited.

While allowing Sahara to raise the loan, the court permitted Roy and group's two directors Ravi Shankar Dubey and Ashok Roy Choudhary to be shifted to a make-shift jail in conference hall at the Tihar Jail complex - a facility that was extended on Aug 1, 2014, for facilitating the sale of group's three offshore hotels - Grosvenor House Hotel in London and the New York Plaza and Dream New York hotels in New York.

The facility to stay in the conference hall that will last till Feb 20 is to facilitate the transaction of additional loan. Roy, Dubey and Choudhary were sent to custody on March 4, 2014, for not complying with the court's order of Aug 31, 2012, to return investors money.

The court in its order Friday said that Sahara Group would simultaneously apply to the Reserve Bank of India for clarification if there was any impediment in the way of transferring the amount of junior loan from Aamby Valley (Mauritius) to its holding company Aamby Valley Ltd.

The court said that Sahara Group would seek the clarification from the RBI within one week from Friday and the apex bank would decide on it within two weeks.

The court made it clear that Sahara Group will not create any equity on the strength of its order or project as if court has created a fait accompli for the government for the transfer of money.

The court's order on Sahara Group approaching the RBI for seeking clarification came in the wake of submission by amicus curiae AShekhar Naphade who told the court that funds raised in foreign markets could not be used to repay debts in the country. He said that there was an explicit bar under the Foreign Exchange Management Act on this count.

However, senior counsel S. Ganesh appearing for Sahara Group two real estate companies -Sahara India Real Estate Corporation Limited (SIRECL) and Sahara Housing Investment Corporation Limited (SHICL) - said that they faced no impediment of FEMA in the transfer of money.

Ganesh told the court that five years back the holding company Aambay Valley Ltd had given a loan of 490 million pounds to Aambay Valley (Mauritius) and what would be coming back would be the part repayment of that loan which along with interest today stands at 540 million pounds.

The apex court Aug 31, 2012, had directed the SIRECL and SHICL to return investors Rs. 17,400 crores collected by then through OFCDs in 2008-2009 along with 15 percent interest. The said amount, according to SEBI, has more than doubled.