The Supreme Court today gave Sahara group companies three weeks’ time to choose between two courses to secure the investments made by the public in the OFCD scheme: either give sufficient bank guarantee or earmark unencumbered, ‘sequestered immovable property’ under attachment of the court.
The bench headed by Chief Justice S H Kapadia also asked both the Sahara group companies and Sebi to sit together and make sure that investors in the optionally fully convertible debenture scheme did not lose their money. A formal order will be passed after three weeks.
While the Supreme Court has stayed the Securities Appellate Tribunal (SAT) order asking two Sahara group companies to refund Rs 17,400 crore to 2.3 million investors, it has repeatedly expressed its anxiety to protect the investors. Two companies of the Sahara brood, Sahara India Real Estate Corporation and Sahara Housing Investment Corporation, have moved the Supreme Court against the SAT order.
Sahara group counsel, F S Nariman, submitted that the companies have furnished particulars of the evaluation of the companies, as demanded by the court earlier. The assets of the companies meet all possible liabilities. Each query of Sebi has been answered. There has been no default; and even premature redemptions have been given. There was no complaint from any investor, counsel stressed.
When he said that the immovable properties themselves will meet all liabilities the judges expressed their apprehensions because the properties may have third party liabilities. Then there might be secured and unsecured creditors who have claims against the group. It should be ensured that the assets are enough to meet the liabilities.
Sebi counsel Arvind Datar submitted that there are “64 companies in 64 towns” through which the group is calling for investments. An examination of the income tax returns showed that it was “completely nebulous” in its transactions. By some manipulation of figures, the taxable income has become zero, counsel said.
Datar further submitted that it was difficult to monitor the operations of the group. They have got only development rights of properties in certain cases, and the land does not belong to them. Any one of the company can go into liquidation. There could be further complications in the development work involving partners, he said.