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SC bars asset sale by Sahara, grounds Roy

Group's attempt to pass off green-zone land as Rs 19k-cr property displeases court

BS Reporter  |  New Delhi 

The Supreme Court on Thursday came down heavily on the Sahara group after it found that the group had not satisfactorily complied with the court’s October order to submit title deeds of properties worth over Rs 20,000 crore. The court imposed restrictions on the entire group from selling any immoveable or moveable property and barred its promoter Subrata Roy Sahara from leaving the country.

The order was passed in a contempt case filed by Securities and Exchange Board of India (Sebi) against two group companies Sahara India real Estate and Sahara Housing Invest, which allegedly have not complied with the Supreme Court’s August 2012 order to refund Rs 24,029 crore they raised by issuing optionally fully convertible debentures(OFCD). Sahara, which paid Rs 5,120 crore to Sebi, claims it has refunded the rest directly to investors. The court adjourned the contempt proceedings to December 11. Last month, the apex court had directed the group to file original title deeds of properties worth Rs 20,000 crore to cover its dues. It emerged that there were several flaws in the documents filed by the group. “They have not complied with the order. They also know it. Everybody knows it,” Judge KS Radhakrishnan said after hearing the explanation of Sahara counsel CA Sundaram and Sebi’s counter arguments. When Sundaram pleaded with the court to clarify which part of the order they have not complied with, Radhakrishnan said “This property is not worth Rs 19,000 crore.” Judge JS Khehar told Sundaram, “It is not for you to understand. It is for Sahara to understand.” Earlier, Sundaram had presented a detailed explanation of a valuation report of the 106-acre property in Versova done by Knight Frank. He presented an additional clarificatory report from the valuer explaining the methodology of valuation.

He also presented an additional report by a second valuer. Both entities had put the valuation of the property between Rs 18,800 crore – Rs 19,300 crore under internationally accepted valuation methods such as market approach method and income method. The Sahara counsel also presented an additional clarificatory report from Knight Frank addressing certain objections raised by Sebi on Wednesday. He said the property was located in close to the upmarket Andheri-Lokhandwala complex in Mumbai and was within a kilometre’s distance from the proposed Metro terminus in Versova. The property also was said to enjoy a premium for its sea-view, being located between a river and the sea. He said, quoting the valuers, that a residential complex developed by Oberoi just opposite the plot was selling flats at rates of Rs 36,000 per square feet. Windsor, another developer in the vicinity, was selling at Rs 30,000 to rs 35000 per square feet. The valuers assumed an average rate of between Rs 27,000 to Rs 37,000 per square feet. This translated into a value of Rs 181-190 crore per acre, which in turn put the value of the entire plot. But, all these arguments came to a naught, when Arvind Datar, the Sebi counsel pointed out that the entire property was situated in the middle of a “no-development zone” and that there was a clear direction by the Union Ministry of Environment and Forests barring any development. “It is in the green zone. Nothing can be built on it. The FSI allowed is 0.5 and that is why there was a plan to develop a golf course.” Datar also pointed out that the land was part of a larger disputed area of 614 acres and Sahara has been engaged in legal disputes with the original owners B Jeejeebhoy Wakaria and associates since 2001. Datar pointed out that the court direction was to submit “title deeds” and not reports of investment value. He submitted in view of the facts submitted that this property could not be considered worth more than Rs 118 crore. Sundaram pointed that there was a notification issued by Maharashtra government in December 2012 allowing development of townships alongside transport corridor and this would allow Sahara to develop the township. But, neither Sebi nor the court was convinced.

First Published: Fri, November 22 2013. 00:59 IST