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Explain source of refunds, SC tells Sahara

Apex court slams group for issuing ads against Sebi, denies relief to Sahara chief even after filing of 3,000-odd title deeds

BS Reporter  |  New Delhi 

Subrata  Roy

The Supreme Court on Wednesday directed Sahara India Real Estate Corp (SIRECL) and Sahara Housing Invest Corp (SHICL) to explain the source of the money they claimed to have refunded to investors in their optionally fully convertible debentures (OFCDs).

The SC also directed the companies to file the relevant official records such as those to the ministry of corporate affairs and the income tax returns, in support of these refund claims.

The judges also rapped Sahara for its series of advertisements in recent weeks against the Securities and Exchange Board of India (Sebi). It directed the group to readvertise a withdrawal of the allegations with the same prominence, in the same media.

  • The Supreme Court on Wednesday directed Sahara India Real Estate Corp and Sahara Housing Invest Corp to explain the source of money they claimed to have refunded to investors in the optionally fully convertible debentures
  • The court also directed the firms to file the relevant official records such as filings with the ministry of corporate affairs and income tax returns in support of these refunds
  • Slams Sahara for issuing advertisements. It has directed Sahara to issue an apology in similar prominence and in all the papers the advertisement was issued
  • Sebi has issued a legal notice against Sahara separately for the 'sarkari goonda' remark against it. It has also written to banks to freeze Sahara accounts
  • No relief for Subrata Roy, despite submitting title deeds including three Aamby valley properties worth Rs 11,000 crore
  • Sebi to check veracity of deeds, claims
  • Next hearing in January

The two companies had raised Rs 24,029 crore by issuing OFCDs and the SC had told them to first stop the sale of these and then to remit the entire amount to the Securities and Exchange Board of India (Sebi), for returning to the depositors. They then claimed all but Rs 2,610 crore had already been directly refunded.

The duo had deposited a sum of Rs 5,120 crore, including a “buffer”, with Sebi to settle with the remaining investors.

On Wednesday, the Sahara group showed evidence of 3,268 title deeds of properties in 71 locations but Sebi counsel Arvind Datar said this process assumed the refunds were already made and the group should not be made to pay twice. “If so, how did you refund? Rs 19,000 crore is a colossal amount. Even large groups would find it difficult to mobilise. Which are the properties you sold? Where did the money come from?” he asked.

He told the judges Sebi had written in May for these details but these were yet to be given by the group. The bench of K S Radhakrishnan and J S Khehar then passed an order directing the companies to file all the documents in support of the refunds as required by the Sebi letter. The order also directs Sebi to verify the title deeds and valuation reports given.

Earlier CA Sundaram, representing Sahara group chief Subrata Roy, moved an application to end the court’s November 21 order directing his client not to leave the country. “There is no urgent need to vary it,” Radhakrishnan said.

Sundaram said the 3,268 title deeds of properties in 71 locations comprised an area of 7,161 acres and were worth Rs 20,172 crore. The bulk of the value came from three lots of land within the group’s Aamby Valley luxury township project, off the Mumbai-Pune Highway. The land parcels located in Pomgaon and Kumheri villages were said to be worth Rs 11,000 crore , according to valuation reports given by the group.

The Aamby valley title deeds covered a total area of 1,747 acres. The group also gave title deeds for land in Faridabad (Rs 423 crore), Noida (Rs 370 crore), Muzzafarnagar (Rs 307 crore) and Haridwar (Rs 213 crore). The 71 locations included Ajmer, Aligarh, Kanpur, Jhansi, Kochi, Coimbatore and Tiruchi, he said.

The court took severe exception to newspaper advertisements issued by Sahara after the November SC hearing, calling Sebi a “sarkari goonda” and alleging a witch hunt. Radhakrishnan said, “We are taking this very, very seriously. Don’t take us for a ride. You are already on contempt; why are you precipitating the issue?”

Khehar added Sebi was only implementing the court order and “What you are telling them, you are indirectly telling us.” And so, he said, an apology had to be published by the group with the same prominence and in all papers in which the original advertisement against Sebi was published by Sahara. Datar informed the court the regulator has sent a legal notice to Sahara for their disparaging remarks.

The court refused to entertain a request from SIRECL counsel S Ganesh to reverse a Sebi move to freeze bank accounts of group companies. “On December 4, they have written to banks to freeze all our accounts. We are running businesses. It is difficult.”

However, Khehar said Sahara’s lawyers were to blame. “All they had to do was comply with our order. But you advised them wrongly,” he said.

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First Published: Wed, December 11 2013. 22:50 IST