 "Supreme Court turns the heat on Roy")
The documents should be accompanied by a valuation report from an approved valuer, judges K S Radhakrishnan and J S Khehar said.
The direction came on a contempt petition filed by Sebi against Roy, the promoter of Sahara India Real Estate and Sahara Housing Invest, the two companies that raised Rs 24,029 crore by issuing optionally fully-convertible debentures, and directors of the companies.
Judge Radhakrishnan initially proposed restricting movement of contemnors outside India until the original documents were filed with Sebi.
However, after assurances from Sahara counsel C A Sundaram, the court settled for a milder direction, to come into play only if the group failed to produce the documents.
The judges also made several severe observations against the group. Radhakrishnan observed: “The problem is you are not consistent. (In) one affidavit, you say this.... and something else (in another).” Khehar said: “We can’t trust you anymore. There has been too much of hide-and-seek.”
Earlier, Sundaram suggested an alternative method of a bank trustee arrangement. He produced a letter from PNB Investment Services, a subsidiary of Punjab National Bank, which had offered its services to take into possession title deeds worth Rs 20,000 crore and liquidate and produce money on directions of the Supreme Court, as and when required.
The arrangement was proposed as Sahara argued a cash payment would mean liquidation of their business.
Sahara said in a statement that Sundaram had pointed out the basic difference between Sahara’s and Sebi’s stands. It said: “Sahara is ready to ensure payments after verification of the documents submitted, if money already deposited with Sebi is found to be inadequate, while Sebi is insisting the money be deposited first even without verification.”
Sebi counsel Arvind Datar was completely against the proposal to take any payment other than in cash. “The direction was to submit a bank guarantee. This prayer (to appoint bank trustee) was made by (counsel) Ram Jethmalani before the other Bench and was rejected. I don’t know why they are making it again. You played with fire, you can’t complain about burnt fingers. You have taken money from investors. You said your properties were worth Rs 71,000 crore. All I am saying is sell a third of that and pay the money,” Datar said.
On the proposal to submit the property documents, Datar said: “This is a minefield. Whatever property documents Sebi has seen, we have found serious discrepancies.”
When judges suggested that Sebi examine the proposal, the Sebi counsel recalled how the group had not filed even one title deed when Sebi had asked for those.
“Why can’t they give it to Sebi? Where is the question of giving it to PNB,” he asked.
The court accepted his arguments and decided that the original title deeds would be first given to Sebi, which will examine those and form an opinion. The next hearing in the case will be on November 20.
At one stage, when Sundaram wanted that the documents be inspected by Sebi and returned to Sahara. Khehar said: “(If) you don’t want to give the documents, we will not let you leave the country.”
He added that since the properties belonged to different companies within the group, each firm should pass a board resolution certifying the property it owned and that it agreed to comply with the court’s future directions.
Sahara to submit:
What?
Original title deeds of assets worth Rs 20,000 crore
To Whom?
Securities and Exchange Board of India
When?
November 11, 2013 (three weeks)
If not...
Subrata Roy, other directors can't travel abroad without permission
Highlights of the day
Properties/assets should have clear, unencumbered titles
Each group company submitting assets should pass board resolution authorising it
Sebi to go through documents, proposal and form a view
Sahara may submit over 30,000 pages of documents
Short history:
November 2010: Sebi interim order restricting money raising by Sahara India Real Estate and Sahara Housing Invest
June 2011: Sebi orders refund of Rs 24,029 crore collected by two firms by issuing optionally fully convertible debentures
August 31, 2012: Supreme court directs companies to deposit money with Sebi. Sebi to repay investors, if they find investors not genuine
November 30, 2012: Sahara submits Rs 5,120 crore in full settlement of dues; says rest directly repaid to investors
December 2012: Sebi moves contempt