Their story gets stranger and stranger: Sebi

Sahara says group firms exchanged Rs 20,000 cr in cash, skips bank statements presentation as was directed by the court

The Sahara group has yet to comply, say counsel for the Securities and Exchange Board of India (Sebi) in the issue before the Supreme Court, with the directive to file all bank statements on the case in question.

Last month, the court had directed the Sahara group to file bank statements and supporting documents to establish the source of Rs 20,000-plus crore of refunds it claimed to have made in 2012.  Two group firms, Sahara India Real Estate Corp (SIRECL) and Sahara Housing Investment Corp (SHICL), are contesting contempt proceedings initiated by Sebi after allegedly failing to comply with an August 2012 order by the apex court. The order had directed the firms to repay Rs 24,029 crore, collected illegally, to Sebi.  

“They have filed five volumes of documents. These contain everything except what we want,” said Sebi counsel Arvind Datar.

It appears the group says all the transactions in question between group entities such as Sahara Q Shop, Sahara Credit Cooperative and Sahara India Commercial Corp (SICCL), dating back to 2012, were done in cash.

The bench of judges K S Radhakrishnan and J S Khehar had adjourned the matter to February 20, after Sahara lawyer Ram Jethmalani sought extension on grounds of poor health.

The group filed a statement from Sahara Credit Cooperative that it had paid Rs 13,366 crore for the purchase of Aamby Valley shares from SIRECL in cash between May and August 2012. Similar statements were filed by Sahara Q Shop and SICCL.

The bench asked Datar to file a detailed note on when the Sahara companies first told the court about the alleged redemption pressure and the consequent refunds.  

Sahara has now claimed that in May and June 2012, when it was still arguing the matter before an SC vacation bench, it had refunded Rs 16,177 crore. “The whole of May and June, they were fighting before us. Why would they do that if they were already refunding?” judge Khehar wondered.

Radhakrishnan asked if payment of such huge amounts in cash was legally permissible. Datar said both under the Companies Act and Sebi regulations, it was not. “Under Section 73 of the Companies Act, refund has to be made only by cheque. Even the Sebi ICDR (Issue of Capital and Disclosure requirements) regulations mandate that payments have to be made through banking channels only.”

Datar accused the group of coming up with a “new theory” at every hearing. He noted that on several occasions in 2010, the nodal partnership firm had transacted with group entities through banking channels such as cheques and electronic transfers. He cited an instance where on January 29, 2010, there were banking transactions worth Rs 1,175 crore.

“If the money has come through a bank, why can’t you show it to the Supreme Court? Why are  saying everything was in cash?” Datar asked. He added documents presented by Sahara showed that in one month alone (June 2012), the Sahara India partnership firm received Rs 7,356 crore in cash. “Can anybody believe this?”he asked.

Adding: “Money can’t come from heaven. It took three years to collect these Rs 24000 crore and you are saying you repaid most of this in two months?” He pleaded with the court to reject the argument of refund and pass an order on contempt proceedings.

Radhakrishnan said, “We want to know whether our order has been complied with or not. Contempt can wait.”