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The Supreme Court has asked the Securities and Exchange Board of India (Sebi) to file a fresh application seeking the appointment of a receiver to sell the Sahara group assets after it got indications that the group was ‘incapable’ of raising the money required to settle Rs 36,000 crore dues.
The apex court has allowed Sahara to file an application challenging the earlier court orders. It has also allowed the group to list various other pending applications. The hearing on these applications is scheduled to begin on September 14.
The court is hearing a dispute between Sebi and two Sahara group firms — Sahara India Real Estate Corporation and Sahara Housing Invest Corporation - over repayment of Rs 24,029 collected from 29.6 million investors along with interest.
The Bench headed by judge T S Thakur started “loud thinking” about the option of appointing a receiver after Sebi filed an application informing the court of Divine Infra Solutions, the Gurgaon-based buyer of a Sahara property in Choma village, defaulting on a sum of Rs 705 crore.
“The process (of sale of assets) is very slow. What is your long-term plan? How do you plan to recover?” Thakur asked Sebi counsel Arvind Datar. He added, “Are we supposed to hear this forever? Why can’t there be a receiver?”
Shekar Naphade, amicus curiae, an officer appointed by the court to help it with the case, said appointing a receiver would be a good solution, but there could be some practical difficulties.
Naphade explained various difficulties such as the prices the properties fetch could be substantially low, the possibility of cartelisation and the enormous cost of the process itself.
Sebi initially indicated it had already filed an application in 2013 to appoint officers under former Supreme Court judge B N Agarwal to sell Sahara properties and realise the dues. Sahara had filed replies and the application was pending.
However, the Bench asked Sebi to file a fresh application in light of several developments and orders. Sahara counsel Kapil Sibal pleaded that his application challenging the earlier court orders and the amount of liability of Rs 36,000 crore be heard before going into receivership. He added a statutory authority had upheld its claims of having refunded substantial amount of the bonds directly.
The court also expressed its discomfort with the extended stay of Sahara chief Subrata Roy in jail. The judges pointed out that the group had claimed to have assets worth Rs 1.85 lakh crore, but it was struggling to pay up a fraction of that sum for its chief’s freedom. “A person blessed with money sacrificing his liberty in jail and not willing to sell properties. This is why it is so troubling,” said Thakur.
When asked why the group was not ready to sell Aamby Valley, which in itself was worth Rs 40,000 crore, Sibal said, “The choice of sale should be mine.”
The judge said, “So, you are in jail by choice.”
Earlier, the court allowed Gorakhpur Real Estate Developers to acquire a property in the Uttar Pradesh city for Rs 152 crore. The original buyer, Samriddhi Developers, which had initially agreed to buy the property for Rs 64 crore, was not ready to increase its bid beyond Rs 150 crore.
Gorakhpur Real Estate, which has deposited Rs 37.5 crore, less than a fourth of the bid amount, was given till November 30 to complete the payment.
The court also issued notices to Divine Infra solutions on the application moved by Sebi over the Choma property and summoned the director of the firm at the next hearing for defaulting despite giving undertakings to the court.
Problems have also cropped up in Sahara’s sale of 270 acres land parcel in Vasai near Mumbai. The buyer, who had paid Rs 130 crore and was due to pay around Rs 800 crore by June, has sought more time citing due diligence process by lenders.
WHAT IS RECEIVERSHIP
- A type of corporate bankruptcy in which a receiver is appointed by a court or creditors to run the company
- The primary responsibility of the receiver is to recoup as much of the unpaid loans as possible
- Oftentimes, receivers find the best way to pay back loans is to liquidate the company's assets, which puts the company out of business, as its assets are sold at deep discounts
