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The Supreme Court on Wednesday directed the transfer to itself of matters pending before the Securities and Appellate Tribunal (SAT) and the Allahabad High Court arising out of the applications filed by the Sahara group. The court expressed displeasure over interference by other forums in a matter decided by the apex court.
“We are annoyed by the SAT order. How can they interfere?” judge K S Radhakrishnan said.
The directors of Sahara India Real Estate and Sahara Housing Invest had moved SAT, while Sahara India Parivar, the partnership firm that offered infrastructure facilities to the two companies collecting money, had moved the Lucknow bench of the Allahabad High Court, following an order by the Securities and Exchange Board of India (Sebi) to attach the properties of the group in February. The attachment order came during the course of the execution of a Supreme Court order on August 31, 2012, which directed the two companies to refund Rs 24,029 crore collected from about three million investors, along with interest of 15 per cent. Sahara had raised this sum by issuing optionally fully convertible debentures (OFCDs).
Sebi had ordered the attachment after the companies failed to deposit the full amount, according to a Supreme Court-directed timeline. So far, the companies have deposited Rs 5,120 crore, less than a quarter of the original sum. They claim the rest has been refunded to the OFCD holders directly.
Before adjourning the matters of contempt proceedings to July 24, the bench of judges Radhakrishnan and J S Khehar wondered why the companies didn’t comply with the court’s clear orders for the past several months. At one point, they said they would hear any further defence by Sahara in the matter only after the group deposited the amount. “If you don’t comply, we would order personal appearance,” Radhakrishnan said.
Sebi counsel Arvind Datar pressed for the appearance of Sahara group chief Subrata Roy, saying he was the promoter of the two errant companies and controlled the entities. He added according to a petition filed before the Lucknow bench of the Allahabad High Court, Roy was named the person in charge of Sahara India Parivar, holding 67 per cent stake, according to the firm’s partnership deed.
Roy’s counsel Aryama Sundaram argued Roy wasn’t party to the Supreme Court order and didn’t have direct interest in the two companies. “Any decision on the contempt proceedings should not be made without hearing me,” Sundaram said.
As time ran out, the court decided to defer the matter to next week.
Earlier, Sebi had submitted its seventh status report in the matter. It said of the 1,000 responses from Sahara OFCD holders, only 12 were genuine. It noted several discrepancies.
Datar said, “In 146 cases, the names and details of the bond holders could not be found in the DVDs (submitted by the group).” In another 130 cases, while bondholders asked for refunds, the DVDs showed they had already been refunded. Turn to TSI, Page 15 >
Ram Jethmalani, counsel for the companies, said Sahara had sought a meeting with Sebi officials to decide a procedure to identify the investors, according to a “gentleman’s agreement” in May. “That meeting is absolutely essential to work out a mechanism under direction 7 (of the August 31 order). Otherwise, this matter will not end,” he said, adding Sebi wasn’t even looking into the truckloads of documents sent by the group. He accused the regulator of wasting both time and money.
To this, Datar responded, “You keep harping about trucks. Who is interested in the trucks? That is not the point. Where is Rs 25,000 crore? Where has the money gone?”
