SC asks Sahara to return Rs.17,000 crore to investors

New Delhi: The Supreme Court today directed the Sahara group’s real estate companies to return with 15 percent interest the over Rs.17,000 crore ($3.5 billion) it had mopped up as debentures from investors in 2008 and 2009.

“Sahara’s SIRECL and SHICL would refund the amounts collected through RHPs (red herring prospectuses) dated March 3, 2008 and Oct 16, 2009 to SEBI (Securities and Exchange Board of India) along with interest at 15 percent per annum from the date of receipt of the subscription amount till the date of repayment,” said a bench of Justice K.S. Radhakrishnan and Justice J.S. Khehar.

The court said that the refund would be done “within a period of three months from today, which shall be deposited in a nationalised bank bearing maximum rate of interest”.

The order to Sahara companies – Sahara India Real Estate Corp Ltd (SIRECL) and Sahara Housing Investment Corporation Limited (SHICL) – came as the apex court held that it found “on facts as well as on law”, no illegality in the proceedings initiated by market watchdog SEBI.

It also upheld the orders passed by SEBI June 23, 2011 and Securities Apellate Tribunal (SAT) Oct 18, 2011.

The court also directed the SEBI to ascertain the “genuineness of the subscribers as well as the amounts deposited”.

If after the verification of the details furnished, it is unable to find out the whereabouts of all or any of the subscribers, then the amount collected from such subscribers will be appropriated to the government, it added.

The court appointed former apex court judge, B.N. Agarwal to “oversee whether directions issued by this court are properly and effectively complied with by the SEBI from the date of this order”.

Pronouncing the order, Justice Radhakrishnan said: “We also make it clear that if Saharas fail to comply with these directions and do not effect refund of money as directed, SEBI can take recourse to all legal remedies, including attachment and sale of properties, freezing of bank accounts etc. for realiszations of the amounts.”

The order further directed the SEBI to “submit a status report, duly approved by Justice Agarwal, as expeditiously as possible, and also permit SEBI to seek further directions from this court, as and when, found necessary.”

Though Justice Radhakrishnan and Justice Khehar passed a common order, they gave separate reasons to reject Sahara’s plea. “We have gone through each other’s judgment and fully concur with the reasoning and the views expressed therein…,” they said in the order.

Saharas was also directed to furnish details with supporting documents to establish whether they had refunded any amount to the subscribers within a period of 10 days from the pronouncement of this order and SEBI was asked to examine the correctness of the details furnished.

The court said if the documents produced by Saharas were not found genuine or acceptable, then the SEBI would proceed as if the Saharas had not refunded any amount to the subscribers.

The court directed Sahara companies to furnish all necessary documents in their custody within 10 days of the order to SEBI to ascertain the genuineness of the subscribers as well as the amounts deposited.

“In the event of finding that the genuineness of the subscribers is doubtful”, the SEBI would afford Sahara an opportunity to “satisfactorily establish the same as being legitimate and valid” but the decision of SEBI on the issue would be final.

SEBI was given authority to engage the necessary officials to carry out the court orders and Sahara would pay the expenses.

The Supreme Court had June 14 reserved its verdict on a plea by the two Sahara group companies, challenging the SAT’s direction to repay the money.

The Sahara group contended that its mobilisation of money from investors was in the nature of private placement and it imposed no obligation on it to get listed in any stock exchange.

It also contended that the SEBI could not proceed against it in the absence of a complaint by investors.


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