Supreme Court warns Sahara Group companies to fall in line
Pulling up the Sahara Group's real estate and finance companies for taking advantage of its "politeness and generosity", the Supreme Court Thursday told them to provide all information sought by SEBI about their claim to have returned 90 percent of Rs.24,000 crore collected from investors.
"We have been most polite. We have been most generous. But you don't like it. In that case, we will show the stick to you," said a bench of Justice K.S. Radhakrishnan and Justice Jagdish Singh Khehar expressing displeasure over SIRECL and SHICL stonewalling every communication from market regulator, Securities and Exchange Board of India (SEBI).
"Whatever they (SEBI) have asked you, unless it was endorsed by us, you have not given," said Justice Khehar.
The provocation for the apex court's ire was the refusal by Sahara India Real Estate Corporation Limited (SIRECL) to disclose the source of funds that it used for redemption of the money collected through Optionally Fully Convertible Debantures (OFCD).
The SIRECL in a Jan 1 communication to SEBI said the fact of redemption could be verified from the redemption vouchers made available to the market regulator and "the source of money from where redemptions were made is not material".
"It is amazing what you saying. One letter after another is obnoxious. It is very unfair. Such a company with such a stature should say that," said Justice Khehar referring to the Sahara firm's reply to SEBI.
As Justice Radhakrishnan admonished Sahara for "always taking a conflicting stand", Justice Khehar said they have to disclose where from they got funds to return the investors' money.
"Was it bank or other sources and that will take care of 90 percent of the problem. You have to tell 'here is where we got the money' and 90 percent of the problem goes. Your job is done," he said.
Senior counsel C.A. Sundaram, appearing for Sahara group chief Subrata Roy, told the court that what SEBI was referring to as order of the apex court was in fact a repetition of its submission that Sahara did not disclose the source from which they got money for repayment despite SEBI's letter dated May 28, 2013.
In response, the court converted Dec 11, 2013 recording of SEBI's submission into an order as it said: "We direct the alleged contemnors to disclose the complete details and source from which they repaid the amount to the investors as also the manner of making payments."
"They (two Sahara companies) shall also disclose the information which SEBI has sought from them from time to time. Such information shall be provided to SEBI and also be filed in this court by Jan 23," the order said.
Observing that the two Sahara companies were employing every trick to dodge the market regulator, Justice Radhakrishnan observed that they brought more than Rs.17,000 crore to pay the investors, it must reflect somewhere in their balance sheets and wondered what the Registrar of Companies was doing.
Telling Sahara's counsel that it was a serious matter, Justice Radhakrishnan, at one stage said that it would summon the Registrar of Companies to appear in person and also Central Bureau of Investigation (CBI) officials and order investigation.
Sensing the court's unrelenting mood, senior counsel U.U. Lalit appearing for SIRECL sought three weeks' time to furnish all the information. Justice Khehar retorted that in the computer age it is a job of just ten minutes.
He asked Lalit that if he had made a payment of crores of rupees to someone, would not he know from where it came.
Asserting that it would get its order complied, the court said that it was over two years that its August 2012 order has not been carried out on one pretext or the other.
The court directed the listing of the case Jan 28.
(Posted on 09-01-2014)