SEBI vs Sahara: Fali S. Nariman appointed as Amicus Curiae


Court :
Supreme Court of India

Brief :
The Supreme Court bench comprising of Justices T.S. Thakur and A.K. Sikri dismissed the prayer for shifting the contemnors to a guest house for continued custody and detention till they comply with the directions of this Court for their release on interim bail and requested Senior Advocate, Fali.S. Nariman to assist the Court as amicus curiae

Citation :

               
     REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
I.A. NOs. 101-103
IN
CONTEMPT PETITIONS (C) NO.412 - 413 OF 2012
IN 
CIVIL APPEALS NO. 9813 AND 9833 OF 2011
AND 
CONTEMPT PETITION (C) NO.260 OF 2013
IN 
CIVIL APPEAL NO.8643 OF 2012
 
S.E.B.I.   …Appellant
Versus
Sahara India Real Estate Corporation Ltd.
 & Ors. …Respondents
T.S. Thakur, J.
J U D G M E N T
1. Sahara  India  Real  Estate  Corporation  Limited
(SIRECL) and Sahara Housing Investment Corporation Limited
(SHICL) (hereinafter referred to as ‘Saharas’ for short) invited
and  claim to  have  collected  deposits  from  general  public
1
including  cobblers,  labourers,  artisans  and  peasants  in  the
form of  what  were  described  as  ‘Optional  Fully  Convertible
Debentures’  (OFCD).  On  a  complaint  received  from
Professional Group of Investors Protection, SEBI found that the
mobilisation of funds under the Red Herring Prospectus (RHP)
dated 13
th
 March,  2008 and 6
th
 October, 2009 issued by the
two companies was not legally permissible.  By an  ad interim
ex  parte order  dated  24
th
 November,  2010  SEBI  directed
Saharas not to offer their equity shares/OFCDS or any other
securities to the public or invite subscription in any manner
whatsoever either directly or indirectly pending further orders.
Aggrieved  by  the  said  order  Saharas  approached  the  High
Court  at  Bombay  but  the  High  Court  not  only  declined  to
interfere with the directions issued by SEBI but also passed a
further order on 23
rd
 June,  2011, directing the promoter Mr.
Subrata Roy Sahara and Directors Miss Vandana Bhargava, Mr.
Ravi Shankar Dubey and Mr. Ashok Roy Choudhary of Saharas
to jointly and severely refund the amount collected by Saharas
in terms of the RHPs issued by them alongwith interest @ 15%
p.a. from the date of the receipt of the deposits till the date of
2
such repayment.  Pursuant thereto the SEBI ordered that the
refund of  the  amount  shall  be  made  only  in  cash  through
demand  drafts  or  pay  orders.  The  SEBI  issued  further
directions  including  a  direction  that  Sahara  Commodity
Services Corporation Limited (earlier  known as SIRECL)  and
SHICL shall not access the security market for raising funds till
the  time  the  aforesaid  payments  are  not  made  to  the
satisfaction of the SEBI.  
2. Aggrieved by the order aforementioned, Saharas filed
an appeal before the Securities Appellate Tribunal (SAT) who
concurred with the view taken by the SEBI, and while affirming
the order passed by the SEBI, directed Saharas to refund the
amount  collected  from the  investors  within  a  period  of  six
weeks.
3. Appeals  No.9813  and  9833  of  2011  were  then
preferred by Saharas against the above orders in which this
Court  by an order  dated 28
period for making the refund upto 9
th
 November, 2011 extended the
th
 January, 2012 but finally
disposed of the appeals by an order dated 31
st
 August, 2012.
This Court  while doing so modified the order  passed by the
3
SEBI and the SAT and directed Saharas to deposit  with the
SEBI  the  amount  collected  by  them  through  their  RHPs
together  with interest  @ 15% p.a.  within a period of  three
months.   The  amount  when  deposited  was  directed  to  be
invested in a nationalised bank to earn interest. Saharas were
also directed to furnish details with supporting documents to
establish  whether  they  had  refunded  any  amount  to  the
investors who had subscribed through the RHPs in question.
SEBI was then to examine the correctness of the details so
furnished.   Failure  to  prove  the  refund  of  the  amount  by
Saharas had to give rise to an inference that Saharas had not
refunded the amount to the real and genuine subscribers as
directed by the SEBI.  
4. It  is common ground that  directions  issued by this
Court by its order dated 31
st
 August, 2012 were not complied
with. Instead Appeal No.221 of 2012 was preferred by Saharas
before  the SAT  which  was  dismissed  by  the  Tribunal  as
premature. This dismissal was assailed by the Saharas in C.A.
No.  8643  of  2012  that  came  to  be  disposed  of  by  a
three-Judge  Bench  of  this  Court  by  an  order  dated  5
4
th
December, 2012 with the following among other directions:
“(I)  The  appellants  shall  immediately  hand over  the
Demand Drafts, which they have produced in Court, to
SEBI, for a total sum of  5120/-Crores and deposit the
balance in  terms of  the order  of  31st  August,  2012,
namely,  17,400/-  Crores  and the  entire  amount,  including
the
amount
mentioned
above,
together
with
interest
 at  the  rate  of  15 per  cent,  per  annum,  with
SEBI,  in  two  installments.  The  first  installment  of
10,000/-Crores, shall be deposited with SEBI within the
first  week of  January,  2013.  The remaining  balance,
along  with  the  interest,  as  calculated,  shall  be  deposited
 
within the first  week of  February,  2013.  The
time  for  filing  documents  in  support  of  the  refunds
made to any person, as claimed by the appellants, is
extended by a period of 15 days. On receipt of the said
documents,  SEBI  shall  implement  the directions contained
 
in the order passed on 31st  August,  2012.  In
default  of  deposit  of  the  said  documents  within  the
stipulated period, or in the event of default of deposit
of  either  of  the two installments,  the directions contained
 
in  paragraph 10 of  the aforesaid  order  dated
31st August, 2012, shall immediately come into effect
and SEBI will be entitled to take all legal remedies, including
attachment
 
and sale of properties, freezing of
bank accounts etc. for realisation of the balance dues.”
5. Pursuant to the above,  Saharas deposited Rs.5120/-
crores with the SEBI but failed to pay the remaining amount.
The balance amount  payable is in the vicinity of Rs.12280/-
crores, exclusive of interest payable on the same. SEBI then
filed  Contempt  Petitions  No.412  and  413  of  2012  and,
Contempt Petition No.260 of 2013 against the contemnors for
non-compliance of the directions of this Court. Various orders
have been passed in these contempt  petitions from time to
5
time, and those which are germane for our purpose, shall be
adverted  to  hereinafter  at  the  appropriate  stage.   The
applications (IAs) which we are dealing with in this order, are
filed in these contempt petitions and arise out of the earlier
orders passed.
6. It is pertinent to point out at this stage that in the
course  of  the  proceedings  in  the  above  contempt  petitions
some proposals appear to have been explored by the parties
for compliance with the directions of this Court  but  all  such
proposal were found to be unsatisfactory eventually leading to
the  issue of  non-bailable  warrants  against  Mr. Subrata  Roy
Sahara  for  his  production  before  this  Court.  Three  other
Directors  of  Saharas  were  also  ordered  to  remain  present
before this Court.
7. On 4
th
 March,  2014 when the contemnors appeared
before this Court one of them in custody, this Court recorded a
finding that  the directions  issued by the Court  by its  order
dated 31
st
 August,  2012 and 5
issued on 25
th
th
 December, 2012 and those
 February, 2013 in CA No.8643 of 2012 and IA
No.67 of 2013 had not been complied with, despite sufficient
6
opportunities to the contemnors to do so. It was also held that
contemnors  had  adopted  dilatory  tactics  to  delay  the
proceedings before the SEBI, the High Court and even before
this Court.  It was further found that no acceptable proposal
was  presented  to  comply  with  the  directions  of  this  Court
which left no option for this Court except to commit three out
of the four contemnors to judicial custody.  The contemnors
are,  ever  since the said order, in judicial  custody in Delhi’s
Tihar Jail.  
8. It is clear from the above narration that as per the
orders passed, a huge amount of nearly Rs.33,000/- crores is
yet  to  be  deposited.  It  is  also  apparent  that  deadlines  for
depositing  this  amount  are  long  over.  No  doubt  various
proposals have been given by Saharas for making payments
but  none  has  fructified.  From  the  tenor  of  orders  passed
earlier, it  can easily be gauged that these proposals did not
inspire confidence.   In this backdrop when the matter  again
came on 26
th
 March,  2014,  and the contemnors insisted on
granting bail  to them,  this Court  passed a conditional  Order
granting interim bail  to the contemnors; the condition being
7
that  they deposit  Rs.10,000/-  crores.  Out  of  this  a sum of
Rs.5,000/- crores had to be deposited in cash before this Court
while  the  balance  amount  of  Rs.5000/-  crores  had  to  be
secured by a bank guarantee of a nationalised bank, furnished
in favour of the SEBI. Upon compliance with those conditions
the contemnors were directed to be released from the custody
and the amount deposited by them to be transferred to the
SEBI. Since we are directly concerned with this order, we may,
as well, extract the same:
“We  have  gone  through  the  fresh  proposal  filed  on
25.3.2014. Through the same is not in compliance with
our Order dated 31.8.2012 or the Order passed by the
three-Judge Bench of this Court on 5.12.2012 in Civil
Appeal No.8643 of 2012 and on 25.2.2013 in I.A. No.
67 of 2013 in Civil  Appeal No.9813 of  2011 with I.A.
No.5 of 2013 in Civil Appeal No.9833 of 2011, we are
inclined to grant interim bail  to the contemnors who
are detained by virtue of our order dated 4.3.2014, on
the  condition  taht  they  would  pay  the  amount  of
Rs.10,000 crores – out of which Rs.5,000 crores to be
deposited before this Court and for the balance a Bank
Guarantee of a nationalised bank be furnished in favour
of S.E.B.I. and be deposited before this Court.
On  compliance,  the  contemnors  be  released
forthwith  and  the  amount  deposited  be  released  to
S.E.B.I.
We  make  it  clear  that  this  order  is  passed  in
order to facilitate the contemnors to further raise the
balance  amount  so  as  to  comply  with  the  Court’s
Orders mentioned above.”
9. Instead of  complying with the above directions  Mr.
Subrata Roy Sahara filed Writ Petition (Crl.) No.  57 of 2014
8
challenging the validity of  the order  of  this Court  dated 4
March,  2014  on  the  ground  that  the  same  was  void  and
non-est  in the eyes  of  law.  A declaration to the effect  that
continued  incarceration  of  the  petitioner  Mr.  Subrata  Roy
Sahara in custody was illegal and a writ of habeas corpus and
directions for release of the petitioner from custody were also
prayed  for.  The  said  writ  petition  was  heard  by  a  Bench
comprising Hon’ble K.S.  Radhakrishnan and J.S.  Khehar, J.J.
and came to be dismissed vide detailed judgment  dated 6
May, 2014.
10. Having traversed in brief, the otherwise long journey
of this case, we revert back to the IAs which are the subject
matter of the instant order.  In the present I.As. No.101-103 of
2014 filed in Contempt Petitions (C) No.412 and 413 of 2012
and Contempt Petitions (C) No. 260 of 2013, the contemnors
have made the following prayers:
“(a) Lift the restrictions imposed by this Hon’ble Court
vide its order dated 21.11.2013 and SEBI’s order
dated 13.2.2013,  in  respect  of  operation of  the
Bank  Accounts/deposits/demat  accounts/sale  of
securities mentioned at Annexure-A;
(b) Lift the restrictions imposed by this Hon’ble Court
vide its order dated 21.11.2013 and SEBI’s order
dated 13.02.2013 in respect of the movable and
immovable properties mentioned in Annexure B,
9
th
th
on condition that  net  proceeds  (after  costs  and
taxes) thereof be utilized exclusively for payment
ordered by this Hon’ble Court.
(c) pass such further  or other order as this Hon’ble
Court may deem fit  and proper in the facts and
circumstances of the present case.”
11. Justice  K.S.  Radhakrishnan  having  demitted  office
and,  Justice  J.S.  Khehar  having  recused  himself  from  the
further hearing of the case, the applications were listed before
us for urgent hearing on 19
th
 May, 2014 when the same were
heard in part and directed to come up for continuation on 29
May, 2014.  
12. Appearing  for  the  contemnors,  Dr.  Rajiv  Dhawan
made a three-fold submission before us.  Firstly, he contended
that  the  order  passed  by  this  Court  on  26
th
 March,  2014
granting interim bail subject to the conditions stipulated in the
said order deserved to be modified as the conditions stipulated
therein were not only onerous but incapable of being complied
with in the facts and circumstances of the case.  Alternatively,
he contended that compliance with the conditions stipulated by
this Court  would require sale of several  items of immovable
properties held by Sahara Group of companies which sales can
be finalised only if the contemnors were enlarged from custody
10
th
with a view to enable them to negotiate the sale transactions.
He submitted that keeping in view the extent and nature of the
properties which shall have to be sold as also the amounts that
have  been  ordered  to  be  deposited  compliance  with  the
conditions stipulated by this Court is extremely difficult, if not
impossible, unless the contemnors are enlarged from jail and
allowed to take steps necessary for compliance.  It was further
contended by Dr. Dhawan that the restraint orders against the
sale of the moveable and immoveable properties held by the
‘Saharas’  made it impossible for them to arrange compliance
unless the embargo placed upon such sale and transfer by this
Court’s Order dated 21
SEBI on 13
th
st
 November, 2013 and that passed by
 February, 2013 are lifted.  He argued that even if
the contemnors were not enlarged on bail  till  such time the
directions issued by this Court on 26
th
 March, 2014 were not
complied  with,  the  restraint  orders  would  prevent  the
contemnors from raising necessary funds to comply with the
directions issued by this Court. He urged that the total amount
currently lying in several  bank accounts and/or invested with
banks and companies in the form of FDs, Bonds and securities
11
etc.  came  to  Rs.2500/-  crores  approximately.   The  broad
details  of  the  amounts  so  available  have  been  given  by
Saharas in the note submitted by Dr. Dhawan as under:
Details of approx. Rs 2500 Crores along with interest
accrued  thereon  to  be  paid  by  Saharas  within  5
working days of lifting the embargo (Pg 39 – 54)
a) Fixed Deposits                     1688.74 crores
b) Savings Account                    464.44 crores       
c) Current Account                      18.45 crores
a) Securities & Bonds                 142.86 crores 
b) Government Bonds                  72.33 crores
c) Bank/PSU Bond                       34.85 crores
-------------------
2421.67 crores
------------------- 
Total approx. Rs 2500 crores along with interest accrued
thereon
13. Encashment  of  the  FDs,  sale  and  transfer  of  the
bonds  and  securities  would,  argued  Dr.  Dhawan,  help  the
contemnors  to  partly  comply  with  the  directions  regarding
deposit  of  Rs.5000/-  crores  by moping Rs.2500/-  crores.  A
further sum of Rs.2500/- crores approximately would have to
be raised for deposit which will be possible only by sale of the
immovable properties situated in nine different  cities details
whereof were filed by Dr. Dhawan in the form of a statement
with the estimated value of such properties which is as under:
Sr. No. Properties Valuation as per Page Nos. Of 
12
the Valuation
Report (Rs. In
crores)
Volume I
1. Pune 575 60 – 76 @ 73
2. Ahmedabad 470 81 -98 @ 94
3. Amritsar 153.75 99 – 127 @ 111
4. Chauma 1430 128 -148 @ 140
5. Vasai 1169.72 143 – 160 @ 149
6. Ajmer 160 161 -175 @ 167
7. Bhavnagar 103 176 – 191 @ 188
8. Jodhpur 112 192 -208 @ 204
9. Bhopal 125 209 – 224  222
TOTAL 4298.47
14. It  was  submitted  that  sale  of  the  above  items  of
property may also not fully satisfy the conditions stipulated by
this Court for grant of interim bail thereby leave no option for
Saharas except  to sell  three other  items of hotel  properties
situated outside the country. One of these hotels by the name
Grosvenor House is situated in London while the remaining two
hotels are in New York (U.S.A.).  It was urged that the said
three  items  of  property  also  need  to  be  sold  to  raise  the
margin  money  which  the  banks  concerned  insist  upon  to
enable them to issue a bank guarantee. It was submitted that
while  the  contemnors  propose  to  mortgage  Aamby  Valley
13
properties,  details  whereof  are given in the Annexure B to
I.As.  No.101-103,  the  contemnors  would  require  funds  to
service any financial arrangement made with the bank/banks.
It was also contended that according to the estimate of the
contemnors, the properties situated in London and New York
would fetch an amount of Rs.5,000/- crores to the contemnors
which may be utilised in full  or  in part  towards the margin
money  necessary  for  obtaining  the  bank  guarantee(s).  The
estimated value of these three properties is indicated by the
contemnors as under :
Shares of
entities
owning the
following
offshore
properties 
Grosvenor
House,
London
Plaza Hotel,
New York
Dreams
Downtown
Hotel, New
York
Value as per
the Valuation
report
GBP 516,000,000
Rs
50,929,200,000 
USD
592,000,000
Rs
34,336,000,000
USD
252,000,000
Rs
14,616,000,000
Expected Sales
Value
GBP 645,000,000
Rs 63,661,500,000
USD 635,000,000
Rs 36,830,000,000
USD 252,000,000
Rs 14,616,000,000
Total Rs
115,107,500,000
14
Immediate
Advances
expected
USD 50,000,000
Rs 2,900,000,000
USD 50,000,000
Rs 2,900,000,000
USD 50,000,000
Rs 2,900,000,000
USD
150,000,000
Rs
8,700,000,000
Page No.
667-Vol  III
415-Vol III
231-Vol III
Net
Realistic
Equity
Value to
Sahara in
India
Rs 50,366,156,000
15. On behalf  of the respondent-SEBI it  was argued by
Mr. Venugopal that he has no objection to the encashment of
the FD receipts and other securities and bonds etc. provided
the  maturity  value  and  sale  consideration  of  such  FDRs,
securities  and  bonds  is  directed  to  be  deposited  in  the
designated  bank  account  of  SEBI  viz. SEBI  Sahara  Refund
Account bearing No.012210110003740 with the Bank of India,
Bandra Kurla Complex  Branch,  Mumbai.  As  regards  sale  or
mortgage  of  properties  situated  in  nine  different  cities
mentioned above,  Mr. Venugopal  submitted that  appropriate
safeguards need be provided for such sale and transfer.  Mr.
Venugopal suggested the following safeguards in this regard:
(i) Details of valuation, buyer(s) and terms of sales
together with letter (s) of intent be submitted in
advance to this Hon’ble Court;
(ii) Buyer(s)  ought  not  to  be  related  party/parties
qua the Sahara Group entities/Director etc.  and
an affidavit of undertaking to that effect be filed
in this Hon’ble Court.
(iii) The  sale  proceeds  be  deposited  by  the  buyer
directly to the designated Bank Account of SEBI
15
viz.  “SEBI-Sahara  Refund  Account”  bearing
No.012210110003740  with  Bank  of  India,
Bandra-Kurla Complex Branch, Mumbai; and
(iv) Actual release of title deeds by SEBI to the buyer
be made only upon receipt  of  sale proceeds in
the aforementioned Bank Account.
16. A direction to the effect that the sale of the properties
shall not be for a price lesser than the circle rates prescribed
for  the  area  where  the  properties  are  situated  was  also
suggested as an additional safeguard, by the learned counsel.
It  was also submitted by Mr. Venugopal  that so long as the
valuation of the assets situated outside the country is fair and
reasonable, the SEBI had no objection to the sale thereof to
enable the contemnors to raise funds necessary for compliance
with the directions of this Court.  
17. We  have  given  our  careful  consideration  to  the
submissions  made  at  the  bar.   It  is  apparent,  from  the
submissions made at the bar, that these IAs have two limbs:
In the first  instance,  the contemnors want  relaxation in the
restraint  orders  over  the  Bank  deposits  and  immovable
properties to comply with the directions of this Court regarding
deposit of the amounts. That part of the prayer does not pose
any difficulty, as the same is in aid of  compliance with the
16
directions of this Court. Second set of prayers is for grant of
bail  or relaxation of jail  conditions in the interregnum. Here,
we have our reservations. We are not inclined to modify order
dated 26
th
 March, 2014 granting interim bail to the contemnors
upon conditions stipulated in the said order. We say so because
the  background  in  which  the  contemnors  came  to  be
committed to the jail  and the finding recorded by the Court
that  they  have  at  all  earlier  stages  tried  to  adopt  dilatory
tactics and avoided to comply with the orders passed by the
Court  does  not  in our  view call  for  any modification of  the
terms on which the contemnors can be released. Dr. Dhawan
pleaded, in the alternative, that the least which could be done
was to shift the contemnors from Tihar Jail  to a guest house
for  incarceration to enable them to take decisions  that  are
necessary for  compliance  with the directions  issued by this
Court.  This request was opposed by Mr. Venugopal, according
to  whom  similar  requests  made  repeatedly  over  several
hearings  in  the  past  have  been  declined  by  this  Court,
although no specific order refusing the same was recorded.  In
support  of  that submission,  our  attention was drawn to the
17
averments made by the applicant  in I.As No.2 to 4 filed by
them on 20
th
 May, 2014 which averments clearly show that
similar prayers were indeed made in the past also. 
18. Apart  from the fact that the prayer  now made is a
repetition of similar prayers made in the past which have not
cut  any ice  with the bench hearing the matter, we see no
reason  to  make  a  departure  from the  usual  course  in  the
present case.  The Bench has passed a conditional bail  order
after  due  and  proper  consideration  having  regard  to  the
attendant circumstances including conduct of the contemnors.
The  order  can  be  modified  only  under  very  compelling
circumstances. The only reason given by the applicants is that
interim release or transfer of the contemnors to a guest house
would enable them to dispose of the properties speedily and
enable them to arrange for the requisite Bank Guarantees. We
don’t  think so.  It is noteworthy that the total amount to be
deposited is between Rs. 33000/- to Rs. 35000/- crores. To
show their  bonafides, the contemnors have been directed to
deposit less than 1/3
rd
 of that amount as a condition for bail.
After all, even when this part of the order is complied with and
18
the contemnors  are set  free,  they will  have to arrange the
deposit of the balance amount, which again is very substantial.
That apart, it is not the case of the contemnors that they or
anyone of them suffers from any medical condition that calls
for  hospitalisation or  an atmosphere conducive for  recovery
from any disease.   This Court  has already issued directions
permitting visitation to those who need to visit the contemnors
in jail.  That arrangement has not been found to be inadequate
as at present so to call for any change.  
19. The prayer for modification of the order, accordingly,
fails. 
20. We,  however,  find  considerable  merit  in  the
submission  made  by  Dr.  Dhawan  that  the  restraint  order
issued by the SEBI and by this Court forbidding transfer and
alienation of moveable and immoveable assets by the Sahara
Group  of  companies  has  the  effect  of  preventing  the
contemnors from complying with the directions of this Court
which  require  them to  deposit  Rs.5,000/-  crores  in  cash
besides a bank guarantee for a similar amount of Rs.5,000/-
crores.  While it is true that the contemnors stand committed
19
to prison for their non-compliance with the directions of this
Court,  nothing  should  prevent  them from  taking  steps  to
comply with the said directions or  the conditions subject  to
which they have been granted interim bail.  Restraint against
transfer of the assets by the contemnors and the companies
promoted by them precisely has the effect of doing so.  The
question, however, is as to what extent should the orders of
restraint  be  modified.  That  aspect  assumes  importance
because of the fact that Saharas need to eventually deposit a
substantial  amount  which according to the current  estimate
may be in the neighbourhood of  Rs.  30,000 to Rs.  35,000
crores inclusive of interest accrued on the principal  amount.
Sale of valuable properties at a price lesser than the market
value of such assets is bound to prejudicially affect the interest
of the depositors and defeat the orders passed by this Court in
its letter and spirit. That is particularly so because according to
Mr.  Venugopal,  SEBI  is  unable  to  value  the  properties  or
process  the  sale  and  transfer  thereof.   It  was  in  that
background  that  we  had  indicated  to  Dr.  Dhawan  learned
counsel for the appellants that the restraint orders cannot be
20
lifted in toto and that  Saharas should come forward with a
proposal  for  sale  of  such  properties  as  were  sufficient  to
comply with the interim bail  direction of this Court regarding
deposit of Rs.5,000/- crores in cash and a bank guarantee of
Rs.5.000/-  in  addition.   Dr.  Dhawan  has  pursuant  to  that
observation confined his prayer for permission to sell/transfer
only nine items of properties situated in nine different cities in
the country and disclosed the estimated value of such property
in the statement which we have extracted above. Dr. Dhawan
on instructions made a statement that although the note filed
by him mentions the names  of  nine different  cities  without
giving details of the properties situated in those cities but the
fact remains that the properties referred to in the note are
only nine in number and no more. 
21. Keeping in view the total number of properties held
by  Sahara  Group  of  companies,  transfer  of  sale  and/or
mortgage of the nine items of properties situated in nine cities
mentioned  in  the  note  and  extracted  above  should,  in  our
opinion, suffice to enable the contemnors to comply with the
26
th
 March, 2014 directions of this Court. In order, however, to
21
ensure that the sale value is fair and reasonable, we need to
make it clear that no item of property shall be sold at a price
lesser than the circle value of the properties fixed for the area
where such property is located.
22. As  regards  properties  situated  in  London  and New
York we have by an interlocutory Order passed on 29
2014  directed  the  contemnors  to  furnish  certain  additional
information  necessary  for  permitting  the  sale  of  the  said
assets.  The  information  demanded  includes
permission/approval  from the Bank of China with whom the
said properties are mortgaged and shares held by Saharas for
repayment  of  the  loans  borrowed  from  the  said  bank
hypothecated/pledged.  We have also directed Saharas to get
the amount outstanding towards the loan transactions qua the
said properties confirmed from the Bank of China so as to give
us a clear picture of the extent of liability that remains to be
discharged against the said assets. The fact that the valuation
reports  regarding  the  three  assets  were  prepared  at  the
instance of the Bank of China shall also have to be verified and
22
th
 May,
confirmed by the Bank of China, especially because no sale of
the assets in question can be permitted at a price lesser than
the price at which the said assets have been valued by the
valuers  who  are  said  to  be  valuers  of  repute.   Directions
regarding sale of the assets outside the country can, therefore,
await the furnishing of information and verification of the facts.
23. In  the  result  we  dispose  of  these  I.As  with  the
following directions:
(i) The  prayer  for  modification  of  the  terms
stipulated in our order dated 26
th
 March, 2014
granting  interim  bail  to  the  contemnors  is
declined and the I.As to that extent dismissed.
(ii) Prayer  for shifting the contemnors to a guest
house for continued custody and detention till
they comply with the directions of this Court for
their release on interim bail is also declined and
the I.As dismissed to that extent.
(iii) Orders dated 21
st
 November, 2013  passed by
this Court and that dated 13
23
th
 February, 2013
passed by SEBI restraining sale and transfer of
moveable and immoveable properties  held by
Saharas are modified to the following extent:
(a)  FDs, bonds and securities held by Sahara Group
of  companies may be encashed by the holders
thereof subject to the condition that the maturity
value/sale consideration of such FDs, bonds and
securities  shall  be  deposited  in  the  designated
bank account of  SEBI  referred to in  the earlier
part  of  this  order  and details  of  such maturity
values  and sale  consideration  furnished to this
Court  on affidavit  to be filed within four weeks
from the date the FDs, bonds and securities are
encashed, sold and/or transferred.  
(b) Immovable properties owned by Sahara Group of
companies  situated  in  9  different  cities
mentioned in the note filed by Dr.  Dhawan and
extracted  in  the  body  of  this  order  with  an
estimated  value  of  Rs.2500/-  crores  are
permitted  to  be  sold  by  the  companies/other
entities persons in whose names such properties
are held subject to the condition that such sales
are not for a price lower than the estimated value
indicated in the statement filed before this Court
or the circle rates fixed for the area in which such
properties are situated.   The seller shall furnish
to this Court the details of  the valuation of  the
properties sold and the terms of  sales together
with a declaration that the purchasers is not  a
24
related party qua Saharas.  Needless to say that
upon deposit  of  the sale consideration the title
deeds of the property shall  be released by SEBI
in favour of the purchaser(s).
(c) The  sale  consideration  of  the  properties  less
transaction cost and statutory dues on the same
shall be deposited with the SEBI to the extent the
same  is  necessary  to  make  a  total  deposit  of
Rs.5,000/- crores inclusive of the maturity value
and  sale  proceeds  of  the  FDs,  bonds  and
securities etc. permitted to be encashed and sold
in  terms  of  direction  (iii)  (a)  above.   The
balance/excess amount of the sale consideration
shall  be  deposited  by  Saharas  in  a  separate
account  to  be  opened  in  a  nationalised  bank
which  deposit  shall  remain  subject  to  further
orders of this Court. 
(d) Saharas  are  also  permitted  to  charge  its
immovable  properties  situated in  Aamby Valley
(Pune), the details whereof are given in Annexure
B to IAs No.101-103, for purposes of furnishing a
bank  guarantee  for  an  amount  of  Rs.5,000/crores
and/or
for
deposit
 of Rs.5,000/- crores if
there  is  any  shortfall  despite  encashment  and
sales  permitted  in  terms  of  (iii)(a)  and  (iii)(b)
above.
(e) In modification of  the orders dated 26
 March,
2014, we direct that the Bank guarantees to the
tune of Rs.5000/- crores shall be furnished from
25
th
a nationalised bank or  a scheduled bank only.
Co-operative Bank Guarantees shall not suffice.  
(iv) In so far as sale of the three properties situated
outside  the  country  are  concerned,  the
question is left open to be determined after the
requisite  documents/information  is  made
available by Sahara in terms of our order dated
29
th
 May, 2014. 
(v) Keeping in view the importance of the issues
 
that fall for determination in these proceedings
and the ramifications that the directions issued
by this Court  may have as also the fact that
one very important order which is sought to be
enforced in these proceedings was passed by a
three-Judge Bench, we refer these proceedings
to a three-Judge Bench to be constituted by the
Hon’ble Chief Justice of India.
(vi) We are further of the view that having regard
26
to  the  nature  of  these  proceedings  and  the
stakes that are involved, we need to appoint an
amicus curiae. We accordingly, request Mr. F.S.
Nariman,  Senior Advocate to assist  the Court
as an amicus curiae. Shri Nariman shall be free
to associate two juniors of his choice to brief
him in the matter.
(vii) We direct that the Amicus curiae shall  be paid
his fee @ Rs.1,10,000/- per hearing while the
juniors assisting him shall be paid Rs.10,000/-
per person for every hearing.    The amount so
due shall  be paid by SEBI by debit to account
Saharas.                               
            
………………….……….…..…J.
New Delhi
June 4, 2014
    (T.S. THAKUR)
………………….……….…..…J.
    (A.K. SIKRI)
27
ITEM NO.1A               COURT NO.3                 SECTION XVII
               S U P R E M E  C O U R T  O F  I N D I A
                          RECORD OF PROCEEDINGS
I.A. No(s). 101-103 in Contempt Petition(s)(Civil) No(s). 412 &
413  of  2012  in  Civil  Appeal  No(s).  9813  &  9833  of  2011  and
Contempt Petition(s) Civil Nos(s). 260 of 2013 in Civil Appeal
No(s). 8643 of 2012. 
S.E.B.I.                                      ..  Appellant(s)
                                VERSUS
SAHARA INDIA REAL ESTATE CORPORATION LTD. & ORS.. Respondents(s)
Date : 04/06/2014 These applications were called on for      
pronouncement of judgment today.
For Appellant(s)       Mr. Gaurav Nair, Adv.for
                        M/s. K.J. John & Co.
For Respondent(s)        Mr. S. Ganesh, Sr.Adv.
       Mr. Gaurav Kejriwal, Adv.
       Mr. Keshav Mohan, Adv.
       Mr. Sandeep Bajaj, Adv.
                        Mrs.Shally Bhasin Maheshwari,Adv.
       Mr. Gautam Awasthi, Adv.
       Mr. Vishwa Pal Singh, Adv.
      Hon'ble Mr. Justice T.S. Thakur pronounced the judgment of
the Bench comprising His Lordship and Hon'ble Mr. Justice A.K.
Sikri.
      Keeping in view the importance of the issues that fall for
determination  in  these  proceedings  and  the  ramifications  that
the directions issued by this Court may have as also the fact
that one very important order which is sought to be enforced in
these proceedings was passed by a three-Judge Bench, we refer
these proceedings to a three-Judge Bench to be constituted by
the Hon’ble Chief Justice of India.
       I.A.Nos.101-103 are disposed of in terms of the judgment.
(USHA BHARDWAJ)                               (RENUKA SADANA)
   AR-cum-PS                                  COURT MASTER
(SIGNED REPORTABLE JUDGMENT IS PLACED ON THE FILE)
28
 

Vineet Kumar
on 23 June 2014
Published in Corporate Law
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