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TMI Blog2015 (6) TMI 651X X X X Extracts X X X X X X X X Extracts X X X X ..... me with SEBI. It is, thus, an unprecedented situation of personal liberty of the three applicants on the one hand vis a vis majesty of law and ensuring larger public good, on the other hand. It is this sense of justice, in an unprecedented kind of situation, that has compelled the Court to take such an extreme step. It is this legal realism which has compelled the Court to adopt an approach which sounds more pragmatic. It is "doing what comes naturally" approach to the problem at hand, which required such a drastic step, going by the experience of this case, giving rise to 'Reflection' that provided 'Understanding'. This case is a burning example where the true dictate of justice is difficult to discern, and the law needed to come down on the side of practical convenience. This Court is not powerless as it can always direct selling the properties of the Sahara Companies to ensure recovery of the aforesaid amount as the value of those properties is stated to be much higher. However, it is not done so far pursuant to the wishes of the applicants who have pleaded against the sale of these properties by the Court with repeated assurances that these companies would be taking necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Guru Krishna Kumar, Sr. Adv., Mr. D.L. Chidananda, Adv., Ms. Sadhana Sandhu, Adv., Mrs. Anil Katiyar, Adv., Mr. Vishwa Pal Singh, Mrs. Shally Bhasin For The Respondent : Mr. Kapil Sibal, Sr. Adv., Dr. Rajeev Dhawan, Sr. Adv., Mr. Gautam Awasthi, Adv., Mr. Nikhil Jain, Adv., Mr. Nijam Pasha, Adv., Mr. Simranjeet Singh, Adv., Ms. Sonali Dhir, Adv. JUDGMENT A.K. Sikri, J. Before we advert to the reliefs claimed in these applications and announce the outcome thereof, we would like to recapitulate, very briefly, the genesis for moving these applications as we feel that such a recount of the previous events would make it easy to understand the circumstances under which these applications have been filed. It would also provide us the course of action that is to be taken on the prayers made in these applications. 2. The main proceedings with which we are concerned are the contempt petitions bearing Nos. 412 of 2012 and 413 of 2012 in Civil Appeal Nos. 9813 of 2011 and 9833 of 2011 as well as Contempt Petition No. 260 of 2013 in Civil Appeal No. 8643 of 2012. These contempt petitions filed by the Securities and Exchange Board of India (for short, ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 SEBI. 3. Aforesaid directions were admittedly not complied with. Instead, another appeal, being Appeal No. 221 of 2012, was preferred by Saharas before SAT which was dismissed as premature. Against that order, Civil Appeal No. 8643 of 2012 was filed in this Court which was decided on 05-12-2012. The Saharas had produced before the Court, demand drafts for a total sum of ₹ 5120 crores. This Court directed them to handover the same to SEBI. Further direction was given to deposit the balance amount of ₹ 17,400 crores together with interest @ 15% per annum with SEBI in two installments. First installment of ₹ 10,000 crores was to be deposited with SEBI by first week of January, 2013 and balance amount, along with interest, was to be deposited by first week of February, 2013. However, the balance amount or the interest payable, as per the installments, was not deposited though it was to be deposited by January/February, 2013. It r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable the Saharas to sell those properties so that the interim bail conditions are fulfilled, on 04.06.2014, this Court permitted various Sahara Group Companies to deal with/sell some of their assets, but only for the purpose of complying with the order dated 26.03.2014 with further condition that whatever amount is realized by the sale of the said assets, same shall be deposited into the SEBI Sahara Refund Account and for providing the requisite bank guarantee in favour of SEBI in the sum of ₹ 5000 crores, as per the directions. Though this liberty was granted to Saharas one year ago and some other directions were given from time to time providing various facilities to the three contemnors in judicial custody felicitating contacts and dialogue/interaction with the prospective buyers for clinching of deals, the contemnors have been able to achieve only a partial success. They have mooted various proposals for the sale of these properties. However, major proposals run into rough weather, hitting one or the other kind of road block and had to be terminated midday. We would like to point out that the embargo which was lifted in respect of certain properties, the value thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compliance of the order dated 26.03.2014 passed by this Hon'ble Court; (ii) permit the Sahara Group Companies to utilize the balance, if any, of the proceeds obtained from the sale/encumbrance of assets which has been specifically permitted by this Hon'ble Court that remains after complying with the order dated 26.03.2014 passed by this Hon'ble Court for the purpose of meeting the liabilities enumerated in this application; and (iii) For such further and other orders and directions as may appear just, necessary and appropriate to this Hon'ble Court, in the circumstances of the case. 9. Insofar as permission to sell certain properties of Sahara group is concerned, it was subject to certain conditions as indicated above and one of the conditions was that sale must not be for a price lower than 5% of the estimated value for such a property. The applicants state that in respect of one such property at Gorakhpur, Uttar Pradesh, they have been able to find a purchaser who is ready to step into the shoes of the applicants for development/maintenance of the said property. MOU with the said party has already been entered into, which is placed on record. It is point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the applicants want seal of approval from this Court in order to enable them to submit the requisite bank guarantee, we would like to reproduce the same, which reads as follows: GUARANTEE We ________________ Bank, a scheduled Bank within the meaning of the Banking Regulation Act, and having our office at _________ do hereby grant and issue this unconditional and irrevocable guarantee of ₹ 5000 crores (rupees five thousand corres) in favour of Securities and Exchange Board of India (SEBI) at the request made by Amby Valley (Mauritius) Ltd. on behalf of Sahara India Real Estate Corporation Ltd. and Sahara Housing Investment Corporation Ltd., in compliance with the order of the Hon'ble Supreme Court of India dated 26th March 2014. We hereby guarantee that on the demand in writing made by SEBI, we shall, without demur, pay the amount demanded upto the maximum amount of Rupees Five Thousand Crores. This guarantee shall remain in force initially for a period of six months and shall be extended for further periods of six months at the time, until SEBI otherwise directs pursuant to the order of Hon'ble Supreme Court. 13. SEBI has given its nod to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea of exempting the applicants from depositing the amount already redeemed by them was considered at length and rejected. In the said judgment, the Court took note of and expressed its opinion on this aspect at various places. In para 55 of the judgment, the Court observed that such a plea was not accepted even earlier by a three Judge Bench while disposing of Civil Appeal No. 8643 of 2012 vide order dated 05.12.2012, in the following manner: During the pendency of the contempt proceedings, we also decided to determine the veracity of the redemption theory, projected by the two companies. As a matter of law, it was not open to the two companies to raise the aforesaid defence. This is because, exactly the same defence was raised by the two companies, when they had approached this Court by filing Civil Appeal No. 8643 of 2012 (and Writ Petition (Civil) No. 527 of 2012). In the aforesaid Civil Appeal, it was submitted on behalf of the two companies that they should be exempted from depositing the amount already redeemed by them. The above contention advanced by the two companies was not accepted, by the three Judge Division Bench, when it disposed of Civil Appeal No. 8643 of 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to make deductions of ₹ 17,443 crores (insofar as SIRECL is concerned) and ₹ 5,442 crores (insofar as SHICL is concerned). 18. The aforesaid discussion clinchingly shows, without any cavil of doubt, that the contemnors/applicants have failed to give satisfactory proof of redemption of ₹ 17,400 crores by SIRECL and ₹ 5,442 crores for SHICL. 19. Mr. Sibal, however, drew our attention to certain lines appearing in paragraph 154 of the same judgment and submitted that it is still open to the applicants to demonstrate that the aforesaid amount is redeemed to the depositors and virtually nothing more is payable. This window which was still kept open by the Court in the said paragraph is in the following form: 154. ..Be that as it may, we have still retained a safety valve, inasmuch as, SEBI has been directed to examine the authenticity of the documents produced by the two Companies, and in case SEBI finds that redemptions have actually been made, the two Companies will be refunded the amounts, equal to the redemptions found to have been genuinely made. 20. No doubt, this much scope is still left for Sahara group. Fact remains that a definite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... release, this Court showed desired compassion and empathy by passing orders dated 26.03.2014, thereby paving a way for grant of interim bail. It was, however, with a legitimate condition that out of almost ₹ 3,000 crores that had become due by that time, the contemnors deposit at least ₹ 10,000 crores, that too with relaxed provision of deposit of 50% thereof by means of bank guarantee only. There was a genuine hope that for the sake of attaining their own freedom, the contemnors shall at least comply with this direction immediately. Since then, though there have been attempts on the part of the contemnors to do the needful, but all in vain. This is notwithstanding the fact that insofar as this Court is concerned, it has shown and extended all support in the form of giving desired facilities in jail; lifting the attachments in respect of those properties chosen by the applicants themselves, for sale/ encumbrances etc.; allowing these applicants to accept the offer of lesser amount than the book value of a particular asset, going by the fact that these were akin to distress sales in a depressed real estate market. May be the applicants now see the light at the end of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dges in hard cases have a discretion to determine what the law is, Dworkin has instead argued for the judicial use of public standards or principles in a way that is capable of providing the right legal answer. The process of reaching a right answer in hard cases obviously differs from the process of reaching the legal answer in easy cases. After all, the avowed objective of rule of law is also to ensure that the orders of this Court are respected and obeyed. Therefore, its a classic case where the approach adopted is influenced by the necessity of making the law work . Therefore, the orders passed may not be strictly construed as arising out of contempt jurisdiction, but in exercise of inherent jurisdiction vested in this Court to do complete justice in the matter and to ensure that the applicants render full compliance of its orders. It's the unprecedented situation which has led to passing of unprecedented, but justifiable, orders. 23. This Court is not powerless as it can always direct selling the properties of the Sahara Companies to ensure recovery of the aforesaid amount as the value of those properties is stated to be much higher. However, it is not done so far purs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the default by the contemnors in depositing the balance amount in terms of the directions that we propose to issue. It is in that spirit that we accept the bank guarantee format furnished by the contemnors and grant to them time to deposit the balance amount that remains to be deposited subject to the following conditions: (1) Keeping in view the total liability which according to SEBI, has risen to ₹ 36,000 crores (approximately), the contemnors shall deposit the balance outstanding amount within a period of 18 months commencing from the date of their release from custody in nine installments. First eight installments shall be of ₹ 3,000 crores payable every two months from the date of their release from custody and last installment shall be of the remaining amount. (2) In the event of the default in payment of two instalments (not necessarily consecutive) the bank guarantee furnished by the contemnors pursuant to the order of this Court shall be encashed by SEBI and the amount so received counted towards part compliance with the earlier directions given by this Court. (3) The bank guarantee shall also be encashable in the event of failure of the contemnors ..... X X X X Extracts X X X X X X X X Extracts X X X X
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