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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 ..... , 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, 'SEBI') have the origin in the judgments that were pronounced in the civil appeals, numbers whereof are mentioned above. It so happened that Sahara India Real Estate Corporation Limited (SIRECL) and Sahara Housing Investment Corporation Limited (SHICL) (hereinafter referred to as the 'Saharas') invited and claimed to have collected deposits from general public who, allegedly, included cobblers, labourers, artisans, peasants etc. This invitation for deposit was in the form of 'Optional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was decided on 05-12-2012. The Saharas had produced before the Court, demand drafts for a total sum of Rs. 5120 crores. This Court directed them to handover the same to SEBI. Further direction was given to deposit the balance amount of Rs. 17,400 crores together with interest @ 15% per annum with SEBI in two installments. First installment of Rs. 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 resulted in filing of the contempt petitions, which are the main proceedings at hand. In these contempt petitions various opportunities were given to the contemnors to purge the contempt by depositing the amount, as directed. The record shows that at various stages the contemnors gave the proposals for compliance with the directions which were explored from time to time, but eventually all these proposals were found to be unsatisfactory, yielding no tangible results. This was perceived as stubborn attitude of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 as per the books of accounts is in several thousand crores and had the Sahara group succeeded in selling even few of these properties, bail conditions would have been met long ago. Thus, insofar as this Court is concerned it gave all necessary stimulus to enable the applicants to sell the assets, that too at reasonable market price. If, the contemnors have still not been able to achieve the required target, it is either because of the reason that the efforts made by the contemnors as well as other officers of Sahara group in raising money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 pointed out, however, that the price being offered is Rs. 64 crores. The price offered is lower than 5% of the estimated value. However, according to the applicants, due to the depressed real estate market, the present estimated market value of the said property is Rs. 53.70 crores, as per the valuation report received. This value is calculated on the basis of circle rate of the project land. On that basis, IA Nos. 62-64 of 2015 are filed with the following prayers: "(i) Allow the applicants to enter into the Definitive Agreement for the property situate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara 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 aforesaid format. Likewise, Mr. Shekhar Naphade, learned amicus appointed by this Court, has made a statement that the guarantee to be furnished in the aforesaid format may be accepted. At the same time, Mr. Arvind Datar, learned senior counsel appearing for SEBI, as well as Mr. Naphade were very emphatic in pointing out that this Court should indicate in its order as to what should be the trigger point for encashing the bank guarantee. In other words, it was their submission that insofar as balance amount payable by the applicants/contemnors is concerned, this Court may give some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (and Writ Petition (Civil) No. 527 of 2012) by order dated 5.12.2012. It is, therefore, apparent that the instant defence of having already redeemed most of the OFCD's was not open to the two companies (and even the contemnors). Yet, so as to ensure that no injustice was done, we permitted the two companies to place material on the record of this case to substantite the factum of redemption. (Emphasis supplied)" 16. The Court, thus, went into this issue again permitting the two companies to place requisite material on record to substantiate the factum of redemption and took into considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable. 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 course of action that is to be chartered is also laid down, namely, in the first instance it is obligatory on the part of the contemnors/applicants to deposit the entire balance amount along with interest accrued thereon in the SEBI-Sahara Refund Account. This obligation has to be performed in all circumstances. It is only thereafter, if and when the applicants are able to substantiate the factum of redemption, they would be entitled to refund of the said amount to the extent they are able to prove in this behalf. Therefore, at this stage, one thing which is more than apparent is that after the conditions for interim bail stipulated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 tunnel as it is projected that the Sahara companies has finally found the buyers for certain assets and/or financers who are ready to provide the requisite finance against some of the Sahara Companies properties and that would bridge the gap insofar as conditions of interim bail are concerned. However, as mentioned above, the matter does not rest with the deposit of Rs. 5,000 crores and Rs. 5,000 crores by way of bank guarantee. Total liability has swelled to more than Rs. 36,000 crores. The aforesaid deposit of Rs. 10,000 crores is only a condition of interim bail. It is the bounden duty of this Court to ensure that balance amount is also depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 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 necessary steps for generating the desired finances and the Court has accepted their request and given them opportunities and chances to do so. 24. Shri Datar, Senior Counsel for SEBI and Shri Naphade, Amicus Curiae contended and in our view rightly so, that if the format of the bank guarantee is accepted, this Court ought to indicate the circumstances in which the SEBI can seek encashment of the said guarantee. It was argued that the Bank Guarantee as furnished by the contemnors did not indicate a trigger ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to deposit the full amount outstanding against them within a period of 18 months commencing from the date of their release. (4) In the event of failure of the contemnors to deposit three instalments (not necessarily consecutive), the contemnors shall surrender back to custody and in case they fail to do so, they shall be taken into custody and committed to jail. (5) Since only some of the properties have been released by this Court for sale by the contemnors, the contemnors shall be free to apply for permission to sell any further property within 15 days from their release in order to enable them to raise funds for deposit of the required amount in terms of the order of this Court. (6) Keepin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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