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Business News/ Companies / News/  Supreme Court bars Sahara group from selling properties
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Supreme Court bars Sahara group from selling properties

Sahara chairman Subrata Roy has been told not to leave the country without prior permission of the court

A file photo of Sahara chairman Subrata Roy. Photo: AFPPremium
A file photo of Sahara chairman Subrata Roy. Photo: AFP

New Delhi/Mumbai: The Supreme Court on Thursday barred the Sahara group from selling any of its properties for failing to refund about 24,000 crore to people who had invested in securities sold by two group companies.

The apex court also ordered five directors of the two Sahara firms, Sahara India Real Estate Corp. Ltd (SIRECL) and Sahara Housing Investment Corp. Ltd (SHICL), including chairman Subrata Roy, to not leave the country without the prior permission of the court.

The order comes in response to a contempt petition filed by the Securities and Exchange Board of India (Sebi), alleging that the Sahara group firms had failed to comply with the apex court’s 31 August 2012 direction to refund investors through the capital market regulator.

“We direct Sahara group of companies not to part with any property and we direct the directors not to leave the country without the permission of the court," said the Supreme court order.

On 29 October, the court had directed SIRECL and SHICL, which sold so-called optionally fully convertible debentures (OFCD) to investors, to make available to Sebi the title deeds of properties worth 20,000 crore within three weeks.

However, Arvind Datar, senior counsel representing Sebi in court on Thursday, said a piece of land in Mumbai that Sahara claimed to be worth 19,000 crore was only worth about 118 crore by government valuation.

The 106 acres of land in Versova is also surrounded by two creeks, which puts it in the “Green Zone".

The area, according to Datar, is a “no development zone" and no commercial activity of any nature is permissible within it.

Datar said Sahara’s “speculative and futuristic value" on the property was inclusive of possible commercial exploitation but as it stood today, its value was much lower.

“Sahara has not complied with the Supreme Court and has not given title deeds and hence the directors should not be allowed to leave the country. The exercise had been undertaken to ensure that the interest of the investor must be secured," said Datar.

C.A. Sundaram, senior counsel representing Sahara, said that the valuation had been carried out by a globally renowned agency and was reliable. However, Datar said the international valuer had not scrutinised, inspected or measured the property, and that Sahara had not given them land registry and other relevant documents.

The Supreme Court, on 5 December 2012, gave the Sahara group companies nine weeks to pay back 24,000 crore with 15% interest to more than 30 million investors, with an immediate upfront payment of 5,120 crore.

The balance amount was to be deposited with Sebi in two instalments— 10,000 crore by the first week of January and the remaining by the first week of February.

The group handed over a draft for 5,120 crore on 5 December, but failed to pay the rest of the amount. In fact, it claimed that the total liabilities of SIRECL and SHICL to bond investors had dropped from 24,000 crore to 2,610 crore, which the group said has been paid to Sebi, along with a buffer amount of 2,500 crore.

On 13 February, Sebi ordered a freeze on the bank accounts of SIRECL and SHICL, their promoters and directors after being criticized by the apex court for delays in taking action against the group.

SIRECL and SHICL had collected money from at least 29.61 million investors between April 2008 and April 2011 through OFCDs. The capital market regulator had said that the OFCD sale was in violation of public issue norms under the companies law and the Sebi Act.

Sahara has filed a defamation case in a Patna court against Mint’seditorand some reporters over the newspaper’s coverage of the company’s dispute with Sebi. Mint is contesting the case.

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Published: 21 Nov 2013, 06:33 PM IST
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