Supreme Court asks Sahara Group for details on current executives and assets

The Supreme Court has directed the Sahara Group to disclose details about its current executives and shareholders, along with a list of unencumbered properties that could be sold to raise ₹10,000 crore. 

This amount is to be deposited into the Sebi-Sahara refund account for returning investors’ money. The government launched the Sebi-Sahara platform in July last year to initiate the refund process for millions of small depositors affected by Sahara Group’s collapse.

A Supreme Court bench comprising Justices Sanjiv Khanna, M.M. Sundresh, and Bela M. Trivedi also ordered Sahara Group companies—Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation Ltd (SHICL)—to refund funds collected from individual and group investors to the Securities and Exchange Board of India. 

The repayment must include 15% annual interest, calculated from the date of subscription until the date of repayment, and should be completed within three months.

This directive follows a Supreme Court order from 31 August, 2012, mandated that SIRECL and SHICL refund the collected amounts with 15% annual interest within three months. Despite the passage of over a decade, Sahara Group has not fully complied, resulting in continued court scrutiny.

During the hearing on Wednesday, senior advocate Arvind Datar, representing Sebi, raised concerns about the Sahara Group’s leadership and its plan to comply with the court’s order following the death of group founder Subrata Roy in 2023.

The bench then stressed the importance of understanding the current organizational structure, including the names of directors and shareholders.

The court stated that on 5 September it will first hear and address the sale of properties and subsequently consider the refund of money to investors. It requested a list of all encumbered and unencumbered properties of the Sahara Group, excluding Aamby Valley, to facilitate necessary directives.

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Mounting liabilities

Earlier, the Supreme Court had expressed dissatisfaction with Sahara Group’s failure to deposit the full payment as ordered, noting that there was no restriction on selling properties to meet the remaining ₹10,000 crore out of the ₹25,000 crore deposit mandated by it. However, properties must not be sold below the circle rate, and court permission is required for sales below this rate. (Circle rate, or guidance value, is the price below which a property cannot be registered.)

Sebi reported that under the 2012 Supreme Court order, Sahara Group firms had deposited ₹15,455.70 crore, and the amount had been invested in fixed deposits with various nationalized banks. As of 30 September, 2020, the total amount, including interest earned, in the Sebi-Sahara refund account was ₹22,589.01 crore.

Sebi stated that Sahara Group and its firms SIRECL and SHICL were in “gross violation” of court orders regarding the full deposit of collected amounts along with interest. 

The market regulator noted that out of the total outstanding principal liability of ₹25,781.32 crore, only ₹15,455.70 crore had been realized from Sahara and its properties. The remaining ₹10,325.62 crore (principal) is still unpaid.

As of 30 September, 2020, the total net liability of Sahara Group was ₹62,602.90 crore, including 15% interest as directed by the court.

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The fall of Sahara

In 2010, Sebi barred Sahara India Pariwar chief Subrata Roy, SIRECL and SHICL from raising public funds due to alleged illegal collection through optionally fully convertible debentures (OFCDs). The Sahara Group appealed to the Allahabad High Court, which issued an order preventing Sebi from taking further action until a court decision was reached. 

The Delhi High Court subsequently issued a warrant against Roy for alleged investor deception in a housing project, though proceedings were temporarily halted. 

The Supreme Court then directed the disclosure of Sahara India Real Estate’s OFCD scheme details and ordered immediate refunds, including 15% interest. On 4 March, 2014, Roy was arrested for failing to comply with the Supreme Court’s summons and sent to Tihar jail. 

Between 2014 and 2016, Roy was granted bail multiple times and released on parole on 6 May, 2016.

In November 2023, Roy passed away at a private hospital in Mumbai following a prolonged illness.