The Sahara Group on Wednesday received a temporary reprieve from the Supreme Court, winning time till February to refund the entire Rs 24,000 crore with 15% interest to its 30 million investors. However, the court asked Sahara to make an immediate upfront payment of R5,120 crore.
The apex court asked Sahara to pay the rest in two instalments — R10,000 crore in the first week of January and the balance in the first week of February. If the company fails to make the first instalment, the Securities and Exchange Board of India (Sebi) will be free to take steps including freezing bank accounts and attaching properties to recover the money. The court also ordered Sahara to submit detailed documents to Sebi if it had already refunded any money collected through its optionally fully convertible debentures.
In doing so, the bench headed by Chief Justice Altamas Kabir modified the court’s August 31 order giving Sahara three months ending November to make the full refund. The court said it had taken a slightly liberal view keeping in mind the interests of the investors and not the company. The bench also observed that it appears the group was not in a position to pay the entire amount as directed on August 31.
However, Sebi and an association of investors who had put money in the schemes raised strong objections, saying the directions were given without hearing their submissions. Sebi senior counsel Arvind Dattar kept insisting that the matter be heard by the original bench, but justice Kabir rejected this and also refused to record Sebi’s objections in the order.
The investors’ association objected to the order saying it was pronounced without hearing its arguments. Senior advocate Vikas Singh said the bench was “passing the order in the guise of protecting investors, but what is there for them if investors are not heard? It is not fair”.
The court had rapped Sahara on Monday stating its steps and intentions were “shaky” and had asked it whether it was in a position to repay money.
The order was passed on an appeal filed by the Sahara Group against a November 29 order of the Securities Appellate Tribunal (SAT), which had refused to entertain their plea and asked them to approach the Supreme Court which had directed them to refund the amount by November 30.
In response to the order, Sahara’s lawyer Satish Kishanchandani said in a statement: “As per the statutory auditor’s certificate, the outstanding liability of both companies towards the outstanding OFCDs is Rs 2,620 crore only as on November 30, 2012, when Sahara had offered to pay orders of Rs 2,620 crore and also a buffer amount of Rs 2,500 crore subject to certain verification … at company’s end....Today, Sahara was ready to offer bank guarantee of Rs 14,780 crore so that this amount plus Rs 2,620 crore would become Rs 17,400 crore… As Sahara has already redeemed OFCDs, Sebi is required to return the excess amount if any, to Sahara after payments to the outstanding OFCD holders. Till the time the said amounts are repaid to Sahara as aforesaid to that extent there would be double payment”.