Business

SC Ultimatum to Shara: Pay up Rs 40,000 cr or we'll auction your assets

March 14, 2015 03:32 PM
SUPREME COURT OF INDIA, New Delhi

Jailed Chief Gets 1 Month th To Save Group

New Delhi: The Supreme Court on Friday issued an ultimatum to the Sahara group and its jailed chief Subrata Roy: pay up dues of Rs 40,000 crore to investors in a month or face auction of group assets.

In August 2012, the court had directed two Sahara group companies -Sahara Real Estate and Sahara Housing -to return around Rs 24,000 crore with interest to nearly 3 crore investors through market regulator Sebi. The firms were later allowed to pay up by February 2013. So, the total dues have now gone up to Rs 40,000 crore with the accretion of interest.

It took a lot of persuasion from senior advocate Kapil Sibal, freshly drafted in to represent Roy and the group, to convince the court for one last opportunity to negotiate deals for mortgage of its three hotels abroad -Grosvenor House in London and Plaza and Downtown in New York -to raise the money.

The court's ultimatum came after it had repeatedly expressed its annoyance over Sahara failing to arrange the money to secure Roy's bail and pay back investors.

In August 2012, the court had directed two Sahara group companies -Sahara Real Estate and Sahara Housing -to return around Rs 24,000 crore with interest to nearly 3 crore investors through market regulator Sebi. The firms were later allowed to pay up by February 2013. So, the total dues have now gone up to Rs 40,000 crore with the accretion of interest.

Sahara deposited Rs 5,120 crore claiming it had refunded most of its investors and had a liability of just over Rs 2,000 crore. The court jailed Roy along with two group directors in 2014. They will get bail when the group deposits Rs 5,000 crore in cash with Sebi and furnishes a bank guarantee for another Rs 5,000 crore. On Friday , when Sibal told a bench of Justic es T S Thakur, A R Dave and A K Sikri that negotiations were underway to work out a fresh deal involving three the overseas hotels to raise money for Roy's release, the bench observed that despite repeated opportunities, the group had failed to pay up the dues.

Sibal pleaded for one more opportunity and four weeks time to make another attempt to raise the money needed to secure bail amount. “I am in the hands of the court. I have suffered a lot. Give me one last opportunity ,“ Sibal said on behalf of Roy . The court agreed to give one last opportunity .

“We will give you one more opportunity . But, this will be the third and last opportunity .If it does not fructify , then we will appoint a receiver for the entire assets of the group and direct transparent auction. We cannot allow your incarceration to continue indefinitely. It is better to realize the dues by auctioning your assets. After realizing the dues as directed in court orders, rest of the money you can keep. The court orders must be taken to its logical conclusion. We must take steps to recover the money due,“ the bench said. Sahara has so far deposited nearly Rs 4,000 crore. Subrata Roy and two group directors have already completed a year in jail.

But, Sahara faces another problem. The court sought responses of Sebi and RBI in four weeks on alleged siphoning off of Rs 500 crore from sale of securities by the group. The court had directed that the entire proceeds of such sale of securities would be deposited in the Sebi-Sahara account. Sahara group denied the charge and said it was permitted by Sebi to divert part of the money for repayment to investors.

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