New Delhi: The Supreme Court Monday directed Sahara Group's real estate and housing finance companies to give original title deeds of their assets worth Rs.20,000 crore to SEBI as a guarantee towards repaying Rs.24,000 crore of investors' money they had collected under optionally fully convertible debentures.
A bench of K.S. Radhakrishnan and Justice J.S. Khehar ruled that Sahara Group will submit original title deeds of the assets held by its companies to Securities and Exchange Board of India (SEBI) along with their valuation reports.
The title deeds will be accompanied with the resolutions by the companies in favour of their pledging. The title deeds also have to be free of any encumbrance.
The court has given the Sahara Group three weeks' time - till Nov 11 - to comply with its order.
It warned in case of failure to comply, Sahara chief Subrata Roy and other directors, who have been named as contemnors, will not leave the country without prior permission of the court.
Sahara has already paid Rs.5,120 crore to the SEBI towards the payment of the investors money.
The apex court by its Aug 31, 2012, order had directed the Sahara India Real Estate Corporation Ltd. (SIRECL) and Sahara Housing Investment Corporation Ltd. (SHICL) to return the investors Rs.24,400 crore with 15 percent interest.
In the hearing Monday, the court initially indicated that Subrata Roy and its two other Directors Ravi Shankar Dubey and Ashok Roy Choudhary who have been hauled for contempt by the market regulator will not leave the country.
But it was a forceful plea by senior lawyer C.A. Sundram, appearing for Sahara, that saved the day for Sahara chief. He said that half the time Roy was abroad and such an order would "affect his reputation, his business and banking operations".
The things appeared slipping out of Sahara's hand when in response to Sundram's submission that the title deeds would only be inspected by the market regulator and returned, Justice Khehar retorted: "Do whatever you want to do. We would bar you from travelling abroad."
But the counsel save the situation by making a quick retreat.
The court's order came after Sundram offered that Sahara Group will pledge the title deeds of the its assets to the Punjab National Bank which in turn would stand security for the payment of investors outstanding amount.
And if it failed to make the payment of the investors money that would emerge after the verifications of the investors documents by the SEBI, then those sureties would be encashed.
Sahara's offer came in response to the apex court asking both Sahara Group and SEBI to sit together and explore the possibility of some solution for the payment of investors money.
SEBI's senior counsel Arvind Dattar, who grudgingly accepted the offer, initially insisted that Sahara Group should deposit the entire amount of investors money with the market regulator as was mandated under the statutory provisions.
"If I have to sell my company then I will be finished. Don't make me liquidated. Please don't take the cash today. If I pay cash today my company will be over," Sundram told resisting SEBI's insistence on Sahara Group making entire payment before the verifications of the documents starts.
Reassuring the SEBI counsel, Justice Khehar said: "They will have to give. They can't escape. You can take it... They can't escape."
"You underestimate the Supreme Court. That is the problem. Everything will be done."