Supreme Court gives Sahara time till February to refund investors

In a huge relief to the Sahara group, the Supreme Court today gave the company until February next year to pay Rs 17,400 crore plus interest to its depositors.

The court has asked Sahara to pay Rs 5,120 crore upfront and the balance in two instalments—Rs 10,000 crore in the first week of January, and the rest in the first week of February.

The Supreme Court had on Monday expressed its fierce displeasure at the Sahara group for ignoring its order to refund Rs 27,000 crore to investors, and asked the two Sahara firms—Sahara India Real Estate Corporation and Sahara Housing Investment Corporation—to explain by Tuesday if the entire amount can be refunded within a week. "Your intention is very shaky. Your every step is shaky,” the court had said.

Yesterday, the companies sought more time to furnish the details of the refund of the investors' money it had mopped up through optionally fully-convertible debentures (OFCD), following which the case was adjourned till today.

Sahara said in newspaper advertisements on Saturday it had "cleared" about Rs 33,000 crore raised in the outlawed bonds and had maximum outstanding liability of Rs 5,120 crore, which it was ready to deposit with the authorities.

On August 31, the Supreme Court ruled that finance schemes run by the two Sahara companies were illegal and ordered the group to repay as much as Rs 24,000 crore plus 15 per cent interest to almost three crore mostly small investors. Under the scheme rejected by the Supreme Court, the two Sahara firms had offered bonds to small investors, promising, in some cases, to return three times the face value after 10 years.

The Supreme Court had then ordered that the money be repaid within 90 days. It also directed market regulator Sebi to facilitate the refund of this money to the investors. Sahara was to ordered to give details of all the investors to Sebi within 10 days, failing which, the court said, the regulator could freeze accounts and attach properties of the two firms. Sebi, it said, would ascertain the genuineness of each investor before a refund was made.

In October, Sahara, through a review petition, appealed to the Supreme Court to reconsider its order and seeking more time.

Last week, the company said that it had returned Rs 19,000 crore to investors in the past few months meeting the end-of-November deadline set by the Supreme Court; the company said it was ready to deposit the balance of a little over Rs 5 crore with the court’s registry. The group has been at loggerheads with the Sebi over making that last payment.

The market regulator had in September refused to accept a truckload of documents sent by Sahara, saying they had arrived after office hours on the day the 10-day deadline set by the court expired and also refused to accept the documents with details about investors in tranches. It has since sought to initiate criminal proceedings against the company, accusing it of non-compliance with a Supreme Court order.

That matter will come up for hearing on December 14.

Last month, Sahara moved the Securities Appellate Tribunal, which looks into appeals against orders passed by Sebi, pleading that it had been wrongly charged by Sebi and asking the tribunal to facilitate the refund, but the latter dismissed its plea saying only the Supreme Court could intervene. Sahara then moved the court.

When senior advocate Gopal Subramaniam, appearing for one of the Sahara companies, tried to justify its failure to refund the entire amount, but the Supreme Court said, "You are justifying your conduct, which is not justifiable."

With inputs from Reuters