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SEBI v. Sahara India Real Estate Corporation

Contempt Petition (Civil) · Neutral citation not assigned (Contempt Petition (Civil) No. 412 of 2012)Decided 22 Jul 2014
Contempt Petition (Civil) No. 412 of 2012
Justice T.S. Thakur · Justice Anil R. Dave · Justice A.K. Sikri

Background

This is an interim order, not a final judgment. Sahara's officers remained in custody for failure to comply with investor-refund directions. An earlier conditional bail order required Rs. 5,000 crore in cash and a further Rs. 5,000 crore bank guarantee. Sahara sought permission to sell or encumber three overseas hotels to raise funds, and Subrata Roy sought temporary release on medical, family and negotiation grounds.

Decision Breakdown

This is an interim order, not a final judgment. The Supreme Court permitted transfer, sale or encumbrance of the three overseas hotels subject to safeguards protecting the money available for compliance. After repayment of the Bank of China loans, the sale proceeds had to be deposited with SEBI toward the release conditions, with any excess held separately pending further orders. Sale prices could fall no more than five per cent below the accepted valuations without prior court approval, a safeguard also applied to remaining domestic properties previously authorised for sale. It refused temporary release because no serious medical condition or concrete transaction requiring negotiations had been established, while leaving possible future negotiation arrangements open. It also appointed Shekhar Naphade as amicus in place of F. S. Nariman, who had earlier represented Sahara.

Lesson Learnt

Court-authorised disposal of assets to satisfy an investor-refund order can carry strict price and proceeds safeguards. Permission to sell property does not itself relax separate conditions for an officer's release from custody.

Official source (sci.gov.in)View Judgment (PDF)

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