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Investment scam: Sahara gets SC notice on SEBI’s contempt plea
Legal Correspondent

Collections refunded: Sahara   Sahara counsel, Ram Jethmalani, said the two Sahara companies had refunded most of the amounts even before the August 2012 verdict and the outstanding stood at only Rs 2,620 crore   Against this, Sahara deposited Rs 5,120 crore with SEBI - as much as Rs 2,500 crore in excess - so that this could be a buffer just in case Sahara’s calculation was wrong

New Delhi, February 6
The Supreme Court today issued notice to Sahara group on a contempt petition filed by market regulator SEBI contending that Sahara had failed to comply with the August 31, 2012 SC judgment. In the verdict, the SC had directed two of its group companies to refund within three months Rs 24,029 crore they had collected in 2008-09 in the form of Optionally Fully Convertible Debentures (OFCD) violating investors’ protection norms.

A Bench comprising KS Radhakrishnan and JS Khehar directed Sahara to give its response within four weeks, while SEBI would have to file its rejoinder in two weeks thereafter.

During the arguments, the Bench asked SEBI to provide reasons for not initiating recovery proceedings against Sahara if the two companies had failed to comply with the SC verdict. In the judgment, the SC had clearly directed SEBI to recover the amount and as such there was no need for moving the contempt petition, the Bench explained.

It was SEBI, not Sahara, which should be subjected to contempt proceedings for failure to implement the SC verdict, the Bench remarked.

SEBI’s counsel Pratap Venugopal said the market regulator had power to freeze Sahara’s bank accounts only for three months. But the Bench was not convinced.

“We gave you the power to initiate recovery proceedings,” it said.

Appearing for Sahara, senior counsel Ram Jethmalani, however, contended that the two companies - Sahara India Real Estate Corporation (SIRECL) and Sahara Housing Investment Corporation (SHICL) - had refunded most of the amount even before the August 2012 verdict and the outstanding had stood at only Rs 2,620 crore. Against this amount, Sahara deposited Rs 5,120 crore with SEBI - as much as Rs 2,500 crore in excess - so that this could be a buffer just in case Sahara’s calculation of the outstanding amount was wrong.

Jethmalani also pleaded that Sahara had provided to SEBI 127 truck-full of documents pertaining to 3.03 crore redemptions. The Bench wanted to know as to how Sahara refunded the amount directly to the investors when the SC had asked it to do it through SEBI. Jethmalani said the refunds had been made prior to the judgment.