Securities And Exchange Board Of India v. Sahara India Real Estate Corporation Limited And Others

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 19-21 of 2014 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on September 8, 2014

SECURITIES AND EXCHANGE BOARD OF INDIA . . Petitioner;

Versus

SAHARA INDIA REAL ESTATE CORPORATION LIMITED AND OTHERS . . Respondents.

With

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 31-39 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on December 2, 2014

SECURITIES AND EXCHANGE BOARD OF INDIA . . Petitioner;

Versus

SAHARA INDIA REAL ESTATE CORPORATION LIMITED AND OTHERS . . Respondents.

With

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 31-39 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on December 17, 2014

SECURITIES AND EXCHANGE BOARD OF INDIA . . Petitioner;

Versus

SAHARA INDIA REAL ESTATE CORPORATION LIMITED AND OTHERS . . Respondents.

With

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 31-36, 43-44 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011, IAs Nos. 90-91 in CAs Nos. 9813, 9833 of 2011 and CPs (C) Nos. 260 of 2013, in CA No. 8643 of 2012 with TCs (C) Nos. 83-87 of 2014, decided on January 9, 2015

SECURITIES AND EXCHANGE BOARD OF INDIA . . Petitioner;

Versus

SAHARA INDIA REAL ESTATE CORPORATION LIMITED AND OTHERS . . Respondents.

With

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 47-55 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP No. 260 of 2013 in CA No. 8643 of 2012, decided on February 24, 2015

SECURITIES AND EXCHANGE BOARD OF INDIA . . Petitioner;

Versus

SAHARA INDIA REAL ESTATE CORPORATION LIMITED AND OTHERS . . Respondents.

With

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 47-49 of 2015 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813 and 9833 of 2011, decided on March 13, 2015

SECURITIES AND EXCHANGE BOARD OF INDIA . . Petitioner;

Versus

SAHARA INDIA REAL ESTATE CORPORATION LIMITED AND OTHERS . . Respondents.

With

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 47-49 of 2015 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on March 23, 2015

SECURITIES AND EXCHANGE BOARD OF INDIA . . Petitioner;

Versus

SAHARA INDIA REAL ESTATE CORPORATION LIMITED AND OTHERS . . Respondents.

With

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 59-64 of 2015 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on June 19, 2015

SECURITIES AND EXCHANGE BOARD OF INDIA AND ANOTHER . . Applicants;

Versus

SAHARA INDIA REAL ESTATE CORPORATION LIMITED AND OTHERS . . Respondents.

IAs Nos. 16-18 of 2014 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on August 14, 2014

With

IAs Nos. 19-21 of 2014 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on September 8, 2014

With

IAs Nos. 31-39 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on December 2, 2014

With

IAs Nos. 31-39 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on December 17, 2014

With

IAs Nos. 31-36, 43-44 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011, IAs Nos. 90-91 in CAs Nos. 9813, 9833 of 2011 and CPs (C) Nos. 260 of 2013, in CA No. 8643 of 2012 with TCs (C) Nos. 83-87 of 2014, decided on January 9, 2015

With

IAs Nos. 47-55 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP No. 260 of 2013 in CA No. 8643 of 2012, decided on February 24, 2015

With

IAs Nos. 47-49 of 2015 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813 and 9833 of 2011, decided on March 13, 2015

With

IAs Nos. 47-49 of 2015 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on March 23, 2015

With

IAs Nos. 59-64 of 2015 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on June 19, 2015

A. Constitution of India — Arts. 142, 129, 21 and 32 — Personal liberty vis-à-vis public interest in ensuring compliance with court orders — Recovery of money illegally collected from the public by the contemnors — Unprecedented situation of issue of personal liberty of three contemnors lodged in custody for refusing to comply with Supreme Court orders on the one hand vis-à-vis the majesty of the law and ensuring larger public good, on the other hand — Resolution of — By resort to legal realism — Held, present is a classic case where approach adopted is influenced by the necessity of “making the law work” — Therefore, the orders passed may not be strictly construed as arising out of contempt jurisdiction, but in exercise of inherent jurisdiction vested in Supreme Court to do complete justice in the matter and to ensure that applicant contemnors render full compliance with court orders — It is the unprecedented situation which has led to passing of unprecedented, but justifiable, orders — Hence, bail to contemnors could only be granted upon strict compliance with interim bail order dt. 26-3-2014 — Payment of balance amount of about Rs 36,000 crores permitted in nine 2-monthly instalments — In the event of default in payment of two instalments (not necessarily consecutive) bank guarantee of Rs 5000 crores shall be encashed by SEBI — Once released on bail after having complied with interim bail order dt. 26-3-2014, in the event of failure of contemnors to deposit three instalments (not necessarily consecutive), contemnors shall surrender back to custody and in case they fail to do so, they shall be taken into custody and committed to jail — Contemnors directed to deposit their passports in Supreme Court within 15 days from the date of this order or before their release, whichever is earlier — They shall not leave the country without prior permission of Supreme Court — Insofar as their movements within the country are concerned, contemnors shall keep Police Station Tilak Marg, New Delhi informed and updated about their whereabouts every fortnight — Big task of recovery of money illegally collected from public by contemnors along with interest from contemnors (amounting to a total of about Rs 36,000 crores) — Contemnors were in judicial custody for 15 months, their assets frozen, as they were simply refusing to comply with court orders — Court doing all that it could to ensure recovery of public money, that is, putting contemnors in judicial custody for past 15 months, showing leniency and allowing relaxations to contemnors within jail premises (like providing office and communication facilities) and lifting embargo in respect of alienation of certain properties — Yet contemnors failed to dispose of their properties to raise money to deposit security of Rs 5000 crores and arrange a bank guarantee of Rs 5000 crores required as conditions of their interim bail vide order dt. 26-3-2014 — Major proposals/deals relating to offshore hotel properties which could have fetched more than required amount, not materialising — Situation demanding that Court should be careful in lifting embargo on frozen assets to ensure that contemnors did not fritter away their properties and at the same time were not constrained from raising money to arrange security/bank guarantee for their interim bail — Because of futile efforts by contemnors, Court on earlier occasion contemplating to appoint Receivers to dispose properties of contemnors (but contemnors vehemently opposing such course of action) — Present total liability being Rs 36,000 crores but prior to that immediate concern being arrangement of security/bank guarantee of Rs 10,000 crores for interim bail — Presently, contemnors being at the verge of fulfilling conditions of bail as certain buyers being available for disposing of some of their properties and a nationalised bank in India agreeing to give bank guarantee — Hence, directed as above — Prayer of contemnors in IAs Nos. 62-64 of 2015, permitted — Thus contemnors allowed to sell Indian property (at Gorakhpur) at a price lower than 5% of estimated value [in terms of order dt. 4-6-2014, Sahara India Real Estate Corpn. Ltd., (2014) 8 SCC 751 a limit on sale price and other restrictions had been imposed] — Entire sale consideration, directed to be deposited in “SEBI Sahara Refund Account” — Prayer in IAs Nos. 59-61 of 2015 to permit contemnors to utilise surplus that would be available after complying with conditional bail order to meet their mounting liabilities in the form of statutory liabilities, unpaid salaries and wages, outstanding and overdue amounts payable to banks, etc., not granted for the present — The same to be considered after interim bail conditions had been satisfied B. Constitution of India — Arts. 129 and 142 — Recovery of money illegally collected from the public by contemnors — Bank guarantee format as a condition for their release on interim bail — Requirement of trigger point for encashment of bank guarantee, held, necessary — Absence of such trigger point in bank guarantee would make such bank guarantee meaningless — Purpose of present bank guarantee, stated — Present bank guarantee is meant to ensure that contemnors would take steps to deposit the remaining amount once they are released — Bank guarantee accepted subject to trigger points and other conditions in paras 102.1 to 102.6 C. Constitution of India — Arts. 129 and 142 — Recovery of money illegally collected from the public by contemnors — Drastic action like arrest and freezing assets of contemnors to enforce compliance and leniency like relaxing conditions of bail and careful lifting of embargo on certain properties to enable contemnors to comply with directions — Need of proper balance — Even though contemnors did not comply with directions, Supreme Court showed compassion by passing interim bail order dt. 26-3-2014, in Sahara India Real Estate Corpn. Ltd., (2014) 5 SCC 429 thus out of total outstanding of Rs 33,000 crores (now more than Rs 36,000 crores), contemnors required to deposit only Rs 10,000 crores, that too with relaxed condition that Rs 5000 could be deposited as bank guarantee D. Constitution of India — Arts. 129 and 142 — Recovery of money illegally collected from the public by contemnors — Arrest and detention to enforce compliance with Court's order which had directed that entire sum concerned with interest was to be deposited with SEBI and only then would question of refunds to alleged subscribers be considered — Proper proof regarding factum of refund to subscribers by contemnors still not furnished to Court — Held, a definite course of action is to be chartered before question of redemption/refund to subscribers is considered, namely, in the first instance it is obligatory on the part of the contemnors/applicants to deposit the entire balance amount along with interest accrued thereon in SEBI Sahara Refund Account — This obligation has to be performed in all circumstances — It is only thereafter, if and when the applicants/contemnors are able to substantiate the factum of redemption, that they would be entitled to refund of said amount to the extent they are able to prove in this behalf E. Constitution of India — Arts. 129 and 142 — Recovery of money illegally collected from the public by contemnors — Sale of offshore properties of contemnors — Prima facie proof — Offer letter by party and communication of foreign bank relating to due date clause and other aspects — SEBI and the Amicus Curiae not finding any fault in allowing transactions subject to amount raised being brought into India, subject to compliance with law F. Constitution of India — Arts. 129 and 142 — Recovery of money illegally collected from the public by contemnors — Disbursement of sums recovered from disposal of securities by contemnors, contrary to directions of Supreme Court — Contemnors violating directions of statutory authority like RBI as well as the Court — Liberty given to RBI to initiate action as per law — Contemnors directed to explain circumstances of such encashment and place on record information regarding mode and manner of disbursement of proceeds and identity of recipients — Court further directed contemnors not to alienate further securities, if any G. Constitution of India — Arts. 129 and 142 — Recovery of money illegally collected from the public by contemnors — Sale of assets of contemnors — Price at which sale can be permitted — Relevant factors — Depressed market conditions — Distress sale of property — Latest market price and circle rates being much lower than book value of Indian properties — Offer prices by prospective buyers considered — Scope of relaxing minimum value at which properties may be sold and allowing contemnors to sell at a price lower than 5% of estimated book value of properties provided it is a reasonable price — Relaxations permitted in respect of Indian properties of Saharas at: (a) Ambey Valley, (b) Gorakhpur, U.P., and (c) Chauma — Properties at Jodhpur, Vasai and Pune were within 5% margin fixed for which deals, permitted by taking undertaking regarding payments from buyers H. Constitution of India — Arts. 129 and 142 — Recovery of money illegally collected from the public by contemnors — Appointment of Receivers to sell properties of contemnors to recover the monies, when can be directed — Contemnors failing to alienate/dispose of their properties in order to meet conditions of bail in spite of provision of adequate office facilities within jail premises and in spite of being given repeated extensions of time therefor — Further, contemnors violating directions of RBI and Court regarding deposit of sale proceeds/maturity value of certain securities of about Rs 484.67 crores — Court deciding to appoint Receivers — But on basis of submissions, contemnors given a last chance to raise funds from their offshore properties to meet conditions of bail failing which Receivers would be appointed — Held, Court is not powerless as it can always direct sale of properties of the Sahara Companies to ensure recovery of amount concerned as value of the properties is stated to be much higher — However, it is not done so far pursuant to the wishes of applicants/contemnors who have pleaded against sale of these properties by the Court with repeated assurances that these Companies would be taking necessary steps for generating the desired finances and the Court has accepted their request and given them opportunities and chances to do so — Civil Procedure Code, 1908, Or. 40 R. 1 (Paras 46, 52 to 58 and 100) I. Constitution of India — Arts. 129 and 142 — Recovery of money illegally collected from the public by contemnors — Sale of foreign properties not materialising — Alternative proposal of substituting loan from China with other junior loans from foreign banks — Deal in which Ambey Valley (Mauritius) Ltd., a subsidiary of Saharas was to get transaction proceeds from Bank of America — Apprehensions of misutilisation and diversion of funds — Submission of Saharas that Ambey Valley (Mauritius) Ltd., being a subsidiary of Saharas, Court can indirectly exercise control on Ambey Valley (Mauritius) Ltd., through contemnors — Said transaction allowed subject to conditions stated in paras 41 and 42 (Paras 37 to 42) J. Constitution of India — Arts. 129 and 142 — Recovery of money illegally collected from the public by contemnors — Sale of properties of contemnors for raising funds for conditions in their interim bail — Office facilities like video conferencing and other communication and IT facilities in jail premises — When can be given and for how long Held : The Court feels concerned with the fact that three persons are deprived of their liberty for the last fifteen months and this situation is quite onerous to them. On the other hand, the public interest as well as the public good demands that the two Sahara Companies, which had collected a whopping amount of more than Rs 22,000 crores from the public in an illegal and unauthorised manner, are made accountable for the same in the manner it is directed vide orders dated 31-8-2012, in Sahara India Real Estate Corpn. Ltd., (2013) 1 SCC 1 and order dated 5-12-2012 in Sahara India Real Estate Exchange Corpn. Ltd., (2013) 2 SCC 733. By any yardstick, this is a huge liability, which the contemnors are bound to discharge by depositing the same with SEBI. It is, thus, an unprecedented situation of the personal liberty of the three applicants on the one hand vis-à-vis the majesty of the law and ensuring the larger public good, on the other hand. It is this sense of justice, in an unprecedented kind of situation, that has compelled the Court to take such an extreme step. It is this legal realism which has compelled the Court to adopt an approach which sounds more pragmatic. It is “doing what comes naturally” approach to the problem at hand, which required such a drastic step, going by the experience of this case, giving rise to “Reflection” that provided “Understanding”. (Para 99) This case is a burning example where the true dictate of justice is difficult to discern, and the law needed to come down on the side of practical convenience. We may borrow the jurisprudential theory propounded by Ronald Dworkin, albeit in somewhat different context viz. the “conventional jurisprudential wisdom” which holds that in certain cases of a particularly complex or novel character the law does not provide a definite answer. In denying that Judges in hard cases have a discretion to determine what the law is, Dworkin has instead argued for the judicial use of public standards or principles in a way that is capable of providing the right legal answer. The process of reaching a right answer in hard cases obviously differs from the process of reaching the legal answer in easy cases. After all, the avowed objective of the rule of law is also to ensure that the orders of the Court are respected and obeyed. Therefore, it is a classic case where the approach adopted is influenced by the necessity of “making the law work”. Therefore, the orders passed in this case may not be strictly construed as arising out of contempt jurisdiction, but in exercise of inherent jurisdiction vested in the Court to do complete justice in the matter and to ensure that the applicants render full compliance with its orders. It is the unprecedented situation which has led to passing of unprecedented, but justifiable, orders. (Para 99) Till date there is no full compliance with the condition for grant of interim bail, with the result that the three contemnors are still in judicial custody and 15 months have passed by. (Para 82) The issue of alleged refund of Rs 17,000 crores approximately to the depositors by the two Sahara Companies has been raked up by the contemnors/applicants time and again, but has been rejected by the Supreme Court every single time, since no credible evidence thereof has ever been placed before the Supreme Court, and even now. The contemnors/applicants have repeatedly failed to give satisfactory proof of redemption of Rs 17,400 crores by Sirecl and Rs 5442 crores for Shicl. (Paras 91 to 95) It is still open to the applicants to demonstrate that the aforesaid amount has been redeemed to the depositors and virtually nothing more is payable; however, a definite course of action is to be chartered before such a course is permissible. Namely, in the first instance it is obligatory on the part of the contemnors/applicants to deposit the entire balance amount along with interest accrued thereon i.e. about Rs 36,000 crores in the SEBI Sahara Refund Account. This obligation has to be performed in all circumstances. It is only thereafter, if and when the applicants are able to substantiate the factum of redemption, that they would be entitled to refund of the said amount to the extent they are able to prove in this behalf. Therefore, after the conditions for interim bail stipulated in order dated 26-3-2014 are fulfilled and pursuant thereto the three contemnors who are in judicial custody are released, the liability to deposit the balance i.e. about Rs 36,000 crores would still remain. Therefore, it would be essential for the applicants/contemnors to not only deposit the balance amount i.e. about Rs 36,000 crores in a time-bound schedule but also the manner in which they propose to muster the said amount. This cannot go on endlessly. (Paras 96 and 97) By order dated 21-11-2013 the assets of Sahara Group of Companies were frozen, to ensure that the contemnors do not fritter away these assets without complying with the directions of the Supreme Court passed in the civil appeals. However, on the request made by Sahara Group for lifting the embargo on certain properties in order to enable the Saharas to sell those properties so that the interim bail conditions are fulfilled, on 4-6-2014, the Supreme Court permitted various Sahara Group Companies to deal with/sell some of their assets, but only for the purpose of complying with the order dated 26-3-2014 granting conditional interim bail with further condition that whatever amount is realised by the sale of the said assets, same shall be deposited into the SEBI Sahara Refund Account and for providing the requisite bank guarantee in favour of SEBI in the sum of Rs 5000 crores, as per the directions. Though this liberty was granted to the Saharas one year ago and some other directions were given from time to time providing various facilities to the three contemnors in judicial custody facilitating contacts and dialogue/interaction with the prospective buyers for clinching of deals, the contemnors have been able to achieve only a partial success. They have mooted various proposals for the sale of these properties. However, major proposals ran into rough weather, hitting one or the other kind of roadblock and had to be terminated midway. The embargo which was lifted in respect of certain properties, the value thereof as per the books of accounts is in several thousand crores and had the Sahara Group succeeded in selling even a few of these properties, bail conditions would have been met long ago. Thus, the Court gave all necessary stimulus to enable the applicants to sell the assets, that too at reasonable market price. If, the contemnors have still not been able to achieve the required target, it is either because of the reason that the efforts made by the contemnors as well as other officers of Sahara Group in raising money from the sale/encumbrance of these properties were not adequate or it was their ill-luck or it is the market conditions which have to be blamed. Fact remains that by order dated 26-3-2014 the Supreme Court had granted bail, albeit with certain conditions. However, it is the contemnors who have not been able to fulfil those conditions for one reason or the other. (Para 83) During this period, certain properties have been sold and the amount realised therefrom stands deposited in the SEBI Sahara Refund Account. Things have come to a stage where, according to the applicants, they are on the verge of fulfilling the conditions imposed in the conditional interim bail order dated 26-3-2014. It is mentioned that they have certain buyers for some of the properties and the sale proceeds therefrom would meet the deficit. It is also stated that the contemnors have been able to negotiate with a nationalised bank, through two of its Sahara Group Companies and the said bank has agreed to furnish the required bank guarantee. (Para 84) The Court is conscious of the fact that three persons are under confinement for the last fifteen months. The circumstances under which orders dated 4-3-2014 were passed taking these persons into custody and sending them to jail are well known. The Court was virtually compelled to do so, going by the stubborn attitude of the contemnors in taking the orders dated 31-8-2012, in Sahara India Real Estate Corpn. Ltd., (2013) 1 SCC 1 and 5-12-2012 in Sahara India Real Estate Exchange Corpn. Ltd., (2013) 2 SCC 733 for granted, as if those orders were only on paper and were not meant to be complied with. So many opportunities were given, showing all the leniency which could be extended, to enable the contemnors to comply with those directions. It is only when the Supreme Court felt that unless some drastic action is taken there will be no desired effect, that this extreme step was taken. However, this step was taken in good faith to uphold the rule of law and to ensure that the dignity of the Court is maintained and there is faithful compliance with its directions. The contemnors, instead of taking steps to follow and fulfil the directions, started making a hue and cry. Still, in the application filed immediately thereafter for release, the Court showed desired compassion and empathy by passing the bail order dated 26-3-2014, thereby paving a way for grant of interim bail. It was, however, with a legitimate condition that out of almost Rs 33,000 crores that had become due by that time, the contemnors deposit at least Rs 10,000 crores, that too with relaxed provision of deposit of 50% thereof by means of bank guarantee only. There was a genuine hope that for the sake of attaining their own freedom, the contemnors shall at least comply with this direction immediately. Since then, though there have been attempts on the part of the contemnors to do the needful, but all in vain. This is notwithstanding the fact that insofar as the Court is concerned, it has shown and extended all support in the form of giving desired facilities in jail; lifting the attachments in respect of those properties chosen by the applicants themselves, for sale/encumbering, etc.; allowing these applicants to accept the offer of lesser amount than the book value of a particular asset, going by the fact that these were akin to distress sales in a depressed real estate market. May be the applicants now see the light at the end of the tunnel as it is projected that the Sahara Companies have finally found the buyers for certain assets and/or financers who are ready to provide the requisite finance against some of the Sahara Companies' properties and that would bridge the gap insofar as conditions of interim bail are concerned. However, the matter does not rest with the deposit of Rs 5000 crores cash and Rs 5000 crores by way of bank guarantee. The total liability of the Saharas has swelled to more than Rs 36,000 crores. The aforesaid deposit of Rs 10,000 crores is only a condition of interim bail. It is the bounden duty of the Court to ensure that the balance amount is also deposited by the applicants. (Para 98) The Court is not powerless as it can always direct sale of the properties of the Sahara Companies to ensure recovery of the aforesaid amount as the value of those properties is stated to be much higher. However, it is not done so far pursuant to the wishes of the applicants who have pleaded against the sale of these properties by the Court with repeated assurances that these Companies would be taking necessary steps for generating the desired finances and the Court has accepted their request and given them opportunities and chances to do so. (Para 100) SEBI has given its nod to the format of guarantee suggested by the Court. Likewise, the Amicus Curiae made a statement that the guarantee to be furnished in the aforesaid format may be accepted. However, the bank guarantee format submitted by the contemnors does not provide for a trigger point for its encashment. Furnishing the bank guarantee without stipulating the situations in which the guarantee shall become encashable, will be meaningless. The bank guarantee is actually meant to ensure that the entire amount is deposited by the contemnors once they are released from custody. That is because the liability to deposit the amount does not get obliterated by furnishing the bank guarantee which is intended to grant release of the contemnors from custody to enable them to comply with the orders passed by the Court. Since most of the properties owned by Sahara Group remain frozen by the order of the Court, the contemnors require time to enable them to deposit the balance outstanding. In case the bank guarantee is made encashable on default, the trigger point for encashment would be the default by the contemnors in depositing the balance amount in terms of the directions. Thus the bank guarantee format furnished by the contemnors is accepted subject to following conditions: (Paras 90 and 102) (i) Keeping in view the total liability which according to SEBI, has risen to Rs 36,000 crores (approximately), the contemnors shall deposit the balance outstanding amount within a period of 18 months commencing from the date of their release from custody in nine instalments. The first eight instalments shall be of Rs 3000 crores payable every two months from the date of their release from custody and last instalment shall be of the remaining amount. (Para 102.1) (ii) In the event of the default in payment of two instalments (not necessarily consecutive) the bank guarantee furnished by the contemnors pursuant to the order of the Court shall be encashed by SEBI and the amount so received counted towards part-compliance with the earlier directions given by the Court. (Para 102.2) (iii) The bank guarantee shall also be encashable in the event of failure of the contemnors to deposit the full amount outstanding against them within a period of 18 months commencing from the date of their release. (Para 102.3) (iv) In the event of failure of the contemnors to deposit three instalments (not necessarily consecutive), the contemnors shall surrender back to custody and in case they fail to do so, they shall be taken into custody and committed to jail. (Para 102.4) (v) Since only some of the properties have been released by the Court for sale by the contemnors, the contemnors shall be free to apply for permission to sell any further property within 15 days from their release in order to enable them to raise funds for deposit of the required amount in terms of the order of the Court. (Para 102.5) (vi) Keeping in view the fact that a large amount remains to be deposited by the contemnors, the contemnors are directed to deposit their passports in the Supreme Court within 15 days from the date of this order or before their release, whichever is earlier. They shall not leave the country without prior permission of the Supreme Court. Insofar as their movements within the country are concerned, they shall keep Police Station Tilak Marg, New Delhi informed and updated about their whereabouts every fortnight. (Para 102.6) However, the stage for releasing the frozen assets of the Sahara Group has not arrived yet. The Sahara Group Companies want to meet their statutory and other liabilities from the surplus that would be available after complying with the bail order dated 26-3-2014. As soon as there is a compliance with the said order, the Court shall consider at that stage the availability of the surplus funds along with other factors and then pass appropriate orders on these applications. Even after the said bail order is complied with, there is a huge deficit in the form of balance amount that would still be required to be deposited by the applicants/contemnors in order to comply with the directions contained in the orders dated 31-8-2012, in Sahara India Real Estate Corpn. Ltd., (2013) 1 SCC 1 and order dated 5-12-2012 in Sahara India Real Estate Exchange Corpn. Ltd., (2013) 2 SCC 733 passed by the Court in the civil appeals. (Para 88) The interlocutory applications stand disposed of on the aforesaid terms. (Para 103) SEBI v. Sahara India Real Estate Corpn. Ltd., (2014) 8 SCC 751 : (2014) 4 SCC (Civ) 634 : (2014) 6 SCC (Cri) 101 : (2014) 3 SCC (L&S) 105; SEBI v. Sahara India Real Estate Corpn. Ltd., (2014) 5 SCC 429 : (2014) 3 SCC (Civ) 190 : (2014) 2 SCC (Cri) 618. Orders dated 26-2-2014, 4-3-2014, 26-3-2014 and 21-11-2013 published together; Sahara India Real Estate Corpn. Ltd. v. SEBI, (2013) 1 SCC 1 : (2013) 1 SCC (Civ) 1 : (2013) 1 SCC (Cri) 257; Sahara India Real Estate Exchange Corpn. Ltd. v. SEBI, (2013) 2 SCC 733 : (2013) 1 SCC (Civ) 1259 : (2013) 1 SCC (Cri) 1152 : (2013) 1 SCC (L&S) 452; Subrata Roy Sahara v. Union of India, (2014) 8 SCC 470 : (2014) 4 SCC (Civ) 424 : (2014) 3 SCC (Cri) 712, relied on Sahara India Real Estate Corpn. Ltd. v. SEBI, 2011 SCC OnLine SAT 160; Sahara India Real Estate Corpn. Ltd. v. SEBI, 2012 SCC OnLine SAT 228, held, affirmed SEBI v. Sahara India Real Estate Corpn. Ltd., (2014) 9 SCC 252 : (2014) 4 SCC (Civ) 809 : (2014) 5 SCC (Cri) 1 : (2014) 2 SCC (L&S) 774; SEBI v. Sahara India Real Estate Corpn. Ltd., (2014) 8 SCC 470 (F 21); SEBI v. Sahara India Real Estate Corpn. Ltd., (2014) 8 SCC 741 : (2014) 4 SCC (Civ) 624 : (2014) 6 SCC (Cri) 92 : (2014) 3 SCC (L&S) 95, referred to SS-D/54865/C

Advocates who appeared in this case:

Ranjit Kumar, Solicitor General, Tushar Mehta, Additional Solicitor General, Shekhar Naphade (Amicus Curiae), Arvind P. Datar, S. Ganesh, Sidharth Luthra, Dr Rajeev Dhavan, Paras Kuhad, Kapil Sibal, P. Chidambaram, Aman Lekhi and Guru Krishna Kumar, Senior Advocates [Ms Shubhangi Tuli, Vikram Sobti, Pratap Venugopal, Ms Surekha Raman, Ms Supriya Jain, Gaurav Nair (for M/s K.J. John & Co.), D.S. Mahra, B.V. Balaram Das, K.K. Sahiri, Jatin Pore, Rahul Kaushik, Gautam Awasthi, Keshav Mohan, Aarohi Bhalla, Gaurav Kejriwal, Ms Amrita Narayan, Sujit Keshri, Raghav Ghei, P.K. Rao, Ms Sujata Kurdukar, Niraj Sharma, Ms Niharika (for M/s K.J. John & Co.), Parag P. Tripathi, Ramesh Babu M.R., Ms Swati Setia, Gaurav Agrawal, Omkar Geedh, Ms Swati V., Jitesh Shrivastava, Ayush Chaudhary, Abhinav Mani Tripathi, Aditya Chopra, Piyush Chuadhary, Nijam Pasha, Simranjeet Singh, Gautam Talukdar, Sandeep Bajaj, R.S. Yadav, Ankur Sehgal, Gurpreet Singh, Ashwarya Sinha, Ms Priyanka Sinha, Arijit Prasad, Ms Anil Katiyar, Rahul Tripathi, D.L. Chidananda and Ms Sadhana Sandhu, Advocates) for the appearing parties.

Chronological list of cases cited on page(s) 1. (2014) 9 SCC 252 : (2014) 4 SCC (Civ) 809 : (2014) 5 SCC (Cri) 1 : (2014) 2 SCC (L&S) 774, SEBI v. Sahara India Real Estate Corpn. Ltd. 60b, 60d, 60f-g, 61a-b, 62c, 70e-f, 76a-b 2. (2014) 8 SCC 751 : (2014) 4 SCC (Civ) 634 : (2014) 6 SCC (Cri) 101 : (2014) 3 SCC (L&S) 105, SEBI v. Sahara India Real Estate Corpn. Ltd. 63c, 63h, 70g, 71d-e, 72a, 76b, 76e, 79e 3. (2014) 8 SCC 741 : (2014) 4 SCC (Civ) 624 : (2014) 6 SCC (Cri) 92 : (2014) 3 SCC (L&S) 95, SEBI v. Sahara India Real Estate Corpn. Ltd. 66e 4. (2014) 8 SCC 470 : (2014) 4 SCC (Civ) 424 : (2014) 3 SCC (Cri) 712, Subrata Roy Sahara v. Union of India 83b, 83c, 83g, 84c, 84f 5. (2014) 8 SCC 470 (F 21), SEBI v. Sahara India Real Estate Corpn. Ltd. 66c-d 6. (2014) 5 SCC 429 : (2014) 3 SCC (Civ) 190 : (2014) 2 SCC (Cri) 618, SEBI v. Sahara India Real Estate Corpn. Ltd. 66f, 74e, 78g, 79a, 79b, 79d, 79e, 80a-b, 80b-c, 80f, 80f-g, 81e-f, 81f, 82c, 85b-c, 85d, 85f-g 7. (2013) 2 SCC 733 : (2013) 1 SCC (Civ) 1259 : (2013) 1 SCC (Cri) 1152 : (2013) 1 SCC (L&S) 452, Sahara India Real Estate Exchange Corpn. Ltd. v. SEBI 78d, 81f-g, 83c, 83e-f, 84b-c, 84d, 85c, 85d-e, 86e 8. (2013) 1 SCC 1 : (2013) 1 SCC (Civ) 1 : (2013) 1 SCC (Cri) 257, Sahara India Real Estate Corpn. Ltd. v. SEBI 70g, 78a-b, 81f-g, 84d, 85d-e, 86e 9. 2012 SCC OnLine SAT 228, Sahara India Real Estate Corpn. Ltd. v. SEBI 78d 10. 2011 SCC OnLine SAT 160, Sahara India Real Estate Corpn. Ltd. v. SEBI 77h

Order dated 14-8-2014

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 16-18 of 2014 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012

1. The respondent contemnors in these applications made the following prayer:

“extend the operation of the said order of this Hon'ble Court dated 1-8-2014 (2014) 9 SCC 252 by a further period of 15 working days.”

2. Mr S. Ganesh, learned Senior Counsel appearing for the contemnors submits that substantial progress has been made by the contemnor applicants in these applications in finding suitable buyers for the three offshore properties and also arranging a bank guarantee for a sum of Rs 5000 crores. He submits that negotiations for sale and for finalising the guarantee, etc. are now at a critical stage, made possible only because this Court had permitted the contemnor applicants to avail of the facility of video conferencing within the Tihar Jail complex. He submits that given 15 working days extension in the arrangement already made by us in terms of our order dated 1-8-2014 (2014) 9 SCC 252 the contemnors should be in a position to complete the process of negotiations not only in relation to sale of the three offshore hotel properties but also in relation to provision for a bank guarantee for the required amount of Rs 5000 crores. It is also submitted that the negotiations are in progress in relation to Ambey Valley property to raise further funds to comply with the directions of this Court.

3. The learned counsel for the respondents submit that although there is nothing on record apart from an assertion in the application and an affidavit in support thereof, to suggest that any negotiations have been conducted or that the negotiations have reached any meaningful stage between the sellers and the purchasers yet this Court could extend the facility already given to the contemnors subject to the condition that the contemnors do not ask for any further extension.

4. In the circumstances and in view of the submissions made at the Bar we extend the operation of our earlier order dated 1-8-2014 (2014) 9 SCC 252 for a further period of 15 working days only, commencing on 20-8-2014. We make it clear that we will not be inclined to grant any further extension and the contemnors would do well to finalise the ongoing negotiations within the extended period.

5. These IAs are disposed of with the above directions.

Order dated 8-9-2014

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 19-21 of 2014 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012

6. Heard. We had by order dated 14-8-2014 extended the operation of our earlier order dated 1-8-2014 (2014) 9 SCC 252 for a period of fifteen working days commencing on 20-8-2014, making it clear that we would not be inclined to grant any further extension of time for the contemnors to finalise the ongoing negotiations with prospective buyers of properties, within India and outside the country.

7. The contemnors have now filed the present applications (IAs Nos. 19-21 of 2014) seeking a further extension of the arrangement made by us by another fifteen working days. The applications inter alia point out that a deal for sale of the three offshore properties has been almost finalised by the contemnors and even a memorandum of master agreement executed between a foreign purchaser. While the deal had yet to be clinched and acted upon, adverse reports, appearing in United States' print and electronic media, led to a panic situation in which the purchaser of the offshore properties expressed their hesitation in finalising the deal. The contemnors assert that they have somehow persuaded the foreign purchaser to hold on and let the protests against the proposed sale of the assets to cool down and that the foreign purchaser has agreed to do so.

8. Appearing for the applicants, Mr S. Ganesh, learned Senior Counsel, submitted that given fifteen working days to negotiate the sale of offshore properties they shall finalise the deal with the party concerned or with any other party, willing to purchase the same. Mr Ganesh also points out that the contemnors are simultaneously making efforts to sell the remaining eight properties situate within the country through property agents/brokers/real estate developers and that notwithstanding the slumps in the real estate market expect to finalise such deals within the extended period.

9. Since the applications filed by the contemnors did not carry any documentary material suggesting that any deal had been finalised with anyone interested in purchasing the offshore properties, we asked Mr Ganesh whether he could make good that statement by reference to any document. Mr Ganesh has, in response, filed before us a copy of the in-principle master agreement as also copies of certain press clippings which suggest that there were some demonstrations against the proposed sale of the properties in question to a particular entity, owned by a sovereign nation. A perusal of these documents does prima facie suggest that an attempt has been indeed made to finalise the deal and also that some protests have been raised on account of the proposed sale of the assets to that particular entity.

10. At the request of Mr Ganesh, we direct that the copies of the in-principle master agreement and the documents enclosed therewith including the press clippings be taken on record but kept in a sealed cover to maintain confidentiality in regard to the proposed transactions. Having said so, we are of the view that a prayer for extension of another fifteen working days' further time to finalise the sale of the assets deserves to be granted.

11. We must mention to the credit of Mr Arvind P. Datar, learned Senior Counsel appearing for SEBI, that even he did not in principle contest the prayer for an extension of time but only urged that the contemnors should finalise the deal as expeditiously as possible particularly when a large amount remains to be recovered from them, which will also have to be arranged after the conditions of bail are satisfied by the contemnors.

12. Mr Ganesh in reply submitted that given fifteen working days' further time, the contemnors would not ask for any further extension. That statement is accepted.

13. In the circumstances, we allow these applications and extend the arrangement made by us by our order dated 1-8-2014 (2014) 9 SCC 252 as extended by order dated 14-8-2014, for a further period of fifteen working days w.e.f. 10-9-2014.

14. IAs Nos. 19-21 of 2014 are disposed of accordingly.

Order dated 2-12-2014

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 31-39 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012

15. Heard. In these applications (IAs Nos. 37-39) filed by the Saharas, the applicants have made the following prayers:

“(a) Grant it permission, whether by Oasis or by some other party, of Bank of China's loans to Sahara (including the related securities) and the amendments of the terms and conditions applicable to such loans;

(b) Grant it permission for raising of additional ‘junior’ loans of up to US $650 million and the creation of subordinate charges on the said three foreign hotel properties (or on Sahara's shareholding in the relevant hotel owning companies);

(c) Grant it permission for the sale of the property at Chauma for the sale prices and in accordance with the payment schedule stated in the Table in Para 15 hereinabove;

(d) Direct that out of the petitioners' deposit the amount of Rs 226.96 crores in the Sahara SEBI Refund A/c in terms of Para 18 hereinabove and also hand over the cheques issued by the buyers of the domestic immovable properties of an aggregate amount of Rs 2146.25 crores (net of the transaction costs, taxes, incidental expenses, etc.) in terms of Para 16 hereinabove; and

(e) Pass such further or other orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the present case.”

16. M/s Rajeev Dhavan and S. Ganesh, learned Senior Counsel appearing for the applicants, submit that the applicants have already negotiated suitable deals for the sale of the properties at Chauma (Gurgaon), Jodhpur, Vasai (Mumbai) and Pune. Agreements to sell in relation to the sale of the said properties have also been executed with the prospective buyers except the Pune property. It is further submitted that in regard to three properties at Chauma, Jodhpur and Vasai, the applicant sellers have received a down payment of Rs 184.50 crores while the balance out of the total consideration is payable to the applicant sellers by May 2015.

17. According to Mr Ganesh, the purchasers of the properties in question have already issued post-dated cheques covering the sale consideration less the transaction costs, taxes and incidental expenses. These cheques have been issued in favour of “Sahara SEBI Refund A/c” copies whereof have been enclosed with these applications. It is urged that while the properties situated at Jodhpur and Vasai are within 5% margin of the estimated value of the said properties in terms of our previous order dated 4-6-2014 (2014) 8 SCC 751, the property situated at Chauma is about 15% below the estimated value of the property. The sale consideration with regard to all the three properties at the places, indicated above, is however many times more than the circle rates fixed for those areas. It is submitted that this Court could permit the sale of the property at Chauma at the price settled in terms of the agreements to sell in relation to the said property in relaxation of the condition earlier imposed by this Court that the properties shall not be sold at a price below 5% of the estimated value without the permission of this Court.

18. Mr Arvind P. Datar and Mr Pratap Venugopal, learned counsel appearing for SEBI, have no objection to the sale of the three properties at Chauma, Jodhpur and Vasai on the terms stipulated in the agreements to sell, executed between the seller applicants herein and the purchasers of the said properties especially when the purchasers have agreed to furnish undertakings to this Court that the post-dated cheques issued by them pursuant to the said agreements to sell, shall be honoured on the due dates.

19. In the circumstances, therefore, we direct deposit of a sum of Rs 184.50 crores already received by the applicant sellers with the “Sahara SEBI Refund A/c”. Mr Ganesh has handed over to Mr Pratap Venugopal, counsel appearing for SEBI, in the Court today three demand drafts and a cheque, totalling Rs 184.50 crores. We direct that the proposed sale of the properties at Chauma, Jodhpur and Vasai shall be subject to the terms of the agreements to sell, copies whereof have been filed by the applicants, and also that the purchasers of the said properties shall file in this Court specific individual undertakings to the effect that the post-dated cheques issued by them shall be honoured on the due dates.

20. As regards to Pune property, Dr Dhavan and Mr Ganesh argued that the properties to which the applicants have agreed to sell is for a sum of Rs 550 crores which is within 5% margins fixed by our order dated 4-6-2014 (2014) 8 SCC 751. They submit that the agreement is being finalised with the purchaser and upon execution of the agreement a down payment of Rs 50 crores received from the purchasers, shall also be deposited with SEBI in the “Sahara SEBI Refund A/c” and the balance amount of consideration deposited within six weeks thereafter, subject of course to deduction of transaction costs, taxes and other statutory dues. We, in that view, permit the applicants to proceed with the finalisation of the sale of the Pune property also on the above condition.

21. That leaves us with the proposed payment of Bank of China's outstanding loan amount and substitution of another lender in place of Bank of China and also permission to take additional junior loans to the tune of US $650 million. Mr Arvind P. Datar and Mr Shekhar Naphade, learned Amicus Curiae, argued that the terms and conditions on which the substitution may take place and the escrow account is being opened and operated as also deductions that may be made on account of junior loans of US $650 million in the second loan, are not very clear from the documents furnished to them by the applicants. They submitted that certain further information in regard to these aspects and other related matters may be required, before the respondents make their submissions to the proposals now floated by the applicants.

22. M/s Dhavan and Ganesh have no objection to the requisite information being furnished to the counsel opposite. In that view, we leave it open to M/s Datar and Naphade to indicate in writing the information they would require from the applicants whereupon the applicants are expected to furnish the same within a period of one week.

23. These applications shall accordingly stand adjourned by two weeks to be listed again on Wednesday, 17-12-2014 at 2 p.m.

Order dated 17-12-2014

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 31-39 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012

IAs Nos. 31-39 in CP (C) No. 412 of 2012

24. Heard. Mr S. Ganesh, learned Senior Counsel appearing for the contemnors has handed over to Mr P. Venugopal, learned counsel for SEBI, a cheque for a sum of Rs 77.80 crores representing the entire balance purchase price of the Jodhpur property. In addition, he has also handed over to Mr Venugopal 21 post-dated cheques payable between 15-1-2015 and 22-6-2015 for a total amount of Rs 1884.96 crores. Mr Ganesh submits that each one of the purchasers who has issued the post-dated cheques aforementioned has also filed an individual undertaking on affidavit in this Court in terms of the previous order of this Court dated 2-12-2014. He contended that this Court could in the light of the payments already made to SEBI grant permission to the Saharas for work on the transfer of the loan outstanding towards Bank of China to Oasis Light Ltd. and suitable amendments of the terms and conditions applicable to those loans. He submitted that permission could also be granted to the Saharas to raise a junior loan to the tune of US $650 million by creating a charge against the three foreign hotel properties and shareholdings relating thereto. It was urged by Mr Ganesh, that as suggested by Mr Shekhar Naphade, learned Amicus Curiae appointed by this Court, the Saharas had agreed to shift the escrow account from Nation Wide to Bank of America which has extensive banking operation even in India but any deposit by the junior lenders will be possible only when Bank of China exits and Oasis is allowed to take over the charge. He urged that this Court could in order to facilitate the deposit in the escrow account by the junior lenders as a first step permit the Saharas to allow the Bank of China to exit and Oasis to enter into the proposed arrangement.

25. M/s Arvind P. Datar, learned Senior Counsel appearing for SEBI and Mr Shekhar Naphade, learned Amicus Curiae, on the other hand submitted that certain aspects of the proposed arrangement between Oasis and Bank of China as also the arrangement between the Mirach and the Saharas still need to be verified and examined especially as to the amount that will actually become available to SEBI, should the proposed arrangement be sanctioned by this Court. It is also submitted that there may be certain legal impediments in the transfer of the money to be deposited in the escrow account on account of the provisions of FEMA and that the loan proposed to be raised by the Saharas in the manner indicated above may require sanction/permission from the competent authority under the said Act. They submitted that additional queries have to be made to the counsel opposite in writing to which Mr Ganesh offered to send a suitable reply without delay.

26. In the circumstances, therefore, we do not consider it necessary at present to issue any direction on the above subject. We may consider all these aspects only after the queries raised by M/s Datar and Naphade are satisfactorily answered by Mr Ganesh in writing. We may only mention in passing that according to Mr Ganesh ECB Regulation to which a brief reference was made by Mr Datar, does not have any application to the transaction. We do not however propose to make any observation regarding the merits of the rival contentions at this stage. M/s Datar and Naphade are permitted to seek any further clarification on any issues or aspect considered relevant by them to which Mr Ganesh may present a suitable reply within a week from the date he receives such queries.

27. Mr Datar at this stage submitted that SEBI has out of the deposited amount disbursed a sum of Rs 2,00,00,000 (Rupees two crores only) but it has also sought permission in IAs Nos. 92 and 93 of 2014 to pay up multiple deposits made by several others who have claimed such deposits some of which have been found to be genuine on verification. He urged that at one stage of these proceedings this Court had not allowed the reimbursement to multiple depositors. It was urged by Mr Datar that SEBI has verified as at present 2781 applications from multiple deposit-holders and the reimbursement if permitted would lead to an outflow of Rs 28.1 crores only. He submits that the Income Tax Authorities could be left free to take such action as may be permissible in law against the depositors or the Saharas who have received such multiple deposits. But there is no reason why the multiple depositors who have made their deposits, which depositors have been found to be genuine on verification should not be reimbursed.

28. Mr Ganesh, learned counsel submits that there should be no difficulty in permitting SEBI to reimburse the depositors whether multiple or otherwise.

29. We accordingly allow these IAs Nos. 37-39 and permit SEBI to reimburse the amount of deposit with interest accrued on the same to all such depositors as have made multiple deposits upon due and proper verification about the genuineness of the deposits.

30. Post on 9-1-2015 at 2.00 p.m. along with IAs Nos. 90-91 and IA No. … of 2014 (application for direction) filed by Mr Niraj Sharma, Advocate.

31. Appeals Nos. 42, 48-50 of 2013 and WP (C) No. 2088 of 2013 shall also be listed on 9-1-2015 which has been transferred from the High Court of Judicature at Allahabad vide this Court's order dated 17-7-2013.

Order dated 9-1-2015

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 31-36, 43-44 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011, IAs Nos. 90-91 in CAs Nos. 9813, 9833 of 2011 and CPs (C) Nos. 260 of 2013, in CA No. 8643 of 2012 with TCs (C) Nos. 83-87 of 2014

IAs Nos. 37-39

32. Taken on board. By our order dated 22-7-2014 (2014) 8 SCC 741 we had allowed IAs Nos. 10-12 of 2014 filed by the contemnors and permitted the Saharas to transfer, sell or encumber three offshore hotel properties owned by them, subject to the condition that the entire sale consideration received by the Saharas after repayment of the loan outstanding towards Bank of China is deposited with SEBI in compliance with the directions contained in the conditional bail order of this Court dated 26-3-2014 (2014) 5 SCC 429. We had further directed that the excess amount, if any, shall be deposited by the Saharas in a separate account to await orders from this Court regarding its utilisation and that the sale of offshore properties shall not be at a price lesser than the value estimated by CBRE and JLL for the said properties reduced at the most by 5% of such value.

33. Pursuant to the above order, the Saharas had started negotiations with parties willing to purchase the said offshore properties. In the course of the said negotiations a certain “in-principle agreement” was also it appears drawn up but before the deal could be finalised difficulties appear to have arisen on account of adverse publicity and demonstration by a section of the public against the proposed sale of the properties to a particular entity. To cut the long story short, the proposed sale of the property in terms of the in-principle agreement has in due course fallen through leaving no option for the Saharas except to explore alternative methods of sale/transfer or mortgage of the said properties to raise the requisite amount. It is in that backdrop that the Saharas have filed IAs Nos. 37-39 in which among others they have sought from this Court the following two reliefs:

(a) Grant its permission, whether by Oasis or by some other party, of Bank of China's loans to Sahara (including the related securities) and the amendment of the terms and conditions applicable to such loans.

(b) Grant its permission for raising of additional junior loans of up to US $650 million and the creation of subordinate charges on the said three foreign hotel properties (or on Sahara's shareholding in the relevant hotel owning companies).

34. When these IAs came up for hearing before us on 2-12-2014 we were informed by M/s Rajeev Dhavan and S. Ganesh, Senior Advocates that in terms of the fresh proposal mooted by the Saharas, Bank of China's outstanding loan shall be repaid by substituting another lender in its place with the permission of this Court, besides the Saharas proposal to raise an additional junior loan for a sum of US $640 million against the offshore properties mentioned above.

35. M/s Arvind Datar, appearing for SEBI and Shekhar Naphade as the Amicus Curiae had sought some time to examine the proposed transactions and the documents relating thereto. They had also asked for certain further information in regard to certain aspects before they make their submissions. We are told by Mr Ganesh that the queries raised by the learned counsel opposite have since been answered and explained in writing and that what remains is only an apprehension expressed by M/s Naphade and Datar regarding the permissibility of bringing into India the money that may be raised towards the proposed junior loans against the said properties. Mr Naphade holds the view that no amount borrowed from outside the country can be brought into India with a view to repaying any outstanding liability. He urged that apart from statutory and other complications in the matter, the Saharas may have to seek the permission of the competent authority in Reserve Bank of India under the provisions of FEMA and the regulations framed thereunder.

36. On behalf of the Saharas it was argued by M/s Dhavan and Ganesh that there is a certain amount of urgency in the finalisation of the proposed deals by which Bank of China has to exit upon repayment of the loan outstanding towards it, by arranging funds from a new lender introduced as a mortgagee of the properties. They have placed before us a communication dated 5-1-2015 addressed by Bank of America to Sahara India Pariwar inter alia stating that under directions from M/s Mirach Capital Group LLC, an amount of USD 1050 million remains blocked and earmarked till 20-2-2015 for the transactions being processed between Mirach and Sahara. The letter further states that Mirach Capital Group LLC has advised Bank of America to disburse USD 650 million out of the said unencumbered funds of USD 1050 million for junior loan transaction as agreed between Ambey Valley (Mauritius) Ltd. and Mirach Capital Group LLC after the execution of necessary legally binding definitive agreements and in accordance with the terms as mentioned in the offer letter dated 15-12-2014 issued by Mirach Capital Group LLC and accepted by Ambey Valley (Mauritius) Ltd. The letter further affirms that Mirach Capital Group LLC has advised Bank of America to disburse USD 400 million out of the said unencumbered funds of USD 1050 million for the purpose of making an investment in Sahara Hospitality Ltd. as per offer letter dated 15-12-2015 issued by Mirach Capital Group LLC after the execution of necessary investment and ancillary agreements.

37. What is significant is that according to the communication aforementioned, Bank of America is also under instructions from Mirach Capital Group LLC to unblock the said funds of USD 1050 million if the junior loan agreement for USD 650 million and investment agreement with Sahara Hospitality Ltd. for USD 400 million is not executed by the end of business on 20-2-2015. It was argued that although the funds required for finalising the deal between the companies aforementioned have been blocked up to 20-2-2015, keeping in view the huge amount involved and the fact that blocking of the said amount would deprive the parties concerned of the beneficial use thereof, there is a great deal of urgency in finalising the transactions which are bound to take some time before the same are clinched by 20-2-2015, the date fixed under the instructions.

38. As regards the apprehension expressed by M/s Naphade and Datar regarding repatriation of the amount so raised from America to India for being utilised in the manner directed by this Court, it was argued that the amount in question will first be credited in the account of Ambey Valley (Mauritius) Ltd. which is a wholly owned subsidiary company of Ambey Valley Ltd. incorporated in India. It was also submitted that any apprehension regarding misutilisation or diversion of those funds can be allayed by a direction from this Court to the Saharas to issue specific instructions to its subsidiary Ambey Valley (Mauritius) Ltd. not to deal with the said money or utilise the same in any manner without the permission of this Court. Insofar as the legal impediments arising out of the provisions of FEMA and other related regulations governing transfer of funds from outside India to this country for liquidation of any outstanding liability are concerned, it was argued that so long as the funds remain parked with Ambey Valley (Mauritius) Ltd. which is the subsidiary of Ambey Valley Ltd., the funds are secure against any misdirection or misutilisation.

39. It was submitted that according to the petitioner's understanding there was no impediment in transferring the funds to India as Ambey Valley (Mauritius) Ltd. owes an amount of USD 540 million towards a loan which Ambey Valley (Mauritius) Ltd. had borrowed from its 100% holding company in the year 2010. The amount available to Ambey Valley (Mauritius) Ltd. pursuant to the proposed transactions will enable the said company to repay the loan outstanding against it at least partly, if not in full. Any such repayment would not attract any statutory or other bar as is being contemplated by the respondents or the learned Amicus Curiae. At any rate the Saharas are ready to move the authorities concerned including Reserve Bank of India at the appropriate level for a clear-cut direction that transfer of money to India pursuant to the transactions mentioned above will not attract any provision of FEMA or the regulations framed thereunder. It was urged that the Saharas will also not claim any equity in their favour in the matter of obtaining such clearance or seeking any declaration from the authority concerned nor will they place reliance upon the order passed by this Court to suggest that this Court has either expressly or by necessary implication permitted the funds to be brought into India in the teeth of any legal impediment against such movement.

40. We have given our anxious consideration to the submissions made at the Bar. There is no gainsaying that the earlier proposal for the sale of the offshore hotel properties mentioned earlier has not materialised. It is unnecessary for us to go into the reasons for the failure of the proposed sale but the fact remains that such a sale has not fructified. In the circumstances the Saharas could and indeed have come forward with an alternative proposal which, as mentioned earlier, involves substitution of Bank of China by another lender and raising of a junior loan. This will, according to the Saharas, enable them to raise an amount that is sufficient for the Saharas to provide the balance Rs 5000 crores in cash and arrange for a bank guarantee of an equivalent amount. The transactions so proposed do not involve sale of the offshore properties. They simply involve an additional burden in terms of creation of a second charge on such properties. The proposed transactions have been critically examined by the learned counsel for SEBI and by Mr Naphade, learned Amicus Curiae appointed by this Court, who have not found any fault in this Court allowing the transactions to go through subject to the condition that the amount so raised can be brought into India under the provisions of FEMA and regulations concerned.

41. In the circumstances therefore and keeping in view the submissions made at the Bar as also the safeguards that have been suggested by the learned counsel for the parties we see no reason to decline Prayers (a) and (b) made in IAs Nos. 37 and 39 as extracted in the earlier part of this order. We accordingly allow these applications to that extent but subject to the following conditions:

41.1. The entire amount raised pursuant to the proposed transactions less processing and other incidental expenses shall be deposited with Ambey Valley (Mauritius) Ltd. with a direction from Ambey Valley Ltd., the holding company that the former shall not utilise the same except for the purpose of depositing the amount with SEBI in terms of the orders of this Court.

41.2. The Saharas will approach Reserve Bank of India at the appropriate level with an appropriate representation to have a suitable clarification issued as to the permissibility of bringing in the amount that may be transferred into the account of Ambey Valley (Mauritius) Ltd. in consequence of the transactions permitted by this Court. The representation shall be made within one week from today, upon receipt whereof the competent authority may look into the same and pass an appropriate order and/or issue clarification in accordance with law as expeditiously as possible but preferably within a period of two weeks from the date the representation is received. The Saharas shall furnish to the competent authority all such information and documents as may be demanded by the competent authority in connection with the representation. We leave it open to the competent authority to decide in its discretion whether it would like to afford an opportunity of being heard to the Saharas in the matter before issuing any such clarification.

41.3. In the representation as at para 41.2 above or at any stage in the course of these proceedings or any other proceedings for that matter, the Saharas will not be entitled to claim any equity on the basis of this order in their favour nor will it be suggested that we have, by permitting the proposed transactions, presented the Government or the competent authority with a fait accompli as regards transfer of the money received pursuant to the proposed transactions to India is concerned. We make it clear that we have neither examined nor expressed any opinion on the question whether the amount raised can be conditionally or unconditionally brought into India which aspect we have left for the competent authority to decide.

42. At the oral prayer made before us by Dr Rajeev Dhavan, we direct that the facility provided to the contemnors by the jail authorities in terms of our order dated 1-8-2014 (2014) 9 SCC 252 as continued from time to time shall be once again provided to the contemnors by the said authorities w.e.f. 12-1-2015 up to 20-2-2015 subject to all such conditions as have been stipulated in those orders. IAs Nos. 37-39 are disposed of with the above directions.

IAs Nos. 90-91

43. Mr Venugopal is permitted to file an additional affidavit setting out the details of the expenditure under different heads and disbursement thereof as claimed by SEBI in terms of our order dated 31-8-2012 (2013) 1 SCC 1 and 4-6-2014 (2014) 8 SCC 751. The Saharas shall be free to file a reply to the supplementary affidavit as and when the same is filed.

Order dated 24-2-2015

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 47-55 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP No. 260 of 2013 in CA No. 8643 of 2012

44. Heard.

IAs Nos. 50-52 of 2015

45. These applications have been filed by Reserve Bank of India seeking addition as party-respondent to these proceedings. From a reading of the averments made in the applications and the submission made in support of the same and keeping in view the fact that the parties do not have any objection to the prayer being allowed, we add Reserve Bank of India as a party-respondent to these proceedings. IAs Nos. 50-52 of 2015 are accordingly allowed and disposed of.

IA No. … of 2015 in IAs Nos. 101-103 in Civil Appeals Nos. 9813 and 9833 of 2011 and Contempt Petition (C) No. 260 of 2013 in Civil Appeal No. 8643 of 2012 — (Application for modification of the order dated 4-6-2014 (2014) 8 SCC 751 passed by this Court )

46. Taken on board. Mr Parag P. Tripathi, learned Senior Counsel for the applicant Reserve Bank of India, submits that in terms of the report of the auditors of Sahara India Financial Corporation Ltd., one of the Sahara Group of Companies, FDs, bonds and securities held by the said Company have been encashed pursuant to the order of this Court dated 4-6-2014 (2014) 8 SCC 751 and sale proceeds/maturity value of Rs 484.67 crores lent to Sahara India, a partnership firm, instead of depositing the same in the “SEBI Sahara Refund Account” as directed by this Court. He submits that by encashing the securities which Sahara India Financial Corporation Ltd. was required to maintain in terms of the directions issued by Reserve Bank of India dated 17-6-2008, the Saharas have not only committed a breach of the direction issued by Reserve Bank of India but also violated the order passed by this Court. He submits that violation of this Court's order can be separately dealt with by this Court in these proceedings, but Reserve Bank of India which propose to take note of the breach committed by the Sahara Company, aforementioned, and initiate proceedings against it under the relevant provisions of the Reserve Bank of India Act should be permitted to do so, after due notice to the Company concerned.

47. Mr S. Ganesh, learned Senior Counsel for the contemnors, submits that the report submitted by the auditors does not appear to be factually correct and stands substantially contradicted by letter dated 23-2-2015 sent by Sahara India Financial Corporation Ltd. to Reserve Bank of India. He further states that although a sum of Rs 484.67 crores has been transferred to Sahara India, a partnership firm, but the same is not a loan as alleged. The amount in question has been transferred to the said partnership firm for repayment to the depositors/investors and has been utilised for that purpose. He submits that the Saharas have no objection to Reserve Bank of India being given the liberty to initiate whatever proceedings it proposes to start but seeks time to explain to this Court the alleged violation of the order of this Court dated 4-6-2014 (2014) 8 SCC 751 by which the entire maturity value/sale consideration of the security had to be deposited in the “SEBI Sahara Refund Account” only.

48. In the circumstances, we allow Reserve Bank of India to initiate such action as may be otherwise legally permissible under the provisions of the Reserve Bank of India Act and the Regulations framed thereunder and to pass appropriate orders on the subject after hearing the parties. A copy of the order so passed shall be placed on record.

49. Mr Ganesh may also in the meantime file an affidavit explaining the circumstances in which the securities in question which were allowed to be encashed/sold were sold and the maturity value/sale consideration thereof transferred to Sahara India instead of being deposited in the “SEBI Sahara Refund Account” as directed by this Court. The affidavit, to be filed by Mr Ganesh, shall also indicate whether the disbursements have been made to the depositors/investors in cash or by cheques and whether the identity of the recipients has been established before making all such disbursements. The information relating to disbursement made by Sahara India Financial Corporation Ltd. to the investors/depositors shall also be placed on record in the form of a DVD/CD with copies to M/s Parag P. Tripathi, Arvind P. Datar and Shekhar Naphade.

50. In the light of the controversy raised before us in relation to the utilisation of the maturity amount/sale value of the “directed securities”, we deem it fit to direct that the Saharas will not transfer, alienate or encumber the remaining “directed securities”, if any, provided by Sahara India Financial Corporation Ltd. (Sifcl).

IAs Nos. 47-49 of 2015

51. Issue notice to the counsel opposite. Objection, if any, be filed within two weeks from today. Post on Friday, 13-3-2015 at 2 p.m.

Order dated 13-3-2015

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 47-49 of 2015 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813 and 9833 of 2011

52. By our order dated 24-2-2015 we had allowed Reserve Bank of India to initiate such proceedings as were called for under the provisions of the Reserve Bank of India Act against the alleged acts of omission and commission committed by Sahara India Financial Corporation Ltd. Mr Ramesh Babu, learned counsel appearing for Reserve Bank of India today submits that the Bank has already initiated action and served a show-cause notice upon the Company concerned and that it would take further steps in the matter no sooner a reply to that notice is received.

53. We had also by the same order directed the Saharas to file an affidavit explaining the circumstances in which the securities and fixed deposits, etc. were encashed/sold and the maturity value/sale consideration thereof transferred to Sahara India instead of being deposited in SEBI Sahara Refund Account. The Saharas have filed an affidavit in compliance with the said direction. Mr Arvind Datar, learned Senior Counsel for the respondent and Mr Ramesh Babu, learned counsel pray for and are granted two weeks' time to respond to the said affidavit.

54. Mr Kapil Sibal, learned Senior Counsel appearing for the respondents submits that the respondents are in the process of negotiating a deal in regard to its offshore properties to comply with the orders passed by this Court. He submits that an outline of the proposed deal which will generate sufficient funds to enable the respondents to comply with the directions of this Court shall be furnished to Mr Shekhar Naphade, the learned Amicus Curiae as also Mr Datar within one week from today along with requisite documents to demonstrate that the deal is a serious attempt to raise money against the offshore assets of the Companies.

55. Mr Sibal further submits that the respondents shall cooperate and furnish such further information as may be demanded by the Amicus Curiae and Mr Datar in relation to the proposed deal. Mr Sibal submits that although two earlier attempts to negotiate a somewhat similar deal have proved abortive, a third and final chance could be given to the respondents to raise the requisite amount of money for discharge of their liability in terms of the orders passed by this Court.

56. We have in the previous orders passed by us from time to time noticed how despite facilities which the respondents had demanded while in custody, the proposed deals had failed to fructify. We have in the light of that experience put it to the learned counsel for the respondents that we are inclined to appoint a Receiver for the properties owned by the Saharas in question and to authorise the Receiver to alienate the same with a view to complying with the directions of this Court. Mr Sibal, however, fervently argued that the need for appointing a Receiver may not arise if a final chance is given to the Saharas to negotiate and finalise a suitable deal that would ensure that the directions of this Court are complied with.

57. We are inclined to accept the prayer made by Mr Sibal. We, therefore, grant to the respondents yet another opportunity to negotiate the proposed deal the outline whereof shall be shared by the respondents with the counsel for SEBI and the Amicus Curiae. Mr Sibal submits that in order to save time we could restore the facility earlier extended to the respondent within the jail precincts. He urged that this would help the respondents in finalising the deal early. We are not for the present inclined to extend the facility earlier directed by us, for the outline of the proposed deal remains to be critically examined by the Amicus Curiae and the counsel for SEBI. We, however, see no difficulty in extending to “five hours a day” the concession of communication with the outside world in favour of the respondents besides two laptop computers. The jail authorities would make sure that the facility is limited to communication for a period of five hours a day and two laptops only are extended to the respondents.

58. This matter shall now stand adjourned, to be posted again on 23-3-2015 at 2.00 p.m.

Order dated 23-3-2015

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 47-49 of 2015 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013in CA No. 8643 of 2012

59. By our order dated 13-3-2015 we had granted to the Saharas an opportunity to place on record broad features of the deal which they propose to strike in respect of their offshore properties comprising three hotels two out of which are situate in the United States of America and the third in London. Since the outline of the proposed deal was not shared by the Saharas with the counsel appearing for SEBI and Mr Shekhar Naphade, the learned Amicus Curiae, Mr Kapil Sibal, learned Senior Counsel appearing for the Saharas had agreed to do so. The whole purpose behind that exercise was to prima facie satisfy ourselves whether the Saharas are indeed making a serious effort to raise funds for compliance with the directions issued by this Court. We had also by the same order extended to the respondent contemnors the concession of communication with the outside world for 5 hours a day besides allowing them use of two laptop computers.

60. When the matter came up today before us Mr Sibal filed what is described as “Confidential note on proposals now being negotiated and finalised by the Saharas for complying with the Supreme Court order dated 26-3-2014 (2014) 5 SCC 429”. In particular Mr Sibal drew our attention to a communication dated 9-3-2015 from the Head of Corporate and Investment Banking, Madrid at BBVA to Nouam Ltd. whereby BBVA Investment Bank has confirmed with full bank responsibility the authenticity and validity of the cash funds to the tune of EUR 900 million in an account mentioned in the said communication and held by the Nouam Ltd. represented by Mr Karan Judge. The letter confirmed legal responsibility that Nouam Ltd. represented by Mr Karan Judge has full custody over the said funds in his account and that the said funds shall remain under his instruction. Not only that the communication further states that the funds are legal, good, clean, clear, unencumbered and legitimately earned cash funds of non-criminal origin consisting of 100% cash and that the same are freely available for investment.

61. Mr Sibal submitted that if permitted by this Court, the Saharas can go ahead with the proposal under consideration whereunder Nouam Ltd. will take over the loan outstanding towards Bank of China. He submitted that the loan/credit being negotiated will not only pay off Bank of China but generate an additional 120 million US dollars equivalent roughly to Rs 650 crores in Indian rupees. Mr Sibal urged that although the Saharas have a few other proposals also on the anvil yet the proposal mooted by Nouam Ltd. for the takeover of Bank of China loan and for payment of an additional amount of 160 million US dollars appears to be the most serious presently under consideration.

62. In an attempt to show that the proposals under consideration with the Saharas are serious, Mr Sibal also placed reliance upon another letter dated 18-3-2015 addressed by HSBC to M/s Ambey Valley confirming a bank guarantee for a sum of $820 million equivalent to INR 5000 crores in favour of Ambey Valley Ltd., Sahara Star Domestic Airport, Bombay. The bank guarantee is according to the said communication irrevocable, divisible and transferable to any supplier of M/s Ambey Valley Ltd. Mr Sibal submitted that although the communication offers the bank guarantee to Ambey Valley Ltd., steps will be taken to ensure that the bank guarantee of Rs 5000 crores is furnished in the name of SEBI in compliance with the orders of this Court.

63. Our attention was also drawn by Mr Sibal to a memorandum of understanding said to have been executed between Nouam Ltd. and Ambey Valley Ltd. in connection with the proposed deal referred to above. It was submitted by Mr Sibal that the availability of funds with Nouam Ltd., the assurance regarding the issue of a bank guarantee for a sum of Rs 5000 crores and the execution of a memo of understanding between Nouam Ltd. and Ambey Valley Ltd. should sufficiently reassure this Court that the Saharas are seriously pursuing the finalisation of the deal.

64. It was in the above context urged that this Court could permit the Saharas to process the deal to its logical conclusion and to present to this Court a final proposal whereunder the Saharas would deposit the balance of the amount required for the release of the respondents from custody on bail and for the bank guarantee which is one of the conditions for their release.

65. On behalf of SEBI, Mr Arvind Datar very fairly stated that the Saharas do appear to be taking some steps for finalising the deal and that so long as the deal results in raising funds that would find their way into the SEBI account in compliance with the orders of this Court, SEBI will have no real objection to the process being taken forward.

66. Mr Naphade, learned Amicus Curiae submitted that even though relevant documents touching the proposed deal were made available to him rather late and even though certain matters remain to be clarified, there is no real impediment in allowing the Saharas as a last chance to finalise the proposed deal with Nouam Ltd.

67. In the circumstances therefore and keeping in view the steps that the Saharas appear to have taken in the matter of finalising their proposed deal with Nouam Ltd. we see no reason why a last and final opportunity be not granted to the Saharas to do the needful. We have made it clear to the learned counsel for the respondents and to others appearing for the Saharas that should there be any difficulty in finalising the deal with Nouam Ltd., we shall be left with no option but to explore the alternative option of appointing a Receiver for sale of the property to recover the outstanding amount. That being made clear we permit the Saharas to negotiate the proposed deal with Nouam Ltd. We make it clear that since this is going to be the last and final opportunity to the Saharas to sell or encumber the properties themselves to raise funds, the Saharas shall also have the liberty to negotiate any other deal qua the said three offshore properties should the deal with Nouam Ltd. for any reason fail to fructify. The needful shall be done within the outer limit of three months from today. In order to facilitate the finalisation of the proposed deal we permit use of facility to the respondents in terms of our order dated 1-8-2014 (2014) 9 SCC 252 for a period of three months from today.

68. Mr Sibal next argued that out of nine properties situate within the country which this Court had permitted (2014) 8 SCC 751 the Saharas to sell, five properties have already been sold while the remaining four properties according to Mr Sibal cannot fetch the required amount within 5% of the estimated value declared by the Saharas. He therefore urged that this Court could modify the order permitting the sale of such properties so as to allow the sale of remaining four items of properties at prices less up to 25 to 40% as indicated in Para C at p. 5 of his note.

69. Alternatively Mr Sibal argued that this Court could allow the Saharas to sell one or more properties out of the ten properties situate in different parts of the country set out at p. 7 of the note with the extent mentioned against each as also the circle rates and the market valuation.

70. From a perusal of the statement set out at p. 7 of the compilation it appears that although the value of the properties set out in the said statement calculated on the circle rates comes to Rs 456.46 crores, the land value as per market valuation is said to be more than Rs 570 crores. We are in that view inclined to allow the alternative prayer made by Mr Sibal and permit the Saharas to sell one or more properties mentioned at p. 7 of the compilation on the same terms and conditions as were stipulated by us in our order dated 4-6-2014 (2014) 8 SCC 751.

71. At this stage Mr Sibal submitted that in the event of any shortfall/difficulty in selling the properties in the prices indicated by them or on the conditions set out by us we could also permit the Saharas to sell up to 600 acres of the developed buildable land area in Ambey Valley at a price which shall not be less than Rs 6.55 crores per acre.

72. We do not see any reason to decline that prayer either especially when the value of land fixed at Rs 6.55 crores per acre is many times in excess of Rs 25 lakhs per acre fixed by SEBI in its affidavit dated 16-3-2012 filed in IAs Nos. 6-7 of 2012. We accordingly permit the Saharas to sell up to 600 acres of land in Ambey Valley @ Rs 6.50 crores per acre. The details of the extent sold shall be furnished to the Court by the Saharas.

73. Mr P. Chidambaram, learned Senior Counsel appearing for Mirach Capital Group LLC proposes to make an application to make an offer in a sealed cover. He is permitted to do so with a copy to the learned counsel for the parties.

74. The note filed by the Saharas shall be kept in a sealed cover. These proceedings shall stand over for a period of three months.

75. At this stage Mr Arvind Datar submits that some of the purchasers of the Gurgaon property have sought rescheduling of the payments and that SEBI has received certain cheques as per the new schedule proposed. We permit SEBI to receive and encash the same. Fresh undertakings filed by the purchasers to abide by the rescheduled payment are accepted.

Judgment dated 19-6-2015

(Before T.S. Thakur, Anil R. Dave and Dr A.K. Sikri, JJ.)

IAs Nos. 59-64 of 2015 in CPs (C) Nos. 412-13 of 2012 in CAs Nos. 9813, 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012

The Judgment of the Court was delivered by

Dr A.K. Sikri, J.— Before we advert to the reliefs claimed in these applications and announce the outcome thereof, we would like to recapitulate, very briefly, the genesis for moving these applications as we feel that such a recount of the previous events would make it easy to understand the circumstances under which these applications have been filed. It would also provide us the course of action that is to be taken on the prayers made in these applications.

77. The main proceedings with which we are concerned are the contempt petitions bearing Nos. 412 and 413 of 2012 in Civil Appeals Nos. 9813 and 9833 of 2011 as well as Contempt Petition No. 260 of 2013 in Civil Appeal No. 8643 of 2012. These contempt petitions filed by the Securities and Exchange Board of India (for short “SEBI”) have the origin in the judgments that were pronounced in the civil appeals, numbers whereof are mentioned above. It so happened that Sahara India Real Estate Corporation Ltd. (Sirecl) and Sahara Housing Investment Corporation Ltd. (Shicl) (hereinafter referred to as “the Saharas”) invited and claimed to have collected deposits from the general public who, allegedly, included cobblers, labourers, artisans, peasants, etc. This invitation for deposit was in the form of “Optional Fully Convertible Debentures” (OFCD). SEBI found that offering of such OFCD was not legally permissible and passed orders directing the Saharas not to offer their equity shares/OFCDs or any other securities to the public or invite subscription in any manner whatsoever either directly or indirectly. The High Court of Bombay dismissed their petitions and directed Sahara Companies, in particular the promoter Mr Subrata Roy Sahara, and Directors Ms Vandana Bhargava, Mr Ravi Shankar Dubey and Mr Ashok Roy Choudhary of the Saharas to jointly and severally refund the amount collected by the Saharas in terms of the aforesaid issue along with interest @ 15% p.a. It is pertinent to mention that on the basis of these directions of the High Court, SEBI ordered that refund of the amount shall be made only through demand drafts or pay orders. Certain other directions were also issued.

78. Aggrieved by these orders of SEBI, the Saharas approached the Securities Appellate Tribunal (for short “SAT”). SAT also declined 2011 SCC OnLine SAT 160 to interfere with the view taken by SEBI and directed the Saharas to refund the amount collected from the investors within a period of six weeks. Against these orders of SAT, Civil Appeals Nos. 9813 and 9833 of 2011 were preferred by the Saharas in this Court, which were finally disposed of by order dated 31-8-2012 (2013) 1 SCC 1.

79. While substantially maintaining the orders of SEBI and SAT, a modification was made in those orders with a direction to the Saharas to deposit the amount collected by them along with interest @ 15% p.a. with SEBI within a period of three months. The amount when deposited was directed to be invested in a nationalised bank to earn interest. The Saharas were also directed to furnish details with supporting documents to establish whether they had refunded any amount to the investors who had subscribed through the red-herring prospectus (RHP) in question. SEBI was then to examine the correctness of the details so furnished. Failure to prove the refund of the amount by the Saharas had to give rise to an inference that the Saharas had not refunded the amount to real and genuine subscribers as directed by SEBI.

80. The aforesaid directions were admittedly not complied with. Instead, another appeal, being Appeal No. 221 of 2012, was preferred by the Saharas before SAT which was dismissed 2012 SCC OnLine SAT 228 as premature. Against that order, Civil Appeal No. 8643 of 2012 was filed in this Court which was decided on 5-12-2012 (2013) 2 SCC 733259. The Saharas had produced before the Court, demand drafts for a total sum of Rs 5120 crores. This Court directed them to hand over the same to SEBI. Further direction was given to deposit the balance amount of Rs 17,400 crores together with interest @ 15% p.a. with SEBI in two instalments. First instalment of Rs 10,000 crores was to be deposited with SEBI by first week of January, 2013 and the balance amount, along with interest, was to be deposited by first week of February, 2013. However, the balance amount or the interest payable, as per the instalments, was not deposited though it was to be deposited by January/February 2013. It resulted in filing of the contempt petitions, which are the main proceedings at hand. In these contempt petitions various opportunities were given to the contemnors to purge the contempt by depositing the amount, as directed. The record shows that at various stages the contemnors gave proposals for compliance with the directions which were explored from time to time, but eventually all these proposals were found to be unsatisfactory, yielding no tangible results. This was perceived as the stubborn attitude of the contemnors with the sole intent to drag on the matter endlessly without complying with the orders. This attitude of the contemnors forced (2014) 5 SCC 429 this Court to issue non-bailable warrants against Mr Subrata Roy Sahara for his production and directing personal presence of the other three Directors in Court on the date fixed. On 4-3-2014 (2014) 5 SCC 429, when the matter was listed, and during the hearing as it transpired that no acceptable proposal was forthcoming to comply with the directions, the Court was left with no option except to commit the three out of four contemnors to judicial custody. We would like to mention that by that time, after including the interest which had accumulated, a sum of Rs 33,000 crores had to be deposited.

81. The matter came up for hearing on 26-3-2014 (2014) 5 SCC 429 again and the three contemnors committed to judicial custody prayed for grant of bail on that day. The Court passed a conditional order of bail on that day. The condition was that the contemnors deposit Rs 10,000 crores—Rs 5000 crores in cash and the balance of Rs 5000 crores in the form of a bank guarantee of a nationalised bank, to be furnished in favour of SEBI. It was specifically directed that upon compliance with these conditions the contemnors would be released from the custody.

82. Till date there is no full compliance with the aforesaid conditions for grant of interim bail, with the result the three contemnors are still in judicial custody and 15 months have passed thereby.

83. We would like to point out at this stage that by orders dated 21-11-2013 (2014) 5 SCC 429 passed by this Court the assets of the Sahara Group of Companies were frozen, to ensure that the contemnors do not fritter away these assets without complying with the directions of this Court passed in the civil appeals. However, on the request made by Sahara Group for lifting the embargo on certain properties in order to enable the Saharas to sell those properties so that the interim bail conditions are fulfilled, on 4-6-2014, this Court permitted (2014) 8 SCC 751 various Sahara Group Companies to deal with/sell some of their assets, but only for the purpose of complying with the order dated 26-3-2014 (2014) 5 SCC 429 with the further condition that whatever amount is realised by the sale of the said assets, the same shall be deposited into the SEBI Sahara Refund Account and for providing the requisite bank guarantee in favour of SEBI in the sum of Rs 5000 crores, as per the directions. Though this liberty was granted to the Saharas one year ago and some other directions were given from time to time providing various facilities to the three contemnors in judicial custody facilitating contacts and dialogue/interaction with the prospective buyers for clinching of deals, the contemnors have been able to achieve only a partial success. They have mooted various proposals for the sale of these properties. However, major proposals ran into rough weather, hitting one or the other kind of roadblock and had to be terminated midway. We would like to point out that the embargo which was lifted in respect of certain properties, the value thereof as per the books of accounts is in several thousand crores and had the Sahara Group succeeded in selling even a few of these properties, bail conditions would have been met long ago. Thus, insofar as this Court is concerned it gave all necessary stimulus to enable the applicants to sell the assets, that too at reasonable market price. If, the contemnors have still not been able to achieve the required target, it is either because of the reason that the efforts made by the contemnors as well as other officers of Sahara Group in raising money from the sale/encumbering of these properties were not adequate or it was their ill-luck or it is the market conditions which have to be blamed. Fact remains that by order dated 26-3-2014 (2014) 5 SCC 429, this Court had granted bail, albeit with certain conditions. However, it is the contemnors who have not been able to fulfil those conditions for one reason or the other.

84. During this period, certain properties have been sold and the amount realised therefrom stands deposited in the SEBI Sahara Refund Account. Things have come to a stage where, according to the applicants, they are on the verge of fulfilling the conditions imposed by the order dated 26-3-2014 (2014) 5 SCC 429. It is mentioned that they have certain buyers for some of the properties and the sale proceeds therefrom would meet the deficit. It is also stated that the contemnors have been able to negotiate with a nationalised bank, through two of its Sahara Group Companies and the said bank has agreed to furnish the required bank guarantee. The format of the bank guarantee is also produced at the time of hearing for the approval of the Court, so that the guarantee is given in the said format, if approved.

85. Assets of various companies of Sahara Group have been frozen. According to the applicants, by reason of the said freeze the financial and liquidity position of various Sahara Group Companies has been adversely affected and it has also resulted into mounting liabilities in the form of statutory liabilities, unpaid salary and wages, outstanding and overdue amounts payable to banks, etc. Because of this reason, IAs Nos. 59-61 of 2015 are filed praying for the following reliefs:

“(i) Allow the Sahara Group Companies to meet their respective statutory and other liabilities as enumerated in this application under such terms and conditions as this Court may deem proper along with the compliance with the order dated 26-3-2014 (2014) 5 SCC 429 passed by this Hon'ble Court;

(ii) Permit the Sahara Group Companies to utilise the balance, if any, of the proceeds obtained from the sale/encumbrance of assets which has been specifically permitted by this Hon'ble Court that remains after complying with the order dated 26-3-2014 (2014) 5 SCC 429 passed by this Hon'ble Court for the purpose of meeting the liabilities enumerated in this application; and

(iii) For such further and other orders and directions as may appear just, necessary and appropriate to this Hon'ble Court, in the circumstances of the case.”

86. Insofar as permission to sell certain properties of Sahara Group is concerned, it was subject to certain conditions as indicated above and one of the conditions was that sale must not be for a price lower than 5% of the estimated value for such a property. The applicants state that in respect of one such property at Gorakhpur, Uttar Pradesh, they have been able to find a purchaser who is ready to step into the shoes of the applicants for development/maintenance of the said property. MoU with the said party has already been entered into, which is placed on record. It is pointed out, however, that the price being offered is Rs 64 crores. The price offered is lower than 5% of the estimated value. However, according to the applicants, due to the depressed real estate market, the present estimated market value of the said property is Rs 53.70 crores, as per the valuation report received. This value is calculated on the basis of circle rate of the project land. On that basis, IAs Nos. 62-64 of 2015 are filed with the following prayers:

“(i) Allow the applicants to enter into the Definitive Agreement for the property situated at Gorakhpur; and

(ii) Pass such further or other orders as this Hon'ble Court may deem fit and proper in the facts and circumstances of the present case.”

87. Insofar as the aforesaid Prayer (i) in IAs Nos. 62-64 of 2015 is concerned, having regard to the reasons mentioned in Paras 4 and 5 of the application, which are stated in brief above, and the fact that an MoU is entered for an area of undeveloped land of 45.71 acres out of the total land area of 146 acres, coupled with the fact that there is slump in the real estate market, we allow the applicants to enter into Definitive Agreement, making it clear that the entire amount from the aforesaid deal shall be deposited in SEBI Sahara Refund Account after adjusting the transaction cost and taxes.

88. Insofar as Prayers (i) and (ii) contained in IAs Nos. 59-61 of 2015 are concerned, we are of the opinion that the stage for making such prayers has not ripened as yet. The Sahara Group Companies want to meet their statutory and other liabilities from the surplus that would be available after complying with order dated 26-3-2014 (2014) 5 SCC 429. As soon as there is a compliance with the said order, this Court shall consider at that stage the availability of the surplus funds along with other factors and then pass appropriate orders on these applications. It is necessary to mention that even after order dated 26-3-2014 (2014) 5 SCC 429 is complied with, there is a huge deficit in the form of the balance amount that would still be required to be deposited by the applicants/contemnors in order to comply with the directions contained in the orders dated 31-8-2012 (2013) 1 SCC 1 and 5-12-2012 (2013) 2 SCC 733259 passed by this Court in the civil appeals. Therefore, orders on the prayers made in IAs Nos. 59-61 of 2015 are deferred for the time being.

89. Coming to the format of the guarantee given by the applicants, on which the applicants want the seal of approval from this Court in order to enable them to submit the requisite bank guarantee, we would like to reproduce the same, which reads as follows:

“Guarantee

We _____________ Bank, a scheduled bank within the meaning of the Banking Regulation Act, and having our office at _________ do hereby grant and issue this unconditional and irrevocable guarantee of Rs 5000 crores (Rupees five thousand crores) in favour of Securities and Exchange Board of India (SEBI) at the request made by Ambey Valley (Mauritius) Ltd. on behalf of Sahara India Real Estate Corporation Ltd. and Sahara Housing Investment Corporation Ltd., in compliance with the order of the Hon'ble Supreme Court of India dated 26-3-2014 (2014) 5 SCC 429.

We hereby guarantee that on the demand in writing made by SEBI, we shall, without demur, pay the amount demanded up to the maximum amount of Rupees five thousand crores.

This guarantee shall remain in force initially for a period of six months and shall be extended for further periods of six months at a time, until SEBI otherwise directs pursuant to the order of the Hon'ble Supreme Court.”

90. SEBI has given its nod to the aforesaid format. Likewise, Mr Shekhar Naphade, learned Amicus Curiae appointed by this Court, has made a statement that the guarantee to be furnished in the aforesaid format may be accepted. At the same time, Mr Arvind Datar, learned Senior Counsel appearing for SEBI, as well as Mr Naphade were very emphatic in pointing out that this Court should indicate in its order as to what should be the trigger point for encashing the bank guarantee. In other words, it was their submission that insofar as the balance amount payable by the applicants/contemnors is concerned, this Court may give some specified time to them for this purpose and on the contemnors/applicants' failure to deposit the balance amount with accrued interest with SEBI, SEBI should be allowed to encash the bank guarantee in question.

91. M/s Kapil Sibal, Rajeev Dhavan and S. Ganesh, learned Senior Counsel appearing for the applicants, on the other hand, submitted that it is not necessary to go into this aspect at this stage. They pointed out that the last paragraph of the bank guarantee categorically mentions that the guarantee is to remain in force “until SEBI otherwise directs, pursuant to the orders of the Hon'ble Court” and, thus, this Court can direct at any stage as at what point of time the bank guarantee is to be encashed. Their argument was that the applicants have refunded almost Rs 16,000 crores to the investors and voluminous record of documents in support thereof has already been handed over to SEBI. It is for SEBI to verify the same and inform as to what would be the balance amount payable after adjustment of the amounts already paid to the investors and to the extent it is found to be genuine, the same be refunded. They submitted that it is SEBI which is not fulfilling its part of obligation by going into the verification of those documents, for which the applicants cannot be blamed or prejudiced.

92. Since this aspect was hotly debated at the Bar, we have gone into the same in some depth and detail. We find that the issue of refund of Rs 17,000 crores approximately to the depositors has been raked up by the contemnors/applicants time and again, but to their dismay, this Court has not accepted their plea to this effect, so far. In the writ petition [Writ Petition (Criminal) No. 57 of 2014, titled Subrata Roy Sahara v. Union of India (2014) 8 SCC 470], this very plea of exempting the applicants from depositing the amount already redeemed by them was considered at length and rejected. In the said judgment, the Court took note of and expressed its opinion on this aspect at various places. In para 55 of the judgment, the Court observed that such a plea was not accepted even earlier by a three-Judge Bench while disposing of Civil Appeal No. 8643 of 2012 vide order dated 5-12-2012 (2013) 2 SCC 733259, in the following manner: (Subrata Roy Sahara case (2014) 8 SCC 470)

“55. During the pendency of the contempt proceedings, we also decided to determine the veracity of the redemption theory, projected by the two Companies. As a matter of law, it was not open to the two Companies to raise the aforesaid defence. This is because exactly the same defence was raised by the two Companies, when they had approached this Court by filing Civil Appeal No. 8643 of 2012 [and Writ Petition (Civil) No. 527 of 2012]. In the aforesaid civil appeal, it was submitted on behalf of the two Companies that they should be exempted from depositing the amount already redeemed by them. The above contention advanced by the two Companies was not accepted, by the three-Judge Division Bench, when it disposed of Civil Appeal No. 8643 of 2012 [and Writ Petition (Civil) No. 527 of 2012] by order dated 5-12-2012 (2013) 2 SCC 733259. It is therefore apparent that the instant defence of having already redeemed most of the OFCDs was not open to the two Companies (and even the contemnors). Yet, so as to ensure that no injustice was done, we permitted the two Companies to place material on the record of this case to substantiate the factum of redemption.”

(emphasis supplied)

93. The Court, thus, went into this issue again permitting the two Companies to place requisite material on record to substantiate the factum of redemption and took into consideration whatever material was placed on record. However, it refused to accept the plea of the two Companies, which is clear from the following discussion in paras 86 and 108 of the said judgment: (Subrata Roy Sahara case (2014) 8 SCC 470)

“86. … When asked how disbursements were made to the investors, the response was that 95% of the payments made to the investors were also made by way of cash, the learned Senior Counsel representing the contemnors (including the petitioner herein) invited our attention to the books of accounts (only general ledger entries) to demonstrate proof of the transactions under reference. Details in this behalf have been recorded by us under Heading IX: ‘A few words about the defence of redemption of OFCDs offered by the two Companies’— see paras 138-155 at pp. 602 et seq. The above explanation may seem to be acceptable to the contemnors, but our view is quite the converse. It is not possible for us to accept that the funds amounting to thousands of crores were transacted by way of cash. We would therefore, on the face of it, reject the above explanation tendered on behalf of the two Companies.”

94. The Court further found that in order dated 5-12-2012 in Sahara India Real Estate Exchange Corpn. Ltd. v. SEBI (2013) 2 SCC 733259, balance amount of Rs 17,400 crores, together with interest @ 15% p.a. was still payable even after the deposit of Rs 5120 crores. It further mentioned that this figure has swelled up to Rs 36,608 crores. Thereafter, the position was concluded in para 154 as under: (Subrata Roy Sahara case (2014) 8 SCC 470)

“154. Therefore, viewed from any angle, there is no substance in the contention advanced on behalf of the two Companies that the monies payable to the investors had been refunded to them. Accordingly, there is no merit in the prayer, that while making payments in compliance with this Court's orders dated 31-8-2012 (2013) 1 SCC 1 and 5-12-2012 (2013) 2 SCC 733259, the two Companies were entitled to make deductions of Rs 17,443 crores (insofar as Sirecl is concerned) and Rs 5442 crores (insofar as Shicl is concerned).”

95. The aforesaid discussion clinchingly shows, without any cavil of doubt, that the contemnors/applicants have failed to give satisfactory proof of redemption of Rs 17,400 crores by Sirecl and Rs 5442 crores for Shicl.

96. Mr Sibal, however, drew our attention to certain lines appearing in para 154 of the same judgment and submitted that it is still open to the applicants to demonstrate that the aforesaid amount is redeemed to the depositors and virtually nothing more is payable. This window which was still kept open by the Court in the said paragraph is in the following form: (Subrata Roy Sahara case (2014) 8 SCC 470)

“154. … Be that as it may, we have still retained a safety valve, inasmuch as, SEBI has been directed to examine the authenticity of the documents produced by the two Companies, and in case SEBI finds that redemptions have actually been made, the two Companies will be refunded the amounts, equal to the redemptions found to have been genuinely made.”

97. No doubt, this much scope is still left for Sahara Group. The fact remains that a definite course of action that is to be chartered is also laid down, namely, in the first instance it is obligatory on the part of the contemnors/applicants to deposit the entire balance amount along with interest accrued thereon in the SEBI Sahara Refund Account. This obligation has to be performed in all circumstances. It is only thereafter, if and when the applicants are able to substantiate the factum of redemption, they would be entitled to refund of the said amount to the extent they are able to prove in this behalf. Therefore, at this stage, one thing which is more than apparent is that after the conditions for interim bail stipulated in order dated 26-3-2014 (2014) 5 SCC 429 are fulfilled and pursuant thereto the three contemnors who are in judicial custody are released, the obligation or liability to deposit the balance would still remain. We may remind the contemnors that as per directions dated 5-12-2012 (2013) 2 SCC 733259, this amount was to be deposited in two instalments, first instalment by the first week of January, 2013 and the second by the first week of February, 2013. Therefore, it would be essential for the applicants/contemnors to not only deposit the balance amount in a time-bound schedule but also the manner in which they propose to muster the said amount. This cannot go on endlessly.

98. We are conscious of the fact that three persons are under confinement for the last fifteen months. The circumstances under which orders dated 4-3-2014 (2014) 5 SCC 429 were passed taking these persons into custody and sending them to jail are well known. This Court was virtually compelled to do so, going by the stubborn attitude of the contemnors in taking the orders dated 31-8-2012 (2013) 1 SCC 1 and 5-12-2012 (2013) 2 SCC 733259 for granted, as if those orders were only on paper and were not meant to be complied with. So many opportunities were given, showing all the leniency which could be extended, to enable the contemnors to comply with those directions. It is only when the Court felt that unless some drastic action is taken there will be no desired effect, that this extreme step was taken. However, this step was taken in good faith to uphold the rule of law and to ensure that dignity of this Court is maintained and there is faithful compliance with its directions. The contemnors, instead of taking steps to follow and fulfil the directions, started making a hue and cry. Still, in the application filed immediately thereafter for release, this Court showed desired compassion and empathy by passing order dated 26-3-2014 (2014) 5 SCC 429, thereby paving a way for grant of interim bail. It was, however, with a legitimate condition that out of almost Rs 33,000 crores that had become due by that time, the contemnors deposit at least Rs 10,000 crores, that too with relaxed provision of deposit of 50% thereof by means of bank guarantee only. There was a genuine hope that for the sake of attaining their own freedom, the contemnors shall at least comply with this direction immediately. Since then, though there have been attempts on the part of the contemnors to do the needful, but all in vain. This is notwithstanding the fact that insofar as this Court is concerned, it has shown and extended all support in the form of giving desired facilities in jail; lifting the attachments in respect of those properties chosen by the applicants themselves, for sale/encumbering, etc.; allowing these applicants to accept the offer of lesser amount than the book value of a particular asset, going by the fact that these were akin to distress sales in a depressed real estate market. May be the applicants now see the light at the end of the tunnel as it is projected that the Sahara Companies have finally found the buyers for certain assets and/or financers who are ready to provide the requisite finance against some of the Sahara Companies' properties and that would bridge the gap insofar as conditions of interim bail are concerned. However, as mentioned above, the matter does not rest with the deposit of Rs 5000 crores and Rs 5000 crores by way of bank guarantee. Total liability has swelled to more than Rs 36,000 crores. The aforesaid deposit of Rs 10,000 crores is only a condition of interim bail. It is the bounden duty of this Court to ensure that the balance amount is also deposited by the applicants.

99. This Court feels concerned with the fact that three persons are deprived of their liberty for the last fifteen months and this situation is quite onerous to them. On the other hand, the public interest as well as the public good demands that the two Sahara Companies, which had collected a whopping amount of more than Rs 22,000 crores from the public in an illegal and unauthorised manner, are made accountable for the same in the manner it is directed vide orders dated 31-8-2012 (2013) 1 SCC 1 and 5-12-2012 (2013) 2 SCC 733259. By any yardstick, this is a huge liability, which the contemnors are bound to discharge by depositing the same with SEBI. It is, thus, an unprecedented situation of personal liberty of the three applicants on the one hand vis-à-vis the majesty of the law and ensuring the larger public good, on the other hand. It is this sense of justice, in an unprecedented kind of situation, that has compelled the Court to take such an extreme step. It is this legal realism which has compelled the Court to adopt an approach which sounds more pragmatic. It is “doing what comes naturally” approach to the problem at hand, which required such a drastic step, going by the experience of this case, giving rise to “Reflection” that provided “Understanding”. This case is a burning example where the true dictate of justice is difficult to discern, and the law needed to come down on the side of practical convenience. We may borrow the jurisprudential theory propounded by Ronald Dworkin, albeit in somewhat different context viz. the “conventional jurisprudential wisdom” which holds that in certain cases of a particularly complex or novel character the law does not provide a definite answer. In denying that Judges in hard cases have a discretion to determine what the law is, Dworkin has instead argued for the judicial use of public standards or principles in a way that is capable of providing the right legal answer. The process of reaching a right answer in hard cases obviously differs from the process of reaching the legal answer in easy cases. After all, the avowed objective of the rule of law is also to ensure that the orders of this Court are respected and obeyed. Therefore, it is a classic case where the approach adopted is influenced by the necessity of “making the law work”. Therefore, the orders passed may not be strictly construed as arising out of contempt jurisdiction, but in exercise of inherent jurisdiction vested in this Court to do complete justice in the matter and to ensure that the applicants render full compliance with its orders. It is the unprecedented situation which has led to passing of unprecedented, but justifiable, orders.

100. This Court is not powerless as it can always direct selling the properties of the Sahara Companies to ensure recovery of the aforesaid amount as the value of those properties is stated to be much higher. However, it is not done so far pursuant to the wishes of the applicants who have pleaded against the sale of these properties by the Court with repeated assurances that these Companies would be taking necessary steps for generating the desired finances and the Court has accepted their request and given them opportunities and chances to do so.

101. Shri Datar, Senior Counsel for SEBI and Shri Naphade, the Amicus Curiae contended and in our view rightly so, that if the format of the bank guarantee is accepted, this Court ought to indicate the circumstances in which SEBI can seek encashment of the said guarantee. It was argued that the bank guarantee as furnished by the contemnors did not indicate a trigger point for encashment which ought to be suitably mentioned and entered either in the guarantee or in the order of this Court. It was further argued that release of the contemnors from the custody even after deposit of a sum of Rs 5000 crores and a bank guarantee of Rs 5000 crores pursuant to the order of this Court was meant only to enable them to deposit the balance amount. It was submitted that in case the contemnors comply with the conditions for release from custody, the next thing they must do is to comply with the directions regarding deposit of the balance amount. This Court, it was argued, should not only direct the deposit of balance amount but provide for the consequences in default of such deposits.

102. The bank guarantee format does not provide for a trigger point for its encashment. Furnishing the bank guarantee without stipulating the situations in which the guarantee shall become encashable, will be meaningless. The bank guarantee is actually meant to ensure that the entire amount is deposited by the contemnors once they are released from custody. That is because the liability to deposit the amount does not get obliterated by furnishing the bank guarantee which is intended to grant release of the contemnors from custody to enable them to comply with the orders passed by this Court. We have in that view examined several options that may provide for a trigger point for encashment. We are of the view that since most of the properties owned by Sahara Group remain frozen by the order of this Court, the contemnors require time to enable them to deposit the balance outstanding. In case the bank guarantee is made encashable on default, the trigger point for encashment would be the default by the contemnors in depositing the balance amount in terms of the directions that we propose to issue. It is in that spirit that we accept the bank guarantee format furnished by the contemnors and grant to them time to deposit the balance amount that remains to be deposited subject to the following conditions:

102.1. Keeping in view the total liability which according to SEBI, has risen to Rs 36,000 crores (approximately), the contemnors shall deposit the balance outstanding amount within a period of 18 months commencing from the date of their release from custody in nine instalments. The first eight instalments shall be of Rs 3000 crores payable every two months from the date of their release from custody and last instalment shall be of the remaining amount.

102.2. In the event of the default in payment of two instalments (not necessarily consecutive) the bank guarantee furnished by the contemnors pursuant to the order of this Court shall be encashed by SEBI and the amount so received counted towards part-compliance with the earlier directions given by this Court.

102.3. The bank guarantee shall also be encashable in the event of failure of the contemnors to deposit the full amount outstanding against them within a period of 18 months commencing from the date of their release.

102.4. In the event of failure of the contemnors to deposit three instalments (not necessarily consecutive), the contemnors shall surrender back to custody and in case they fail to do so, they shall be taken into custody and committed to jail.

102.5. Since only some of the properties have been released by this Court for sale by the contemnors, the contemnors shall be free to apply for permission to sell any further property within 15 days from their release in order to enable them to raise funds for deposit of the required amount in terms of the order of this Court.

102.6. Keeping in view the fact that a large amount remains to be deposited by the contemnors, we direct the contemnors to deposit their passports in this Court within 15 days from the date of this order or before their release, whichever is earlier. They shall not leave the country without prior permission of this Court. Insofar as their movements within the country are concerned, they shall keep Police Station Tilak Marg, New Delhi informed and updated about their whereabouts every fortnight.

103. The interlocutory applications stand disposed of on the aforesaid terms.