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Securities And Exchange Board Of India v. Sahara India Real Estate Corporation Limited And Others
Supreme Court of India – Multiple Interim Orders (May 2013 – March 2014)
Factual and Procedural Background
The present contempt proceedings arise out of the Supreme Court’s judgment dated 31-8-2012 ((2013) 1 SCC 1) directing Sahara Group entities to refund large sums collected from investors and to deposit the amounts with the Securities and Exchange Board of India (SEBI). Alleging non-compliance with that judgment and with subsequent orders of 5-12-2012 and 25-2-2013, SEBI moved contempt petitions.
Between May 2013 and March 2014 the Court passed a series of interim orders: it stayed parallel proceedings before the Securities Appellate Tribunal and the Allahabad High Court, required repeated disclosures of payment sources, froze the Group’s movable and immovable assets, summoned the contemnors, issued a non-bailable warrant for Mr Subrata Roy Sahara, and eventually detained several directors in judicial custody. The orders culminated on 26-3-2014 in conditional interim bail linked to payment of Rs 10,000 crores.
Legal Issues Presented
- Whether the respondents/contemnors had complied with the monetary and reporting obligations imposed by the judgment dated 31-8-2012 and subsequent orders of the Supreme Court.
- Whether their continuing default constituted civil contempt warranting coercive measures such as asset freezes, travel restrictions, arrest, and detention.
- What conditions, if any, should govern the grant of interim bail to purge the contempt and secure compliance with the Court’s earlier directions.
Arguments of the Parties
Petitioner/SEBI’s Arguments
- Requested that any money already deposited by Sahara be refunded to genuine investors only after SEBI verifies investor identities and documentation.
- Highlighted Sahara’s failure to disclose the exact sources of funds allegedly used to repay investors, despite a specific request dated 28-5-2013.
- Sought detailed bank statements and explanations for large payments made through allied companies to partnership firms, questioning the legitimacy of such transactions.
Respondents/Sahara Group’s Arguments
- Offered a list of properties (items 68–70 of Annexure-A) said to be worth over Rs 11,000 crores to secure compliance, and sought time for SEBI to verify valuations.
- Maintained that substantial amounts (approximately Rs 17,443 crores for SIRECL and Rs 5,442 crores for SHICL) had already been repaid to investors.
- Repeatedly sought exemption from personal appearance for Mr Subrata Roy on medical and other grounds, and later applied for interim bail.
- Filed a “fresh proposal” on 25-3-2014 offering partial payment and sought the Court’s acceptance of the same.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Subrata Roy Sahara v. SEBI, judgment dated 31-8-2012 ((2013) 1 SCC 1) | Directed Sahara entities to refund monies and deposit them with SEBI under specified terms. | Formed the foundation of the contempt proceedings; Court examined whether its conditions had been met. |
| Orders dated 5-12-2012 ((2013) 2 SCC 733) and 25-2-2013 ((2013) 2 SCC 738) | Clarified and enforced the directions of the 2012 judgment. | Court found continuing non-compliance with these orders, justifying coercive contempt measures. |
| Order dated 28-10-2013 ((2013) 9 SCC 331) | Imposed conditional travel restrictions on an alleged contemnor. | Later orders referenced this precedent when tightening travel bans and asset freezes. |
Court's Reasoning and Analysis
The bench observed a consistent pattern of non-compliance by the contemnors, noting that despite multiple opportunities they had “adopted various dilatory tactics.” The Court reasoned that:
- Non-compliance undermines the rule of law and public confidence in the judiciary; therefore, strong coercive steps are justified under Articles 129 and 142 of the Constitution.
- The documents submitted by Sahara cast “serious doubts” on the existence of many claimed investors, raising concerns of market abuse and threats to market integrity.
- Earlier leniency—such as allowing travel abroad and granting time for disclosure—had failed to secure obedience, necessitating stricter measures including a freeze on all movable and immovable assets and the issuance of a non-bailable warrant.
- Detention of directors (with limited exception for a woman director) was warranted to compel a “concrete and acceptable proposal” for payment.
- The fresh proposal dated 25-3-2014, though still short of full compliance, could be leveraged by linking interim bail to a substantial upfront payment (Rs 10,000 crores) to demonstrate bona fides and facilitate further recovery.
Holding and Implications
INTERIM BAIL GRANTED CONDITIONALLY: The contemnors detained on 4-3-2014 were granted interim bail upon:
- Depositing Rs 5,000 crores with the Supreme Court, and
- Furnishing a bank guarantee from a nationalised bank for a further Rs 5,000 crores in favour of SEBI.
Upon compliance, they are to be released forthwith and the deposited amount is to be made available to SEBI.
Implications: The order does not create new precedent but exemplifies the Supreme Court’s readiness to employ its contempt powers, including arrest and conditional bail, to enforce compliance with its financial directives. The contemnors remain under a continuing obligation to raise the balance amount required by earlier judgments; failure to do so may result in renewed coercive action.
Order dated 2-5-2013
Contempt Petition (C) No. 412 of 2012 in Civil Appeal No. 9813 of 2011
1. List on 8-5-2013, immediately after the normal work in the Court comprising Hon'ble Mr Justice Jagdish Singh Khehar is over.
IAs Nos. 72-73 of 2013 in Civil Appeal No. 9813 of 2011
2. Issue notice. The counsel appearing for the respective petitioners (non-applicants) accept notice.
3. List on 8-5-2013, immediately after the normal work in the Court comprising Hon'ble Mr Justice Jagdish Singh Khehar is over.
4. Counter-affidavit, if any, be filed before the next date.
5. We are inclined to stay all further proceedings in Appeals Nos. 42 of 2013 (Subrata Roy Sahara v. SEBI), 48 of 2013 (SHICL v. SEBI), 49 of 2013 (SIRECL v. SEBI) and 50 of 2013 (Ashok Roy Chaudhary v. SEBI) pending before the Securities Appellate Tribunal, Mumbai, and in Writ Petition No. 2088 of 2013 pending before the High Court of Judicature of Allahabad, Lucknow Bench, since we are examining the question, whether the respondents have complied with the various conditions stipulated in our judgment dated 31-8-2012 (2013) 1 SCC 1.
6. Ordered accordingly.
Order dated 8-5-2013
IAs Nos. 68-69 of 2013 in CA No. 9813 of 2011
7. Application praying for filing additional documents is allowed.
8. Heard the counsel for either side.
9. Due to paucity of time, it would not be possible for us to hear the contempt petition and the same stands adjourned to 17-7-2013 at 2.00 p.m Parties shall complete pleadings in all IAs/petitions before that date.
10. Mr Arvind Datar, learned Senior Advocate appearing for the petitioner, submits that the money so far deposited by Saharas be permitted to be refunded to the genuine investors, with interest, after verifying the genuineness of the documents. SEBI may do so.
11. As far as genuine multiple investors are concerned, the issue be examined on the next date of hearing. Ordered accordingly.
Order dated 1-11-2013
IA No. 4 in Contempt Petition (C) No. 260 of 2013 in Civil Appeal No. 8643 of 2012
12. We have heard Mr C.A Sundaram, learned Senior Advocate appearing for the applicants. For the reasons indicated in Para 4 of the application, we make it clear that it is open for the alleged Contemnor No. 5 in Contempt Petitions (Civil) Nos. 412 and 413 of 2012 to go abroad, but, in the event of non-compliance with the directions contained in the order dated 28-10-2013 (2013) 9 SCC 331, he shall immediately return back and be present in the country before the expiry of the period of three weeks, as indicated in the said order. With the aforesaid observation, IA No. 4 is disposed of.
Order dated 21-11-2013
13. We are convinced that the order dated 28-10-2013 (2013) 9 SCC 331 passed by this Court has not been complied with in its letter and spirit. In such circumstances, we direct that Sahara Group of Companies shall not part with any movable and immovable properties until further orders. We further direct that all the alleged contemnors shall not leave the country without the permission of this Court. List on 11-12-2013 at 2.00 p.m for further arguments.
Order dated 11-12-2013
14. Heard the counsel on either side. Following our orders dated 28-10-2013 (2013) 9 SCC 331, 1-11-2013 and 21-11-2013, Mr C.A Sundaram, learned Senior Counsel, has taken us through Annexure-A, filed along with IA No. 82 of 2013, which gives details of various properties which the alleged contemnors have agreed to offer to SEBI. Reference was specifically made to properties mentioned at Items 68, 69 and 70, which, according to Mr Sundaram, would fetch a value of more than Rs 11,000 crores.
15. Mr Arvind Datar, learned Senior Counsel appearing for SEBI, prayed for some time to verify the same as well as the valuation reports filed along with the IA in support of that prayer. However, he submitted that if it is the stand of the alleged contemnors that they had refunded the amounts (Rs 17,443 crores approximately in case of Sirecl and Rs 5442 crores approximately in case of Shicl), then they should produce the relevant records, duly certified by a competent authority which is acceptable in a court of law, indicating the sources from which they got the money for repayment, as requested vide SEBI's letter dated 28-5-2013.
16. Put up on 9-1-2014 at 2.00 p.m
Order dated 9-1-2014
17. Heard the counsel on either side.
18. Mr C.A Sundaram, learned Senior Counsel appearing for one of the alleged contemnors, submitted that earlier this Court on 11-12-2013 has only reiterated the submission made by Mr Arvind Datar, learned Senior Counsel appearing for SEBI, that they did not disclose the source from which they got money for repayment, despite SEBI's letter dated 28-5-2013. Mr Sundaram is right in his submission. However, we feel that it would be appropriate to give a direction of the nature stated above.
19. Accordingly, we direct the alleged contemnors to disclose the complete details and source from which they repaid the amount to the investors as also the manner of making payments. They shall also disclose the information which SEBI has sought from them from time to time. Such information shall be provided to SEBI and also be filed in this Court by 23-1-2014.
20. Put up on 28-1-2014 at 2.00 p.m In the meantime, SEBI shall verify the information provided to it by the alleged contemnors.
Order dated 28-1-2014
21. Heard Mr Ram Jethmalani, learned Senior Counsel and Mr Arvind P. Datar, learned Senior Counsel.
22. Mr Datar submitted that the Saharas have not disclosed the details as to when the refund was made. Reference was made to pp. 6 to 9 of the reply-affidavit filed today. Mr Datar further submitted that SEBI requires an explanation from the Saharas with regard to the payments made on behalf of Sahara India Real Estate Corpn. Ltd. (Sirecl) (partnership firm) by the following firms, as mentioned below:
Rupees (in crores) 1. Sahara Credit Cooperative Society Ltd. Rs 13,366.18 2. Sahara India Commercial Corpn. Ltd. Rs 4384.00 3. Sahara Q Shop Rs 2258.32 4. Ketak City Homes Ltd. Rs 19.43 5. Kirit City Homes Ltd. Rs 44.05
23. Similarly, SEBI requires the Saharas to show the following payments made on behalf of Sahara Housing Investment Corpn. Ltd. (Shicl) (partnership firm), by the following firms, as mentioned below:
Rupees (in crores) 1. Siccl Rs 2479.00 2. Sahara Q Shop Rs 2411.90
24. Further, the Saharas will also provide the bank statements of the above firms showing when the amount was paid to the partnership firms and subsequently, when and how partnership firm made the disbursement, as sought for by SEBI.
25. Mr Ram Jethmalani, learned Senior Counsel appearing for the respondents submitted that he will examine the same and come out with a response within a week.
26. Post on 11-2-2014 at 2.00 p.m
Order dated 20-2-2014
27. Heard Mr Ram Jethmalani and Mr C.A Sundaram, learned Senior Counsel appearing for the alleged contemnors and Mr Arvind P. Datar, learned Senior Counsel appearing for SEBI.
28. In view of the conflicting stands taken by the Senior Counsel appearing for the alleged contemnors and the defiant and non-cooperative attitude adopted by the contemnors in honouring the judgment dated 31-8-2012 (2013) 1 SCC 1, passed by this Court as well as orders dated 5-12-2012 (2013) 2 SCC 733259 and 25-2-2013 (2013) 2 SCC 738264 passed in Civil Appeal No. 8643 of 2012 and IA No. 67 of 2013 by a three-Judge Bench of this Court, we direct the personal presence of the alleged contemnors and the Directors of the respondent Companies in Court on 26-2-2014 at 2.00 p.m, on which date the matter will be next taken up.
Order dated 26-2-2014
29. This Court passed an order on 20-2-2014 directing the personal presence of the alleged contemnors and the Directors of the respondent Companies today i.e on 26-2-2014 at 2.00 p.m On our directions, Mr Ashok Roy Choudhary, Mr Ravi Shankar Dubey and Smt Vandana Bhargava are present in the Court today.
30. Even though, Mr Ram Jethmalani, learned Senior Counsel appearing for the alleged contemnors, made a mention yesterday i.e on 25-2-2014, before this Bench for dispensing with the personal presence of Mr Subrata Roy Sahara, alleged Contemnor 5, that request was specifically turned down by this Court.
31. Today, when the matter is taken up, the same request was made by Mr Jethmalani, by moving an application, which was supported by a medical certificate. The said medical certificate was issued by Sahara Hospital and, in our view, the factual position indicated therein does not solicit the exemption sought.
32. Since, we have already declined to grant exemption from personal presence of the alleged Contemnor 5 on 25-2-2014, we find no reason to accede to the renewal of the request made today. Accordingly, we issue non-bailable warrants of arrest qua Mr Subrata Roy Sahara, alleged Contemnor 5. He shall be arrested and produced before this Court on 4-3-2014 at 2.00 p.m The aforementioned Directors, who are present today, shall also remain present in the Court on the next date. Put up on 4-3-2014 at 2.00 p.m
Order dated 4-3-2014
33. The contemnors are personally present in the Court, including the fifth respondent, who has been brought to the Court by the U.P Police, in due execution of our non-bailable warrant of arrest.
34. We have heard the Senior Counsel on various occasions and perused the various documents, affidavits, etc. We have heard the learned counsel and the contemnors today as well. We are fully convinced that the contemnors have not complied with our directions contained in the judgment dated 31-8-2012 (2013) 1 SCC 1, as well as orders dated 5-12-2012 (2013) 2 SCC 733259 and 25-2-2013 (2013) 2 SCC 738264 passed in Civil Appeal No. 8643 of 2012 and IA No. 67 of 2013 by a three-Judge Bench of this Court.
35. Sufficient opportunities have been given to the contemnors to fully comply with those orders and purge the contempt committed by them but, rather than availing of the same, they have adopted various dilatory tactics to delay the implementation of the orders of this Court. The non-compliance with the orders passed by this Court shakes the very foundation of our judicial system and undermines the rule of law, which we are bound to honour and protect. This is essential to maintain faith and confidence of the people of this country in the judiciary.
36. We have found that the contemnors have maintained an unreasonable stand throughout the proceedings before SEBI, SAT, High Court and even before this Court. The reports/analysis filed by SEBI on 18-2-2014 make detailed reference to the submissions, documents, etc. furnished by the contemnors, which indicates that they are filing and making unacceptable statements and affidavits all through and even in the contempt proceedings. The documents and affidavits produced by the contemnors themselves would apparently falsify their refund theory and cast serious doubts about the existence of the so-called investors. All the fact-finding authorities have opined that majority of investors do not exist. Preservation of market integrity is extremely important for economic growth of this country and for national interest. Maintaining investors' confidence requires market integrity and control of market abuse. Market abuse is a serious financial crime which undermines the very financial structure of this country and will make imbalance in wealth between haves and have-nots.
37. We notice, on this day also, no proposal is forthcoming to honour the judgment of this Court dated 31-8-2012 (2013) 1 SCC 1 and the orders passed by this Court on 5-12-2012 (2013) 2 SCC 733259 and 25-2-2013 (2013) 2 SCC 738264 by the three-Judge Bench. In such circumstances, in exercise of the powers conferred under Articles 129 and 142 of the Constitution of India, we order detention of all the contemnors, except Mrs Vandana Bhargava (the fourth respondent) and send them to judicial custody at Delhi till the next date of hearing. This concession is being extended towards the fourth respondent because she is a woman Director, and also, to enable the contemnors to be in a position to propose an acceptable solution for execution of our orders by coordinating with the detenus. Mrs Vandana Bhargava, who herself is one of the Directors, is permitted to be in touch with the rest of the contemnors and submit an acceptable proposal arrived at during their detention, so that the Court can pass appropriate orders.
38. List on 11-3-2014 at 2.00 p.m All the contemnors be produced in Court on that date. Mrs Vandana Bhargava, the fourth respondent, to appear on her own. However, liberty is granted for mentioning the matters for preponement of the date if a concrete and acceptable proposal can be offered in the meantime.
Order dated 13-3-2014
39. Shri Ram Jethmalani, learned Senior Counsel, appearing for the petitioner submitted that he has some inconvenience for tomorrow i.e 14-3-2014 and cannot address arguments tomorrow. The learned Senior Counsel made a request that the matter be posted on 25-3-2014.
40. Consequently, the matter is posted on 25-3-2014 at 2.00 p.m, at the request of the learned Senior Counsel for the petitioner.
41. Prayer made by Mr Ram Jethmalani, learned Senior Counsel for the petitioner, for bail cannot be considered at this juncture, since no written proposal for payment in compliance with the directions issued by this Court has been made so far.
Order dated 26-3-2014
42. We have gone through the fresh proposal filed on 25-3-2014. Though the same is not in compliance with our order dated 31-8-2012 (2013) 1 SCC 1 or the order passed by the three-Judge Bench of this Court on 5-12-2012 in Sahara India Real Estate Exchange Corpn. Ltd. v. SEBI (2013) 2 SCC 733259 and on 25-2-2013 in Sahara India Real Estate Corpn. Ltd. v. SEBI (2013) 2 SCC 738264, we are inclined to grant interim bail to the contemnors who are detained by virtue of our order dated 4-3-2014, on the condition that they would pay the amount of Rs 10,000 crores, out of which Rs 5000 crores to be deposited before this Court and for the balance a bank guarantee of a nationalised bank be furnished in favour of SEBI and be deposited before this Court. On compliance, the contemnors be released forthwith and the amount deposited be released to SEBI.
43. We make it clear that this order is passed in order to facilitate the contemnors to further raise the balance amount so as to comply with the Court's orders mentioned above.
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