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Securities And Exchange Board Of India v. Sahara India Real Estate Corporation Limited And Others
Factual and Procedural Background
The order concerns contemnors from the Sahara Group who were committed to judicial custody on 4 March 2014 for non-compliance with earlier Supreme Court directions requiring deposit of large sums with the Securities and Exchange Board of India (SEBI). Interim bail granted on 26 March 2014 was conditional upon depositing ₹10,000 crore (₹5,000 crore in cash and the rest secured by a bank guarantee). Subsequent orders dated 4 June 2014 and 22 July 2014 relaxed embargoes on certain assets so the amounts could be raised.
Having deposited only about ₹3,000 crore, the contemnors filed fresh applications seeking facilities inside Tihar Jail to negotiate the sale of domestic and overseas properties in order to comply with the financial conditions. The present order disposes of those applications.
Legal Issues Presented
- Whether the contemnors could be shifted from Barrack No. 3, Tihar Jail, to an “outhouse” (designated as “Option I” premises) within the jail complex for the purpose of conducting negotiations.
- Whether the court should permit extensive communication and office facilities (video conferencing, telephones, computers, internet) and allow designated secretarial staff to assist the contemnors during those negotiations.
- Whether it was necessary to declare the “Option I” premises a jail by formal notification before housing the contemnors there.
Arguments of the Parties
Contemnors (represented by Mr. Harish N. Salve & Mr. K.T.S. Tulsi)
- Requested relocation to the “Option I” premises for twenty days, including weekends, to avoid daily transfers for video conferencing.
- Sought specific facilities: video conferencing with internet/Wi-Fi, STD/ISD telephone line, one mobile phone, two desktop computers with printer and stationery, two laptops, and a support team comprising two secretarial staff, one technician/operator, and one office staff member.
- Contended that a formal declaration of the premises as a jail was not strictly necessary.
Government of NCT of Delhi / Jail Authorities (represented by Solicitor General Mr. Ranjit Kumar)
- Agreed that, because the contemnors are in judicial custody, the contemplated premises must be notified as a jail before use.
- Expressed no objection to using the “Option I” premises and to providing the requested facilities, subject to security checks and at the contemnors’ expense.
- Confirmed that video conferencing and internet facilities already exist in the room identified as “Option I.”
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Order dated 31-8-2012 (2013) 1 SCC 1 | Initial directions to Sahara Group to refund monies through SEBI. | Forms background for contempt finding and continuing deposit obligations. |
| Order dated 5-12-2012 (2013) 2 SCC 733 | Follow-up compliance directions. | Referenced to show continuing default leading to contempt. |
| Order dated 25-2-2013 (2013) 2 SCC 738 | Further enforcement steps. | Cited as part of chronology of unfulfilled obligations. |
| Order dated 4-3-2014 (2014) 5 SCC 429 | Commitment of contemnors to judicial custody for contempt. | Establishes current custodial status. |
| Order dated 26-3-2014 (2014) 5 SCC 429 | Conditional interim bail requiring ₹10,000 crore deposit. | Conditions remain the benchmark for assessing compliance. |
| Order dated 4-6-2014 (2014) 8 SCC 751 | Lifted embargo on specific Sahara properties to facilitate sale. | Shows court’s earlier willingness to enable asset liquidation. |
| Order dated 22-7-2014 (2014) 8 SCC 741 | Permitted negotiation/sale of three offshore hotel properties but denied parole absent concrete proposals. | Forms the immediate procedural backdrop for present applications. |
Court's Reasoning and Analysis
The Court considered an affidavit from the Superintendent of Tihar Jail (filed 30-7-2014) outlining two feasible options for enabling negotiations. Both parties agreed upon “Option I,” a conference-room-type facility within the jail complex.
Key points in the Court’s analysis:
- A formal notification declaring the “Option I” premises a jail is mandatory to house persons in judicial custody; the Solicitor General undertook that such notification would issue by 4-8-2014.
- The requested communication facilities and equipment posed no objection, provided they are installed at the contemnors’ cost and subjected to security checks.
- Allowing limited support staff is acceptable, but their identities must be furnished in advance for verification. Presence is restricted to 6 a.m. – 8 p.m.
- The arrangement should be strictly time-bound to prevent it from becoming an enduring privilege and to preserve jail administration norms.
Holding and Implications
Applications ALLOWED IN PART. The contemnors are permitted to be lodged in the “Option I” premises for ten working days starting 5-8-2014, with specified communication facilities and up to three support staff, subject to security and procedural conditions. The premises must be formally notified as a jail.
Implications: The order temporarily eases custodial restrictions to facilitate compliance with financial obligations owed to SEBI. The Court expressly states that this is a one-time, non-precedential arrangement; no broader legal principle is created beyond the immediate logistical accommodation.
Order
1. Heard. The contemnors stand committed to jail by our order dated 4-3-2014 (2014) 5 SCC 429 on account of their failure to comply with the directions of this Court in terms of orders dated 31-8-2012 (2013) 1 SCC 1 and 5-12-2012 (2013) 2 SCC 733259 and those issued on 25-2-2013 (2013) 2 SCC 738264 in Civil Appeal No. 9813 of 2011. By an order dated 26-3-2014 (2014) 5 SCC 429, the contemnors were granted interim bail subject to their depositing a sum of rupees ten thousand crores, out of which rupees five thousand crores had to be deposited in cash while the balance had to be secured by a bank guarantee from a nationalised bank in favour of the Securities and Exchange Board of India (SEBI). By yet another order dated 4-6-2014 (2014) 8 SCC 751, this Court had lifted the embargo placed by an earlier order upon the operation of the bank accounts and sale/transfer of immovable assets held by Sahara Group of Companies qua nine properties referred to in the said order. Sahara Group has, ever since the above orders, deposited an amount of rupees three thousand crores approximately by sale/encashment of FDs, bonds and securities and by sale of one of the nine items of property permitted to be sold.
2. By our order dated 22-7-2014 (2014) 8 SCC 741, we had allowed Saharas to transfer, sell or encumber three offshore hotel properties owned by them subject to the conditions that the entire sale consideration received by the Saharas after repayment of the loan outstanding towards Bank of China is deposited with SEBI towards compliance with the directions contained in the conditional bail order dated 26-3-2014 (2014) 5 SCC 429. The prayer made by the contemnors for parole to enable them to negotiate deals in connection with the sale of the offshore properties was however declined on the ground that there was no concrete proposal at that stage to justify any such concession in favour of the contemnors. We had all the same made it clear that if and when the occasion arises and negotiations appear to be essentially for sale of the properties, Saharas could approach this Court for appropriate orders.
3. The present applications have now been filed by the contemnors seeking the following directions:
(a) Shifting of the applicants from Barrack No. 3 to the ‘outhouse in the Tihar Jail premises’ at Tihar Jail, Delhi;
(b) Allow three secretarial persons for full 24 hours to assist the applicants along with the office equipment as mentioned in para in finalising the negotiations, quickly; and
(c) Pass such other or further order or orders or such directions as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case and to meet the ends of justice.
4. When these applications came up before us on 25-7-2014, Mr Ranjit Kumar, learned Solicitor General, was requested (2014) 9 SCC 252 (F7) to appear on behalf of the Government of National Capital Territory of Delhi and to examine and place on record options considered feasible for purposes of facilitating negotiations which the contemnors may like to conduct with the parties interested in purchasing their properties situated within and outside the country. Pursuant to the said direction, Mr Ranjit Kumar filed an affidavit on 30-7-2014 sworn by Superintendent, Tihar Jail No. 3, indicating two clear “options”. One of these options was accepted to M/s Harish N. Salve and K.T.S Tulsi, appearing for the contemnors, subject to certain further directions on the subject touching the “visiting hours” to be specified by this Court keeping in view the time difference between India and the United States of America where some of the interested parties may be located. At the request of Mr Salve, the matter was adjourned to enable the learned counsel for the parties to present a mutually acceptable mechanism for making “Option I”, suggested in the affidavit, workable.
5. When the matter came up today before us Mr Salve presented to us a proposal indicating the minimal requirements that alone can according to him provide a viable mechanism for facilitating negotiations with the prospective buyers. According to the said proposal, the contemnors need to be lodged at the premises, mentioned in “Option I” of the affidavit dated 30-7-2014 filed by the Superintendent of the Central Jail, No. 3, Tihar, New Delhi, for twenty days, including Sundays and holidays rather than move to and fro for video conference from their barracks. In addition, the proposal requires the following five items to be provided to the contemnors:
1. Video conferencing system and internet/Wi-Fi connection;
2. One telephone line with STD/ISD facility and one mobile phone;
3. Two desktop computers with printer and stationery;
4. Two laptops;
5. Two secretarial, 1 technician/operator and 1 office staff.
It was submitted by Mr Salve that although it is not necessary that the premises, mentioned in “Option I”, should be declared as a jail, yet there should not be any difficulty in the competent authority issuing an appropriate notification to that effect.
6. Mr Ranjit Kumar submitted in reply that a notification will be necessary as the contemnors have been committed to judicial custody and they can be validly held in the said premises aforementioned only if it is declared as a jail. He, however, had no serious objection to the premises, mentioned in “Option I” of the said affidavit to be declared as a jail by the competent authority by 4-8-2014. We must add to the credit of Mr Kumar that he had no objection even regarding the facilities indicated by the contemnors extracted above, to be allowed to the contemnors. Mr Ranjit Kumar submitted that video conferencing system and internet/Wi-Fi connection facility already exists in the conference room comprising “Option I” of the affidavit, which could be used by the contemnors at their own expenses. Insofar as a telephone line with STD/ISD facility, a mobile phone, two desktop computers with printer and stationery and two laptops are concerned, the jail authorities, would according to Mr Kumar, permit the same to be brought into the premises comprising “Option I”, subject to suitable check and verification from the security angle.
7. There is no difficulty even in permitting two secretarial staff and one technician/operator (total three in number) to be allowed in the premises from 6 a.m to 8 p.m initially for a period of ten working days commencing 5-8-2014, subject to the condition that the names, particulars and addresses of such staff are furnished to the jail authorities, Superintendent of the Central Jail, No. 3, Tihar, New Delhi by 10 a.m tomorrow so that the jail authorities are in a position to verify their antecedents and other credentials, if so advised.
8. In the circumstances, therefore, we allow these applications but only to the extent indicated above. We make it clear that this arrangement is limited to a period of ten working days commencing 5-8-2014 to enable the contemnors to negotiate sale of the properties within and outside the country during this period and shall not constitute a precedent in future. We also make it clear that rules, regulations, procedures in regard to visitors/visiting hours shall continue to be applicable during the period the contemnors are lodged in the premises mentioned in “Option I” in the affidavit dated 30-7-2014. We further make it clear that all other conditions stipulated in the affidavit dated 30-7-2014 shall also continue to remain applicable.
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