SC directs Sahara to return 17,000-crore to investors

In a major setback to real estate companies of Sahara group, as the Supreme Court Friday directed it return an amount of Rs.17,000-crore with interest of 15% to the investors which it had mopped up as debentures.

Slapping a fine of 15% interest over the amount of Rs.17,000-crore, the apex court has rejected the plea of Sahara group which has challenged the order of markets watchdog Securities and Exchange Board of India (SEBI) to refund the investors' money.

'Sahara India Real Estate Corp Ltd. (SIRECL) and Sahara Housing Investment Corp Ltd. to return the money would have to return the amount of Rs.19,400-crore with included interest at the rate of 15% to the investors,' said a bench of two judges Justice K S Radhakrishnan and Justice J S Khehar.

'In case, the companies fail to refund the money, SEBI can take legal action as well as attach the properties of both the companies,' added bench in its verdict.

The court has appointed former apex court judge Justice B N Agarwal to oversee the compliance of its order.

Earlier, on June 14, the Supreme Court had reserved its verdict on a plea by the Sahara group of companies, dealing in real estate and housing, challenging a tribunal's direction to repay the money.

The apex court bench reserved the order after arguments spread over three weeks wherein senior counsel Fali Nariman and Gopal Subramanium, who had appeared for the Sahara group of companies, contested the Oct 18, 2011 award of the Securities Appellate Tribunal.

The Sahara group contended that its mobilisation of money from investors was in the nature of private placement and it imposed no obligation on it to get listed in any stock exchange.

It also contended that the Securities and Exchange Board of India (SEBI) could not proceed against it in the absence of a complaint by investors.

The stock market regulator had told the court that the company resorted to the massive mobilization outside the well- developed investor protection framework developed by it, which provided for checks and balances and statutory protection to investors.

In an earlier hearing, Chief Justice S H Kapadia had asked the petitioner companies to state how they had secured the investors' money. The companies were also asked to state the manner in which they had deployed the investors' money.

--With Agencies Inputs--