Supreme Court orders RBI hearing on Sahara
09 Jun 2008
Mumbai: The Supreme Court has asked Sahara India Financial Corporation (SIFCL), which was barred by the Reserve Bank of India last week from accepting fresh deposits from the public, to appear before the central bank on 12 June.
The Supreme Court on Friday set aside both the Allahabad High Court stay and Reserve Bank of India's rulings debarring SIFCL from accepting deposits from investors, and directed RBI to give a fresh hearing to the company.
A vacation bench comprising Justices Arijit Pasayat and P P Naolekar directed that the fresh hearing be held on 12 June, and SIFCL should place all its arguments along with the entire material it wants to rely on before the competent authority appointed by RBI for giving fresh hearing.
"In view of the facts involved in the case, it will be appropriate that RBI gives them a fresh hearing. The respondent shall appear before RBI on 12 June 2008, and RBI shall pass a fresh order after hearing SIFCL. The impugned high court order shall not be given effect to," the apex court said in its order.
Senior counsel T R Andhyaarjina, appearing for RBI, had contended before the court that the respondent was issued a show-cause notice on 9 May and was given ample opportunity of hearing and the ban order was passed on 2 June, after the RBI came to the conclusion that the company had violated guidelines while accepting deposits from the public and the ban order was passed to protect the interests of the investing public.
Senior counsel Mukul Rohatagi, appearing for the company, contended before the court that SIFCL had 50 million investors across the country and about Rs18,000 crore as public deposits and the company had been debarred by the RBI from accepting deposits from the depositors without being given a fresh hearing which was violative of principle of natural justice and fair play.
The RBI last week barred the residuary finance company from accepting deposits saying it had flouted rules on maintaining investments and interest payments.
Sahara moved the Allahabad High Court and secured a stay against the central bank's order. The RBI then went to the Supreme Court to appeal against the stay.
SIFCL, based in Lucknow, has around 42.5 million customers and 1,508 service centres. The Sahara group has interests in financial services, entertainment, real estate and sports.
