Sahara ordered to submit Rs20,000-cr worth title deeds to SEBI as guarantee

Subrata RoyThe Supreme Court has directed the Sahara group to give original title deeds of its assets worth Rs20,000 crore to the Securities and Exchange Board of India (SEBI) as guarantee towards payment of the Rs24,000 crore it owes to various investors.

Two Sahara group companies, Sahara India Real Estate and Sahara Housing Invest, had collected Rs24,029 crore through issue of optionally fully convertible debentures (OFCDs) to millions of small investors across the country.

A Supreme Court bench of Justice K S Radhakrishnan and Justice J S Khehar has directed the group and its directors, including chief Subrata Roy, to submit the original title deals within three weeks, without which they cannot leave the country.

The bench did not, however, specifically order restriction in the movement of Sahara chieftains outside the country after assurances from Sahara counsel CA Sundaram.

The SC opted for a milder direction, which will come into play only if the group fails to submit the documents.

The SC has directed the Sahara group to furnish the title deeds along with the valuation report latest by 11 November.

The order was passed on a contempt of court filed by market regulator SEBI against Roy, the promoter of Sahara India Real Estate and Sahara Housing Invest, the two companies and their directors.

Sahara has already paid Rs5,000 crore to the market regulator while it has been dilly-dallying on refunding the remaining amount.

The judges also made several strictures against the group. ''The problem is you are not consistent. One affidavit you say one this. And something else (in the other),'' said Justice Radhakrishnan.

''We can't trust you anymore. There has been too much of hide and seek,'' Justice Khehar added.

Sahara counsel Sundaram had suggested a bank trustee arrangement as alternative for cash payment arguing that cash payment would mean liquidation of their companies.

Sundaram had also produced a letter from PNB Investment Services, a subsidiary of Punjab National Bank, which had offered to take into possession title deeds worth Rs20,000 crore and produce money on directions of the Supreme Court, as and when required.

SEBI counsel opposed the proposal to take any bank guarantee or any other instrument in lieu of cash payment.

"The direction was to submit a bank guarantee. This prayer was made by Ram Jethmalani before the other bench and was rejected. I don't know why they are making it again. You played with fire, you can't complain of burnt fingers. You have taken money from investors. You said your properties are worth Rs71,000 crore. All I am saying is sell one-third of that property and pay the money," Datar said.

Datar also said the property documents so far submitted by Sahara cannot be relied upon. "This is a minefield. Whatever property documents SEBI has seen, we have found serious discrepancies," he said.

The counsel suggested that Sahara submit the title deeds to SEBI instead of giving it to PNB.

''Why can't they give it to SEBI? Where is the question of giving it to PNB,'' he said