Supreme Court gives Sahara a month to file objections to auctioning its property

Subrata RoyThe Supreme Court has sought Sahara group's response on market regulator Sebi's plea seeking appointment of a receiver to raise money by auctioning off the group's assets, so as to recover liabilities of over Rs36,000 crore, after the group failed to raise even Rs10,000 crore needed to secure release of its chairman Subrata Roy from jail.

A three-judge bench headed by Justice TS Thakur issued notice asking the Sahara group to respond as to why a receiver should not be appointed to take over and sell its properties.

The Supreme Court has given the troubled conglomerate a month's time to explain why a receiver should not be appointed to auction off its properties to refund investors in its illegal bonds, a Sebi lawyer said.

Sebi had said that inspite of the apex court's directions giving clear timelines, the group ''in utter disregard, disrespect and disobedience of the directions …deliberately and wilfully, did not comply with them and thereby committed contempt of this court.''

The SC, however, refused to entertain impleadment application filed by the Helvetia group, which showed its willingness to lend $5 billion to the Sahara group for development of Aamby Valley project, which is valued at around Rs1,00,000 crore.

Senior counsel LN Rao appearing for the Sahara group told the court that the British Virgin Islands-based Helvetia group is ready to give now €720 million (Rs5,000 crore ) towards bank guarantee - to secure Roy's bail - and rest of the money will be brought in after the they sign an agreement.

''Due diligence will be over by 15 October and we will be ready to bring in money thereafter within four weeks. The three overseas hotels will have to be encumbered with us,'' he said.

He further said that the Sahara group will also pay Reuben Brothers, which has taken charge of the three hotel properties.

The three foreign properties - London's Grosvenor House Hotel, New York's Dream Downtown and The Plaza - are at present under the charge of David Reuben and Simon Reuben-led private equity firm Reuben Brothers after they refinanced the Sahara group by taking over the loan for around $900 million from BOC in June.

Ruben Brothers had bought the Sahara's debt after the bank had declared it as a defaulter and had started looking for a buyer for the three offshore properties (See: Sahara clinches Rs5,500-cr debt deal for London, US hotels: report).

Sahara founder Subrata Roy was arrested in March last year after the company failed to comply with a court order to refund money raised from millions of small investors by selling them bonds later ruled to be illegal.

In June, the court gave the group 18 months to pay the entire sum of Rs36,000 crore Sahara owes investors. Sahara has previously said it had repaid 95 per cent of its liability, which the court did not accept.

The group has been trying to raise funds since Roy's arrest, but has failed in several of its bids in the past year to raise the money against its hotels and some other properties in India.

Last month, the court had asked the regulator, the Securities and Exchange Board of India (Sebi), which is seeking redress for the bond investors, to submit an application for the appointment of a receiver for the property auction.

On Monday, the Supreme Court gave Sahara a month's time to respond to its show-cause notice, after which Sebi will get two weeks to file a rejoinder, the lawyer told reporters after the court hearing.