Sahara runs out of wriggle room as SC firm on Aamby Valley auction

12 September 2017

Calling the Sahara Group ''an abuser of process of law'', the Supreme Court on Monday directed that the Sahara group's Rs37,000-crore luxury township Aamby Valley near Pune in Maharashtra be auctioned as scheduled.

The SC turned down requests to give a two-month extension for paying an instalment, which was due last week. Of the Rs1,500 crore due for payment on 7 September, the group had paid only around Rs530 crore and offered post-dated cheques payable by up to 11 November for the remaining Rs970 crore.

''We direct without any hesitation that the auction shall be held as per the direction given by this court and the official liquidator is permitted to carry out the auction as per procedure,'' a bench of Chief Justice of India Dipak Misra and Justices Ranjan Gogoi and A K Sikri said.

It appointed the registrar general of the High Court of Bombay as an observer ''to remain personally present to oversee the physical auction at the auction venue at Mumbai.''

Aamby Valley will go under the hammer on 10 and 11 October, with the Bombay High Court as the official liquidator. Any successful bidder will have to deposit the money by January 2018 and the final sale will be approved by the bench of CJI Dipak Misra along with Justices Gogoi and Sikri.

"We are constrained to state that the respondent-contemnor (Subrato Roy) in his own way has treated this court as a laboratory possibly thinking that he can survive on the ventilator as long as possible. He would have been well advised that a person who goes on a ventilator may not survive for long and in any case, a time would come when he has to be comatosed," the bench said on Monday.

"Grant of further time to the respondent-contemnor and entertaining post-dated cheques which are dated 11 November 2017 would tantamount to travesty of justice and extending unwarranted sympathy to a person who is indubitably an abuser of the process of law. He who thinks or for that matter harbours the notion that he can play with law, is under wrong impression," the bench said in a strongly worded order.

Earlier, Kapil Sibal, senior counsel appearing for the group, said ''would submit with all the vehemence as well as humility at his command'' that it was the first case where a contemnor has paid the substantial amount which may go up to Rs16,000 crore, and though approximately Rs8,651 crore is due, that should not be held against him.

''The submission on a first blush may look attractive, but the proceeding that has been recorded by this court from time to time will compel one to repel the submission and extinguish the impression gathered on the first blush,'' the court said.

At the previous hearing, when Sahara failed to deposit the requisite amount in the refund account, the apex court ordered the Bombay High Court to go ahead and initiate the auction of Aamby Valley.

The more than 8,000-acre township located 200 km from Mumbai and valued at more than Rs34,000 crore is the crown jewel in Sahara's portfolio. The sale of this property would strike a blow and "finish my business", Sahara had said.

After Sahara failed to pay the requisite Rs5,000 crore on 17 April, the court had also decided to auction Aamby Valley. Roy's pleas to prevent the auctioning of this jewel fell on deaf ears as a three-judge bench had fixed the fair market price and instructed the Bombay High Court to "proceed with the formalities of auction by preparing the draft terms and conditions and other formalities".

Sahara, which allegedly duped its investors of Rs 24,000 crore, has been seeking ways to raise money to pay the principal amount. So far, Sahara has managed to repay around Rs16,000 crore.

The dues pertain to a seven-year-old case between the group and the Securities and Exchange Board of India. A Sebi order directing refund of over Rs24,000 crore raised from 29.6 million investors by Sahara India Real Estate Corp and Sahara Housing Invest Corp was upheld by the Supreme Court in August 2012.

The court had asked the regulator to collect dues with interest of 15 per cent and repay the investors. Sahara initially deposited around Rs5,000 crore and claimed that the rest had been refunded directly to the investors.

However, the court was not convinced by this claim and has insisted on payments. It had sent group chief Subrata Roy to jail in 2014 for non-compliance of the order. 

Though Roy has since been released on parole, the group is yet to pay about a third of the principal amount, while according to the regulator, total dues have gone up to over Rs40,000 crore with interest. The auction of Aamby Valley, which the group had tried to avoid over the years, has become the last resort for the court.

Nestled in the Western ghats on the Mumbai-Pune highway the hill city sprawls over 8000-odd acres with luxury amenities such as golf course, villas, airstrips, entertainment facilities and infrastructure facilities such as road, water and power plants.

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