SC refuses to release Sahara Roy; can defreeze asset, bank accts

–New SC bench begins hearing in Sahara case
–SC refuses release, house arrest of Sahara head Roy for now –SC: Can allow sale of specific Sahara properties
–Can defreeze Sahara bank accts if money directly paid to SEBI
–Sahara seeks Roy’s release for 60 days to deposit bail money –Sahara to SC: Can give 30 bln rupee in 5 days after defreezing bk acct
–To get valuation done for group’s 3 hotels abroad
–To give valuation, buy offer for some assets for deposit
–Can sell 3 hotels, 9 other properties
–To give 100 bln rupee in cash, guarantee post Roy’s release
–Lift order restraining co from selling its properties.

New Delhi: The Supreme Court today refused to release Sahara head Subrata Roy from Tihar Jail or send him to house arrest but said it can defreeze the group’s bank accounts and some properties for raising 100 bln rupees, the deposit required for Roy’s release.

The Sahara group today told the court that it is willing comply with its earlier order to deposit 50 bln rupees with Securities and Exchange Board of India and another 50 bln rupees bank guarantee, but sought Roy’s release for it. Sahara’s counsel said if Roy is released for 60 days, the group will deposit 30 bln rupees in five working days and pay the rest in 60 days.

A new bench of the apex court comprising Justice T.S. Thakur and Justice A.K. Sikri rejected Sahara’s plea, saying as per the apex court’s earlier order, the company ought to deposit the money first and then Roy would be released.

“The spirit of the order is you (Sahara) deposit the money first and then (Roy) be released,” said the bench headed by Justice Thakur, referring to the order of an earlier bench that comprised Justice K.S. Radhakrishnan and Justice Khehar. While Justice Radhakrishnan retired, Justice Khehar, who had cited “pressures” in handling the case, recused himself from the case last week.

The court today asked the Sahara group to come with valuation of the properties it wants to sell and offers it has received from prospective buyers. During the hearing, Sahara told the court it has shortlisted three hotels in London and New York and nine other properties, which include Aamby Valley projects, for sale to raise the 100-bln-rupee deposit.

The court said it will not defreeze all the properties and the company will have to give one or two specific properties through which the 50-bln-rupee cash will be raised and the rest 50-bln-rupee bank guarantee can be raised through mortgaging the properties. Sahara, however, said banks may not be ready to mortgage its properties.

The Sahara counsel told the court that it has 25 bln to 30 bln rupees in its bank accounts and according to the company, the hotels abroad are worth 60 bln rupees to 70 bln rupees. Sales in Aamby valley projects will fetch rest of the money, Sahara said. Sahara said Roy may be released for 60 days and he will give an undertaking to deposit the money in that time, failing which he can be sent to jail again.

The court, however, rejected the plea for now. The court also rejected the plea that Roy be sent to house arrest in Lucknow. The Uttar Pradesh police had arrested Roy on Feb 28 after the Supreme Court had issued a non-bailable warrant against him for not appearing in court despite summons in a contempt case. Roy was produced in court on Mar 4, when his detention was ordered. Roy is in Tihar Jail since then.

Roy had filed a plea challenging his detention, describing the detention order as illegal. He sought hearing on his custody case by a larger bench, saying there was a “reasonable apprehension” of bias against the Sahara companies by the two-judge Bench that was earlier hearing the case.

The plea was rejected but the bench was changed as Justice Radhakrishnan retired and justice Khehar recused himself. SEBI had filed contempt petitions against Sahara for violation of the apex court’s order dated Aug 31, 2012 to deposit the debentures money within three months with the market regulator.

The sum was collected through optionally fully convertible debentures in 2008 and 2009. Sahara has so far deposited only 51.20 bln rupees with the SEBI. The total amount to be deposited by the company runs to the tune of 370 bln rupees, including interest.

At the heart of the case is SEBI’s contention that the optionally fully convertible debentures issued by the company breached the provisions of the Companies Act and SEBI regulations, and that the debentures for collecting such a huge sum ought to have been listed on a recognised exchange.

The apex court, in its Aug 31 judgment, upheld SEBI’s view that Sahara companies had raised huge amount of money without conforming to the “prudent disclosure” and other investor protection norms governing public issues.

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