Fresh trouble for Sahara

New Delhi, Feb. 6: The Supreme Court today issued contempt notices to two Sahara Group companies for failing to refund an estimated Rs 24,000 crore investors' money and pulled up the Securities and Exchange Board of India (Sebi) for its reluctance to confiscate and initiate attachment proceedings against the firms as per its August 31, 2012 judgment.

A bench of justices K.S. Radhakrishnan and J.S. Khehar sought response within four weeks from the two Sahara entities ' Sahara India Real Estate Corporation Limited and Sahara Housing Investment Corporation Limited ' on the contempt application moved by Sebi.

The bench said Sebi was free to freeze accounts and seize properties of the two Sahara companies for defying court orders by not refunding the Rs 24,000 crore to investors.

"Confiscation power is there in the judgment. Why are you waiting for our orders. What are the action you have taken so far from August to December, what were you doing? Confiscation power is there, under contempt action we can only punish them," Justice Radhakrishnan, heading the bench, observed.

Sebi's counsel Pratap Venugopal told the court that as per the apex court's judgment, Sahara had to pay the amount within three months from August 31. Hence, Sebi started issuing notices from December for the refund.

"Why are you issuing only notices? why no consequential orders? Now, who has committed the contempt ' you or Sahara," the bench asked the counsel.

Justice Khehar asked the counsel, "The judgment says you can freeze the account. You have not frozen any account. Are you waiting for the outcome of this petition (contempt)?"

Sahara counsel Ram Jethmalani pleaded that contempt notices need not be issued as another petition had been filed by the companies before the apex court seeking certain clarifications and modifications in the August judgment.

He also contradicted Sebi's claim that documents relating to the investors had not been handed over to the regulator.

Jethmalani claimed that so far the companies had dispatched "127 truckloads of documents containing 31,000 odd cartons" to Sebi.

However, the court proceeded to issue notices to the two Sahara companies. It granted Sebi a further two weeks to file its response to the companies' response.

Last month, the Subrata Roy-owned companies suffered a blow with the Supreme Court dismissing their petition seeking a review of its August judgment directing the company to pay back an estimated Rs 24,000 crore raised from lakhs of small investors who had deposited money in optionally fully convertible debentures.

In August, the apex court while directing Sahara to refund the money had fixed a three-month time limit to pay back its investors. It had asked the company to furnish the details and documents pertaining to those who had deposited money in the schemes to Sebi within 10 days.