Home ECONOMY RBI not barred to proceed against Sahara finance company, says SC

RBI not barred to proceed against Sahara finance company, says SC

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New Delhi, Feb 24:

The Supreme Court Tuesday told the Reserve Bank of India to go ahead with its action against Sahara India Finance Corporation Ltd (SIFCL) for divesting its securities in violation of the central bank’s 2008 order and the NBFC guidelines and rules.

Supreme CourtDescribing the information furnished by senior counsel Prarag Tripathi about SIFCL selling securities in breach of RBI direction as “useful”, a bench of Justice T.S.Thkaur, Justice Anil R. Dave and Justice A.K.Sikri said: “We will permit you (RBI) to do it (to proceed against Sahara). You should not feel handicapped in proceeding into the matter.”

Justice Thakur said: “This is a useful information coming to us.”

Tripathi, appearing for the RBI, told the court despite June 16, 2008 restraint orders of the central bank, SIFCL alienated securities to the tune of Rs.484.67 crore and instead of returning the money to investors, gave it to its partnership firm Sahara India.

The court was told that only a small amont of the Rs. 484.67 crores was deposited in the Sahara’s account with market regulator SEBI meant to park money that would be returned to investors collected through in 2008-09 by two group companies – Sahara India Real Estate Corporation Limited (SIRECL) and Sahara Housing Investment Corporation Limited (SHICL).

Noting that Sahara did not disclose everything to the court when it passed an order lifting a freeze on group’s moveable and immovable assets so it could raise Rs.10,000 crore, Justice Thakur told Sahara’s counsel Srinivasan Ganesh appearing for Sahara that “your problems are increasing. That is your own doing”.

The court stressed that the order lifting the freeze on the sale of assets of Sahara group was passed so that all the proceeds would go to Sahara SEBI account for returning investors’ money collected under through optionally fully convertible debentures (OFCDs) but this did not happen.

“We only say that all this should be been disclosed (before June 4, 2014 order was passed by the court),” Justice Sikri said expressing apprehension whether the Sahara company had even actually returned the depositor/investors money that it had collected for its SIFCL.

“You are very lucky. You always take money from those who don’t come back to take it,” he observed as Ganesh told the court that the company returned all the investors/depositors money in SIFCL, and for the rest, no depositor/investors was coming forward to claim it.

“It is highly unlikely that a depositor will deposit the money and will not come back to get it”, the court observed taking Ganesh’s statement with a pinch of salt.

Allowing RBI to go ahead with its action against SIFCL, the court issued notice on Sahara’s application seeking the extension of communication facilities for Subrata Roy and two other directors to raise Rs.10,000 crores.

Sahara has been asked to deposit Rs.10,000 crore with SEBI to make a part payment of investors money that it had mopped-up in 2008-09 through OFCDs. It is also condition for their release from custody in which they were sent March 4, 2014.

The court said that Sahara could forward its new proposals to mop-up money to amicus curiae Shekhar Naphade and SEBI counsel Arvind Dattar and they will look into it.

Directing the hearing on Saharas’s application March 13, the court also declined all the plea for unlimited use of phone facilities during two hours in the jail, saying it would look into extending the communication facilities only after a proposal to get money crystallises.

“You are placing your business above your liberty. We will not refuse anything that is reasonable,” the court said declining senior counsel Rajiv Dhawan’s plea for unlimited use of phone facilities. IANS

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