The Supreme Court Friday directed Sahara group's real estate company to return with a 15-percent interest the Rs.17,000 crore ($3.5 billion) it had mopped up as debentures from investors.
The apex court bench of Justice K.S. Radhakrishnan and Justice J.S. Khehar gave the directions while rejecting Sahara's plea, challenging the order of markets watchdog Securities and Exchange Board of India (SEBI) to refund the investors money.
The court has appointed formal apex court judge Justice B.N. Agarwal to oversee the compliance of its order.
The court said that in case Sahara fails to comply with its orders of returning the money taken as optionally fully convertible debentures, then the watchdog will take legal remedies, including attaching properties of the Sahara company dealing in real estate.
On June 14, the Supreme Court had reserved its verdict on a plea by the Sahara group of companies, dealing in real estate and housing, challenging a tribunal's direction to repay the money.
The apex court bench reserved the order after arguments spread over three weeks wherein senior counsel Fali Nariman and Gopal Subramanium, who had appeared for the Sahara group of companies, contested the Oct 18, 2011 award of the Securities Appellate Tribunal.
The tribunal directed Sahara India Real Estate Corp Ltd. (SIRECL) and Sahara Housing Investment Corp Ltd. to return the money, which amounted to Rs.19,400 crore, including interest.
The Sahara group contended that its mobilisation of money from investors was in the nature of private placement and it imposed no obligation on it to get listed in any stock exchange.
It also contended that the Securities and Exchange Board of India (SEBI) could not proceed against it in the absence of a complaint by investors.
The stock market regulator had told the court that the company resorted to the massive mobilization outside the well-developed investor protection framework developed by it, which provided for checks and balances and statutory protection to investors.
In an earlier hearing, Chief Justice S.H. Kapadia had asked the petitioner companies to state how they had secured the investors' money. The companies were also asked to state the manner in which they had deployed the investors' money.