Sahara India Real Estate Corporation Limited (SIRECL) and Sahara Housing Investment Corporation Limited (SHICL) - Grant of Parole- declined - Permission to sale some properties situated in Off shore - granted =
whether the contemnors can be granted parole as prayed for in the applications?
We regret to say that we do not,
for the present, see any justification for us to take a view different from
the one taken in our order dated 4th June, 2014. There is nothing before
us to show that Shri Subrata Roy Sahara suffers from any serious medical
condition. At any rate, we expect the jail doctors to keep a check on his
medical condition and provide necessary medical aid as and when required.
The alternative ground urged for the grant of parole also does not stand
closer scrutiny. There is, at present, no concrete proposal with Saharas
for sale of the properties situate in India or abroad that may call for any
negotiation by Shri Subrata Roy Sahara. While it may be true that such
negotiations cannot be said to be advisable when properties of such
magnitude as in the instant case are sought to be sold, yet it is pre-
mature for us to make any arrangement to facilitate any such negotiations
either by directing release of Shri Subrata Roy Sahara on parole or
otherwise.
We may make it clear that if a situation arises in which
negotiations become essential, this Court may consider passing orders to
facilitate such negotiations. Beyond that we do not consider it necessary
or proper to say anything at this stage.
I.As. No.8-9 of 2014 in Contempt Petitions (C) No.412 and 413 of 2012
are dismissed.
2. I.As. No.10-12 of 2014 in Contempt Petitions (C) No.412 of 2012, 413
of 2012 and 260 of 2013 are allowed to the extent that three offshore hotel
properties owned by Saharas are allowed to be transferred, sold or
encumbered subject to the condition that the entire sale consideration
received by the Saharas after repayment of the loan outstanding towards the
Bank of China is deposited with SEBI towards compliance with the directions
contained in the conditional bail order dated 26.3.2014 passed by this
Court. The excess amount, if any, shall be deposited by the Saharas in a
separate account to await orders from this Court regarding their
utilisation. The sale of the offshore properties shall not be at a price
lesser than the value estimated by CBRE and JLL for the said properties
reduced at the most by 5% of such value.
3. We clarify that sale of remainder of the properties which Saharas
have been allowed to transfer, sell or encumber in terms of our order dated
4th June, 2014 shall not be at a price less than the estimated value of the
said properties reduced at the most by 5% of such estimate.
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
I.A. NOS. 8-9 & 10-12 OF 2014
IN
CONTEMPT PETITION (C) NO.412 OF 2012
IN
CIVIL APPEAL NO. 9813 OF 2011
S.E.B.I. …Appellant
Versus
Sahara India Real Estate Corporation Ltd.
& Ors. …Respondents
WITH
I.A. NOS. 8-9 & 10-12 OF 2014
IN
CONTEMPT PETITION (C) NO.413 OF 2012
IN
CIVIL APPEAL NO. 9833 OF 2011
AND
I.A. NOS. 10-12 OF 2014
IN
CONTEMPT PETITION (C) NO.260 OF 2013
IN
CIVIL APPEAL NO. 8643 OF 2012
J U D G M E N T
T.S. Thakur, J.
1. By our order dated 4th June, 2014 we had, while declining the prayer
made by the contemnors for modification of the terms on which they were
granted interim bail, partially modified order dated 21st November, 2013
passed by this Court and that passed by SEBI on 13th February, 2013 so as
to enable Sahara India Real Estate Corporation Limited (SIRECL) and Sahara
Housing Investment Corporation Limited (SHICL) (hereinafter referred to as
‘Saharas’ for short) to deposit with SEBI the maturity value/sale
consideration of FDs, bonds and securities held by the Saharas. We had
also, by the same order, permitted Saharas to sell nine different
properties situate in nine different cities in the country and to deposit
the sale proceeds thereof with SEBI, to the extent the same was necessary
to make a total deposit of Rs.5,000/- crores required in terms of the bail
order. We had also permitted Saharas to charge its immovable property
situate in Aamby Valley (Pune) for obtaining and furnishing to this Court a
bank guarantee for an amount of Rs.5,000/- crores in terms of the bail
order dated 4th June, 2014. As regards Sahara’s prayer for permission to
sell three hotel properties situate outside the country, we had left the
question open to be determined after Saharas furnished the requisite
documents/information in terms of our order dated 29th May, 2014 evidencing
the approval of Bank of China to the proposed transfer of the stakes held
by the Saharas in the said three properties. We were informed that Bank of
China had a charge over the three properties and that it had agreed in
principle to the sale of the stakes held by Saharas subject to the
repayment of the outstanding loan amount for which the said properties were
charged. We had also noticed the valuation reports in regard to the three
properties mentioned above and a contention urged by Saharas that the same
had been prepared by reputed valuers at the instance of the Bank of China
in connection with the loan transactions as a part of the ongoing exercise
undertaken by the bankers. We had asked Saharas to obtain a confirmation
from the Bank of China to the effect that the valuation reports prepared in
respect of the three offshore hotel properties by CBRE and JLL have been
prepared at the instance of the Bank of China and that the same had been
accepted by the bank to be correct. We were of the view that such a
confirmation would lend re-assurance to the Court that the valuation
reports represented the true value of the stakes held by the Saharas in the
said three properties. This is evident from the following portion of the
order passed by us on 29th May, 2014:
“Dr. Dhawan submitted, on instructions, that an appropriate communication
could subject to the order of this Court be addressed to the Bank of China
by the Saharas seeking its approval to the proposed transfer of the stakes
held by Saharas in the three properties mentioned above, subject to the
repayment of the loan outstanding against those properties. Dr. Dhawan
submitted that a copy of the communication addressed to the Bank of China
and its response shall be placed on record before this Court along with an
affidavit within one week from today. He further submitted that apart from
the correspondence that may be exchanged on the subject between Saharas and
the Bank of China, the
Bank of China will also be requested to confirm the amount that is
outstanding towards the loan advanced by it in regard to each one of the
three properties mentioned above to give a clear picture to this Courts to
the outstanding liability that remains to be liquidated by the Saharas qua
the said properties.
Our attention was also drawn to the valuation reports in regard to the
three properties mentioned earlier. It was urged that the said valuation
reports have been prepared by reputed valuers at the instance of the Bank
of China in connection with the loan transactions as a part of on-going
annual exercise undertaken by the lending Bank. If that be so, Saharas
would do well to obtain a confirmation from the Bank of China to the effect
that the valuation reports prepared in respect of the three properties
mentioned above by CBRE and JLL, have been prepared at the instance of the
Bank of China and that the said valuation reports have been accepted by the
Bank to be correct. This could lend re-assurance to the Court that the
value/stakes held by Saharas in these properties are sought to be
transferred on the basis of the true market value of the said assets.
Needful shall be done expeditiously, but not later than one week from
today.”
2. Saharas have now made the present applications seeking certain
directions. In I.As No. 8-9 of 2014, Shri Subrata Roy Sahara has prayed for
temporary/conditional release from judicial custody for a period of 15 days
or so to meet his nonagenarian and ailing mother as also for taking steps
for compliance with the order of this Court dated 26th March, 2014. The
applicant has, inter alia, stated that his mother Smt. Chhabi Roy who is
aged over 93 years suffers from several ailments which complicate matters
in view of her being in a fragile emotional state. The applicant Shri
Subrata Roy Sahara is also, according to the averments, not keeping good
health requiring medical attention. The application, however, stops short
of elaborating the medical condition of the applicant Shri Sahara. More
importantly, the application seeks release of Shri Sahara on parole with a
view to negotiating deals directly with the purchasers who have shown
interest in the purchase of the property being offered for sale by the
Saharas.
3. In the accompanying I.As Nos.10, 11 & 12 of 2014 Saharas have prayed
for permission to obtain a bank guarantee of Rs.5,000/- crores by
leveraging the three overseas hotel properties by way of sale, mortgage in
the light of the Bank of China’s consent to such sale or transfer, and
certification that the valuation reports were prepared at the instance of
the Bank and accepted by it. The Saharas also seek permission for sale,
hypothecation, mortgage/leverage the land owned by them and situate in
Versova.
4. Appearing for the applicants, Dr. Rajiv Dhavan, learned senior
counsel, argued that the applicants had, pursuant to our order dated 29th
May, 2014, addressed a joint letter to the Bank of China on 2nd June, 2014
requesting the Bank of China to confirm the information sought for by this
Court. The Bank of China had, on receipt of the said communication,
consented to the proposed sale of the stakes held by Saharas in the hotel
properties subject to the repayment of the amount outstanding against
Saharas. It had also confirmed the loan amounts and the valuation reports
as required by the Order passed by this Court. Our attention was, in
support of that submission, drawn by the learned counsel to letter dated
3rd June, 2014 sent by the Bank of China to the Saharas conveying the
Bank’s consent to the sale and direct or indirect disposal by the Saharas
Group of its interests in the three hotels subject to the condition that
the sale proceeds are sufficient to and the same are applied towards
repayment in full of the outstanding principal, interest and other amounts
including any applicable prepayment premia, fees, out of pocket costs and
expenses of Facility Agents and lenders owned by Sahara Group in connection
with the loans obtained from the Bank. The letter sets out the outstanding
amount under the Sahara Group loans as on 2nd June, 2014 in the following
words:
“2) Amounts outstanding under the Sahara Group Loans as at 02 June 2014
A. Amounts outstanding under the Sahara Group Loans as at 02 June 2014
are:
|As at 02 June 2014 |GHH Loan |Plaza/Dream Loan |
|Loan outstanding |£289,750,000.0 |US$427,241,303.00 |
|balance | | |
|Accrued Interest |£985,469.20 |US$244,036.67 |
|Prepayment Fee |£2,897,500.00 |$8,544,826.07 |
|Libor Breakage |Approximately |Approximately |
|Costs |£11,873,16, final |£9,740.96, final |
| |amount to be |amount to be confirmed|
| |confirmed at the |at the prepayment date|
| |prepayment date | |
|Legal Fees |Approximately |Approximately £15,000,|
| |£15,000 final amount|final amount to be |
| |to be confirmed at |confirmed at the |
| |the prepayment date |prepayment date |
Please note that the exact amounts required to prepay the Sahara Group
Loans will depend on when the prepayment is made. Whilst the above numbers
are accurate as at 2 June 2014 (Except that the Libor Breakage Costs and
Legal fees are estimates), they are subject to change.”
5. The Bank of China has also, in the same communication, confirmed that
valuation reports were instructed and accepted by the Facility Agents for
loan security purposes in regard to the three properties in question. The
bank says :
“Latest Valuation reports prepared pursuant to the Sahara Group loans
The following Valuation reports were instructed and accepted by Facility
Agent for loan security purposes:
Plaza Hotel Valuation Report prepared by CBRE dated 27 Oct 2013 with the
Market Value of US$592,000,000;
Dream Downtown Hotel Valuation Report prepared by CBRE dated 29 Oct 2013
with the Market Value of US$252,000,000
Grosvenor House Hotel Valuation Report prepared by Jones Lang LaSalle (JLL)
dated 26 February 2014 with the Market Value of £516,000, 000
We understand that you will share a copy of this letter with the Supreme
Court of India.”
6. It was in the above context, Dr. Dhavan submitted that (a) Bank of
China had no objection to the proposed sales/transfer of the stakes held by
the Saharas in the three hotel properties and (b) the valuation reports
indicating the value of the assets in question were prepared on the
instructions of the Bank of China and had been accepted by it for loan
security purposes. Dr. Dhavan argued that the valuation reports had been
prepared in the ordinary course of business long before the present
controversy arose and were truly indicative of the market value of the
properties. It was also submitted that the reports were prepared by reputed
international valuers after a thorough and analytical application of
recognised methods of valuation of a going establishment like a hotel.
There was, therefore, no basis for any apprehension that the properties
proposed to be sold may be sold at a price lesser than the true market
value with a view to defrauding the creditors or siphoning away the sale
consideration. Dr. Dhavan argued that while the encashment of FDs and sale
of bonds and securities had already resulted in the deposit of a
substantial amount of over Rs.3,000/- crores in SEBI-Sahara Refund account,
sale of the three hotel properties would enable the Saharas to make up the
deficit amount of Rs.2000/- crores besides helping Saharas arrange a bank
guarantee for another Rs.5,000/- crores, as directed by this Court.
7. Mr. Arvind P. Datar, learned Senior Counsel appearing for SEBI, on
the other hand, contended that the prayer made by the contemnors/applicants
in I.As. No.8 and 9 for release on parole was not justified on the ground
stated. The material on record did not, according to the learned counsel,
suggest that Shri Subrata Roy Sahara had any serious medical problem to
justify his release on parole nor can his release on parole be justified on
the ground for facilitating negotiations with the prospective purchasers.
It was submitted that Saharas had not come forward to disclose the names of
the prospective buyers with whom they proposed to hold such negotiations
nor was there any concrete proposal at present under their consideration.
8. As regards sale of the three hotel properties, Mr. Arvind P. Datar,
did not deny that though the Bank of China has a substantial charge over
the said properties but according to the valuation reports the market value
of the property is considerably higher than the outstanding loan amount,
thereby accepting the plea of the applicants that if the properties are
sold, sufficient surplus would be available even after discharge of the
Bank loan that could be utilised for deposit with SEBI and for furnishing a
bank guarantee as demanded by this Court. Moreover, the valuation reports
prepared by leading and reputed international valuers were not questioned
by Mr. Arvind P. Datar nor was it suggested that the reports had been
procured only for use in these proceedings.
9. We have considered the matter in the light of the submissions made at
the bar. The contemnors stand committed to jail by the Order of this Court
dated 4th March, 2014 on account of their failure to comply with the
directions of this Court’s Orders dated 31st August, 2012 and 5th December,
2012 and those issued on 25th February, 2013 in I.A. No.67 of 2013 in Civil
Appeal No.9813 of 2011 and I.A No.5 in Civil Appeal No.9833 of 2011.
Interim bail order passed by this Court on 26th March, 2014 requires them
to deposit Rs.10,000/- crores, out of which Rs.5,000/- crores has to be in
cash while the balance has to be secured by bank guarantee of a
nationalised bank furnished in favour of SEBI. It was with a view to
enabling the contemnors to comply with the said direction that this Court
had by Order dated 4th June, 2014 lifted the embargo placed upon operation
of the bank accounts and sale/transfer of immovable assets held by the
Saharas qua nine properties referred to in the said order. Saharas have
since then deposited an amount of more than Rs.3,000/- crores with SEBI by
encashment of FDs, Bonds and securities.
10. Saharas have also out of the nine properties referred to above sold
the property situate in Ahmedabad for a sum of Rs.4,11,82,55,138/- (Rupees
Four Hundred and Eleven Crores Eighty Two Lacs Fifty Five Thousand One
Hundred and Thirty Eight only). The remaining eight properties, however,
remain to be sold or encumbered. We had in the light of the above asked Dr.
Dhavan whether the proposed sale/transfer of the offshore hotel properties
was essential when no less than eight other properties apart from Aamby
Valley (Pune) remained to be sold or encumbered for raising funds necessary
for compliance with the order of this Court. Dr. Dhavan argued that it may
be easier for the contemnors-Saharas to leverage the overseas hotel
properties for deposit of the deficit of around Rs.2000/- crores and
arranging a bank guarantee of Rs.5,000/- crores in comparison to sale or
transfer of property situate within the country which may take a relatively
longer period leading to continued incarceration of the contemnors in jail.
It was submitted that so long as it was ensured that the offshore
properties are sold for the market value they command, the Saharas should
have the liberty to do so.
11. There is, in our opinion, merit in the contention urged by Dr.
Dhavan. What is important is that the properties held by the Saharas are
sold at their market value and the sale proceeds, subject to any other
directions issued by this Court, utilised for compliance with the terms of
the conditional bail order issued by this Court. It is evident that if
sale of properties situate within the country is likely to take time, the
contemnors may be exposed to a longer period of incarceration on account of
their failure to comply with the directions of this Court. On the other
hand, quicker the compliance with the directions of the Court’s Order for
deposit of cash and bank guarantee, the easier would be the way out of jail
for them. The anxiety on the part of the Saharas generally and the
contemnors in particular to sell the offshore properties is, therefore,
understandable especially when such sale and transfer is not only going to
help Saharas in liquidating the outstanding loan amount payable to the Bank
of China but leave sufficient surplus with the Saharas to not only deposit
the balance of Rs.2,000/- crores approximately that needs to be immediately
paid by them but also furnish a bank guarantee for a sum of Rs.5,000/-
crores, as directed. We, therefore, see no legal impediment in permitting
the sale of the offshore properties owned by Saharas. This is particularly
so when not only do we have the valuation reports of the said properties on
record prepared as they are by internationally reputed valuers but also the
concurrence of SEBI for the sale of such properties at that value subject
to the condition that the sale consideration shall as far as possible be at
the estimated value of such properties, less, at the most by 5% of such
value. We are, mindful of the fact that Saharas have sold the property at
Ahmedabad at more than three times the circle rates of such property. No
such rates are, however, available or prescribed for offshore properties.
We shall, therefore, have to go only by the valuation reports of the
valuers as the basis for such proposed sale/transfer subject to a margin of
5% which we have indicated above. In case the offer received is lesser by
more than 5%, they will seek prior approval of the Court.
12. We may incidentally mention at this stage that Dr. Dhavan had sought
a clarification of our Order dated 4th June, 2014 inasmuch as in the para
23 (iii) (b) of the said order, we had stated that the sale of the
properties referred to in the order shall not be for an amount lesser than
the circle rate for such properties or the estimated value indicated by the
Saharas whereas in the operative portion of the said order we had permitted
sale at a price that is not lower than the circle rate prescribed for such
properties. Having regard, however, to the experience that Saharas have
had with the sale of properties in Ahmedabad which fetched more than three
times the circle rates prescribed for the same, we are of the view that the
actual market value of the property held by Saharas is many times more than
the circle rates for such property. This is evident not only from the sale
transaction relating to Ahmadabad property but also the fact that Saharas
have themselves estimated the value of the properties much higher than the
circle rates for the same. In the circumstances, we see no difficulty in
clarifying that the sale of the remainder of the properties which we have
permitted to be sold by our order dated 4th June, 2014 shall not be lesser
than the estimated value of the properties given by Saharas less by no more
than 5% of such estimated value. In case the offer(s) received is/are less
by more than 5%, prior approval of the Court will have to be sought.
13. That brings us to the question whether the contemnors can be granted
parole as prayed for in the applications? We regret to say that we do not,
for the present, see any justification for us to take a view different from
the one taken in our order dated 4th June, 2014. There is nothing before
us to show that Shri Subrata Roy Sahara suffers from any serious medical
condition. At any rate, we expect the jail doctors to keep a check on his
medical condition and provide necessary medical aid as and when required.
The alternative ground urged for the grant of parole also does not stand
closer scrutiny. There is, at present, no concrete proposal with Saharas
for sale of the properties situate in India or abroad that may call for any
negotiation by Shri Subrata Roy Sahara. While it may be true that such
negotiations cannot be said to be advisable when properties of such
magnitude as in the instant case are sought to be sold, yet it is pre-
mature for us to make any arrangement to facilitate any such negotiations
either by directing release of Shri Subrata Roy Sahara on parole or
otherwise. We may make it clear that if a situation arises in which
negotiations become essential, this Court may consider passing orders to
facilitate such negotiations. Beyond that we do not consider it necessary
or proper to say anything at this stage.
14. In the result :
1. I.As. No.8-9 of 2014 in Contempt Petitions (C) No.412 and 413 of 2012
are dismissed.
2. I.As. No.10-12 of 2014 in Contempt Petitions (C) No.412 of 2012, 413
of 2012 and 260 of 2013 are allowed to the extent that three offshore hotel
properties owned by Saharas are allowed to be transferred, sold or
encumbered subject to the condition that the entire sale consideration
received by the Saharas after repayment of the loan outstanding towards the
Bank of China is deposited with SEBI towards compliance with the directions
contained in the conditional bail order dated 26.3.2014 passed by this
Court. The excess amount, if any, shall be deposited by the Saharas in a
separate account to await orders from this Court regarding their
utilisation. The sale of the offshore properties shall not be at a price
lesser than the value estimated by CBRE and JLL for the said properties
reduced at the most by 5% of such value.
3. We clarify that sale of remainder of the properties which Saharas
have been allowed to transfer, sell or encumber in terms of our order dated
4th June, 2014 shall not be at a price less than the estimated value of the
said properties reduced at the most by 5% of such estimate.
4. We had by our order dated 4th June, 2014 requested Shri F.S. Nariman,
Senior Advocate, to assist the Court as an Amicus Curiae. We had also
permitted Shri Nariman to associate two juniors of his choice to brief him
in the matter. Shri Nariman as in terms of a communication dated 5th June,
2014 regretted his inability to assist the Court as he had also appeared
for Saharas upto 31st August, 2012 when the main judgment was delivered in
the case. That Shri Nariman had appeared on behalf of Saharas had been
brought to our notice also but only after we had pronounced the order in
the Court on 4th June, 2014 by which he was appointed as Amicus Curiae. It
is obvious that having appeared as a counsel on behalf of Saharas Mr.
Nariman cannot possibly take up the assignment offered to him. We,
therefore, have no option but to modify our order dated 4th June, 2014 to
the extent that in place of Shri F.S. Nariman, Senior Advocate, we request
Shri Shekhar Naphade, Senior Advocate, to assist the Court in the case as
an Amicus Curiae. The terms and conditions of Shri Naphade’s appointment
shall, however, remain the same as were stipulated for Shri Nariman.
………………….……….…..…J.
(T.S. THAKUR)
………………….……….…..…J.
(ANIL R. DAVE)
………………….……….…..…J.
(A.K. SIKRI)
New Delhi
July 22, 2014
whether the contemnors can be granted parole as prayed for in the applications?
We regret to say that we do not,
for the present, see any justification for us to take a view different from
the one taken in our order dated 4th June, 2014. There is nothing before
us to show that Shri Subrata Roy Sahara suffers from any serious medical
condition. At any rate, we expect the jail doctors to keep a check on his
medical condition and provide necessary medical aid as and when required.
The alternative ground urged for the grant of parole also does not stand
closer scrutiny. There is, at present, no concrete proposal with Saharas
for sale of the properties situate in India or abroad that may call for any
negotiation by Shri Subrata Roy Sahara. While it may be true that such
negotiations cannot be said to be advisable when properties of such
magnitude as in the instant case are sought to be sold, yet it is pre-
mature for us to make any arrangement to facilitate any such negotiations
either by directing release of Shri Subrata Roy Sahara on parole or
otherwise.
We may make it clear that if a situation arises in which
negotiations become essential, this Court may consider passing orders to
facilitate such negotiations. Beyond that we do not consider it necessary
or proper to say anything at this stage.
are dismissed.
2. I.As. No.10-12 of 2014 in Contempt Petitions (C) No.412 of 2012, 413
of 2012 and 260 of 2013 are allowed to the extent that three offshore hotel
properties owned by Saharas are allowed to be transferred, sold or
encumbered subject to the condition that the entire sale consideration
received by the Saharas after repayment of the loan outstanding towards the
Bank of China is deposited with SEBI towards compliance with the directions
contained in the conditional bail order dated 26.3.2014 passed by this
Court. The excess amount, if any, shall be deposited by the Saharas in a
separate account to await orders from this Court regarding their
utilisation. The sale of the offshore properties shall not be at a price
lesser than the value estimated by CBRE and JLL for the said properties
reduced at the most by 5% of such value.
3. We clarify that sale of remainder of the properties which Saharas
have been allowed to transfer, sell or encumber in terms of our order dated
4th June, 2014 shall not be at a price less than the estimated value of the
said properties reduced at the most by 5% of such estimate.
2014 July. Part – http://judis.nic.in/supremecourt/filename=41779
REPORTABLEIN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
I.A. NOS. 8-9 & 10-12 OF 2014
IN
CONTEMPT PETITION (C) NO.412 OF 2012
IN
CIVIL APPEAL NO. 9813 OF 2011
S.E.B.I. …Appellant
Versus
Sahara India Real Estate Corporation Ltd.
& Ors. …Respondents
WITH
I.A. NOS. 8-9 & 10-12 OF 2014
IN
CONTEMPT PETITION (C) NO.413 OF 2012
IN
CIVIL APPEAL NO. 9833 OF 2011
AND
I.A. NOS. 10-12 OF 2014
IN
CONTEMPT PETITION (C) NO.260 OF 2013
IN
CIVIL APPEAL NO. 8643 OF 2012
J U D G M E N T
T.S. Thakur, J.
1. By our order dated 4th June, 2014 we had, while declining the prayer
made by the contemnors for modification of the terms on which they were
granted interim bail, partially modified order dated 21st November, 2013
passed by this Court and that passed by SEBI on 13th February, 2013 so as
to enable Sahara India Real Estate Corporation Limited (SIRECL) and Sahara
Housing Investment Corporation Limited (SHICL) (hereinafter referred to as
‘Saharas’ for short) to deposit with SEBI the maturity value/sale
consideration of FDs, bonds and securities held by the Saharas. We had
also, by the same order, permitted Saharas to sell nine different
properties situate in nine different cities in the country and to deposit
the sale proceeds thereof with SEBI, to the extent the same was necessary
to make a total deposit of Rs.5,000/- crores required in terms of the bail
order. We had also permitted Saharas to charge its immovable property
situate in Aamby Valley (Pune) for obtaining and furnishing to this Court a
bank guarantee for an amount of Rs.5,000/- crores in terms of the bail
order dated 4th June, 2014. As regards Sahara’s prayer for permission to
sell three hotel properties situate outside the country, we had left the
question open to be determined after Saharas furnished the requisite
documents/information in terms of our order dated 29th May, 2014 evidencing
the approval of Bank of China to the proposed transfer of the stakes held
by the Saharas in the said three properties. We were informed that Bank of
China had a charge over the three properties and that it had agreed in
principle to the sale of the stakes held by Saharas subject to the
repayment of the outstanding loan amount for which the said properties were
charged. We had also noticed the valuation reports in regard to the three
properties mentioned above and a contention urged by Saharas that the same
had been prepared by reputed valuers at the instance of the Bank of China
in connection with the loan transactions as a part of the ongoing exercise
undertaken by the bankers. We had asked Saharas to obtain a confirmation
from the Bank of China to the effect that the valuation reports prepared in
respect of the three offshore hotel properties by CBRE and JLL have been
prepared at the instance of the Bank of China and that the same had been
accepted by the bank to be correct. We were of the view that such a
confirmation would lend re-assurance to the Court that the valuation
reports represented the true value of the stakes held by the Saharas in the
said three properties. This is evident from the following portion of the
order passed by us on 29th May, 2014:
“Dr. Dhawan submitted, on instructions, that an appropriate communication
could subject to the order of this Court be addressed to the Bank of China
by the Saharas seeking its approval to the proposed transfer of the stakes
held by Saharas in the three properties mentioned above, subject to the
repayment of the loan outstanding against those properties. Dr. Dhawan
submitted that a copy of the communication addressed to the Bank of China
and its response shall be placed on record before this Court along with an
affidavit within one week from today. He further submitted that apart from
the correspondence that may be exchanged on the subject between Saharas and
the Bank of China, the
Bank of China will also be requested to confirm the amount that is
outstanding towards the loan advanced by it in regard to each one of the
three properties mentioned above to give a clear picture to this Courts to
the outstanding liability that remains to be liquidated by the Saharas qua
the said properties.
Our attention was also drawn to the valuation reports in regard to the
three properties mentioned earlier. It was urged that the said valuation
reports have been prepared by reputed valuers at the instance of the Bank
of China in connection with the loan transactions as a part of on-going
annual exercise undertaken by the lending Bank. If that be so, Saharas
would do well to obtain a confirmation from the Bank of China to the effect
that the valuation reports prepared in respect of the three properties
mentioned above by CBRE and JLL, have been prepared at the instance of the
Bank of China and that the said valuation reports have been accepted by the
Bank to be correct. This could lend re-assurance to the Court that the
value/stakes held by Saharas in these properties are sought to be
transferred on the basis of the true market value of the said assets.
Needful shall be done expeditiously, but not later than one week from
today.”
2. Saharas have now made the present applications seeking certain
directions. In I.As No. 8-9 of 2014, Shri Subrata Roy Sahara has prayed for
temporary/conditional release from judicial custody for a period of 15 days
or so to meet his nonagenarian and ailing mother as also for taking steps
for compliance with the order of this Court dated 26th March, 2014. The
applicant has, inter alia, stated that his mother Smt. Chhabi Roy who is
aged over 93 years suffers from several ailments which complicate matters
in view of her being in a fragile emotional state. The applicant Shri
Subrata Roy Sahara is also, according to the averments, not keeping good
health requiring medical attention. The application, however, stops short
of elaborating the medical condition of the applicant Shri Sahara. More
importantly, the application seeks release of Shri Sahara on parole with a
view to negotiating deals directly with the purchasers who have shown
interest in the purchase of the property being offered for sale by the
Saharas.
3. In the accompanying I.As Nos.10, 11 & 12 of 2014 Saharas have prayed
for permission to obtain a bank guarantee of Rs.5,000/- crores by
leveraging the three overseas hotel properties by way of sale, mortgage in
the light of the Bank of China’s consent to such sale or transfer, and
certification that the valuation reports were prepared at the instance of
the Bank and accepted by it. The Saharas also seek permission for sale,
hypothecation, mortgage/leverage the land owned by them and situate in
Versova.
4. Appearing for the applicants, Dr. Rajiv Dhavan, learned senior
counsel, argued that the applicants had, pursuant to our order dated 29th
May, 2014, addressed a joint letter to the Bank of China on 2nd June, 2014
requesting the Bank of China to confirm the information sought for by this
Court. The Bank of China had, on receipt of the said communication,
consented to the proposed sale of the stakes held by Saharas in the hotel
properties subject to the repayment of the amount outstanding against
Saharas. It had also confirmed the loan amounts and the valuation reports
as required by the Order passed by this Court. Our attention was, in
support of that submission, drawn by the learned counsel to letter dated
3rd June, 2014 sent by the Bank of China to the Saharas conveying the
Bank’s consent to the sale and direct or indirect disposal by the Saharas
Group of its interests in the three hotels subject to the condition that
the sale proceeds are sufficient to and the same are applied towards
repayment in full of the outstanding principal, interest and other amounts
including any applicable prepayment premia, fees, out of pocket costs and
expenses of Facility Agents and lenders owned by Sahara Group in connection
with the loans obtained from the Bank. The letter sets out the outstanding
amount under the Sahara Group loans as on 2nd June, 2014 in the following
words:
“2) Amounts outstanding under the Sahara Group Loans as at 02 June 2014
A. Amounts outstanding under the Sahara Group Loans as at 02 June 2014
are:
|As at 02 June 2014 |GHH Loan |Plaza/Dream Loan |
|Loan outstanding |£289,750,000.0 |US$427,241,303.00 |
|balance | | |
|Accrued Interest |£985,469.20 |US$244,036.67 |
|Prepayment Fee |£2,897,500.00 |$8,544,826.07 |
|Libor Breakage |Approximately |Approximately |
|Costs |£11,873,16, final |£9,740.96, final |
| |amount to be |amount to be confirmed|
| |confirmed at the |at the prepayment date|
| |prepayment date | |
|Legal Fees |Approximately |Approximately £15,000,|
| |£15,000 final amount|final amount to be |
| |to be confirmed at |confirmed at the |
| |the prepayment date |prepayment date |
Please note that the exact amounts required to prepay the Sahara Group
Loans will depend on when the prepayment is made. Whilst the above numbers
are accurate as at 2 June 2014 (Except that the Libor Breakage Costs and
Legal fees are estimates), they are subject to change.”
5. The Bank of China has also, in the same communication, confirmed that
valuation reports were instructed and accepted by the Facility Agents for
loan security purposes in regard to the three properties in question. The
bank says :
“Latest Valuation reports prepared pursuant to the Sahara Group loans
The following Valuation reports were instructed and accepted by Facility
Agent for loan security purposes:
Plaza Hotel Valuation Report prepared by CBRE dated 27 Oct 2013 with the
Market Value of US$592,000,000;
Dream Downtown Hotel Valuation Report prepared by CBRE dated 29 Oct 2013
with the Market Value of US$252,000,000
Grosvenor House Hotel Valuation Report prepared by Jones Lang LaSalle (JLL)
dated 26 February 2014 with the Market Value of £516,000, 000
We understand that you will share a copy of this letter with the Supreme
Court of India.”
6. It was in the above context, Dr. Dhavan submitted that (a) Bank of
China had no objection to the proposed sales/transfer of the stakes held by
the Saharas in the three hotel properties and (b) the valuation reports
indicating the value of the assets in question were prepared on the
instructions of the Bank of China and had been accepted by it for loan
security purposes. Dr. Dhavan argued that the valuation reports had been
prepared in the ordinary course of business long before the present
controversy arose and were truly indicative of the market value of the
properties. It was also submitted that the reports were prepared by reputed
international valuers after a thorough and analytical application of
recognised methods of valuation of a going establishment like a hotel.
There was, therefore, no basis for any apprehension that the properties
proposed to be sold may be sold at a price lesser than the true market
value with a view to defrauding the creditors or siphoning away the sale
consideration. Dr. Dhavan argued that while the encashment of FDs and sale
of bonds and securities had already resulted in the deposit of a
substantial amount of over Rs.3,000/- crores in SEBI-Sahara Refund account,
sale of the three hotel properties would enable the Saharas to make up the
deficit amount of Rs.2000/- crores besides helping Saharas arrange a bank
guarantee for another Rs.5,000/- crores, as directed by this Court.
7. Mr. Arvind P. Datar, learned Senior Counsel appearing for SEBI, on
the other hand, contended that the prayer made by the contemnors/applicants
in I.As. No.8 and 9 for release on parole was not justified on the ground
stated. The material on record did not, according to the learned counsel,
suggest that Shri Subrata Roy Sahara had any serious medical problem to
justify his release on parole nor can his release on parole be justified on
the ground for facilitating negotiations with the prospective purchasers.
It was submitted that Saharas had not come forward to disclose the names of
the prospective buyers with whom they proposed to hold such negotiations
nor was there any concrete proposal at present under their consideration.
8. As regards sale of the three hotel properties, Mr. Arvind P. Datar,
did not deny that though the Bank of China has a substantial charge over
the said properties but according to the valuation reports the market value
of the property is considerably higher than the outstanding loan amount,
thereby accepting the plea of the applicants that if the properties are
sold, sufficient surplus would be available even after discharge of the
Bank loan that could be utilised for deposit with SEBI and for furnishing a
bank guarantee as demanded by this Court. Moreover, the valuation reports
prepared by leading and reputed international valuers were not questioned
by Mr. Arvind P. Datar nor was it suggested that the reports had been
procured only for use in these proceedings.
9. We have considered the matter in the light of the submissions made at
the bar. The contemnors stand committed to jail by the Order of this Court
dated 4th March, 2014 on account of their failure to comply with the
directions of this Court’s Orders dated 31st August, 2012 and 5th December,
2012 and those issued on 25th February, 2013 in I.A. No.67 of 2013 in Civil
Appeal No.9813 of 2011 and I.A No.5 in Civil Appeal No.9833 of 2011.
Interim bail order passed by this Court on 26th March, 2014 requires them
to deposit Rs.10,000/- crores, out of which Rs.5,000/- crores has to be in
cash while the balance has to be secured by bank guarantee of a
nationalised bank furnished in favour of SEBI. It was with a view to
enabling the contemnors to comply with the said direction that this Court
had by Order dated 4th June, 2014 lifted the embargo placed upon operation
of the bank accounts and sale/transfer of immovable assets held by the
Saharas qua nine properties referred to in the said order. Saharas have
since then deposited an amount of more than Rs.3,000/- crores with SEBI by
encashment of FDs, Bonds and securities.
10. Saharas have also out of the nine properties referred to above sold
the property situate in Ahmedabad for a sum of Rs.4,11,82,55,138/- (Rupees
Four Hundred and Eleven Crores Eighty Two Lacs Fifty Five Thousand One
Hundred and Thirty Eight only). The remaining eight properties, however,
remain to be sold or encumbered. We had in the light of the above asked Dr.
Dhavan whether the proposed sale/transfer of the offshore hotel properties
was essential when no less than eight other properties apart from Aamby
Valley (Pune) remained to be sold or encumbered for raising funds necessary
for compliance with the order of this Court. Dr. Dhavan argued that it may
be easier for the contemnors-Saharas to leverage the overseas hotel
properties for deposit of the deficit of around Rs.2000/- crores and
arranging a bank guarantee of Rs.5,000/- crores in comparison to sale or
transfer of property situate within the country which may take a relatively
longer period leading to continued incarceration of the contemnors in jail.
It was submitted that so long as it was ensured that the offshore
properties are sold for the market value they command, the Saharas should
have the liberty to do so.
11. There is, in our opinion, merit in the contention urged by Dr.
Dhavan. What is important is that the properties held by the Saharas are
sold at their market value and the sale proceeds, subject to any other
directions issued by this Court, utilised for compliance with the terms of
the conditional bail order issued by this Court. It is evident that if
sale of properties situate within the country is likely to take time, the
contemnors may be exposed to a longer period of incarceration on account of
their failure to comply with the directions of this Court. On the other
hand, quicker the compliance with the directions of the Court’s Order for
deposit of cash and bank guarantee, the easier would be the way out of jail
for them. The anxiety on the part of the Saharas generally and the
contemnors in particular to sell the offshore properties is, therefore,
understandable especially when such sale and transfer is not only going to
help Saharas in liquidating the outstanding loan amount payable to the Bank
of China but leave sufficient surplus with the Saharas to not only deposit
the balance of Rs.2,000/- crores approximately that needs to be immediately
paid by them but also furnish a bank guarantee for a sum of Rs.5,000/-
crores, as directed. We, therefore, see no legal impediment in permitting
the sale of the offshore properties owned by Saharas. This is particularly
so when not only do we have the valuation reports of the said properties on
record prepared as they are by internationally reputed valuers but also the
concurrence of SEBI for the sale of such properties at that value subject
to the condition that the sale consideration shall as far as possible be at
the estimated value of such properties, less, at the most by 5% of such
value. We are, mindful of the fact that Saharas have sold the property at
Ahmedabad at more than three times the circle rates of such property. No
such rates are, however, available or prescribed for offshore properties.
We shall, therefore, have to go only by the valuation reports of the
valuers as the basis for such proposed sale/transfer subject to a margin of
5% which we have indicated above. In case the offer received is lesser by
more than 5%, they will seek prior approval of the Court.
12. We may incidentally mention at this stage that Dr. Dhavan had sought
a clarification of our Order dated 4th June, 2014 inasmuch as in the para
23 (iii) (b) of the said order, we had stated that the sale of the
properties referred to in the order shall not be for an amount lesser than
the circle rate for such properties or the estimated value indicated by the
Saharas whereas in the operative portion of the said order we had permitted
sale at a price that is not lower than the circle rate prescribed for such
properties. Having regard, however, to the experience that Saharas have
had with the sale of properties in Ahmedabad which fetched more than three
times the circle rates prescribed for the same, we are of the view that the
actual market value of the property held by Saharas is many times more than
the circle rates for such property. This is evident not only from the sale
transaction relating to Ahmadabad property but also the fact that Saharas
have themselves estimated the value of the properties much higher than the
circle rates for the same. In the circumstances, we see no difficulty in
clarifying that the sale of the remainder of the properties which we have
permitted to be sold by our order dated 4th June, 2014 shall not be lesser
than the estimated value of the properties given by Saharas less by no more
than 5% of such estimated value. In case the offer(s) received is/are less
by more than 5%, prior approval of the Court will have to be sought.
13. That brings us to the question whether the contemnors can be granted
parole as prayed for in the applications? We regret to say that we do not,
for the present, see any justification for us to take a view different from
the one taken in our order dated 4th June, 2014. There is nothing before
us to show that Shri Subrata Roy Sahara suffers from any serious medical
condition. At any rate, we expect the jail doctors to keep a check on his
medical condition and provide necessary medical aid as and when required.
The alternative ground urged for the grant of parole also does not stand
closer scrutiny. There is, at present, no concrete proposal with Saharas
for sale of the properties situate in India or abroad that may call for any
negotiation by Shri Subrata Roy Sahara. While it may be true that such
negotiations cannot be said to be advisable when properties of such
magnitude as in the instant case are sought to be sold, yet it is pre-
mature for us to make any arrangement to facilitate any such negotiations
either by directing release of Shri Subrata Roy Sahara on parole or
otherwise. We may make it clear that if a situation arises in which
negotiations become essential, this Court may consider passing orders to
facilitate such negotiations. Beyond that we do not consider it necessary
or proper to say anything at this stage.
14. In the result :
1. I.As. No.8-9 of 2014 in Contempt Petitions (C) No.412 and 413 of 2012
are dismissed.
2. I.As. No.10-12 of 2014 in Contempt Petitions (C) No.412 of 2012, 413
of 2012 and 260 of 2013 are allowed to the extent that three offshore hotel
properties owned by Saharas are allowed to be transferred, sold or
encumbered subject to the condition that the entire sale consideration
received by the Saharas after repayment of the loan outstanding towards the
Bank of China is deposited with SEBI towards compliance with the directions
contained in the conditional bail order dated 26.3.2014 passed by this
Court. The excess amount, if any, shall be deposited by the Saharas in a
separate account to await orders from this Court regarding their
utilisation. The sale of the offshore properties shall not be at a price
lesser than the value estimated by CBRE and JLL for the said properties
reduced at the most by 5% of such value.
3. We clarify that sale of remainder of the properties which Saharas
have been allowed to transfer, sell or encumber in terms of our order dated
4th June, 2014 shall not be at a price less than the estimated value of the
said properties reduced at the most by 5% of such estimate.
4. We had by our order dated 4th June, 2014 requested Shri F.S. Nariman,
Senior Advocate, to assist the Court as an Amicus Curiae. We had also
permitted Shri Nariman to associate two juniors of his choice to brief him
in the matter. Shri Nariman as in terms of a communication dated 5th June,
2014 regretted his inability to assist the Court as he had also appeared
for Saharas upto 31st August, 2012 when the main judgment was delivered in
the case. That Shri Nariman had appeared on behalf of Saharas had been
brought to our notice also but only after we had pronounced the order in
the Court on 4th June, 2014 by which he was appointed as Amicus Curiae. It
is obvious that having appeared as a counsel on behalf of Saharas Mr.
Nariman cannot possibly take up the assignment offered to him. We,
therefore, have no option but to modify our order dated 4th June, 2014 to
the extent that in place of Shri F.S. Nariman, Senior Advocate, we request
Shri Shekhar Naphade, Senior Advocate, to assist the Court in the case as
an Amicus Curiae. The terms and conditions of Shri Naphade’s appointment
shall, however, remain the same as were stipulated for Shri Nariman.
………………….……….…..…J.
(T.S. THAKUR)
………………….……….…..…J.
(ANIL R. DAVE)
………………….……….…..…J.
(A.K. SIKRI)
New Delhi
July 22, 2014
