Securities and Exchange Board of India v. Sahara India Real Estate Corporation Limited and Others

(T.S. Thakur, Anil R. Dave and A.K. Sikri, JJ.)

IAs Nos. 68-76 in CP (C) No. 412 of 2012 in CA No. 9813 of 2011, CP (C) No. 413 of 2012 in CA No. 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on July 13, 2015

Securities and Exchange Board of India _________________ Petitioner

Sahara India Real Estate Corporation Limited and Others _______________________________________________ Respondent(s)

With

IAs Nos. 68-76 in Contempt Petition (C) No. 412 of 2012 in CA No. 9813 of 2011 and Contempt Petition (C) No. 413 of 2012 in CA No. 9833 of 2011 with Contempt Petition (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on August 3, 2015

Securities and Exchange Board of India __________________ Petitioner

Sahara India Real Estate Corporation Limited and Others _______________________________________________ Respondent(s)

With

IAs Nos. 86-103 of 2015 in Contempt Petition (C) No. 412 of 2012 in CA No. 9813 of 2011 and Contempt Petition No. 413 of 2012 in CA No. 9833 of 2011 and Contempt Petition (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on August 17, 2015

Securities and Exchange Board of India __________________ Petitioner

Sahara India Real Estate Corporation Limited and Others _______________________________________________ Respondent(s)

With

Contempt Petition (C) No. 412 of 2012 in CA No. 9813 of 2011 and Contempt Petition (C) No. 413 of 2012 in CA No. 9833 of 2011 and Contempt Petition (C) No. 260 of 2013 in CA No. 8643 of 2012 with TC (C) Nos. 83-87 of 2014, decided on September 28, 2015

Securities and Exchange Board of India __________________ Petitioner

Sahara India Real Estate Corporation Limited and Others _______________________________________________ Respondent(s)

With

IAs Nos. 90-91 of 2014, 104-106, 119-21, 131-37 of 2015, 138-43 of 2016 in Contempt Petition (C) No. 412-13 of 2012 in CA No. 9813 & 9833 of 2011 with Contempt Petition (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on February 2, 2016

Securities and Exchange Board of India __________________ Petitioner

Sahara India Real Estate Corporation Limited and Others _______________________________________________ Respondent(s)

IAs Nos. 68-76 in CP (C) No. 412 of 2012 in CA No. 9813 of 2011, CP (C) No. 413 of 2012 in CA No. 9833 of 2011 and CP (C) No. 260 of 2013 in CA No. 8643 of 2012, decided on July 13, 2015

With

The Judgement of the court was delivered by

Order 13-7-2015

(BEFORE T.S. THAKUR, ANIL R. DAVE AND DR. A.K. SIKRI, JJ.)

IAs Nos. 68-76 in CP (C) No. 412 of 2012 in CA No. 9813 of 2011 and CP (C) No. 413 of 2012 in CA No. 9833 of 2011 with CP (C) No. 260 of 2013 in CA No. 8643 of 2012

1. Ms. Kamini Jaiswal, learned counsel has filed IAs Nos. 68-70 of 2015, inter alia, pointing out that an extent of 45.71 acres of land situated at Gorakhpur is being alienated by the Sahara Group of Companies in favour of Samridhi Builders for a total consideration of Rs. 64,00,00,000 (Rupees sixty-four crores only). The applicant alleges that the actual market value of the property even according to the prevailing circle rates works out to over Rs. 194,00,00,000 (Rupees one hundred ninety-four crores only), excluding stamp duty and taxes, etc. The application further alleges that the applicant has made sufficient inquiry and after being satisfied about the prevailing market value of the property, is ready and willing to purchase the property on the very same terms and conditions as have been negotiated between the Saharas and Samridhi for a total price of Rs. 110,00,00,000 (Rupees one hundred ten crores only). The application asserts that to prove its bona fides the applicant is ready and willing to deposit 10% of the above amount as soon as this Court issues a direction to that effect. The applicant has on that premise prayed for addition as a co-respondent in these proceedings and for appropriate directions.

2. When these applications first came up for hearing before us on 7-7-2015, we directed the applicant to deposit a sum of Rs. 11,00,00,000 (Rupees eleven crores only) in this Court by way of a bank draft drawn in favour of the Registrar of this Court to prove its bona fides. By the same order we directed Mr. Chandiok, learned Senior Counsel appearing for Samridhi to file a certificate from the Bank concerned to the effect that the cheque offered by Samridhi for a sum of Rs. 55,56,00,000 (Rupees fifty-five crores fifty-six lakhs only) drawn in favour of SEBI was good for payment. Samridhi had in the Court offered to pay up the entire sale consideration by a bank draft of Rs. 12.80 crores and a cheque for the balance of Rs. 55.56 crores.

3. Ms. Jaiswal today informs us that she has pursuant to the above direction of this Court deposited a sum of Rs. 11,00,00,000 (Rupees eleven crores only) with the Registrar of this Court by way of a bank draft. The learned counsel appearing for Samridhi also handed over a draft for a sum of Rs. 12,80,00,000 (Rupees twelve crores eighty lakhs only) drawn in favour of SEBI Sahara Account to Mr. Pratap Venugopal, learned counsel appearing for SEBI. Our attention was also drawn to a certificate issued by HDFC Bank to the effect that the cheque for Rs. 55,56,00,000 (Rupees fifty-five crores fifty-six lakhs only) drawn in the name of SEBI Sahara Account is good for payment.

4. At the hearing Mr. Kuhad, learned Senior Counsel appearing for Samridhi was asked by us whether Samridhi was willing to match the offer made by the applicant. In response he stated on instructions from Mr. Tanmay Modi, partner of Samridhi, also present in person that Samridhi was ready to do so by revising its offer to Rs. 110 crores. The counsel for the parties thereafter revised the offers of their clients upwards to eventually reach a figure of Rs. 150 crores which was amount both the intending purchasers offered to pay. It was at this stage that we considered it proper to put the parties to terms before they made any further offer. It was made clear to them that before they could proceed any further they ought to deposit 25% of the amount of Rs. 150 crores offered by them to show their bona fides and also agree to pay the balance 75% in 3 monthly instalments ending 30-10-2015. Even this was acceptable to the parties. Ms. Jaiswal submitted that the applicant was ready and willing to deposit a further amount of Rs. 26.50 crores by 31-7-2015 which would constitute 25% of the amount of Rs. 150 crores offer by her client for the property in question.

5. Mr. Kuhad, learned Senior Counsel for Samridhi, was not far behind in making a similar offer. In fact, he offered to deposit an amount higher than 25% also to show that he was not only keen to purchase the property but had the requisite resources to do so.

6. Be that as it may, the proceedings heretofore only show that the two intending purchasers are very keen to purchase the property which appears to be fairly valuable. It is also evident that they have not yet said the last word as regards the amount they are ready to pay. The offer to deposit 25% of Rs. 150 crores is only meant to show their bona fides so that this Court takes the process further when the matter comes up again on the next date of hearing. Developments that have taken place till now only show that Rs. 150 crores offered by the two purchasers is only the threshold or reserve price. Both of them are ready to revise the said figure upward but before we allow them to do so, we would like them to deposit 25% of Rs. 150 crores as a condition precedent for further participation in competitive bidding.

7. We accordingly, direct that the applicants as also Samridhi represented by Mr. Kuhad shall deposit 25% of the amount of Rs. 150 crores in SEBI Sahara Account inclusive of the amount already deposited by them. Since the applicant has deposited a sum of Rs. 11 crores in this Court, we direct the applicant to deposit the balance amount in the SEBI Sahara Account. We make it clear that if the balance of the amount is not deposited as directed above by 31-7-2015, the amount already received towards the property from the defaulting party concerned shall be forfeited. We may also mention here that the parties are agreeable to these conditions.

8. We also deem it proper to indicate that any further proceedings in relation to the property shall be, subject also to the condition that in case after the deposit of 25% of the amount of Rs. 150 crores currently offered any one of the purchasing parties fails to make good the offer by depositing the balance amount in three monthly instalments of 25% each, the amount representing 25% of the offer shall stand forfeited.

9. Dr. Dhawan, learned Senior Counsel appearing for the Saharas pointed out that certain cheques which SEBI has in its possession in connection with sale of certain other properties have not been encashed.

10. Mr. Venugopal, learned counsel for SEBI on the other hand submits that the purchasers had filed an application seeking extension of time and also agreed to furnish an undertaking which process has taken sometime but there has been no undue delay in the encashment of the cheques. Mr. Arvind Datar, learned Senior Counsel, may furnish a statement of SEBI Sahara Account and investments made to the counsel for the Saharas by the next date of hearing.

11. List the matter on 3-8-2015 at 2.00 p.m.

ORDER dated 3-8-2015

(BEFORE T.S. THAKUR, ANIL R. DAVE AND DR. A.K. SIKRI, JJ.)

12. By our order dated 13-7-2015¹, we had directed the applicant Samridhi Developers and M/s. Gorakhpur Real Estate Developers (P) Ltd. to deposit an amount equivalent to 25% of 150 crores in the SEBI Sahara Account excluding the amount already deposited by the applicant. While Samridhi Developers has complied with the said order within the time allowed by this Court, M/s. Gorakhpur Real Estate Developers (P) Ltd. has not been able to do so.

13. When the matter came up for hearing today, Ms. Kamini Jaiswal, learned counsel appearing for the said company presented before us bank drafts for a sum of Rs. 25 crores and 51 lakhs and a cheque for a sum of Rs. 1 crore drawn in favour of SEBI Sahara Refund Account along with a certificate from the bank concerned that the account on which the cheque is drawn has sufficient funds for payment of the cheque amount.

14. Ms. Kamini Jaiswal submits that the intervening delay in deposit of the amount could be delayed and the deposit taken as having been made within the time stipulated by this Court. We see no reason to decline that prayer. We have accordingly handed over the drafts and the cheque mentioned above to Mr. Pratap Venugopal, learned counsel appearing for SEBI for being credited to SEBI Sahara Account.

15. On the last date of hearing, both the intending purchasers had offered a sum of Rs. 150 crores for the property in question. It was at that stage that we had directed deposit of further amount by both of them only to test whether their offers are bona fide. Since both the parties have complied with the said direction as mentioned above we asked Mr. Paras Kuhad, learned counsel appearing for Samridhi Developers whether he was willing to raise his offer beyond Rs. 150 crores. Mr. Kuhad, upon instructions, submitted that his clients were not ready to go beyond Rs. 150 crores. Mr. Kuhad submitted that if M/s. Gorakhpur Real Estate Developers (P) Ltd. raised the offer beyond Rs. 150 crores, the property could be directed to be sold to them with a direction to SEBI to refund the amount deposited by Samridhi Developers.

16. Ms. Kamini Jaiswal, learned counsel appearing for M/s. Gorakhpur Real Estate Developers (P) Ltd. has on instructions further raised the bid amount by another Rs. 2 crores to take it to Rs. 152 crores as against Rs. 150 crores offered by Samridhi Developers. In that view, therefore, we see no reason to decline the higher offer made by Gorakhpur Real Estate Developers (P) Ltd. not only because the amount offered is higher but also because the said company has shown its seriousness and bona fides by depositing a total amount of Rs. 37.51 crores by now out of which Rs. 11 crores which has been deposited in this Court which shall stand transferred to SEBI Sahara Account.

17. Consequently, the arrangement arrived at between the respondent the Saharas and Samridhi Developers shall stand rescinded with a direction to SEBI to refund the amount deposited by Samridhi Developers in connection with the sale and purchase of property at Gorakhpur latest within a period of one week from today. Needless to say that the memorandum of understanding executed between Samridhi Developers and the Saharas shall stand annulled in view of the subsequent above developments.

18. Ms. Kamini Jaiswal, then submitted that the Saharas must keeping in view the representation made before this Court as also the terms settled with the outgoing purchases execute a memoramdum of understanding with Gorakhpur Real Estate Developers (P) Ltd. on the same terms and conditions as were settled between Samridhi and the Saharas.

19. Mr. Kapil Sibal, learned Senior Counsel appearing for the Saharas has no objection to that course of action. He submits that the requisite memorandum of understanding on the very same conditions as were settled with the outgoing purchaser shall be executed within a period of one week from today with M/s. Gorakhpur Real Estate Developers (P) Ltd. Mr. Sibal clarified that joint owners of the property at Gorakhpur or their duly authorised power of attorney shall execute the memorandum of understanding on their behalf in favour of new purchaser. That statement is recorded.

20. Regarding the balance payment due for the property in question we have already mentioned in our order dated 13-7-2015¹ that the successful bidder shall have to deposit the remainder of the sale price in three equal monthly instalments falling due on 31-8-2015, 30-9-2015 and 31-10-2015. Now that the signing of the memorandum of understanding is going to take some time, the first instalment earlier scheduled to be due on 31-8-2015 shall have to be shifted to another date. We accordingly direct that the first of the remaining three instalments shall be payable on 10-9-2015, the second on 10-10-2015 and the third and last instalment which would also represent the balance of the amount shall fall due on 10-11-2015.

21. We also make it clear as we have done in our previous order dated 13-7-2015¹ that in the event of any default in payment of any one of the three balance instalments, the amount already deposited by the purchaser shall stand forfeited and that the purchaser shall not be entitled to claim any extension of time for making such payment.

22. At this stage, Ms. Kamini Jaiswal submits that since this Court has made the deposits pre-emptory and since the last of the instalments falls during festival time, this Court would consider granting time till 30-11-2015 to make the payment of the last instalment. We order accordingly. The payment of last instalment shall now be paid by 30-11-2015 instead of 10-11-2015 as directed earlier.

23. Mr. Arvind Datar, learned Senior Counsel appearing for SEBI has filed a statement in terms of previous order of this Court, a copy whereof has been furnished to the counsel appearing on the other side.

IAs Nos. 77-79 of 2015 in Contempt Petition No. 412 of 2012 in Civil Appeal No. 9813 of 2011

24. Issue notice to M/s. Divine Infra Solutions (P) Ltd. Company which is said to be in default.

25. Mr. S.S. Ray, counsel appearing on behalf of the said company accepts notice. On his request, two weeks’ time is granted for filing reply to this application. Rejoinder-affidavit, if any, shall be filed within two weeks thereafter. Mr. Gauri Shankar Singh, Director and authorised representative of the said company shall remain present in person on the next date of hearing.

IAs Nos. 53-55 of 2015

26. In terms of order in the main matter, these applications shall stand dismissed.

IAs Nos. 68-76 of 2015

27. IAs Nos. 68-76 of 2015 are disposed of in terms of our order of even date in the main application.

IAs Nos. 80-82 of 2015

28. We do not see any reason to entertain IAs Nos. 80-82 of 2015 which are accordingly dismissed.

IAs Nos. 68-69 of 2013

29. Reply in this petition has already been filed by the contemnors. SEBI is free to file rejoinder to the reply within two weeks.

30. List again along with any fresh application for appointment of receiver, if any, filed by SEBI along with Transferred Cases (Civil) Nos. 83, 84, 85, 86, 87 of 2014 and all other pending applications in Contempt Petitions (C) Nos. 412 and 413 of 2012 and Contempt Petition (C) No. 260 of 2013 in the week commencing from 14-9-2015.

31. Mr. Paras Kuhad, learned Senior Counsel appearing for the intending purchaser of property situated in Varshwa seeks permission to file a fresh application for extension of time for payment of balance amount supported by relevant documents. He is permitted to do so.

32. Post the application for hearing within three weeks after the application has been filed.

ORDER dated 17-8-2015

(BEFORE T.S. THAKUR, ANIL R. DAVE AND DR. A.K. SIKRI, JJ.)

In IAs Nos. 86-88

33. We have heard these applications. Facilities extended by this Court’s order dated 19-6-2015² shall stand extended till the end of September 2015.

In IAs Nos. 89-91

34. Issue notice to the counsel for the respondents including the purchasers of the property referred to in these applications.

35. The learned counsel appearing for the respondents accept notice.

36. Objections be filed by the non-respondent owners before 18-9-2015.

In IAs Nos. 98-103

37. Non-applicants the Saharas may file their objections to these applications also. The respondents the Saharas shall file in a sealed cover a copy of the mortgage deed executed by them in favour of Bank of China and a note as to the arrangements made between Bank of China and Rueben Brothers as also the arrangements, if any, between Rueben Brothers and the Saharas on or before the next date of hearing.

38. The proposals said to be under consideration of the respondent the Saharas filed by Mr. Kapil Sibal today in the form of a spiral binding compilation shall be kept in a sealed cover.

IAs Nos. 77-79 of 2015

39. Time to file a reply is extended by one more week in favour of Divine Infrasolutions (P) Ltd. List all the IAs on 18-9-2015.

ORDER dated 28-9-2015

(BEFORE T.S. THAKUR, ANIL R. DAVE AND DR. A.K. SIKRI, JJ.)

IAs Nos. 104-06 of 2015

40. SEBI has moved these applications seeking appointment of a receiver and for issue of incidental directions. The Saharas shall file their reply to the applications within four weeks.

41. Rejoinder, if any, shall be filed within two weeks thereafter.

IAs Nos. 125-27 of 2015

42. These applications have been moved by Helvetia Group Ltd., applicant, for intervention.

43. Having heard Mr. Rao, learned Senior Counsel for the applicant at some length, we are of the view that it is neither necessary nor proper for us to allow a third party like the applicant in the present applications to intervene in the present proceedings specially when the presence of the applicant even as an intervener may not be necessary for an effective and final adjudication of the matter under consideration in the contempt petitions. The prayer made in the applications is accordingly declined and the applications dismissed.

IAs Nos. 116-18 of 2015

44. Issue notice. The Saharas to file their reply within four weeks.

IAs Nos. 119-21 of 2015

45. Issue notice to the Saharas and SEBI as also to amicus curiae to respond to the applications and file their reply within four weeks.

IAs Nos. 122-24 of 2015

46. Heard. The facilities extended to the contemnors in terms of our order dated 1-8-2014 shall stand extended by another six weeks.

IAs Nos. 90-93 of 2015

47. These applications shall also be listed on the next date of hearing along with other IAs.

IAs Nos. 107-09 of 2015

48. Tag these applications along with IAs Nos. 116-18 of 2015.

49. List the main matter along with IAs Nos. 104-06 of 2015, IAs Nos. 116-18 of 2015, IAs Nos. 119-21 of 2015, IAs Nos. 122-24 of 2015, IAs Nos. 90-93 of 2015 and IAs Nos. 107-09 of 2015 after six weeks.

50. Documents submitted today by Mr. Kapil Sibal, learned Senior Counsel, shall be kept in a sealed cover.

ORDER dated 2-2-2016

(BEFORE DR. T.S. THAKUR, C.J. AND ANIL R. DAVE AND DR. A.K. SIKRI, JJ.)

IAs Nos. 90-91 of 2014, 104-106 of 2015, 119-21 of 2015, 144-46 of 2016, 131-37 of 2015, 138-43 of 2016 in Contempt Petition (C) No. 412 & 413 of 2012 in CA No. 9813 & 9833 of 2011 with Contempt Petition (C) No. 260 of 2013 in CA No. 8643 of 2012

IAs Nos. 77-79 of 2015

51. Taken on board. By our order dated 3-8-2015³ we had directed Mr. Gauri Shankar Singh, Director and authorised representative of M/s. Divine Infra Solutions (P) Ltd. to remain present in this Court on the next date of hearing. Despite the said direction he is not present today. Though no reply seems to have been filed on behalf of Divine Infra Solutions (P) Ltd., the learned counsel for the company submits that a reply has already been filed. The Office is directed to locate and place the same on record. Mr. Gauri Shankar Singh shall remain present in person on the next date of hearing to show cause why he should not be proceeded against for breach of the undertaking dated 8-1-2015 furnished by him to this Court.

52. Mr. Gauri Shankar Singh shall all the same have the liberty of making the deposit in terms of the undertaking furnished on or before next date of hearing.

53. List IAs Nos. 77-79 of 2015 on 29-3-2016 at 2.00 p.m.

IAs Nos. 89-91 of 2015

54. Taken on board. Issue notice to Divine Infra Solutions (P) Ltd.

55. Mr. S.S. Ray, learned counsel accepts notice on behalf of the said respondent. He shall file his objection to the applications within two weeks. List IAs Nos. 89-91 of 2015 along with connected applications on 29-3-2016 at 2.00 p.m.

IAs Nos. 135-37 of 2015

56. Issue notice.

57. Mr. Gaurav Agrawal, learned counsel accepts notice on behalf of the respondents. He may file reply to these applications within two weeks.

IAs Nos. 119-21 of 2015

58. The learned counsel for the Saharas and SEBI shall file their reply to these applications within two weeks.

59. List IAs Nos. 119-21 of 2015 along with other connected applications on 29-3-2016 at 2.00 p.m.

IAs Nos. 138-40 of 2015

60. Mr. Kapil Sibal, learned Senior Counsel seeks permission to sell certain items of property including four aircrafts which the group companies owned details whereof are given in Para 3 of the applications.

61. Mr. Venugopal, learned counsel for SEBI and Mr. Shekhar Naphade, learned Amicus Curiae may file their objections to these applications within two weeks.

62. List IAs Nos. 138-40 of 2015 along with connected applications on 29-3-2016 at 2.00 p.m.

IAs Nos. 104-06 of 2016

63. List the applications for appointment of Receiver along with IAs Nos. 83-85 of 2015 for final hearing on 29-3-2016 at 2.00 p.m.

IAs Nos. 90-91 of 2014

64. Heard. For the reasons stated in the applications and the additional-affidavit filed by SEBI, we direct that a sum of Rs. 41,44,76,410 shall be reimbursed to SEBI towards the expenditure incurred by SEBI on various items as set out in the additional affidavit up to 28-5-2015. The reimbursement shall be out of the interest amount earned by the deposit made in SEBI Sahara Account. The adjustment shall be without prejudice to the Saharas’ right to seek refund, if any, in accordance with law.

65. IAs Nos. 90-91 of 2014 are accordingly disposed of.

66. Mr. Kapil Sibal, learned Senior Counsel submits that since the entire record filed by the Saharas has been digitised, the original documents can be returned to the Saharas not only to keep them in safe custody but also to avoid the recurring expenditure which SEBI is incurring towards rent of the storage facility hired by it.

67. Mr. Arvind Datar, learned Senior Counsel appearing for SEBI submits that he has no objection to the return of the documents provided they are kept in safe custody under double locking system by SEBI & the Saharas.

68. Mr. Kapil Sibal, learned Senior Counsel agrees to approach SEBI with the requisite details of the storage facility where the Saharas would like the record to be shifted for storage purposes.

69. Once SEBI is satisfied with the storage facility it shall be free to transfer the records to any such facility to be retained under double lock of SEBI & the Saharas. Transportation/shifting of the record with the new storage facility shall be by the Saharas. In case SEBI is called upon to do so, expenditure so incurred on transportation/shifting shall be reimbursed to SEBI out of the interest earned by the deposit made by the Saharas.

70. Mr. Arvind Datar submits that SEBI will have no difficulty in providing to the Saharas a copy of the additional record at the expense of the Saharas.

71. The needful shall be done within six weeks. List the matter again on 29-3-2016 at 2.00 p.m.

———

¹ Set out in paras 1-11, above.

² SEBI v. Sahara India Real Estate Corpn. Ltd., (2016) 1 SCC 48 (M)

³ Set out in paras 12-32, above.

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