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Rediff.com  » Business » Sahara can bring money from abroad only after RBI approval: SC

Sahara can bring money from abroad only after RBI approval: SC

Source: PTI
December 17, 2014 20:02 IST
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The Supreme Court on Wednesday said that the money likely to be arranged by Sahara Group from overseas to raise Rs 10,000 crore (Rs 100 billion) for the release of its jailed chief Subrato Roy would come into the country only after necessary clearances by RBI.

The court agreed that legal impediments in the transfer of money from escrow account of foreign bank agent requires special permission by competent authority under the Foreign Exchange Management Act (FEMA).

A bench headed by Justice T S Thakur said before the issue of transaction of amount from escrow account was settled, it would not like to pass any order on the issue.

"We do not consider it necessary to pass any direction on transfer of proposed account which exists of third party. Any direction can be passed on satisfaction of SEBI and amicus curiae," the bench, also comprising Justices A R Dave and A K Sikri said.

The issue came after senior advocate Shekhar Naphade, who is assisting the court as an amicus curiae, submitted that the legal requirement for external commercial borrowing requires clearance under FEMA which has not been complied with by the Sahara Group.

The court was hearing the issue of Sahara seeking its nod for raising 'junior loan' of $650 million (approx. Rs 3,600 crore) as a part of the scheme to overcome the liability with Bank of China which had lent money to it in purchasing stakes in three overseas hotels, Dream Downtown and The Plaza in New York and Grosvenor House in London.

The bench said certain aspects arising out of the foreign properties have to be verified, specifically the amount likely to be deposited in the SEBI-Sahara refund account. Sahara also informed the bench that the escrow account has been shifted to Bank of America.

The Bench made it clear that it was not ready to consider any plea to allow Roy to walk out of the jail for some period to arranging money for his bail.

"Let us be realistic you can come out only if you make the payment," the bench said adding that Roy has to pay Rs 5,000 crore (Rs 50 billion) and another Rs 5,000 crore as bank guarantee.

"We don't see any change in the circumstances going by the history of the litigation. The balance amount you are unable to arrange for your release. What will happen after you are released for payment and refund to investors," the bench asked.

However, the bench gave relief to multiple depositors by lifting its earlier order restraining SEBI from reimbursing their amount.

"There is no reason why they should not get back their deposit with interest," the bench said while giving relief to 2781 such depositors whose credentials were verified by the SEBI and would lead to reimbursement of around Rs 28.10 crore.

The apex court also gave some relief to Sahara Group by agreeing that it should be allowed to operate bank accounts which are in the names of its various companies. The Bench asked that the Sahara Group to place before it the details of its companies, bank account, amount etc for verification.

It also said there was an order for freezing the assets but there was nothing to hinder its business activities. The bench, which posted the matter for hearing on January 9, agreed to hear the appeals of Sahara filed against SEBI’s regarding verification of investors.

Sahara's counsel S Ganesh and Keshav Mohan handed over to SEBI the cheques amounting to Rs 1,900 crore (Rs 19 billion) relating to sale of domestic properties.

The apex court on December 2 had permitted the Sahara Group to proceed with the sale of four domestic properties, which is likely to fetch Rs 2,710 crore (Rs 27.10 billion), in its bid to raise Rs 10,000 crore (Rs 100 billion) for the release of Roy.

The court had allowed the group to sell properties in Jodhpur, Pune, Chauma in Gurgaon and Vasai in Mumbai after it was satisfied that the transactions were in accordance with its June 4 order.

Ganesh told the bench that there are some problem in selling the Pune property which would likely to fetch Rs 550 crore (Rs 5.5 billion).

The June 4 order had stated that "such sales are not for a price lower than the estimated value indicated in the statement filed before this Court or the circle rates fixed for the area in which such properties are situated".

Earlier the court was told that the transactions for these properties would be completed by May 2015 and in the meantime, the purchasers would deposit post-dated cheques in the name of SEBI-Sahara refund account with undertakings that those would be honoured on due dates.

Out of the list of nine domestic properties, Sahara has already sold its Ahmedabad property and has raised Rs 411.82 crore (Rs 4.11 billion) which has gone into the account of SEBI. Earlier, Sahara Group had approached the court with a fresh proposal for securing release of Subrato Roy.

Roy, who was sent to jail on March 4 this year for non-refund of over Rs 20,000 crore (rs 200 billion) with interest to depositors, was asked by the court to pay Rs 10,000 crore to get bail, out of which Rs 5,000 crore should be paid in cash and rest of the amount in bank guarantee.

Sahara, which earlier had raised Rs 3,117 crore (Rs 31.17 billion) and deposited with SEBI, has told the court that out of nine domestic assets it has now sold an Ahmedabad property and raised  Rs 411.82 crore (Rs 4.11 billion) which has also gone into account of the market regulator.

Earlier, SEBI had moved the court seeking its direction to Sahara group to give a time schedule for payment of Rs 47,000 crore (Rs 470 billion) to it.

In the application, SEBI had submitted that the group be directed to furnish all details before the court regarding offers it received for its three luxury hotels, which was to be put on sale to raise money to be deposited with it.

The apex court had earlier allowed Roy, 65, to use the conference room in Tihar jail complex to hold negotiations with potential buyers for selling the hotels in New York and London. 

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