SEBI v. Sahara| Supreme Court Asks SEBI To Examine Sahara Group's Proposed JV Agreement For Versova Land

The Supreme Court today (January 8) directed the Security Exchange Board of India (SEBI) to examine Sahara Group's Joint Venture Agreement proposed for developing latter's Versova land in Mumbai and file sealed cover response before the Court. The proposed developer for the project is also ordered to deposit Rs.1000 Crores with the Court in 15 days from today.

The bench of CJI Sanjiv Khanna and Justices MM Sundresh and Bela Trivedi was hearing a batch of contempt petitions against Sahara Group of Companies who were in default violation of the Court's 2012 order.

In 2012, the Supreme Court ordered two Sahara companies to refund Rs. 25,000 crores (approx.), along with 15% interest, to over two crore small investors who invested in their debentures between 2008-2011. The deposit was directed to be made with SEBI. When the directed amount remained outstanding, pleas were filed against Sahara, alleging contempt.

Notably, the Court on September 5, 2024 directed Sahara Group to deposit Rs 1000 crores in a separate escrow account within 15 days and also allowed the cash-strapped company to enter into joint venture for developing its properties at Versova, Mumbai in order to raise the sum of Rs 10,000 crores due to be paid to its lenders.

The bench also ordered that development projects would be executed only upon the approval of the Joint Venture agreements by the Court. Incase the agreement was not filed within 15 days, the versova property would be ordered to be sold on 'as is where is' basis.

This was subsequent to its earlier direction on September 3, 2024, where the Court called on the conglomerate to place before it a scheme as to how it plans to deposit the outstanding sum in the Sahara-SEBI Refund Account. The Court also asked the company to give a list of its unencumbered properties.

Senior Advocate Kapil Sibal appearing for Sahara informed the bench that the development agreement was ready and filed with the Court in a sealed cover and the proposed builder namely Oberoi Realty would be giving Rs. 2000 Crores in the intial stage. The holding ratio would be 25:75 for the Sahara Group and the Builder respectively. The builder was represented by Senior Advocate AM Singhvi.

ibal also informed that of the two properties, for one of them, the Coastal Zone Regularion (CRZ) approval has been obtained for development. As per the submission, the project would be developed over 14 years. The developer/builder would be paying Sahara a cash flow of Rs. 21000 Crores over these 14 years.

During the hearing, the CJI clarified that "if we find that the project is delayed , then the Court will return that 1000 crores without interest and cancel the joint venture."

Sibal added that the present vervosa joint venture is one where approvals are required, but there are several other joint venture projects which don't require such approvals and which would be submitted before the Court in the coming 9 months.

"Within 9 months, substantial money of the 8000 crores will be paid," Sibal expressed.

Apart from the present builder, another prosposal has been made by a developer namely 'Valor' who was represented by Advocate Mishra. However, the terms of agreements by Valor are yet to be proposed and filed with the Court.

Taking note of the above, the Court ordered that the Joint Venture agreement between Sahara and Oberoi Realty be handed over to SEBI and Sr Advocate Shekhar Naphde (amicus) who will further examine the proposal. SEBI's reponse may then be filed in a sealed cover to the Court.

"The proposer will hand over the proposal to learned Counsel appearing for SEBI and learned Senior Counsel Mr Naphde who has been appearing in this Court as amicus Curiea."

"SEBI will conduct their own investigation and examine the proposal. They may file their response under sealed cover in this Court with copy to both the advocates on record appearing for the proposer and SHICL and SIRECL."

Valor has also been granted an oppurtubity to furnish its proposal before the Court. Both Oberoi Realty and Valor are directed to deposit Rs.1000 crores each before the Court within 15 days from date of order.

"The copy of the applications filed by Valor will also be furnished to the AOR for SEBI and Mr Naphde as well as the proposer/ Sahara. The proposal given by Valor will also be examined by SEBI. Valor has undertaken to deposit Rs.1000 crores in this Court by way of demand draft within period of 15 days from today."

"Demand draft to the Court by Oberoi Realty (proposer) will also be deposited with the Court within a period of 15 days from today. The said demand drafts will not be encashed."

Case Details : SECURITIES AND EXCHANGE BOARD OF INDIA Versus SUBRATA ROY SAHARA AND ORS. AND ORS. CONMT.PET.(C) No. 001820 - 001822 / 2017 and Conneted matters.