Press Note from Sahara’s Lawyer Shri Gautam Awasthi

Rupees 40,000 Crores dues issue is wild imagination of media

Sahara’s Rs. 12,000 Crores are already with SEBI

1. Sahara says that report of Due amount of Rs 40,000 Cr is incorrect, since such amount or such observation was never made during the course of hearing either by the Counsel appearing for SEBI or by the Hon’ble Court or any other Counsel. The figure of Rs. 40000 Cr. is imaginary and same amounts to irresponsible reporting of Court proceedings. There is no pleading or any document in the Court record which mentioned the figure of Rs. 40000 Cr. The order dictated in the open Court on 13.03.2015 also does not bear this figure and therefore, these amounts to incorrect reporting of Court proceedings which further dented the image of Mr. Roy and two directors in the public eye.

2.In fact, the Court very fairly stated that amount payable was subject to verification and after verification all excess amount would be refunded Back to Sahara.

3.There is no observation pertaining to the reporting of one month to save group by the Hon’ble Court, same is misconceived.

As a matter of fact, the Hon’ble Court observed during the proceeding to Mr. Kapil Sibal, Senior Advocate that the outhouse facility along with secretarial staff etc. can be extended even up to “two months” provided a concrete proposal is put forward as far as the satisfaction of the bail bond of rest of the amount of about 6000 Cr. is concerned. Please note that Sahara’s two companies are asked to provide proposal for complying with the remaining amount out of bail amount of Rs. 5,000 Cr cash and Rs. 5,000 Cr. as bank guarantee and not for any imagery figure of Rs. 40,000 Cr. The period of 2 month was observed by the Hon’ble Court when Mr. Sibal requested for 8 weeks outhouse facility to finalize the transaction to satisfy the bail bond amount of Rs. 10,000 Cr. as ordered by the Hon’ble Court on 26.03.2014.

Therefore, the figure of 4 weeks as reported in the article is incorrect since Mr. Sibal sought 8 weeks’ time and not 4 weeks. Same is clarified to that extent.

4.The news represented that an ultimatum was given whereas the order passed by the Hon’ble Court makes it clear that the Hon’ble Court accepted the request of not appointing a Receiver since Mr. Sibal stated that a serious attempt has been made for finalizing a deal of which the documents will be provided to the Amicus Curiae and the Counsel for SEBI. This acceptance of the request was also noted in the order dated 13.03.2015. As a matter of fact, Mr. Sibal stated that the situation of appointment of a Receiver may not arise if an opportunity is given. There is nothing mentioned in the order passed on 13.03.2015 about any ultimatum and therefore same amounts to incorrect reporting and same is clarified to that extent.

5.The Hon’ble Court extended the facility of communication up to 5 hours a day to Mr. Roy and two directors of Sahara’s two companies, inside the jail premises which was not reported in the article. Further, jail authorities were also directed to facilitate Mr. Roy and two directors with two laptops for functioning which was also not reported in the article.

6.During the hearing, SEBI was directed to file an affidavit clarifying its stand when a letter was indicated to the Hon’ble Court by Mr. Sibal that a communication was issued to HDFC Bank by SEBI on 19.12.2013 that the order dated 21.11.2013 only applies to specific movable and immovable properties in a particular application, therefore, RBI has no cause of action to state that there was a violation by Sahara India Financial Corporation Limited of the order passed by the Hon’ble Supreme Court on 21.11.2013 and 04.06.2014.

7.Further, Mr. Sibal fairly stated during hearing that about Rs. 12,000 Cr. stands deposited with SEBI as on date out of which barely anything was disbursed by SEBI. The Hon’ble Court also made it clear that it will be open to argue on that issue at a later stage. However, the article in the front page of the newspaper reported that only Rs. 5,120 Cr. was deposited whereas nearly Rs. 12,000 Cr. stands deposited with SEBI as on date. Same is clarified to that extent.

Sahara Employees’ Salaries Overdue Following Liquidity Crunch

Sahara’s conflict with Sebi over investor repayments has begun to effect salaries of the group’s employees, which are getting overdue because of a major liquidity crunch. Majorly corporate offices of the crisis-hit group are facing salary delays. Even day-to-day petty operating expenses and statutory payments are getting due. A Sahara spokesperson said “We are working to diffuse this crisis, which has also created grave difficulties for our employees. Sahara India is one big Pariwar (family) and all the employees are its members, who are standing together in these difficult times.” The company has a total of 10 lakh employees, which include permanent and part time employees and agents. An exact number of salaries overdue was hard to summate but it has been estimated to go up to “tens of thousands”.

Sahara is also working hard to raise money for getting its chief, Subrata Roy, and two of its officials released from imprisonment from Tihar jail, where they have been for an year now. The spokesperson said that Sahara is facing liquidity crunch for a year now due to restriction and double payment of investor refund. This has led to delays in salaries and other operating obligations and expenses. He added, “We are however releasing the salaries time to time based on the fund flow on a continuous basis. The delayed salaries of junior staff were released just a few days back as extra care has been taken for our junior staff. Soon salaries of other brackets will be released.” He also said that the companies which have their own fund-flow are in a better situation to pay salaries without much delay. These include their luxury hotel Sahara Star in Mumbai, resort town Aamby Valley City and the 500-bed tertiary care Sahara Hospital in Lucknow.

Sahara still maintains that it has repaid more than 95 percent of its investors directly. But the group was asked by the Supreme Court in August 2011 to deposit over Rs 24,000 crore with Sebi for refund to investors. The spokesperson added that “any fund raised by the group, which we are doing, through sales and mortgaging of properties, that money shall go to Sahara-Sebi account and nothing will come to the corporate”. And he said that the payment to Sebi is a double payment for them. Sahara till today has already deposited Rs 11,000 crore (including interest) with Sebi. The spokesperson also said that “Sahara’s two Companies in question collected Rs 25,780 crore through OFCD (Optionally Fully Convertible Debenture) schemes. Of this, Sahara repaid almost 95 per cent (around Rs 23,000 crore) of OFCD liabilities of these two companies by 2012.”

Recent attempts by Sahara to raise funds through a US-based company Mirach Capital failed. The group said it is now in talks with a European bank and a Dutch pension fund and some other entities to raise funds for Subrata Roy’s release.

SEBI versus Sahara: Rs. 22 crores versus Rs. 18000 crores

Sebi has around Rs.11, 500 crores of Sahara‘s money, including bank interest.

By the time Saharasri Subrata Roy shall come out, that is, when full bail amount is paid, Money of Sahara India Pariwar Company lying with Sebi will be Rs.18, 000 crores cash.  Since no bank is ready to give Bank Guarantee to Sahara India Pariwar without 100% cash margin, it is going to be Rs.18, 000 crores of cash with Sebi.

While in the last 26 months, Sebi had to pay only around Rs.2 crores. More importantly, Sebi came out with an All-India Media Advertisement, twice, inviting investors for repayments. But till now, they have received from all over India, a demand of Rs.20 crores only. A question can now arise that whether the investors exist or do not exist; meaning, are these all fictitious accounts?

Only verification can clarify this point, as mandated in Hon’ble Court’s order of 2012. Since then, in almost past 26 months, Sebi has not started verification; the reason best known to them.

About fictitious account, it must be mentioned here another issue pertaining to the Reserve Bank of India (RBI) which is as follows:

Between 2008 and 2012, on RBI’s order, Sahara paid back Rs.18, 000 crores under the command of RBI’s two Statutory Auditors and 3 RBI nominated Directors.  The bank account of that amount was controlled by the RBI.  A strict rule was followed that when RBI auditors finally checked the identity of all investors (KYC), only then the next months’ payments were all owed by the RBI and during the process, in 4 years, RBI did not find any fictitious account; not even one.

Ex-RBI official, Sebi men and ROC officer under CBI scanner

The Central Bureau of Investigation (CBI) has zeroed in on at least four senior officials, including two of market regulator Sebi and a retired manager of the Reserve Bank of India, for their alleged role in laundering huge amounts of money in the multi-crore Saradha financial scam.

The agency, which has already made two arrests in connection with the ponzi scheme in West Bengal — East Bengal Club executive member Debabrata Sarkar on Wednesday and businessman Sandhir Agarwal on Saturday — had put the said officials, all from regulatory organisations, under the scanner. The investigation against them is now at an advanced stage.

Significantly, the Enforcement Directorate (ED), which is probing into the money laundering aspect of the scam, had found several “serious irregularities” in the functioning of these officials.

The ED had also interrogated these four along with several others. They include a retired RBI manager, a top official in the Registrar of Companies, Kolkata, and two Sebi officials. They are accused of “lapses”, and investigators revealed that they “compromised on their official responsibility” and had allegedly accepted huge “bribes” to look the other way. Sources in the CBI said the agency has collected proof about their involvement.

Earlier CBI sleuths during raids across several locations across the country, had seized documents that showed how certain officials tried to cover up the business of Saradha Group chief Sudipta Sen.

For instance, in 2009, 140 companies of Saradha Group were registered with the ROC, Kolkata in a span of four days. Significantly, more than 50 of these 140 companies were registered on a Saturday, revealed a senior official of Union finance ministry. Officially, the ROC is closed on Saturday.

“RBI and Sebi are equally responsible (for the scam). While Sebi officers were sitting on the Saradha files, RBI did not inspect the company even though it has the power to do so. The vigilance commission in Sebi has already conducted an internal inquiry into the malpractices of some of its officers. A report has been submitted to both the ED and the CBI,” the official said.

He added that the ROC, Kolkata also played a major role in the scam. “Every year, ROC used to receive the balance sheets of the company. They should have identified the irregularities… Most of the balance sheets of the company are now found to be fake and mostly with manipulated data,” he said.

See more at: http://indianexpress.com/article/business/business-others/ex-rbi-official-sebi-men-and-roc-officer-under-cbi-scanner-in-saradha-scam/#sthash.tztFxdCG.dpuf

Sahara India Pariwar: Legal debate over Roy’s detention gathers pace

It’s been over six months that Subrata Roy, the flamboyant chief of Sahara, has been in Delhi’s Tihar jail. In the meantime, the hopes of his release have risen and ebbed. And as the days go by, it is becoming uncertain when he will be able to furnish Rs 10,000 crore to Sebi — a pre-condition set by the Supreme Court for his release.

Company sources say that it’s not that the company doesn’t have the money. The issue is Roy’s current predicament. “The entire world knows that he’s being forced to make distress sales to raise this amount and so he is getting badly discounted offers for his valuable overseas properties. Now, which businessman wants to sell his jewels at throwaway prices,” said a company executive.

Roy’s case — and along with him that of two other Sahara directors, Ashok Roy Choudhury and R S Dubey — has few parallels. Technically, Rs 10,000 crore is not a bail amount; bail was granted to him five months ago, but it came with the pre-condition of him paying Rs 10,000 crore for his release. Legal experts say this is an extraordinary pre-condition.

There is also lack of clarity about the charges that have been slapped against Roy and the two Sahara directors. If it is contempt of court — Roy refused to appear before the Supreme Court on the given date citing his mother’s illness — he has already served the maximum punishment of six months prescribed for the offence.

“The question to be debated is whether there is a reasonable limit for how long someone can be incarcerated under the present circumstances — or if the six-month limit prescribed under the Contempt of Courts Act applies here,” said Gopal Sankaranarayanan, senior advocate, Supreme Court.

Article 21 of the Constitution deals with an individual’s personal liberty. It states, “No person shall be deprived of his life or personal liberty except according to procedure established by law.”

Some feel that this Article is being violated. Abhishek Manu Singhvi said, “Although currently I am not arguing the case, in my professional opinion, the continued incarceration may well be held to be a violation of his right to life under Article 21 (of Constitution of India) and a fit ground for a curative petition.”

These legal points aside, it is now clear that Roy — about whom company executives say was not an original respondent in this case — will have to pay the amount as ordered by the Supreme Court. The question is whether he should be kept in prison until he coughs up with Rs 10,000 crore, or should he be released with due safeguards, allowed to negotiate the best terms for sale of assets, and told to pay the amount within a set deadline.

Roy has been in Tihar jail, under judicial custody, since March 4 this year. In early August, Roy was given a 10 working days to negotiate sale or lease of Sahara group’s hotel properties to raise the Rs 10,000-crore bail amount. According to people within the group, he has been making ‘relentless efforts to sell the properties’ in order to meet the criterion set forth by the apex court, ‘which shows his bonafide intention to comply with the orders passed by the court’.

Reference Link: http://timesofindia.indiatimes.com/business/india-business/Legal-debate-over-Roys-detention-gathers-pace/articleshow/44661645.cms

Sahara India Pariwar: Truth always wins at last

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Subrata Roy a true Indian – Truth can never be defeated

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Sahara India Pariwar Desh ki Dhadkan

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Sahara-SEBI Case : Gautam Awasthi is thankful to Supreme Court

Statement of Advocate Gautam Awasthi on yesterday’s Supreme Court Proceedings

“Today, we are extremely thankful to our Hon’ble Judges who have opened the path after 5 months for Saharasree to reintroduce him and his presence in the work sphere. He never could get a chance to talk to anybody. Here in the jail, Subrata Roy Sahara used to get only 35 minutes and additional few calls at times in a week.

Actually from today only the business is starting to fulfill the direction of Hon’ble Court though these are all double payments.

So, on 22nd July, 2014, we got the permission for mortgage and sale of overseas assets and today on 1st August, 2014, we are going to get the support of all kinds of communications round the clock with office staff and technical support.

Since all the assets, every Rupee, every inch of all immovable properties, every gram of movable properties were under absolute embargo no payment in compliance of order dated 26th March, 2014 could have been made. Immediately after lifting of embargo on Bank account etc. things have started improving from beginning of June and consequently a substantial part of the cash payment of Rs.5000 crores could be deposited.”

Sahara Group thanks apex court for asset de-freeze

The Sahara Group has thanked the Supreme Court for lifting the freeze on its moveable and immovable assets so that it can raise the Rs 10,000 crore for part payment of dues, but also said it had repaid the bulk of money owed to investors.

“We are very thankful we got clearance of bank accounts and certain select properties,” Sudeep Seth, Sahara’s lawyer, said in a statement on the behalf of the group after the Supreme Court gave it the go-ahead Wednesday for sale of its assets in India.

“However, the fact remains that Sahara has already repaid 93 per cent of the investors, mostly in cash, and has submitted all repayment vouchers receipts and other documents in original with SEBI (Securities and Exchange Board of India), which SEBI has to verify.”

The group said the actual repayment that was pending amounted to just Rs 2,500 crore and that there was not even a single complaint against Sahara. The group also claimed that Rs 5,600 crore of its money was already lying with the markets watchdog.

“Of course, all the money shall ultimately come back to Sahara after verifications.”

De-freezing the assets of Sahara on Wednesday, an apex court bench of Justice T.S. Thakur and Justice A.K. Sikri also directed that the money so generated would have to be deposited in an account opened by the regulator.

Soon after the judgment, senior counsel Srinivasan Ganesh asked the court to grant five days’ parole to Sahara Group chief Subrata Roy to be with his ailing mother. The court asked him to file an application and said it will pass an order after the regulator’s reply.

“Today, we are reassured of justice in the Indian judiciary. Over the last 37 years, we have always been given justice on merit. We are reassured that the Indian judiciary can never go wrong,” Sahara lawyer Seth said.

“From November 2013, all of group’s bank accounts, every inch of immovable properties and movable properties were frozen and were under an embargo of the Hon’ble Court and SEBI,” he said.

“As a result, Sahara was not in a position to get or raise even Rs 100. The question is as to why Rs 5,000 crore cash plus Rs 5,000 crore bank guarantee bail order was given without lifting any embargo,” he said, referring to Roy’s quantum of the bail amount.

Seth also said the demand of Rs 20,000 crore plus interest imposed on the group to be paid to the regulator was tantamount fo Sahara being asked to pay twice for a single liability — and that, too, for one that had substantially been repaid.

“No financial institution can repay twice for one liability.”

Reference URL: http://businesstoday.intoday.in/story/sahara-group-thanks-apex-court-for-asset-de-freeze/1/206942.html