Pay up or Face Prison... Again
The law appears to be coming down ever more heavily on Subrata Roy, chairman of the embattled Sahara Group, who’s out on bail after spending more than two years in Tihar jail in a case of seeking illegal deposits from the public. On February 6, the Supreme Court ordered the seizure of Sahara’s Aamby Valley project in Pune, to force the group to pay Rs 14,799 crore more to the Securities and Exchange Board of India (Sebi). Roy’s options are running out. If his lawyers cannot come out with an alternative list of properties to sell, the prime Aamby Valley property, a township in Pune that spans over 10,000 acres and is reportedly worth Rs 39,000 crore, could go under the hammer. A Mumbai-based corporate lawyer with knowledge of the case says, “Sebi is likely to seek the help of some top real estate consulting firm to auction off the project and raise the money.” The case will next be heard on February 27.
Roy’s problems date back to
The move to seize the Aamby Valley project is seen as an effort to get Roy to pay up
2008, when the Sahara Housing Investment Corporation (SHICL) and Sahara India Real Estate Corporation (SIRECL) raised Rs 19,400 crore from 22.1 million investors through optionally fully-convertible debentures (OFCDs), which are loan certificates that can be converted into equity shares when the investor wishes. Later, when Sahara Prime City Ltd, a developer of homes and commercial properties, sought Sebi’s nod to raise money from the public, it was alleged that the other Sahara companies hid facts about the debenture issue in the documents they had submitted.
After a tough legal battle, in August 2012, the Supreme Court ordered SIRECL and SHICL to return the investors’ money with 15 per cent interest. This amounted to Rs 24,000 crore, which could be paid in instalments. With the group playing truant, the court later ordered that at least the principal amount must be paid back to investors. The company has so far deposited Rs 11,000 crore, Sahara’s counsel Kapil Sibal told the apex court in November last year. Corporate lawyers see the move to seize the Aamby Valley project as the next logical step in getting Roy to pay up.
“It is not an empty threat from the apex court,” says another lawyer. “The company is taking too long to comply with the court’s earlier order, which leaves it with no option but to tighten the screws.” Sahara is not even able to pay off the principal amount, which has infuriated the court, he adds. The apex court now wants to take the case to its logical conclusion. If Roy cannot pay, he faces the spectre of going back to jail.