By R Jagannathan
Has the Sahara Group gotten off the hook once again?
Yesterday, the Supreme Court directed the group to make a full refund of Rs 24,000 crore payable to investors in its optionally fully convertible debentures (OFCDs). These OFCDs had been issued illegally by two of its companies, Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC). Sebi's order to these companies to refund the money will 15 percent interest was confirmed by the Supreme Court on 31 August 2012 with a repayment deadline of 30 November.
Now that deadline is gone. The money is to be paid in three instalments-Rs 5,120 crore immediately, and the balance in two more parts-Rs 10,000 crore in the first week of January and the rest in February.
In doing so, a three-judge bench headed by Chief Justice of India (CJI) Altamas Kabir has effectively modified an earlier verdict delivered by Justices KS Radhakrishnan and JS Khehar, who ordered repayment by 30 November.
The Saharas claim that only Rs 5,120 crore is left to be repaid even though the outstanding amount was shown as Rs 24,000-and-odd crore in August 2011.
Sebi's protests against the Chief Justice's order were brushed aside, and so were those of an investor protection group, reports Business Standard. Sebi's counsel said that any change in the court's 31 August order should have been heard by the same bench.
In fact, the newspaper reports that the CJI declined to record Sebi's objections. He is reported to have said: "We will record what we feel to record. We cannot record what you say."
The Chief Justice said that his concern was for investors, and not anyone else.
But the turnaround is surprising since at the last hearing the court had made caustic comments about the shifty nature of Sahara's claims. Sahara failed to provide Sebi investor documentation on time and also moved the Securities Appellate Tribunal (SAT) against the regulator when the Supreme Court's orders were clear on what it had to do.
Sahara offered to pay Rs 5,120 crore to investors at SAT, which refused to entertain its petition since the Supreme Court was already involved. Sebi has already filed a contempt plea against Sahara for not adhering to the court's 31 August orders.
Not surprisingly, the CJI's bench criticised Sahara's conduct in no uncertain terms at the last hearing: "You are justifying your conduct, which is unjustifiable. Your intention is very shaky... every step taken by you is shaky."
In fact, Sahara now seems to be saying that it owes only Rs 2,620 crore to OFCD investors, which is barely a tenth of the Rs 24,000-crore-plus interest the Supreme Court has asked it to pay.
According to Satish Kishanchandani, a partner in DSK Legal which is advising the Saharas, the actual amount owed to OFCD investors as on 30 November was just Rs 2,620 crore. But the group was offering an additional buffer amount of Rs 2,500 crore due to some ongoing verifications of investors, reports The Economic Times.
At yesterday's hearing, the Sebi counsel accused Sahara of constantly shifting the goalposts, but the CJI's bench declined to take either Sebi's or Sahara's arguments on board.
Quite clearly, since there are now several disputes between Sebi and Sahara-from the amounts to be paid to delays in providing documents and a contempt petition to boot-what we are likely to see is further litigation by both sides.
If this is the case, one wonders why the court gave the group even more leeway. The Saharas may just have received an opening to litigate further.