Agencies/New Delhi
The Supreme Court deferred until today a hearing over the Sahara conglomerate’s failure to meet the court’s guidelines to repay billions of rupees it had raised from investors through bond sales that were later ruled to be illegal.
On August 31, the court had asked Sahara to repay within 90 days as much as Rs240bn ($4.4bn) to up to nearly 30mn mostly small investors, plus interest of 15% a year.
Sahara said in newspaper advertisements on Saturday it had “cleared” about Rs330bn to investors in the so-called optionally fully-convertible debentures (OFCD) and had maximum outstanding liability of Rs51.20bn, which it was ready to deposit with the authorities.
India’s capital markets regulator said in late October it had received complaints from investors that they were being “forced” by agents and officials of Sahara to switch the money held through the outlawed bonds to other investment products sold by the group.
A member of a two-judge Supreme Court bench on Monday said Sahara had defaulted on paying the money as ordered by November 30, the Economic Times newspaper reported.
The Supreme Court said it would hear the case today, after a lawyer for Sahara sought more time to reply to why the group had not complied with the court’s order.
Lawyer Gopal Subramaniam told the court the group needed more time to go through the documents to furnish the details.
The Supreme Court on Monday lashed out at the Sahara group’s real estate companies, saying their intentions are “shady” in the matter of returning the investors’ money mopped up through debentures.
“You have no intention of returning (the investors’ money). Your intentions are shady,” the court said.
The Sahara India Real Estate Corporation and Sahara Housing Investment Corporation had challenged in the court an order issued by the Securities Appellate Tribunal (SAT).
The unlisted Sahara, whose interests range from real estate to insurance and sports, is a household name in India, where it is the lead sponsor of the national cricket team. It recently bought New York’s Plaza Hotel, and had earlier bought the Grosvenor House hotel in London.
The dispute is the latest in a string of run-ins between regulators and Sahara chief Subrata Roy, a hero to millions of poor people for his rags-to-riches story and who lives in a mansion modelled on the White House - only bigger.
In 2008, Sahara shut its operations as India’s biggest non-bank deposit-taking firm on the orders of the Supreme Court which was worried about the soundness of the investments in which the money was being parked.
Observers say much of Sahara’s fundraising success rests on the fact that vast numbers of people in rural areas have no access to banks and no other place to put their money than in poorly regulated non-bank institutions.