Court gives Sahara more time to repay its investors

Agencies/New Delhi

The Supreme Court yesterday gave the giant Sahara business group extra time to comply with an order to repay billions of rupees it collected from small rural savers through illegal bond sales.

Sahara, a famous name in India through its sponsorship of the national cricket team, raised around Rs240bn ($4.4bn) from tens of millions of savers in a process later judged by authorities to be against the law.

The court said it appeared the Sahara group was not in a position to make the entire payment right now.

“We have taken a slightly liberal view with the concern of depositors (in mind),” the three-judge bench headed by Chief Justice Altamas Kabir said.

The court ordered the group to pay Rs51bn immediately to the Securities and Exchange Board of India, the securities regulator, which is overseeing the repayment process.

The remainder should be repaid in two instalments - the first in early January and the rest by the first week of February.

The top court had earlier asked Sahara to deposit the amount with the regulator. It had also ordered Sahara to submit detailed documents with the regulator if it had refunded any money collected through the so-called optionally fully convertible debentures to investors.

The case was back in court after the SEBI said Sahara had not complied with the order, while Sahara argued the regulator “deliberately refused” to accept documents and information submitted by it.

“You are in default. It seems that you have chosen not to pay the money,” the Supreme Court told Sahara yesterday, according to Gopal Subramaniam, a lawyer who represented Sahara in the case.

“Tell us whether you are ready to pay the amount or not? Don’t say sorry. Say I will deposit the amount,” the court told Sahara, according to the lawyer, as it gave extra time.

Sahara said in newspaper advertisements on Saturday it had “cleared” about Rs330bn raised through the bonds and had maximum outstanding liability of Rs51.2bn, which it was ready to deposit with the authorities.

India’s capital markets regulator issued advertisements in late October saying it had received complaints from investors that they were being forced by agents and officials of Sahara to switch the money held through the bonds to other investment products sold by the group.

Sahara had no immediate comment on the court ruling. The company, whose interests range from finance to real estate to sports, recently bought New York’s Plaza Hotel, and had earlier bought the Grosvenor House hotel in London.

Sahara, which has sought a review of the August order, said on Saturday its total group assets have a book value of $14bn. The Supreme Court is yet to give its verdict on that review.

The dispute is the latest in a string of run-ins between regulators and Roy, a hero to millions of poor people for his rags-to-riches story and who has a mansion modelled on the US White House - only bigger.