Sebi files second contempt petition against Sahara - Moneycontrol.com

Earlier this week Sebi filed a second contempt petition against the Sahara Group, alleging non-compliance of the order delivered by the Chief Justice of India on December 5. Today, an earlier contempt petition was heard by another bench and notice has been issued to Sahara. Menaka Doshi of CNBC-TV18 reports. It is complex issue. The first date you need to remember is August 31, last year. That was the day when the two-judge bench of Justice Radhakrishnan and Justice Khehar passed a seminal order. They not only ruled that Securities and Exchange Board of India (Sebi) has jurisdiction over that optionally fully convertible debentures (OFCD) issue by two unlisted Sahara group companies. But they also laid out fairly comprehensive directions on when and how Sahara was to pay Sebi over Rs 24,000 crore that was collected through those OFCD issues and how Sebi would in turn verify and repay Sahara's OFCD investors. However, the two Sahara companies missed the very first deadline laid out by that bench. That was the deadline to hand over investor documentation to Sebi. Because they missed that deadline, in November Sebi filed a contempt petition against the non-compliance of the August 31 order. That contempt petition was supposed to come up in December but a lot of other stuff went down in December and it was finally heard today. Consequently, the Supreme Court bench of Justice Radhakrishnan and Justice Khehar has given Sahara notice to respond to that contempt petition. That is what went on in court today. There were other comments made by the judges regarding how Sebi has all the powers to go ahead and freeze assets or cease assets, etc but that is not as important right now as the fact that that's the first contempt petition that finally got heard today. Contours of the case While we were awaiting the hearing regarding the first contempt petition, Sahara managed to get heard in front of the Chief Justice's court. The Chief Justice's bench then gave Sahara, in a sense amended the August 31st order or modified it and gave Sahara more time, so 15 more days to submit the investor documents. It also amended the repayment or the payment schedule. Rs 5120 crore were to be paid immediately by Sahara on that day itself that is December 5, when the order was passed and then Rs 10,000 crore were to be paid by Sahara to Sebi in the first week of January and the remaining by the end of this week, that is the first week of February. Sahara paid the Rs 5120 crore because they have for the last month and a half been claiming that that is the only amount outstanding to OFCD investors. The remaining almost Rs 20,000 crore has been redeemed to investors and only about Rs 2000-3000 crore is outstanding and hence they paid about Rs 5000 crore odd including a buffer. It then started the process in December of handing over the documents. This took place between December 10 and December 20, but even that is not been completed and not all the documents have been handed over. The next deadline that came up was the January second installment payment deadline, but Sahara failed to meet that payment deadline. It seems most likely that it is not going to meet this week's deadline either. However, the interesting news is that when it failed to meet that January payment deadline, it was in contempt of the December 5th order. So, earlier this week Sebi has filed a second contempt petition against Sahara for non-compliance with the December 5 Supreme Court order that was the order passed by the Chief Justice's bench both on account of not submitting all the documents in time and not making the payment in January. However, Sebi has not confirmed it but sources, and some of Sahara lawyers said that they have not yet received any notice of the second contempt petition. Sources also added that a second contempt petition was filed yesterday. Will Sahara meet this week's deadline? According to legal sources, Sahara has filed an interim application, which is expected to be heard on Friday. The interim application says Sebi was to give Sahara 15 days in December to submit the documents, which was laid out in the December 5 Supreme Court order, but instead Sebi gave them just 10 days from December 10 to 20th. So, they would like more time or the additional five days to complete document submission because over a 100 truckload of documents have been submitted. However, about 20-30 truckloads of documents yet have to be submitted. So in that interim application Sahara asks for five more days. The other argument that is being made in that interim application is that, they had only roughly Rs 2000 crore outstanding on account of the OFCDs and they have already paid Rs 5120 crore. So, they have paid what they think they need to pay and any further payment would amount to double payment. Instead they are willing to offer the court some security instead of payment. That is the argument that is likely to come up on Friday. Ram Jethmalani will be representing Sahara and that will be the test of how this case moves on from here.  via Business - Google News

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