Protecting investors & depositors

The once high-flying Sahara group is said to owe around Rs 24,000 crore to investors. If that money is to be returned with 15 percent interest, as per a Supreme Court order in 2012, the dues add up to Rs 36,000 crore. For lakhs of investors who put their money in housing projects floated by Sahara India Real Estate (SIREC) and Sahara Housing Investment Corporation (SHIC), the outlook has been gloomy of ever getting their money back. Now an apex court order is likely to give them some hope in the coming days. On Tuesday, the Supreme Court asked capital market regulator SEBI to begin selling off Sahara group properties to raise Rs 10,000 crore if Sahara boss Subrata Roy is to come out of jail. Roy and two senior Sahara directors have been lodged in Tihar jail for more than two years, huffing and puffing to raise the Rs 10,000 crore bail amount set for their release. A delicious exchange between Sahara counsel Kapil Sibal and the bench indicates the apex court’s exasperation at the Sahara group’s thick-skinned defiance of market regulatory mechanism and the courts. When Sibal argued that ‘there is no jurisdiction in the world that allows a person to be inside jail for two years without any charge’, the bench retorted that ‘nowhere in the world does a person say his assets are worth Rs 1, 87,000 crore, he can pay any time, but despite being given two years, he is not paying even Rs 10,000 crore to come out of jail’. Indeed, the Sahara group had pulled out all stops to fight a SEBI order in court after court for four years after the market regulator had barred Sahara in raising money from the public through optiolly fully convertible debentures. To many observers, liquor baron and big-time bank defaulter Vijay Mallya’s insouciance in the face of several banks petitioning the Supreme Court to recover outstanding loans worth Rs 9,000 crore, is very reminiscent of Sahara chief Subrata Roy’s repeated attempts to play fast and loose with the apex court.

The Sahara group in a statement has clarified that the latest Supreme Court order does not pertain to the group’s Amby Valley or Sahara Star Hotel in Maharashtra or its foreign properties, and that inputs must be taken from Sahara while conducting the sale process. As for securing Roy’s bail, cash payment of Rs 5,000 crore has been completed with only bank guarantee of Rs 5,000 crore still pending, Sahara has informed. Be as it may, the Supreme Court has now given the go-ahead to SEBI to sell some 86 Sahara properties worth an estimated Rs 40,000 crore. A retired Supreme Court judge will oversee the sale process, with the stipulation that no property shall be sold below 90 percent of the circle rates prevailing in the area where the property is located. The Sahara group owns a range of prime land properties in the country and abroad, including the Sahara Star hotel in Mumbai, 42.5 percent stakes in Force India Formula One Team, as well as Grosvenor House hotel in London, the New York Plaza and the Dream New York hotel. Within India, the Sahara group has reportedly been trying to sell off plots in Gurgaon, Ahmedabad, Jodhpur, Pune and many other cities, but has made heavy weather of the whole process. Ostensibly, prospective buyers have been put off because the plots were not competitively and reasobly priced. Market insiders ascribe this to the slowdown in the realty sector in the last couple of years, making developers and investors wary of buying land which does not come with a clear title or is tangled in court cases. The fact that the recent auction of Vijay Mallya’s Kingfisher House in Mumbai, failed to draw any bids with the base price set at Rs 150 crore, is a pointer to this growing caution. Mallya on Wednesday made an offer of paying back Rs 4,000 crore to his banks, which the Supreme Court has directed the banks to study and inform about their response in a week’s time. But the question can be asked — is Mallya actually offering a one-time settlement, and thereby shrewdly angling for a write-off of loans worth Rs 5,000 crore? In that case, other big corporate borrowers too can negotiate with banks for similar huge write-offs of outstanding loans. So whether it is duped investors as in the case of Sahara or depositors whose banks funded Mallya, the process of getting recompensed for their losses still remains uncertain.