 A.S. Rao, and Ranoj Das Gupta where the tribunal directed the following:){kind=link}
The Securities Appellate Tribunal, Mumbai has directed Sahara India Commercial Corporation Ltd (SICCL), Kolkata, and Sahara India, Aliganj, Lucknow to deposit a sum of Rs 2000 crores before the Securities and Exchange Board of India (SEBI) with regard to the issuance of Optionally Fully Convertible Debentures (OFCDs) including the application money collected from investors pending allotment of securities along with interest of 15% per annum. The amount is directed to be kept by SEBI in an escrow account within four weeks from the date of order.
The bench comprising of Justice Tarun Agarwala, Presiding Officer, and Justice M.T. Joshi, Judicial Member, noted, “No doubt the Company is a going concern. It has a large number of employees on its rolls. Salaries are required to be disbursed, taxes are to be paid. There are business expenditures which are required to be met on a daily basis. The Company cannot run on air. The attachment of the bank account can bring the Company to a grinding halt. At the same time, the interest of the investors is required to be protected.”
The bench heard two appeals one by Sahara India Commercial Corporation Ltd and Sahara India and the other by Subrata Roy, J.B. Roy, O.P. Srivastava, Lt. Gen.(Retd.) A.S. Rao, and Ranoj Das Gupta where the tribunal directed the following:
(i) Upon deposit of the aforesaid amount, the attachment order against the Company and its Directors would be lifted forthwith.
(ii) In so far as appellant no.4 Lt. Gen (Retd.) A.S. Rao and appellant no.5 Shri Ranoj Das Gupta in appeal no.251 of 2019 are concerned considering their old age and medical exigencies, we direct that the attachment orders against them would be withdrawn forthwith.
(iii) We direct the appellant no.1 Sahara India Commercial Corporation Ltd. and appellant no.2 Sahara India in appeal no.250 of 2019 to provide a full inventory of all the assets and properties and details of all the bank accounts in India and abroad, demat accounts and holding of mutual funds/shares/securities (in physical or in demat form) to SEBI within four weeks from today. The said details would be provided on an affidavit to be sworn by Subrata Roy.
The tribunal while considering the track record of the appellants, said, “We find that under the impugned order the appellants are required to refund a sum of Rs 14,106 crores along with interest at the rate of 15 percent per annum to the investors.”
“Though the statistics given cannot be accepted as the gospel truth as it is not certified by a qualified Chartered Accountant but we can take judicial notice of the fact that if the total expenses of the appellant companies is around Rs 46 crore per month then the annual turnover would be in 100s and 1000s of crores on a rough estimate. Therefore, we are of the opinion that the appellants have the capacity to deposit some amount pursuant to the impugned order,”
-the tribunal noted further.
“It is unfortunate that the respondents have initiated recovery of the amount pursuant to the impugned order during the period when this Tribunal was hearing the matter finally. However, we are of the opinion that merely by filing an appeal does not give a right to the appellant for an automatic stay of the impugned order,” said the bench.
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The tribunal observed,
“We also find that when the hearing of the appeals had started in April, 2021 the notice of demand was issued on 9 th April, 2021 and the appellants became aware that the Recovery Officer had initiated proceedings under Section 28A of the SEBI Act. No attempt was made by the appellants to press the interim application at that stage nor the appellants brought this fact to the knowledge of the Tribunal…….Thus, we are of the opinion that even though it would have been appropriate for the respondent to await the result of the decision of this Tribunal, however, there is no embargo upon the Recovery Officer to proceed independently to recover the amount under Section 28A of the SEBI Act since there was no stay of the impugned order.”
The counsel appearing for the Company contended that the Company is a running Company and has a monthly expenditure of Rs 10.36 crores and Rs 35.85 crores respectively. Salaries to employees, taxes to the government and other business expenditure are required to be made on a daily basis which has come to a halt on account of the attachment order. It was urged that the Company cannot survive unless it has funds to run and manage the affairs of the Company. It was, thus, contended that it is essential for this Tribunal to lift the attachment order otherwise there would be a colossal damage.
While the counsel appearing for the appellant in appeal no.251 of 2019 is concerned it was urged that the appellant no 4, namely, Lt. Gen.(Retd.) A.S. Rao is a senior citizen being 81 years old and has served the Indian Army for 39 years and retired as a Lieutenant General. His wife is suffering from various ailments and both his savings bank account and pension account has been frozen. It was also stated in the rejoinder affidavit that Ranoj Das Gupta, appellant no.5, has cardiac ailments and is also suffering from kidney failure and is undergoing treatment for which he requires appropriate funds but on account of attachment of bank accounts his medical treatment is suffering.
The present appeal has been filed against the order dated October 31, 2018 passed by the Whole Time Member whereby the appellants have been directed jointly and severally to refund the monies collected by the Company and its Directors through issuance of Optionally Fully Convertible Debentures (OFCDs) including the application money collected from investors pending allotment of securities along with interest of 15% per annum. The appellants were further restrained from accessing the securities market till four years from the date of the refund. The Company was also directed to provide a full inventory of all the assets and properties and details of bank accounts, demat accounts and holdings of mutual funds/shares/securities, if held in physical form and demat form.
Gaurav Joshi, Senior Advocate and Somashekar Sundaresan, appeared on behalf of the appellants and Rafique Dada, Senior Advocate and Kevic Setalvad, Senior Advocate for the respondent.
Read order below
sahara-Subrata-Roy