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     REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL ORIGINAL JURISDICTION

I.A. NOS. 8-9 & 10-12 OF 2014 IN

CONTEMPT PETITION (C) NO.412 OF 2012 IN  

CIVIL APPEAL NO. 9813 OF 2011  

 S.E.B.I. …Appellant

Versus

Sahara India Real Estate Corporation Ltd.  & Ors. …Respondents

WITH

I.A. NOS. 8-9 & 10-12 OF 2014

IN CONTEMPT PETITION (C) NO.413 OF 2012

IN  CIVIL APPEAL NO. 9833 OF 2011  

AND

I.A. NOS. 10-12 OF 2014

IN CONTEMPT PETITION (C) NO.260 OF 2013

IN  CIVIL APPEAL NO. 8643 OF 2012  

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J U D G M E N T

T.S. Thakur, J.

1. By  our  order  dated  4th June,  2014  we  had,  while  

declining  the  prayer  made  by  the  contemnors  for  

modification  of  the  terms  on  which  they  were  granted  

interim bail,  partially modified order dated 21st November,  

2013 passed by this Court and that passed by SEBI on 13th  

February,  2013 so  as  to  enable  Sahara India  Real  Estate  

Corporation  Limited  (SIRECL)  and  Sahara  Housing  

Investment  Corporation  Limited  (SHICL)  (hereinafter  

referred to as ‘Saharas’  for short) to deposit with SEBI the  

maturity  value/sale  consideration  of  FDs,  bonds  and  

securities held by the Saharas.  We had also, by the same  

order,  permitted  Saharas  to  sell  nine  different  properties  

situate in nine different cities in the country and to deposit  

the sale proceeds thereof with SEBI, to the extent the same  

was necessary to make a total deposit of Rs.5,000/- crores  

required in terms of the bail order. We had also permitted  

Saharas to charge its immovable property situate in Aamby  

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Valley (Pune) for  obtaining and furnishing to this  Court a  

bank guarantee for an amount of Rs.5,000/- crores in terms  

of the bail order dated 4th June, 2014. As regards Sahara’s  

prayer for permission to sell  three hotel properties situate  

outside the country,  we had left  the question open to be  

determined  after  Saharas  furnished  the  requisite  

documents/information in terms of our order dated 29th May,  

2014  evidencing  the  approval  of  Bank  of  China  to  the  

proposed transfer of the stakes held by the Saharas in the  

said three properties. We were informed that Bank of China  

had  a  charge  over  the  three  properties  and  that  it  had  

agreed in principle to the sale of the stakes held by Saharas  

subject to the repayment of the outstanding loan amount for  

which the said properties were charged. We had also noticed  

the  valuation  reports  in  regard  to  the  three  properties  

mentioned above and a contention urged by Saharas that  

the  same  had  been  prepared  by  reputed  valuers  at  the  

instance of the Bank of China in connection with the loan  

transactions as a part of the ongoing exercise undertaken by  

the bankers. We had asked Saharas to obtain a confirmation  

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from  the  Bank  of  China  to  the  effect  that  the  valuation  

reports  prepared  in  respect  of  the  three  offshore  hotel  

properties  by  CBRE  and  JLL  have  been  prepared  at  the  

instance of the Bank of China and that the same had been  

accepted by the bank to be correct.  We were of the view  

that  such  a  confirmation  would  lend  re-assurance  to  the  

Court that the valuation reports represented the true value  

of  the  stakes  held  by  the  Saharas  in  the  said  three  

properties. This is evident from the following portion of the  

order passed by us on 29th May, 2014:

“Dr. Dhawan submitted, on instructions, that an ap- propriate communication could subject to the order   of this Court be addressed to the Bank of China by   the Saharas seeking its  approval  to the proposed   transfer of the stakes held by Saharas in the three   properties mentioned above, subject to the repay- ment of the loan outstanding against those proper- ties. Dr. Dhawan submitted that a copy of the com- munication addressed to the Bank of China and its   response shall be placed on record before this Court   along with an affidavit within one week from today.   He further submitted that apart from the correspon- dence that may be exchanged on the subject be- tween Saharas and the Bank of China, the Bank of China will also be requested to confirm the   amount  that  is  outstanding  towards  the  loan  ad- vanced  by  it  in  regard  to  each  one  of  the  three   properties mentioned above to give a clear picture   to  this  Courts  to  the outstanding liability  that  re- mains to be liquidated by the Saharas qua the said  properties.  

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Our attention was also drawn to the valuation  reports in regard to the three properties mentioned  earlier. It was urged that the said valuation reports   have been prepared by reputed valuers at the in- stance of the Bank of China in connection with the   loan transactions as a part of on-going annual exer- cise undertaken by the lending Bank. If that be so,   Saharas would do well to obtain a confirmation from  the Bank of China to the effect that the valuation   reports prepared in respect of the three properties   mentioned above by CBRE and JLL, have been pre- pared at the instance of the Bank of China and that   the said valuation reports have been accepted by  the Bank to be correct. This could lend re-assurance   to the Court that the value/stakes held by Saharas   in these properties are sought to be transferred on  the basis of the true market value of the said as- sets. Needful shall  be done expeditiously,  but not   later than one week from today.”

2. Saharas  have  now  made  the  present  applications  

seeking  certain  directions.  In  I.As  No.  8-9  of  2014,  Shri  

Subrata  Roy  Sahara  has  prayed for  temporary/conditional  

release from judicial custody for a period of 15 days or so to  

meet his nonagenarian and ailing mother as also for taking  

steps for compliance with the order of this Court dated 26th  

March, 2014. The applicant has,  inter alia, stated that his  

mother Smt. Chhabi Roy who is aged over 93 years suffers  

from several ailments which complicate matters in view of  

her  being in  a  fragile  emotional  state.  The applicant  Shri  

Subrata Roy Sahara is also, according to the averments, not  

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keeping  good  health  requiring  medical  attention.  The  

application, however, stops short of elaborating the medical  

condition of the applicant Shri Sahara. More importantly, the  

application seeks release of  Shri  Sahara on parole with a  

view to negotiating deals directly with the purchasers who  

have shown interest in the purchase of the property being  

offered for sale by the Saharas.  

3. In  the  accompanying  I.As  Nos.10,  11  &  12  of  2014  

Saharas  have  prayed  for  permission  to  obtain  a  bank  

guarantee  of  Rs.5,000/-  crores  by  leveraging  the  three  

overseas hotel properties by way of sale, mortgage in the  

light of the Bank of China’s consent to such sale or transfer,  

and certification that the valuation reports were prepared at  

the instance of the Bank and accepted by it. The Saharas  

also  seek  permission  for  sale,  hypothecation,  

mortgage/leverage the land owned by them and situate in  

Versova.    

4. Appearing for the applicants, Dr. Rajiv Dhavan, learned  

senior counsel, argued that the applicants had, pursuant to  

our order dated 29th May, 2014, addressed a joint letter to  

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the Bank of China on 2nd June, 2014 requesting the Bank of  

China to confirm the information sought for by this Court.  

The  Bank  of  China  had,  on  receipt  of  the  said  

communication,  consented  to  the  proposed  sale  of  the  

stakes held by Saharas in the hotel properties subject to the  

repayment of  the amount outstanding against Saharas.  It  

had  also  confirmed  the  loan  amounts  and  the  valuation  

reports as required by the Order passed by this Court.  Our  

attention was, in support of that submission, drawn by the  

learned counsel to letter dated 3rd June, 2014 sent by the  

Bank of China to the Saharas conveying the Bank’s consent  

to the sale and direct or indirect disposal by the Saharas  

Group  of  its  interests  in  the  three  hotels  subject  to  the  

condition that  the sale proceeds are sufficient  to  and the  

same  are  applied  towards  repayment  in  full  of  the  

outstanding principal, interest and other amounts including  

any applicable prepayment premia, fees, out of pocket costs  

and  expenses  of  Facility  Agents  and  lenders  owned  by  

Sahara Group in connection with the loans obtained from the  

Bank. The letter sets out the outstanding amount under the  

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Sahara Group loans as on 2nd June, 2014 in the following  

words:

“2) Amounts  outstanding  under  the  Sahara  Group  Loans as at 02 June 2014

A.   Amounts outstanding under the Sahara Group Loans as at   02 June 2014 are:

As at  02  June  2014

GHH Loan Plaza/Dream Loan

Loan  outstanding  balance

£289,750,000.0 US$427,241,303.00

Accrued Interest £985,469.20 US$244,036.67

Prepayment Fee £2,897,500.00 $8,544,826.07

Libor  Breakage  Costs

Approximately  £11,873,16,  final   amount  to  be  confirmed  at  the  prepayment date

Approximately  £9,740.96,  final   amount  to  be  confirmed  at  the  prepayment date

Legal Fees Approximately  £15,000  final  amount  to  be  confirmed  at  the  prepayment date

Approximately  £15,000,  final   amount  to  be  confirmed  at  the  prepayment date

Please note that the exact amounts required to prepay the   Sahara Group Loans will depend on when the prepayment   is made.  Whilst the above numbers are accurate as at 2   June  2014  (Except  that  the  Libor  Breakage  Costs  and   Legal fees are estimates), they are subject to change.”

5. The  Bank  of  China  has  also,  in  the  same  

communication,  confirmed  that  valuation  reports  were  

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instructed  and  accepted  by  the  Facility  Agents  for  loan  

security  purposes  in  regard  to  the  three  properties  in  

question. The bank says :

“Latest  Valuation  reports  prepared  pursuant   to the Sahara Group loans

The following Valuation reports were instructed and   accepted  by  Facility  Agent  for  loan  security   purposes:

• Plaza  Hotel  Valuation  Report  prepared  by  CBRE  dated  27  Oct  2013  with  the  Market   Value of US$592,000,000;

• Dream  Downtown  Hotel  Valuation  Report   prepared by CBRE dated 29 Oct 2013 with  the Market Value of US$252,000,000

• Grosvenor  House  Hotel  Valuation  Report   prepared by Jones Lang LaSalle (JLL) dated   26 February 2014 with the Market Value of   £516,000, 000

We understand that you will share a copy of this   letter with the Supreme Court of India.”

6. It was in the above context, Dr. Dhavan submitted that  

(a)  Bank  of  China  had  no  objection  to  the  proposed  

sales/transfer of the stakes held by the Saharas in the three  

hotel properties and (b) the valuation reports indicating the  

value  of  the  assets  in  question  were  prepared  on  the  

instructions of the Bank of China and had been accepted by  

it  for  loan security  purposes.  Dr.  Dhavan argued that  the  

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valuation reports had been prepared in the ordinary course  

of business long before the present controversy arose and  

were truly indicative of the market value of the properties. It  

was  also  submitted  that  the  reports  were  prepared  by  

reputed international valuers after a thorough and analytical  

application of  recognised methods of  valuation of  a  going  

establishment like a hotel. There was, therefore, no basis for  

any apprehension that the properties proposed to be sold  

may be sold at a price lesser than the true market value  

with a view to defrauding the creditors or siphoning away  

the  sale  consideration.  Dr.  Dhavan  argued  that  while  the  

encashment  of  FDs and sale  of  bonds and securities  had  

already resulted in the deposit of a substantial amount of  

over Rs.3,000/- crores in SEBI-Sahara Refund account, sale  

of the three hotel properties would enable the Saharas to  

make  up  the  deficit  amount  of  Rs.2000/-  crores  besides  

helping  Saharas  arrange  a  bank  guarantee  for  another  

Rs.5,000/- crores, as directed by this Court.

7. Mr. Arvind P. Datar, learned Senior Counsel appearing  

for  SEBI,  on  the  other  hand,  contended  that  the  prayer  

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made by the contemnors/applicants in I.As. No.8 and 9 for  

release on parole was not justified on the ground stated.  

The material  on  record did  not,  according to  the  learned  

counsel,  suggest  that  Shri  Subrata  Roy  Sahara  had  any  

serious medical problem to justify his release on parole nor  

can  his  release  on  parole  be  justified  on  the  ground  for  

facilitating negotiations with the prospective purchasers. It  

was  submitted  that  Saharas  had  not  come  forward  to  

disclose  the  names  of  the  prospective  buyers  with  whom  

they proposed to hold such negotiations nor was there any  

concrete proposal at present under their consideration.  

8. As regards sale of the three hotel properties, Mr. Arvind  

P. Datar, did not deny that though the Bank of China has a  

substantial charge over the said properties but according to  

the valuation reports  the market  value of  the property is  

considerably  higher  than  the  outstanding  loan  amount,  

thereby  accepting  the  plea  of  the  applicants  that  if  the  

properties  are  sold,  sufficient  surplus  would  be  available  

even after discharge of the Bank loan that could be utilised  

for deposit with SEBI and for furnishing a bank guarantee as  

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demanded  by  this  Court.  Moreover,  the  valuation  reports  

prepared by leading and reputed international valuers were  

not questioned by Mr. Arvind P. Datar nor was it suggested  

that the reports had been procured only for  use in these  

proceedings.  

9. We  have  considered  the  matter  in  the  light  of  the  

submissions  made  at  the  bar.  The  contemnors  stand  

committed to jail by the Order of this Court dated 4th March,  

2014 on account of their failure to comply with the directions  

of  this  Court’s  Orders  dated  31st August,  2012  and  5th  

December, 2012 and those issued on 25th February, 2013 in  

I.A. No.67 of 2013 in Civil Appeal No.9813 of 2011 and I.A  

No.5 in Civil  Appeal No.9833 of 2011.  Interim bail  order  

passed by this Court on 26th March, 2014 requires them to  

deposit Rs.10,000/- crores, out of which Rs.5,000/- crores  

has to be in cash while the balance has to be secured by  

bank guarantee of a nationalised bank furnished in favour of  

SEBI.   It  was with a view to enabling the contemnors to  

comply with the said direction that this Court had by Order  

dated  4th June,  2014  lifted  the  embargo  placed  upon  

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operation  of  the  bank  accounts  and  sale/transfer  of  

immovable assets held by the Saharas  qua nine properties  

referred  to  in  the  said  order.  Saharas  have  since  then  

deposited an amount of more than Rs.3,000/- crores with  

SEBI by encashment of FDs, Bonds and securities.

10. Saharas have also out of the nine properties referred to  

above sold the property situate in Ahmedabad for a sum of  

Rs.4,11,82,55,138/-  (Rupees  Four  Hundred  and  Eleven  

Crores Eighty  Two Lacs Fifty  Five Thousand One Hundred  

and  Thirty  Eight  only).  The  remaining  eight  properties,  

however, remain to be sold or encumbered. We had in the  

light of the above asked Dr. Dhavan whether the proposed  

sale/transfer of the offshore hotel properties was essential  

when no less than eight other properties apart from Aamby  

Valley (Pune) remained to be sold or encumbered for raising  

funds necessary for compliance with the order of this Court.  

Dr. Dhavan argued that it may be easier for the contemnors-

Saharas to leverage the overseas hotel properties for deposit  

of  the deficit  of  around Rs.2000/- crores and arranging a  

bank guarantee of Rs.5,000/- crores in comparison to sale  

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or transfer of property situate within the country which may  

take  a  relatively  longer  period  leading  to  continued  

incarceration of the contemnors in jail.   It  was submitted  

that so long as it was ensured that the offshore properties  

are sold for the market value they command, the Saharas  

should have the liberty to do so.   

11. There is, in our opinion, merit in the contention urged  

by Dr. Dhavan.  What is important is that the properties held  

by the Saharas are sold at their market value and the sale  

proceeds,  subject  to  any  other  directions  issued  by  this  

Court,  utilised  for  compliance  with  the  terms  of  the  

conditional bail order issued by this Court.  It is evident that  

if  sale of  properties situate within the country is  likely to  

take  time,  the  contemnors  may  be  exposed  to  a  longer  

period of incarceration on account of their failure to comply  

with the directions of this Court.  On the other hand, quicker  

the compliance with the directions of the Court’s Order for  

deposit of cash and bank guarantee, the easier would be the  

way out  of  jail  for  them. The anxiety  on the part  of  the  

Saharas generally and the contemnors in particular to sell  

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the  offshore  properties  is,  therefore,  understandable  

especially when such sale and transfer is not only going to  

help  Saharas  in  liquidating  the  outstanding  loan  amount  

payable  to  the Bank of  China but leave sufficient  surplus  

with  the  Saharas  to  not  only  deposit  the  balance  of  

Rs.2,000/-  crores  approximately  that  needs  to  be  

immediately paid by them but also furnish a bank guarantee  

for a sum of Rs.5,000/- crores, as directed. We, therefore,  

see  no  legal  impediment  in  permitting  the  sale  of  the  

offshore properties owned by Saharas.  This is particularly so  

when not only do we have the valuation reports of the said  

properties on record prepared as they are by internationally  

reputed valuers but also the concurrence of SEBI for the sale  

of such properties at that value subject to the condition that  

the  sale  consideration  shall  as  far  as  possible  be  at  the  

estimated value of such properties, less, at the most by 5%  

of such value.  We are, mindful of the fact that Saharas have  

sold the property at Ahmedabad at more than three times  

the  circle  rates  of  such  property.   No  such  rates  are,  

however, available or prescribed for offshore properties.  We  

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shall, therefore, have to go only by the valuation reports of  

the  valuers  as  the  basis  for  such  proposed  sale/transfer  

subject to a margin of 5% which we have indicated above.  

In case the offer received is lesser by more than 5%, they  

will seek prior approval of the Court.  

12. We  may  incidentally  mention  at  this  stage  that  Dr.  

Dhavan  had  sought  a  clarification  of  our  Order  dated  4th  

June, 2014 inasmuch as in the para 23 (iii) (b) of the said  

order, we had stated that the sale of the properties referred  

to in the order shall not be for an amount lesser than the  

circle  rate  for  such  properties  or  the  estimated  value  

indicated by the Saharas whereas in the operative portion of  

the said order we had permitted sale at a price that is not  

lower  than  the  circle  rate  prescribed  for  such  properties.  

Having  regard,  however,  to  the  experience  that  Saharas  

have had with the sale of properties in Ahmedabad which  

fetched more than three times the circle rates prescribed for  

the same, we are of the view that the actual market value of  

the property held by Saharas is many times more than the  

circle rates for such property. This is evident not only from  

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the sale transaction relating to Ahmadabad property but also  

the fact that Saharas have themselves estimated the value  

of the properties much higher than the circle rates for the  

same.   In  the  circumstances,  we  see  no  difficulty  in  

clarifying that the sale of the remainder of the properties  

which we have permitted to be sold by our order dated 4th  

June, 2014 shall not be lesser than the estimated value of  

the properties given by Saharas less by no more than 5% of  

such estimated value.  In case the offer(s)  received is/are  

less by more than 5%, prior approval of the Court will have  

to be sought.    

13. That brings us to the question whether the contemnors  

can be granted parole as prayed for in the applications?  We  

regret  to  say  that  we  do  not,  for  the  present,  see  any  

justification  for  us  to  take  a  view different  from the  one  

taken in our order dated 4th June, 2014.  There is nothing  

before us to show that Shri Subrata Roy Sahara suffers from  

any serious medical condition. At any rate, we expect the jail  

doctors to keep a check on his medical condition and provide  

necessary medical aid as and when required. The alternative  

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ground urged for  the grant of parole also does not stand  

closer scrutiny. There is,  at present, no concrete proposal  

with Saharas for sale of the properties situate in India or  

abroad that may call for any negotiation by Shri Subrata Roy  

Sahara.  While it may be true that such negotiations cannot  

be said to be advisable when properties of such magnitude  

as in the instant case are sought to be sold, yet it is pre-

mature for  us  to make any arrangement  to  facilitate  any  

such negotiations either by directing release of Shri Subrata  

Roy Sahara on parole or otherwise.  We may make it clear  

that  if  a  situation  arises  in  which  negotiations  become  

essential, this Court may consider passing orders to facilitate  

such  negotiations.  Beyond  that  we  do  not  consider  it  

necessary or proper to say anything at this stage.   

14. In the result :

1. I.As.  No.8-9  of  2014  in  Contempt  Petitions  (C)  

No.412 and 413 of 2012 are dismissed.

2. I.As. No.10-12 of 2014 in Contempt Petitions (C)  

No.412 of 2012, 413 of 2012 and 260 of 2013 are  

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allowed  to  the  extent  that  three  offshore  hotel  

properties  owned by Saharas  are  allowed to  be  

transferred,  sold  or  encumbered  subject  to  the  

condition  that  the  entire  sale  consideration  

received by the Saharas after  repayment of  the  

loan  outstanding  towards  the  Bank  of  China  is  

deposited with SEBI towards compliance with the  

directions contained in the conditional  bail  order  

dated 26.3.2014 passed by this Court. The excess  

amount, if any, shall be deposited by the Saharas  

in  a separate account to  await  orders  from this  

Court regarding their  utilisation. The sale of  the  

offshore properties shall not be at a price lesser  

than the value estimated by CBRE and JLL for the  

said properties reduced at the most by 5% of such  

value.

3. We clarify that sale of remainder of the properties  

which Saharas have been allowed to transfer, sell  

or encumber in terms of our order dated 4th June,  

2014  shall  not  be  at  a  price  less  than  the  

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estimated value of the said properties reduced at  

the most by 5% of such estimate.

4. We  had  by  our  order  dated  4th June,  2014  

requested Shri F.S. Nariman, Senior Advocate, to  

assist the Court as an Amicus Curiae. We had also  

permitted Shri Nariman to associate two juniors of  

his choice to brief him in the matter. Shri Nariman  

as in terms of  a  communication dated 5th June,  

2014 regretted his inability to assist the Court as  

he  had  also  appeared  for  Saharas  upto  31st  

August,  2012  when  the  main  judgment  was  

delivered  in  the  case.   That  Shri  Nariman  had  

appeared on behalf of Saharas had been brought  

to  our  notice  also  but  only  after  we  had  

pronounced the  order  in  the  Court  on  4th June,  

2014  by  which  he  was  appointed  as  Amicus  

Curiae.  It is obvious that having appeared as a  

counsel on behalf of Saharas Mr. Nariman cannot  

possibly take up the assignment offered to him.  

We, therefore, have no option but to modify our  

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order dated 4th June, 2014 to the extent that in  

place of Shri  F.S. Nariman, Senior Advocate, we  

request Shri Shekhar Naphade, Senior Advocate,  

to  assist  the  Court  in  the  case  as  an  Amicus  

Curiae.  The  terms  and  conditions  of  Shri  

Naphade’s appointment shall, however, remain the  

same as were stipulated for Shri Nariman.             

………………….……….…..…J.     (T.S. THAKUR)

………………….……….…..…J.     (ANIL R. DAVE)

………………….……….…..…J.     (A.K. SIKRI)

New Delhi July 22, 2014

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