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“REPORTABLE”

IN THE SUPREME COURT OF INDIA

CRIMINAL ORIGINAL JURISDICTION

WRIT PETITION (CRIMINAL) NO. 57 OF 2014

Subrata Roy Sahara …. Petitioner

versus

Union of India and others        …. Respondents

J U D G M E N T

Jagdish Singh Khehar, J.

I. Should we be hearing this case? Would it not be better, for another Bench to hear this case?

1. In  the present  writ  petition,  the petitioner  has made the following  

prayers:-

“(a) Declare the order dated 4.3.2014 as void, nullity and non-est  in the eyes of law;  

(b) Declare that the incarceration and the custody of the petitioner  are illegal which should be terminated forthwith;

(c) Issue such other writ in the nature of Habeas (corpus) or other  writs, order or direction for release of the petitioner from the  illegal custody.

(d) Pass such further orders as this Hon’ble Court may deem fit  and proper in the facts and circumstances of the case.”

A perusal of the prayers made in the writ petition reveals, that in sum and  

substance the petitioner has assailed the order dated 4.3.2014 passed by  

us in Contempt Petition (Civil) nos. 412 and 413 of 2012 and Contempt  

Petition (Civil) no. 260 of 2013.  To understand the exact purport of the  

prayers made in the writ petition, it is essential to extract herein the order

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dated 4.3.2014, which is subject matter of challenge through the present  

criminal writ petition:-

“1. Contemnors are personally present in the Court, including the  fifth respondent,  who has been brought to the Court  by the  U.P. Police, in due execution of our non-bailable warrant of  arrest.

2. We have heard the Senior Counsel on various occasions and  perused  the  various  documents,  affidavits,  etc.   We  have  heard the learned counsel and contemnors today as well.  We  are  fully  convinced that  the  contemnors  have not  complied  with our directions contained in the judgment dated August 31,  2012,  as  well  as  orders  dated  December  5,  2012  and  February 25, 2013 passed in Civil  Appeal no. 8643 of 2012  and I.A. no. 67 of 2013 by a three Judge Bench of this Court.

3. Sufficient opportunities have been given to the contemnors to  fully  comply  with  those  orders  and  purge  the  contempt  committed by them but, rather than availing of the same, they  have  adopted  various  dilatory  tactics  to  delay  the  implementation of the orders of this Court.  Non-compliance of  the orders passed by this Court shakes the very foundation of  our judicial system and undermines the rule of law, which we  are bound to honour and protect.  This is essential to maintain  faith  and  confidence  of  the  people  of  this  country  in  the  judiciary.

4. We  have  found  that  the  contemnors  have  maintained  an  unreasonable stand throughout the proceedings before SEBI,  SAT, High Court and even before this Court.  Reports/analysis  filed by SEBI on 18.2.2014 make detailed  reference to  the  submissions,  documents,  etc.  furnished  by the  contemnors,  which indicates that they are filing and making unacceptable  statements and affidavits all through and even in the contempt  proceedings.    Documents  and  affidavits  produced  by  the  contemnors themselves would apparently  falsify their  refund  theory and cast serious doubts about the existence of the so- called investors.  All  the fact finding authorities have opined  that majority of investors do not exist.  Preservation of market  integrity  is  extremely  important  for  economic  growth  of  this  country  and  for  national  interest.   Maintaining  investors’  confidence  requires  market  integrity  and  control  of  market  abuse.   Market  abuse  is  a  serious  financial  crime  which  undermines the very financial structure of this country and will  make imbalance in wealth between haves and have nots.

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5. We notice,  on this  day also,  no  proposal  is  forthcoming  to  honour the judgment of this Court dated 31st August, 2012 and  the orders passed by this Court on December 05, 2012 and  February  25,  2013  by  the  three  Judge  Bench.   In  such  circumstances,  in  exercise  of  the  powers  conferred  under  Articles  129 and 142 of  the  Constitution  of  India,  we order  detention  of  all  the  contemnors,  except  Mrs.  Vandana  Bhargava (the fourth  respondent)  and send them to judicial  custody at Delhi, till the next date of hearing.  This concession  is being extended towards the fourth respondent because she  is a woman Director, and also, to enable the contemnors to be  in a position to propose an acceptable solution for execution of  our orders, by coordinating with the detenues.  Mrs.  Vandana  Bhargava, who herself is one of the Directors, is permitted to  be in touch with the rest  of  the contemnors  and submit  an  acceptable proposal arrived at during their detention, so that  the Court can pass appropriate orders.

6. List on March 11, 2014 at 2.00 p.m.  All the contemnors be  produced in Court on that date.  Mrs. Vandana Bhargava, the  fourth respondent, to appear on her own.  However, liberty is  granted  for  mentioning  the  matters  for  preponement  of  the  date, if a concrete and acceptable proposal can be offered in  the meantime.”

2. When this matter came up for hearing for the first time on 12.3.2014,  

Mr. Ram Jethmalani, learned Senior Counsel appearing for the petitioner,  

sought liberty to make a frank and candid submission.  He told us, that it  

would be embarrassing for him, to canvass the submissions which he is  

bound to raise in the matter before us, i.e., before the Bench as it was  

presently structured.  It was also his submission, that hearing this matter  

would also discomfort and embarrass us as well.  He therefore suggested,  

that we should recuse ourselves from hearing the case, and require it to be  

heard by another composition, not including either of us.

3. Mr.  Arvind  Datar,  learned  Senior  Counsel,  appearing  for  the  

respondents,  vociferously  implored  us  not  to  withdraw  ourselves  from

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hearing the case.  It was his vigorous and emphatic contention, that the  

present petition was not maintainable, either under the provisions of the  

Constitution  of  India,  or  under  any  other  law of  the  land.   Inviting  the  

Court’s attention to the heading of the petition, it was submitted, that it did  

not disclose any legal provision, whereunder the present writ petition had  

been filed.  He submitted, that as per its own showing (ascertainable from  

the title of the petition), the present writ petition had been filed, under the  

power  recognized and exercised  by this  Court,  in  A.R.  Antulay  v.  R.S.  

Nayak, (1988) 2 SCC 602.  It was the assertion of learned counsel, that  

the above judgment, has now been clarified by this Court.  According to  

learned counsel, it has now been settled, that the above judgment did not  

fashion or create any such power or jurisdiction, as is sought to be invoked  

by the petitioner.

4. Besides the above purely legal submission, learned Senior Counsel  

for  the  respondents  equally  candidly  submitted,  that  the  filing  of  this  

petition was a carefully engineered device, adopted by the petitioner as a  

stratagem, to seek our withdrawal from the matter.  In order to emphasise  

that  this  Bench  was  being  arm  twisted,  learned  counsel  invited  our  

attention to the foot of the last page of the petition, i.e., to the authorship of  

the petition, just under the prayer clause.  The text, to which our attention  

was drawn, is set out below:-

“Signed and approved by:-

Mr. Ram Jethmalani, Sr. Adv. Dr. Rajeev Dhawan, Sr. Adv. Mr. Rakesh Dwivedi, Sr. Adv.

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Mr. S. Ganesh, Sr. Adv. Mr. Ravi Shankar Prasad, Sr. Adv.”

According to learned counsel, this is the first petition he has seen in his  

entire professional career, which is settled by five Senior Counsel, all of  

them of recognized eminence.

5. It would be relevant to mention, that when the matter was taken up  

for hearing by us, for the first time on 12.3.2014 at 2.00 PM, it had been so  

listed on the directions of  Hon’ble the Chief  Justice in furtherance of  a  

“mentioning for listing”, on the morning of the same day, i.e., 12.3.2014.  

We had therefore, no occasion to go through the pleadings of the present  

writ  petition.   After  having  heard  submissions  of  rival  counsel  noticed  

above, we decided not to proceed with the matter, before going through  

the pleadings of the case.  We therefore directed the posting of the case  

for hearing on the following day, i.e., 13.3.2014.

6. By the next date, we had an opportunity to determine, how exactly  

the matter was listed before us, as also, to ascertain whether the pleadings  

of  the  present  criminal  writ  petition  incorporated  material  which  would  

embarrass us, as suggested by the learned counsel for the petitioner.  So  

far as the filing and listing of the present petition is concerned, it was filed  

by the petitioner in the Registry of this Court on 11.3.2014.  Thereafter,  

learned counsel  for  the petitioner,  appeared before the Bench presided  

over by Hon’ble the Chief Justice, on the morning of 12.3.2014 to “mention  

for listing”, for the same day.  The Court Master of the Bench presided over  

by Hon’ble the Chief Justice, recorded the following note:-

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“As directed list today i.e., 12.3.2014, if in order, in the mentioning  list at 2.00 PM, before appropriate Bench.”

For the concerned Bench before which the matter was to be posted, the  

noting file of the branch, reads as under:-

“Apprised.

May  be  listed  before  the  Special  Bench  comprising  Hon’ble  Mr.  Justice  K.S.  Radhakrishnan  and  Hon’ble  Mr.  Justice  J.S.  Khehar.”

The  above  note  was  recorded  on  the  directions  of  Hon’ble  the  Chief  

Justice.   A perusal  of the above sequence of events reveals,  that even  

though  our  combination  as  a  Bench  did  not  exist  for  12.3.2014,  yet  a  

Special  Bench was constituted for listing the present  writ  petition,  in its  

present arrangement.  It is therefore reasonable to infer, that the present  

constitution of the Bench, was a conscious determination of Hon’ble the  

Chief Justice.   

7. Now the embarrassment part.  Having gone through the pleadings of  

the writ petition we were satisfied, that nothing expressed therein could be  

assumed, as would humiliate or discomfort us by putting us to shame.  To  

modify  an  earlier  order  passed  by  us,  for  a  mistake  we  may  have  

committed, which is apparent on the face of the record, is a jurisdiction we  

regularly exercise under Article 137 of the Constitution of India.  Added to  

that, it is open to a party to file a curative petition as held by this Court in  

Rupa Ashok Hurra v. Ashok Hurra, (2002) 4 SCC 388.  These jurisdictions  

are  regularly  exercised  by  us,  when  made  out,  without  any  

embarrassment.  Correction of a wrong order, would never put anyone to

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shame.  Recognition of a mistake, and its rectification, would certainly not  

put  us to shame.   In  our  considered  view,  embarrassment  would arise  

when  the  order  assailed  is  actuated  by  personal  and/or  extraneous  

considerations,  and the pleadings record such an accusation.   No such  

allegation was made in the present writ petition.  And therefore, we were  

fully satisfied that the feeling entertained by the petitioner, that we would  

not pass an appropriate order, if the order impugned dated 4.3.2014 was  

found to be partly or fully unjustified, was totally misplaced.

8. It  is  therefore,  that  we informed  learned  Senior  counsel,  that  we  

would hear the matter.  It seems that our determination to hear the matter  

marked to us by Hon’ble the Chief Justice, was not palatable to some of  

the learned counsel for the petitioner.  For, Mr. Ram Jethmalani, learned  

Senior Counsel, was now more forthright.  He told us, that we should not  

hear the matter, because “his client” had apprehensions of prejudice.  He  

would, however, not spell out the basis for such apprehension.  Dr. Rajeev  

Dhawan, came out all guns blazing, in support of his colleague, by posing  

a query: Has the Court made a mistake, serious enough, giving rise to a  

presumption  of  bias  “… even  if  it  is  not  there  …”?   It  was  difficult  to  

understand  what  he  meant.   But  seriously,  in  the  manner  Dr.  Rajeev  

Dhawan had addressed the Court, it sounded like an insinuation.  Mr. Ram  

Jethmalani joined in to inform us, that the Bar (those sitting on the side he  

represented)  was  shell-shocked,  that  an  order  violating  the  petitioner’s  

rights under Article 21 of the Constitution of India, had been passed, and it

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did not seem to cause any concern to us.  The petitioner had been taken  

into judicial custody, we were told, without affording him any opportunity of  

hearing.   Learned  counsel  asked  the  Bench,  to  accept  its  mistake  in  

ordering the arrest and detention of the petitioner, and acknowledge the  

“human error” committed by the Court, while passing the impugned order  

dated 4.3.2014.   Dr.  Rajeev Dhawan,  then informed the Court,  that  “…  

moments come in the profession, though rarely, when we tell the Judges of  

the Supreme Court, that you have committed a terrible terrible mistake, by  

passing an order which has violated the civil liberties of our client. … that  

the order passed is void …”.  And moments later, referring to the order, he  

said, “… it is a draconian order …”  The seriousness of the submissions  

apart, none of them, even remotely, demonstrated “bias”.   

9. But Mr.  C.A. Sundaram, another Senior Counsel  representing the  

petitioner, distanced himself from the above submissions.  He informed the  

Court,  “… I am not invoking the doctrine of bias, as has been alleged …”  

We are of the view, that a genuine plea of bias alone, could have caused  

us to withdraw from the matter, and require it to be heard by some other  

Bench.   Detailed submissions on the allegations constituting bias,  were  

addressed well after proceedings had gone on for a few weeks, the same  

have  been  dealt  with  separately  (under  heading  VIII,  “Whether  the  

impugned order dated 4.3.2014, is vitiated on account of bias?”).  Based  

on the submissions advanced by learned counsel, we could not persuade  

ourselves in accepting the prayer for recusal.

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10. We have recorded the above narration, lest we are accused of not  

correctly depicting the submissions, as they were canvassed before us.  In  

our understanding, the oath of our office, required us to go ahead with the  

hearing.  And not to be overawed by such submissions.  In our view, not  

hearing the matter, would constitute an act in breach of our oath of office,  

which mandates us to perform the duties of our office, to the best of our  

ability, without fear or favour, affection or ill will.  This is certainly not the  

first time, when solicitation for solicitation for recusal has been sought by  

learned counsel.  Such a recorded peremptory prayer, was made by Mr.  

R.K. Anand, an eminent Senior Advocate, before the High Court of Delhi,  

seeking  the  recusal  of  Mr.  Justice  Manmohan  Sarin  from  hearing  his  

personal case.  Mr. Justice Manmohan Sarin while declining the request  

made by Mr. R.K. Anand, observed as under:

"The path of recusal is very often a convenient and a soft option.  This is especially so since a Judge really has no vested interest in  doing a particular matter. However, the oath of office taken under  Article 219 of the Constitution of India enjoins the Judge to duly and  faithfully and to the best of his knowledge and judgment, perform the  duties  of  office  without  fear  or  favour,  affection  or  ill  will  while  upholding the constitution and the laws. In  a case, where unfounded  and motivated allegations of bias are sought to be made with a view  of forum hunting / Bench preference or brow-beating the Court, then,  succumbing to such a pressure would tantamount to not fulfilling the  oath of office."

The above determination of the High Court of Delhi was assailed before  

this Court  in R.K. Anand v. Delhi  High Court,  (2009) 8 SCC 106.  The  

determination  of  the  High  Court  whereby  Mr.  Justice  Manmohan  Sarin  

declined to withdraw from the hearing of the case came to be upheld, with  

the following observations:

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“The above passage, in our view, correctly sums up what should be  the Court's response in the face of a request for recusal made with  the intent to intimidate the court or to get better of an `inconvenient'  judge or to obfuscate the issues or to cause obstruction and delay  the proceedings or in any other way frustrate or obstruct the course  of justice.”

(emphasis is ours)

11. In fact, the observations of the High Court of Delhi and those of this  

Court reflected, exactly how it felt, when learned counsel addressed the  

Court, at the commencement of the hearing.  If it was learned counsel’s  

posturing antics, aimed at bench-hunting or bench-hopping (or should we  

say, bench-avoiding), we would not allow that.  Affronts, jibes and carefully  

and consciously planned snubs could not deter us, from discharging our  

onerous responsibility.  We could at any time, during the course of hearing,  

walk out and make way, for another Bench to decide the matter, if ever we  

felt that, that would be the righteous course to follow.  Whether or not, it  

would be better for another Bench to hear this case, will emerge from the  

conclusions, we will draw, in the course of the present determination.

12. What is it that this Court had done through its order dated 31.8.2012  

while  upholding  the  earlier  orders  passed  by  the  SEBI  (FTM)  (dated  

23.6.2011) and the SAT (dated 18.10.2011)?  We had merely confirmed  

the directions earlier issued to the two companies, to refund the moneys  

collected by them from investors, who had subscribed to their OFCD’s, by  

the SEBI (FTM) and by the SAT.  The directions did not extend to funds  

contributed by the promoters, the directors or the other stakeholders.  The  

refund did not include any business gains earned by the two companies

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during  the  subsistence  of  their  enterprise.   According  to  the  stance  

adopted by the two companies before this Court, all the investors’ money  

collected  through  OFCD’s,  had  mainly  been  invested  with  the  other  

companies of the Sahara Group.  This position was expressly reiterated, in  

the two separate affidavits filed by Sahara India Real Estate Corporation  

Limited  (hereinafter  referred  to  as  ‘SIRECL’)  and  Sahara  Housing  

Investment Corporation Limited (hereinafter referred to as ‘SHICL’) dated  

4.1.2012, before this Court.  It is now their case, that these properties were  

sold  to  other  Sahara  Group  companies  to  redeem  the  OFCD’s.   It  is  

therefore all within the companies of the Sahara Group.  That is how, sale  

transactions by way of cash have been explained.  It is therefore apparent,  

that we had not directed a refund of any other amount, besides that which  

was collected from the investors themselves.  The petitioner herein – Mr.  

Subrata  Roy  Sahara,  during  the  course  of  his  personal  oral  hearing  

informed us, that most of the investments were made by petty peasants,  

labourers, cobblers, blacksmiths, woodcutters and other such like artisans,  

ranging  mostly  between  Rs.2,000/-  and  Rs.3,000/-.   Almost  all  the  

investors, according to the petitioner, did not even have a bank account.  

That was why, they had chosen to invest the same through OFCD’s, in the  

two companies.  If the above position was/is correct, and the refund related  

only to deposits made by these petty poor citizens of this country, why are  

the  two companies  or  the  petitioner  –  Mr.  Subrata  Roy  Sahara,  in  his  

capacity as promoter, and the other concerned directors, so agitated with  

our order.  The findings against the two companies have been concurrent.

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At all levels, where issues raised by the two companies were considered  

and agitated, the determination has been in one voice, that the action of  

the two companies was unlawful  and accordingly  the moneys collected  

had to be refunded.  There is not even a single order at any level, in favour  

of the two companies.  The two companies were required to refund the  

money to its investors, because of the absolute illegality in its collection.

13. Because  both  the  SEBI  and  the  SAT  were  doubtful  about  the  

veracity of the receipt of the funds as alleged, they had directed the refund  

to  the  investors  by  way  of  cash  “through”  demand  draft  or  pay  order.  

During the course of final hearing of the appellate proceedings before this  

Court,  submissions were heard over a period of three weeks during the  

summer  vacation.   We entertained  a  similar  impression  and suspicion.  

Firstly because, the two companies never made available any information  

sought  from  them.  They  always  stonewalled  all  attempts  to  gather  

information by the SEBI, even by exerting influence from the Ministry of  

Corporate  Affairs,  and  by  raising  purely  technical  pleas.   And  also  

because, the little bits of information made available by the companies for  

evaluation, were found to be seriously doubtful.  It is also important for us  

to record, that the pointed position adopted by the SEBI before this Court,  

during the disposal of Civil Appeal nos. 9813 and 9833 of 2011 was, that  

neither SIRECL, nor SHICL, ever provided details of its investors to the  

SEBI (FTM).  They contested the proceedings initiated by the SEBI (FTM),  

only on technical grounds.  We were told that even before the SAT, no

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details were furnished.  The position remained the same, even before this  

Court.  Based on the non disclosure of information sought from the two  

companies, it was not possible to record a firm finding, either ways.  It is,  

therefore,  that  a  different  procedure  was  adopted  by  this  Court  while  

disposing the appeals preferred by the two companies, vide order dated  

31.8.2012.  The companies were restrained from making direct refunds.  

They  were  directed  to  deposit  all  investor  related  funds  (along  with  

interest)  with  the  SEBI.   The  SEBI  was  in  turn  directed,  to  make  the  

refunds to the investors.  In case the investors could not be identified, or  

were found to be non-existent or bogus, the remaining funds along with  

interest, were directed to be deposited with the Government of India.  This  

seems  to  us,  to  be  the  reason,  for  all  these  twists  and  turns,  in  the  

aftermath of this Court’s order dated 31.8.2012.  If the two companies were  

ready and willing to pay the money, as has been made out, on behalf of  

the two companies, there would be no cause for agitation.

14. One of the reasons for retaining the instant petition for hearing with  

ourselves was, that we had heard eminent Senior Counsel engaged by the  

two  companies  exclusively  for  over  three  weeks  during  the  summer  

vacation  of  2012.   We had been taken through thousands  of  pages  of  

pleadings.  We had the occasion to watch the demeanour and defences  

adopted by the two companies and the contemnors from time to time, from  

close quarters.  Writing the judgment, had occupied the entire remaining  

period  of  the  summer  vacation  of  2012,  as  also,  about  two months  of

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further time.  The judgment dated 31.8.2012 runs into 269 printed pages.  

Both of us had rendered separate judgments, concurring with one another,  

on each aspect of the matter.  During the course of writing the judgment,  

we  had  the  occasion  to  minutely  examine  numerous  communications,  

exchanged between the rival parties.  That too had resulted in a different  

kind of  understanding,  about  the  controversy.   For  any other  Bench to  

understand the nuances of the controversy determined through our order  

dated 31.8.2012, would require prolonged hearing of the matter.  Months  

of time, just in the same manner as we had taken while passing the order  

dated 31.8.2012, would have to be spent again.  Possibly the submissions  

made by the learned counsel seeking our recusal, was consciously aimed  

at the above objective.  Was this the reason for the theatrics, of some of  

the learned Senior Counsel?  Difficult to say for sure.  But deep within,  

don’t we all understand?  It was also for the sake of saving precious time  

of this Court, that we decided to bear the brunt and the rhetoric, of some of  

the learned Senior Counsel representing the petitioner.  We are therefore  

satisfied, that it would not be better, for another Bench to hear this case.

II. Must judicial orders be obeyed at all costs?

Can a judicial  order be disregarded,  if  the person concerned  feels, that the order is wholly illegal and void?

15. By the time a Judge is called upon to serve on the Bench of the  

Supreme  Court  of  India,  he  understands  his  responsibilities  and  

duties…..and also his powers and authority.  A Judge has the solemn duty  

of deciding conflicting issues between rival parties.  Rival parties inevitably

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claim diagonally opposite rights.  The decision has however to be rendered  

in favour of one party (and against  the other).   That, however,  is not a  

cause for  much worry,  because a Judge is  to decide  every  dispute,  in  

consonance with law.  If one is not free to decide in consonance with his  

will, but must decide in consonance with law, the concept of a Judge being  

an  individual  possessing  power  and  authority,  is  but  a  delusion.   The  

saving grace is, that only a few understand this reality.   But what a Judge  

is taught during his arduous and onerous journey to the Supreme Court is,  

that his calling is based on, the faith and confidence reposed in him to  

serve his country, its institutions and citizens.  Each one of the above (the  

country, its institutions and citizens), needs to be preserved.  Each of them  

grows  to  prosper,  with  the  others’  support.   Each of  them has  duties,  

obligations  and  responsibilities…..and  also  rights,  benefits  and  

advantages.   Their  harmonious glory,  emerges from, what is commonly  

understood  as,  “the  rule  of  law.”   The  judiciary  as  an  institution,  has  

extremely sacrosanct duties, obligations and responsibilities. We shall, in  

the  succeeding  paragraphs,  attempt  to  express  these,  in  a  formal  

perspective.

16. The President of India is vested with executive power of the Union.  

All  executive  actions  of  the  Government  of  India,  are  expressed  to  be  

taken in his name.  The responsibility, and the power, which is vested in  

the President of India, is to be discharged/ exercised, in accordance with  

the provisions of the Constitution of India.   For that, the President of India

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may even consult the Supreme Court, on a question of law or fact of public  

importance.   And when so consulted,  the Supreme Court  is  obliged  to  

tender its opinion to the President.  Furthermore, the Constitution of India  

contemplates, that law declared by the Supreme Court, is binding on all  

courts within the territory of India.  It also mandates, that an order made by  

the Supreme Court, is enforceable throughout the territory of India.  But  

what is the scope of the law declared by the Supreme Court?  And what  

are the kinds of orders it passes? The Supreme Court has been vested  

with the power to decide substantial questions of law, as also, to interpret  

the provisions of the Constitution of India.  The Supreme Court exercises  

jurisdiction to determine, whether or not, laws made by Parliament or by a  

State Legislature, are consistent with the provisions of the Constitution of  

India.  And in case any legislation is found to be enacted, in violation of the  

provisions of the Constitution of India, this Court is constrained to strike it  

down.  The resultant effect is, that a law enacted by the Parliament or by a  

State Legislature, is declared illegal or void.  After a Court’s verdict has  

attained finality, not once, never and never, has any legislative body ever  

disobeyed  or  disrespected  an  order  passed  by  a  court,  declaring  a  

legislation,  illegal  or  void.   The  Supreme  Court  also  exercises  original  

jurisdiction, to settle disputes between the Government of India and one or  

more States; or between the Government of India and any one State or  

more States on the one side, and one or more other States on the other; or  

between two or more States.    In such disputes, the order could be in  

favour of (or against),  the Government of India, and/or one or the other

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State Government(s) concerned.  Yet, the orders passed by the Supreme  

Court on the above disputes, have unfailingly been accepted and complied  

with, despite the seriousness of the consequences, emerging from such  

orders.  The settlement of such disputes by the Supreme Court, has not  

ever  earned  scorn,  disdain,  disrespect  or  denigration  of  the  parties  

concerned.  The Supreme Court also enforces through its writ jurisdiction,  

fundamental rights of the citizens of this country.    In case an individual’s  

fundamental rights (or other legal rights), are found to have been violated,  

the  Government  of  India,  or  the  concerned  State  Government,  or  the  

instrumentality/institution concerned, is directed to restore to the individual,  

what  is due to him.   The Government  (or  the instrumentality/institution)  

concerned, which is directed to extend benefits denied to an individual(s),  

has always honourably obeyed and implemented Court orders, gracefully.  

There  are  numerous  institutions  created  to  assist  the  executive  

government, in matters of governance.  Some of them are constitutional  

authorities, others are creatures, either of a legislation or of the executive.  

The object of executive governance, is to enforce duties, obligations and  

responsibilities,  and  also,  to  extend  rights,  benefits  and  advantages.  

Courts  also exercise,  the power of  judicial  review,  over actions of  such  

instrumentalities/institutions.  While exercising the power of judicial review,  

Courts also pass orders and directions, to enforce legal rights.  Courts are  

rarely  confronted  with  a  situation  where  an  executive  department  of  a  

government,  or  an  instrumentality/institution,  has  denied  compliance.  

Likewise,  the  Supreme  Court  is  also  vested  with  the  responsibility  to

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adjudicate private disputes between individuals (both civil and criminal), so  

as to render a determination of their individual rights.  These too, are as a  

rule (almost) always complied with voluntarily and gracefully.

17. There is no escape from, acceptance, or obedience, or compliance  

of  an  order  passed  by  the  Supreme  Court,  which  is  the  final  and  the  

highest  Court,  in  the  country.   Where  would  we  find  ourselves,  if  the  

Parliament or a State Legislature insists, that a statutory provision struck  

down as  unconstitutional,  is  valid?   Or,  if  a  decision  rendered  by the  

Supreme Court, in exercise of its original jurisdiction, is not accepted for  

compliance, by either the Government of India,  and/or  one or the other  

State Government(s) concerned?  What if, the concerned government or  

instrumentality, chooses not to give effect to a Court order, declaring the  

fundamental right of a citizen?  Or, a determination rendered by a Court to  

give effect to a legal right, is not acceptable for compliance?  Where would  

we  be,  if  decisions  on  private  disputes  rendered  between  private  

individuals, are not complied with?  The answer though preposterous, is  

not far fetched.  In view of the functional position of the Supreme Court  

depicted  above,  non-compliance  of  its  orders,  would  dislodge  the  

cornerstone maintaining the equilibrium and equanimity  in  the country’s  

governance.  There would be a breakdown of constitutional functioning.  It  

would be a mayhem of sorts.   

18. Before  we  advert  to  the  question,  whether  this  Court  can  order  

obedience of an order passed by it, it may be relevant to understand, the

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extent and width of jurisdiction, within the framework whereof this Court  

can pass orders.  In this behalf reference may be made to the nine-Judge  

Constitution Bench judgment of this Court, in  Naresh Sridhar Mirajkar v.  

State of Maharashtra, AIR 1967 SC 1, wherein it was held as under:-

“60.  There  is  yet  another  aspect  of  this  matter  to  which  it  is  necessary to refer. The High Court is a superior Court of Record and  under Article     215  , shall have all powers of such a Court of Record    including the power to punish contempt of itself. One distinguishing  characteristic  of  such  superior  Courts  is  that  they  are  entitled  to  consider  questions  of  their  jurisdiction  raised  before  them.  This  question fell to be considered by this Court in Special Reference No.  1 of 1964, (1965) 1 S.C.R. 413 at p. 499. In that case, it was urged  before  this  Court  that  in  granting  bail  to  Keshav Singh,  the High  Court  had exceeded its jurisdiction and as such, the order was a  nullity. Rejecting this argument, this Court observed that in the case  of a superior Court of Record, it is for the Court to consider whether  any matter falls within its jurisdiction or not. Unlike a court of limited  jurisdiction,  the  superior  court  is  entitled  to  determine  for  itself  questions about its own jurisdiction. That is why this Court did not  accede to the proposition that in passing the order for interim bail,  the High Court can be said to have exceeded its jurisdiction with the  result that the order in question was null and void. In support of this  view, this Court cited a passage from Halsbury's Laws of England  where it is observed that:-

“prima facie, no matter is deemed to be beyond the jurisdiction  of a superior court unless it is expressly shown to be so, while  nothing is within the jurisdiction of an inferior court unless it is  expressly  shown  on  the  face  of  the  proceedings  that  the  particular  matter  is  within  the  cognizance  of  the  particular  Court." (Halsbury's Laws of England, Vol. 9, p. 349).”.

If the decision of a superior Court on a question of its jurisdiction is  erroneous, it can, of course, be corrected by appeal or revision as  may be permissible under the law; but until  the adjudication by a  superior  Court  on  such  a  point  is  set  aside  by  adopting  the  appropriate  course,  it  would  not  be  open  to  be  corrected  by  the  exercise of the writ jurisdiction of this Court.”

(emphasis is ours)

Just like High Courts, the Supreme Court is a superior Court of Record.  

This mandate is expressly contained in Article 129 of the Constitution of

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India.  Since it is not the case of the petitioner before this Court, that there  

is some legislative or constitutional provision, curtailing the jurisdiction of  

this Court, to pass an order of the nature which is impugned through the  

instant writ petition, it stands acknowledged, that the above order has been  

passed by this Court, in legitimate exercise of its jurisdiction.

19. On the subject  of  obedience of  orders  passed by this Court,  this  

Court  recently in K.A. Ansari  v. Indian Airlines Ltd.,  (2009) 2 SCC 164,  

observed thus:  “The respondent Indian Airlines was obliged to obey and  

implement the … direction.  If they had any doubt or if the order was not  

clear, it was always open to them to approach the court for clarification of  

the … order.  Without challenging the … direction or seeking clarification,  

Indian Airlines could not circumvent the same, on any ground whatsoever.  

Difficulty in implementation of an order passed by the Court, howsoever  

grave  its  effect  may  be,  is  no  answer  for  its  non-compliance.”   It  is  

therefore that Article 142 of the Constitution of India mandates that this  

Court “…in exercise of its jurisdiction may pass such decree or make such  

order as is necessary for doing complete justice in any cause or matter  

pending before it, and any decree so passed or order so made shall be  

enforceable throughout the territory of India…”  And it is also inter alia for  

the above enforcement, that Article 129 of the Constitution of India, vests  

in  the  Supreme  Court  the  power,  amongst  other  things,  to  enforce  

compliance of Court directions.  The Supreme Court has the jurisdiction  

and  power,  to  punish  for  its  contempt.   It  is  this  dispensation,  which

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(i) They are punished to pay a fine of Rs.2,000/-  each  and  in  default,  they  shall  be  liable  to  undergo  simple  imprisonment for a period of fifteen days.

(ii) We  impose  exemplary  cost  of  Rs.50,000/-  on  the  State of Haryana, which amount, at the first instance, shall  be  paid  by  the  State  but  would  be  recovered  from  the  salaries  of  the  erring  officers/officials  of  the  State  in  accordance  with  law  and  such  recovery  proceedings  be  concluded within six months. The costs would be payable to  the Supreme Court Legal Services Committee.

(iii) In  view  of  the  principle  that  the  courts  also  invoke  contempt jurisdiction as a tool for compliance of its orders in  future,  we  hereby  direct  the  State  Government  and  the  Respondent/contemnor herein now to positively comply with  the orders  and implement  the scheme within  eight  weeks  from today.”

(emphasis is ours)

In this context, the following observations made by this Court, in Supreme  

Court Bar Association v. Union of India, (1998) 4 SCC 409, illustrate the  

point sought to be made:

“42. The contempt of court is a special jurisdiction to be exercised  sparingly and with caution, whenever an act adversely effects the  administration of justice or which tends to impede its course or tends  to shake public confidence in the judicial institutions. This jurisdiction  may also be exercised when the act complained of adversely effects  the Majesty of Law or dignity of the courts. The purpose of contempt  jurisdiction is to uphold the majesty and dignity of the Courts of law.  It is an unusual type of jurisdiction combining "the jury, the judge and  the hangman" and it is so because the court is not adjudicating upon  any claim between litigating parties. This jurisdiction is not exercised  to  protect  the  dignity  of  an  individual  judge  but  to  protect  the  administration of justice from being maligned. In the general interest  of the community it is imperative that the authority of courts should  not be imperiled and there should be no unjustifiable interference in  the administration of justice. It is a matter between the court and the  contemner  and third parties  cannot  intervene.  It  is  exercised in a  summary manner in aid of the administration of justice, the majesty  of law and the dignity of the courts. No such act can be permitted  which may have the tendency to shake the public confidence in the  fairness and impartiality of the administration of justice.”

(emphasis is ours)

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We are satisfied to hold, that the provisions referred to by us in the order  

dated 4.3.2014 (Articles 129 and 142 of the Constitution of India) vest in  

the  Supreme  Court,  the  power  to  persuade,  and  if  necessary,  compel  

obedience and observance, of judicial orders.  It is not possible, to view  

this matter in any other perspective, in the background of the conclusion  

recorded by us hereinabove, namely, non-compliance of the orders of the  

Supreme  Court,  would  dislodge  the  cornerstone  maintaining  the  

equilibrium and equanimity, in the governance of this country.  This has  

been the manner of understanding, of the power of this Court.   In case  

there has been any ambiguity, let it now be understood, that this Court has  

the unlimited power (in fact, the sacred obligation), to compel obedience  

and observance of its orders.  

III. Facts  reflecting  the  demeanour  of  the  two  companies,  the  petitioner,  and  other  directors  of  SIRECL and  SHICL,  in  the  process  of  litigation,  leading  upto  the  passing  of  the  order  dated 31.8.2012.

20. During our entire careers as Advocates practicing before the High  

Court and before this Court, and as Judges of different High Courts, as  

Chief Justices of High Courts in different States, and also, as Judges of  

this Court, we have yet to experience a demeanour of defiance, similar to  

the one adopted by SIRECL or SHICL or their promoter and directors.  The  

responsibility  of  the  above  defiance,  which  constituted  a  rebellious  

behaviour, challenging the authority of the SEBI, from investigating into the  

affairs  of  the  two  companies,  required  brazenness,  flowing  from  

unfathomable power and authority.  It is therefore essential to recapitulate,

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the demeanour adopted by the two companies, before the SEBI (FTM),  

which position remained unaltered,  before the SAT.  These need to be  

highlighted, to fully understand how a litigant can behave, to defeat the  

cause  of  justice.   The  responsibility  for  the  above  demeanour,  would  

essentially fall, on the shoulders of the promoter, and the directors, of the  

two  companies.   As  a  matter  of  fact,  Mr.  Subrata  Roy  Sahara  (the  

petitioner  before  this  Court),  Ms.  Vandana  Bhargava  (the  director  

exempted from arrest,  in the impugned order dated 4.3.2014),  Mr. Ravi  

Shankar  Dubey  and  Mr.  Ashok  Roy  Choudhary  (the  directors,  whose  

arrest  and detention  was  ordered  by  this  Court,  along  with  that  of  the  

petitioner,  on  4.3.2014)  were  expressly  named  by  the  SEBI,  and  

prohibitory  orders  were  passed  by  the  SEBI  (FTM),  against  the  afore-

stated promoter and directors, expressly restraining them from carrying out  

various activities connected with the two companies.  It is also essential, to  

refer  to  the  disposition  of  the  two companies  (under  reference),  in  the  

proceedings  initiated  by  them,  before  the  High  Court  of  Judicature  at  

Allahabad, Lucknow Bench (hereinafter referred to as, ‘the High Court’).  

The  above  referred  disposition,  led  to  passing  of  strictures,  and  the  

vacation of an interim order passed by the High Court, in their favour.  That  

too, would show their spirit of defiance.  The impressions gathered by this  

Court, when the two companies appeared before this Court in Civil Appeal  

Nos. 9813 and 9833 of 2011, are also significant.  Thus, the above details  

are being set out briefly, herein below.

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21. A  complaint  was  addressed  by “Professional  Group  for  Investors  

Protection”  on  25.12.2009,  alleging  violation  of  the  provisions  of  the  

Securities and Exchange Board of India Act, 1992 (hereinafter referred to  

as, ‘the SEBI Act’),  against  the companies under reference.  On similar  

lines, another complaint was addressed to the SEBI by one “Roshan Lal”  

on 04.01.2010.  In order to probe the authenticity of the allegations leveled  

in  the  complaints,  the  SEBI  sought  information  from  Enam  Securities  

Private Limited -  a merchant  banker.   In its response dated 21.2.2010,  

Enam  Securities  Private  Limited  asserted,  that  the  OFCDs  issued  by  

SIRECL and  SHICL,  had  been  issued  in  conformity  with  all  applicable  

laws.  In sum and substance, the above merchant banker did not tender  

any reply, which could have been of help, to determine the authenticity of  

the allegations leveled in the complaints.

22. All  the  same,  the  SEBI  again  sought  further  details  from  Enam  

Securities Private Limited.  The particulars of the information sought are  

being extracted herein below:  

“a. details regarding the filing of RHP of the said companies with  the concerned RoC.

b. date of opening and closing of the subscription list. c. details  regarding the number of  application forms circulated  

after the filing of the RHP with RoC. d. details regarding the number of applications received. e. the number of allottees f. list of allottees. g. the date of allotment. h. date of dispatch of debenture certificates etc. i. copies  of  application  forms,  RHP,  pamphlets  and  other  

promotional material circulated.”

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Enam Securities Private Limited, however, did not furnish the information  

sought.

23. The SEBI then directly sought the desired information from SIRECL  

and SHICL,  through two separate letters  dated 12.05.2010.   Instead of  

furnishing  the  details  of  the  information  sought,  the  companies  under  

reference,  required the SEBI to furnish them the complaints,  which had  

prompted it to seek the information.

24. The  SEBI  again  addressed  separate  communications  to  the  two  

companies,  dated  21.5.2010,  seeking  the  same  information.   Both  

companies  adopted  the  same posture,  yet  again.   This  time,  however,  

SIRECL,  as  well  as,  SHICL  pointed  out  to  the  SEBI,  that  it  had  no  

jurisdiction  to  inquire  into  the  affairs  of  the  two  companies,  under  the  

provisions of the SEBI Act.

25. The  SEBI  repeated  its  request  to  the  two  companies,  for  the  

required  information,  through  two  separate  communications,  dated  

11.06.2010.   On this  occasion,  the two companies addressed separate  

letters dated 16.06.2010 to the SEBI, informing it, that they had received a  

communication from the office of the Union Minister of State for Corporate  

Affairs,  to  the  effect,  that  the  jurisdictional  issue  raised  by  the  two  

companies,  was  under  the  consideration  of  the  Ministry  of  Corporate  

Affairs.   Accordingly,  the  two  companies  informed  the  SEBI,  that  they  

would furnish the information sought, only upon the Ministry’s conclusion,  

that the SEBI had the jurisdiction in the matter.

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26. In  view of  the posture adopted  by the two companies,  summons  

dated 30.8.2010 and 23.9.2010,  were issued under  Section 11C of  the  

SEBI Act to them, to provide the following information:

“1. Details regarding filing of prospectus/Red-herring Prospectus  with ROC for issuance of OFCDs.

2. Copies  of  the  application  forms,  Red-Herring  Prospectus,  Pamphlets,  advertisements  and  other  promotional  materials  circulated for issuance of OFCDs.

3. Details  regarding  number  of  application  forms  circulated,  inviting subscription for OFCDs.

4. Details  regarding  number  of  applications  and  subscription  amount received for OFCDs.

5. Date of opening and closing of the subscription list for the said  OFCDs.

6. Number  and  list  of  allottees  for  the  said  OFCDs  and  the  number of OFCDs allotted and value of such allotment against  each allottee’s name;

7. Date of allotment of OFCDs; 8. Copies of the minutes of Board/committee meeting in which  

the resolution has been passed for allotment; 9 Copy of Form 2 (along with annexures) filed with ROC, if any,  

regarding issuance of OFCDs or equity shares arising out of  conversion of such OFCDs.

10. Copies  of  the  Annual  Reports  filed  with  Registrar  of  Companies for the immediately preceding two financial years.

11. Date of dispatch of debenture certificate etc.”

The aforesaid summons were responded to by the companies, through two  

separate communications dated 13.09.2010, wherein the companies again  

adopted the stance, that the SEBI had no jurisdiction in the matter, and  

further, that the matter of jurisdiction was being examined by the Ministry  

of  Corporate  Affairs.   Based  on  the  above  response,  the  companies  

required the SEBI to withdraw the above summons (dated 30.8.2010 and  

23.9.2010).

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27. On  30.09.2010,  through  separate  letters  issued  by  SIRECL  and  

SHICL,  the  companies  adopted  the  stance,  that  they  did  not  have the  

complete information sought by the SEBI.  This was indeed a shocking  

disclosure, by two statutory entities, holding thousands of crores of rupees  

of  investment  funds,  deposited  by  crores  of  investors.   Such  like  

absurdities, were routine defences, adopted by the two companies.

28. The Chief Financial Officer of the Sahara India Group of Companies  

sought an opportunity of personal hearing.  The SEBI (FTM) afforded the  

above sought opportunity of hearing, on 03.11.2010.  During the course of  

hearing, it was impressed upon the Chief Financial Officer, that he should  

furnish information solicited by the SEBI (through the aforesaid summons,  

dated 30.8.2010 and 23.9.2010), fully and accurately, without any delay.  

Despite the above, neither of the two companies, furnished the information  

sought.

29. On its own, the SEBI obtained a part of the information, from the  

MCA-21  portal  maintained  by  the  Ministry  of  Corporate  Affairs.   This  

information had been furnished by SIRECL, to the Registrar of Companies,  

Uttar  Pradesh  and  Uttarakhand;  and  by  SHICL,  to  the  Registrar  of  

Companies, Maharashtra. By an order dated 24.11.2010, the SEBI (FTM)  

drew the following inferences/conclusions:

“Firstly, neither SIRECL nor SHICL had denied their having issued  OFCDs.  Secondly,  SIRECL as  also  SHICL acknowledged  having  filed  RHPs  in  respect  of  the  OFCDs  issued  by  them  with  the  concerned Registrar of  Companies.   Thirdly, besides the dates of  filing the RHPs with the respective Registrar of Companies, neither

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of  the  companies  had  furnished  any  other  information/document  sought from the companies by SEBI.  Fourthly, the companies had  adopted a stance, that they did not have complete details relating to  the  securities  issued  by  them.   This  stance  adopted  by  the  two  companies, according to the SEBI, was preposterous.  Fifthly, SEBI  had sought details of the number of application forms circulated, the  number  of  application  forms received,  the amount  of  subscription  deposited, the number and list of allottees, the number of OFCDs  allotted,  the value of  allotment,  the date of  allotment,  the date of  dispatch  of  debenture  certificates,  copies  of  board/committee  meetings, minutes of meetings during which the said allotment was  approved.   According  to  SEBI,  since  the  information  sought  was  merely basic, the denial of the same by the companies amounted to  a  calculated  and  deliberate  denial  of  information.   Sixthly,  information  sought  by  the  SEBI  depicted  at  serial  number  fifthly  hereinabove,  was  solicited  to  determine  the  authenticity  of  the  assertion made by the companies, that the OFCDs had been issued  by way of private placement. Whereas, it was believed by the SEBI  that the companies had issued the OFCDs to the public.  Seventhly,  since the companies had adopted the position, that the OFCDs were  issued  by  way  of  private  placement  to  friends,  associate  group  companies,  workers/employees  and  other  individuals  who  were  associated/affiliated/connected to the Sahara Group of Companies,  according  to  SEBI  it  was  highly  improbable,  that  the  details  and  particulars  of  such  friends,  associate  group  companies,  workers/employees  and  other  individuals  which  were  associated/affiliated/connected  to  the  Sahara  India  Group  of  companies, was not available with them (for being passed over to  SEBI).”

wherein the following summary of inferences was recorded:

“i. The issue of OFCDs by the companies have been made to a  base of investors that are fifty or more in number.

ii. The  companies  themselves  tacitly  admit  the  same as  they  have no case that funds have been mobilized from a group  smaller than fifty.

iii. A resolution under  section 81(1A) of  the Act does not  take  away the ‘public’ nature of the issue.

iv. The filing of a prospectus under the Act signifies the intention  of the issuer to raise funds from the public.

Therefore,  for  the  aforesaid  reasons,  the  submission  of  the  companies that their OFCD issues are made on private placement  and do not fall under the definition of a public issue, is not tenable.  The instances discussed above would prima facie suggest that the  offer of OFCDs made by the companies is “public” in nature .”

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30. Based on the DIP Guidelines and the ICDR Regulations, the SEBI  

(FTM)  found,  that  the  two  companies  had  committed,  the  following  

violations:

a) failure to file the draft offer document with SEBI; b) failure to mention the risk factors and provide the adequate  

disclosures that is stipulated, to enable the investors to take a  well-informed decision.

c) denied the exit opportunity to the investors. d) failure to lock-in the minimum promoters contribution. e) failure to grade their issue. f) failure to open and close the issue within the stipulated time  

limit. g) failure  to obtain the credit  rating from the recognized credit  

rating agency for their instruments. h) failure to appoint a debenture trustee i) failure to create a charge on the assets of the company. j) failure to create debenture redemption reserve, etc.”

Based on the above conclusions, the SEBI (FTM) issued directions by way  

of  an  ad  interim  ex  parte  order,  restraining  SIRECL  and  SHICL  from  

mobilizing  funds  under  their  respective  RHPs,  dated  13.03.3008  and  

06.10.2009.  The companies were also directed, not to offer their equity  

shares/OFCDs  or  any  other  securities,  to  the  public  and/or  invite  

subscription  in  any  manner  whatsoever,  either  directly  or  indirectly,  till  

further directions.  The SEBI’s ad interim ex parte order dated 24.11.2010  

expressly referred to Mr. Subrata Roy Sahara, Ms. Vandana Bhargava, Mr.  

Ravi Shankar Dubey and Mr. Ashok Roy Choudhary.  They were named  

as promoter and directors, in the RHPs filed by the two companies, before  

the respective Registrar of Companies.  The above named promoter and  

directors, were expressly prohibited from issuing prospectus, or any other  

offer  document,  or  issuing  advertisement  for  soliciting  money,  from the

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public for the issue of securities, in any manner whatsoever, either directly  

or indirectly, till further orders.

31. The SEBI’s order dated 24.11.2010 was challenged before the High  

Court through Writ Petition No.11702 (M/B) of 2010 on 29.11.2010.  On  

13.12.2010,  the  High  Court  stayed  the  operation  of  the  order  dated  

24.11.2010.  On an application filed by the SEBI, the High Court vacated  

its  interim  order.   While  vacating  the  interim  order,  the  High  Court  

observed, inter alia:

“4. …..The petitioners were supposed to cooperate in the inquiry  and  their  interest  was  protected  by  restraining  the  SEBI  from  passing any final orders.  The matter was being heard finally under  the expectation that the assurances given by the learned counsel for  the petitioners would be honoured by the petitioners and the matter  would be finished at the earliest.  But the petitioners appear to have  thought  otherwise.   The  court’s  order  cannot  be  allowed  to  be  violated or circumvented by any means.

We, therefore, do not find any ground to continue with the interim  order, which is hereby vacated for the own conduct of the petitioners  and for which they have to thank their own stars.”

(emphasis is ours)

It  is,  therefore,  apparent  that  the  High  Court  had  denied  relief  to  the  

companies because of their non-cooperative attitude in the inquiry being  

conducted by the SEBI.  It was also sought to be concluded against the  

two companies, that they had not honoured the commitments given to the  

Court.   And further that,  they were guilty of  violating and circumventing  

Court’s  orders.   The  order  passed  by  the  High  Court,  is  yet  another  

instance of the defiance of the two companies, in allowing their affairs to  

be investigated.

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32. The SEBI issued yet another show cause notice dated 20.5.2011, to  

the  two companies,  principally  on  the  same facts  and grounds,  as  the  

earlier  show cause notice  dated  24.11.2010.   The above  notices  were  

contested  by  both  the  companies,  again  on  legal  technicalities.  

Importantly, the companies yet again, did not furnish any factual details to  

the SEBI.  The defiance continued.

33. On 23.6.2011, the SEBI(FTM), passed the following directions:-

“1. The two Companies, Sahara Commodity Services Corporation  Limited  (earlier  known  as  Sahara  India  Real  Estate  Corporation  Limited) and Sahara Housing Investment Corporation Limited and its  promoter,  Mr.  Subrata Roy Sahara,  and the directors  of  the said  companies,  namely,  Ms.  Vandana  Bhargava,  Mr.  Ravi  Shankar  Dubey and Mr.  Ashok Roy Choudhary,  jointly and severally,  shall  forthwith  refund the money  collected  by the aforesaid  companies  through  the  Red  Herring  Prospectus  dated  March  13,  2008  and  October  6,  2009,  issued  respectively,  to  the  subscribers  of  such  Optionally  Fully  Convertible  Debentures  with  interest  of  15% per  annum  from  the  date  of  receipt  of  money  till  the  date  of  such  repayment.    2. Such  repayment  shall  be  effected  only  in  cash  through  Demand Draft or Pay Order.    3. Sahara  Commodity  Services  Corporation  Limited  (earlier  known as Sahara India Real Estate Corporation Limited) and Sahara  Housing Investment Corporation Limited shall issue public notice, in  all editions of two National Dailies (one English and one Hindi) with  wide circulation, detailing the modalities for refund, including details  on contact persons including names, addresses and contact details,  within fifteen days of this Order coming into effect.    4. Sahara  Commodity  Services  Corporation  Limited  (earlier  known as Sahara India Real Estate Corporation Limited) and Sahara  Housing  Investment  Corporation  Limited  are  restrained  from  accessing the securities  market  for  raising funds,  till  the time the  aforesaid payments are made to the satisfaction of the Securities  and Exchange Board of India.  

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5. Further, Mr. Subrata Roy Sahara, Ms. Vandana Bhargava, Mr.  Ravi Shankar Dubey and Mr. Ashok Roy Choudhary are restrained  from associating  themselves,  with  any listed  public  company  and  any public company which intends to raise money from the public, till  such time the aforesaid payments are made to the satisfaction of the  Securities and Exchange Board of India.”

(emphasis is ours)

34. The  order  of  the  SEBI  (FTM)  came  to  be  assailed  by  the  two  

companies,  before  the  SAT.   Even  during  the  course  of  appellate  

proceedings,  the companies did not  disclose,  the factual  position.   The  

companies, continued to contest the claim of the respondents, by relying  

on technicalities of law, i.e., on the same legal parameters, as had been  

adopted by them before the SEBI (FTM).   The SAT by its order  dated  

18.10.2011 upheld the order passed by the SEBI (FTM) dated 23.6.2011.  

The SAT directed  the appellant  companies  to  refund  the  entire  money  

collected from the investors, within six months (from the date of its order  

dated 18.10.2011).

35. Thereupon the matter was brought to this Court by way of appeals  

preferred by the two companies concerned, i.e.,  Civil  Appeal  nos. 9813  

and 9833 of 2011.  On 28.11.2011, this Court passed the following interim  

order:-

“By the impugned order, the appellants have been asked by SAT to  refund  a  sum  of  Rs.17,400  crores  approximately  on  or  before  28.11.2011.  We extend the period upto 9.1.2012.”

It is, therefore, that this Court while issuing the interim directions, merely  

permitted  the  two companies  concerned to  refund a  sum of  Rs.17,400  

crores  (approximately)  as  directed  by  the  SEBI  (FTM)  and  SAT,  upto  

9.1.2012.  It is, however, imperative to understand, that this Court while

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passing  the  above  interim  order,  did  not  vary  the  manner  of  making  

refunds,  in  case  the  two  companies  concerned  decided  to  make  any  

refund to the investors.  In this behalf it  needs to be noticed, that in its  

order  dated  23.6.2011,  the  SEBI  (FTM)  had clearly  directed,  that  such  

repayment could only be made in cash through demand draft or pay order.  

No liberty was granted to the two companies, to convert the investment  

made by the holders of the OFCD’s, into similar investments, with the other  

companies.  In other words, cash conversion in any other format, was not  

permitted.   To  comply  with  the  letter  and  spirit  of  the  above  orders,  

therefore, even if refund was to be made by the investors, it could have  

been done, only by way of demand drafts or pay orders, and not, by way of  

cash.   The  alleged  cash  payment  made  by  the  two  companies,  while  

redeeming the OFCD’s, was therefore per se illegal, and in violation of the  

orders,  dated  23.6.2011  (passed  by  the  SEBI  (FTM))  and  18.10.2011  

(passed by the SAT).  We must, therefore emphatically point out, that the  

very  submission  now made  by  the  companies,  that  the  investors  were  

refunded their  deposits  by  way of  cash,  is  per  se another  tactic  in  the  

series  of  manoeuvres  adopted  by  the  two  companies,  to  defeat  the  

process of law.  Factually,  there is no acceptable proof of such refund.  

This aspect is being dealt with separately, hereafter.

36. During the course of adjudication of Civil Appeal No.9813 of 2011  

(along with Civil Appeal No.9833 of 2011), the issues were canvassed at  

the behest of the appellants, as is apparent from the order passed by this

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Court on 31.8.2012, on the same legal issues, which were canvassed on  

behalf of the companies under reference before the SEBI (FTM) and the  

SAT.  In the adjudication rendered by this Court, it was concluded that the  

material  sought by the SEBI from the companies,  though available with  

them,  must  be  deemed to  have been consciously  withheld.   Since the  

companies willfully avoided to furnish the information to the SEBI, it was  

felt that an adverse inference should be drawn against the two companies.  

Having examined the factual details available on the record, this Court also  

expressed  an  impression  that  the  material  made  available  by  the  

companies “… was totally unrealistic and could well be fictitious, concocted  

and  made  up…”.   While  disposing  of  the  appeals,  filed  by  the  two  

companies,  this Court  was not certain whether all  the subscribers were  

genuine, and therefore, while concluding the matter, this Court in its order  

dated  31.08.2012,  expressed  the  hope  that  all  the  subscribers  were  

genuine.  And so also, the subscription amount, as there was indeed a  

needle of suspicion on this subject as well.  Accordingly this Court, in its  

order  dated  31.8.2012  observed,  that  “…  whole  affair  being  doubtful,  

dubious  and  questionable…”.   These  observations  were  recorded,  

because the actions of the appellants made the genuineness of the affairs  

of the two companies, questionable.

37. It is also important for us to record that the positive position adopted  

by the SEBI before this Court, during the disposal of Civil Appeal Nos.9813  

and  9833  of  2011  was,  that  neither  SIRECL nor  SHICL ever  provided

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details  of  its  investors  to  the  SEBI  (FTM)  or  to  the  SAT.   The  two  

companies had, contested the proceedings initiated against them, only on  

technical grounds.  We may record, that we were told, that even before the  

SAT,  no  details  were  furnished.   As  against  the  above,  the  position  

adopted  by  the  SIRECL before  us,  during  the  course  of  the  appellate  

proceedings was, that SIRECL had furnished a compact disc to the SEBI  

(FTM),  along  with  its  operating  key.   The  compact  disc,  according  to  

learned counsel, had complete investor related data, pertaining to SIRECL.  

Whilst it was acknowledged by the SEBI before this Court, that a compact  

disc  (allegedly  containing  details  about  the  investors)  was furnished by  

SIRECL, yet it  was emphatically pointed out, that its operating key was  

withheld.   This  was another  deliberate  manoeuvre adopted,  to withhold  

investor related information from the SEBI(FTM).  Resultantly, no details  

whatsoever were ever disclosed by SIRECL either before the SEBI (FTM)  

or the SAT.   

38. The position adopted by SHICL was even worse.  It is necessary to  

place  on  record  the  fact,  that  the  SHICL,  one  of  the  two  concerned  

companies, never ever disclosed the names and other connected details of  

its investors to the SEBI.  We made a repeated poser, during open hearing  

(in  the  present  writ  petition),  about  SHICL  having  never  furnished  its  

investor  details.  The above  position  was confirmed  by  learned  counsel  

representing  the  SEBI.   Unfortunately,  Mr.  S.  Ganesh,  learned  Senior  

Counsel for the petitioner, on the last day of hearing, ventured to contest

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the above position.  He handed over to us two volumes of papers running  

into 260 pages under the title – Note on information provided by SHICL to  

the SEBI).  We required him to invite our attention to documents indicating  

disclosure of the above information.  His subterfuge stood exposed, when  

no material depicting disclosure of names and other connected details by  

SHICL to the SEBI emerged from the two volumes of papers, handed over  

to us.  What is essential to record is, that till date SHICL has never ever  

supplied investor related details to the SEBI.  A fact about which there is  

now  no  ambiguity  (specially  after,  learned  counsel,  filed  the  

aforementioned  two  volumes  of  papers).   Does  it  lie  in  the  mouth  of  

learned counsel to assert, that unjustified conclusions have been recorded,  

in the impugned order dated 4.3.2014 against the two companies without  

any  basis?   We  are  fully  satisfied,  that  the  factual  position  depicted  

hereinabove,  fully justifies our mentioning in the impugned order (dated  

4.3.2014),  that  the  contemnors  had  maintained  an  unreasonable  stand  

throughout the proceedings before the SEBI, SAT, High Court, and even  

before this Court.

39. According to the assertions made by SIRECL, it had collected an  

amount of Rs.19,400,86,64,200 through its open ended schemes between  

25.4.2008 and 13.4.2011.  Its collections, after taking into consideration  

redemptions, statedly stood at Rs.17,565,53,22,500 as on 31.8.2011.  The  

above collection was allegedly made from 2,21,07,271 investors.  It is not  

possible for us to narrate similar figures in respect of the amount collected

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by SHICL, or for that matter, the number of investors, because the records  

depicting the above details have never been disclosed by SHICL.  The  

figures mentioned in the order dated 31.8.2012, are therefore, the figures  

provided by SIRECL and SHICL.  All those figures are unauthenticated.  In  

sum and substance, nothing was known.  All assertions made by the two  

companies  were  subject  to  verification.   The  above  factual  position  

indicates the basis and the rationale, of the directions issued by this Court  

on 31.8.2012.  We had simply required the two companies, to deposit the  

admitted  investor  funds.   We  had  directed  disbursement,  only  on  

verification.  The factual position depicted above also inter alia depicts, that  

the petitioner – Mr. Subrata Roy Sahara as promoter, and Mr. Ashok Roy  

Choudhary and Mr. Ravi Shankar Dubey, as directors, were always treated  

as actively involved in the matter, and therefore, various orders (including  

restraint orders) were passed, wherein they were expressly named.  Since  

they  shouldered  the  overall  responsibility  of  the  affairs  of  the  two  

companies, it was fully justified for this Court, to require them to comply  

with the orders passed by this Court on 31.8.2012 and 5.12.2012.

IV. Efforts made by this Court, to cajole the contemnors, including  the petitioner – Mr. Subrata Roy Sahara, for compliance of the  orders of this Court, dated 31.8.2012 and 5.12.2012

40. During the course of  hearing of  the instant  writ  petition,  we were  

given to understand, that all counsel representing the petitioner were taken  

by surprise when we passed the order dated 4.3.2014 (extracted at the  

beginning of this order).  It was submitted, that a person of the eminence of

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the petitioner,  could not  be suddenly sent to jail  without  notice.   It  was  

asserted, that the petitioner had entered appearance to assist this Court,  

and to explain his position, but no opportunity was granted to him.  Some  

of the learned counsel  representing the petitioner accordingly  described  

the  impugned  order  dated  4.3.2014  as  a  “draconian  order”.   Because,  

according to them, the said impugned order, had violated the petitioner’s  

rights under Article 21 of the Constitution of India.  And also because, it  

was  issued  without  affording  the  petitioner  an  opportunity  of  showing  

cause.   

41. The  bona fides of the above submission, are difficult to fathom.  It  

seems to us, that rather than the petitioner tendering his explanation to this  

Court,  for  not  complying  with  the  orders  passed  by  it,  the  petitioner’s  

counsel  were  posing  a  question  to  this  Court  to  explain  to  them,  the  

legitimacy of the procedure adopted by the Court.  In our understanding,  

learned counsel who represented the petitioner, were surely insincere to  

the cause of justice, when they drummed their assertions, without blinking  

an eye; since they were aware, that the factual position was otherwise.  

For learned counsel  for the petitioner,  to advance such submissions, to  

state  the  least,  was  unimaginable.   Both  Mr.  Ram Jethmalani  and  Dr.  

Rajeev Dhawan,  were lead counsel  representing the contemnors in the  

contempt proceedings.  They surely ought to have known better, because  

they had appeared in  the contempt  proceedings,  in  the defence of  the  

contemnors.  It is not for a Court, to tender any explanation to any litigant,

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or to his counsel.  Accordingly, it should never be considered as obligatory,  

on the part of this Court, to tender any such explanation.  Undoubtedly, it is  

open to a party to seek review, of an order passed by this Court, under  

Article 137 of the Constitution of India.  Or to file a curative petition, after a  

review petition  had been  rejected,  as  laid  down by this  Court  in  Rupa  

Ashok Hurra’s case (supra),  if  it  is felt  that a serious mistake had been  

committed.  Just for this case, in order to depict the position in its correct  

perspective, we shall narrate in the succeeding paragraphs, the long rope  

which was extended to the petitioner (as also, to the other contemnors) to  

comply  with  the  directions  issued  by  this  Court  (on  31.8.2012  and  

5.12.2012), before the order dated 4.3.2014 was passed.

42. Ever since the disposal of Civil Appeal nos. 9813 and 9833 of 2011,  

on the issue of compliance (as also, the alleged non-compliance), one or  

the other proceeding was listed for hearing, for no less than the following  

35 dates, before the order dated 4.3.2014 was passed:-

“11.9.2012, 28.9.2012, 19.10.2012, 19.11.2012, 8.1.2013, 6.2.2013,  8.2.2013,  19.2.2013,  25.2.2013,  4.4.2013,  22.4.2013,  2.5.2013,  8.5.2013,  17.7.2013,  24.7.2013,  30.7.2013,  6.8.2013,  13.8.2013,  26.8.2013, 2.9.2013, 16.9.2013, 4.10.2013, 28.10.2013, 31.10.2013,  1.11.2013,  20.11.2013,  21.11.2013,  11.12.2013,  17.12.2013,  2.1.2014, 9.1.2014, 28.1.2014, 11.2.2014, 20.2.2014 and 26.2.2014”

In recording the dates of hearing, we have not taken into consideration the  

dates of hearing in Civil Appeal no. 8643 of 2012 (and Writ Petition (Civil)  

no. 527 of 2012), during the proceedings whereof a three-Judge Bench of  

this Court, passed the order dated 5.12.2012.  Surely, during the 35 dates  

of hearing, whereafter the order dated 4.3.2014 was passed, the petitioner

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must  have  been  able  to  understand,  what  was  going  on.   For  the  

proceedings were not smooth and favourable for the petitioner.  A number  

of earlier orders, affected the petitioner’s rights adversely.  It is therefore,  

that we have recorded hereinabove, that the stand canvassed by learned  

counsel was unimaginable.  We may therefore first record the happenings,  

after we passed the order dated 31.8.2012.

43. On 6.2.2013, this Court issued notices in Contempt Petition (Civil)  

nos. 412 and 413 of 2012.  Personal appearance of the contemnors (which  

included the petitioner) was dispensed with.  The SEBI was also directed  

to file a status report.  The receipt of the above notices, should have been  

the first information to the petitioner, of this Court’s concern, about the non-

compliance  of  the  order  dated  31.8.2012.   The  petitioner  came  to  be  

represented in the contempt proceedings through counsel,  on 4.4.2013.  

Learned  counsel  for  the  petitioner,  have  however  been  making  their  

submissions as if, the petitioner had entered appearance only on 4.3.2014,  

when the impugned order was passed.  There were actually 25 dates of  

hearing  after  the  petitioner  had  been  represented  in  the  contempt  

proceedings, and before the impugned order was passed (on 4.3.2014).

44. We were shocked, when we were informed that extension of time to  

comply with this Court’s orders dated 31.8.2012 and 5.12.2012 was, in the  

first  instance, sought  by the two companies,  from the SEBI.  When the  

SEBI declined, the concerned parties approached the SAT by preferring  

Appeal nos. 42 of 2013 (Subrata Roy Sahara v. SEBI), 48 of 2013 (SHICL

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v.  SEBI),  49  of  2013  (SIRECL  v.  SEBI)  and  50  of  2013  (Ashok  Roy  

Chaudhary v. SEBI).  For just the same purpose, Writ Petition no. 2088 of  

2013, was filed before the High Court.  We are at a loss to understand,  

how relaxation of an order passed by this Court, could have been sought  

either from the SEBI or the SAT, or for that matter, even from the High  

Court.  How this abuse of process, was handled by us, stands recorded in  

a subsequent paragraph.

45. The SEBI  filed Interlocutory  Application  nos.  72  and 73  of  2013.  

Notice  in  the  above  applications  was  issued  for  8.5.2013.   The  above  

Interlocutory  Applications  pertained  to  proceedings  initiated  by  the  

contemnors before the SAT and the High Court.   The said proceedings  

were initiated by the contemnors, after the SEBI had declined to extend the  

time  frame,  fixed  by  this  Court  through  its  order  dated  31.8.2012.  

Interestingly,  the petitioner  in  the  instant  writ  petition,  had initiated  one  

such proceeding in his own name (Appeal no. 42 of 2013, Subrata Roy  

Sahara v. SEBI).  We are of the prima facie view, that the initiation of the  

above proceedings was aimed at diverting the issue of implementation of  

our order dated 31.8.2012.  Accordingly on 17.7.2013, we directed “… that  

no High Court,  Securities Appellate Tribunal  and any other Forum shall  

pass any order against the orders passed by the Securities and Exchange  

Board of  India (SEBI)  in  implementation of  this  Court’s  judgment  dated  

31.8.2012”.  

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46. On 24.7.2013, this Court issued notice, in Contempt Petition (Civil)  

no. 260 of 2013 on account of non-compliance of the orders passed by this  

Court on 5.12.2012.  The order dated 5.12.2012 (passed in  Civil Appeal  

no.  8643  of  2012  and  Writ  Petition  (Civil)  no.  527  of  2012) is  being  

extracted hereunder:-

“This appeal is directed against the judgment and order dated 29th  November,  2012,  passed  by  the  Securities  Appellate  Tribunal,  in  Appeal No.221 of 2012, holding that the same was premature and  was not, therefore, maintainable  

2. In  earlier  appeals,  being  C.A.No.9813  of  2011  and  C.A.No.9833 of 2011, this Court was concerned with the powers of  the Securities and Exchange Board of India (SEBI) under Section  55A(b) of the Companies Act, 1956, to administer various provisions  relating  to  issue and transfer  of  securities  to  the  public  by  listed  companies or companies which intend to get their securities listed  on any recognized Stock Exchange in India and also the question  whether  Optionally  Fully  Convertible  Debentures,  offered  by  the  appellants,  should  have  been  listed  on  any  recognized  Stock  Exchange in India, being Public Issue under Section 73 read with  Section 60B and allied provisions of the Companies Act. The said  appeals were heard and finally disposed of on 31st August, 2012,  with the following directions:-

“1. Saharas (SIRECL & SHICL) would refund the amounts  collected  through  RHPs  dated  13.3.2008  and  16.10.2009  along with interest @ 15% per annum to SEBI from the date of  receipt of the subscription amount till the date of repayment,  within  a period  of  three  months from today,  which shall  be  deposited  in  a  Nationalized  Bank bearing  maximum rate  of  interest.

2. Saharas  are  also  directed  to  furnish  the  details  with  supporting documents to establish whether they had refunded  any amount to the persons who had subscribed through RHPs  dated 13.3.2008 and 16.10.2009 within a period of 10 (ten)  days from the pronouncement of this order and it is for the  SEBI  (WTM)  to  examine  the  correctness  of  the  details  furnished.

3. We make it  clear  that  if  the documents  produced  by  Saharas are not found genuine or acceptable, then the SEBI

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(WTM) would proceed as if the Saharas had not refunded any  amount to the real and genuine subscribers who had invested  money through RHPs dated 13.3.2008 and 16.10.2009.

4. Saharas are directed to furnish all  documents in their  custody,  particularly,  the  application  forms  submitted  by  subscribers, the approval and allotment of bonds and all other  documents  to  SEBI  so  as  to  enable  it  to  ascertain  the  genuineness  of  the  subscribers  as  well  as  the  amounts  deposited, within a period of 10 (ten) days from the date of  pronouncement of this order.

5. SEBI  (WTM)  shall  have  the  liberty  to  engage  Investigating Officers,  experts  in Finance and Accounts and  other supporting staff to carry out directions and the expenses  for the same will be borne by Saharas and be paid to SEBI.

6. SEBI  (WTM)  shall  take  steps  with  the  aid  and  assistance of Investigating Authorities/Experts in Finance and  Accounts  and  other  supporting  staff  to  examine  the  documents  produced  by  Saharas  so  as  to  ascertain  their  genuineness  and  after  having  ascertained  the  same,  they  shall identify subscribers who had invested the money on the  basis of  RHPs dated 13.3.2008 and 16.10.2009 and refund  the  amount  to  them  with  interest  on  their  production  of  relevant  documents  evidencing  payments  and after  counter  checking the records produced by Saharas.

7. SEBI  (WTM),  in  the  event  of  finding  that  the  genuineness  of  the  subscribers  is  doubtful,  an  opportunity  shall  be  afforded  to  Saharas  to  satisfactorily  establish  the  same as being legitimate and valid.  It  shall  be open to the  Saharas,  in such an eventuality  to associate the concerned  subscribers  to  establish  their  claims.  The  decision  of  SEBI  (WTM) in this behalf will be final and binding on Saharas as  well as the subscribers.

8. SEBI  (WTM)  if,  after  the  verification  of  the  details  furnished, is unable to find out the whereabouts of all or any of  the  subscribers,  then  the  amount  collected  from  such  subscribers will be appropriated to the Government of India.

9. We  also  appoint  Mr.  Justice  B.N.  Agrawal,  a  retired  Judge of this Court to oversee whether directions issued by  this Court  are properly  and effectively  complied with by the  SEBI  (WTM)  from the  date  of  this  order.  Mr.  Justice  B.N.  Agrawal would also oversee the entire steps adopted by SEBI

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(WTM)  and  other  officials  for  the  effective  and  proper  implementation of the directions issued by this Court. We fix  an amount of Rs.5 lakhs towards the monthly  remuneration  payable to Mr. Justice B.N. Agrawal, this will be in addition to  travelling,  accommodation  and  other  expenses,  commensurate  with  the status  of  the office held  by  Justice  B.N. Agrawal, which shall be borne by SEBI and recoverable  from Saharas. Mr. Justice B.N. Agrawal is requested to take  up this assignment without affecting his other engagements.  We also order that all administrative expenses including the  payment  to  the  additional  staff  and  experts,  etc.  would  be  borne by Saharas.  

10. We also make it clear that if Saharas fail to comply with  these directions and do not effect refund of money as directed,  SEBI  can  take  recourse  to  all  legal  remedies,  including  attachment and sale of properties, freezing of bank accounts  etc. for realizations of the amounts.

11. We also direct  SEBI(WTM) to submit  a status report,  duly approved by Mr. Justice B.N. Agrawal, as expeditiously  as  possible,  and  also  permit  SEBI  (WTM)  to  seek  further  directions from this Court, as and when, found necessary. The  appeals  were,  therefore,  dismissed  with  the  aforesaid  directions.

3. As indicated above, the present appeal is directed against the  order  of  the  Securities  Appellate  Tribunal,  in  the  Appeal,  being  No.221  of  2012,  which  had  been  filed  on  27th November,  2012,  complaining that the SEBI had not accepted the documents, which  were  to  be  furnished  to  it  by  the  appellants,  since  they  were  tendered a couple of days after the stipulated period.

4. We are not inclined to interfere with the substance of the order  of the Tribunal impugned in this appeal. The only question which we  are inclined to consider  is  whether  the time for  implementing the  directions contained in the earlier order of 31st August, 2012, may  be extended or not.

5. Mr. Gopal Subramanium, learned Senior Counsel, submitted  that after the aforesaid order had been passed, certain amounts had  been paid to investors and that according to them a sum of ` 5120/-  Crores  remained  to  be  paid  to  SEBI,  out  of  the  amount  already  indicated, for the purpose of distribution to the investors.

6. Having  heard  learned  Senior  Counsel,  Mr.  Gopal  Subramanium, appearing for the appellants, Mr. Datar, for SEBI and

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Mr.  Vikas  Singh,  appearing  for  Universal  Investors  Association  &  Ors., who has filed a separate Writ Petition,  we are not inclined to  accept the submissions made by Mr. Gopal Subramanium, at their  face value,  since,  in  the order  of  31st  August,  2012,  it  has been  indicated that if any payments had been made, the details thereof,  along with supporting documents, were to be submitted to SEBI to  verify  the  same.  Essentially,  the  appellants  have  failed  on  both  counts, since neither the amount indicated in the order, together with  interest  @ 15% per annum, accrued thereon,  has been paid,  nor  have the documents been submitted within the time stipulated in the  said order. The reliefs prayed for in the writ petition filed by Universal  Investors Association,amounts to a review of the order passed by  this Court on 31.08.2012.

7. We, therefore, dispose of the appeal and the writ petition, as  also the intervention applications with the following directions:-

(I)          The  appellants  shall  immediately  hand  over  the    Demand Drafts, which they have produced in Court, to SEBI,   for a total sum of ` 5120/- Crores and deposit the balance in   terms of the order of 31st August, 2012, namely, ` 17,400/-   Crores  and  the  entire  amount,  including  the  amount   mentioned above, together with interest at the rate of 15 per   cent,  per  annum,  with  SEBI,  in  two  installments.  The  first   installment  of  10,000/-Crores,  shall  be deposited with  SEBI   within the first week of January, 2013. The remaining balance,   along with the interest, as calculated, shall be deposited within   the first week of February, 2013. The time for filing documents   in support of the refunds made to any person, as claimed by   the appellants, is extended by a period of 15 days. On receipt   of  the said documents,  SEBI shall  implement the directions   contained in the order passed on 31st August, 2012. In default   of deposit of the said documents within the stipulated period,   or  in  the  event  of  default  of  deposit  of  either  of  the  two   installments, the directions contained in paragraph 10 of the   aforesaid  order  dated  31st  August,  2012,  shall  immediately   come into  effect  and SEBI  will  be  entitled to take all  legal   remedies,  including  attachment  and  sale  of  properties,   freezing  of  bank accounts  etc.  for  relisation  of  the balance   dues.

8. Let a copy of this order be made available to Mr. Justice B.N.  Agrawal,  who has been appointed by this Court,  by tomorrow,  to  enable  His Lordship  to oversee the working of  the Order  of  31st  August, 2012, and this Order passed by us today.

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9. Having regard to the nature of the case, the appellants shall  bear the costs of the respondent(s) in these proceedings.

10. In the event any excess payment is found to have been made  by the appellants by virtue of the earlier Order and this Order, the  same shall be refunded to the appellants by SEBI.”

(emphasis is ours)

When the above order was passed by this Court, should the petitioner not  

have known, that the exercise of seeking extension of time had come to an  

end, and the first installment of Rs.10,000 crores had to be paid “within the  

first week of January, 2013”?   

47. Even though responses to the contempt petitions referred to above,  

had been filed,  and we were hearing  learned counsel  representing  the  

contemnors, on the subject of contempt, we were also trying to cajole the  

two companies, into an understanding that they were obliged to comply  

with the orders dated 31.8.2012 and 5.12.2012.  In our view, compliance of  

the above orders would reduce the seriousness of the issue.  The effort on  

our part was always to avoid hardship, to any of the concerned parties.  

But  in  our  above  effort,  we  could  not  compromise,  the  interest  of  the  

investors.   As  already  noticed,  in  the  discussion  recorded  under  the  

preceding  heading,  the  two  companies  never  supplied  any  authentic  

details  of  their  investors.   Nor  the  details  of  the  moneys  collected.  

Whatever  the two companies asserted,  had to be accepted on its face  

value, to proceed further.  When learned counsel for the petitioner, made a  

proposal  to  secure  the  amount  payable  to  the  investors  of  the  two  

companies, we were not averse to the proposal.  We wished to explore  

some  intermediary  means  to  secure  compliance.   That  would  have

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deferred adoption of harsher measures.  With the above object in mind, we  

accepted the proposal of the learned counsel for the petitioner (and the  

other  contemnors),  to  furnish  a  list  of  unencumbered  immovable  

properties,  which  would  secure  the  liability  of  the  two  companies  (for  

compliance of the order dated 31.8.2012, as well as, the subsequent order  

dated 5.12.2012).  The list of properties furnished to this Court, could not  

have been so furnished, without the petitioner’s express approval.  There  

can be no doubt about the aforesaid inference, because the stance now  

adopted by the petitioner shows, that the petitioner is in absolute charge of  

all the affairs of the companies.  And nothing can move without his active  

involvement.  During the course of hearing of the present petition, learned  

counsel have repeatedly emphasized that further deposits will be possible,  

only  after  the  petitioner  is  released  from judicial  custody.   This  stance  

shows, that in the affairs of the Sahara Group, Mr. Subrata Roy Sahara, is  

the only person who matters.  And therefore, the other individual directors,  

may have hardly any say in the matter.

48. The lists of properties which were provided by the two companies  

during the above exercise, were rejected by the SEBI, for good reason.  It  

is  not  necessary  for  us  to  record  the  details  herein,  why  the  lists  of  

properties  furnished to this  Court  were found to be unacceptable.   We  

may,  however,  record,  that  we  were  satisfied  with  the  submissions  

advanced at the behest of the SEBI, that the proposed properties, would  

not secure the amount of the refund contemplated by the orders of this

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court.  It is therefore, that another attempt was made, consequent upon an  

offer made on behalf of the two companies, that other companies within  

the  framework  of  the Sahara  Group,  would also make available  to  the  

SEBI, their unencumbered immovable properties.  Is it possible for anyone  

to  say,  after  the  petitioner  agreed  to  provide  the  list  of  immovable  

properties,  that  he  was  not  aware  of  the  nature  of  proceedings  being  

conducted in this Court, or their gravity?  Is it possible for the petitioner to  

say,  that  he was not  aware  of  the reason,  why these lists  were being  

furnished to this Court?  There can be no doubt, that it was abundantly  

clear to the petitioner, that the properties mentioned in the lists furnished,  

would  be  sold  if  necessary,  to  comply  with  this  Court’s  order  dated  

31.8.2012.  This was sufficient notice to the petitioner, of the seriousness  

of the situation.

49. Since  our  efforts  of  this  Court,  to  secure  the  investors’  interests,  

determined  vide  its  order  dated  31.8.2012,  were  being  systematically  

frustrated this Court in order to demonstrate the seriousness of the issue,  

directed that “… the alleged contemnors (respondents) shall not leave the  

country without the permission of this Court…” till compliance of the above  

order.  The above direction was issued on 28.10.2013.  Is it open to the  

learned  counsel  for  the  petitioner,  after  the  above  restraint  order  was  

passed, to contend that the petitioner was not aware of the happenings in  

Court?  He was aware that the above restraint order was passed, during  

the pendency of the contempt proceedings, which were initiated because

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of  non-compliance of  the  orders  dated  31.8.2012 and 5.12.2012.   It  is  

therefore incorrect to contend, that the petitioner had no notice, and was  

taken unawares.  During the course of one of the subsequent hearings (on  

the subject), learned counsel representing the contemnors, clarified, that  

the properties in the list provided to this Court, could not be put to sale, in  

execution of the orders dated 31.8.2012 and 5.12.2012.  What was the  

purpose  sought  to  be  achieved,  if  the  properties  (included  in  the  list  

furnished  to  this  Court)  could  not  be  sold,  for  the  satisfaction  of  the  

judgment  dated  31.8.2012?   Surely,  the  contemnors,  were  taking  this  

Court  for  a  ride.   The  demeanour  of  the  contemnors  to  stonewall  the  

process of law, from the time investigation was commenced by the SEBI in  

2009, continued even after the judicial process had attained finality, by this  

Court’s order dated 31.8.2012.  All along the petitioner feigns ignorance of  

everything.

50. Even though this Court had no intention to grant any relaxation to  

the contemnors, on the restraint order passed on 28.10.2013 (by which the  

contemnors,  were  stopped  from  leaving  this  country),  yet  when  

Interlocutory Application no. 4 was filed (in Contempt Petition (Civil)  no.  

260  of  2013),  contending  that  Mr.  Subrata  Roy  Sahara,  had  foreign  

commitments,  the  Court  relaxed  the  above  order,  and  permitted  the  

petitioner  to  go  abroad.   But,  simultaneously  the  Court  directed  the  

petitioner,  to immediately return back, and be present in the country,  in  

case of non-compliance of this Court’s directions, (to submit original title

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deeds of unencumbered properties of the Sahara Group of Companies).  

On 21.11.2013,  the Court  was informed by the learned counsel  for the  

contemnors, that the properties depicted in the list furnished to this Court  

(in furtherance of the order dated 28.10.2013), could not be sold without  

the approval  of  the Board of Directors,  of the concerned companies (to  

which the individual properties belonged).  The Court was then constrained  

to record, that the order dated 28.10.2013 passed by this Court, had not  

been complied with, in its letter and spirit.  It is, therefore, the Court took  

one  further  step  to  demonstrate  to  the  petitioner,  as  also,  the  other  

contemnors, the seriousness of the issue, by ordering on 21.11.2013 “…  

that the Sahara Group of Companies shall not part with any movable or  

immovable property, until further orders...”  Is it open to the petitioner to  

contend,  that  he had no notice,  of  the above Court  proceedings?  The  

business obligations of the petitioner, were bound to have been seriously  

affected,  by the  above order.   The petitioner  would have to  be hugely  

unconcerned and disinterested, if he was still unaware of the nature of the  

ongoing contempt proceedings; and where the proceedings were leading  

to.   The Court  further directed (by the same order),  that all  the alleged  

contemnors  would not  leave the country,  without  the permission of  this  

Court.  By this, the Court restored its earlier order dated 28.10.2013.  This  

order also had serious repercussions, for the petitioner.  When the above  

order was passed, should the petitioner be permitted to contend, that he  

did not have any adverse business consequences?  If it did, was it open

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for  him to  assert,  that  he  had  no  notice,  and  was  unaware  about  the  

direction towards which, the contempt proceedings were moving?  

51. Consequent upon passing of the above order dated 21.11.2013, a  

fresh list of properties was made available by the companies, to this Court.  

The Court permitted learned Senior Counsel representing the SEBI, time,  

to examine the authenticity of the list of properties furnished, including the  

valuation reports pertaining to the said properties.   After a few dates of  

hearing, learned counsel for the contemnors informed this Court, that the  

list of properties offered, could not be sold for the execution of this Court’s  

orders dated 31.8.2012 and 5.12.2012.  We were then satisfied, that all the  

efforts  made by us were systematically  scuttled by the contemnors,  by  

adopting  one  or  the  other  excuse.   The  petitioner  was  adopting  these  

tactics because, he had notice.  Notice to comply with the orders dated  

31.8.2012 and 5.12.2012.  Yet, he stonewalled all efforts for compliance.  

He adopted the latter.  Not even a single paisa has been deposited, after  

this Court’s order dated 5.12.2012.

52. During the pendency of the contempt proceedings, we also decided  

to determine the veracity of the redemption theory, projected by the two  

companies.  As a matter of law, it was not open to the two companies to  

raise the aforesaid defence.  This is because, exactly the same defence  

was raised by the two companies, when they had approached this Court  

by filing Civil Appeal no. 8643 of 2012 (and Writ Petition (Civil) no. 527 of  

2012).  In the aforesaid Civil Appeal, it was submitted on behalf of the two

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companies,  that  they  should  be  exempted  from depositing  the  amount  

already redeemed by them.  The above contention advanced by the two  

companies was not accepted, by the three-Judge Division Bench, when it  

disposed of Civil Appeal no. 8643 of 2012 (and Writ Petition (Civil) no. 527  

of  2012) by  order  dated  5.12.2012.   It  is,  therefore  apparent,  that  the  

instant defence of having already redeemed most of the OFCD’s, was not  

open to the two companies (and even the contemnors).   Yet,  so as to  

ensure, that no injustice was done, we permitted the two companies to  

place material  on the record of  this case, to substantiate the factum of  

redemption.  The above issue has been dealt with by us in this judgment  

(under the heading IX, “A few words, about the defence of redemption of  

OFCD’s, offered by the two companies”).  It is, therefore, that details about  

the conclusions on the alleged redemptions, are not being expressed here.  

All that needs to be stated is, that the two companies adopted the same  

tactics, as were adopted by them on all  earlier occasions.  No material  

worth  the name,  was ever  produced before this  Court,  to  establish  the  

defence of redemption, even though ample opportunities were afforded to  

the petitioner to do so.  The instant factual position, has been placed on  

the record of this case, only to demonstrate the efforts made by this Court,  

to  cajole  the  contemnors  (including  the  petitioner  –  Mr.  Subrata  Roy  

Sahara)  into  compliance  of  this  Court’s  orders  dated  31.8.2012  and  

5.12.2012.  In the process, the Court examined each and every defence  

raised  on  behalf  of  the  two  companies.   The  Court  also  examined  

alternative  avenues  by  which,  the  compliance  of  the  orders  dated

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31.8.2012 and 5.12.2012, could be ensured.  In recording our conclusions,  

we may only state, that the petitioner only engaged eminent learned Senior  

Counsel, to avoid or defer compliance.

53. Having done the utmost, in requiring the contemnors to comply with  

the orders dated 31.8.2012 and 5.12.2012, wherein this Bench would meet  

exclusively  for  the  benefit  of  the  contemnors,  the  Court  felt  that  it  had  

miserably failed, to persuade the contemnors to comply with its directions.  

Accordingly  on  4.3.2014,  in  exercise  of  the  powers  conferred  under  

Articles 129 and 142 of the Constitution of India, this Court ordered the  

arrest  and  detention  of  all  the  contemnors  (except  Mrs.  Vandana  

Bhargava) in judicial custody at Delhi, till the next date of hearing.  By the  

order  dated  4.3.2014,  the  Court  expressly  granted  liberty  to  the  

contemnors to propose an acceptable solution, for execution of its orders.  

Mrs. Vandana Bhargava, who was excused from the order of detention,  

was permitted  to  coordinate  with those whose detention  the  Court  had  

ordered,  so  as  to  enable  them to  formulate  an  acceptable  solution  for  

execution of the above orders.  It is apparent, that right from the beginning,  

and  even  after  ordering  the  detention  of  the  contemnors  including  the  

petitioner  herein,  The  Court  was  only  endeavouring,  to  ensure  the  

compliance  of  the  orders  passed  by  this  Court  on  31.8.2012  and  

5.12.2012.  On the following date of hearing i.e., on 7.3.2014, at the asking  

of  the  learned  counsel  representing  the  contemnors,  we enhanced  the  

visitation times permissible to the detenues, so as to enable them to meet

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their  financial  consultants  and  lawyers  for  two  hours  every  day.   On  

26.3.2014,  unilaterally,  and  without  the  asking  of  the  contemnors,  the  

Court also passed the following order:-

“We have gone through the fresh proposal  filed  on 25.03.2014.     Though the same is not in compliance with our  Order dated 31.08.2012 or the Order  passed  by  the  three-Judge  Bench  of  this  Court  on 05.12.2012 in Civil  Appeal No.8643 of  2012  and on 25.02.2013   in   I.A.  No.67  of  2013 in  Civil  Appeal  No.9813 of 2011 with I.A. No.5  of  2013 in Civil Appeal No.9833 of  2011, we are inclined to grant interim bail to the contemnors who are  detained   by   virtue   of   our   order   dated  04.03.2014,  on  the  condition  that  they  would  pay  the  amount  of Rs.10,000 crores -  out of which Rs.5,000 crores to be deposited before this Court and  for  the  balance  a  Bank  Guarantee  of  a  nationalized  bank  be  furnished in favour of S.E.B.I. and be deposited before this Court.

On  compliance,  the  contemnors  be  released  forthwith  and  the amount deposited be released to S.E.B.I.  We  make  it  clear  that  this  order  is  passed  in  order  to facilitate the  contemnors to further raise the balance amount so as to comply with  the Court's Orders mentioned above.”

We  are  not,  and  have  never  been  interested  in  the  detention  of  the  

petitioner (and the two directors) in judicial custody.  Our only purpose has  

been,  to ensure compliance of  this Court’s orders dated 31.8.2012 and  

5.12.2012.

54. Despite affording the contemnors close to 40 hearings, and despite  

putting  them to  terms  which  ought  to  have  shown  them,  that  leniency  

would not be extended forever, the contemnors have remained adamant,  

and  steadfast.   They  made  only  one  deposit  of  Rs.5,120  crores  on  

5.12.2012.  Besides that amount, not a single paisa has been deposited by  

the contemnors.  The thought, that repeatedly comes to our mind is, why  

the two companies had not been able to pay anything for the last about 1½

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years  (close  to  17  months)  from  this  Court’s  order  dated  5.12.2012,  

whereas,  in  a  period  of  three/four  months  (before  our  order  dated  

31.8.2012) SIRECL claims to have unilaterally refunded Rs.17,443 crores,  

and SHICL claims to have on its own, redeemed Rs.5,442 crores, to their  

investors.   If  the money could be easily  collected and disbursed to the  

investors then, why not now?  Considering the attitude of the petitioner  

before this Court, one wonders what would happen to the judicial system, if  

every Court  order had to be implemented, in the manner as the one in  

hand.  We are informed, that the total amount presently payable in terms of  

this Court’s order dated 31.8.2012, has swelled up to Rs.36,608 crores.  In  

the above scenario, no other order, but the one passed by us, could have  

been passed on 4.3.2014.   

55. Our leniency is apparent from the fact, that we have by our order  

dated 26.3.2014 ordered the petitioner  and the other  contemnors  to be  

released on bail, on the receipt of a payment of Rs.10,000 crores, which is  

less than a third of the amount presently due.  That would constitute, the  

first small step, taken by the contemnors, for the satisfaction of the orders  

passed  by  this  Court  on  31.8.2012  and 5.12.2012.   The above  orders  

must, under all circumstances, be given effect to in letter and spirit, and till  

that  is done,  the process of  enforcing compliance,  shall  have to go on.  

The petitioner may be released from judicial custody, if he complies with  

our order dated 26.3.2014.  That would however not excuse the petitioner  

from making the balance payment, in terms of the orders dated 31.8.2012

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and 5.12.2012, even if it means the re-arrest of the petitioner again and  

again, for the purpose of compliance of this Court’s orders.

V. Whether there is no provision, whereunder an order of arrest  and detention  can  be  passed  for  the  execution  of  a  money- decree?

56. One of the emphatic contentions advanced by some of the learned  

counsel for the petitioner was, that execution of a money-decree by way of  

arrest  was  a  procedure  “unknown  to  law”.   Recourse  to  arrest  of  an  

individual  for  recovery  of  money,  according  to  one  learned  counsel,  

constituted a “draconian order”.  During the course of their submissions,  

learned counsel  for the petitioner,  chose to address the Court  by using  

language, which we had not heard (either as practicing Advocates, or even  

as  Judges  in  the  High  Courts  or  this  Court).   We  would,  however,  

unhesitatingly state, that it  is not possible for us to accept,  that learned  

counsel  who  addressed  the  instant  submission,  were  unaware  of  the  

relevant provisions of law.  It is however interesting to notice, that in the  

written  submissions  handed  over  to  us  during  the  course  of  hearing,  

reference was actually made to such a provision.  It was asserted in the  

written  submissions  prepared  by  Mr.  Ram  Jethmalani,  that  “No  

imprisonment for failure to comply with a decree or order for payment of  

money can be inflicted on a person liable to pay in compliance, without  

complying with the conditions of Section 51 proviso (b) of the CPC.”.  A  

contradiction in terms.  But there were many such contradictions, even on  

facts.  A new phase of advocacy seems to have dawned.

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57. It is, therefore, that we shall first venture to set out the provisions  

contained in the Code of Civil Procedure, 1908 (hereinafter referred to as,  

the  CPC),  as  also,  the  Code  of  Criminal  Procedure,  1973  (hereinafter  

referred to as, the Cr.P.C.), to highlight the provisions whereunder, a Court  

may order arrest and detention, for the execution of a money-decree (or for  

the enforcement of a financial liability).

58. It  is  necessary,  first  of  all,  to  place  on  record,  the  provisions  of  

Sections  51,  55  and  58  of  the  CPC.   The  same  are  being  extracted  

hereunder:-

“51. Powers of Court to enforce execution Subject  to  such  conditions  and  limitations  as  may  be  prescribed,  the Court may, on the application of the decree- holder, order execution of the decree-

(a) by delivery of any property specifically decreed;

(b) by attachment and sale or by the sale without attachment  of any property;

(c)  by  arrest  and  detention  in  prison  for  such  period  not  exceeding the period specified in section 58, where arrest and  detention is permissible under that section;

(d) by appointing a receiver; or

(e) in such other manner as the nature of the relief granted  may require:

Provided that, where the decree is for the payment of money,  execution by detention in prison shall not be ordered unless,  after  giving  the  judgment-debtor  an  opportunity  of  showing  cause why he should not be committed to prison, the Court,  for reasons recorded in writing, is satisfied-

(a)  that  the  judgment-debtor,  with  the  object  or  effect  of  obstructing or delaying the execution of the decree,-

(i)  is  likely to abscond or leave the local  limits of  the  jurisdiction of the Court, or

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(ii)  has,  after  the  institution  of  the  suit  in  which  the  decree was passed, dishonestly transferred, concealed,  or removed any part of his property, or committed any  other act of bad faith in relation to his property, or

(b) that the judgment-debtor has, or has had since the date of  the decree,  the means to pay the amount  of  the decree or  some substantial part thereof and refuses or neglects or has  refused or neglected to pay the same, or

(c) that the decree is for a sum for which the judgment-debtor  was bound in a fiduciary capacity to account.

Explanation.- In the calculation of the means of the judgment- debtor for the purposes of clause (b), there shall be left out of  account any property which, by or under any law or custom  having the force of law for the time being in force, is exempt  from attachment in execution of the decree.”

55. Arrest and detention

(1)  A  judgment-debtor  may  be  arrested  in  execution  of  a  decree at any hour and on any day, and shall,  as soon as  practicable,  be brought  before  the Court,  and his  detention  may be in the civil  prison of  the district  in  which the Court  ordering the detention is situate, or,  where such civil  prison  does not afford suitable accommodation, in any other place  which the State Government may appoint for the detention of  persons ordered by the Courts of such district to be detained:

Provided,  firstly,  that,  for  the  purpose  of  making  an  arrest  under this section,  no dwelling-house shall  be entered after  sunset and before sunrise:

Provided,  secondly,  that  no outer  door  of  a  dwelling-house  shall  be  broken  open  unless  such dwelling-house  is  in  the  occupancy of the judgment-debtor and he refuses or in any  way prevents access thereto, but when the officer authorised  to make the arrest  has duly gained access to any dwelling- house, he may break open the door of any room in which he  has reason to believe the judgment-debtor is to be found:

Provided, thirdly, that, if the room is in the actual occupancy of  a woman who is not the judgment-debtor and who according  to the customs of the country does not appear in public, the  officer authorised to make the arrest shall give notice to her  that  she  is  at  liberty  to  withdraw,  and,  after  allowing  a  reasonable time for her to withdraw and giving her reasonable

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facility for withdrawing, may enter the room for the purpose of  making the arrest:

Provided,  fourthly,  that,  where  the  decree  in  execution  of  which  a  judgment-debtor  is  arrested,  is  a  decree  for  the  payment of money and the judgment-debtor pays the amount  of the decree and the costs of the arrest to the officer arresting  him, such officer shall at once release him.

(2) The State Government may, by notification in the Official  Gazette, declare that any person or class of persons whose  arrest might be attended with danger or inconvenience to the  public  shall  not  be liable to arrest  in execution of  a decree  otherwise than in accordance with such procedure as may be  prescribed by the State Government in this behalf.

(3)  Where  a  judgment-debtor  is  arrested  in  execution  of  a  decree  for  the  payment  of  money  and  brought  before  the  Court,  the  Court  shall  inform him that  he  may apply  to  be  declared an insolvent, and that he may be discharged, if he  has not committed any act of bad faith regarding the subject of  the application and if he complies with provisions of the law of  insolvency for the time being in force.

(4) Where a judgment-debtor expresses his intention to apply  to  be  declared  an  insolvent  and  furnishes  security,  to  the  satisfaction  of  the  Court,  that  he  will  within  one  month  so  apply,  and  that  he  will  appear,  when  called  upon,  in  any  proceeding  upon  the  application  or  upon  the  decree  in  execution of  which he was arrested,  the Court may release  him from arrest, and, if he fails so to apply and to appear, the  Court may either direct the security to be realized or commit  him to the civil prison in execution of the decree.

58. Detention and release

(1) Every person detained in the civil prison in execution of a  decree shall be so detained,-

(a)  where the decree is for the payment  of  a sum of  money exceeding     five thousand rupees, for a period not    exceeding three months, and

(b)  where the decree is for the payment of a sum of  money  exceeding  two  thousand  rupees,  but  not  exceeding  five  thousand  rupees,  for  a  period  not  exceeding six weeks:

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Provided that he shall be released from such detention before  the expiration of the said period of detention-

(i)  on  the  amount  mentioned  in  the  warrant  for  his  detention being paid to the officer in charge of the civil  prison, or

(ii)  on  the  decree  against  him  being  otherwise  fully  satisfied, or

(iii) on the request of the person on whose application  he has been so detained, or

(iv) on the omission by the person, on whose application  he has been so detained, to pay subsistence allowance:

Provided,  also,  that  he  shall  not  be  released  from  such  detention under clause (ii) or clause (iii), without the order of  the Court.

(1A) For the removal of doubts, it is hereby declared that no  order  for  detention  of  the judgment-debtor  in  civil  prison  in  execution  of  a  decree  for  the  payment  of  money  shall  be  made,  where  the  total  amount  of  the  decree  does  not  exceed two thousand rupees.

(2)  A  judgment-debtor  released  from  detention  under  this  section  shall  not  merely  by  reason  of  his  release  be  discharged from his debt, but he shall not be liable to be re- arrested  under  the  decree  in  execution  of  which  he  was  detained in the civil prison.”

(emphasis is ours)

A perusal of Section 51 of the CPC, leaves no room for any doubt, that for  

the execution of a decree for payment of money, an executing Court may  

order the arrest and detention of the judgment-debtor.  Section 55 of the  

CPC lays down the manner and modalities to be followed, while executing  

an  order  of  arrest  or  detention.   A  perusal  of  Section  58  of  the  CPC  

postulate the detention of a judgment-debtor for up to six weeks for the  

recovery of a meager amount, of less than Rs.5,000/-.  Where the amount  

is in excess of Rs.5,000/-, the provision postulates, detention for upto three

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months.  Interestingly, the first proviso to Section 58(1) of the CPC clearly  

brings  out,  the  purpose  of  the  person’s  detention.   It  provides  for  the  

concerned person’s release, on the satisfaction of the money-decree, even  

before the duration, for which he had been ordered to be detained.  But the  

second proviso to Section 58(1) of the CPC provides, that such an order of  

detention would not be revoked “without the order of the Court.”.  Another  

interesting  aspect  pertaining  to  the  detention  of  an  individual  for  the  

execution of a money-decree, is contained in Section 58(2) of the CPC,  

which provides, that a person who has been ordered to be arrested and  

detained (in the course of  execution of a money-decree) and has been  

released from jail, would not be treated as having been discharged from  

his debt.  In other words, the detention of a judgment-debtor in prison (for  

the execution of  a money-decree),  would not  liberate/free him from the  

financial  liability  which  he  owes  to  the  decree-holder.   It  is  therefore  

apparent, from the provisions of the CPC, that a Court can order for the  

arrest  and detention  of  a person,  even for  the enforcement  of  a  paltry  

amount  of  Rs.2,000/-  (and  also  for  recovery  of  amounts,  in  excess  

thereof).

59. We  may  also  refer  to  the  provisions  under  the  Cr.P.C.  which  

mandate  arrest  and  detention,  for  compliance  of  a  monetary  payment.  

Reference in this behalf  is to be made to Sections 125 and 128 of the  

Cr.P.C., which are being extracted hereunder:-

“125. Order for maintenance of wives, children and parents-

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(1) If any person having sufficient means neglects or refuses to  maintain-

(a) his wife, unable to maintain herself, or

(b) his legitimate or illegitimate minor child, whether married or  not, unable to maintain itself, or

(c)  his  legitimate  or  illegitimate  child  (not  being  a  married  daughter) who has attained majority, where such child is, by  reason of any physical or mental abnormality or injury unable  to maintain itself, or

(d) his father or mother, unable to maintain himself or herself,

A Magistrate of the first class may, upon proof of such neglect  or refusal, order such person to make a monthly allowance for the  maintenance  of  his  wife  or  such  child,  father  or  mother,  at  such  monthly rate, as such magistrate thinks fit, and to pay the same to  such person as the Magistrate may from time to time direct:

Provided that the Magistrate may order the father of a minor female  child  referred  to  in  clause (b)  to  make such allowance,  until  she  attains her majority, if the Magistrate is satisfied that the husband of  such minor female child,  if  married, is not possessed of sufficient  means.

Provided further that the Magistrate may, during the pendency of the  proceeding regarding monthly allowance for the maintenance under  this sub-section, order such person to make a monthly allowance for  the interim maintenance of his wife or such child, father or mother,  and  the  expenses  of  such  proceeding  which  the  Magistrate  considers reasonable, and to pay the same to such person as the  Magistrate may from time to time direct:

Provided also that an application for the monthly allowance for the  interim maintenance and expenses for proceeding under the second  proviso shall,  as far as possible,  be disposed of within sixty days  from the  date  of  the  service  of  notice  of  the  application  to  such  person.

Explanation: For the purposes of this Chapter.

(a) “minor” means a person who, under the provisions of the  Indian Majority Act, 1875 (9 of 1875) is deemed not to have  attained his majority;

(b) “wife” includes a woman who has been divorced by, or has  obtained a divorce from, her husband and has not remarried.

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(2) Any  Such  allowance  for  the  maintenance  or  interim  maintenance and expenses of proceeding shall be payable from the  date of the order, or, if so ordered, from the date of the application  for  maintenance  or  interim  maintenance  and  expenses  of  proceeding, as the case may be.

(3) If  any  person  so  ordered  fails  without  sufficient  cause  to  comply with the order, any such Magistrate may, for every breach of  the order, issue a warrant for levying the amount due in the manner  provided for levying fines, and may sentence such person, for the  whole, or any part of each month’s     allowance for the maintenance or    the interim maintenance and expenses of proceeding, as the case  be,  remaining  unpaid  after  the  execution  of  the  warrant,  to  imprisonment  for  a term which may extend to one month or  until  payment if sooner made:

Provided that  no warrant  shall  be issued for  the recovery  of  any  amount due under this section unless application be made to the  court to levy such amount within a period of one year from the date  on which it became due:

Provided further that if  such person offers to maintain his wife on  condition of  her  living with him,  and she refuses to live with him,  such Magistrate may consider any grounds of refusal stated by her,  and  may  make  an  order  under  this  section  notwithstanding  such  offer, if he is satisfied that there is just ground for so doing.

Explanation: If  a  husband  has  contracted  marriage  with  another  woman or keeps a mistress, it shall be considered to be just ground  for his wife’s refusal to live with him.

(4)  No  wife  shall  be  entitled  to  receive  an allowance  for  the  maintenance  or  the  interim  maintenance  and  expenses  of  proceeding,  as  the  case  may  be,  from  her  husband  under  this  section if she is living in adultery, or if, without any sufficient reason,  she refuses to live with her husband, or if they are living separately  by mutual consent.

(5) On proof that any wife in whose favour an order has been made  under  this  section  is  living  in  adultery,  or  that  without  sufficient  reason she refuses to live with her husband, or that they are living  separately by mutual consent, the Magistrate shall cancel the order.

128. Enforcement of order of maintenance.

A  copy  of  the  order  of maintenance  or  interim  maintenance  and  expenses of proceeding, as the case may be, shall be given without  payment to the person in whose favour it is made, or to his guardian,  if any, or to the person to whom the allowance for the maintenance

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or  the  allowance  for  the  interim  maintenance  and  expenses  of  proceeding, as the case may be, is to be paid; and such order may  be  enforced  by  any  Magistrate  in  any  place  where  the  person  against whom it is made may be, on such Magistrate being satisfied  as  to  the  identity  of  the  parties  and  the  non-payment  of  the allowance, or as the case may be, expenses, due.”

(emphasis is ours)

Rather  than venturing an interpretation of  Sections 125 and 128 of  the  

Cr.P.C., in order to demonstrate the nature of orders, that can be passed  

thereunder, reference may be made to the decision rendered by this Court  

in Kuldip Kaur v. Surinder Singh, (1989) 1 SCC 405, wherein this Court  

observed as under:-

“6. A distinction has to be drawn between a mode of enforcing  recovery  on  the  one  hand  and  effecting  actual  recovery  of  the  amount  of  monthly  allowance  which  has  fallen  in  arrears  on  the  other. Sentencing a person to jail is a 'mode of enforcement'. It is not  a 'mode of satisfaction' of the liability. The liability can be satisfied  only by making actual payment of the arrears. The whole purpose of  sending  to  jail  is  to  oblige  a  person  liable  to  pay  the  monthly  allowance who refuses to comply with the order without  sufficient  cause, to obey the order and to make the payment. The purpose of  sending  him  to  jail  is  not  to  wipe  out  the  liability  which  he  has  refused to discharge. Be it also realised that a person ordered to pay  monthly allowance can be sent to jail only if he fails to pay monthly  allowance 'without sufficient cause' to comply with the order. It would  indeed be strange to hold that  a person who 'without  reasonable  cause' refuses to comply with the order of the Court to maintain his  neglected  wife  or  child  would  be  absolved  of  his  liability  merely  because he prefers to go to jail. A sentence of jail is no substitute for  the recovery of the amount of monthly allowance which has fallen in  arrears. Monthly allowance is paid in order to enable the wife and  child to live by providing with the essential economic wherewithal.  Neither the neglected wife nor the neglected child can live without  funds for purchasing food and the essential articles to enable them  to live. Instead of providing them with the funds, no useful purpose  would be served by sending the husband to jail. Sentencing to jail is  the means for achieving the end of enforcing the order by recovering  the amount of arrears. It is not a mode of discharging liability. The  section does not say so. The Parliament in its wisdom has not said  so.  Commonsense  does  not  support  such  a  construction.  From  where does the Court draw inspiration for persuading itself that the

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enactments, whereunder arrest and detention is ordered for the execution  

of a financial liability.

VI. Whether it was imperative for this Court to adopt the procedure  prescribed under Section 51 (and other allied provisions) of the  CPC?

Whether if the above procedure was not followed, the impugned  order passed by this Court on 4.3.2014 was rendered void, and  as such, unsustainable in law?

62. Despite the written submission filed by Shri Ram Jethmalani, which  

we have adverted to in the immediately preceding part of this order, the  

credit  for  advancing  submissions  on  the  issue depicted  in  the  heading  

hereinabove, goes to Dr. Abhishek Manu Singhvi, learned Senior Counsel,  

who also represented the petitioner.   It  was his submission,  that it  was  

imperative for this Court before ordering the detention of the petitioner, to  

ensure compliance of the preconditions referred to in Section 51 of the  

CPC.  Section 51 is once again being extracted hereunder:-

“51. Powers of Court to enforce execution

Subject  to  such  conditions  and  limitations  as  may  be  prescribed,  the Court may, on the application of the decree- holder, order execution of the decree-

(a) by delivery of any property specifically decreed;

(b) by attachment and sale or by the sale without attachment  of any property;

(c)  by  arrest  and  detention  in  prison  for  such  period  not  exceeding the period specified in section 58, where arrest and  detention is permissible under that section;

(d) by appointing a receiver; or

(e) in such other manner as the nature of the relief granted  may require:

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Provided that, where the decree is for the payment of money,  execution by detention in prison shall not be ordered unless,  after  giving  the  judgment-debtor  an  opportunity  of  showing  cause why he should not be committed to prison, the Court,  for reasons recorded in writing, is satisfied-

(a)  that  the  judgment-debtor,  with  the  object  or  effect  of  obstructing or delaying the execution of the decree,-

(i)  is  likely to abscond or leave the local  limits of  the  jurisdiction of the Court, or

(ii)  has,  after  the  institution  of  the  suit  in  which  the  decree was passed, dishonestly transferred, concealed,  or removed any part of his property, or committed any  other act of bad faith in relation to his property, or

(b) that the judgment-debtor has, or has had since the date of  the decree,  the means to pay the amount  of  the decree or  some substantial part thereof and refuses or neglects or has  refused or neglected to pay the same, or

(c) that the decree is for a sum for which the judgment-debtor  was bound in a fiduciary capacity to account.

Explanation.- In the calculation of the means of the judgment- debtor for the purposes of clause (b), there shall be left out of  account any property which, by or under any law or custom  having the force of law for the time being in force, is exempt  from attachment in execution of the decree.”

(emphasis is ours)

Referring to Section 51 of the CPC, it was the pointed contention of the  

learned  counsel,  that  the  proviso  to  Section  51,  lays  down  the  

preconditions  for  execution  of  a  money-decree  (by  way  of  arrest  and  

detention, in prison).  While inviting our attention to the aforesaid proviso, it  

was asserted, that it was imperative for a Court, to afford an opportunity to  

show  cause  to  a  judgment-debtor,  before  he  is  committed  to  prison.  

Furthermore, while interpreting the above proviso, it was the submission of  

learned Senior Counsel,  that such detention could be ordered, only and

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only, if the Court felt that the judgment-debtor had consciously obstructed  

or delayed the execution of a money-decree.  Such active obstruction or  

delay, according to the learned counsel,  could be inferable,  if  the Court  

was apprehensive, that the judgment-debtor would abscond or leave the  

local limits of the jurisdiction of the Court.  Or if the Court was satisfied,  

that  the  judgment-debtor  had  dishonestly  transferred,  concealed  or  

removed his property, so as to avoid the execution of the money-decree.  

Or if it was found by the Court, that the judgment-debtor had committed an  

act of bad faith in relation to his property, with the above stated objectives.  

Or  if  the  Court  could  arrive  at  the  conclusion,  that  even  though  the  

judgment-debtor had means to pay the amount expressed in the decree  

(or some substantial part thereof), yet he was refusing or neglecting to pay  

the same.  According to learned counsel, any one of the above alternatives  

would enable the Court concerned, to enforce payment, by way of arrest  

and  detention.   It  was  however  the  contention  of  the  learned  Senior  

Counsel, that none of the above preconditions existed, when this Court all  

of a sudden, without affording an opportunity to the petitioner, ordered his  

arrest and detention along with two other directors on 4.3.2014 (by passing  

the impugned order).

63. In addition to the above submission, learned Senior Counsel invited  

our attention to Order XXI rules 37 and 40 of the CPC.  The above Rules  

are being extracted hereunder:-

“37. Discretionary power to permit judgment-debtor to show cause  against detention in prison

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(1)  Notwithstanding  anything  in  these  rules,  where  an  application is for the execution of a decree for the payment of  money  by  the  arrest  and  detention  in  the  civil  prison  of  a  judgment-debtor who is liable to be arrested in pursuance of  the application,  the Court     shall,  instead of  issuing a warrant    for     his arrest, issue a notice calling upon     him to appear before    the Court  on a day to be specified in the notice and show  cause why he should not be committed to the civil prison:

Provided     that such notice shall not be necessary if the Court is    satisfied,  by  affidavit,  or  otherwise,  that,  with  the  object  or  effect of delaying the execution of the decree, the judgment- debtor  is  likely  to  abscond  or  leave  the  local  limits  of  the  jurisdiction of the Court.

(2) Where appearance is not made in obedience to the notice,  the  Court  shall,  if  the  decree-holder  so  requires,  issue  a  warrant for the arrest of the judgment-debtor.

40. Proceedings on appearance of judgment-debtor in obedience  to notice or after arrest

(1)  When  a  judgment-debtor  appears  before  the  Court  in  obedience  to  a  notice  issued  under  rule     37,  or  is  brought    before the Court after being arrested in execution of a decree  for the payment of money, the Court shall proceed to hear the  decree-holder and take all such evidence as may be produced  by     him in  support  of     his  application  for  execution,  and shall    then  give  the  judgment-debtor  an  opportunity  of  showing  cause why he should not be committed to the civil prison.

(2)  Pending the conclusion of the inquiry under sub-rule (1)  the Court may, in its discretion, order the judgment-debtor to  be  detained  in  the  custody  of  an  officer  of  the  Court  or  release     him on     his furnishing security to the satisfaction of the    Court for     his appearance when required  .

(3)  Upon the conclusion of the inquiry under sub-rule (1) the  Court may, subject to the provisions of section 51 and to the  other provisions of this Code, make an order for the detention  of  the  judgment-debtor  in  the  civil  prison  and  shall  in  that  event  cause     him  to  be  arrested  if  he  is  not  already  under    arrest :

Provided that  in  order  to  give  the  judgment-debtor  an  opportunity  of  satisfying  the  decree,  the  Court  may,  before  making the order of detention, leave the judgment-debtor in

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the custody of an officer of the Court for a specified period not  exceeding  fifteen  days  or  release him  on his  furnishing  security to the satisfaction of the Court for his appearance at  the  expiration  of  the  specified  period  if  the  decree  be  not  sooner satisfied.

(4)  A  judgment-debtor  released  under  this  rule  may be  re- arrested. (5) When the Court does not make an order of detention under  sub-rule  (3),  it  shall  disallow  the  application  and,  if  the  judgment-debtor is under arrest, direct his release.”

(emphasis is ours)

Relying on the afore-extracted rules from Order XXI of the CPC, it was  

sought to be asserted, that a show cause notice to a judgment-debtor was  

imperative, before he could be committed to civil prison.  In fact, according  

to learned counsel, rule 40 extracted above, affords an opportunity to the  

judgment-debtor to lead evidence in order to demonstrate, why he should  

not be committed to civil prison.  Based on the aforementioned assertions,  

it  was sought  to  be contended,  that  since  no procedure,  of  the nature  

referred to hereinabove, had been followed before issuing the order dated  

4.3.2014, the said order must be treated as void, as it must be deemed to  

have been passed in violation of the mandatory procedure, established by  

law.

64. In order to support his above submissions, learned Senior Counsel  

also  placed  reliance  on  Supreme  Court  Rules,  1966.   He  invited  our  

attention to Order XIII rule 6, which is being reproduced hereunder:-

“Order XIII Judgments, decrees and Orders

6. The  decree  passed  or  order  made  by  the  Court in  every  appeal, and any order for costs in connection with the proceedings  therein, shall be transmitted by the Registrar to the Court or Tribunal

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from which the appeal was brought, and steps for the enforcement  of such decree or order shall be taken in that court or Tribunal in the  way prescribed by law.”

(emphasis is ours)

It was sought to be asserted, on the basis of the above rule, that the power  

of execution of an order passed by this Court in appeal, did not rest with  

this Court, but was to be exercised by the Court or Tribunal concerned, in  

the  manner  “prescribed by law”.   It  was accordingly  asserted,  that  this  

Court had transgressed the aforesaid rule framed by this Court, inasmuch  

as, it  had exercised the power of an executing Court  while passing the  

order dated 4.3.2014, whereas, no such power was vested in this Court.

65. In order to demonstrate, that it was not within the jurisdiction of this  

Court  (in  exercise  of  the  power  vested  in  it  under  Article  142  of  the  

Constitution of India), to pass the impugned order dated 4.3.2014, learned  

Senior Counsel placed reliance on the judgment rendered by this Court in  

Supreme Court  Bar  Association’s  case (supra),  wherein  this  Court  had  

declared the legal position as under:-

“47. The  plenary  powers  of  this  court  under  Article  142  of  the  Constitution  are  inherent  in  the  Court  and  are  complementary  to  those  powers  which  are  specifically  conferred  on  the  court  by  various  statutes  though  are  not  limited  by  those  statutes.  These  powers  also  exist  independent  of  the  statutes  with  a  view to  do  complete justice between the parties. These powers are of very wide  amplitude  and  are  in  the  nature  of  supplementary  powers.  This  power  exists as a separate and independent  basis  of  jurisdiction,  apart from the statutes. It stands upon the foundation, and the basis  for its exercise may be put on a different and perhaps even wider  footing,  to  prevent  injustice  in  the  process  of  litigation  and to  do  complete  justice  between  the  parties.  This  plenary  jurisdiction  is,  thus, the residual source of power which this Court may draw upon  as  necessary  whenever  it  is  just  and  equitable  to  do  so  and  in  particular to ensure the observance of the due process of law, to do  complete  justice  between  the  parties,  while  administering  justice

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according  to  law.  There  is  no  doubt  that  it  is  an  indispensable  adjunct  to  all  other  powers  and  is  free  from  the  restraint  of  jurisdiction and operates as a valuable weapon in the hands of the  Court to prevent "clogging or obstruction of the stream of justice". It,  however, needs to be remembered that the powers conferred on the  Court by Article 142 being curative in nature cannot be construed as  powers which authorise the Court to ignore the substantive rights of  a litigant while dealing with a cause pending before it. This power  cannot be used to "supplant" substantive law applicable to the case  or cause under consideration of the court. Article 142, even with the  width of its amplitude, cannot be used to build a new edifice where  none existed earlier, by ignoring express statutory provisions dealing  with  a  subject  and thereby  to achieve something  indirectly  which  cannot be achieved directly. Punishing a contemner advocate, while  dealing with a contempt of court case by suspending his licence to  practice,  a  power  otherwise  statutorily  available  only  to  the  Bar  Council  of  India,  on  the  ground  that  the  contemner  is  also  an  advocate, is, therefore, not permissible in exercise of the jurisdiction  under  Article  142.  The  construction  of  Article  142  must  be  functionally informed by the salutary purpose of the Article, viz., to  do complete justice between the parties. It cannot be otherwise. As  already noticed in a case of contempt of court, the contemner and  the court cannot be said to be litigating parties.”

Reliance was also placed by the learned Senior Counsel,  for the same  

objective, on P. Ramachandra Rao v. State of Karnataka, (2002) 4 SCC  

578.   In order to understand the exact  purport  of  the decision,  learned  

counsel invited our attention to the factual position which constituted the  

basis of the above adjudication.  The factual position has been expressed  

in  paragraph  2  of  the  above  judgment,  which  is  being  reproduced  

hereunder:-

“2. In Criminal Appeal No.535/2000 the appellant was working as  an Electrical Superintendent in the Mangalore City Corporation. For  the  check  period  1.5.1961  to  25.8.1987  he  was  found  to  have  amassed assets disproportionate to his known sources of income.  Charge-sheet accusing him of offences under Section 13(1)(e) read  with Section 13(2)  of  the Prevention of  Corruption Act,  1988 was  filed on 15.3.1994. The accused appeared before the Special Court  and was enlarged on bail  on 6.6.1994.  Charges  were framed on  10.8.1994 and the case proceeded for trial on 8.11.1994. However,

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the trial did not commence. On 23.2.1999 the learned Special Judge  who was seized of the trial directed the accused to be acquitted as  the trial had not commenced till then and the period of two years had  elapsed which obliged him to acquit  the accused in terms of  the  directions of this court in Raj Deo Sharma Vs. State of Bihar (1998)  7 SCC 507 (hereinafter, Raj Deo Sharma-I). The State of Karnataka  through  the  D.S.P.  Lokayukta,  Mangalore  preferred  an  appeal  before the High Court putting in issue the acquittal of the accused.  The  learned  Single  Judge  of  the  High  Court,  vide  the  impugned  order,  allowed  the  appeal,  set  aside  the  order  of  acquittal  and  remanded the case to the Trial Court, forming an opinion that a case  charging  an  accused  with  corruption  was  an  exception  to  the  directions made in Raj Deo Sharma-I as clarified by this Court in Raj  Deo Sharma (II)  Vs. State of  Bihar (1999) 7 SCC 604.  Strangely  enough the High Court not only condoned a delay of 55 days in filing  the appeal against acquittal by the State but also allowed the appeal  itself  --  both  without  even  issuing  notice  to  the  accused.  The  aggrieved accused has filed this appeal by special leave. Similar are  the facts in all the other appeals. Shorn of details, suffice it to say  that  in  all  the  appeals  the  accused  persons  who  were  facing  corruption charges, were acquitted by the Special Courts for failure  of commencement of trial in spite of lapse of two years from the date  of framing of the charges and all the State appeals were allowed by  the High Court without noticing the respective accused persons.”

In  the  factual  scenario  noticed  hereinabove,  this  Court  recorded its  

conclusions, in respect of the power available to Constitutional Courts, by  

recording the following observations:-

“27. Prescribing periods of limitation at the end of which the trial  court would be obliged to terminate the proceedings and necessarily  acquit or discharge the accused, and further, making such directions  applicable to all the cases in the present and for the future amounts  to  legislation,  which,  in  our  opinion,  cannot  be  done  by  judicial  directives  and  within  the  arena  of  the  judicial  law-making  power  available  to  constitutional  courts,  howsoever  liberally  we  may  interpret  Articles  32,  21,  141  and  142  of  the  Constitution.  The  dividing line is fine but perceptible. Courts can declare the law, they  can interpret the law, they can remove obvious lacunae and fill the  gaps  but  they  cannot  entrench  upon  in  the  field  of  legislation  properly meant for the legislature. Binding directions can be issued  for enforcing the law and appropriate directions may issue, including  laying down of time limits or chalking out a calendar for proceedings  to follow, to redeem the injustice done or for taking care of rights  violated, in a given case or set of cases, depending on facts brought

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to the notice of the court. This is permissible for judiciary to do. But it  may not, like legislature, enact a provision akin to or on the lines of  Chapter XXXVI of the Code of Criminal Procedure, 1973.”

It was, therefore the vehement contention of the learned counsel for the  

petitioner, that the order passed by this Court was clearly impermissible,  

not only under the provisions of the CPC, but also in terms of the Supreme  

Court Rules, 1966, coupled with the legal position declared by this Court.

66. Before endeavouring to deal with the submissions advanced at the  

hands of the learned counsel for the petitioner, on the basis of Section 51  

of  the  CPC,  and  other  allied  provisions  referred  to  hereinabove,  it  is  

relevant to keep in mind, that the orders dated 31.8.2012 and 5.12.2012  

(the implementation whereof is subject matter of consideration), arose out  

of proceedings initiated by the SEBI (FTM), under the SEBI Act.  In the  

context under reference, it is necessary to peruse Sections 11(3), 15U and  

15Y  of  the  SEBI  Act.   The  same  are  accordingly  being  extracted  

hereunder:-

“11(3) Notwithstanding anything contained in any other law for  the time being in force while exercising the powers under 22 clause  (i)  or clause (ia) of sub-section (2) or sub-section (2A),  the Board  shall have the same powers as are vested in a Civil Court under the  Code of  Civil  Procedure,  1908 (5 of  1908),  while trying a suit,  in  respect of the following matters, namely:  

(i) the discovery and production of books of account and  other documents, at such place and such time as may be specified  by the Board;

(ii) summoning and enforcing the attendance of persons  and examining them on oath;  

(iii) inspection  of  any  books,  registers  and  other  documents of any person referred to in section 12, at any place;

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(iv) inspection  of  any  book,  or  register,  or  other  document or record of the company referred to in sub-section (2A);

(v) issuing  commissions  for  the  examination  of  witnesses or documents.

15U. Procedure and powers of the Securities Appellate Tribunal-  

(1)  The  Securities  Appellate  Tribunal  shall  not  be  bound  by  the  procedure  laid  down by the  Code of  Civil  Procedure,  1908 (5  of  1908),  but shall be guided by the principles of natural justice and,  subject  to  the  other  provisions  of  this  Act  and  of  any  rules,  the  Securities Appellate Tribunal shall have powers to regulate their own  procedure including the places at which they shall have their sittings.

(2) The Securities Appellate Tribunal shall have, for the purposes of  discharging their functions under this Act, the same powers as are  vested in a Civil Court under the Code of Civil Procedure, 1908 (5 of  1908), while trying a suit, in respect of the following matters, namely:

(a)  summoning and enforcing the attendance of any person  and examining him on oath;  

(b) requiring the discovery and production of documents;  

(c) receiving evidence on affidavits;  

(d)  issuing commissions for the examination of witnesses or  documents;  

(e) reviewing its decisions;  

(f) dismissing an application for default or deciding it ex parte;  

(g)  setting aside any order of dismissal of any application for  default or any order passed by it ex parte;  

(h) any other matter which may be prescribed.  

(3) Every proceeding before the Securities Appellate Tribunal shall  be  deemed  to  be  a  judicial  proceeding  within  the  meaning  of  sections 193 and 228, and for the purposes of section 196 of the  Indian  Penal  Code  (45  of  1860),  and  the  Securities  Appellate  Tribunal shall be deemed to be a Civil Court for all the purposes of  section 195 and Chapter XXVI of the Code of Criminal Procedure,  1973(2 of 1974).

15Y. Civil Court not to have jurisdiction –  No  Civil  Court  shall  have  jurisdiction  to  entertain  any  suit  or  proceeding in respect of any matter which an Adjudicating Officer

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appointed  under  this  Act  or  a  Securities  Appellate  Tribunal  constituted  under  this  Act  is  empowered  by  or  under  this  Act  to  determine and no injunction shall be granted by any court or other  authority in respect of any action taken or to be taken in pursuance  of any power conferred by or under this Act.”

(emphasis is ours)

A perusal of the above provisions reveals, that the functionaries under the  

SEBI Act,  have been vested on some subjects,  with the same powers,  

which are available to a Civil Court under the CPC.  This necessarily leads  

to the inference, that other provisions of the CPC are per se, not applicable  

to the subjects not  covered by the above provisions.   Similarly,  for  the  

SAT, it has been specially provided, that the provisions of the CPC will be  

inapplicable  to it,  however,  in  its  functioning it  would  be guided by the  

principles of natural justice.  The above provision also vests in the SAT,  

some powers as are vested in a Civil Court.  Obviously therefore, on the  

remaining  subjects  the provisions  of  the CPC would not  be applicable.  

Since the provisions in the CPC relating to execution have not been made  

applicable  for  enforcement  of  orders  passed  under  the  SEBI  Act,  the  

conclusion has to be, that the same (including the provisions referred to by  

learned counsel),  would not be applicable for the enforcement of orders  

passed under the SEBI Act.  Furthermore, Section 15Y of the SEBI Act  

bars Civil Courts from entertaining any suit or proceeding, in respect of a  

controversy governed by the SEBI Act.  It is, therefore apparent, that the  

provisions of the CPC are per se inapplicable to proceedings under the  

SEBI Act.  

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67. It is however important to notice, that the SEBI Act does not provide  

either to the SEBI or the SAT, power for execution of orders passed by  

either of them.  Therefore, no such power could be exercised by the above  

fora for executing even the appellate order(s) passed by this Court under  

Section 15Z of the SEBI Act.  It was when the legal position stood thus,  

that the question of execution of the orders dated 31.8.2012 and 5.12.2012  

arose (during the pendency of Contempt Petition (Civil) nos. 412 and 413  

of 2012 and Contempt Petition (Civil) no. 260 of 2013).   

68. It  is  in  the  above  background,  that  we  shall  first  determine  the  

submissions advanced by learned Senior Counsel, based on Section 51 of  

the CPC.  First and foremost, the procedure contemplated under Section  

51 of the CPC has not been adopted by the SEBI Act, either expressly or  

impliedly.  Secondly, Section 51, deals with the power of a Civil Court to  

enforce execution of money-decrees rendered by a Civil Court.  Herein, we  

are concerned with the execution of orders emanating from the provisions  

of the SEBI Act, and not out of orders in proceedings, initiated before a  

Civil  Court.   Insofar  as  the  SEBI  Act  is  concerned,  as  already  noticed  

hereinabove, Section 15Y totally excludes the jurisdiction of Civil Courts, in  

respect of subjects governing investors’ interest and the regulation of the  

securities market.  There can, therefore be no doubt that Section 51 of the  

CPC is per se inapplicable to the controversy in hand.   

69. There can however be no doubt, that even though the provisions of  

the CPC are inapplicable to proceedings under the SEBI Act (except when

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expressly provided for), yet we all understand, that the provisions of the  

CPC have evolved as a matter of long years of experience emanating out  

of  the  common  law  of  England.   Even  though  the  same  may  not  be  

binding, insofar as the present controversy is concerned, yet if an order is  

passed keeping in mind the parameters laid down in the CPC, it would be  

sufficient to conclude that the rules of natural justice were fully complied  

with. We are of the view that the conditions contemplated in Section 51 of  

the  CPC as  preconditions,  for  the  arrest  and  detention  of  a  judgment-

debtor for executing a Court’s order, can be demonstrated as having been  

duly complied with,  before this Court  passed the impugned order dated  

04.03.2014.  The proviso to Section 51 of the CPC contemplates certain  

preconditions  for  execution  of  a  money-decree  by  way  of  arrest  and  

detention in prison.  As already discussed above, on the satisfaction of any  

one of the preconditions, a money-decree can be executed, by ordering  

arrest and detention of the judgment-debtor in prison.   

70. The first situation contemplated by the proviso to Section 51 of the  

CPC is, when the executing Court entertains the view, that the judgment-

debtor is likely to abscond or leave the local jurisdiction of the Court, with  

the object of obstructing or delaying the execution of the decree.  Insofar  

as the instant aspect of the matter is concerned, it is apparent that this  

Court  actually  entertained  the  view,  that  the  petitioner  was  “likely”  to  

abscond  or  leave  the  local  limits  of  the  jurisdiction  of  this  Court,  for  

obstructing or delaying the execution of the decree.  It is, therefore, that

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this  Court  by  its  order  dated  28.10.2013  directed,  that  “… the  alleged  

contemnors  (respondents)  shall  not  leave  the  country  without  the  

permission  of  this  Court…”.   Even  though  the  above  order  was  

subsequently relaxed by this Court on a request made by the petitioner,  

yet  once  again  on  21.11.2013,  this  Court  directed  “…  the  alleged  

contemnors  shall  not  leave  the  country  without  the  permission  of  this  

Court.”.  The first of the postulated preconditions for ordering arrest and  

detention of a judgment-debtor, for the execution of the liability resting on  

the  shoulders  of  the  two  companies,  was  therefore  clearly  made  out,  

before the impugned order dated 4.3.2014 was passed.   

71. Another  alternative  pre-condition  contemplated  in  the  proviso  to  

Section 51 of the CPC is, when a judgment-debtor has the means to pay  

the  amount  of  the  decree  (or  some  substantial  part  thereof),  and  yet  

refuses or neglects to pay the same.  Insofar as the instant aspect of the  

matter is concerned, the two concerned companies could have easily paid  

the contemplated amounts, by selling their assets (in terms of their affidavit  

dated 4.1.2012).  It is also relevant to mention, that in the affidavits filed by  

the two concerned companies before the SAT on 14.9.2011 (taken from  

Volume II of additional documents filed by the respondents in Contempt  

Petition (Civil) no. 412 of 2012), it was acknowledged on behalf of the two  

companies,  that  the  book  value/market  value  of  their  properties  as  on  

30.8.2011 were as under:-

Book Value (Rs. in Crores)

Market Value (Rs. in Crores)

SIRECL

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i) Investments ii) Cash/Current Assets etc.

6,430 15,937

36,021 20,297

SHICL i) Investments ii) Cash/Current Assets etc.

1,865 6,027

5,498 7,682

Total 30,259 69,498

The  market  value  of  the  assets  acknowledged  by  the  two  companies,  

would have undoubtedly appreciated further, from the figures depicted in  

2011.   During  the  course  of  hearing  before  this  Court,  on  several  

occasions it was undertaken by the contemnors, that they would dispose of  

the unencumbered immovable properties owned by the Sahara Group, to  

comply with the orders dated 31.8.2012 and 5.12.2012.  In this background  

it  may  also  be  mentioned,  that  the  official  website  of  Sahara  India,  

indicates  the  net  worth  of  the  Sahara  Group  as  Rs.68,174/-  crores.  

According to the above website,  the Sahara Group has a land bank of  

approximately  36,631  acres,  and  the  market  value  of  the  Group  

assets/potential earning is to the tune of Rs.1,52,518 crores.  It is also not  

a matter of dispute, that the Sahara Group owns premium hotels in London  

(the Grosvenor House) and in New York (the New York Plaza).  The above  

hotels,  according  to  the  Sahara  Group,  are  valued  at  over  several  

thousand crores of rupees.  Be that as it  may, after the passing of  the  

orders dated 31.8.2012 and 5.12.2012, no payment has been made by the  

two concerned companies.  The last deposit of Rs.5120 crores was made  

on 5.12.2012.  It is, therefore apparent, that inspite of their means to pay,  

the two companies have refused and neglected to pay the amount due in  

its entirety (or even a substantial  part thereof).   Another postulated pre-

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condition for ordering the arrest and detention of a judgment-debtor, for the  

execution of a money-decree, was therefore clearly made out, before the  

impugned order dated 04.03.2014 was passed.

72. We  are  prima  facie satisfied,  that  yet  another  pre-condition  

contemplated in the proviso to Section 51 of the CPC was also made out.  

The reason for expressing the instant view is, that no clear responses were  

ever  given  by  the  two  companies.   The  position  remained  the  same  

whether those answers were sought by the SEBI(FTM),  or the SAT, or  

even by this Court.  When SIRECL was required to disclose the manner in  

which it had made payments by way of redemption to the OFCD’s holders,  

the following sources were disclosed:-

Rupees (In Crores)

1. Sahara Credit Co-operative Society Ltd. 13,366.18 2. Sahara India Commercial Corporation Limited 4384.00 3. Sahara Q Shop 2258.32 4. Ketak City Homes Ltd. 19.43 5. Kirit City Homes Ltd. 44.05

Likewise,  when similar  information  about  redemptions  was sought  from  

SHICL, the following sources were disclosed:-

At the cost of repetition we may record, that when asked the manner in  

which the companies had forwarded the above mentioned payments to the  

Rupees (In Crores)

1. SICCL 2479.00 2. Sahara Q Shop 2411.90

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two companies,  the response was, that the above amounts were never  

released, but were transferred to Sahara India (Firm),  for disbursement.  

When  details  of  the  above  transactions  were  sought,  the  Court  was  

informed that the above transactions were made by way of cash, and the  

requirement of the Court to show banking transactions, was unfair.  When  

asked how the two companies had collected the cash funds, which were  

paid to Sahara India (Firm),  the response was, that the two companies  

which had collected the funds, had collected the same by way of cash.  

When asked how disbursements were made to the investors, the response  

was, that about 95% of the payments made to the investors,  were also  

made by way of cash.  To demonstrate the receipt  and payment of the  

funds  by  way  of  cash,  learned  Senior  Counsel  representing  the  

contemnors  (including the petitioner  herein),  invited our attention to the  

books of accounts (only general ledger entries) to demonstrate proof of the  

transactions under reference.  Details in this behalf have been recorded by  

us under the heading “A few words, about the defence of redemption of  

OFCD’s,  offered  by  the  two  companies”.   The  above  explanation  may  

seem  to  be  acceptable  to  the  contemnors,  but  our  view  is  quite  the  

converse.  It is not possible for us to accept, that the funds amounting to  

thousands  of  crores,  were  transacted  by  way  of  cash.   We  would,  

therefore, on the face of it, reject the above explanation tendered on behalf  

of  the  two  companies.   It  is  necessary  to  notice,  that  one  of  the  

preconditions  contemplated under  the proviso  to  Section 51 postulates,  

that if the judgment-debtor dishonestly transfers, conceals or removes any

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part  of  his  property,  or  commits  any  act  of  bad faith  in  relation  to  his  

property, the concerned executing Court can enforce a money-decree, by  

way of arrest and detention.  Since a farcical explanation was tendered by  

the  two  companies  in  respect  of  receipt,  payment  and  transfer  of  

thousands of crores of rupees by way of cash, without reference to any  

banking  transactions  whatsoever,  it  was  legitimate  to  infer  dishonest  

transfers, as well as, bad faith, on behalf of the contemnors.  Therefore, for  

yet another reason, it was open for this Court, to order arrest and detention  

of the contemnors (including the present petitioner), for enforcement of the  

directions issued by this Court on 31.8.2012 and 5.12.2012.

73. The  three  preceding  paragraphs  clearly  demonstrate,  that  three  

different conditions contemplated in the proviso to Section 51 of the CPC,  

were  satisfied,  before  we  ordered  the  arrest  and  detention  of  the  

contemnors,  for  enforcement  of  the  orders  passed  by  this  Court.  

Satisfaction of any one of the conditions, expressed in the foregoing three  

paragraphs, would have been sufficient to order the arrest and detention of  

the petitioner,  under Section 51 of  the CPC.  Our instant determination  

should  not  be  understood  to  mean,  that  Section  51  of  the  CPC  is  

applicable  to  the  facts  and  circumstances  of  this  case.   The  instant  

determination should only be understood to mean, that the parameters laid  

down in Section 51 of the CPC, stood fully satisfied, before the arrest and  

detention order dated 4.3.2014 was passed.

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74. For  the  same  reasons  as  have  been  recorded  in  the  foregoing  

paragraph,  even  rules  37  and  40  of  Order  XXI  of  the  CPC,  would  be  

inapplicable for the execution of this Court’s orders dated 31.8.2012 and  

5.12.2012.  Firstly, because the above provisions of the CPC, relating to  

execution,  have  not  been  made  applicable  for  enforcement  of  orders  

passed under the SEBI Act.  Secondly, a perusal of rule 37(1) of Order XXI  

of  the  CPC reveals,  that  where  a Court  is  satisfied  that  the  judgment-

debtor is likely to abscond or leave the local limits of the jurisdiction of the  

Court,  the  procedural  requirements  of  the  aforesaid  rules  is  expressly  

excluded.   Likewise,  sub-rule  (2)  of  rule  37  of  Order  XXI  of  the  CPC  

provides,  that  the  procedural  requirements  depicted  therein,  would  be  

inapplicable when the judgment-debtor does not enter appearance before  

a Court in obedience of a notice issued to him.  The impression of this  

Court, that the appellant would abscond, and the fact, that the appellant  

did not enter appearance when summoned to do so, is apparent from the  

orders passed by this Court (already extract above).  Yet, at the cost of  

repetition, we may reiterate, that by an order dated 28.10.2013, this Court  

directed, that “…the alleged contemnors (respondents) shall not leave the  

country without the permission of this Court…”.  Even though the above  

order was relaxed by this Court on a request made by the petitioner, yet  

once again on 21.11.2013 this Court directed “… the alleged contemnors  

shall  not  leave the country  without  the permission of  this  Court.”.   The  

above restraint order was subsisting when the petitioner’s order of arrest  

and detention was passed.  Furthermore, having expressed its satisfaction,

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that the information furnished by the contemnors (including the petitioner)  

did not establish the stance adopted by them, this Court by its order dated  

20.2.2014  noticing  the  defiant  and  non-cooperative  attitude  of  the  

contemnors,  had  directed  “the  personal  presence  of  the  alleged  

contemnors and the directors of  the respondent  companies in Court  on  

February 26, 2014 at 2.00 pm…”  On 25.2.2014, a mention was made on  

behalf of the petitioner herein, for exemption from personal presence on  

26.2.2014.   The  same  was  declined.   Despite  the  above  refusal,  Mr.  

Subrata  Roy  Sahara  did  not  enter  appearance  before  this  Court  on  

26.2.2014.  The other directors were present.  Thus there is no room for  

any doubt, that the above provision was rendered inapplicable, insofar as  

the petitioner is concerned.  A perusal of rule 40 of Order XXI of the CPC  

reveals, that the procedural requirements expressed in the same, would  

come into play inter alia, after the person concerned “… is brought before  

the Court  after  being  arrested  in execution  of  a decree  for  payment  of  

money…”.   Reference  to  above  rule,  on  behalf  of  the  petitioner,  is  

therefore wholly misconceived.   The above deliberations,  should not be  

understood to mean, that the aforesaid provisions of the CPC, relied upon  

by  the  learned  counsel,  were  applicable  to  this  case.   The  above  

deliberations  only  demonstrated,  that  the  parameters  laid  down  in  the  

above provisions cannot be stated to have been disregarded, when the  

impugned order dated 4.3.2014 was passed.

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75. Insofar as rule 6 of Order XIII of the Supreme Court Rules, 1966, is  

concerned, the same mandates the enforcement of an order passed by  

this Court, by transmitting the order to be enforced to the “Court or Tribunal  

in the way prescribed by law”.  We have already concluded hereinabove,  

that  no executing  mechanism was in place under  the provisions of  the  

SEBI Act, when the orders dated 31.8.2012 and 5.12.2012 were passed.  

Thus viewed, even rule 6 of Order XIII of the Supreme Court Rules, 1966  

would be inapplicable to deal with the issue in hand, as it was not possible  

for this Court to transmit “… to the Court or Tribunal from which the appeal  

was brought ...” for execution of this Court’s orders dated 31.8.2012 and  

5.12.2012.   

76. The orders  dated  31.8.2012 and 5.12.2012,  could  therefore have  

only been executed by this Court, in exercise of the power conferred on it  

under Articles 129 and 142 of the Constitution of India.  Passing an order  

under the above provisions was necessary to ensure the observance of  

due process of law, in the facts and circumstances of this case, and to  

maintain the majesty of law and the dignity of this Court.  The impugned  

order dated 4.3.2014 was accordingly passed thereunder.  The power of  

arrest and detention can be exercised, as and when this Court is satisfied,  

in  the facts and circumstances with which this Court  is confronted in a  

given case, that the above means should be adopted for the execution of  

its orders.

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Accordingly reliance placed by the learned counsel for the petitioner on the  

above judgment, is wholly misconceived.  

VII. Whether  the  impugned  order  dated  4.3.2014,  was  passed  in  violation of the rules of natural justice?

78. While arguing on merits, the very first plea advanced on behalf of  

the petitioner was, that the order of detention dated 4.3.2014 was passed  

all  of  a sudden,  without  affording any opportunity  to the petitioner.   Dr.  

Rajeev Dhawan, learned Senior Counsel, who spearheaded submissions  

on the instant  issue,  informed this  Court,  that  an order  passed without  

affording an opportunity of hearing, by any authority whosoever (including  

this  Court),  would  be  constitutionally  unacceptable,  and  therefore  void.  

The  order  dated  4.3.2014,  according  to  learned  Senior  Counsel,  was  

passed without affording the petitioner any opportunity to know why, and  

also,  without  any effective opportunity  to respond to,  whatever  was the  

basis of passing such order.  The petitioner, according to learned counsel,  

is till date not aware of the reasons which had prompted this Court to pass  

the impugned order dated 4.3.2014.  He apologized to us, while informing  

us, that he had no option but to be blunt.  Referring to the impugned order,  

he reiterated, “Your Lordships have passed a draconian order”.  Learned  

Senior Counsel in the above context, asserted, that this Court had made a  

“…terrible  terrible  mistake…,  which needed to  be corrected…”.   In  this  

behalf  his submission was, that “…to err  was human…” and his advice  

was,  that  “...  it  is  imperative  for  you,  to  correct  this  blunder...”.   In

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supporting  the above contention  advanced by  Dr.  Rajeev  Dhawan,  Mr.  

Ram Jethmalani, learned Senior Counsel, also representing the petitioner,  

submitted, that “… the whole Bar was shell-shocked…”, when this Court  

out of the blue, directed the arrest of the petitioner, without affording him  

any opportunity  to state his case.  It  was the contention of  the learned  

Senior Counsel, that the order passed by this Court on 4.3.2014 was “…

extremely disturbing…”. It was submitted, that there was no hearing of the  

matter. Suddenly on the conclusion of the day’s hearing on 4.3.2014, “…  

when there was still much to be said…”, a judicial order was passed, to the  

detriment of the petitioner “… depriving him of his civil liberties…”.  The  

order, it was contended, “… was an absolute nullity…”.  Learned counsel  

advised  the  Court,  “…  humility  was  the  greatest  attribute  of  human  

resource…”, and as such, “… you must have the courage to accept, that  

the order dated 4.3.2014 was a nullity in law..., and you should have the  

courage  to  recall  your  void  order…”.   We were  also  advised,  that  the  

mandate expressed in Article 142 of the Constitution of India (under which  

provision, the order dated 4.3.2014, was passed),  “… was to do justice  

according to law, and not by whim or caprice...”.   During the course of  

hearing, learned counsel for the petitioner, addressed a number of queries  

to  the  Bench.   Has  any  person  ever  been  committed  to  jail,  without  

knowing what offence he had committed?  The whole of the criminal law is  

codified,  has  anybody  ever  been  incarcerated,  except  according  to  the  

procedure laid down in the Cr.P.C.?  What offence, punishable under what  

provision of law, has the petitioner committed, that you have sent him to

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jail?   Can an order  of  arrest  and detention be passed orally…, without  

there being any writing…, without there being any notice…, without any  

opportunity to reply to the same?  “… You have done all this, and more…”,  

we were told.  What has been done by this Court on 4.3.2014, according to  

learned counsel, was a blunder which needed to be revised.  Dr. Rajeev  

Dhawan then affirmed,  confirmed and repeated what  his  colleague had  

submitted.  He informed us, “… Mr. Ram Jethmalani is right… we all make  

mistakes...”.  He went on to state “… we tell very rarely, what we have had  

to tell this Bench, that it has gone terribly terribly wrong...”  He, however,  

reminded us, that every extraordinary situation, has to be dealt with, in an  

equally extraordinary manner i.e., in exactly the manner he had done.  By  

informing the Court upfront, that it had erred, and therefore, the mistake  

committed by it, needed to be corrected, Mr. Ram Jethmalani in the above  

context  told  the  Court,  “Acknowledgement  of  a  mistake  enhances  the  

prestige  of  the  Court.   I  hope  your  Lordships  will  acknowledge  this  

mistake.”

79. Seriously, we were taken aback by the ferocity with which, the above  

submissions were advanced.  Had we been a part  of the audience, we  

would  have acclaimed  the  courage  and the  capacity  of  learned  Senior  

Counsel, to be able to call a spade a spade.  We would have felt, that their  

eminence was rightfully bestowed on them, and well deserved.  That of  

course, would have been subject to the condition, that what was sought to  

be conveyed through erudite grandiloquence, was factually correct.  The

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question  therefore  that  needs  to  be  considered  is,  whether  the  above  

submissions made by the learned counsel for the petitioner, are based on  

a truthful foundation.  If their assertions are correct, we would concede at  

the beginning, that their inferences would have to be accepted as correct.

80. Mr.  Arvind Datar,  learned Senior  Counsel  appearing for the SEBI  

would contend, that there was nothing farther from the truth, in what had  

been submitted on behalf of the petitioner.  We were taken through piles of  

pleadings, paper work, and orders passed by this Court, to demonstrate an  

express written notice to the petitioner,  his  written response,  numerous  

opportunities of hearing afforded to learned Senior Counsel representing  

him,  and  finally,  even  an  opportunity  of  personal  oral  hearing  to  the  

petitioner - Mr. Subrata Roy Sahara, himself.

81. Before examining the veracity of the submissions advanced by the  

learned  Senior  Counsel  for  the  petitioner,  we  would  unhesitatingly  

concede, that they were correct on one aspect of the matter.  That it was  

an  extraordinary  situation.   For  many  many  years  now,  ever  since  we  

moved from the Bar to the Bench, we were the ones who were posing the  

questions,  and  the  warring  factions  projecting  their  conflicting  claims  

before us, were obliged to respond.  Now for once, questions were being  

posed by a litigant asking the Court,  for its response.  Not that we find  

anything wrong with that, only that we too were shell-shocked, that we had  

committed a blunder, as to be informed by learned counsel, that we had  

passed  a void  order,  that  needed  to  be  corrected.    We would  like  to

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acknowledge,  that  all  this  was  possible  because  of  the  legal  acumen  

possessed by learned Senior Counsel.  If what was stated was correct, no  

Court would have any hesitation to correct such an error.  The Court was  

an unconnected  disinterested  party.   The Court  would neither  gain  nor  

loose, if the contentions advanced by the petitioner, were to be accepted.  

In  such an eventuality,  by rendering the correction,  the purpose of  law  

would be served, justice would be done.  We would never ever, refrain  

from rising to such an occasion.  But if the factual position on the basis  

whereof  the  assertions  were  made,  was found  to  be  incorrect,  learned  

Senior  Counsel  would  most  definitely  have  committed  a  terrible  

professional mistake.  We say so, because Mr. Ram Jethmalani and Dr.  

Rajeev Dhawan, learned Senior Counsel, attended each date of hearing,  

of the proceedings in Contempt Petition (Civil) nos. 412 and 413 of 2012  

and Contempt Petition (Civil) no. 260 of 2013, and were personally aware  

of the day to day happenings.

82. Now the merits of the contention.  Interlocutory Application nos. 68  

and 69 of 2013 in Civil Appeal no. 9813 of 2011 were filed by the SEBI.  

The prayers made therein inter alia, read as under:-

“(d) pass an order permitting SEBI [WTM]  to take measures for  arrest and detention in civil prison of promoter of Saharas Shri  Subrata  Roy  Sahara  and  the  two male  directors,  viz.,  Shri  Ashok  Roy  Choudhary  and Shri  Ravi  Shankar  Dubey  after  giving reasonable opportunity of hearing.

(f) pass an order directing the promoter of SIRECL and SHICL  Shri Subrata Roy Sahara and their Directors, viz., Shri Ashok  Roy Choudhary, Shri Ravi Shankar Dubey and Ms. Vandana  Bhargava to  deposit  forthwith  their  respective passport  with  the Secretary General of this Hon’ble Court and not to leave

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the country without the prior permission of this Hon’ble Court;  and

(g) pass such other and/or further order(s) as this Hon’ble Court  may deem fit and proper in the facts and circumstances of the  case.”

(emphasis is ours)

In view of the above prayers made in Interlocutory Application nos. 68 and  

69 of 2013, wherein notice was issued to the petitioner, can it be said, that  

the petitioner had no notice?  Can it not be said, that there was a pending  

Interlocutory Application expressly, seeking his arrest and detention?  We  

are fully satisfied, that the petitioner – Mr. Subrata Roy Sahara had due  

notice, as also, that he was fully alive to the basis and reasons, why his  

arrest and detention (along with the directors of the two companies) was  

being sought.

83. The  said  Interlocutory  Application  nos.  68  and  69  of  2013  were  

taken up for consideration on 22.4.2013.  Mr. Gaurav Kejriwal, Mr. U.U.  

Lalit, and Mr. C.A. Sundaram, learned Senior Counsel appearing for the  

contemnors  undertook  to  file  their  response  to  the  above  applications,  

within  one week.   Accordingly,  liberty  was granted  to  Mr.  Subrata  Roy  

Sahara  (and  the  other  contemnors)  to  file  their  reply  affidavits  by  

29.4.2013.  The petitioner herein - Mr. Subrata Roy Sahara, actually filed  

his  personal  counter  affidavit  dated  8.5.2013  in  reply  to  Interlocutory  

Application nos. 68 and 69 of 2013.  He asserted in paragraph 2 of his  

affidavit as under:-

“… while so seeking relief for arrest and detention in a civil prison,  depositing of passport etc., would not be warranted in fact or in law.  I submit that such reliefs are granted in extreme cases of execution

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of decree only when it is established that a judgment-debtor having  the  means  to  pay,  is  willfully  and  intentionally  not  paying  the  amount…”

(emphasis is ours)

In paragraph 4 of the counter affidavit filed by the petitioner – Mr. Subrata  

Roy Sahara, to Interlocutory Application nos. 68 and 69 of 2013, it was  

submitted:-

“Without prejudice to the aforesaid, I further submit that, there would  be no warrant or justification for SEBI to seek reliefs as they have  prayed  for.   In  the  first  place,  all  my  assets  have  already  been  attached  by  SEBI  and  particulars  of  which  are  given  to  SEBI  in  compliance of its order.  It is neither allegation of SEBI that I have  secreted  away  any  assets,  nor  any  part  of  moneys  received  by  SIRECL/SHICL from the investors has been diverted to me.  Whilst  so there is no case made out by SEBI, for the orders as sought by  SEBI.   Apart  from  the  aforesaid,  I  also  submit  that  I  am  businessman, holding Indian passport residing in India and most of  my assets and businesses are in India.  My entire family and home,  is also in India.  While so there cannot be any apprehension, leave  alone  reasonable  apprehension/ground  requiring  my  detention  or  restrain  on  any  travel  as  sought  for.  In  absence  of  any  such  reasonable apprehension, I submit that the application is not bona  fide and warranted in any manner whatsoever.”.

(emphasis is ours)

His above affidavit  ended with a prayer,  that the relief  sought  by SEBI  

ought not to be granted.  In view of the above personal counter-affidavit  

filed by the petitioner,  is it  not  abundantly  clear,  that the petitioner was  

conscious  of  the  implications  of  the  prayer  made  in  Interlocutory  

Application nos. 68 and 69 of 2013?  We are also satisfied, that he was  

also fully conscious, of the provisions under which the prayer made had to  

be examined, and therefore, relied upon the various technicalities of law, in  

his  defence.   He also placed,  certain  personal  factors  on record in his  

defence.  In other words, not only was he aware of the reasons, why his  

arrest and detention was sought, but he had availed of the opportunity to

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respond to the same in writing.  We are fully satisfied, that the petitioner –  

Mr. Subrata Roy Sahara had a notice depicting the reasons why his arrest  

and detention was sought, and an opportunity to carefully respond to the  

same, by stating his defence in writing.

84. The matter was thereafter posted for hearing on 2.5.2013.  Having  

found,  that  the  petitioner  -  Mr.  Subrata  Roy  Sahara  (and  the  other  

contemnors) were engaging themselves in unnecessary litigation arising  

out of our order dated 31.8.2012, the following interim order came to be  

passed on 2.5.2013:-

“We  are  inclined  to  stay  all  further  proceedings  in  Appeal  Nos.  42/2013 (Subrata Roy Sahara v. SEBI), 48/2013 (SHICL v. SEBI),  49/2013 (SIRECL v. SEBI) and 50/2013 (Ashok Roy Chaudhary &  Ors.  v.  SEBI)  pending  before  the  Securities  Appellate  Tribunal,  Mumbai, and in Writ Petition No. 2088/2013 pending before the High  Court  of  Judicature  at  Allahabad,  Lucknow  Bench,  since  we  are  examining  the  question,  whether  the  respondents  have  complied  with  the various  conditions  stipulated  in our  judgment  dated  31st  August, 2012.”

85. Interlocutory  Application nos.  68 and 69 of  2013 continued to be  

listed on each date of hearing thereafter, i.e., on 2.5.2013, 8.5.2013 and  

17.7.2013.  To ensure, that the issue of compliance of the orders passed  

by us on 31.8.2012, would be listed only before this Court,  we passed,  

inter alia, the following order on 17.7.2013:-

“We  call  for  the  Appeals  Nos.42/2013  (titled  Subrata  Roy  Sahara  v.  SEBI),  48/2013  (titled  SHICL  v.  SEBI),  49/2013  (titled  SIRECL  v.  SEBI)  and  50/2013  (titled  Ashok  Roy  Chaudhary & Ors.,  SEBI) pending before the Securities Appellate  Tribunal  Mumbai  and  W.P.  No.2088  of  2013  (titled  Sahara  India  Lucknow  &  Anr.,  v.  SEBI)  pending  before  the  High  Court  of  Judicature at Allahabad, which shall stand transferred to this Court.  

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We make it clear that no High Court,  Securities  Appellate  Tribunal  and  any  other  Forum  shall  pass  any  orders  against  the  orders  passed  by  Securities  and  Exchange  Board  of  India  (SEBI)  in  implementation  of  this  Court's  judgment  dated  31.08.2012.”

The above order was considered essential because it seemed to us, that  

the  petitioner  was  unnecessarily  opening  and  extending  the  litigation  

pertaining  to  the  execution  of  order  dated  31.8.2012,  to  other  Fora  

including the High Court.   

86. The matter was then taken up for hearing on various dates including  

24.7.2013,  30.7.2013,  6.8.2013,  13.8.2013,  26.8.2013,  2.9.2013,  

16.9.2013,  4.10.2013  and  28.10.2013.   On  all  the  above  dates,  

Interlocutory Application nos. 68 and 69 of 2013, were actually posted for  

hearing.  By now, enough time had been afforded to the petitioner to solicit  

compliance  of  the  orders  passed  by  this  Court.   Rather  than  actual  

compliance by making financial deposits, an alternative route was sought  

to be treaded by Mr.  C.A. Sundram,  learned Senior  Counsel.   Learned  

Senior  Counsel  informed us,  that  the contemnors  were willing to  make  

available  to  the  SEBI,  the  details  of  unencumbered  properties  worth  

Rs.20,000/-  crores.   It  was apparent,  that  the implied purpose to make  

available the above properties was, to guarantee the payment ordered by  

this  Court  on  31.8.2012  and  5.12.2012.   Noticing  the  above  factual  

position, this Court passed the following order:-

“Mr.  C.A.  Sundaram,  learned  Senior  Counsel  appearing  for  respondent  No.5 (alleged contemnor),  brought  to our  notice letter  dated October 17, 2013 received from the Managing Director and  CEO of the PNB Investment Services Limited. The same is taken on  record and is marked as 'Annexure-A'.

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Mr. Sundaram, on the basis of  the said letter and on instructions  received from the Sahara Group of Companies, submitted that the  alleged contemnors are willing to make available to SEBI the original  title deeds of unencumbered properties, worth `20,000 crores, along  with proper valuation reports,  within a period of three weeks from  today.  SEBI,  in  turn,  will  examine  the  same  and  make  their  response, which shall be considered by this Court on the next date  of hearing.

Till the above direction is complied with to the satisfaction of SEBI,  the alleged contemnors  (respondents)  shall  not  leave the country  without the permission of this Court.”

(emphasis is ours)

It is in furtherance of the prayer (f) made in Interlocutory Application nos.  

68  and  69  of  2013,  that  the  above  order  came  to  be  passed  on  

28.10.2013,  restraining  the  petitioner  (and  the  other  contemnors)  from  

leaving the country, without this Court’s permission.  This Court through its  

above order,  issued its first disciplinary order.   We had hoped, that the  

above  order  would  convey  to  the  contemnors,  the  seriousness  of  the  

matter.

87. The  matter  was  then  taken  up  on  31.10.2013  and  1.11.2013.  

Having considered the submissions advanced on behalf of the petitioner -  

Mr.  Subrata Roy Sahara in Interlocutory Application no. 4 (in Contempt  

Petition (Civil) no. 260 of 2013 in Civil Appeal no. 8643 of 2012), that he  

needed  to  go  abroad  urgently,  in  connection  with  some  business  

commitments,  we permitted him the liberty  to leave the country,  with a  

clear direction, that he would return back before the expiry of the period of  

three weeks, if the directions issued by us in the order dated 28.10.2013

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were not complied with.  An extract of the above order dated 1.11.2013 is  

being reproduced hereunder:-

“For the reasons indicated in para 4 of the application,  we make it  clear  that  it  is  open for  the alleged contemnor  No.5 in Contempt  Petition (Civil) Nos. 412 and 413 of 2012 to go abroad, but, in the  event  of  non-compliance  of  the  directions  contained  in  the  order  dated October 28, 2013, he shall  immediately return back and be  present in the country before the expiry of the period of three weeks,  as indicated in the said order.”

(emphasis is ours)

It  is  therefore  apparent,  that  this  Court  did  not  wish  any  harm  to  the  

petitioner.   The  requests  made  by  him  were  duly  considered,  and  

appropriate  orders  were  passed,  to  ensure  that  his  business  ventures  

would not be adversely affected.

88. The matter was taken up for hearing thereafter, on 20.11.2013 and  

21.11.2013.  On 21.11.2013, finding the conduct of the petitioner and the  

other contemnors unacceptable, and in complete disregard with the order  

passed by us on 28.10.2013, we issued further directions on 21.11.2013  

restraining  the  Sahara  Group  of  Companies,  from  parting  with  any  

movable or immovable properties, until further orders.  We further directed,  

that all the alleged contemnors would not leave the country, without the  

prior  permission  of  this  Court.   In  this  behalf  it  would  be  relevant  to  

mention, that the above order came to be passed because, the Court felt  

that an attempt had been made to mislead the Court, by submitting a false  

evaluation  report.   In  this  behalf  we  may  record,  that  learned  Senior  

Counsel  representing  the  SEBI  had  invited  our  attention  to  an  order  

passed  by  the  Bombay  High  Court,  depicting  that  the  main  properties

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offered  by  the alleged  contemnors,  in  compliance  with  the  order  dated  

28.10.2013, fell in the CRZ Zone, where no construction whatsoever was  

permissible.   An  extract  of  the  order  dated  21.11.2013  is  reproduced  

hereunder:-

“We are convinced that the order dated 28.10.2013 passed by this  Court  has not been complied with in its letter and spirit.   In such  circumstances, we direct that the Sahara Group of Companies shall  not  part  with  any  movable  or  immovable  properties  until  further  orders.  We further direct that all the alleged contemnors shall not  leave the country without the permission of this Court.”

(emphasis is ours)

This was another order,  in the series of corrective and deterrent orders  

passed by this Court, in the process of enforcement of our orders dated  

31.8.2012 and 5.12.2012.  This Court through its above order, restrained  

the  entire  Sahara  Group  of  Companies,  from  transferring  any  of  their  

movable or immovable properties.  Needless to mention, that the above  

order  was  also  clearly  passed  in  furtherance  of  the  prayer  made  in  

Interlocutory Application nos. 68 and 69 of 2013, which was actually listed  

on the above date of  hearing.  This was another order in the series of  

orders  passed  by  this  Court,  which  would  have  certainly  made  the  

petitioner aware, that sequentially harsher orders were being passed by  

this Court, in the light of the prayers made in the aforesaid Interlocutory  

Applications.

89. The matter was then listed for hearing on 11.12.2013, 17.12.2013,  

2.1.2014 and 9.1.2014.  On all the above dates, Interlocutory Application  

nos. 68 and 69 of 2013 were also listed for hearing.  On 9.1.2014, this  

Court passed the following order:-

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“Heard counsel on either side.

Mr.  C.A. Sundaram, learned Senior Counsel  appearing for one of  the  alleged  contemnors,  submitted  that  earlier  this  Court  on  December 11, 2013 has only reiterated the submission made by Mr.  Arvind Datar, learned Senior Counsel appearing for SEBI, that they  did  not  disclose  the  source  from  which  they  got  money  for  repayment, despite SEBI's letter dated May 28, 2013.

Mr.  Sundaram is right  in his submission.  However,  we feel  that it  would be appropriate to give a direction of the nature stated above.

Accordingly,  we  direct  the  alleged  contemnors  to  disclose  the  complete details and source from which they repaid the amount to  the investors as also the manner of making payments. They shall  also disclose the information which SEBI has sought from them from  time to time. Such information shall be provided to SEBI and also be  filed in this Court by January 23, 2014.

Put up on January 28, 2014 at 2.00 p.m.

In the meantime, SEBI shall verify the information provided to it by  the alleged contemnors.”

It  is  imperative for  us to give the background explaining why the order  

extracted hereinabove came to be passed.  In this behalf it is relevant to  

mention, that Mr. Arvind Datar, learned Senior Counsel appearing for the  

SEBI, had informed this Court, that the contemnors including the petitioner  

herein,  had  been  asserting  that  they  had  refunded  Rs.17,443  crores  

(approximately)  in  the  case  of  SIRECL  and  Rs.5,442  crores  

(approximately) in the case of SHICL, but had not given any details, nor  

produced  any  relevant  record  to  show  the  source  from which  the  two  

companies  had collected  the  money,  for  such huge  repayments.   This  

information, according to Mr. Datar, had been sought by the SEBI from the  

alleged contemnors through a letter dated 28.5.2013 (i.e., more than six  

months prior to the passing of the above order).  We were of the view, that

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mentioning the aforesaid factual position was sufficient to prompt the two  

companies to furnish the abovesaid details.  The demeanour of the two  

companies has remained the same, throughout.  They have never supplied  

any investor related information.  Not even such information, which would  

have substantiated their own defence.  It is this repeated behaviour, that  

has given us the repeated impression, that the submissions advanced on  

behalf of the two companies, were just a pack of lies.  The fact that the  

companies had not furnished the above details, was brought to our notice  

by Mr. Datar on 9.1.2014, prompting us to pass an express order directing  

the two companies, as also, the alleged contemnors including the present  

petitioner – Mr. Subrata Roy Sahara, to furnish the required particulars.  

The above order discloses the games the two companies, and the alleged  

contemnors, have been playing with this Court.   

90. Thereafter the matter was taken up for consideration on 28.1.2014,  

when we passed the following order:-

““Heard  Mr.  Ram  Jethmalani,  learned  Senior  Counsel  and  Mr.  Arvind P. Datar, learned Senior Counsel.

Mr. Datar submitted that the Saharas have not disclosed the details  as to when the refund was made.  Reference was made to pages 6  to 9 of the reply affidavit filed today.

Mr.  Datar further submitted that the SEBI requires an explanation  from Saharas with regard to the payments made on behalf of Sahara  India Real  Estate Corporation Ltd.  (SIRECL) (partnership  firm) by  the following firms, as mentioned below:-

Rupees (In Crores)

1. Sahara Credit Co-operative Society Ltd. 13,366.18 2. Sahara  India  Commercial  Corporation 4384.00

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Limited 3. Sahara Q Shop 2258.32 4. Ketak City Homes Ltd. 19.43 5. Kirit City Homes Ltd. 44.05

Similarly,  SEBI requires  Saharas to show the following payments  made  on  behalf  of  Sahara  Housing  Investment  Corporation  Ltd.  (SHICL)  (partnership  firm),  by  the  following  firms,  as  mentioned  below:-

Rupees (In Crores)

1. SICCL 2479.00 2. Sahara Q Shop 2411.90

Further,  the Saharas will  also provide the bank statements of  the  above firms showing when the amount was paid to the partnership  firms and subsequently  when and how partnership firm made the  disbursement, as sought for by the SEBI.

Mr.  Ram  Jethmalani,  learned  Senior  Counsel  appearing  for  the  respondents submitted that he will examine the same and come out  with a response within a week.”

(emphasis is ours)

The above order  is  self-explanatory.   The two companies,  as also,  the  

contemnors including the present petitioner, were obviously not providing  

the required bank statements, even though in Appeal no. 49 of 2013 filed  

by SIRECL before the SAT, it had committed to furnish bank accounts of  

Sahara  India  to  establish  redemption  of  payments.   The  relevant  

paragraph  containing  the  assertions  made  therein  is  being  extracted  

hereunder:-

“(ee) The Appellant has invested the funds of OFCD  as per the details mentioned in the Affidavit dated 04.01.2012 of Shri  B.M. Tripathi filed before the Hon’ble Supreme Court in Civil Appeal  No.  9833 of  2011 which  is  already  on  the  record  of  the  Hon’ble  Supreme  Court.   Further,  it  is  submitted  that  in  order  to  make  redemptions to the OFCD holders, the Appellant had to dispose of  the investments.  Amounts realized on such disposal were utilized to  pay the investors, on redemption through Sahara India-Partnership  Firm to make the redemptions.  The redemptions made to investors

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are clearly reflected and found in the Books of Accounts of Sahara  India.   The Appellant  crave leave to refer  to and rely  upon bank  accounts of Sahara India as and when produced.”

(emphasis is ours)

In a similar Appeal no. 48 of 2013, filed by SHICL before the SAT, exactly  

the  same  stance  (as  adopted  by  SIRECL,  and  extracted  above),  was  

taken.  Even though the position adopted by the two companies was, that  

verification  of  redemption  of  OFCD’s  could  be  established  from  bank  

accounts of  Sahara India Limited,  the said bank accounts depicting the  

said transactions were not being disclosed.  A perusal of the above order  

dated 28.1.2014 reveals, that Mr. Ram Jethmalani, learned Senior Counsel  

sought time to examine the matter, so as to be able to come out, with an  

appropriate  response.   On 20.2.2014,  conflicting  stands  were  taken  by  

learned  counsel  appearing  for  the  alleged  contemnors  (including  the  

present petitioner).  One learned counsel, went to the extent of contending,  

that the position adopted by the two companies in the two appeals, was  

the result of a typographical error.  All along, most ridiculous and absurd  

defences  were  raised.   Our  impression  is,  that  this  was done to avoid  

furnishing of the information sought.  Maybe there was no information to  

supply.

91. This  Court  was  also  convinced,  that  the  attitude  of  the  alleged  

contemnors  was  defiant  and  non-cooperative,  insofar  as  the  

implementation  of  its  orders  dated  31.8.2012  and  5.12.2012  was  

concerned.  Accordingly the personal presence of the alleged contemnors  

was ordered.  This was yet another order, in the line of orders passed by

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us, this time sterner than the previous ones.  Yet again, aimed at cajoling  

compliance  of  the  orders  dated  31.8.2012  and  5.12.2012.   On  all  the  

earlier  dates of  hearing,  as also on 20.2.2014,  Interlocutory  Application  

nos. 68 and 69 of 2013 were posted for hearing.  It was evident, that the  

order  dated  20.2.2014 was passed by this  Court,  in  furtherance of  the  

prayers made in the above Interlocutory Applications.  A relevant portion  

thereof is reproduced hereunder:-

“Heard Mr. Ram Jethmalani and Mr. C.A. Sundaram, learned Senior  Counsel  appearing for  the alleged contemnors  and Mr.  Arvind P.  Datar, learned Senior Counsel appearing for SEBI.

In  view  of  the  conflicting  stands  taken  by  the  Senior  Counsel  appearing  for  the  alleged  contemnors  and  the  defiant  and  non- cooperative  attitude  adopted  by the  contemnors  in  honouring  the  judgment dated August 31, 2012, passed by this Court as well as  orders dated December 05, 2012 and February 25, 2013 passed in  Civil  Appeal  No. 8643 of 2012 and IA No. 67 of 2013 by a three  Judge Bench of this Court, we direct the personal presence of the  alleged contemnors and the Directors of the respondent companies  in Court on February 26, 2014 at 2.00 p.m., on which date the matter  will be next taken up.”

(emphasis is ours)

A perusal of the above order reveals, that the contemnors were to appear  

personally before this Court on 26.2.2014.  Most importantly, it also reveals  

why  the  petitioner  was  being  summoned  to  this  Court.   We  are  also  

satisfied, that the petitioner was fully conscious, of the reason why he was  

being summoned to Court,  anyway his personal  presence was directed  

(along with the other contemnors).  It therefore does not lie in the mouth of  

the petitioner – Mr. Subrata Roy Sahara, or his learned counsel, that they  

were not aware why the above summoning order was passed.

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92. On 25.2.2014, an oral request was made by Mr. Ram Jethmalani,  

learned Senior  Counsel.    He prayed  for  exemption,  of  the  petitioner’s  

personal presence.  The above oral request was specifically turned down.  

When  the  matter  was  taken  up  on  26.2.2014,  whilst  the  other  alleged  

contemnors were present in Court, Mr. Subrata Roy Sahara, the petitioner  

herein, did not enter appearance.  This Court passed the following order  

on 26.2.2014, to enforce the presence of the petitioner Mr. Subrata Roy  

Sahara on the next date of hearing, i.e., on 4.3.2014:-

“This  Court  passed an  order  on  February  20,  2014 directing  the  personal presence of the alleged contemnors and the Directors of  the respondent companies today, i.e. on February 26, 2014 at 2.00  p.m. On our directions, Mr. Ashok Roy Choudhary, Mr. Ravi Shankar  Dubey and Smt. Vandana Bhargava are present in Court today.

Even  though,  Mr.  Ram  Jethmalani,  learned  Senior  Counsel  appearing for the alleged contemnors, made a mention yesterday,  i.e. on February 25, 2014, before this Bench for dispensing with the  personal presence of Mr. Subrata Roy Sahara, alleged contemnor  No.5, that request was specifically turned down by this Court.

Today, when the matter is taken up, same request was made by Mr.  Jethmalani,  by moving an application,  which was supported  by a  medical  certificate.  The  said  medical  certificate  was  issued  by  Sahara  Hospital  and,  in  our  view,  the  factual  position  indicated  therein does not solicit the exemption sought.

Since, we have already declined to grant exemption from personal  presence of alleged contemnor No.5 on February 25, 2014, we find  no reason to accede to the renewal of the request made today.

Accordingly,  we  issue  non-bailable  warrants  of  arrest  qua  Mr.  Subrata Roy Sahara, alleged contemnor No.5.  He shall be arrested  and produced before this Court on March 04, 2014 at 2.00 p.m.

The afore-mentioned Directors,  who are present  today,  shall  also  remain present in Court on the next date.

Put up on March 04, 2014 at 2.00 p.m.” (emphasis is ours)

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On 4.3.2014,  all  the contemnors  were present.   Not  only  were learned  

counsel appearing for the petitioner permitted to address arguments, we  

afforded an opportunity of hearing to each of the directors present in Court,  

as also, Mr. Subrata Roy Sahara.  In the facts and circumstances of the  

controversy  it  needs  to  be  noticed,  that  Mr.  Subrata  Roy  Sahara  was  

repeatedly  heard  on  4.3.2014,  as  and when he  desired  to  express  his  

view, till he had nothing further to state.  

93. It is thereupon that the impugned order dated 4.3.2014 extracted at  

the beginning of this order, was passed.

94. Based on the factual position noticed in the foregoing paragraphs, it  

was the vehement contention of Mr. Arvind Datar, learned Senior Counsel  

appearing for the SEBI, that the entire basis of the submissions canvassed  

on behalf of the petitioner was fallacious.  It was submitted, that a written  

prayer was made in Interlocutory Application nos. 68 and 69 of 2013, inter  

alia praying  for  the  arrest  of  the  petitioner  herein  –  Mr.  Subrata  Roy  

Sahara,  and  also,  that  of  two  other  male  directors  of  the  companies,  

namely,  Mr. Ashok Roy Choudhary and Mr.  Ravi Shankar Dubey.  The  

impugned  order  dated  4.3.2014,  was  exactly  to  the  above  effect.   In  

consonance with the prayer made by the SEBI, the impugned order dated  

4.3.2014 directed the arrest and detention of Mr. Subrata Roy Sahara, Mr.  

Ashok Roy Choudhary and Mr. Ravi Shankar Dubey.  We did not traverse  

beyond the prayers made in the Interlocutory Applications.   We did not  

order  the  arrest  and  detention  of  another  contemnor  Smt.  Vandana

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Bhargava,  because  no  prayer  for  her  arrest  had been made,  and also  

because of  the reasons expressed in the order dated 4.3.2014.   There  

could therefore be no reason to doubt, that the order dated 4.3.2014 had  

been  passed  in  furtherance  of  express  prayers  made  to  this  Court,  in  

Interlocutory Application nos. 68 and 69 of 2013.   

95. We find each one of the submissions advanced by Mr. Arvind Datar  

on  behalf  of  the  SEBI,  as  fully  justified.   We  have  recorded  our  own  

observations, at the end of each of the above paragraphs, dealing with the  

factual position brought to our notice, by the learned Senior Counsel for  

the SEBI.  We are satisfied, that Mr. Subrata Roy Sahara was well aware  

of the proceedings before this Court.  He was well aware of the prayers  

made in Interlocutory Application nos. 68 and 69 of  2013.  He filed his  

written response thereto, by way of an affidavit.  The petitioner was aware  

of  the  seriousness  of  the  issue,  on  account  of  various  restraining,  

corrective and deterrent orders passed by this Court,  from time to time,  

each graver than the previous ones.  He remained unaffected to all  the  

efforts made by this Court, to enforce refund of the moneys collected by  

the two companies, to those who had invested in their OFCD’s, along with  

interest, in terms of this Court’s orders dated 31.8.2012 and 5.12.2012.  It  

is, therefore, that this Court was left with no other option, but to order the  

arrest and detention of two of the directors, and Mr. Subrata Roy Sahara.  

We were  satisfied,  that  the  above  order  was  necessary  to  ensure  the  

observance of the due process of law, in the facts and circumstances of

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the case.  The above order was also imperative, if we were to perform our  

duties and functions effectively, and if we were to maintain the majesty of  

law and/or the dignity of the Supreme Court.

96. It is not possible for us to accept, that while passing the above order,  

no opportunity was afforded to the petitioner - Mr. Subrata Roy Sahara.  

Indeed every response made by the alleged contemnors, was taken into  

consideration on each occasion.  The alleged contemnors were found to  

be  playing  tricks  with  this  Court.   Not  only  were  learned  counsel  

representing  the alleged contemnors  heard  from time to  time,  personal  

hearing was also afforded to the directors and Mr. Subrata Roy Sahara,  

the petitioner herein on 4.3.2014.  In fact, Mr. Subrata Roy Sahara, the  

petitioner herein, was heard repeatedly to his heart’s content, before the  

order dated 4.3.2014 was passed.  For the reasons recorded hereinabove,  

it is not possible for us to accept the contention advanced at the hands of  

the learned counsel for the petitioner, that the order dated 4.3.2014 was  

passed without  following the rules  of  natural  justice,  or  that,  the above  

order violates any of the petitioner’s fundamental rights.

VIII. Whether  the  impugned  order  dated  4.3.2014,  is  vitiated  on  account of bias?

97. To be fair to Mr. Ram Jethmalani and Dr. Rajeev Dhawan, learned  

Senior Counsel representing the petitioner, it is essential to indicate, that  

one of the reasons expressed by them, for us not to hear this matter was,  

that we entertained a bias against the petitioner.  The pointed contention

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was, that the deliberations conducted by us, had generated a reasonable  

apprehension in the mind of the petitioner, that we had already arrived at a  

final resolve, and that, we would not be satisfied under any circumstances,  

with  the  petitioner’s  arguments  and  submissions  on  merits.   It  was,  

therefore submitted, that the merits of the controversy would not make any  

difference  to  this  Bench,  since  the  Bench  had  already  pre-judged  the  

matter, and that, no relief could be expected by the petitioner from us.

98. In order to support his above submission, learned Senior Counsel  

for the petitioner argued, that the petitioner had been confined to Tihar Jail,  

since  4.3.2014,  without  any  justification.   It  was  submitted,  that  the  

incarceration  of  the  petitioner  was  void,  and with  the  march  of  events,  

during the course of hearing of the instant petition, it had further become  

clear to the petitioner, that it was likely that the petitioner would continue to  

remain in custody for an indefinite period.  In this behalf it was submitted,  

that it was the petitioner’s impression that the Judges hearing the matter,  

wished to enforce the orders dated 31.8.2012 and 5.12.2012, at all costs.  

It was submitted, that the above orders had been substantially complied  

with,  yet without following the rules of  natural  justice, the petitioner has  

been  accused  of  not  complying  with  the  orders  of  this  Court.   It  was  

submitted, that the petitioner’s incarceration vide order dated 4.3.2014 was  

a  complete  nullity,  and  it  was  the  duty  of  this  Court,  to  terminate  his  

unlawful detention, and to order his release forthwith.

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99. It  was  the  pointed  submission  of  the  learned  counsel  for  the  

petitioner, that during the course of hearing (of  Contempt Petition (Civil)  

nos. 412 and 413 of 2012 and Contempt Petition (Civil) no.260 of 2013), in  

order to determine whether or not the respondents therein (including the  

present  petitioner)  were  actually  guilty  of  contempt,  one  of  the  Judges  

hearing the matter (J.S. Khehar, J.), had presumably in agreement with the  

other  Judge  on  the  Bench  (K.S.  Radhakrishnan,  J.)  informed  learned  

counsel,  that  the  issue  as  to  whether  the  respondents  in  the  above  

petitions, had committed contempt or not, would only be considered after  

the Court’s  satisfaction,  that  the orders  dated 31.8.2012 and 5.12.2012  

had been complied  with.  It  was the submission  of  the  learned Senior  

Counsel for the petitioner, that when the petitioner’s detention was ordered  

on 4.3.2014, neither the petitioner nor his counsel understood the purpose  

for which the petitioner, as promoter of the two companies, and the other  

directors  of  the  two  companies,  had  been  summoned  to  this  Court.  

Besides the above stated factual submission, it was also the contention of  

the  learned  Senior  Counsel  for  the  petitioner,  that  the  petitioner  is  still  

unaware, of the reasons for which his detention has been ordered.

100. It was submitted, that under the stress created by the order passed  

by this Court on 4.3.2014, by which the petitioner’s liberty had been taken  

away,  the  petitioner  has  made  repeated  efforts  to  suggest  a  possible  

settlement,  yet  all  efforts  made  by  the  petitioner  were  rejected.   The  

petitioner’s proposals were construed, according to learned counsel, as an

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insult to the Court.  It was submitted, that all these events, had generated a  

reasonable apprehension in the mind of the petitioner, that this Court had  

already  arrived  at  a  final  decision.   In  order  to  support  the  instant  

submission, learned counsel for the petitioner invited this Court’s attention  

to something which had completely shocked the petitioner, and had made  

him incapable  to  expecting  a just  decision  at  the hands of  the  Judges  

hearing the matter.  In this behalf it was pointed out, that in the impugned  

order a finding had been recorded, that “… all the fact finding authorities  

had  opined  that  a  majority  of  the  investors  did  not  exist…”   It  was  

submitted,  that  the  identity  of  the  authorities  which  had  arrived  at  the  

above conclusion, had not been disclosed, by this Court.  It was pointed  

out, that no such mention had been made in the affidavit filed by the SEBI,  

and no such submission was advanced, during the course of hearing.  It  

was therefore, the contention of the learned counsel for the petitioner, that  

the petitioner  was of  the firm belief,  that  in view of  our  pre-disposition,  

legitimate verification of the documents furnished by the two companies to  

the SEBI, cannot be expected.  It was submitted, that the situation created  

by this Court was such, that the petitioner is in no position, even to make  

an effort to find a compromise solution to the problem.  It was also the  

assertion of the learned counsel for the petitioner, that the impugned order  

recited, that the respondents/contemnors (including the petitioner herein)  

were heard, whereas, the respondents were called upon when only a few  

minutes were left for this Court to rise on 4.3.2014.  While acknowledging,  

that  all  the  four  respondents  (including  the  present  petitioner)  were

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individually asked, as to whether they had anything to say, they were not  

informed  what  they  were  asked  to  respond  to.   Accordingly,  all  the  

respondents who had appeared before this Court on 4.3.2014, were fully  

justified in stating to this Court on 4.3.2014, that their response was the  

same  as  had  been  submitted  to  this  Court,  on  their  behalf,  by  their  

respective  learned  Senior  Counsel.   It  was  accordingly  sought  to  be  

suggested, that only an illusory hearing, in total defiance of the rules of  

natural  justice,  was  afforded  to  the  petitioner,  and  the  other  

contemnors/respondents.   Based  on  the  above  premise,  it  was  the  

submission  of  the  learned  Senior  Counsel  for  the  petitioner,  that  on  

account of the lack of confidence of the petitioner, in this Bench, it would  

be improper for this Bench to hear the present case on its merit, and to  

render judgment thereon.

101. In  order  to  support  his  above  contention,  and  to  bring  forth  the  

principles  enunciated by this  Court,  which were relevant  to the present  

case,  Mr.  Ram Jethmalani,  learned Senior  Counsel,  placed reliance on  

Manak  Lal  v.  Dr.  Prem Chand,  (1957),  SCR 575.   Inviting  the  Court’s  

attention to the factual background of the controversy in the above case, it  

was  brought  out,  that  Dr.  Prem  Chand,  the  respondent,  had  filed  a  

complaint against Manak Lal, the petitioner, under the Bar Councils Act.  

During the course of adjudication, both the Members of the Tribunal (under  

the  Bar  Councils  Act)  and the Judges of  the High Court  of  Rajasthan,  

accepted  the  complainant’s  version,  and  rejected  the  pleas  raised  by

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Manak Lal.  Resultantly, Manak Lal was held guilty of gross professional  

misconduct.  It was the above finding, which was assailed by Manak Lal  

before this Court.  The contention advanced on his behalf was, that the  

Members  of  the  Tribunal,  nominated  to  enquire  into  the  misconduct  of  

Manak Lal, had been improperly nominated.  The improper constitution of  

the Tribunal was premised on the fact, that Shri Chhangani who was the  

Chairman  of  the  Tribunal,  had  previously  filed  a  power  of  attorney  on  

behalf of Dr. Prem Chand, in a matter being determined under Section 145  

of the Cr.P.C.  It was submitted that Shri Chhangani, had also argued the  

above  matter,  on  behalf  of  Dr.  Prem  Chand  on  23.8.1952.   Having  

appeared for  the opponent,  it  was submitted,  that  Shri  Chhangani  was  

disqualified from acting as Chairman/Member of the Tribunal.  This Court  

in the above factual background, held as under:-

“There is some force in this argument.  It is well settled that every  member of a tribunal that is called upon to try issues in judicial or  quasi-judicial proceedings must be able to act judicially; and it is of  the  essence  of  judicial  decisions  and  judicial  administration  that  judges should be able to act impartially, objectively and without any  bias. In such cases the test is not whether in fact a bias has affected  the  judgment;  the  test  always is  and must  be  whether  a,  litigant  could reasonably apprehend that a bias attributable to a member of  the tribunal might have operated against him in the final decision of  the tribunal. It is in this sense that it, is often said that justice must  not only be done but must also appear to be done.”  

(emphasis is ours)  

On the issue, that justice must not only be done, but must also appear to  

be done, this Court  in the above judgment,  had relied on the judgment  

rendered in Frome United Breweries Co. v. Bath Justices, (1926) AC 586,  

and thereupon, had observed as under:-

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“As Viscount Cave L. C. has observed in From United Brewerses Co.  v. Bath Justices, "this rule has been asserted not only in the case of  Courts  of  Justices  and  other  judicial  tribunals  but  in  the  case  of  authorities which, though in no sense to be called Courts, have to act  as  judges  of  the  rights  of  others  ".  In  dealing  with  cases  of  bias  attributed to members constituting tribunals, it is necessary to make a  distinction between pecuniary interest and prejudice so attributed. It  is  obvious  that  pecuniary  interest,  however  small  it  may  be  in  a  subject-matter of the proceedings, would wholly disqualify a member  from acting as a judge. But where pecuniary interest is not attributed  but  instead  a  bias  is  suggested,  it  often  becomes  necessary  to  consider  whether  there  is  a  reasonable  ground  for  assuming  the  possibility of a bias and whether it is likely to produce in the minds of  the  litigant,  or  the  public  at  large  a  reasonable  doubt  about  the  fairness of the administration of justice. It would always be a question  of fact to be decided in each case. " The principle says Halsbury,  "nemo debet esse judex in causaproprta sua precludes a justice, who  is  interested  in  the  subject  matter  of  a  dispute,  from acting  as  a  justice therein”  (Halsbury’s  Laws of  England,  Vol.  XXI,  page 535,  para 952).  In our opinion, there is and can be no doubt about the  validity  of  this  principle  and we are  prepared  to  assume that  this  principle applies not only to the justices as mentioned by Halsbury  but  to  all  tribunals  and  bodies  which  are  given  jurisdiction  to  determine judicially the rights of parties.”

(emphasis is ours)

In Manak Lal’s case (supra), reliance was also placed by this Court on Rex  

v. Sussex Justices, Ex parte McCarthy, (1924) 1 KB 256.  Relying on the  

above judgment, this Court had expressed as under:-

“In  support  of  his  argument,  Shri  Daphtary  referred  us  to  the  decision in Rex v. Sussex Justices, Ex parte McCarthy.  In this case,  the Court was dealing with a case arising out of a collision between  a motor vehicle belonging to the applicant and one belonging to W.  At the hearing of the summons the acting clerk to the justices was a  member of the firm of solicitors who were acting for W in a claim for  damages against the applicant for injuries received in the collision.  After the evidence was recorded the justices retired to consider their  decision and the acting clerk  also retired  with them in case they  should desire to be advised on any point of law. The applicant was  convicted  in  the  case.   This  conviction  was  challenged  by  the  applicant on the ground that it was vitiated by the improper conduct  of the justices in allowing the acting clerk to be associated with them  when they deliberated about the merits of the case. An affidavit was  filed on behalf of the justices that they reached their decision without

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consulting  the  acting  clerk  and  that  the  acting  clerk  had  in  fact  abstained from referring to the case. This affidavit was accepted as  true  by  all  the  learned  judges  who  heard  the  case  and  yet  the  conviction was quashed. "The question is"  observed Lord Hewart  C.J. “whether the acting clerk was so related to the case in its civil  aspect, as to be unfit to act as a clerk to the justices in the criminal  matter"  and  the  learned  judge  added  that  "the  answer  to  that  question depends not upon what exactly was done but upon what  might appear to be done.  Nothing is to be done which creates even  a  suspicion  that  there  has  been  an  improper  interference  in  the  course  of  justice."  Lush  J.  who  agreed  with  Lord  Hewart  C.J.  likewise accepted the affidavit  made on behalf  of  the justices but  observed,  "that  they  have  placed  themselves  in  an  impossible  position by allowing the clerk in those circumstances to retire with  them into their consultation room."

(emphasis is ours)

This Court in Manak Lal’s case (supra) also placed reliance on  Rex v.  

Essex  Justices,  Ex  parte  Perkins,  (1927)  2  KB  475.   The  conclusions  

recorded in the latter judgment were accepted by this Court, by holding as  

under:-

“The same principle was enunciated with equal emphasis in Rex v.  Essex Justices,  Ex parte  Perkins.  This  was a dispute between a  husband and his wife and it appeared that the wife had consulted  the solicitor’s clerk in their office about the preparation of a deed of  separation from her husband and the lawyer acted in the matter for a  time after which she ceased to consult him. No mention of the matter  was made to the solicitor himself except one very short reference to  it in a weekly report from his clerk.  Subsequently the solicitor acted  as a clerk to the justices who tried the case. He stated in his affidavit  that,  when  acting  as  a  clerk  to  the  justices  on  the  occasion  in  question, he had no knowledge that his firm had acted for the wife  and that he was in no way adverse to the husband.  It was urged  that the decision of the justices should be set aside as the justices  were  not  properly  constituted  and  it  appears  also  to  have  been  suggested that the decision might, perhaps, have been influenced  by a prejudice though indirectly and to a very small extent. Rejecting  the argument that the decision of the justices had been influenced  even  remotely  by  the  impropriety  alleged,  Avory  J.  stated  that  "though the clerk to the justices and the ’justices did not know that  his firm had acted for the applicant’s wife, the necessary, or at least  the reasonable, impression, on the mind of the applicant would be  that justice was not done seeing that the solicitor for his wife was

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acting with  the justices and advising’  them on the hearing of  the  summons which she had taken against him."

(emphasis is ours)

The submission of Shri Ram Jethmalani, learned Senior Counsel for the  

petitioner,  having  placed reliance on the  judgments  was,  that  we were  

disqualified  from hearing  the  merits  of  the  claim  projected  through  the  

instant petition, because of our bias.

102. Dr.  Rajeev  Dhawan,  learned  Senior  Counsel  for  the  petitioner,  

seconded  the  position  expressed  by  Mr.  Ram  Jethmalani.  It  was  his  

contention, that there is a pre-disposition in the matter on the part of the  

Bench.  The above pre-disposition, according to him, appears to be on the  

basis of a strong commitment towards the “other side”.  The inference of  

his assertion,  according to learned counsel,  could be gathered from the  

fact,  that all  the proposals offered by the petitioner for his release from  

detention,  had been rejected  by us,  one after  the other.   According  to  

learned counsel, the Bench had demonstrated its rigidity to such an extent,  

that the petitioner finds “no play in the joints”.  In other words, according to  

learned counsel, we were willing to accept nothing short of, what we had  

already ordered.  The Bench according to learned Senior Counsel,  had  

repulsed  all  alternative  reasonable  grounds  of  compromise.   Learned  

counsel then invited our attention to an order passed by us on 26.3.2014.  

The said order is being extracted hereunder:-

“We have gone through the fresh proposal  filed  on 25.03.2014.     Though the same is not in compliance with our  Order dated 31.08.2012 or the Order  passed  by  the  three-Judge  Bench  of  this  Court  on 05.12.2012 in Civil  Appeal No.8643 of  2012  and on 25.02.2013   in   I.A.  No.67  of  2013 in  Civil  Appeal

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No.9813 of 2011 with I.A. No.5  of  2013 in Civil Appeal No.9833 of  2011, we are inclined to grant interim bail to the contemnors who are  detained   by   virtue   of   our   order   dated  04.03.2014,  on  the  condition  that  they  would  pay  the  amount  of Rs.10,000 crores -  out of which Rs.5,000 crores to be deposited before this Court and  for  the  balance  a  Bank  Guarantee  of  a  nationalized  bank  be  furnished in favour of S.E.B.I. and be deposited before this Court.  On  compliance,  the  contemnors  be  released  forthwith   and   the  amount deposited be released to S.E.B.I.   

We make  it  clear  that  this  order  is  passed  in  order   to  facilitate  the  contemnors  to  further  raise  the  balance  amount so as to comply with the Court's Orders mentioned above.”

(emphasis is ours)

It  was  submitted,  that  the  above  order  passed  by  this  Court  was  an  

impossible  order.   Because  it  was  impossible  to  implement.   It  was  

submitted, that even after the passing of the above order, the petitioner  

had repeatedly sought modification thereof, through further proposals.  In  

order to demonstrate bias at the hands of the Bench, it was contended,  

that  all  subsequent  proposals  made  by  the  petitioner  were  rejected  

unceremoniously.  This, according to the learned Senior Counsel for the  

petitioner demonstrates,  that the mind of the Judges hearing the matter  

was closed, and that, even genuine proposals made by the petitioner were  

being rejected, without due application of mind.

103. All that has been noticed hereinabove, has been so recorded, lest  

we are accused of, not having taken into consideration the submissions  

advanced  by  the  learned  counsel  for  the  petitioner,  in  their  correct  

perspective.   However brazen the arguments may be, it  is our onerous  

duty to deal with the contentions advanced by the learned Senior Counsel

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for the petitioner.   We will make a humble effort to deal with the same, in  

the following paragraphs.

104. No allegation of bias or prejudice was levelled, when this very Bench  

was constituted to decide Civil Appeal nos. 9813 and 9833 of 2011.  We  

had heard  the  learned Senior  Counsel  for  the two companies  at  great  

length, and had adjudicated the matter taking into consideration each and  

every aspect of the controversy projected before us. It has never been the  

case of the petitioner, that we were biased when we had disposed of the  

appeals  by  our  common  order  dated  31.8.2012.   On  the  issue  of  

disbursement of payments by the two companies (to the SEBI), the date of  

deposit, was extended by an order dated 5.12.2012, passed by a three-

Judge Division Bench (in Civil Appeal no. 8643 of 2012 and Writ Petition  

(Civil) no. 527 of 2012).  Neither of us was on the three-Judge Division  

Bench, which passed the order dated 5.12.2012.  It needs to be clearly  

understood,  that  the  order  dated  31.8.2012  read  with  the  order  dated  

5.12.2012 is final and binding, and no proceedings are pending before this  

Court, either at the hands of the two companies, or the petitioner herein,  

for their reconsideration on merits.  We have neither the jurisdiction, nor  

the authority to relax the terms and conditions of the above orders.  In fact,  

we would be committing contempt if we were to, on our own, interfere with  

the above directions.  As a matter of fact, it is not open to us, to relax the  

order  dated  5.12.2012,  which  was  passed  by  a  three-Judge  Division

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Bench,  requiring  the  contemnors  to  deposit  the  first  installment  of  

Rs.10,000 crores, in the first week of January 2013.   

105. On 6.2.2013, we issued notice, in Contempt Petition (Civil) Nos. 412  

and 413 of 2012.  On 24.7.2013, we issued notice, in Contempt Petition  

(Civil)  No.  260  of  2013.   We  heard  the  above  contempt  petitions  on  

numerous dates (details whereof have already been enumerated above).  

No allegation of bias was ever levelled by any of the contemnors, not even  

by the petitioner  herein,  before the hearing  of  the present  writ  petition.  

Despite  prolonged  hearings  in  the  matters  pertaining  to  the  two  

companies, which would directly affect the petitioner herein, no allegation  

of  bias  was  ever  levelled  against  this  Bench  hither  to  before.  We are  

therefore, satisfied that the instant plea of bias, is based on the petitioner’s  

frustration, arising out of being cornered into a situation, wherefrom there  

is no escape.

106. The  assertion,  that  we  would  not  be  satisfied  under  any  

circumstances, with the petitioner’s arguments and submissions on merits,  

is clearly misconceived.  The assertion made by the petitioner, that we had  

already prejudged the matter, and no relief could be expected from us, is  

likewise a total misconstruction of the proceedings we are dealing with.  It  

needs to be understood, that there is no lis pending before us, wherein we  

have to determine the merits of the claims raised by the rival parties.  In a  

situation, where rival claims of parties, have to be decided on merits, such  

a submission could have possibly been made.  Merits of the claims (and

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counter-claims)  have  already  been  settled  by  this  Court’s  order  dated  

31.8.2012.  The proceeding wherein the impugned order was passed, was  

being conducted in the contempt jurisdiction of  this Court  (under Article  

129  of  the  Constitution  of  India).   The  scope  of  the  instant  contempt  

jurisdiction extends to, punishing contemnors for violating Court’s orders;  

punishing contemnors for disobeying Court’s orders; punishing contemnors  

for breach of undertakings given to Courts.  It also extends to enforcement  

of Court’s orders.  Contempt jurisdiction even extends to punishing those  

who scandalize (or lower the authority of) any Court; punishing those who  

interfere in due course of judicial proceedings; and punishing those who  

obstruct  the  administration  of  justice.   During  the  course  of  hearing,  

learned counsel again and again, admitted breach of this Court’s orders,  

dated 31.8.2012 and 5.12.2012.  It was inter alia admitted, that payments  

could not be made within the time frame stipulated.  Contempt by way of  

breach of this Court’s orders having been admitted, the allegation of bias is  

clearly  a  plea  which  is  not  available  to  the  petitioner.    In  such  

consideration, there is no room which remains for further adjudication on  

merits.  There cannot, therefore be a prejudged mind (all that has to be  

decided, has already been adjudged).  For the same reason, there is no  

scope for  a compromise.   Issues of  compromise arise between parties,  

while merits of rival claims are pending.  The dispute between the parties  

has already been settled,  and contempt  by  way of  breach has already  

been admitted.   The question of  compromise does not arise at  all.  We

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therefore  reject  all  the  above  submissions  advanced  by  the  learned  

counsel for the petitioner.

107. We  shall  now  deal  with  the  substance,  and  the  import,  of  the  

judgments relied upon.  It is not the case of the petitioner, that we have  

any  connection  with  either  the  two companies  under  reference,  or  any  

other company/firm which constitutes the Sahara Group.  We may state,  

that  neither  of  us  has  even  a  single  share  with  the  two  concerned  

companies  or  with  any  other  company/firm  comprising  of  the  Sahara  

Group.  In order to remove all  ambiguity in the matter we would further  

state, that neither of us, nor any of our dependent family members, own  

even a single share in any company whatsoever.  Neither of us has been  

assisted in this case, for its determination on merits by any law clerk, intern  

or staff member, while hearing, dealing with or deciding the controversy.  

Nor  has  any  assertion  in  this  behalf,  been  made  against  us,  by  the  

petitioner or his learned counsel.   Accordingly the factual position, which  

was the basis of the decisions relied upon by the learned counsel, is not  

available in the facts and circumstances of this case.  In the above view of  

the matter, it is but natural to conclude, that none of the judgments relied  

upon by the learned Senior Counsel for the petitioner, on the subject of  

bias, are applicable to the facts and circumstances of this case.  We are  

satisfied  that  none  of  the  disguised  aspersions  cast  by  learned  Senior  

Counsel,  would be sufficient to justify the invocation of  the maxim, that  

justice must not actually be done, but must also appear to be done.  As

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already noticed above, even though our combination as a Bench, did not  

exist at the time, when the present petition was filed, a Special Bench, with  

the present composition, was constituted by Hon’ble the Chief Justice, as a  

matter  of  his  conscious determination.   No litigant,  can be permitted to  

dissuade us, in discharging the onerous responsibility assigned to us by  

Hon’ble the Chief Justice.   

108. Once it  is understood, that we are no longer possessed with any  

adjudicatory role, insofar as the controversy on merits is concerned, the  

principal allegation of bias itself pales into insignificance.  This Court by its  

order dated 31.8.2012 had directed the two companies to “… refund the  

amounts collected through RHPs dated 13.3.2008 and 16.10.2009 along  

with interest at the rate of 15% per annum to the SEBI, from the date of  

receipt  of  the  subscription  amount  till  the  date  of  repayment,  within  a  

period of three months from today…”  The above amount was payable by  

the two companies by 30.11.2012.  It is not a matter of dispute, that neither  

the two companies nor its promoter or the directors, ever sought extension  

of time in making the above payment, by initiating proceedings known to  

law, either in Civil Appeal no. 9813 or 9833 of 2011.  The two companies,  

however, filed Writ Petition (Civil) no. 527 of 2012 in the same manner, as  

the petitioner has filed the present writ petition.  The filing of the above writ  

petition was itself a matter of serious concern with the legal fraternity, to  

the extent that the President of the Supreme Court Bar Association had  

suo moto intervened in the above matter, to advance submissions before

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the three-Judge Division Bench.  The three-Judge Division Bench while  

disposing of the matter on 5.12.2012, declined to accept the prayer made  

by  the  two companies,  for  taking  into  consideration  the  refund  already  

made by way of redemptions to investors.  At the time of disposal of Writ  

Petition (Civil)  no. 527 of  2012 (and Civil  Appeal  no. 8643 of  2012) on  

5.12.2012, it was directed, that the demand draft in the sum of Rs.5,120  

crores,   which  had  been  produced  before  this  Court  on  5.12.2012,  be  

immediately handed over. It was concluded, that the balance amount of  

Rs.17,400 crores, together with interest at the rate of 15% per annum, was  

still payable (even after the deposit of above Rs.5,120 crores).  A direction  

was  accordingly  issued to  pay  the  first  installment  of  Rs.10,000 crores  

within  the  first  week  of  January,  2013.   The  application  filed  by  the  

petitioner for extension of time to make the above deposit, was rejected by  

a three-Judge Division Bench of this Court on 25.2.2013.  The direction to  

pay the first installment of Rs.10,000 crores, by the first week of January,  

2013, therefore, assumed finality.  We have neither the authority nor the  

jurisdiction to entertain any prayer for reducing the sum directed to be paid,  

as the first installment.  The submission of the learned Senior Counsel for  

the petitioner, that we are unrelenting, or that we are pre-disposed, or that  

we have a closed mind, is therefore,  just a bogey projected by learned  

Senior Counsel  representing the petitioner.   As a matter of fact,  by our  

conscious  effort,  we  have  unilaterally  relaxed  the  rigor  of  the  first  

installment of Rs.10,000 crores, as much as we could, by our order dated  

26.3.2014.  Unfortunately, the above order is also not acceptable to the

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petitioner.  But acceptability apart, our above voluntary action of slackening  

the effect of the first installment, directed to be paid by the two companies,  

within the first week of January 2013, is clearly sufficient to repudiate and  

reject, all submissions in the nature of our having a predisposed mind.

109. While rendering the instant judgment, we have recorded the efforts  

made  by  this  Court  to  cajole  the  contemnors  (including  the  present  

petitioner)  into  compliance  of  this  Court’s  orders  dated  31.8.2012  and  

5.12.2012, under an independent heading (IV.  Efforts made by this Court  

to  cajole  the  contemnors,  including  the  petitioner  –  Mr.  Subrata  Roy  

Sahara, for compliance of the orders of this Court, dated 31.8.2012 and  

5.12.2012).   The  long  rope  given  to  the  two  companies  including  the  

petitioner, and the other directors, demonstrates the efforts made by us to  

help  the  petitioner  (and  others)  out  of  the  mess,  in  which  they  find  

themselves.   As  of  now,  the  amount  payable  in  furtherance  of  the  

directions issued by this Court (on 31.8.2012 and 5.12.2012), has swelled  

up to Rs.36,608 crores.  Each proposal made by the petitioner till  date,  

reveals an acknowledgment to pay.  The petitioner has offered to deposit  

Rs.2,500 / 3,000 crores, in the proposals made thus far, and the remaining  

amount  of  the  first  instalment  (i.e.,  Rs.7,500  /  7,000  crores),  later  on.  

Therefore, the proposals submitted thus far, only acknowledge payment of  

Rs.10,000  crores.   None  of  the  proposals,  covers  the  whole  amount  

payable.   The  proposals,  as  a  matter  of  a  precondition,  demand  the  

revocation of restraint orders on bank accounts, and movable as well as,

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immovable properties.  It may be understandable, that the restraint order is  

lifted in  respect  of  the  bank  accounts,  and properties,  which are  to  be  

utilized in discharge of the liability arising out of this Court’s orders (dated  

31.8.2012 and 5.12.2012).  Repeatedly, during Court hearings, we have  

been assuring learned counsel for the petitioner, that individual accounts  

will  be  permitted  to  be  operated,  if  the  deposits  therein  are  to  be  

transferred  to  the  SEBI.   Likewise,  orders  pertaining  to  particular  

immovable properties, will be lifted, if the sale proceeds thereof are to be  

utilized in honouring the commitment  to refund investors’  deposits  (with  

15%  interest).   None  of  the  contemnors,  have  made  any  proposal,  in  

consonance with the above liberty.  Acceptance of the proposals is just not  

possible,  in the teeth of  the order dated 5.12.2012,  passed by a three-

Judge Division Bench, requiring the two companies to make a deposit of  

Rs.10,000 crores in the first week of January, 2013.  By now, about 17  

further months have elapsed without the petitioner and the two companies  

having  made  any  deposit  whatsoever.   Within  the  framework  of  the  

requirement depicted in the order dated 5.12.2012, we, by our own order  

dated 26.3.2014 (extracted above), softened the modus of payment.  It is,  

therefore, not possible for us to accept, that there has been “no play in the  

joints” for the enforcement of the orders passed by this Court.  We find the  

submission made by the learned counsel for the petitioner to the effect,  

that our order dated 26.3.2013 cannot be complied with, because it was  

premised on impossible conditions, is wholly unjustified.  The assets of the

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Sahara Group are sufficient to discharge the entire liability, without much  

difficulty.

110. Insofar  as  the  assertion  made  by  Dr.  Rajeev  Dhawan,  learned  

Senior  Counsel,  that  the  factual  position  expressed  in  the  order  dated  

4.3.2014 was not correct, is concerned, we may at the cost of repetition  

once again notice, that it is also important for us to record that the positive  

position expressed by the SEBI before this Court (during the disposal of  

Civil Appeal Nos.9813 and 9833 of 2011) was, that neither SIRECL nor  

SHICL ever  provided details  of  its  investors  to  the SEBI  (FTM).   They  

contested the proceedings initiated by the SEBI (FTM) only on technical  

grounds.   We  were  told  that  even  before  the  SAT,  no  details  were  

furnished.   As against  the above,  the position  adopted  by the SIRECL  

before us, during the course of appellate proceedings was, that SIRECL  

had furnished a compact disc with all details to the SEBI (FTM), along with  

its operating key.  Whilst  it  was acknowledged by the SEBI before this  

Court,  that  a  compact  disc  (allegedly  containing  details  about  the  

investors) was furnished by SIRECL, yet it was emphatically pointed out,  

that its operating key was withheld.  This was another ploy, in the series of  

moves adopted by the two companies to  withhold  the providing  of  any  

details  to  the  SEBI.   Resultantly,  no  details  whatsoever  were  ever  

disclosed  by  SIRECL either  before  the  SEBI  (FTM)  or  the  SAT.   The  

position adopted by SHICL was even worse.  It is necessary to place on  

record the fact, that the SHICL has never ever disclosed, the names and

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other connected details of even a single investor to the SEBI, despite this  

prolonged litigation.  We had repeatedly made a poser, during the hearing  

of the present petition, about SHICL, as indicated above.  The position was  

confirmed  by  learned  Senior  Counsel  representing  the  SEBI.  

Unfortunately, Mr. S. Ganesh, learned Senior Counsel for the petitioner, on  

the last day of hearing, ventured to contest the above position.  He handed  

over to us two volumes of papers running into 260 pages (under the title –  

Note on information provided by SHICL to the SEBI).  We required him to  

invite  our  attention,  to  documents  indicating  disclosure  of  the  above  

information.   His  ploy  stood  exposed,  when  no  material  depicting  

disclosure of names, and other connected details of SHICL to the SEBI,  

could be brought to our notice. That apart, what is essential to record is,  

that till date SHICL has never ever supplied investor related details to the  

SEBI.  A fact about which there is now no ambiguity, specially after learned  

Senior Counsel filed the two volumes of papers referred to above.  The  

above factual position remained unaltered before the SAT and even before  

this Court.  Does it lie in the mouth of learned Senior Counsel to assert,   

that unjustified conclusions had been recorded against the two companies,  

without any basis?

111. Dr.  Rajeev  Dhawan,  learned  Senior  Counsel  also  accused  us  of  

having a pre-disposition in respect of the controversy.  This predisposition,  

according to him, appeared to be on the basis of a strong commitment  

towards the “other side”.  This assertion was repeated several times during

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uncertainable  time  without  the  petitioner  or  his  Counsel  being  present  there".  The learned Judge by his order  dated 13.5.1993  recorded the following proceedings:

“Counsel for the petitioner has not appeared and the petitioner  himself has made a request that he wants to move the Hon'ble  Supreme Court for transfer of the Election Petition from this  Court.   In  view  of  this  statement,  the  petition  is  being  adjourned.   The petitioner wants to place as application for  transfer on record.  He may file it in the Registry, if so advised.

During  the  course  of  arguments  yesterday,  two  sealed  envelopes relating to polling booth Nos. 28 and 31 had been  opened in the presence of the parties and their Counsel at the  time when the report of the Commissioner who carried out test  checking was being considered.  These open envelopes had  remained in my custody in my Almirah under lock and key.  Since the case is now being adjourned, these open envelopes  be resealed and the same be handed over to the Additional  Registrar (Judicial) alongwith other sealed envelopes.”

33. Thereafter,  the appellant as already noticed, filed a transfer  petition  in  this  Court  which  was  dismissed  on  30.8.1993.   The  transfer petition like the application (supra) cast aspersions on the  learned Judge in the discharge of his judicial functions and had the  tendency to scandalise the Court.  It was an attempt to brow beat  the learned Judge of the High Court and cause interference in the  conduct  of  a  fair  trial.   Not  only  are  the  aspersions  derogatory,  scandalous and uncalled for but they also tend to bring the authority  and  administration  of  law  into  disrespect.   The  contents  of  the  application seeking stay as also of  the transfer  petition,  bring the  Court  into disrepute and are an affront  to the majesty of  law and  offend the dignity of the Court.  The appellant is an Advocate and it  is painful that by filing the application and the petition as a party in  person, couched in an objectionable language, he permitted himself  the liberty of indulging in an action, which ill behoves him and does  little credit to the noble profession to which he belongs.  An advocate  has no wider  protection  than a layman when he commits  an act  which amounts to contempt of court.   It  is most unbefitting for an  advocate to make imputations against the Judge only because he  does not get the expected result, which according to him is the fair  and  reasonable  result  available  to  him.   Judges  cannot  be  intimidated  to  seek  favorable  orders.   Only  because  a  lawyer  appears as a party in person, he does not get a license thereby to  commit  contempt  of  the  Court  by  intimidating  the  Judges  or  scandalising  the  courts.   He  cannot  use  language,  either  in  the  pleadings  or  during  arguments,  which  is  either  intemperate  or  unparliamentary.  These safeguards are not for the protection of any

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Judge individually but are essential for maintaining the dignity and  decorum of the courts and for upholding the majesty of law.   Judges  and courts are not unduly sensitive or touchy to fair and reasonable  criticism of their judgments.  Fair comments, even if, out-spoken, but  made without any malice or attempting to impair the administration  of justice and made in good faith, in proper language, do not attract  any punishment  for  contempt  of  court.   However,  when from the  criticism a deliberate, motivated and calculated attempt is discernible  to bring down the image of judiciary in the estimation of the public or  to  impair  the  administration  of  justice  or  tend  to  bring  the  administration  of  justice  into  disrepute  the  courts  must  bestir  themselves  to  uphold  their  dignity  and  the  majesty  of  law. The  appellant, has, undoubtedly committed contempt of the Court by the  use of the objectionable and intemperate language.  No system of  justice can tolerate such unbridled licence on the part of a person,  be he a lawyer, to permit himself the liberty of scandalising a Court  by casting unwarranted, uncalled for and unjustified aspersions on  the  integrity,  ability,  impartiality  or  fairness  of  a  Judge  in  the  discharge of his judicial functions as it amounts to an interference  with the dues course of administration of justice.”

(emphasis is ours)

The observations recorded in the above judgment are fully applicable, to  

the mannerism and demeanour of the petitioner – Mr. Subrata Roy Sahara  

and some of  the learned Senior  Counsel.   We would have declined to  

recuse from the matter, even if the “other side”, had been a private party.  

For, our oath of office requires us to discharge our obligations, without fear  

or favour.  We therefore also commend to all Courts, to similarly repulse all  

baseless and unfounded insinuations, unless of course, they should not be  

hearing  a  particular  matter,  for  reasons  of  their  direct  or  indirect  

involvement.   The  benchmark,  that  justice  must  not  only  be  done  but  

should also appear to be done, has to be preserved at all costs.

IX. A  few  words,  about  the  defence  of  redemption  of  OFCD’s,  offered by the two companies:

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113. The SEBI (FTM) vide order dated 23.6.2011 passed the following  

directions:-

“1. The two Companies, Sahara Commodity Services Corporation  Limited  (earlier  known  as  Sahara  India  Real  Estate  Corporation  Limited) and Sahara Housing Investment Corporation Limited and its  promoter,  Mr.  Subrata Roy Sahara,  and the directors  of  the said  companies,  namely,  Ms.  Vandana  Bhargava,  Mr.  Ravi  Shankar  Dubey and Mr.  Ashok Roy Choudhary,  jointly and severally,  shall  forthwith  refund the money  collected  by the aforesaid  companies  through  the  Red  Herring  Prospectus  dated  March  13,  2008  and  October  6,  2009,  issued  respectively,  to  the  subscribers  of  such  Optionally  Fully  Convertible  Debentures  with  interest  of  15% per  annum  from  the  date  of  receipt  of  money  till  the  date  of  such  repayment.  

 2. Such  repayment  shall  be  effected  only  in  cash  through  Demand Draft or Pay Order.  

 3. Sahara  Commodity  Services  Corporation  Limited  (earlier  known as Sahara India Real Estate Corporation Limited) and Sahara  Housing Investment Corporation Limited shall issue public notice, in  all editions of two National Dailies (one English and one Hindi) with  wide circulation, detailing the modalities for refund, including details  on contact persons including names, addresses and contact details,  within fifteen days of this Order coming into effect.  

 4. Sahara  Commodity  Services  Corporation  Limited  (earlier  known as Sahara India Real Estate Corporation Limited) and Sahara  Housing  Investment  Corporation  Limited  are  restrained  from  accessing the securities  market  for  raising funds,  till  the time the  aforesaid payments are made to the satisfaction of the Securities  and Exchange Board of India.

 5. Further, Mr. Subrata Roy Sahara, Ms. Vandana Bhargava, Mr.  Ravi Shankar Dubey and Mr. Ashok Roy Choudhary are restrained  from associating  themselves,  with  any listed  public  company  and  any public company which intends to raise money from the public, till  such time the aforesaid payments are made to the satisfaction of the  Securities and Exchange Board of India.”

(emphasis is ours)

Thereafter,  the  SAT  by  its  order  dated  18.10.2011,  upheld  the  order  

passed by the SEBI (FTM) dated 23.6.2011.  The SAT having so held,

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directed the appellant companies (as was the position of parties therein) to  

refund the money to the investors within six months (from the date of its  

order dated 18.10.2011).  Thereupon, the matter was brought to this Court  

by way of appeals preferred by the two companies concerned, i.e., Civil  

Appeal nos. 9813 and 9833 of 2011.  On 28.11.2011, this Court passed  

the following interim order:-

“By the impugned order, the appellants have been asked by SAT to  refund  a  sum  of  Rs.17,400  crores  approximately  on  or  before  28.11.2011.  We extend the period upto 9.1.2012.”

The  above  interim  order  was  continued  indefinitely,  by  this  Court  on  

9.1.2012.   The  direction  to  refund,  therefore,  stood  eclipsed.   It  is  

necessary to understand the cumulative effect of the interim orders passed  

on 28.11.2011 and 9.1.2012.  The above orders need to be interpreted, by  

keeping  in  mind  the  two  affidavits  dated  4.1.2012  filed  by  the  two  

companies  (in  Civil  Appeal  nos.  9831 and 9833 of  2011).   The  above  

affidavits were filed in compliance of this Court’s order, requiring the two  

companies to  put  on record,  the  manner  in which the companies  had  

applied the funds collected from the investors.  This Court was informed  

that the funds were safe as they were either invested directly or indirectly,  

in  real  estate  projects,  or  were  held  as  current  assets/cash  and  bank  

balances  (as  development  rights  on  land  and  projects,  and  advances  

under joint ventures etc.).  Believing the factual position depicted in the two  

affidavits,  this  Court  was  satisfied,  that  the  investors’  deposits  in  the  

OFCD’s of the two companies were safe, therefore, the direction to refund  

(ordered by the SEBI (FTM) and the SAT), came to be stayed.  But the

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orders of the SEBI (FTM) and SAT were not interfered with, in any other  

manner.   It  is,  therefore  clear,  that  this  Court  while  passing  the above  

interim order, did not vary the manner of making the refunds (in case the  

two  companies  concerned,  decided  to  make  any  refund(s)  to  the  

investors).   In this behalf  it  needs to be noticed, that in its order dated  

23.6.2011 the SEBI (FTM) had clearly directed, that such repayment could  

only be made “in cash through demand draft or pay order”.  The SAT had  

reiterated the above position. No liberty was granted to the two companies  

concerned, to convert the investment made by the holders of the OFCD’s,  

into similar investments with the other companies.  In other words cash  

conversion in any other format,  was not permitted.  To comply with the  

letter and spirit of law, therefore, even if the refund had to be made by the  

two concerned companies, it could have been done only “through” demand  

drafts  or  pay  orders.   The  alleged  cash  payment  made  by  the  two  

companies while redeeming the OFCD’s (even if we assume, that refund  

had actually been made) was therefore per se, illegal and unacceptable in  

terms  of  the  orders  dated  23.6.2011  (passed  by  the  SEBI  (FTM))  and  

18.10.2011 (passed by the SAT).  We must, therefore emphatically point  

out,  that  the  very  submission  now  made  by  the  companies,  that  the  

investors were refunded their deposits by way of cash, is per se another  

tactic,  in  the  series  of  manoeuvres,  adopted  by  the  two  companies  to  

defeat the process of law.

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114. This issue needs to be examined from another perspective.   The  

different kinds of bonds (OFCDs) issued by SIRECL and SHICL, as also,  

their maturity/conversion periods are depicted hereunder:

   SIRECL

S.No. Name of Bonds Term (months)

Minimum period  for redemption

(months)

Period for  conversion into  

shares (months)

(i) Abode Bond 120 60 119 (ii) Real Estate Bond 60 Nil 59 (iii) Nirman Bond 48 18 47

   SHICL

S.No. Name of Bonds Term (months)

Minimum period  for redemption

(months)

Period for conversion  into shares (months)

(i) Multiple Bond 180 120 179 (ii) Income Bond 120 Nil 119 (iii) Housing Bond 180 120 179

It  would  be  relevant  to  mention,  that  in  furtherance  of  the  terms  and  

conditions attached to the different kinds of bonds, it was acknowledged,  

that except for Nirman Bonds issued by SIRECL, no other bond could be  

redeemed before the year 2013.  The earliest redemption of the bonds,  

could have been made in 2013.  The above factual position was expressed  

by the two companies in separate affidavits dated 4.1.2012 (filed before  

this Court).  The affidavits in unmistakable terms also clearly narrated, that  

only  one  out  of  the  six  different  types  of  bonds  issued,  by  the  two  

companies was partially redeemable, in the financial year 2012-13.  The  

companies also confirmed in their above affidavits, that the total amount  

which would become redeemable, towards the end of the financial year  

2012-13, was only Rs.351 crores.  There was therefore,  no question of

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redeeming thousands of crores of rupees of deposits made towards the  

above OFCD’s, in 2012 itself.  It needs to be understood, that a debenture  

(OFCD) is a contract between a company and the debenture holder.  It  

sets out the terms and conditions on the basis of which, the debenture  

certificate, which is a debt instrument, has been issued.   It is neither open  

to  the  concerned  company,  nor  the  debenture  holder,  to  grant/seek  

premature  redemption.   No  company  can  unilaterally  redeem  the  

debentures,  before  the  prescribed  period.   The  theory  of  redemption  

propounded by the two companies, is therefore in clear violation of law.  In  

any case, there was no reason for the two companies to refund any money  

to the investors, specially because the two companies were protected by  

an order of this Court, from making any refund to the investors, during the  

pendency of the appellate proceedings (Civil Appeal Nos. 9813 and 9833  

of 2011), which continued up to 31.8.2012.  A submission was, however,  

made during the course of  hearing,  that  the investors were mounting a  

collective pressure for premature payments.  The two companies (nor the  

petitioner,  in  this  case)  did  not  place any material  on the record  of  its  

pleadings, at any stage to demonstrate,  that mobs had gathered at the  

companies collection centres,  demanding redemptions.   Had the above  

position been correct,  the same would have definitely been noticed and  

reported  by  the  media.   There  was  not  even  an  iota  of  such  media  

reporting.   It  is  therefore  prima facie,  not  possible  for  us to accept  the  

refund theory, projected on behalf of the two companies (or even by the  

petitioner).   Besides  the  factual  position  expressed  in  the  instant

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paragraph, there are other reasons also, to come to the same conclusion.  

The same are separately being recorded hereinafter.

115. Factually there is no acceptable proof of such refund/redemption of  

OFCD’s by the two companies to the investors.   Therefore,  we find no  

reason to accept  per se, that  any such redemption was actually  made.  

Our reasons for the same, are being narrated hereafter.  When SIRECL  

was required to disclose, the sources from which, it had made payments  

by way of redemption to the OFCD’s holders, the following sources were  

disclosed:-

Rupees (In Crores)

1. Sahara Credit Co-operative Society Ltd. 13,366.18 2. Sahara India Commercial Corporation Limited 4384.00 3. Sahara Q Shop 2258.32 4. Ketak City Homes Ltd. 19.43 5. Kirit City Homes Ltd. 44.05

Likewise,  when similar  information  about  redemptions  was sought  from  

SHICL, the following sources were disclosed:-

When asked about  the manner  in which the  aforesaid  companies,  had  

forwarded  the  above  mentioned  payments  to  the  two  companies,  the  

response was, that the above amounts were never released to the two  

companies.  The case set up was, that the amounts were transferred to  

Rupees (In Crores)

1. SICCL 2479.00 2. Sahara Q Shop 2411.90

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Sahara  India  (Firm).   When asked to  explain  the  manner  in  which the  

companies had forwarded the funds to Sahara India (Firm), the submission  

was, that the companies had collected the funds by way of cash, and had  

forwarded the same to Sahara India (Firm), by cash.  And Sahara India  

(Firm) had then directly made refunds to the investors.  When proof of the  

same  was  sought,  the  submission  advanced  on  behalf  of  the  two  

companies was, that the above transfers were not made through banking  

channels,  and  therefore  banking  transactions  were  not  available  to  

establish the same.  When asked how the amounts were disbursed to the  

investors  concerned,  it  was  submitted,  that  about  95%  of  the  above  

payments  to  the  investors,  were  also  made  by  way  of  cash.   To  

demonstrate  the  receipts  and  payments  of  the  funds  by  way  of  cash,  

learned  counsel  representing  the  contemnors  (including  the  petitioner  

herein), invited our attention to the books of accounts, which had been duly  

audited.  This according to learned counsel, was proof of the transactions  

under reference.  The above explanation may seem to be acceptable to  

the contemnors, but our view is quite the converse.  It is not possible for us  

to accept,  that  the funds amounting to thousands of  crores could have  

been transacted by way of cash.  The credibility of the books of accounts  

relied  upon  by  the  two  companies  has  been  dealt  with  separately  

hereinafter.

116. We had also made efforts to obtain details in respect of redemption  

from the two companies, after  Mr. Arvind Datar, learned Senior Counsel

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appearing for the SEBI, informed this Court, that the contemnors including  

the petitioner herein, had been asserting that they had refunded Rs.17,443  

crores  (approximately)  in  case  of  SIRECL  and  Rs.5,442  crores  

(approximately)  in  case  of  SHICL,  but  had  not  given  any  details,  nor  

produced any relevant record, to show the source from which they had got  

the  above  moneys  for  repayment.   This  information,  according  to  Mr.  

Datar, had been sought by the SEBI from the alleged contemnors through  

a  letter  dated  28.5.2013.   Based on  the  above prayer,  we passed the  

following order on 11.12.2013:-

“Heard counsel on either side.

Following our orders dated 28.10.2013, 1.11.2013 and 21.11.2013,  Mr. C.A. Sundaram, learned senior counsel, has taken us through  Annexure-A, filed alongwith IA no. 82 of 2013, which gives details of  various  properties  which  the  alleged  contemnors  have  agreed  to  offer  to  SEBI.   Reference  was  specifically  made  to  properties  mentioned  at  Item  nos.  68,  69  and  70,  which,  according  to  Mr.  Sundaram, would fetch a value of more than Rs.11,000 crores.

Mr. Arvind Datar, learned Senior Counsel appearing for the SEBI,  prayed for some time to verify the same as well  as the valuation  reports filed along with the IA in support of that prayer.  However, he  submitted that if it is the stand of the alleged contemnors that they  had refunded the amounts (Rs.17443 crores approximately in case  of  SIRECL and Rs.5442 crores approximately  in case of  SHICL),  then they should produce the relevant records, duly certified by a  competent authority which is acceptable in a Court of law, indicating  the  sources  from  which  they  got  the  money  for  repayment,  as  requested vide SEBI’s letter dated May 28, 2013.

Put up on January 09, 2014 at 2.00 p.m.” (emphasis is ours)

117. The fact  that the companies had not furnished the above details,  

was  brought  to  our  notice  by  Mr.  Arvind  Datar  on  9.1.2014.   But  the  

audacity and the fearlessness of the two companies is apparent, from the

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reason expressed to this Court, for not furnishing the above information.  

We were informed, that we had not passed any express direction to the  

companies, to furnish the information, therefore the companies were not  

obliged  to  provide  the  information  to  the  SEBI.   Ordinarily,  an  honest  

person would immediately provide the information sought, to obviate any  

adverse impression.  Moreover, the SEBI had not only the authority, but  

every reason to seek the said information.  The above stance adopted by  

the  two  companies,  therefore,  prompted  us  on  9.1.2014  to  pass  an  

express  order  directing  the  two  companies,  as  also,  the  alleged  

contemnors  (including  the  present  petitioner),  to  furnish  the  required  

particulars.  The order dated 9.1.2014 is being extracted below:-

“Heard counsel on either side.

Mr.  C.A. Sundaram, learned Senior Counsel  appearing for one of  the  alleged  contemnors,  submitted  that  earlier  this  Court  on  December 11, 2013 has only reiterated the submission made by Mr.  Arvind Datar, learned Senior Counsel appearing for SEBI, that they  did  not  disclose  the  source  from  which  they  got  money  for  repayment, despite SEBI's letter dated May 28, 2013.

Mr.  Sundaram is right  in his submission.  However,  we feel  that it  would be appropriate to give a direction of the nature stated above.

Accordingly,  we  direct  the  alleged  contemnors  to  disclose  the  complete details and source from which they repaid the amount to  the investors as also the manner of making payments. They shall  also disclose the information which SEBI has sought from them from  time to time. Such information shall be provided to SEBI and also be  filed in this Court by January 23, 2014.

Put up on January 28, 2014 at 2.00 p.m.

In the meantime, SEBI shall verify the information provided to it by  the alleged contemnors.”

(emphasis is ours)

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If redemption of funds had actually been made by the two companies, they  

would have immediately furnished the information sought.  Now that there  

was an express order to furnish the information, room for any excuse, was  

ruled  out.   Surprisingly,  the  position  remained  the  same.   The  two  

companies never provided any authentic information.  The SEBI, SAT and  

the Supreme Court, were required to accept the factum of redemption, just  

because the companies were asserting the factum of redemption.

118. To persuade the companies once again, to provide the information  

sought by the SEBI, we passed yet another explicit order on 28.1.2014.  

The same is being extracted hereunder:

““Heard Mr. Ram Jethmalani, learned Senior Counsel and Mr. Arvind  P. Datar, learned Senior Counsel.

Mr. Datar submitted that the Saharas have not disclosed the details  as to when the refund was made.  Reference was made to pages 6  to 9 of the reply affidavit filed today.

Mr.  Datar further submitted that the SEBI requires an explanation  from Saharas with regard to the payments made on behalf of Sahara  India Real  Estate Corporation Ltd.  (SIRECL) (partnership  firm) by  the following firms, as mentioned below:-

Rupees (In Crores)

1. Sahara Credit Co-operative Society Ltd. 13,366.18 2. Sahara  India  Commercial  Corporation  

Limited 4384.00

3. Sahara Q Shop 2258.32 4. Ketak City Homes Ltd. 19.43 5. Kirit City Homes Ltd. 44.05

Similarly,  SEBI requires  Saharas to show the following payments  made  on  behalf  of  Sahara  Housing  Investment  Corporation  Ltd.  (SHICL)  (partnership  firm),  by  the  following  firms,  as  mentioned  below:-

Rupees(In Crores)

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1. SICCL 2479.00 2. Sahara Q Shop 2411.90

Further,  the Saharas will  also provide the bank statements of  the  above firms showing when the amount was paid to the partnership  firms and subsequently  when and how partnership firm made the  disbursement, as sought for by the SEBI.

Mr.  Ram  Jethmalani,  learned  Senior  Counsel  appearing  for  the  respondents submitted that he will examine the same and come out  with a response within a week.”

(emphasis is ours)

The above order  is  self-explanatory.   The two companies,  as also,  the  

contemnors including the present petitioner, were obviously not providing  

the required bank statements, even though in Appeal no. 49 of 2013 filed  

by SIRECL before the SAT, and in Appeal no. 48 filed by SHICL before the  

SAT, the two companies had committed to furnish their bank accounts, to  

establish redemption of payments.  The relevant paragraph containing the  

undertaking given by SIRECL, is being extracted hereunder:-

“(ee) The Appellant has invested the funds of OFCD  as per the details mentioned in the Affidavit dated 04.01.2012 of Shri  B.M. Tripathi filed before the Hon’ble Supreme Court in Civil Appeal  No.  9833 of  2011 which  is  already  on  the  record  of  the  Hon’ble  Supreme  Court.   Further,  it  is  submitted  that  in  order  to  make  redemptions to the OFCD holders, the Appellant had to dispose of  the investments.  Amounts realized on such disposal were utilized to  pay the investors, on redemption through Sahara India-Partnership  Firm to make the redemptions.  The redemptions made to investors  are clearly reflected and found in the Books of Accounts of Sahara  India.   The Appellant  crave leave to refer  to and rely  upon bank  accounts of Sahara India as and when produced.”

(emphasis is ours)

An exactly similar commitment, in exactly the same words was made by  

SHICL, in Appeal no. 48 of 2013, filed by it before the SAT.  Even though  

the  stance  adopted  by  the  two  companies  was,  that  verification  of  

redemptions  of  OFCD’s  could  be  established  from  bank  accounts  of

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Sahara  India  Limited,  the  said  bank  accounts  depicting  the  said  

transactions were never disclosed.   

119. All that needs to be noticed is, that in furtherance of the directions  

issued by this Court, Mr. S. Ganesh, learned Senior Counsel, during the  

course of hearing, produced general ledger entries of SIRECL and SHICL,  

to authenticate the receipt of funds, out of which refunds were made.  The  

general  ledger  entries  brought  to  our  notice  merely  indicated  large  

amounts of inflow/outflow of cash.  We had wished to extract the same  

herein.  The entire general ledger entries, placed for the consideration of  

the Court to demonstrate receipt of funds, out of which redemptions were  

made,  would  have  exposed  the  companies’  outrageous  defence.   But  

since the above entries would make this judgment unnecessarily bulky, we  

considered it just and appropriate, to extract entries of only one day, i.e., of  

31.5.2012.  A day picked up randomly, without any comprehension, of its  

eventual effect.  The date was chosen only with one objective, namely, it  

fell within the period during which the two companies claim to have made  

cash  refunds  to  the  investors.   The  same  are  accordingly  reproduced  

below:-

SAHARA INDIA REAL ESTATE CORPORATION LTD. 6TH FLOOR, CASH & BANK

GENERAL LEDGER VOC. DATE VOC.  

NO. CHQ.  NO.

NARRATION OF THE VOUCHER SUB  CODE

DEBIT CREDIT

31/05/2012 500009 9BV

072282 CHEQUE DEPOSITED BY SAHARA  INDIA

1,40,00,000.00

31/05/2012 500014 9JV

AMT. OF E-TAX PAID TH. SAHARA  INDIA

11,03,260.00

31/05/2012 500015 0JV

AMT. OF E-TAX PAID TH. SAHARA  INDIA

11,11,321.00

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156

31/05/2012 500015 5JV

BEING JV NO. 5000120 DT. 260512  WRONGLY CR TO INSURANCE TO  VEHICLE  INSTEAD  OF  SI  NOW  RECTIFIED  AND  TRF  TOWARDS  INSURANCE  AMT.  DEDUCTED  FROM SI

40,162.00

31/05/2012 500016 1JV

BEING  BV  NO  50000360  DT  10052012  WRONGLY  CR  TO  SI  INSTEAD OF SUNDRY ADV 430109

53,75,932.00

PAGE TOTAL 53,75,932.00 55,61,27,771.00 CARRIED FORWARD 22,86,45,04,128.78 30,43,18,43,975.28

XXX XXX XXX XXX XXX

SAHARA INDIA REAL ESTATE CORPORATION LTD. 6TH FLOOR, CASH & BANK

GENERAL LEDGER VOC. DATE VOC.  

NO. CHQ.  NO.

NARRATION OF THE VOUCHER SUB  CODE

DEBIT CREDIT

BROUGHT FORWARD 22,86,45,04,128.78 30,43,18,43,975.28 31/05/2012 50001

85JV BEING  AMT  OF  SECURITY  FUND  PAID MS SC YA DAV THROUGH CV  NO 5000530 DT 310512

KSF0002 (EMPLO

YEE  MISSING

)

2,000.00

31/05/2012 50001 87JV

BEING AMOUNT OF COMMISSION  PAID DURING THE M/O MAY-2012

6,477.00

31/05/2012 50001 89JV

BEING  RENT  OF  WARE  HOUSES  PROVIDED  FOR  THE  M/O  MAY- 2012 AS PER AGREEMENT

6,71,756.00

31/05/2012 50001 91JV

BEING  AMOUNT  DEPOSITED  BY  SAHARA  INDIA  EMPLOYEE’S  &  EMPLOYER’S  CONTRIBUTION  PF,  PENSION, ADM CHG ON PF, EDLI  FOR THE M/O APR-2012

15,24,021.00

31/05/2012 50001 96JV

BEING  AMOUNT  OF  EDLI  CHARGES  FOR  THE  M/O  MAY,  2012 PAID BY SAHARA INDIA

22,820.00

31/05/2012 50002 01JV

BEING  AMT  RECEIVABLE  FROM  SICOL  AS  PER  TERMINATION  AGREEMENT  DATED  11.05.2012  TRF  TO  SAHARA  INDIA  AS  PER  LETTER DATED 24.05.2012

19,42,65,437.00

31/05/2012 50002 03JV

BEING  AMT  RECEIVABLE  FROM  SICOL  AS  PER  TERMINATION  AGREEMENT  DATED  11.05.2012  TRF  TO  SAHARA  INDIA  AS  PER  LETTER DATED 25.05.2012

44,04,86,210.00

31/05/2012 50002 07JV

BEING  AMOUNT  RECEIVABLE  FROM  SQSURPL  AGAINST  AGREEMENT  DT.  31.05.12  TRFD.  TO SAHARA INDIA AS PER LETTER  DT.  31.05.12  &  ADV.  OF  4  SUBI  ALSO TRF

5,37,87,17,066.00

31/05/2012 50002 07JV

BEING  AMOUNT  RECEIVABLE  FROM  SQSURPL  AGAINST  AGREEMENT  DT.  31.05.12  TRFD.  TO SAHARA INDA AS PER LETTER  DT.  31.05.12  &  ADV  OF  4  SUBI  ALSO TRF.

4,57,140.00

31/05/2012 50002 11JV

BEING  AMT  RECEIVABLE  FROM  SAHARA  INDIA  AS  PER  SIRECL  LETTER DATED 11.05.12

14,37,00,00,000.00

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157

31/05/2012 50002 13JV

BEING  AMOUNT  RECEIVABLE  FROM SCCSL TOWARDS SALE OF  SHARES NOW RECEIVABLE FROM  SAHARA  INDIA  AS  PER  LETER  ENCLD.

1,33,66,18,11,270.00

31/05/2012 50002 15JV

BEING  AMT  OF  SWF  DEDUCTED  DURING THE M/O MAY-12

10,464.00

31/05/2012 50002 16JV

BEING AMT OF FINE & PENALTIES  DEDUCTED  FROM  WORKER  IN  M/O MAY-2012

50.00

31/05/2012 50002 17JV

BEING AMT DEDUCTED TOWARDS  APNA PARIWAR DURING THE M/O  MAY-12

40.00

31/05/2012 50002 18JV

BEING AMT OF SSWF DEDUCTED  DURING THE M/O MAY-12

58.00

31/05/2012 50002 19JV

BEING  AMOUNT  RECOVERED  FROM F.W. DURING THE M/O MAY- 12

60.00

31/05/2012 50002 20JV

BEING  SERVICE  CHG  RECEIVED  IN THE M/O MAY-2012

48.00

31/05/2012 50002 21JV

BEING AMOUNT RECEIVED FROM  CUSTOMER  DURING  THE  M/O  MAY-12

57,69,750.00

31/05/2012 PAGE TOTAL 1,54,05,15,19,593.00 22,25,074.00 31/05/2012 CARRIED FORWARD 1,76,91,60,23,721.78 30,43,40,69,049.28

XXX XXX XXX XXX XXX

SAHARA INDIA REAL ESTATE CORPORATION LTD. 6TH FLOOR, CASH & BANK

GENERAL LEDGER VOC. DATE VOC.  

NO. CHQ.  NO.

NARRATION OF THE VOUCHER SUB  CODE

DEBIT CREDIT

BROUGHT FORWARD 1,76,91,60,23,721.78 30,43,40,69,049.28 31/05/2012 50002

22JV BEING  AMOUT  RECEIVED  FROM  CUSTOMER  DURING  THE  M/O  MAY-12

1,08,966.00

31/05/2012 50002 23JV

BEING AMOUNT RECEIVED FROM  CUSTOMER  DURING  THE  M/O  MAY-12

28,22,765.00

31/05/2012 50002 24JV

BEING AMOUNT RECEIVED FROM  CUSTOMER  DURING  THE  M/O  MAY-12

49,547.00

31/05/2012 50002 25JV

BEING AMOUNT RECEIVED FROM  F.W. DURING THE M/O MAY-12

11.00

31/05/2012 50002 26JV

BEING  AMOUNT  PAID  TO  BOND  HOLDERS DURING THE M/O MAY- 12

37,39,86,45,750.00

31/05/2012 50002 27JV

BEING  INTT.  PAID  TO  BOND  HOLDERS DURING THE M/O MAY- 12

12,22,41,30,389.00

31/05/2012 50002 28JV

BEING  AMT  PAID  TO  BOND  HOLDER  TOWARDS  LOAN  AGAINST OFCD DURING THE M/O  MAY-12

59,72,79,970.00

31/05/2012 50002 29JV

BEING  AMT  RECOVERED  FROM  BOND HOLDERS DURING THE M/O  MAY-12  TOWARDS  LOAN  GIVEN  AGAINST OFCD

1,13,05,48,059.00

31/05/2012 50002 30JV

BEING  INTT  RECOVERED  FROM  BOND HOLDERS DURING THE M/O  MAY-12  TOWARDS  LOAN  GIVEN  AGAINST OFCD

15,35,36,852.00

31/05/2012 50002 31JV

BEING  TDS  DEDUCTED  DURING  THE  M/O  MAY-12  AGAINST  INTT  

1,50,03,876.00

Page 158

158

PAID TO BOND HOLDER 31/05/2012 50002

32JV BEING AMOUNT OF COMMISSION  PAID  TO  OTHER  THAN  SIRECL  STAFF

30,24,984.00

31/05/2012 50002 34JV

BEING COMMISSION PAID DURING  THE M/O MAY-12

1,61,17,023.00

31/05/2012 50002 35JV

BEING AMOUNT OF DEATH HELP  PAID TO BOND HOLDER

7,020.00

(the sole cheque entry has been underlined, all the remaining entries are cash  entries).

A perusal  of  the above general  ledger  entries  reveals  just  one cheque  

entry, and enormous inflow/outflow of funds by way of cash.  On a single  

day (31.5.2012), the cash inflow is shown as Rs.15,535,89,65,601.00 (i.e.  

more  than rupees  fifteen  thousand  five hundred  and thirty  five  crores).  

Mind boggling inflows, just by cash.  Most certainly not acceptable as true,  

unless there is authentic supporting material.  Can these general ledger  

entries ever be the basis for accepting, that the entire cash transactions  

were correct?  We do not think so.  Mr. S. Ganesh, learned Senior Counsel  

for the petitioner, was surprisingly in agreement with us.  But his pointed  

submission  was,  that  the  above  entries  assumed  authenticity,  because  

they  had  been  duly  audited  by  a  firm  of  Chartered  Accountants.   Our  

attention was invited to the two certificates issued by the firm of Chartered  

Accountants, both dated 31.1.2014, which were placed on the record of  

the case by the petitioner, for our consideration.  The certificate pertaining  

to SIRECL is being reproduced hereunder:-

“CA DE & Bose in association with ASH Associates UK

8/2, Kiran Sankar Roy Road, 2nd Floor Room no. 1 & 18, Kolkata – 700 001

Ph.: 22485039. Fax: 91-33-2243-4864 E-mail: durgadas@cal3.vsnl.net.in

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159

1, Garstin Place, Unit 1E, ORBIT, Kolkata – 700 001.  Phone: 2248 7424

TO WHOM IT MAY CONCERN

We, M/s. DE & Bose, Chartered Accountants, Statutory Auditor of  M/s.  Sahara India Real Estate Corporation Limited, registered office at Sahara  India Bhawan, 1, Kapoorthala Complex, Aliganj, Lucknow – 226024, have  performed  the  following  procedures  in  carrying  out  the  Special  Assignment:

1. We have examined books and records provided to  us and also  obtained the relevant information and explanation which to the best  of our knowledge and belief were necessary to give this certificate.

2. We have relied upon the system and procedure of the company,  books,  records,  documents,  bank  statements,  clarifications,  representations, information and statements made available to us  and also done verification and scrutiny of the same.

Based  on  the  above  procedures  and  verification,  we  certify  that  M/s.  Sahara  Indian  Real  Estate  Corporation  Limited  had  subscription  of  Optionally  Fully  Convertible  Debentures  of  approximately  Rs.748.75  crores (covering 2,92,344 control numbers)  through cheque.  Further till  March,  2013,  Rs.1,151.02  crores (covering  6,70,677  control  numbers)  were  paid  to  the  Optionally  Fully  Convertible  Debenture  holders  on  account of redemption/pre-redemption through cheque.

For De & Bose Chartered Accountants

Firm Regn. No. 302175E

Date: 31.01.2014 Sd/- Place: Kolkata     (Subrata De)

        Partner              Membership no. 054962”

(emphasis is ours)

The  second  certificate  pertaining  to  SHICL  is  also  being  reproduced  

hereunder:-

“CA DE & Bose in association with ASH Associates UK

8/2, Kiran Sankar Roy Road, 2nd Floor Room no. 1 & 18, Kolkata – 700 001

Page 160

160

Ph.: 22485039. Fax: 91-33-2243-4864 E-mail: durgadas@cal3.vsnl.net.in 1, Garstin Place, Unit 1E, ORBIT,

Kolkata – 700 001.  Phone: 2248 7424

TO WHOM IT MAY CONCERN

We, M/s. DE & Bose, Chartered Accountants, Statutory Auditor of  M/s.  Sahara  Housing  Investment  Corporation  Limited,  registered  office  at  Sahara India Point, CTS-40 & 44, S.V. Road, Goregaon (West), Mumbai –  400  104,  Maharashtra  have  performed  the  following  procedures  in  carrying out the Special Assignment:

1. We have examined books and records provided to  us and also  obtained the relevant information and explanation which to the best  of our knowledge and belief were necessary to give this certificate.

2. We have relied upon the system and procedure of the company,  books,  records,  documents,  bank  statements,  clarifications,  representations, information and statements made available to us  and also done verification and scrutiny of the same.

Based  on  the  above  procedures  and  verification,  we  certify  that  M/s.  Sahara  Housing  Investment  Corporation  Limited  had  subscription  of  Optionally  Fully  Convertible  Debentures  of  approximately  Rs.324.62  crores  (covering  91,970  control  numbers)  through  cheque.   Further  till  March,  2013,  Rs.14.66 crores (covering  10,501 control  numbers)  were  paid to the Optionally Fully Convertible Debenture holders on account of  redemption/pre-redemption through cheque.

For De & Bose Chartered Accountants

Firm Regn. No. 302175E

Date: 31.01.2014 Sd/- Place: Kolkata     (Subrata De)

        Partner              Membership no. 054962”

(emphasis is ours)

A  perusal  of  the  above  certificates  reveals,  that  the  above  firm  of  

Chartered Accountants, confirmed the redemption of OFCD’s which were  

made by way of cheque only.  Both the above certificates are silent on the  

redemptions made by way of cash.  The firm of Chartered Accountants,  

therefore, did not choose to confirm the redemption of OFCD’s made by  

way of cash.  This action must be deemed to be conscious, otherwise it

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161

was  not  necessary  even  to  confirm  the  redemptions  made  by  way  of  

cheque.   It  was the clear  contention  of  Mr.  S.  Ganesh,  learned Senior  

Counsel before us, that approximately 95% of the OFCD’s were refunded  

by cash, and only 5% of the OFCD’s were refunded by way of cheques.  

Even if the certificates issued by the firm of Chartered Accountants were to  

be accepted to be correct (even though there seems to be no justifiable  

basis  for  the  same),  the  authenticity  of  the  general  ledger  entries  was  

expressly only in respect of payments made by the two companies, by way  

of cheque.  There is no authenticity whatsoever, in respect of payments  

made by way of cash.  It is, therefore, not possible for us, on the basis of  

the record made available to us to accept, that any relevant material had  

been made available to us till  date.   We wish to express, that no other  

record,  besides  the  above  general  ledger  entries,  was  brought  to  our  

notice, to demonstrate the factum of alleged redemptions.  Therefore, even  

a  prima  facie finding  cannot  be  recorded,  that  the  two companies  had  

made  available  to  this  Court,  any  relevant  material,  wherefrom  an  

inference could be drawn, that any redemption had ever been made to the  

investors, i.e., to the OFCD holders.  

120. We have  examined  the  above  issue  of  redemptions  only  for  the  

petitioner’s satisfaction.  As a matter of law, it does not lie in the mouth of  

the contemnors, to agitate the issue of redemption.  Insofar as the instant  

aspect of the matter is concerned, it is necessary to highlight the fact, that  

the order dated 31.8.2012 directed the two companies, to deposit with the

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162

SEBI, the entire redeemable amount along with interest at the rate of 15%.  

The above deposit had to be made within a period of three months, i.e., by  

30.11.2012.   The  case  set  up  by  the  two  companies  has  been,  that  

SIRECL  had  already  refunded  Rs.17,443  crores  to  the  investors,  and  

SHICL  had  likewise  refunded  Rs.5,442  crores.   The  two  companies  

therefore assert, that they cannot be required to make the same payment  

to the investors, for the second time.  It would be pertinent to mention, that  

the two companies had approached this Court by filing Civil  Appeal no.  

8643  of  2012  (and  Writ  Petition  (Civil)  no.  527  of  2012).   In  the  said  

proceedings,  the two companies had sought  exemption from depositing  

the  amounts,  which  they  had  allegedly  redeemed.   The  three-Judge  

Division Bench, which heard the matter(s), did not accept the redemption  

theory projected by the two companies.  Accordingly, the prayer made by  

the  two  companies  in  Civil  Appeal  no.8643  of  2012  (and  Writ  Petition  

(Civil)  no.  527  of  2012)  for  deduction  of  the  above  amount,  was  not  

accepted by this Court,  when it passed the final order dated 5.12.2012.  

Accordingly,  the companies were directed to deposit  the entire  balance  

amount of Rs.17,400 crores.  It is, therefore imperative to conclude, that  

the  issue  of  deduction  of  allegedly  redeemed  funds,  stood  concluded  

against  the  two  companies,  when  this  Court  passed  its  order  dated  

5.12.2012.  This plea is no longer available to the two companies, in law.  

To  continue  to  harp  on  the  alleged  redemptions,  is  clearly  a  

misrepresentation, specially when the order dated 5.12.2012 has attained  

finality.

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163

121. Therefore,  viewed  from  any  angle,  there  is  no  substance  in  the  

contention advanced on behalf  of  the two companies,  that  the moneys  

payable to the investors had been refunded to them.  Accordingly, there is  

no merit in the prayer, that while making payments in compliance with this  

Court’s orders dated 31.8.2012 and 5.12.2012, the two companies were  

entitled  to  make deductions  of  Rs.17,443 crores (insofar  as SIRECL is  

concerned) and Rs.5,442 crores (insofar as SHICL is concerned). Be that  

as it may, we have still retained a safety valve, inasmuch as, the SEBI has  

been directed to examine the authenticity of the documents produced by  

the two companies,  and in case the SEBI finds, that redemptions have  

actually  been  made,  the  two companies  will  be  refunded the  amounts,  

equal to the redemptions found to have been genuinely made.

122. We are persuaded to record, that either the submissions made to  

this  Court  on the subject  of  refunds made by the two companies were  

false; or the present projection of the two companies of their inability to pay  

the investors is false.  One learned Senior Counsel for the petitioner, Mr.  

S. Ganesh, during the course of his narration, in order to substantiate the  

redemption  of  OFCD’s  to  the  tune  of  thousands  of  crores  of  rupees,  

referred to the collection of thousands of crores of rupees in successive  

months,  during  the  year  2012,  from  the  account  books  of  the  two  

companies.   On a single  day (31.5.2012),  the cash inflow is  shown as  

Rs.15,535,89,65,601.00  (i.e.  more  than  Rupees  fifteen  thousand  five  

hundred and thirty five crores).  This was done by collecting funds from all

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companies (and firms, under the conglomerate) of the Sahara Group.  If it  

was possible to do that, at that juncture, in order to redeem the payments  

claimed by investors, we fail to understand why the same cannot be done  

now.   Specially  when,  as  already  noticed  hereinabove,  the  book  

value/market value of the properties of the Sahara Group conglomerate, is  

to the tune of Rs.1,52,500 crores (as per its own website).  It is after all,  

close to 2 years (about 20 months) since the order dated 31.8.2012 was  

pronounced,  and close to 1½ years (about  17 months)  since the order  

dated 5.12.2012 was passed.

X. The maintainability of the present petition

123. At the very commencement  of  hearing,  Mr.  Arvind Datar,  learned  

Senior Counsel representing the SEBI, raised a preliminary objection.  He  

contested the very maintainability of the instant petition.  He invited our  

attention to the heading of the petition, which is extracted hereunder:

“PETITION  UNDER  THE  POWERS  OF  THIS  COURT  TO  ACT  EX  DEBITO  JUSTITIAE  A  POWER  EXPRESSLY  RECOGNIZED BY THE AUTHORITIES MENTIONED IN THE  PARA ‘A’ OF THIS PETITION.”

It was his vehement contention, that the instant petition does not disclose  

the provisions under which it had been filed.  In this behalf, it was sought to  

be asserted, that the right to maintain a petition can only emerge from a  

statutory provision, or a constitutional mandate.  It was also submitted that  

neither a maxim of law, nor a decision of a Court, could create jurisdiction  

in a Court.

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165

124. The objection of jurisdiction, raised by the learned Senior Counsel  

representing the SEBI, met with the strangest possible response from the  

learned Senior Counsel representing the petitioner.  It was a response of a  

nature  which  we  had  not  experienced  in  our  professional  careers  as  

Advocates, or even in approximately one and a half  decades of service  

rendered as Judges.  It  is necessary to point out, that when the above  

objection  was  raised,  we  had  informed  learned  Senior  Counsel  

representing the SEBI, that we would not stand on technicality, inasmuch  

as, if the instant petition was maintainable under one or the other provision  

of law, we would read that provision in the title of the present petition, even  

though the same had not been expressly mentioned therein.   

125. When  confronted  with  the  objection  of  maintainability,  Mr.  Ram  

Jethmalani,  learned  Senior  Counsel,  adopted  the  positive  stance,  that  

there was no deficiency in the title of the petition.  In his view, the instant  

petition was maintainable under the maxim of ex debito justitiae, a power  

which has been expressly recognized by this Court in A.R. Antulay’s case  

(supra).  The decision in A.R. Anulay’s case (supra) was rendered by a  

Constitution Bench of seven Hon’ble Judges of this Court.  According to  

Mr. Ram Jethmalani, in the above judgment, the proposition canvassed by  

him, had been upheld by a majority of 5:2.   He pointedly asserted, that we  

should record his submission to the effect, that he had ever contended that  

the  instant  petition  was  maintainable  either  under  Article  32  of  the  

Constitution  of  India,  or  jointly  under  Articles  129  and  142  of  the

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166

Constitution  of  India.   In  fact  he  submitted,  that  he  had  authored  the  

present  criminal  writ  petition.   And  in  the  process,  he  had  extensively  

researched  on  the  issue  of  jurisdiction,  before  filing  this  petition.   His  

unambiguous assertion on the subject of jurisdiction was, that the petition  

had not  been  filed under  a  legislative  enactment  of  the  Constitution  of  

India.  It has been filed under the maxim ex debito justitiae.

126. In contradistinction to the submissions advanced at the hands of Mr.  

Ram Jethmalani, Mr. C.A. Sundaram, learned Senior Counsel, who also  

represented the petitioner, invited our attention to the prayers made in the  

instant petition.  To understand the tenor of his submission, the prayers  

made in the petition are being extracted hereunder:

“PRAYER

It is therefore most graciously prayed that this Hon’ble Court may be  pleased to:-

(a) Declare  the  order  dated  04.03.2014  as  void,  nullity  and  non-est in the eyes of law;

(b) Declare  that  the  incarceration  and  the  custody  of  the  Petitioner are illegal which should be terminated forthwith;

(c) issue such other writ in the nature of Habeas or other writs,  order  or  direction  for  release  of  the  Petitioner  from  the  illegal custody;

(d) pass such further orders as this Hon’ble Court may deem  fit and proper in the facts and circumstances of the case.”

Referring  to  prayer  (a)  extracted  above,  it  was  submitted,  that  the  

declaration sought in the instant prayer would be in the nature of a writ of  

certiorari.  Referring to clause (b) of the prayer clause, it was contended,  

that  the  declaration  sought  therein  would  be  in  the  nature  of  a  writ  of

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certiorarified mandamus.  Insofar as prayer clause (c) is concerned, it was  

asserted,  that  the prayer  sought  was in the nature of  a writ  of  habeas  

corpus.  In the above view of the matter, it was the submission of Mr. C.A.  

Sundaram,  that  the  jurisdiction  of  this  Court  to  issue  writs,  could  be  

invoked only under Article 32 of the Constitution of India.  As such, it was  

his submission,  that the instant petition be treated as having been filed  

under Article 32 of the Constitution of India.  In other words, the contention  

of Mr. C.A. Sundaram, learned Senior Counsel was, that the title of the  

petition be read by including Article 32 of the Constitution of India therein.  

In  fact,  it  was  the  pointed  submission  of  the  learned  counsel,  that  he  

should  not be taken as having canvassed,  that  the instant  petition was  

maintainable on account of the jurisdiction evolved through the judgment  

rendered by this Court in A.R. Antulay’s case (supra).  He also contended,  

that he should not be taken to have canvassed, that the present petition is  

maintainable under Article 129 read with Article 142 of the Constitution of  

India.

127. Dr. Rajeev Dhawan, was yet another learned Senior Counsel, who  

represented the petitioner.  His candid contention was, that he could not  

accept  the  submissions  on  the  subject  of  jurisdiction,  as  had  been  

canvassed  by  his  colleagues,  Mr.  Ram  Jethmalani  and  Mr.   C.A.  

Sundaram.   It  was  his  assertion,  that  the  prayers  made  in  the  instant  

petition could be sought by the petitioner, only under Articles 129 and 142  

of the Constitution of India.  As such, he submitted that the title of this

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petition  be  read  by  including  therein,  Articles  129  and  142  of  the  

Constitution of India.

128. It is apparent from the submissions advanced at the hands of the  

learned counsel for the petitioner, that even learned counsel representing  

the  petitioner,  were  not  sure  about  the  maintainability  of  the  instant  

petition.   Each of  them while adopted an independent  stance, and was  

unwilling to accept the position adopted by his other two colleagues.  In the  

above view of the matter, we would have been happy to follow a simple  

course.  To reject the petition’s maintainability, on the basis of the majority  

view, expressed by the learned counsel representing the petitioner himself.  

Such rejection  would  be,  by  a  majority  of  2:1.   Learned  counsel  were  

probably  independently  conscious of  the legal  position,  that  the petition  

was not maintainable.  Unfortunately, this course is not open to a Court of  

law.  We will have to examine the maintainability of the petition, by taking  

into consideration all the perspectives presented before us.  The burden  

will naturally be three-folds than the usual.  However, keeping in mind the  

eminence of the learned Senior Counsel who represented the petitioner, it  

is not possible for us, at first blush, to draw any such inference.  We shall  

endeavour  to  independently  determine  the  issue  of  maintainability,  

canvassed  at  the  hands  of  all  the  learned  counsel  representing  the  

petitioner.  In case we arrive at the conclusion, that the submission of any  

one  of  the  learned  counsel  is  acceptable,  we  would  treat  the  instant  

petition as maintainable.

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129. First  and  foremost,  on  the  subject  of  maintainability,  we  shall  

determine the veracity of the submissions advanced at the hands of Mr.  

Ram Jethmalani, Senior Advocate.  To substantiate his contention learned  

counsel placed reliance, only on the judgment rendered by this Court in  

A.R. Antulay’s case (supra).  Before examining the decision rendered by  

this Court in the above judgment, we shall summarise the factual context,  

in which the aforesaid judgment was rendered.  The appellant in the above  

case, A.R. Antulay was the Chief Minister of the State of Maharashtra from  

1980 to 1982.  R.S. Nayak belonged to a rival political party.  R.S. Nayak  

filed a complaint before the Additional Metropolitan Magistrate, Bombay,  

under Sections 161 and 165 of the Indian Penal Code and Section 5 of the  

Prevention of Corruption Act, as also, under Sections 384 and 420 read  

with Sections 109 and 120-B of the Indian Penal Code.  The complaint was  

not only against the appellant A.R. Antulay, but also against other known  

and  unknown  persons.   Since  sanction  for  prosecution  had  not  been  

granted, the concerned Magistrate refused to take cognizance.  To assail  

the order of the Magistrate, a criminal revision application came to be filed.  

In  the  meantime,  the  Governor  of  the  State  of  Maharashtra  accorded  

sanction.  R.S. Nayak thereupon, filed a fresh complaint in the Court of the  

Special Judge, Bombay, alleging the commission of the same offences,  

which were the subject matter of the complaint earlier filed by him, before  

the  Magistrate.   The  Special  Judge,  Bombay,  issued  summons  to  the  

appellant – A.R. Antulay.  On entering appearance A.R. Antulay adopted  

the stance, that the Special Judge, Bombay, had no jurisdiction to entertain

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the complaint.  For the aforesaid objection, he placed reliance on Section 7  

of  the  Criminal  Law  Amendment  Act,  1952.    He  also  asserted,  that  

cognizance  could  not  be  taken by  the  above  Court,  on  the  basis  of  a  

private complaint.  The Special Judge, Bombay, overruled the objections  

raised by A.R. Antulay, and listed the matter for recording evidence of the  

complainant’s  witnesses.   The  aforesaid  order  of  the  Special  Judge,  

Bombay, was assailed by A.R. Antulay, by filing a criminal revision petition,  

before the Bombay High Court.   The said petition was dismissed.  The  

order of the High Court was then assailed before this Court.  This Court  

granted special leave to A.R. Antulay, on the issue as to whether, a private  

complaint was maintainable.  In the meantime, an objection was raised by  

A.R. Antulay before the Special Judge, Bombay, to the effect, that he could  

not be prosecuted without sanction of the competent authority.  His instant  

plea was based on the fact, that he still continued to be a Member of the  

Legislative  Assembly,  and  as  such,  sanction  was  an  essential  pre-

condition, before his prosecution.  The above plea, was accepted by the  

Special Judge, Bombay.  R.S. Nayak, then filed a criminal revision petition  

before  the  High  Court,  questioning  the  above  order.   The  High  Court  

upheld the order passed by the Special Judge, Bombay.  R.S. Nayak then  

approached  this  Court.   This  Court  granted  special  leave,  against  the  

decision of  the High Court,  holding that  sanction was necessary before  

A.R. Antulay could be prosecuted.  The aforesaid Criminal Appeals were  

heard by a five-Judge Constitution Bench of this Court.  Even though, the  

same Bench heard the matters, the two appeals were disposed of by two

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separate judgments.  The appeal preferred by R.S. Nayak was accepted.  

This  Court  held,  that  as  a  Member  of  the  Legislative  Assembly,  A.R.  

Antulay was not a public servant, and therefore, no sanction was required  

for his prosecution.  In the above view of the matter, it is apparent, that this  

Court  set  aside  the  order  of  discharge  passed  by  the  Special  Judge,  

Bombay.  This Court accordingly directed the trial Court, to proceed with  

the  trial  of  the  matter.   While  disposing  of  the  two  cases  referred  to  

hereinabove, this Court having taken into consideration the fact, that A.R.  

Antulay had already suffered adversely, as his reputation was tarnished by  

the imputations levelled against him, for a period of two and a half years  

(i.e., the period during which the controversy had remained pending), felt  

that he deserved an expeditious trial.  In the aforesaid view of the matter,  

while disposing of the two matters referred to above, this Court directed,  

that  the  cases  filed  against  A.R.  Antulay  before  the  Special  Judge,  

Bombay, be withdrawn and be transferred to the High Court of Bombay for  

trial.  The Chief Justice of the High Court of Bombay was also requested,  

to assign the trial of the matter, to a sitting Judge of the High Court, so as  

to conclude the matter by holding day-to-day proceedings.  Accordingly,  

trial commenced before a Single Judge of the High Court of Bombay in  

1984.   A.R.  Antulay  again  contested  the  maintainability  of  the  trial  

proceedings, before the High Court of Bombay.  The learned Single Judge  

hearing  the  matter,  rejected  the  plea  canvassed  at  the  hands  of  A.R.  

Antulay by concluding, that the High Court was bound by the order passed  

by this Court.  In the above circumstances, A.R. Antulay filed a writ petition

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before this  Court,  under  Article 32 of  the Constitution of  India.   A two-

Judge Division Bench of this Court, dismissed the petition.  Whilst one of  

the  Judges  expressed  the  view,  that  the  learned  Single  Judge  of  the  

Bombay High Court  was not  only  justified,  but  was also duty bound to  

follow the decision of this Court,  which was binding on him; the second  

Judge on the Bench expressed the view, that the challenge raised by the  

petitioner (by assailing the validity of the judgment rendered by this Court,  

as incorrect  or a nullity) could not be entertained.  The second Hon’ble  

Judge, therefore, granted liberty to A.R. Antulay, to approach this Court  

with an appropriate review petition, if the petitioner – A.R. Antulay was so  

advised.  Having examined the witnesses produced by R.S. Nayak before  

the learned Single Judge of the High Court, 21 charges came to be framed  

(out  of  43  draft  charges,  which  were  placed  before  the  Court,  for  its  

consideration) against A.R. Antulay.  At the instance of the rival parties, the  

matter again came to this Court, for determining the validity of the order  

framing only 21 charges.  In the judgment rendered by this Court in A.R.  

Antulay’s case (supra), this Court held, on facts, that a  prima facie case  

had also been made out against A.R. Antulay, in respect of some of the  

allegations,  in  furtherance whereof  no charges  had been framed.   This  

Court accordingly, set aside the order of the High Court refusing to frame  

charges, in respect of some of the alleged offences, on which A.R. Antulay  

had been discharged.  Thereupon, the learned Single Judge of the High  

Court  framed  79  charges  against  A.R.  Antulay.   The  High  Court  

simultaneously  rejected  the  application  made  by  A.R.  Antulay,  for

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proceeding  against  the  alleged  co-conspirators.   A.R.  Antulay,  then  

challenged the aforesaid order of the High Court before this Court.  He,  

inter  alia,  questioned  the  High  Court’s  jurisdiction  to  try  the  case.   He  

alleged that his trial by the Single Judge of the High Court, was in violation  

of Articles 14 and 21 of the Constitution of India.  The contention advanced  

on behalf of A.R. Antulay was, that he could be tried only in accordance  

with the procedure established by law.  This plea was raised under Article  

21 of the Constitution of India.  A.R. Antulay relied on Section 7(1) of the  

Criminal  Law  Amendment  Act,  1952,  which  expressly  provided  

(notwithstanding anything contained in the Code of Criminal Procedure or  

any other law), that the offences under Section 6(1) would be triable by a  

Special Judge only.  It was, therefore, sought to be asserted, that his trial  

by  the  Single  Judge  of  the  High  Court,  was  in  clear  violation  of  his  

constitutional rights, and the aforesaid legislative mandate.  A.R. Antulay  

alleged prejudice by asserting, that four of his valuable rights had been  

taken away when this Court had passed the direction, whereby his trial  

was  withdrawn  from  the  Court  of  the  Special  Judge,  Bombay,  and  

transferred to the High Court.  In this behalf, it was his contention, that he  

was deprived of the right to trial by a Special Judge, in accordance with the  

procedure established by law, i.e., procedure which had been enacted by  

Parliament.  He also asserted, that his right of revision to the High Court  

under  Section 9 of  the Criminal  Law Amendment  Act,  1952,  had been  

taken  away.   It  was  also  his  submission,  that  had  the  Special  Judge,  

Bombay conducted his trial, he would have had a right of first appeal, to

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the High Court.  The above right which was vested in him under Section 9  

of the Criminal Law Amendment Act, 1952, was also allegedly taken away.  

He  also  asserted,  that  under  the  provisions  of  the  Criminal  Law  

Amendment Act, 1952, besides preferring an appeal to the High Court, he  

would have a right of a second appeal before this Court under Article 136  

of the Constitution of India.  It was his contention, that the right to prefer a  

second appeal,  was also sought  to be taken away from him.  Besides,  

alleging  the  deprivation  of  the  above  valuable  rights,  it  was  also  the  

contention of A.R. Antulay before this Court, that this Court had suo motu  

directed  withdrawal  of  the  case  against  A.R.  Antulay  from the  Special  

Judge,  Bombay,  and  transferred  the  same  to  the  High  Court  without  

affording any opportunity of hearing to him.  It was, therefore, sought to be  

asserted, that the above order passed by the High Court, was clearly in  

violation  of  the  principles  of  natural  justice,  and  accordingly,  the  same  

violated  his  fundamental  rights,  causing  grave  prejudice  to  him,  and  

therefore, deserved to be set aside.

130. From the judgment  rendered by this Court  in A.R. Antulay’s case  

(supra), Mr. Ram Jethmalani relied upon the following observations:-

“79. ...These  directions  were  void  because  the  power  was  not  there for this Court to transfer a proceeding under the Act of 1952  from one Special  Judge to the High Court.  This is not  a case of  collateral attack on judicial proceeding; it is a case where the court  having no court superior to it rectifies its own order. We recognise  that  the  distinction  between  an  error  which  entails  absence  of  jurisdiction and an error made within the jurisdiction is very fine. So  fine  indeed  that  it  is  rapidly  being  eroded  as  observed  by  Lord  Wilberforce  in  Anisminic  Ltd.  v.  Foreign  Compensation  Commissioner, (1969) 1 All E.R. 208.  Having regard to the enormity

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of the consequences of the error to the appellant and by reason of  the fact that the directions were given suo motu, we do not find there  is anything in the observations of Ittavira Mathai v. Varkey Varkey  (1964) 1 SCR 495 which detract the power of the court to review its  judgment  ex debito justitiae in case injustice has been caused.  No  court, however high, has jurisdiction to give an order unwarranted by  the Constitution and, therefore, the principles of Bhatia Co- operative  Housing  Society  Ltd.  v.  D.  C.  Patel,  (1953)  SCR 185,  would not  apply.

80. ln giving the directions this Court infringed the constitutional  safeguards granted to a citizen or to an accused and injustice results  therefrom. It is just and proper for the court to rectify and recall that  injustice, in the peculiar facts and circumstances of this case.

81. This case has caused us considerable anxiety. The appellant- accused has held an important  position in this country,  being the  Chief  Minister  of  a  premier  State  of  the  country.  He  has  been  charged with serious criminal offences. His trial in accordance with  law  and  the  procedure  established  by  law  would  have  to  be  in  accordance  with  the  1952  Act.  That  could  not  possibly  be  done  because of the directions of this Court dated February 16, 1984, as  indicated above. It has not yet been found whether the appellant is  guilty or innocent.  It is unfortunate, unfortunate for the people of the  State,  unfortunate for  the country  as a whole,  unfortunate for the  future working of democracy in this country which, though is not a  plant of an easy growth yet is with deep root in the Indian polity that  delay has occurred due to procedural wrangles. The appellant may  be  guilty  of  grave  offences  alleged  against  him  or  he  may  be  completely or if not completely to a large extent, innocent.  Values in  public  life  and  perspective  of  these  values  in  public  life,  have  undergone  serious  changes  and  erosion  during  the  last  few  decades.  What was unheard of before is commonplace today. A  new  value  orientation  is  being  undergone  in  our  life  and  in  our  culture.  We are at the threshold of the cross-roads of values.  It is,  for the sovereign people of the country to settle these conflicts yet  the courts have vital roles to play in such matters.  With the avowed  object  of  speedier  trial  the  case  of  the  appellant  had  been  transferred to the High Court but on grounds of expediency of trial  he cannot  be subjected to a procedure  unwarranted by law,  and  contrary to the constitutional provisions.  The appellant may or may  not be an ideal politician.  It is a fact, however, that the allegations  have been brought against him by a person belonging to a political  party  opposed  to  his  but  that  is  not  the  decisive  factor.   If  the  appellant - Shri Abdul Rehman Antulay has infringed law, he must  be  dealt  with  in  accordance  with  the  law.   We  proclaim  and  pronounce  that  no  man  is  above  the  law,  but  at  the  same  time

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reiterate and declare that no man can be denied his rights under the  Constitution  and  the  laws.   He  has  a  right  to  be  dealt  with  in  accordance with the law and not in derogation of it. This Court, in its  anxiety to facilitate the parties to have a speedy trial gave directions  on February 16, 1984 as mentioned hereinbefore without conscious  awareness of the exclusive jurisdiction of the Special Courts under  the 1952 Act and that being the only procedure established by law,  there  can  be  no  deviation  from  the  terms  of  Article  21  of  the  Constitution  of  India.  That  is  the  only  procedure  under  which  it  should  have  been  guided.  By  reason  of  giving  the  directions  on  February  16,  1984 this Court  had also unintentionally  caused the  appellant the denial of rights under Article 14 of the Constitution by  denying him the equal protection of law by being singled out for a  special procedure not provided for by law.  When these factors are  brought  to  the  notice  of  this  Court,  even  if  there  are  any  technicalities  this  Court  should  not  feel  shackled  and  decline  to  rectify  that  injustice  or  otherwise  the  injustice  noticed  will  remain  forever a blot on justice. It has been said long time ago that "actus  curiae neminem gravabit"  - an act of the Court shall  prejudice no  man.  This  maxim  is  founded  upon  justice  and  good  sense  and  affords a safe and certain guide for the administration of the law.

xxx xxx xxx xxx xxx

83….It appears that in giving directions on February 16, 1984, this  Court  acted    per  incuriam   inasmuch  it  did  not  bear  in  mind    consciously the consequences and the provisions of Sections 6 and  7  of  the  1952  Act  and  the  binding  nature  of  the  larger  Bench  decision in  Anwar Ali Sarkar case,  1952 SCR 284 which was not  adverted  to  by  this  Court.   The  basic  fundamentals  of  the  administration of justice are simple. No man should suffer because  of  the  mistake  of  the  court.  No  man  should  suffer  a  wrong  by  technical  procedure  of  irregularities.  Rules  or  procedures  are  the  handmaids of justice and not the mistress of the justice.  Ex debito  justitiae  , we must do justice to him. If a man has been wronged so    long as it lies within the human machinery of administration of justice  that wrong must be remedied. This is a peculiar fact  of this case  which requires emphasis.”

(emphasis is ours)

Based on the above parameters recorded in A.R. Antulay’s case (supra),  

Mr. Ram Jethmalani, learned Senior Counsel vehemently contended, that  

the maxim of actus curiae neminem gravabit, meaning, the act of a Court  

will not prejudice any man, is founded on the principle of justice and good

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conscience.  The above principle affords a safe and certain guide for the  

administration of law.  It was pointed out, that Courts in England abide by  

the principle, that the size of the Bench did not make any difference for the  

adjudication of a controversy.  It was submitted, that the aforesaid concept  

was not valid in this country.  We were informed, that the law laid down by  

this  Court  established  a  hierarchy  within  this  Court  itself,  whereby  

decisions of a larger Bench binds a smaller Bench.  It was submitted, that  

a  larger  Bench can override  the  decision  of  a  smaller  Bench.   It  was,  

therefore pointed out, that when this Court in A.R. Antulay’s case (supra)  

examined the validity of the order passed by this Court, whereby the trial  

pending  before  the  Special  Judge,  Bombay  under  the  Criminal  Law  

(Amendment) Act, 1952, was transferred to the High Court, a Constitution  

Bench of this Court declared the above transfer order as being void and a  

nullity in law.  It was submitted, that if the above determination could be  

rendered, the controversy in hand needs to be similarly redressed, so as to  

do justice to the petitioner.  It was submitted, that the principle of  actus  

curiae  neminem  gravabit would  apply  with  much  greater  force  in  the  

present case on account of the fact, that the petitioner has been deprived  

of his liberty and has been remanded to jail without the authority of law.  It  

was submitted, that the impugned order dated 4.3.2014 was totally unjust,  

without any judgment of conviction, without proper charges being framed  

or notice issued, and without a hearing.  It was also the contention of the  

learned  Senior  Counsel,  that  the  principle  of  audi  alteram partem was  

given a complete go-by, in the facts and circumstances of this case.  It was

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accordingly  the  submission  of  the  learned  Senior  Counsel  for  the  

petitioner,  that  even  a  judicial  order  passed  in  derogation  of  the  

constitutional limitations or in derogation of principles of natural justice, can  

always be remedied by this Court ex debito justitiae.  According to learned  

counsel,  it  was  imperative  for  this  Court  to  exercise  the  above  power  

without insisting on the formalities of the petitioner being required to file a  

review petition or a curative petition.

131. In addition to the reliance placed by the learned Senior Counsel for  

the petitioner on the judgment  rendered by this Court  in A.R. Anutlay’s  

case (supra),  he also placed reliance on the judgments of this Court in  

Supreme Court Bar Association’s case (supra),  and on M.S. Ahlawat v.  

State  of  Haryana  &  Anr.,  (2000)  1  SCC  278,  wherein  this  Court  had  

recalled its own order, when a litigant had approached it complaining of  

miscarriage  of  justice  (through  an  earlier  order,  passed  by  this  Court).  

Specially  when  the  earlier  order  was  without  jurisdiction  and  without  

following due procedure of law.  And specially, when the challenged order  

had resulted in the incarceration of the concerned petitioner.

132. In response to the contentions advanced at the hands of the learned  

Senior Counsel for the petitioner, Mr. Arvind Datar, learned Senior Counsel  

representing the SEBI, invited our attention to the following observations  

made in A.R. Antulay’s case (supra):-

“107. There is still  another aspect which should be taken note of.  Finality of the orders is the rule. By our directing recall of an order  the well settled propositions of law would not be set at naught.  Such  a situation may not recur in the ordinary course of judicial functioning

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and if there be one certainly the Bench before which it comes would  appropriately deal with it.  No strait-jacket formula can be laid down  for  judicial  functioning  particularly  for  the  apex  Court.   The  apprehension that the present decision may be used as a precedent  to  challenge  judicial  orders  of  this  Court  is  perhaps  misplaced  because  those  who  are  familiar  with  the  judicial  functioning  are  aware of the limits and they would not seek support from this case  as a precedent.  We are sure that if precedent value is sought to be  derived out of this decision, the court which is asked to use this as  an instrument would be alive to the peculiar facts and circumstances  of the case in which this order is being made.”

(emphasis is ours)

Based  on  the  above,  it  was  submitted  by  the  learned  counsel,  that  

challenge to an order passed by this Court would be a rarity, and not a  

common  feature.   He  emphatically  pointed  out,  that  if  the  submission  

advanced at the hands of the learned counsel for the petitioner was to be  

accepted, no order passed by this Court would ever attain finality.  And  

therefore, the jurisdiction of this Court would be open to exploitation, any  

number  of  times,  if  the  petitioner/respondent  continued  to  feel,  that  

injustice had been done to him.

133. We are of the view, that reliance by the learned Senior Counsel for  

the petitioner on Supreme Court  Bar Association’s case (supra) and on  

M.S.  Ahlawat’s  case (supra)  is  wholly  misconceived  on  account  of  the  

determination rendered by this Court in Rupa Ashok Hurra’s case (supra),  

wherein in paragraph 13,  a five-Judge Constitution Bench,  observed as  

under:-

“13. It is, however, true that in Supreme Court Bar Association vs.  Union of India, (1998) 4 SCC 409, a Constitution Bench and in M.S.  Ahlawat  vs.  State  of  Haryana,  (2000)  1  SCC 278,  a three-Judge  Bench,  and in  other  cases different  Benches quashed the earlier  judgments/orders of this Court in an application filed under Article 32  of  the Constitution.   But in those cases no one joined issue with

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superior  Court  on  such  a  point  is  set  aside  by  adopting  the  appropriate  course,  it  would  not  be  open  to  be  corrected  by  the  exercise of the writ jurisdiction of this Court.”

(emphasis is ours)

135. Since it is not the case of the petitioner before this Court, that some  

legislative or constitutional  provision had curtailed the jurisdiction of this  

Court, from passing an order, of the nature which is impugned through this  

criminal writ petition, there can be no doubt that the above order has been  

passed by this Court in legitimate exercise of its jurisdiction.  This will have  

to be the natural determination arising out of the law declared in Naresh  

Sridhar  Mirajkar’s  case  (supra),  which  is  the  very  judgment,  on  which  

learned counsel for the petitioner has placed reliance.

136. Independently  of  the  above  purely  legal  determination,  we  have  

under a separate heading examined the issue, whether this Court had the  

jurisdiction to order the arrest and detention of the petitioner – Mr. Subrata  

Roy Sahara.  We have independently concluded, that we were possessed  

of such jurisdiction.  It is therefore apparent, that the impugned order dated  

4.3.2014, does not suffer from any jurisdictional error.

137. We are in absolute agreement with the submissions advanced by  

Mr. Arvind Datar, learned Senior Counsel for the respondent.  In view of  

the factual position depicted in this judgment (under the heading: “Whether  

the impugned order dated 4.3.2014 was passed, in violation of the rules of  

natural justice?”), based on the pleas advanced by the petitioner on merits,  

it  is  apparent,  that  the rules of  natural  justice were followed to the hilt,

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before the impugned order dated 4.3.2014 was passed.  Accordingly, the  

principle of actus curiae neminem gravabit is not available to the petitioner.

138. We  have  recorded  hereinabove,  that  the  instant  petition  is  not  

maintainable, because the challenge raised by the petitioner herein, on the  

grounds of a jurisdictional error, or non compliance of the rules of natural  

justice have been found to be not made out in this case.  That was the only  

basis of interference in Naresh Sridhar Mirajkar’s case (supra).  We are  

however  persuaded,  to  record  another  reason  for  not  accepting  the  

maintainability of the present writ petition, on the basis of Naresh Sridhar  

Mirajkar’s  case (supra).   In  this  behalf  it  is  relevant  to notice,  from the  

factual background of Naresh Sridhar Mirajkar’s case (supra) which has  

been traced hereinabove, that A.R. Antulay, had earlier approached this  

Court, by filing a writ petition under Article 32 of the Constitution of India  

(just  in the same manner,  as the petitioner  herein has approached this  

Court).  A two-Judge Division Bench of this Court dismissed the petition by  

observing inter alia, that a writ petition challenging the validity of an order  

and  judgment  passed  by  the  Supreme  Court  as  nullity  or  otherwise  

incorrect, could not be entertained.  The said writ petition was accordingly  

dismissed  (Abdul  Rehman  Antulay  v.  Union  of  India,  Writ  Petition  

(Criminal) no. 708 of 1984, decided on 17.4.1984; reported as Appendix,  

(1988) 2 SCC 764).  In the above view of the matter also, even on the  

basis of the very judgment relied upon by the learned counsel, we have no  

other  alternative  but  to  conclude,  that  the  instant  writ  petition  is  not

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maintainable,  to  assail  the  impugned  order  passed  by  this  Court  on  

4.3.2014.

139. We shall now endeavour to deal with the submissions advanced at  

the hands of Mr. C.A. Sundaram, learned Senior Counsel appearing for the  

petitioner,  whose express submission was,  that  the instant  criminal  writ  

petition,  filed by the petitioner was maintainable under Article 32 of  the  

Constitution of India.  The sum and substance of the submission advanced  

by  the  learned  counsel,  has  already  been  noticed  above,  and  is  

accordingly not being repeated herein again, for reasons of brevity.  Before  

dealing with the issue in hand, it would also be relevant to mention, that  

while the long drawn hearing in the instant matter was coming to an end,  

Mr. Ram Jethmalani, learned Senior Counsel, had a slight change of heart.  

His submission on second thoughts was, that the contention advanced at  

the hands of Mr. C.A. Sundaram, learned Senior Counsel, to the effect that  

the instant petition was maintainable under Article 32 of the Constitution of  

India,  had merit.   In the succeeding paragraphs,  we shall  deal  with the  

submissions  advanced  by Mr.  C.A.  Sundaram,  to  demonstrate  that  the  

present  writ  petition was maintainable  at  the hands of  the petitioner,  to  

assail the order passed by us, on 4.3.2014.

140. The instant issue being a pure question of law, was canvassed at  

the hands of the learned counsel for the rival parties, by placing reliance  

on judgments rendered by this Court.  In our considered view, therefore, it

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above extracted paragraphs, clearly held, that a writ petition would  

not  be  maintainable  against  an  order  passed  by  this  very  Court,  

even though it alleged violation of a fundamental right.

(ii) Reference was next made to the decision rendered by a three-

Judge Division Bench of this Court in Col. Dr. B. Ramachandra Rao  

v.  The State of  Orissa & Ors.,  (1972) 3 SCC 256.   Even though  

during the course of hearing,  learned counsel  for the rival  parties  

read before us paragraphs 5 and 7 of the present judgment, we are  

of the view that for the issue in hand, the purpose would be served  

by  extracting  herein  paragraph  6,  which  is  being  reproduced  

hereunder:-

“6. As admitted by both sides the petitioner was sentenced  to  imprisonment  on  conviction  by  the  Third  Additional  Sessions  Judge,  Secunderabad  in  October,  1965.  Unfortunately, neither side has been able to inform us as to  whether that sentence has expired or is still running.  The jail  authorities at Bhubaneshwar, we have little doubt, must have  information whether or not the petitioner, when brought there,  was undergoing a sentence of imprisonment and how much  sentence remain to be undergone, and the petitioner also, in  our opinion, must be presumed to be aware of the sentence  imposed on him. We need only add that in case the petitioner  is undergoing the sentence of imprisonment imposed on him  by competent Court then too writ of habeas corpus cannot be  granted. This position is well settled.”

(emphasis is ours)

A perusal of the above judgment leaves no room for any doubt, that  

this  Court  clearly  declared,  that  in  case  a  Court  of  competent  

jurisdiction, had passed an order of imprisonment, the order could  

not be assailed by praying for a writ in the nature of habeas corpus.  

A  writ  of  habeas  corpus  can  only  be  sought  from this  Court,  in

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executive  or  may  be  also  at  the  instance  of  private  persons.   This  principle  of  habeas  corpus  has  been  incorporated in our constitutional law and we are of the  opinion that  in  a democratic  republic  like India  where  Judges function under a written Constitution and which  has  a  chapter  on  fundamental  rights,  to  protect  individual liberty the Judges owe a duty to safeguard the  liberty  not  only  of  the citizens but  also of  all  persons  within the territory of India.  The most effective way of  doing the same is by way of exercise of power by the  Court by issuing a writ of habeas corpus.”

In the said case, a reference was made to Halsbury's  Laws of England, 4th Edn. Vol. 11, para 1454 to highlight that  a  writ  of  habeas  corpus  is  a  writ  of  highest  constitutional  importance  being  a remedy  available  to  the  lowliest  citizen  against the most powerful authority.

16. Having  stated  about  the  significance  of  the  writ  of  habeas corpus as a weapon for protection of individual liberty  through  judicial  process,  it  is  condign  to  refer  to  certain  authorities to appreciate how this Court has dwelled upon and  expressed its views pertaining to the legality of the order of  detention, especially that ensuing from the order of the court  when an accused is produced in custody before a Magistrate  after arrest.  It is also worthy to note that the opinion of this  Court  relating  to  the  relevant  stage  of  delineation  for  the  purpose of adjudicating the legality of the order of detention is  of immense importance for the present case.

17. In Col. Dr. B. Ramachandra Rao v. The State of Orissa,  (1972) 3 SCC 256, it was opined that a writ of habeas corpus  is not granted where a person is committed to jail custody by a  competent  court  by  an  order  which  prima  facie  does  not  appear to be without jurisdiction or wholly illegal.”

(emphasis is ours)

Yet again, therefore, this Court affirmed the conclusion, that a writ petition  

cannot be filed to raise a challenge against a validly passed judicial order.

In view of the clear expression of law recorded in all the above judgments,  

without any divergence of view whatsoever, we have no other alternative  

but to conclude, that it was not open for the petitioner to file the instant writ

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petition,  to  assail  the  order  passed  by  this  Court,  in  exercise  of  its  

jurisdiction under Articles 129 and 142 of the Constitution of India.  As a  

matter of abundant caution, it is considered necessary to record, that even  

though reference was made to M.S. Ahlawat’s case (supra) and Supreme  

Court Bar Association’s case (supra), wherein this Court had entertained a  

challenge to earlier orders passed by it, under Article 32 of the Constitution  

of  India,  yet,  the above two judgments,  cannot  be treated to have any  

bearing on the determination of the issue in hand, because in the aforesaid  

two cases,  the maintainability  of  the petitions  was not  contested.   Our  

instant conclusion, has also been recorded by this Court in, Rupa Ashok  

Hurra’s case (supra), the relevant observations wherefrom, have already  

been extracted hereinabove.

142. Last of all, we shall endavour to deal with the submission advanced  

by  Dr.  Rajeev  Dhawan,  learned  Senior  Counsel,  to  the  effect  that  the  

instant petition was maintainable in exercise of the jurisdiction vested in  

this Court, under Articles 129 and 142 of the Constitution of India.  The  

above provisions are being extracted hereunder;-

“129. Supreme Court to be a court of record - The Supreme Court  shall be a court of record and shall have all the powers of such a  court including the power to punish for contempt of itself.

142. Enforcement of decrees and orders of the Supreme Court and  orders as to discovery, etc. - (1)  The Supreme Court in the exercise  of its jurisdiction may pass such decree or make such order as is  necessary for doing complete justice in any cause or matter pending  before  it,  and  any  decree  so  passed  or  order  so  made shall  be  enforceable throughout the territory of India in such manner as may  be prescribed by or under any law made by Parliament and, until  provision in that behalf is so made, in such manner as the President  may by order prescribe

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49. The upshot of the discussion in our view is that this Court, to  prevent  abuse of  its  process  and to  cure  a  gross  miscarriage  of  justice,  may  re-consider  its  judgments  in  exercise  of  its  inherent  power.

50. The next step is to specify the requirements to entertain such  a curative petition under  the inherent  power of  this Court  so that  floodgates are not opened for filing a second review petition as a  matter of course in the guise of a curative petition under inherent  power.  It is common ground that except when very strong reasons  exist,  the  Court  should  not  entertain  an  application  seeking  reconsideration of an order of this Court which has become final on  dismissal of a review petition.  It is neither advisable nor possible to  enumerate  all  the  grounds  on  which  such  a  petition  may  be  entertained.”

(emphasis is ours)

143. It  is not possible for us to accept the contention advanced at the  

hands of the learned Senior Counsel.  By placing reliance on the decision  

rendered  by  this  Court  in  Rupa  Ashok  Hurra’s  case  (supra),  learned  

counsel must be deemed to have impliedly conceded the issue, against  

himself.   In  Rupa Ashok Hurra’s  case (supra),  this Court  examined the  

remedies available  to an individual.   In  the above judgment,  this  Court  

examined the ambit and scope of Article 137 of the Constitution of India,  

whereunder, a review petition could be filed for the correction of an error  

apparent on the face of the record.  In the judgment relied upon, this Court  

also  expressed  the  view,  that  a  curative  petition  could  be  filed  for  

corrections of such like errors, after a review petition had been dismissed.  

It is relevant to mention, that in furtherance of the directions issued by this  

Court in Rupa Ashok Hurra’s case (supra), this Court has framed rules, for  

entertaining curative petitions.  Such curative petitions, when entertained,  

are  placed  before  a  five-Judge  Bench  including  the  senior  most  three

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Judges  of  this  Court.   Placing  reliance  on  Rupa  Ashok  Hurra’s  case  

(supra) evidences, that the petitioner was aware of the jurisdiction of this  

Court  under  Article  137  of  the  Constitution  of  India  for  filing  a  review  

petition,  as  also,  the  permissibility  of  filing a  curative  petition,  after  the  

concerned party had not succeeded, in the review petition.  Unfortunately,  

the petitioner has not chosen either of the above jurisdictions.  The instant  

petition has been styled as a criminal writ petition.  The instant petition is  

not maintainable as no fresh petition is shown to be maintainable, under  

the provisions (Articles 129 and 142 of the Constitution of  India),  relied  

upon by the learned Senior Counsel.  Moreover, our deliberations on the  

merits  of  the  controversy  further  reveals,  that  there  is  neither  any  

jurisdictional error, nor any error in law has been shown to be made out,  

from the impugned order dated 4.3.2014.

144. For all the reasons recorded hereinabove we are of the view, that  

the instant petition is not maintainable and the same is, therefore, liable to  

be dismissed on the ground of maintainability.

XI. Conclusions

145. In view of our findings recorded hereinabove, our conclusions are  

summarized hereunder:-

I. We  find  no  merit  in  the  contention  advanced  on  behalf  of  the  

petitioner, that we should recuse ourselves from the hearing of this case.  

Calculated  psychological  offensives  and  mind  games  adopted  to  seek  

recusal  of  Judges,  need  to  be  strongly  repulsed.   We deprecate  such

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tactics  and  commend  a  similar  approach  to  other  Courts,  when  they  

experience such behaviour.  (For details, refer to paragraph nos. 1 to 14).

II. Disobedience of orders of a Court strikes at the very root of the rule  

of law, on which the judicial system rests.  Judicial orders are bound to be  

obeyed at all costs.  Howsoever grave the effect may be, is no answer for  

non-compliance of a judicial order.  Judicial orders cannot be permitted to  

be circumvented.   In exercise of  contempt  jurisdiction,  Courts  have the  

power  to  enforce  compliance of  judicial  orders,  and also,  the power  to  

punish for contempt.  (For details, refer to paragraph nos. 15 to 19).

III. The facts of this case reveal, that the two companies of which the  

petitioner is a promoter, flouted orders passed by the SEBI (FTM), SAT,  

the High Court  and of  this Court,  with impunity.   Facts and information  

solicited  were  never  disclosed.   The  position  adopted  by  the  two  

companies  was  always  projected  on  the  basis  of  unverifiable  material.  

This  Court  recorded  in  its  order  dated  31.8.2012,  that  the  factual  

assertions  made on  behalf  of  the  two companies  seemed to  be totally  

unrealistic and could well be fictitious, concocted and made up, and also  

remarked, that the affairs of the two companies seemed to be doubtful,  

dubious and questionable.  The above position has remained unaltered,  

inasmuch as, no authentic and verifiable material  sought has ever been  

furnished by the two companies.  The two companies remained adamant  

while frittering away repeated opportunities granted by this Court to comply  

with the orders dated 31.8.2012 and 5.12.2012.  The companies adopted a

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demeanour of defiance constituting a rebellious behaviour, not amenable  

to the rule of law.  (For details, refer to paragraph nos. 20 to 39).

IV. Efforts made to cajole the two companies and the petitioner were  

always stonewalled and brushed off.   All  intermediary means to secure  

compliance of  this Court’s  orders dated 31.8.2012 and 5.12.2012,  were  

evaded and skirted.  Even proposals to secure the payments (as against,  

the payment itself) to be made to the investors, in terms of this Court’s  

orders, were systematically frustrated.  Similar proposals made unilaterally  

by  learned  Senior  Counsel  representing  the  two  companies  and  the  

petitioner  himself,  turned  out  to  be  ploys  to  sidetrack  and  derail  the  

process of  law.   Such unilateral  proposals,  were unilaterally  withdrawn.  

Since all the efforts to cajole the two companies and the petitioner were  

methodically  circumvented,  we  started  adopting  sequentially  harsher  

means to persuade compliance of this Court’s orders dated 31.8.2012 and  

5.12.2012,  leading  finally  to  the  passing  of  the  impugned  order  dated  

4.3.2014.  (For details, refer to paragraph nos. 40 to 55).

V. The  Code  of  Civil  Procedure,  1908,  which  regulates  civil  

proceedings in India, expressly contemplates arrest and detention for the  

enforcement of a money decree.  And the Code of Criminal Procedure,  

1973, which regulates criminal proceedings in India, envisages arrest and  

detention as a mean for enforcing financial liability.  The submission made  

by  the  learned  Senior  Counsel  for  the  petitioner  to  the  effect,  that  

execution of a money decree or enforcement of a financial liability by way

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of  arrest  and detention  was a procedure  unknown to  law,  is  therefore,  

wholly misconceived.  (For details, refer to paragraph nos. 56 to 61).

VI. The submission made by the learned counsel for the petitioner, that  

this Court was obliged to comply with the procedure contemplated under  

Section  51,  and  rules  37  and  40  of  Order  XXI,  of  the  Code  of  Civil  

Procedure, 1908, before ordering the arrest and detention of the petitioner  

(and the other contemnors) is devoid of any merit, because Section 51 of  

the Code of Civil Procedure, 1908 and the other allied provisions referred  

to above, are not applicable to actions emanating out of the SEBI Act.  So  

also,  rule  6  of  Order  XIII  of  the  Supreme  Court  Rules,  1966,  has  no  

applicability, with reference to the SEBI Act.  Be that as it may, this Court  

before  passing  the  impugned  order  dated  4.3.2014  had  immaculately  

followed the procedure contemplated under the provisions of the Code of  

Civil Procedure, 1908, as were relied upon by the learned counsel for the  

petitioner,  before  ordering  the  petitioner’s  (and  the  other  contemnors’)  

arrest  and  detention.   The  submission  of  the  learned  counsel  for  the  

petitioner, so as to avoid his arrest and detention, based on the judgment  

rendered by this Court in Jolly George Varghese & Anr. v. Bank of Cochin,  

(1980) 2 SCC 360, being inapplicable to the facts and circumstances of  

this case, was liable to be rejected, and has accordingly been rejected.  

(For details, refer to paragraph nos. 62 to 77).

VII. In  response  to  a  prayer  made  by  the  SEBI  (in Interlocutory  

Application nos. 68 and 69 of 2013 in Civil Appeal no. 9813 of 2011), inter

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alia,  seeking  the  arrest  and  detention  of  the  petitioner  (and  two  other  

contemnors,  namely,  Mr.  Ravi  Shankar  Dubey  and  Mr.  Ashok  Roy  

Choudhary),  the petitioner  filed a personal  reply  by way of  an affidavit.  

The  petitioner  in  his  written  reply  raised  all  possible  legal  and  factual  

defences.  Different orders were passed from time to time in furtherance of  

the  prayers  made  in  the  aforementioned  interlocutory  applications,  

including the order preventing the petitioner (and the other contemnors)  

from leaving the country, as also, the order restraining the two companies  

from  parting  with  any  movable  or  immovable  property.   A  number  of  

opportunities of hearing were given to the learned counsel representing the  

two  companies  and  the  contemnors.   Finding  the  attitude  of  the  

contemnors  defiant  and  non-cooperative,  their  personal  presence  was  

ordered.  The petitioner, who was directed to be present on 26.2.2014, did  

not  enter  personal  appearance.   His  personal  presence  was  enforced  

through non-bailable  warrants  on 4.3.2014.   During  the  course  of  their  

personal presence in Court, the petitioner and the other contemnors were  

afforded  an  opportunity  of  oral  hearing.   The  petitioner  repeatedly  

addressed this Court on 4.3.2014.  Only thereafter,  the impugned order  

dated 4.3.2014 was passed.  In view of the above facts it is not possible for  

us to accept, that the impugned order was passed without following the  

rules of natural justice or without affording the petitioner an opportunity of  

hearing.  (For details, refer to paragraph nos. 78 to 96).

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VIII. The law laid down by this Court in Jaswant Singh v. Virender Singh  

& Ors., 1995 Supp. (1) SCC 384, has been found to be fully applicable to  

the facts of this case, particularly the mannerism and demeanour exhibited  

by the petitioner and some of the learned counsel.  Our recusal from the  

case sought on the ground of bias, has been found to be devoid of any  

merit.   Each  and  every  insinuation  levelled  by  the  petitioner  and  his  

learned  Senior  Counsel,  during  the  course  of  hearing,  has  been  

considered and rejected on merits.  (For details, refer to paragraph nos. 97  

to 112).

IX. The defence raised by the petitioner,  that the two companies had  

already  substantially  redeemed the OFCD’s,  has been examined under  

two different perspectives.  Firstly, the above defence is unavailable to the  

two companies  in law,  after  the same was rejected  on 5.12.2012 by a  

three-Judge Division Bench (in  Civil  Appeal  no.  8643 of  2012 and Writ  

Petition (Civil)  no. 527 of  2012).   Secondly,  the said defence has been  

examined from various  factual  perspectives  and has  been  found  to  be  

untenable.   Sole  reliance  on  general  ledger  entries  without  any  other  

authentication,  has  been  held  to  be  insufficient  proof  of  the  refunds  

claimed  to  have  been  made  by  the  two  companies  to  the  investors,  

specially because, such cash redemptions have not been affirmed in the  

certificate issued by the firm of Chartered Accountants, which had audited  

the accounts of the two companies.  (For details, refer to paragraph nos.  

113 to 122).

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X. The submission advanced by Mr. Ram Jethmalani, learned Senior  

Counsel  asserting  the  maintainability  of  the  instant  petition  under  the  

maxim of  ex debito justitiae, expressly recognized by this Court  in  A.R.  

Antulay v.  R.S. Nayak, (1988) 2 SCC 602,  is held to be devoid of  any  

merit, consequent upon a detailed analysis of the judgment relied upon.  

The contention advanced by Mr. C.A. Sundaram, learned Senior Counsel  

for the petitioner, projecting the maintainability of the instant petition under  

Article 32 read with Article 21 of the Constitution of India, has been found  

to be unacceptable in law on the basis of a series of judgments rendered  

by this Court.  The submission advanced by Dr. Rajeev Dhawan, learned  

Senior Counsel representing the petitioner, supporting the maintainability  

of the instant petition by placing collective reliance on Articles 129 and 142  

of the Constitution of India, has also been found to be ill-founded.  (For  

details, refer to paragraph nos. 123 to 144).

For the reasons recorded hereinabove,  we find no merit  in the present  

petition, and the same is accordingly dismissed.

XII. Post Script

146. Even though our instant observations are being recorded as a post  

script,  after we have concluded examining the merits of the controversy  

arising out of the criminal writ petition filed by the petitioner - Mr. Subrata  

Roy Sahara, the instant part of our judgment should be treated as a part  

and  parcel  of  our  decision,  because  it  emerges  out  of  years  of  our

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experience with the justice delivery system, and is prompted on account of  

the abuse of the judicial process, exposed while dealing with some Sahara  

Group related cases.  The seriousness of the conclusions recorded herein,  

we hope, shall not be overlooked merely on account of the heading given  

to this part.

147. The number of similar litigants, as the parties in this group of cases,  

is  on the increase.   They derive their  strength from abuse of  the legal  

process.  Counsel are available,  if  the litigant is willing to pay their fee.  

Their  percentage  is  slightly  higher  at  the  lower  levels  of  the  judicial  

hierarchy, and almost non-existent at the level of the Supreme Court.  One  

wonders,  what is it,  that a Judge should be made of, to deal with such  

litigants,  who have nothing to lose.  What is the level of merit,  grit  and  

composure  required,  to  stand  up  to  the  pressures  of  today’s  litigants?  

What is it, that is needed to bear the affront, scorn and ridicule hurled at  

officers presiding over Courts?  Surely one would need superhumans to  

handle  the  emerging  pressures  on  the  judicial  system.   The  resultant  

duress is grueling.  One would hope for support for officers presiding over  

Courts, from the legal fraternity, as also, from the superior judiciary upto  

the  highest  level.   Then  and  only  then,  will  it  be  possible  to  maintain  

equilibrium, essential to deal with complicated disputations, which arise for  

determination all the time, irrespective of the level and the stature, of the  

Court concerned.  And also, to deal with such litigants.

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148. We  have  no  doubt,  that  the  two  companies  and  the  present  

petitioner before this Court – Mr. Subrata Roy Sahara, are such litigants.  

They never subjected themselves to the authority and jurisdiction of the  

SEBI.  They have continued with the same mannerism at all levels, right  

upto this Court.  They have always adopted an accusing stance, before all  

the adjudicatory authorities.  Even against us.  Exhaustive details in this  

behalf  have been expressed by us,  in the order dated 31.8.2012.   The  

pleas  raised  have been  found  to  be  patently  false,  on  the  face  of  the  

record.

149. During the course of passing this judgment, we required the Registry  

of  this  Court  to place before us a compilation of  the orders  passed on  

different  dates  of  hearing,  ever  since  the  filing  of  the  appeals,  which  

culminated in passing of the order dated 31.8.2012.  We were astounded  

to learn,  that  the controversy arising out  of  Civil  Appeal  nos. 9813 and  

9833 of 2011 was listed for hearing on the following 81 dates:-

“28.11.2011,  9.1.2012, 20.1.2012,  10.2.2012, 2.3.2012,  20.3.2012,  23.3.2012,  27.3.2012,  28.3.2012,  29.3.2012,  3.4.2012,  10.4.2012,  11.4.2012, 12.4.2012, 17.4.2012, 18.4.2012, 19.4.2012, 20.4.2012,  24.4.2012,  25.4.2012,  26.4.2012,  1.5.2012,  2.5.2012,  3.5.2012,  4.5.2012,  30.5.2012,  31.5.2012,  1.6.2012,  5.6.2012,  6.6.2012,  7.6.2012,  12.6.2012,  13.6.2012,  14.6.2012,  31.8.2012,  11.9.2012,  28.9.2012,  19.10.2012,  19.11.2012,  8.1.2013,  6.2.2013,  8.2.2013,  19.2.2013,  25.2.2013,  4.4.2013,  22.4.2013,  2.5.2013,  8.5.2013,  17.7.2013,  24.7.2013,  30.7.2013,  6.8.2013,  13.8.2013,  26.8.2013,  2.9.2013, 16.9.2013, 4.10.2013, 28.10.2013, 31.10.2013, 1.11.2013,  20.11.2013,  21.11.2013,  11.12.2013,  17.12.2013,  2.1.2014,  9.1.2014,  28.1.2014,  11.2.2014,  20.2.2014,  26.2.2014,  4.3.2014,  7.3.2014,  12.3.2014,  13.3.2014,  26.3.2014,  27.3.2014,  3.4.2014,  9.4.2014, 16.4.2014, 17.4.2014 and 21.4.2014”

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A lot of these hearings consumed this Court’s full working day.  Hearing of  

the main case, consumed one full part, of the entire summer vacation (of  

the Supreme Court) of the year 2012.  For the various orders passed by  

us, including the order dated 31.8.2012 (running into 269 printed pages)  

and the present order (running into 205 printed pages), substantial Judge  

hours  were  consumed.   In  this  country,  judicial  orders  are  prepared,  

beyond Court hours, or on non-working days.  It is apparent, that not a  

hundred, but hundreds of Judge hours,  came to be spent in the instant  

single Sahara Group litigation, just at  the hands of the Supreme Court.  

This  abuse  of  the  judicial  process,  needs  to  be  remedied.   We  are,  

therefore  of  the  considered  view,  that  the  legislature  needs  to  give  a  

thought, to a very serious malady, which has made strong inroads into the  

Indian judicial system.   

150. The Indian judicial system is grossly afflicted, with frivolous litigation.  

Ways  and  means  need  to  be  evolved,  to  deter  litigants  from  their  

compulsive obsession, towards senseless and ill-considered claims.  One  

needs to keep in mind, that in the process of litigation, there is an innocent  

sufferer on the other side, of every irresponsible and senseless claim.  He  

suffers  long  drawn  anxious  periods  of  nervousness  and  restlessness,  

whilst the litigation is pending, without any fault on his part.  He pays for  

the litigation, from out of his savings (or out of his borrowings), worrying  

that the other side may trick him into defeat, for no fault of his.  He spends  

invaluable time briefing counsel and preparing them for his claim.  Time

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which he should have spent at work, or with his family, is lost, for no fault  

of his.  Should a litigant not be compensated for, what he has lost, for no  

fault?   The  suggestion  to  the  legislature  is,  that  a  litigant  who  has  

succeeded,  must  be  compensated  by  the  one,  who  has  lost.   The  

suggestion to the legislature is to formulate a mechanism, that anyone who  

initiates and continues a litigation senselessly,  pays for the same.  It  is  

suggested that the legislature should consider the introduction of a “Code  

of Compulsory Costs”.   

151. We should not be taken to have suggested, that the cost of litigation  

should  be enhanced.   It  is  not  our  suggestion,  that  Court  fee or  other  

litigation related costs,  should be raised.   Access to justice and related  

costs, should be as free and as low, as possible.  What is sought to be  

redressed is a habituation, to press illegitimate claims.  This practice and  

pattern is so rampant, that in most cases, disputes which ought to have  

been  settled  in  no  time  at  all,  before  the  first  Court  of  incidence,  are  

prolonged endlessly, for years and years, and from Court to Court, upto  

the highest Court.   

152. This  abuse of  the judicial  process is  not  limited to  any particular  

class of litigants.  The State and its agencies litigate endlessly upto the  

highest Court, just because of the lack of responsibility, to take decisions.  

So much so,  that  we have started  to  entertain  the  impression,  that  all  

administrative and executive decision making, are being left to Courts, just  

for that reason.  In private litigation as well, the concerned litigant would

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continue to approach the higher Court, despite the fact that he had lost in  

every Court hitherto before.  The effort is not to discourage a litigant, in  

whose perception, his cause is fair and legitimate.  The effort is only to  

introduce consequences, if the litigant’s perception was incorrect, and if his  

cause is found to be, not fair and legitimate, he must pay for the same.  In  

the present setting of the adjudicatory process, a litigant, no matter how  

irresponsible he is, suffers no consequences.  Every litigant, therefore likes  

to take a chance, even when counsel’s advice is otherwise.   

153. Does the concerned litigant realize, that the litigant on the other side  

has  had to  defend himself,  from Court  to  Court,  and has had to  incur  

expenses  towards  such  defence?   And  there  are  some  litigants  who  

continue to pursue senseless and ill-considered claims, to somehow or the  

other, defeat the process of law.  The present case, is a classic illustration  

of what we wish to express.  Herein the regulating authority has had to  

suffer litigation from Court to Court, incurring public expense in its defence,  

against frivolous litigation.  Every order was consistently and systematically  

disobeyed.  Every order passed by the SEBI was assailed before the next  

higher  authority,  and then before this Court.   Even though High Courts  

have no jurisdiction, in respect of issues regulated by the SEBI Act, some  

matters were taken to the High Court of Judicature at Allahabad (before its  

Lucknow Bench).  Every such endeavour resulted in failure, and was also  

sometimes,  accompanied  with  strictures.   Even  after  the  matter  had  

concluded, after the controversy had attained finality, the judicial process is

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still being abused, for close to two years.  A conscious effort on the part of  

the  legislature  in  this  behalf,  would  serve  several  purposes.   It  would,  

besides  everything  else,  reduce  frivolous  litigation.   When the  litigating  

party  understands,  that  it  would  have  to  compensate  the  party  which  

succeeds, unnecessary litigation will be substantially reduced.    At the end  

of the day, Court time lost is a direct loss to the nation.  It is about time,  

that the legislature should evolve ways and means to curtail this unmindful  

activity.   We are  sure,  that  an  eventual  determination,  one way or  the  

other, would be in the best interest of this country, as also, its countrymen.

 …………………………….J. (K.S. Radhakrishnan)

…………………………….J.           (Jagdish Singh Khehar)

New Delhi; May 6, 2014.