SEBI orders upheld in Sahara case, contempt proceedings for non-compliance. Judicial custody, bail conditions include property sale.

The Court upheld SEBI's orders for Sahara Companies to refund collected deposits, leading to contempt proceedings due to non-compliance. Contemnors faced judicial custody and bail conditions, including a substantial deposit and sale of properties. Despite partial success in property sales, the Court emphasized full compliance with refund obligations. The approved bank guarantee format included trigger points for encashment and strict conditions. The Court's directives aimed to ensure order compliance while considering the contemnors' liberty, upholding the rule of law, and protecting public interest.

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Issues Involved:
1. Compliance with SEBI's orders regarding refund of collected deposits.
2. Non-compliance with the Supreme Court's orders and resultant contempt proceedings.
3. Judicial custody and bail conditions for the contemnors.
4. Sale of Sahara Group properties to meet bail conditions.
5. Verification of redemption claims by SEBI.
6. Format and conditions of the bank guarantee.

Detailed Analysis:

Compliance with SEBI's Orders Regarding Refund of Collected Deposits:
The genesis of the contempt petitions lies in the judgments passed in Civil Appeal Nos. 9813 of 2011 and 9833 of 2011, where SEBI directed Sahara India Real Estate Corporation Limited (SIRECL) and Sahara Housing Investment Corporation Limited (SHICL) to refund the collected deposits along with interest at 15% per annum. SEBI found the offering of Optional Fully Convertible Debentures (OFCD) by Saharas to be legally impermissible. The High Court of Bombay dismissed the petitions of Sahara Companies and directed the refund, which was upheld by the Securities Appellate Tribunal (SAT).

Non-Compliance with Supreme Court's Orders and Resultant Contempt Proceedings:
Despite the Supreme Court's order dated 31.08.2012, which directed Saharas to deposit the collected amount with SEBI within three months, the directions were not complied with. Subsequent appeals and proposals by Saharas were found unsatisfactory, leading to the filing of contempt petitions. The Court observed a "stubborn attitude" from the contemnors, resulting in the issuance of non-bailable warrants and judicial custody for the promoters and directors.

Judicial Custody and Bail Conditions for the Contemnors:
On 04.03.2014, the Court committed three contemnors to judicial custody. On 26.03.2014, the Court passed a conditional bail order requiring the deposit of Rs. 10,000 crores-Rs. 5,000 crores in cash and Rs. 5,000 crores in the form of a bank guarantee. The contemnors failed to fully comply with these conditions, resulting in their continued judicial custody for 15 months.

Sale of Sahara Group Properties to Meet Bail Conditions:
The Court had frozen Sahara Group's assets to prevent them from being frittered away. On 04.06.2014, the Court permitted the sale of certain properties to meet bail conditions. Despite various attempts, the contemnors achieved only partial success in selling the properties. The Court noted that the value of the properties was sufficient to meet the bail conditions if sold at reasonable market prices.

Verification of Redemption Claims by SEBI:
Saharas claimed to have refunded a significant portion of the collected deposits to the investors. However, the Court found the evidence provided by Saharas unsatisfactory. The Court reiterated that the obligation to deposit the entire balance amount with SEBI must be fulfilled before any claims of redemption could be considered. The Court emphasized that the balance amount must be deposited in a time-bound manner.

Format and Conditions of the Bank Guarantee:
The Court approved the format of the bank guarantee provided by the applicants, which was accepted by SEBI and the amicus curiae. The Court specified the trigger points for encashment of the bank guarantee, including default in payment of two installments or failure to deposit the full outstanding amount within 18 months. The Court also directed the contemnors to deposit their passports and inform the police station about their whereabouts.

Conclusion:
The Court disposed of the interlocutory applications with specific directions for the deposit of the balance amount in installments, conditions for encashment of the bank guarantee, and measures to ensure compliance with the orders. The Court balanced the personal liberty of the contemnors with the need to uphold the rule of law and ensure public good.

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