The sum, along with 15% interest, should be deposited in a bank in three months

The Supreme Court on Friday held that the economic offences committed by Saharas must be dealt with by an iron hand and directed the Sahara India Real Estate Corporation Ltd. (SIRECL) and the Sahara Housing Investment Corporation Ltd. (SHICL) to refund over Rs. 24,400 crore collected from 2.21 crore depositors.

The sum was collected through the optimally fully convertible debentures (OFCDs) by way of bonds.

A Bench of Justices K.S. Radhakrishnan and J.S. Khehar said they should refund the amounts collected through Red Herring Prospectus (RHPs) dated March 13, 2008 (Rs. 17,400 crore) and October 16, 2009 (over Rs. 7,000 crore), along with 15 per cent interest to the Securities and Exchange Board of India (SEBI) from the date of receipt of the subscription amount till the date of repayment, within three months.

The sum should be deposited in a nationalised bank bearing the maximum rate of interest.

The Bench directed the Saharas to give details, with supporting documents, to establish whether they had refunded any amount to persons who had subscribed through the RHPs within 10 days, and “it is for the SEBI (WTM) to examine the correctness of the details furnished.”

“We make it clear that if the documents produced by Saharas are not found genuine or acceptable … the SEBI (WTM) will proceed as if Saharas had not refunded any amount to the real and genuine subscribers who had invested money through [the] RHPs,” it said.

The court appointed the retired Supreme Court judge, B.N. Agrawal, “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. Agarwal would also oversee the entire steps adopted by the SEBI (WTM) and other officials for the effective and proper implementation of the directions issued by this court.”

In a separate judgment, Justice Khehar said: “It seems the two companies collected money from investors without any sense of responsibility to maintain records pertaining to funds received. It is not easy to overlook that the financial transactions under reference are not akin to transactions of a street hawker or a cigarette retail made from a wooden cabin. The present controversy involves contributions which approximate Rs. 40,000 crore, allegedly collected from the poor rural inhabitants of India. Despite restraint, one is compelled to record that the whole affair seems to be doubtful, dubious and questionable. Money transactions are not expected to be casual, certainly not in the manner expressed by the two companies.”

The Bench directed the Saharas to furnish the SEBI, in 10 days, with all documents, especially the application forms submitted by subscribers, the approval and allotment of bonds, to enable it to ascertain the genuineness of the subscribers as well as the amounts deposited.