SECURITIESAND EXCHANGE BOARD OF INDIA(SEBI) & ANR.  versus SAHARA INDIA REAL ESTATE CORPN. LTD. & ORS.
[2015] 7 S.C.R. 1025, Supreme Court of India, 2015
Outcome: Disposed off
Segment: Ratio
[2015] 7 S.C.R. 1025 
SECURITIESAND EXCHANGE BOARD OF INDIA(SEBI) 
A 
&ANR. 
v. 
SAHARA INDIA REAL ESTATE CORPN. LTD. & ORS. 
I.A. NOS. 59-61/2015 & I.A. NOS. 62-64/2015 INC P (C) 
Nos.412-413/2012 
and 
CP (C) No.260 of 2013 in Civil Appeal No.8643 of 
2012 
JUNE 19, 2015 
[T.5. THAKUR, ANIL R. DAVE AND A.K. SIKRI, JJ.) 
B 
c 
Contempt of Court - Sahara matters - Issuance of 
direction to Sahara Companies-Promoters and Director to D 
refund the amount collected by them for the Optional Fully 
Convertible Debentures - However, failure to deposit the 
same within the stipulated period- Contempt Petition by SEBI 
- Various opportunities given to contemnors to purge the 
contempt by depositing the amount, as directed - However, E 
non-compliance of the directions -
Three out of four 
contemnors taken to judicial custody and direction issued to 
deposit sum of Rs. 33, 0001- crores - Subsequently, grant of 
bail to the contemnors, imposing condition on them to deposit 
Rs 10,000 crores-Rs.5,000 crores in cash and balance of F 
Rs. 5, 000 crores in the form of bank guarantee of a 
nationalised bank, to be furnished in favour of SEBI -
However, non-compliance of the condition and three 
contemnors in jail for the last fifteen months -
Various G 
directions given from time to time and /A's filed- Held: Total 
liability swelled to more than Rs.36, 000 crores - Said deposit 
of Rs. 10, 000 crores was only a condition of interim bail - It is 
the bounden duty of this Court to ensure
that balance amount 
1025 
H

' 
1026 
SUPREME COURT REPORTS 
[2015] 7 S.C.R. 
A is also deposited by the applicants - Thus, it is, an 
unprecedented situation of personal liberty of three applicants 
on the one hand vis a vis majesty of law and ensuring larger 
public good, on the other hand - Therefore, orders passed 
may not be strictly construed as arising out of contempt 
B jurisdiction, but in exercise of inherent jurisdiction vested in 
this Court to do complete justice and to ensure that the 
applicants render full compliance of its orders - Bank 
guarantee format furnished by the contemnors accepted -
Contemnors granted 18 months time to deposit the balance 
C amount from the date of their release from custody subject 
to the conditions stated therein - In the event of failure to do 
so, they would be taken into custody and committed to jail. 
Subrata Roy Sahara v. Union of India & Ors. (2014) 8 
D SCC 470 -
referred to. 
E 
Case Law Reference 
(2014) a sec 470 
Referred to. 
Para 15 
CIVILAPPELLATE JURISDICTION: I. A. NOS. 59-61 OF 
2015AND I.A. NOS. 62-64 OF 2015 
IN 
F 
CONTEMPT PETITION (CIVIL) NOS.412 &413 OF 2012 
G 
H 
IN 
CIVILAPPEAL NOS. 9813 & 9833 OF 2011 
AND 
CONTEMPT PETITION (CIVIL) NO. 260 OF 2013 
IN 
(CIVILAPPEAL NO. 8643 OF 2012)
SEBI v. SAHARAINDIAREALESTATE CORPN. LTD. 
1027 
From the Judgment and Order dated 18.10.2011 of the A 
Securities Appellate Tribunal in Appeal No. 131 of 2011. 
Shekhar Naphade, Arvind Datar, Kapil Sibal, Dr. Rajiv 
Dhawan, S. Ganesh, Guru Krishna,Kumar, Shubhangi Tuli, 
Vikram Sobti, Pratap·Venugopal, Surekha Raman, Supriya B 
Jain, Gaurav Nair, Niharika (for K. J. John & Co.), Gautam 
Awasthi, Ayush Chaudhary, Abhinav Mani Tripathi, Nijam 
Pasha, Simranjeet Singh, Gautam Talukdar, Rahul Tripathi, R. 
S. YAdav, Gaurav Kejriwal, Ramesh Babu M. R., Swati Setia, 
D. L. Chidananda, Sadhana Sandhu, Anil Katiyar for the C 
appearing parties. 
The Judgment of the Court was delivered by 
A.K. SIKRI, J. 1. Before we advert to the reliefs claimed 
in these applications and announce" the outcome thereof, we D 
would like to recapitulate, very briefly, the genesis for moving 
these applications as we feel that such a recount of the previous 
events would make it easy to understand the circumstances 
under which these applications have been filed. It would also E 
provide us the course of action that is to be taken on the prayers 
made in these applications. 
2. The main proceedings with which we are concerned 
are the contempt petitions bearing Nos. 412 of 2012 and 413 F 
of 2012 in Civil Appeal Nos. 9813 of 2011 and 9833 of 2011 
as well as Contempt Petition No. 260 of 2013 in Civil Appeal 
No. 8643 of 2012. These contempt petitions filed by the 
Securities and Exchange Board of
India (for short, 'SEBI') have 
the origin in the judgments that were pronounced in the civil G 
appeals, numbers whereof are mentioned above. It so 
happened that Sahara India Real Estate Corporation Limited 
(SIRECL) and Sahara Housing Investment Corporation Liniited 
(SHICL) (hereinafter referred to as the 'Saharas') invited and 
claimed to have collected deposits from general public who, H
1028 
SUPREME COURT REPORTS 
[2015) 7 S.C.R. 
A allegedly, included cobblers, labourers, artisans, peasants etc. 
This invitation for deposit was in the form of 'Optional Fully 
Convertible Debentures' (OFCD). SEBI found that offering of 
such OFCD was not legally permissible and passed orders 
directing Saharas not to offer their equity shares/ OF CDs or 
B any other securities to the public or invite subscription in any 
manner whatsoever either directly or indirectly. The High Court 
of Bombay dismissed their petitions and directed Sahara 
Companies, in particular the promoter Mr. Subrata Roy Sahara, 
and Directors Ms. Vandana Bhargava, Mr. Ravi Shankar Dubey 
C and Mr. Ashok Roy Choudhary of Saharas to jointly and severely 
refund the amount collected by Saharas in terms of the 
aforesaid issue along with interest@ 15% per annum. It is 
pertinent to mention that on the basis of these directions of the 
D High Court, SEBI ordered that refund of the amount shall be 
made only through demand drafts or pay orders. Certain other 
directions were also issued. Aggrieved by these orders of 
SEBI, Saharas approached Securities Appellate Tribunal (for 
short, 'SAT'). SAT also declined to interfere with the view taken 
E by SEBI and directed Saharas to refund the amount collected 
from the investors within a period of six weeks. Against these 
orders of SAT, Civil Appeal Nos. 9813 of 2011 and 9833 of 
2011 were preferred by Saharas in this Court, which were finally 
disposed of by
order dated 31.08.2012. While substantially 
F maintaining the orders of SEBI and SAT, a modification was 
made in those orders with a direction to Saharas to deposit 
the amount collected by them along with interest@ 15% per 
annum with SEBI within a period of three months. The amount 
when deposited was directed to be invested in a nationalised 
G bank to earn interest. Saharas were also directed to furnish 
details with supporting documents to establish whether they 
had refunded any amount to the investors who had subscribed 
through the Red Herring Prospectus (RHP) in question. SEBI 
was then to examine the correctness of the details so furnished. 
H Failure to orove the refund of the amount by Saharas had to
SEBlv. SAHARAINDIAREALESTATECORPN. LTD. 
1029 
[A.K. SIKRI, J.] 
give rise to an inference that Saharas had not refunded the A 
amount to the real and genuine subscribers as directed by 
SEBI. 
3. Aforesaid directions were admittedly not complied with. 
Instead, another appeal, being Appeal No. 221 of2012, was . B 
preferred by Saharas before SAT which was dismissed as 
premature. Against that order, Civil Appeal No. 8643 of 2012 
was filed in this Court which was decided on 05-12-2012. The 
Saharas had produced before the Court, demand drafts for a 
total sum of 5120 crores. This Court directed them to handover C 
the same to SEBI. Further direction was given to deposit the 
balance amount of 17,400 crores together with interest@ 15% 
per annum with SEBI in two installments. First installment of 
10,000 crores was to be deposited with SEBI by first week of 
January, 2013 and balance amount, along with interest, was D 
to be deposited by first week of February, 2013. However, the 
balance amount or the interest payable, as per the installments, 
was not deposited though it was to be deposited by January/ 
February, 2013. It resulted in filing of the contempt petitions, 
which are the main proceedings at hand. In these contempt E 
petitions various opportunities were given to the contemnors 
to purge the contempt by depositing the.amount, as directed. 
The record shows that at various stages the contemnors gave 
the proposals for compliance with the directions which were F
explored from time to time, but eventually all these proposals 
were found to be unsatisfactory, yielding no tangible results. 
This was perceived as stubborn attitude of the contemnors 
with sole intent to drag on the matter endlessly without 
complying with the orders. This attitude of the contemnors G 
forced thi~. Court to issue non-bailable warrants against Mr. 
Subrata Roy Sahara for his production and directing personal 
presence of the other three Directors in the Court on the date 
fixed. On 04.03.2014, when the matter was listed, and during 
the hearing as it transpired that no acceptable proposal was H
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SUPREME COURT REPORTS 
[2015] 7 S.C.R. 
A forthcoming to comply with the directions, the Court was left 
with no option except to commit the three out of four contemnors 
to judicial custody. We would like to mention that by that time, 
after including the interest which had accumulated, a sum of 
B 
33,000 crores had to be deposited. 
4. The matter came up for hearing on 26.03.2014 again 
and the three contemnors committed to judicial custody prayed 
for grant of bail on that day. The Court passed conditional order 
of bail on that day. The condition was that the contemnors 
C deposit 10,000 crores - 5000 crores in cash and balance of 
5000 crores in the form of bank guarantee of a nationalised 
bank, to be furnished in favour of SEBI. It was specifically 
directed that upon compliance with these conditions the 
contemnors would be released from the custody. 
D 
E 
5. Till date there is no full compliance of the aforesaid 
condition for grant of interim bail, with the result the three 
contemnors are still in judicial custody and 15 months have 
passed thereby. 
6. We would like to point out at this stage that by orders 
dated 21.11.2013 passed by this Court the assets of Sahara 
Group of Companies were frozen, to ensure that the 
contemnors do not fritter away these assets without complying 
F with the directions of this Court passed in the Civil Appeals. 
However, on the request made by Sahara Group for lifting the 
embargo on certain properties in order to enable
the Saharas 
to sell those properties so that the interim bail conditions are 
fulfilled, on 04.06.2014, this Court permitted various Sahara 
G Group Companies to deal with/sell some of their assets, but 
only for the purpose of complying with the order dated 
26.03.2014 with further condition that whatever amount is 
realized by the sale of the said assets, same shall be deposited 
into the SEBI -'Sahara Refund Account and for providing the 
H requisite bank guarantee in favour of SEBI in the sum of 5000
SEBI v. SAHARA INDIA REAL ESTATE CORPN. LTD. 
1031 
[A.K. SIKRI, J.] 
crores, as per the directions. Though this liberty was granted A 
to Saharas one year ago and some other directions were given 
from time to time providing various facilities to the three , 
contemnors in judicial custody felicitating contacts and 
dialogue/interaction with the prospective buyers for clinching 
of deals, the contemnors have been able to achieve only a B 
partial success. They have mooted various proposals for the 
sale of these properties. However, major propqsals run into 
rough weather, hitting one or the other kind of road block and 
had to be terminated midday. We would like to point out that 
the embar90 which was lifted in respect of certain properties, C 
the value thereof as per the books of accounts is in several 
thousand crores and had the Sahara group succeeded in 
selling even few of these properties, bail conditions would have 
been met long ago. Thus, insofar as this Court is concerned it 0 
gave all necessary stimulus to enable the applicants to sell the 
assets, that too at reasonable market Rrice. If, the contemnors 
have still not been able to achieve the required target, it is 
either because of the reason that the efforts made by the 
contemnors as well as other officers of Sahara group in raising E 
money from the sale/encumbrance of these properties were 
not adequate or it was their ill-luck or it is the market conditions 
which have to be blamed. Fact remains that
by order dated 
26.03.2014, this Court had granted bail, albeit with certain 
conditions. However, it is the contemnors who have not been F 
able to fulfil those conditions for one reason or the other. 
7. During this period, certain properties have been sold 
and the amount realised therefrom stands deposited in the 
SEBI - Sahara Refund Account. Things have come to a stage G 
where, according to the applicants, they are at the verge of 
fulfiling the conditions imposed by the orders dated 
26.03.2014. It is mentioned that they have certain buyers for 
some of the properties and the sale proceeds therefrom Vvould 
meet the deficit. It is also stated that the contemnors have H
1032 
SUPREME COURT REPORTS 
[2015] 7 S.C.R. 
A been able to negotiate with a nationalised bank, through two 
of its Sahara group companies and the said bank has agreed 
to furnish the required bank guarantee. The format of the bank 
guarantee is also produced at the time of hearing for the 
approval of the Court, so that the guarantee is given in the 
B said format, if approved. 
8. Assets of various companies of Sahara group have 
been frozen. ·According to the applicants, by reason of the 
said freeze the financial and liquidity position of various Sahara 
C group companies has been adversely affected and it has also 
resulted into mounting liabilities in the form of statutory 
liabilities, unpaid salary and wages, outstanding and overdue 
amounts payable to banks, etc. Because of this reason, IA 
D 
E 
F 
G 
Nos. 59-61 of 2015 are filed praying for the following reliefs: 
"(i) allow the Sahara Group Companies to meet their 
respective statutory and other liabilities as enumerated in 
this application under such terms and condition as this 
Court may deem proper along with the compliance of the 
order dated 26.03.2014 passed by this Hon'ble Court; 
(ii) permit the Sahara Group Companies to utilize the 
balance, if any, of the proceeds obtained from the sale/ 
encumbrance of assets which has been specifically 
permitted by this Hon'ble Court that remains after 
complying with the order dated 26.03.2014 passed by this 
Hon'ble Court for the purpose of meeting the
liabilities 
enumerated in this application; and 
(iii) For such further and other orders and directions as 
may appear just, necessary and appropriate to this 
Hon'ble Court, in the circumstances of the case." 
9. Insofar as permission to sell certain properties of 
H Sahara group is concerned, it was subject to certain conditions 
as indicated above and one of the conditions was that sale
SEBI v. SAHARAINDIAREAL ESTATE CORPN. LTD. 
1033 
[A.K. SIKRI, J.] 
must not be for a price lower than 5% of the estimated value A 
for such a property. The applicants state that in respect of one 
such property at Gorakhpur, Uttar Pradesh, they have been 
able to find a purchaser who is ready to step into the shoes of 
the applicants for development/ maintenance of the said 
property. MOU with the said party has already been entered B 
into, which is placed on record. It is pointed out, however, that 
the price being offered is 64 crores. The price offered is 
lower than 5% of the estimated value. However, according to 
the applicants, due to the depressed real estate market, the 
present estimated market value of the ~aid property is 53.70 C 
crores, as per the valuation report received. This value is 
calculated on the basis of circle rate of the project land. On 
that basis, IA Nos. 62-64 of 2015 are filed with the following 
prayers: 
"(i) Allow the applicants to enter into the Definitive 
Agreement for the property situated at Gorakhpur; and 
D 
(ii) pass such further or other orders as this Hon'ble Court 
may deem fit and proper in the facts and circumstances E 
of the present case." 
10. Insofar as the aforesaid prayer (i) in IA Nos. 62-64 of 
2015 is concerned, having regard to the reasons mentioned 
in paras 4 and 5 of the application, which are stated in brief F 
above, and the fact that the MOU is entered for an area of 
undeveloped land of 45. 71 acres out of
the total land area of 
146 acres, coupled with the factthatthere is slump in the real 
estate market, we allow the applicants to enter into Definitive 
Agreement, making it clear that the entire amount from the G 
aforesaid deal shall be deposited in SEBl-Sahara Refund 
Account after adjusting transaction cost and taxes. 
11. Insofar as prayers (i) and (ii) contained in IA Nos. 59-
61 of2015 are concerned, we are of the opinion thatthe stage H
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SUPREME COURT REPORTS 
[2015] 7 S.C.R. 
A for making such prayers has not ripened as yet. The Sahara 
group companies want to meet their statutory and other 
liabilities from the surplus that would be available after 
complying with order dated 26.03.2014. As soon as there is 
a compliance with the said order, this Court shall consider at 
B that stage the availability of the surplus funds along with other 
factors and then pass appropriate orders on these applications. 
It is necessary to mention that even after order dated 
26.03.2014 is complied with, there is a huge deficit in the form 
of balance amount that would still be required to be deposited 
C by the applicants/contemnors in order to comply with the 
directions contained in the orders dated 31.08.2012 and 
05.12.2012 passed by this Court in the civil appeals. 
Therefore, orders on the prayers made in IA Nos. 59-61 of 
0 2015 are deferred for the time being. 
12. Coming to the format of the guarantee given by the 
applicants, on which the applicants want seal of approval from 
this Court in order to enable them to submit the requisite bank 
guarantee, we would like to reproduce the same, which reads 
E as follows: 
"GUARANTEE 
We 
Bank, a scheduled Bank within.the 
F 
meaning of the Banking Regulation Act, and having our 
office at 
do hereby grant and issue this 
unconditional and irrevocable guarantee of Rs.5000 
crores (rupees five thousand corres) in favour of Securities 
and Exchange Board of India
(SEBI) at the request made 
G 
by Amby Valley (Mauritius) Ltd. on behalf of Sahara India 
Real Estate Corporation Ltd. and Sahara Housing 
Investment Corporation Ltd., in compliance with the order 
of the Hon'ble Supreme Court of India dated 261h March 
2014. 
.. 
H
SEBlv. SAHARAINDIAREALESTATECORPN. LTD. 
1035 
[A.K. SIKRI, J.] 
We hereby guarantee that on the demand in writing made A 
by SEBI, we shall, without demur, pay the amount 
demanded upto the maximum amount of Rupees Five 
Thousand Crores. 
This guarantee shall remain in force initially for a period s 
of six months and shall be extended for further periods of 
six months at the time, until SEBI otherwise directs 
pursuant to the order of Hon'ble Supreme Court." 
13. SEBI has given its nod to the aforesai~ format. c 
Likewise, Mr. Shekhar Naphade, learned amicus appointed 
by this Court, has made a statement that the guarantee to be 
furnished in the aforesaid format may be accepted. At the 
same time, Mr. Arvind Datar, learned senior counsel appearing 
for SEBI, as well as Mr. Naphade were very em'phatic in o 
pointing out that this Court should indicate in its order as to 
what should be the trigger point for encashing the bank 
guarantee. In other words, it was their submission that insofar 
as balance amount payable by the applicants/con~emnors is 
concerned, this Court may give some specified time to them E 
for this purpose and on the contemnors/applicants failure to 
deposit the balance amount, with accrued interest with SEBI, 
SEBI should be allowed to encash the bank guarantee in 
question. 
F 
14. M/s. Kapil Sibal, Rajeev Dhawan and S. Ganesh, 
learned senior counsel appearing for the applicants, on the 
other hand, submitted that it is not necessary to go into this
aspect at this stage. They pointed out that last para of the 
bank guarantee categorically mentions that the guarantee is G 
to remain in force 'until SEBI otherwise directs, pursuant to 
the orders of the Hon'ble Court' and, thus, this Court can direct 
at any stage as at what point of time the bank guarantee is to 
be en cashed. Their argument was that the applicants have 
refunded almost 16,000 crores to the investors and voluminous H
1036 
SUPREME COURT REPORTS 
[2015] 7 S.C.R. 
A record of documents in support thereof has already been 
handed over to SEBI. It is for the SEBI to verify the same and 
inform as to what would be the balance amount payable after 
adjustment of the amounts already paid to the investors and to 
the extent it is found to be genuine, the same be refunded. 
B They submitted that it is SEBI which is not fulfilling its part of 
obligation by going into the verification of those documents, 
for which applicants cannot be blamed or prejudiced. 
15. Since this aspect was hotly debated at the Bar, we 
C have gone into the same in some depth and detail. We find 
that the issue of refund of 17,000 crores approximately to the 
depositors has been raked up by the contemnors/applicants 
time and again, but to their dismay, this Court has not accepted 
their plea to this effect, so far. In the writ petition (Writ Petition. 
D (Criminal) No. 57 of 2014, titled Subrata Roy Sahara v. Union 
oflndia & Ors. 16), this very plea of exempting the applicants 
from depositing the amount already redeemed by them was 
considered at length and rejected. In the said judgment, the 
Court took note of and expressed its opinion on this aspect at 
E various places. In para 55 of the judgment, the Court observed 
that such a plea was not accepted even earlier by a three Judge 
Bench while disposing of Civil Appeal No. 8643 of 2012 vide 
order dated 05.12.2012, in the following manner: 
F 
G 
H 
"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 companies that they should be exempted from 
depositing the amount already redeemed by them. The
SEBI v. SAHARAINDIAREALESTATE CORPN. LTD. 
1037 
[A.K. SIKRI, J.] 
above contention advanced by the two companies was A 
not accepted, by the three Judge Division Bench, when it 
disposed of Civil Appeal No. 8643 of 2012 (and Writ 
Petition (Civil) No. 527of2012) by order dated 5.12.2012. 
It is, therefore, apparent that the instant defence of having 
already redeemed most of the OF CD's was not open to B 
the two companies (and even the contemnors). Yet, so 
as to ensure that no injustice was 1one, we permitted the 
two companies to place material on the record of this case 
to substantite the factum of redemption. 
(emphasis supplied)" 
16. The Court, thus, went into this issue again permitting 
c 
the two companies to place requisite material on record to 
substantiate the factum of redemption and took into D 
consideration whatever material was placed on record. 
However, it refused to accept the plea of the two companies, 
which is clear from the following discussion in paras 86 and 
108 of the said judgment: 
"When asked how disbursements were made to the E 
investors, the response was that 95% of th~ payments 
made to the investors were also made by way of cash, 
the learned Senior Counsel representing the Contemnors 
(including the petitioner herein) invited our attention to the 
F 
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 
heading IX: "A few words
about the defence of redemption 
of OFCDs offered by the two Companies". The above G 
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 H
1038 
SUPREME COURT REPORTS 
[2015] 7 S.C.R. 
A 
explanation tendered on behalf of the two Companies." 
17. The Court further found that in order dated 05.12.2012 
in Civil Appeal No. 8643of2012, balance amount of 17,400 
crores, together with interest @ 15% per annum, was still 
B payable even after the deposit of 5,120 crores. It further 
mentioned that this figure has swelled up to 36,608 crores. 
Thereafter, the position was concluded in para 154 as under: 
, 
"Therefore, viewed from any angle, there is no substance 
c 
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 31.08.2012 and 05.12.2012, the 
o 
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)." 
18. The aforesaid discussion clinchingly shows, without 
E any cavil.of doubt, that the contemnors/applicants have failed 
to give satisfactory proof of redemption of 17,400 crores by 
SIRECL and 5,442 crores for SHICL. 
19. Mr. Sibal, however, drew our attention to certain lines 
F appearing in paragraph 154 of the same judgment and 
submitted that it is still open to the applicants to demonstrate 
that the aforesaid amount is redeemed to the depositors and 
virtually nothing more is payable. This window which was still
kept open by the Court in the said paragraph is in the following 
G form: 
H 
"154. " ..... Be that as it may, we have still retained a safety 
valve, inasmuch as, SEBI has been directed to examine 
the authenticity of the documents produced by the two 
Companies, and in case SEBI finds that redemptions have 
actually been made, the two Companies will be refunded
SEBI v. SAHARA INDIA REAL ESTATE CORPN. LTD. 
1039 
[A.K. SIKRI, J.] 
the amounts, equal to the redemptions found to have been A 
genuinely made." 
20. No doubt, this much scope is still left for Sahara group. 
Fact remains that a definite course of action that is to be 
chartered is also laid down, namely, in the first instance it is B 
obligatory on the part of the contemnors/applicants to deposit 
the entire balance amount along with interest accrued thereon 
in the SEBl-Sahara Refund Account. This obligation has to 
be performed in all circumstances. It is only thereafter, if and 
when the applicants are able to substantiate the factum of C 
redemption, they would be entitled to refund of the said amount 
to the extent they are able to prove in this behalf. Therefore, at 
this stage, one thing which is more than apparent is that after 
, the conditions for interim bail stipulated in order dated 
26.03.2014 are f1 1lfilled and pursuant thereto the three D 
contemnors who are in judicial custody are released, the 
obligation or liability to deposit the balance would still remain. 
We may remind the contemnors that as per directions dated 
05.12.2012, this amount was to be deposited in two 
installments, first installment by the first week of January 2013 E 
and the second by the first week of February 2013,. Therefore, 
it would be essential for the applicants/contemnors to not only 
to deposit the balance amount in a time bound schedule but 
also the manner on which they
propose to muster the said F 
amount. This cannot go on endlessly. 
21. We are conscious of the fact that three persons are 
under confinement for the last fifteen months. The 
circumstances under which orders dated 04.03.2014 were 
passed taking these persons into custody and sending them G 
to jail are well known. This court was virtually compelled to do 
so, going by the stubborn attitude of the contemnors in taking 
the orders dated 31.08.2012 and 05.12.2012 for granted, as 
if those orders were only on papers and W€re not meant to be H 
complied with. So many opportunities were given, showing
1040 
SUPREME COURT REPORTS 
[2015] 7 S.C.R. 
A all that leniency which could be extended, to enable the 
contemnors to comply with those directions. It is only when 
the Court felt that unless some drastic action is taken there will 
be no desired effect, that this extreme step was taken. However, 
this step was taken in good faith to uphold the rule of law and 
B to ensure that dignity of this Court is maintained and there is 
faithful compliance with its directions. The contemnors, instead 
of taking steps to follow and fulfil the directions, started making 
hue and cry. Still, in the application filed immediately thereafter 
for release, this Court showed desired compassion and 
C empathy by passing orders dated 26.03.2014, thereby paving 
a way for grant of interim bail. It was, however, with a legitimate 
condition that out of almost~ 33,000 crores that had become 
due by thattime, the contemn ors deposit at least 10, 000 crores, 
D that too with relaxed provision of deposit of 50% thereof by 
means of bank guarantee only. There was a genuine hope 
that for the sake of attaining their own freedom, the contemnors 
shall at least comply with this direction immediately. Since 
then, though there have been attempts on the part of the 
E contemnors to do the needful, but all in vain. This is 
notwithstanding the fact that insofar as this Court is concerned, 
it has shown and extended all support in the form of giving 
desired facilities in jail; lifting the attachments in
respect of 
those properties chosen by the applicants themselves, for sale/ 
F encumbrances etc.; allowing these applicants to accept the 
offer of lesser amount than the book value of a particular asset, 
going by the fact that these were akin to distress sales in a 
depressed real estate market. May be the applicants now 
see the light at the end of the tunnel as it is projected that the 
G Sahara companies has finally found the buyers for certain 
assets and/or financers who are ready to provide the requisite 
finance against some of the Sahara Companies properties 
and that would bridge the gap insofar as conditions of interim 
bail are concerned. However, as mentioned above, the matter 
H does not rest with the deposit of~ 5,000 crores and~ 5,000
SEBI v. SAHARAINDIAREALESTATECORPN. LTD. 
1041 
[A.K. SIKRI, J.] 
crores by way of bank guarantee. Total liability has swelled to A 
more than~ 36,000 crores. The aforesaid deposit of~ 10,000 
crores is only a condition of interim bail. It is the bounden duty 
of this Court to ensure that balance amount is also deposited 
by the applicants. 
B 
22. This Court feels concerned with the fact that three 
persons are deprived of their liberty for the last fifteen months 
and this situation is quite onerous to them. On the other hand, 
public interest as well as public good demands that the two 
Sahara Companies, which had collected whopping amount of C 
more than~ 22,000 crores from the public in an illegal and 
unauthorised manner, are made accountable for the same in 
the manner it is directed vide orders dated 31.08.2012 and 
05.12.2012. By any yardstick, this is a huge liability, which the 
contemnors are bound to discharge by depositing the same D 
with SEBI. It is, thus, an unprecedented situation of personal 
liberty of the three applicants on the one hand vis a vis majesty 
of law and ensuring larger public good, on the other hand. It is 
this sense of justice, in an unprecedented kind of situation, 
that has compelled the Court to take such an extreme step. It E 
is this legal realism which has compelled the Court to adopt 
an approach which sounds more pragmatic. It is "doing what 
comes naturally" approach to the problem at hand, which 
required such a drastic step,
going by the experience of this F 
case, giving rise to 'Reflection' that provided 'Understanding'. 
This case is a burning example where the true dictate of justice 
is difficult to discern, and the law needed to come down on the 
side of practical convenience. We may borrow the 
jurisprudential theory propounded by Ronald Dworkin, albeit G 
in somewhat different context, viz. the "conventional 
jurisprudential wisdom" which holds that in certain cases of a 
particularly complex or novel character the law does not provide 
a definite answer. In denying that judges in hard cases have a 
discretion to determine what the law is, Dworkin has instead H
1042 
SUPREME COURT REPORTS 
[2015) 7 S.C.R. 
A argued for the judicial use of public standards or principles in 
a way that is capable of providing the right legal answer. The 
process of reaching a right answer in hard cases obviously 
differs from the process of reaching the legal answer in easy 
cases. After all, the avowed objective of rule of law is also to 
B ensure that the orders of this Court are respected and obeyed. 
Therefore, its a classic case where the approach adopted is 
influenced by the necessity of "making the law work". Therefore, 
the orders passed may not be strictly construed as arising out 
of contempt jurisdiction, but in exerc!se of inherent jurisdiction 
C vested in this Court to do complete justice in the matter and to 
ensure that the applicarys render full compliance of its orders .. 
It's the unprecedented situation which has led to passing of 
unprecedented, but justifiable, orders. 
D 
23. This Court is not powerless as it can always direct 
selling the properties of the Sahara Companies to ensure 
recovery of the aforesaid amount as the value of those 
properties is stated to be much higher. However, it is not done 
so far pursuant to the wishes of the applicants who have 
E pleaded against the sale of these properties by the Court with 
repeated assurances that these companies would be taking 
necessary steps for generating the desired finances and the 
Court has accepted their request and given them opportunities 
F and chances to do so.
24. Shri Datar, Senior Counsel for SEBI and Shri Naphade, 
Amicus Curiae contended and in our view rightly so, that if the 
' 
format of the bank guarantee is accepted, this Court ought to 
indicate the circumstances in which the SEBI can seek 
G encashment of the said guarantee. It was argued that the Bar.k 
Guarantee as furnished by the contemnors did not indicate a 
trigger point for encashment which ought to be suitably 
mentioned and entered either in the guarantee or in the order 
H of this Court. It was further argued that release of the 
contemnors from the custody even after deposit of a sum of
SEBI v. SAHARA INDIA REAL ESTATE CORPN. LTD. 
1043 
[A.K. SIKRI, J.] 
Rs.5000 crores and a bank guarantee of Rs.5000 crores A 
pursuant to the order of this Court was meant only to enable 
them to deposit the balance amount. It was submitted that in 
case the contemnors comply with the conditions for release 
from custody, the next thing they must do is to compiy with the 
directions regarding deposit of the balance amount. This B 
Court, it was argued, should not only direct the deposit of 
balance amount but provide for th~J;onsequences in default 
of such deposits. 
The bank guarantee format d6es not provide for a trigger c 
point for its encashment. F umishing the bank guarantee without 
stipulating the situations in which the.guarantee shall become 
encashable, will be meaningless. The Bank guarantee is 
actually meant to ensure that the entire amount is deposited 
by the contemnors once they are released from custody. That D 
is because the liability to deposit the amount .does not get 
obliterated by furnishing the bank guarantee which is intended 
to grant release of the contemnors from custody to enable them 
to comply with the orders passed by this Court. We have in 
that view examined several options that may provide for a E 
trigger point for encashment. We are of the view that since 
most of the properties owned by Sahara group remain frozen 
by the order of this Court, the contemnors require time to 
enable them to deposit the balance oUtstanding. In case the
bank guarantee is made encashable on default, the trigger F 
point for encashment would be the default by the contemnors 
in depositing the balance amount in terms of the directions 
that we propose to issue. It is in that spirit that we accept the 
bank guarantee format furnished by the contemnors and grant 
to them time to deposit the balance amount that remains to be G 
~eposited subject to the following conditions: 
(1) Keeping in view the total liability which according to 
SEBI, has risen to Rs.36,000 crores (approximately), the 
contemnors shall deposit the balanee outstanding amount · H
1044 
SUPREME COURT REPORTS 
[2015) 7 S.C.R. 
A within. a period of 18 months commencing from the date of 
their· release from custody in nine installments. First eight 
installments shall be of Rs.3,000 crores payable every two 
months from the date of their release from custody and last 
B 
installment shall be of the remaining amount. 
(2) In the event of the default in payment of two instalments 
(not necessarily consecutive) the bank guarantee furnished by 
the contemnors pursuant to the order of this Court shall be 
encashed by SEBI and the amount so received counted 
C towards part compliance with the earlier directions given by 
this Court. 
(3) The bank guarantee shall also be encashable in the 
event of failure of the contemnors to deposit the full amount 
o outstanding against them within a period of 18 months 
commencing from the date of their release. 
( 4) In the event of failure of the contemn ors to deposit three 
instalments (not necessarily consecutive), the contemnors shall 
E surrender back to custody and in case they fail to do so, they 
shall be taken into custody and committed to jail. 
(5) Since only some of the properties have been released 
by this Court for sale by the contemnors, the contemnors shall 
F be free to apply for permission to sell any further property within 
15 days from their release in order to enable them to raise 
funds for deposit of the required amount in terms of the order 
of this Court. 
(6) Keeping in view the fact that a
large amount remains 
G to be deposited by the contemnors, we direct the contemnors 
to deposit their passports in this Court within 15 days from the 
date of this order or before their release, whichever is earlier. 
They shall not leave the country without prior permission of 
H this Court. Insofar as their movements within the country are 
concerned, they shall keep police station Tilak Marg, New Delhi

SEBI v. SAHARAINDIAREALESTATE CORPN. LTD. 
1045 
[A.K. SIKRI, J.] 
informed and updated about their whereabouts every fortnight. A 
25) The Interlocutory Applications stand disposed of on 
the aforesaid terms. 
NidhiJain 
I.As disposed of. 
,, I"'