SECURITIESAND EXCHANGE BOARD OF INDIA(SEBI) & ANR.versusSAHARA INDIA REAL ESTATE CORPN. LTD. & ORS.

                    [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)          B
                   Nos.412-413/2012
                           and
     CP (C) No.260 of 2013 in Civil Appeal No.8643 of
                            2012
                                                               c
                       JUNE 19, 2015
   [T.5. THAKUR, ANIL R. DAVE AND A.K. SIKRI, JJ.)
      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 ofpersonal 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.

                              Case Law Reference

'             (2014) a sec 470        Referred to.         Para 15
     E        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

                                       IN

                 CIVILAPPEAL NOS. 9813 & 9833 OF 2011

     G                               AND

               CONTEMPT PETITION (CIVIL) NO. 260 OF 2013

                                       IN
     H               (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
1030         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
   33,000 crores had to be deposited.
 B
        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
           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.
 E
          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
   Nos. 59-61 of 2015 are filed praying for the following reliefs:
 D
         "(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
 E       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
 F       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
 G
         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:
                                                               D
    "(i) Allow the applicants to enter into the Definitive
    Agreement for the property situated at Gorakhpur; and

    (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
1034       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
   2015 are deferred for the time being.
 0
        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       "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
G        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
H
         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.
                                                                  c
                                        (emphasis supplied)"

     16. The Court, thus, went into this issue again permitting
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:
         "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
 H
         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
       ' of the bank guarantee is accepted, this Court ought to
  format
  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. Fumishing 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
   installment shall be of the remaining amount.
 B
        (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.




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