Mumbai: The Securities Appellate Tribunal will continue its hearing on March 26 on Sahara group chief Subrata Roy's plea against Sebi's attachment order of his bank accounts and other assets, along with those of his two firms and their top executives.
The matter relates to a Supreme Court direction ordering refund of more than Rs 24,000 crore of investors' money raised by two Sahara group firms -- Sahara India Real Estate Corp Ltd and Sahara Housing Investment Corp Ltd -- through issue of bonds, wherein Sebi has been asked to facilitate the refund.
After expiry of the court-set deadline for the refund, Sebi last month issued attachment orders against the two firms and their top executives, including Subrata Roy.
Roy had approached the SAT against the attachment orders and the plea was posted by the SAT for "final hearing" today.
After a day-long hearing here, the SAT decided to adjourn the matter till Tuesday in New Delhi.
Questioning the legality of the Sebi action of attaching Subrata Roy's property, the Sahara counsel said his client was denied natural justice as he was not issued a show-cause notice before the action and nor did Sebi follow procedure like securing an enabling order from a judicial magistrate.
The counsel also argued that the Sebi Act did not invest the market regulator with the powers of seizure and attachment and hence not getting the permission from a magistrate before attaching the properties was illegal.
The counsel said under the Sebi Act, it can act against entities only and not against any persons connected with them.
Roy is not a director of the two affected companies -- Sahara India Real Estate Corp and Sahara Housing Investment Corp- -and he does not hold 70 per cent stake in these firms as is being claimed by Sebi, the Counsel said.
Countering Sahara's claims, Sebi counsel asked the SAT officiating presiding officer PK Malhotra and Member Jog Singh to dismiss the petition as it is "making a perfect mockery of the apex court order" as the affected companies or Roy and three of his directors ever questioned the findings of the Sebi during the pendency of the petitions at the SAT or at the Supreme Court.
The Sebi Counsel said the Supreme Court order is self-explanatory and is executive in nature and that SAT is not empowered to interpret the orders of the highest court of the land.
To this SAT observed prima facie it looked like Sahara was seeking the tribunal to interpret the operative side of the February 8 order of the Suprme Court and the best place to do so is the Supreme Court itself.
However, it did allow both the parties to proceed with their arguments. SAT also observed that that there was no precedence in the country in which a Supreme Court or any other court order was executed without the affected party being heard once again and without securing an enabling warrant from a judicial magistrate.
The Sebi counsel, however, argued that the apex court is "self-operative in nature" as the Saharas were given many occasions to present their case but they did not choose to deny any of the findings of the Sebi order regarding Roy's stake in these companies nor his role in the two companies, except those relating to the OFCDs.
"If you don't protect your own interests, there will be no one to do it for you. The court passed its order based on the arguments and evidence presented. And in this case, Roy and Sahara India were given ample opportunities to defend themselves to deny our findings, which they did not do so.
"Since the SC order was self-operative and executionary in nature, we just followed that. The natural justice is only the operative and procedural side of the court order," the Sebi counsel said.
The fact that the over Rs 2,4000 crore collected by these two Sahara group companies were entered into the "day-book", and Sahara India makes it clear that the parties concerned are all related to each other and their merger document also substantiates the same, the Sebi counsel said, adding the documents submitted to the Sebi and SC clearly mention Roy holding 68 per cent stake in these companies and he is designated as CEO.
Subrata Roy's son Shumanto Roy was present at the day-long argument.