In a significant development, the Supreme Court of India has formed a High-Powered Sale Committee to oversee the auction of assets in the Sai Group of Companies case. This committee will play a crucial role in managing the sale of immovable properties to settle liabilities and claims. Stay informed about this landmark legal decision involving the Sai Group of Companies.
Facts
- Multiple complaints received by SEBI against Sai Group of Companies
- Interim orders and show-cause notices issued against SPFL, SSSCL, and SPPL
- Direction to refrain from collecting money from investors and launching new schemes
- Orders against SPPL, SPFL, and SSSCL for violations and restrictions on activities
- Penalties imposed, winding up of schemes, and refund directives
- FIRs registered against the Petitioners under various Acts in multiple states
- Restrictions on accessing securities market for SPCL and its Directors
- Allegations of illegal mobilization of funds and violations of SEBI Act
- Direction to abstain from collecting money and carrying out investment schemes
- Assets of companies attached, properties auctioned, and funds to be refunded to investors
- Ongoing investigations, arrests, and bail conditions imposed on the Petitioners
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Analysis
- The parties agree that the liability of each Company can be settled from the sale proceeds of some immovable properties.
- Liquidating all assets through public auctions is complex due to various factors like property location, encumbrances, and market value.
- SEBI has auctioned some assets and agreed to form a High-Powered Sale Committee (HPSC) for auctioning remaining assets to satisfy claims and liabilities.
- The HPSC will handle the sale process, with expenses reimbursed from sale proceeds.
- The HPSC is directed to conclude the process within a year, involving experts and following legal procedures.
- A detailed process for sale, valuation, and auction of assets to be followed by the HPSC.
- States are directed to provide assistance in securing and protecting Company properties.
- Remuneration for the HPSC members and Chairperson to be determined from sale proceeds.
- SEBI to deposit sale proceeds in a separate account for refunds to investors.
- Investor claims to be invited through public notices for refund process.
- The HPSC will identify investors, determine refund amounts, and ensure a transparent refund process.
- Petitioners and Companies to submit details of assets and cooperate with HPSC for sale deeds, especially in case of disputes.
- Private guards may be deployed for property protection if needed.
- SEBI to assist HPSC in administrative setup and infrastructure.
- HPSC to have discretion in decision-making and operational matters for efficient functioning.
- In the second order dated 29 March, 2023, in the case involving Pinak Pani Mohanty v. Union of India & Ors., a High-Powered Committee was established to oversee the disbursement of Rs. 5000 crores to depositors of the Sahara Group of Co-operative Societies.
- The High-Powered Committee is led by a former Judge of the Court.
- An honorarium of Rs. 15 lakhs per month was directed to be paid to the former Judge, along with Rs. 5 lakhs per month to the amicus curiae.
- In the first order dated 4 May, 2022, in the case of National Spot Exchange Ltd. v. Union of India & Ors., a ‘Supreme Court Committee’ under a former Chief Justice of the High Court was formed to handle the sale of attached properties and distribution of sale proceeds to investors.
- The Court decided that the learned Judge would determine their own fee rather than having it fixed by the Court.
- The learned Member, a former Judge of the High Court, will be provided with additional compensation for travelling, boarding, and other miscellaneous expenses related to their assigned responsibilities.
- This compensation is in addition to any expenses incurred in carrying out their duties.
- The former Judge will receive support for expenses needed to discharge the assigned responsibilities.
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Decision
- The Chairperson of the HPSC is entitled to an honorarium of Rs. 2 lakhs per sitting day.
- States of Chhattisgarh, Maharashtra, Madhya Pradesh, Rajasthan, Uttar Pradesh, and Haryana must provide full cooperation to HPSC.
- SEBI and the Petitioners are directed to extend full cooperation to the HPSC.
- Petitioner Nos. 1 and 2 are directed to be enlarged on interim bail in Case No 7 / 2016.
- The Chairperson of the HPSC shall be entitled to an honorarium of Rs. 75 thousand per sitting day in certain circumstances.
- HPSC can seek further guidelines or clarifications as required.
- Member Secretary cum Nodal Officer of the Committee is entitled to an honorarium of Rs. 1.50 lakhs per sitting day.
Also Read: State of Kerala vs. Union of India: Fiscal Responsibility Case
Case Title: BALSAAHEB KESHAWRAO BHAPKAR Vs. SECURITIES AND EXCHANGE BOARD OF INDIA (2024 INSC 525)
Case Number: W.P.(Crl.) No.-000546 – 2023
