{"id":326674,"date":"2024-07-16T17:00:36","date_gmt":"2024-07-16T11:30:36","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=326674"},"modified":"2024-07-23T16:19:11","modified_gmt":"2024-07-23T10:49:11","slug":"justice-s-ravindra-bhat-satish-chandra-sale-committee-auction-assets-company-liable-4700-crores","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2024\/07\/16\/justice-s-ravindra-bhat-satish-chandra-sale-committee-auction-assets-company-liable-4700-crores\/","title":{"rendered":"Supreme Court forms Committee of Justices S Ravindra Bhat, Satish Chandra to auction assets of Company liable to refund Rs. 4,700 crores"},"content":{"rendered":"<div style=\"text-align: justify; line-height: 150%;\">\n<p style=\"margin-bottom: 3%;\"><span style=\"font-weight: bold;\">Supreme Court:<\/span> In a criminal writ petition seeking issuance of writ of mandamus or any direction directing the Securities and Exchange Board of India (&#8216;SEBI&#8217;) to liquidate the attached assets within a period of six months, the Division Bench of <span style=\"font-weight: bold;\">Surya Kant<\/span> and KV Viswanathan, JJ. constituted a high-powered sale committee comprising of Justice S. Ravindra Bhat, Former Judge, Supreme Court of India, as Chairperson and Dr. Justice Satish Chandra, Former Judge, High Court of Allahabad as Member to oversee auction of assets of a company undergoing liquidation liable to refund Rs. 4700 crores to investors and against liabilities.<\/p>\n<p style=\"font-weight: bold;\">Background<\/p>\n<p style=\"margin-bottom: 3%;\">The present petition was filed by husband, wife and their son who are Directors (&#8216;Directors&#8217;) of Sai Prasad Properties Ltd, incorporated under the provisions of the <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-9000055985\" target=\"_blank\" rel=\"noopener\">Companies Act, 1956<\/a>. The petitioners also floated various other companies, known as the Sai Group of Companies, consisting of Sai Prasad Properties Ltd. (&#8216;SPPL&#8217;); Sai Prasad Foods Ltd. (&#8216;SPFL&#8217;); Sai Prasad Corporation Ltd. (&#8216;SPCL&#8217;); and Shree Sai Space Creations Ltd. (&#8216;SSSCL&#8217;). The SEBI received a complaint alleging illegal mobilisation of funds by SPFL. An interim order-cum-show cause notice dated 17-07-2013, inter alia, directing SPFL and its Directors to refrain from collecting any more money from investors, under the existing schemes or any new schemes. Another order dated 14-01-2015 was passed by SEBI against SPFL and its promotors\/Directors, restraining them from collecting any money from the investors, launching or carrying out any new schemes, and from alienating or selling any of the assets of the Company, except for the purpose of refund to its investors.<\/p>\n<p style=\"margin-bottom: 3%;\">The Registrar of Companies, informed SEBI that SPPL had been accepting investments from their associates for a period of 4 to 9 years and had also been executing joint venture agreements. SPCL and its sister concerns, were also alleged of collecting money from the public, through the Collective Investment Schemes. Income Tax Department also complained of collection of money from the public by Sai Prasad Group, to the tune of Rs. 290 crores.<\/p>\n<p style=\"margin-bottom: 3%;\">Subsequently, penalties were imposed. Recovery proceedings for a sum of Rs. 30,561,041,451.69 (Three Thousand and Fifty-Six Crores approximately) were initiated and all the immovable properties and jewelleries owned by the companies were attached, including those permitted to be auctioned by the Maharashtra Protection of Interest of Depositors (&#8216;MPID Court&#8217;).<\/p>\n<p style=\"margin-bottom: 3%;\">Through the present petition, petitioners sought a direction to SEBI to liquidate the attached assets in a time-bound manner and disburse the sale proceeds to genuine investors as early as possible.<\/p>\n<p style=\"font-weight: bold;\">Constitution of a High-Powered Sale Committee<\/p>\n<p style=\"margin-bottom: 3%;\">SEBI had already liquidated the assets and generated funds to satisfy the claims of investors, through auction of some of the assets. The SEBI agreed to <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002726967\" target=\"_blank\" rel=\"noopener\">constitution<\/a> of a High-Powered Sale Committee (&#8216;HPSC&#8217;) to auction the immovable assets of the companies.<\/p>\n<p style=\"margin-bottom: 3%;\">Invoking the powers under Article <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0001574873\" target=\"_blank\" rel=\"noopener\">142<\/a> of the <a href=\"https:\/\/www.scconline.com\/DocumentLink.aspx?q=JTXT-0002726967\" target=\"_blank\" rel=\"noopener\">Constitution of India<\/a>, so as to do complete justice between the parties, the Court constituted the HPSC comprising of Justice S. Ravindra Bhat, Former Judge, Supreme Court of India, as Chairperson; Dr. Justice Satish Chandra, Former Judge, High Court of Allahabad as Member; A nominee of SEBI who shall be an officer preferably in the rank of its Director as Member. The States of Chhattisgarh, Maharashtra, Madhya Pradesh, Rajasthan, Uttar Pradesh and Haryana were directed to appoint one of their officers of the Revenue Department, not below the rank of Collector, to assist the HPSC in relation to the properties situated within that State. The Collector shall be obligated to provide the requisite information, in writing, and shall sign the proceedings as State Representative. The Court also elucidated the manner in which the HSPC will auction the assets and accommodate the sale proceeds in a dedicated account.<\/p>\n<p style=\"margin-bottom: 3%;\">Regarding the process of refund, the Court said that the HPSC shall identify the number of investors and database of such investors, in consultation with all the concerned agencies \/ State Representatives and, if so required, the Representatives of the Companies and also determine the amount to be refunded to each investor. The HPSC shall determine a threshold recovery limit beyond which the refund process can be started. Further, the HPSC shall open an Escrow Account with a bank designated by SEBI, transfer all amounts from the account monitored presently by the MPID Court, Mumbai, and deposit all sale proceeds in that interest-bearing account. The Investor&#8217;s claims shall be invited through a public notice that shall be widely publicized in one English newspaper and in one vernacular newspaper, popular in the State.<\/p>\n<p style=\"margin-bottom: 3%;\">The Court also defined the obligations of the petitioners\/ Directors as to submission of details of all the immovable assets\/jewellery items to the HPSC and shall also handover original title deeds or other relevant documents as may be in their possession. The petitioners and their Companies shall execute the necessary sale deeds within the time frame and as per the instructions of the HPSC after the sale is confirmed and the full consideration is received in the bank account to be operated by HPSC.<\/p>\n<p style=\"font-weight: bold;\">Honorarium<\/p>\n<p style=\"margin-bottom: 3%;\">Further, the Court said that the Chairperson of the HPSC, Justice S. Ravindra Bhat shall be entitled to an honorarium of Rs. 2 lakhs per sitting day, in addition to travelling, boarding and other miscellaneous expenses as may be incurred in discharging the assigned responsibilities. The Member, Dr. Justice Satish Chandra shall be entitled to an honorarium of Rs. 1.50 lakhs per sitting day. The Member nominated by SEBI shall not be entitled to any remuneration&mdash;&#8212;since he is a full-time officer of SEBI. The Member Secretary cum Nodal Officer of the Committee shall be entitled to an honorarium of Rs. 75 thousand per sitting day, when effective proceedings are held.<\/p>\n<p style=\"margin-bottom: 3%;\">To facilitate the sale and disbursement process and keeping in mind the period of incarceration already undergone by the husband-wife Director duo, they were directed to be enlarged on interim bail to the satisfaction of the MPID Court, Mumbai.<\/p>\n<p><!--\n\n<p style=\"margin-bottom: 3%;\">[<span style=\"font-weight: bold; color: #632423;\">Balasaheb Keshawrao Bhapkar v. Securities and Exchange Board of India, Writ Petition (Criminal) No. 546 of 2023, Decided on: 15-07-2024<\/span>]<\/p>\n\n--><\/p>\n<div style=\"text-overflow: ellipsis; background-color: #92A8D1; text-align:justify; clear:both; text-size-adjust: auto; overflow: auto;\">\n<p style=\"font-size: 18pt; margin-top: 5px; text-align: center;\">CASE DETAILS<\/p>\n<table width=\"100%\" style=\"word-wrap: break-word; border-collapse:collapse; table-layout: fixed; margin-top: 10px;\">\n<colgroup>\n<col width=\"41%\"\/>\n<col width=\"59%\"\/>\n<\/colgroup>\n<tbody>\n<tr>\n<td valign=\"top\">\n<p><span style=\"color: #D4E4F7; font-weight: bold;\">Citation:<\/span><br \/> <span style=\"color: #D4E4F7; font-size: 10pt;\"><a href=\"http:\/\/www.scconline.com\/DocumentLink\/kb9n129D\" target=\"_blank\" rel=\"noopener\">2024 SCC OnLine SC 1713<\/a><\/span><\/p>\n<p><span style=\"color: #D4E4F7; font-weight: bold;\">Appellants&#160;:<\/span><br \/> Balasaheb Keshawrao Bhapkar<\/p>\n<p><span style=\"color: #D4E4F7; font-weight: bold;\">Respondents&#160;:<\/span><br \/> Securities and Exchange Board of India<\/p>\n<\/td>\n<td valign=\"top\">\n<p style=\"color: #D4E4F7; font-weight: bold;\">Advocates who appeared in this case<\/p>\n<p><span style=\"color: #D4E4F7; font-weight: bold;\">For Petitioner(s):<\/span> <\/p>\n<p><span style=\"color: #D4E4F7; font-weight: bold;\">For Respondent(s):<\/span> <\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p style=\"font-size: 12pt; margin-top: -20px; margin-left: 5px;\"><span style=\"color: #D4E4F7; font-weight: bold;\">CORAM&#160;:<\/span><\/p>\n<div id=\"banner\" style=\"overflow: hidden; display: flex; justify-content: space-between; padding-left: 3%;\">\n<div class=\"\" style=\"max-width: 100%; max-height: 100%; font-size: 9pt; text-align: center;\">\n<p><a href=\"https:\/\/www.scconline.com\/blog\/post\/2024\/02\/10\/know-your-judge-justice-surya-kant-supreme-court-life-career-judgments-legal-news\/\" targe=\"_blank\"><img decoding=\"async\" height=\"100px\" width=\"100px\" src=\"https:\/\/www.scobserver.in\/wp-content\/uploads\/2021\/09\/18.-Kant-modified-2048x2048.png\" alt=\"Surya Kant, J.\" style=\"border-radius: 50%; border:2px solid #FF5733; padding: 1px;\"><br \/><span style=\"font-weight: bold;\">Surya Kant, J.<\/span><\/a><\/p>\n<\/div>\n<div class=\"\" style=\"max-width: 100%; max-height: 100%; font-size: 9pt; text-align: center;\">\n<p><a><img decoding=\"async\" height=\"100px\" width=\"100px\" src=\"https:\/\/www.scobserver.in\/wp-content\/uploads\/2023\/05\/K_V_Viswanathan-modified.png\" alt=\"KV Viswanathan, J.\" style=\"border-radius: 50%;\"><br \/><span style=\"color: black !important;\">KV Viswanathan, J.<\/span><\/a><\/p>\n<\/div>\n<div class=\"\" style=\"max-width: 100%; max-height: 100%;\"><\/div>\n<div class=\"\" style=\"max-width: 100%; max-height: 100%;\"><\/div>\n<div class=\"\" style=\"max-width: 100%; max-height: 100%;\"><\/div>\n<div class=\"\" style=\"max-width: 100%; max-height: 100%;\"><\/div>\n<\/div>\n<\/div>\n<h3 style=\"color: #000080;\">Buy Constitution of India &nbsp;<a href=\"https:\/\/www.ebcwebstore.com\/product\/the-constitution-of-india-coat-pocket-edition?products_id=100647\" target=\"_blank\" rel=\"noopener\">HERE<\/a><\/h3>\n<p style=\"margin-bottom: 3%;\"><a href=\"https:\/\/www.ebcwebstore.com\/product\/the-constitution-of-india-coat-pocket-edition?products_id=100647\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/s3.amazonaws.com\/ebcwebstore\/images\/the-constitution-of-india-coat-pocket-edition-Gopal-Sankaranarayanan-ebc-front-cover.JPG\" alt=\"Constitution of India\" width=\"300\" height=\"200\" class=\"aligncenter size-large wp-image-294438\" \/><\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p style=\"font-style: italic;\">The Committee shall identify the number of investors and database of investors, and also determine the amount to be refunded to each investor. An Escrow Account with a bank designated by SEBI, shall be opened and all sale proceeds shall be deposited in that interest-bearing account.<\/p>\n","protected":false},"author":67517,"featured_media":326686,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,9],"tags":[71044,34873,69000,2563,16791,5363],"class_list":["post-326674","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-supremecourt","tag-high-powered-sale-committee","tag-justice-s-ravindra-bhat","tag-justice-satish-chandra","tag-SEBI","tag-securities-and-exchange-board-of-india","tag-supreme-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.4 (Yoast SEO v26.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Justices S Ravindra Bhat, Satish Chandra sale committee to auction assets 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