Thread by @lawbarandbench

#DelhiHighCourt is hearing petitions filed by Sahara Credit Cooperative Society and two other Sahara group companies challenging the order of the Central Registrar restraining them from taking fresh deposits as well as renewing the investment or deposit of existing members.

The petitions are being heard by a bench of Acting Chief Justice Vipin Sanghi and Justice Navin Chawla.

ASG Chetan Sharma informs the court that more than Rs 60K crore has been deposited by around 10 crore people in these societies.

Sharma further submits that the societies now have no money to pay its depositors and using the fresh deposits to pay its earlier depositors.

Sharma: A predecessor bench has stayed the order of the registrar. There is also a blanket stay on investigation against the promoters of the society.

Bench says it has prima facie enough material to order an investigation into the entire matter.
Sr Advocate SB Upadhyay appears for Sahara group and informs that the in the last two years, the societies have paid over Rs 20K crores to its depositors.

Upadhyay: We have been paying the depositors.
Sharma: Thousands of crores of money has been diverted towards Aamby Valley Project. Rs 2.5K crore has been used by them to secure bail of Mr Subrato Roy Sahara.

Bench: Lakhs and crores of people cannot be left in the lurch.
Upadhyay: A hype is being created here abut thousands of crores of Rupees.
#DelhiHighCourt #Sahara

Upadhyay: The central government has a power to regulate but there is a prescribed manner.
Bench: You will give this answer to the registrar.
#DelhiHighCourt #Sahara

Upadhyay: They have it in mind that we are the defaulter. They keep passing orders.
Bench: Take the money back from Aamby valley.
Upadhyay: SC has restrained us from doing that.
#DelhiHighCourt #Sahara

Upadhyay: These are hard facts that need to be kept in mind while passing any orders. There are 7 crore members. We have paid 20K crores. It is not as if the company is not paying. All this needs to be examined.

Bench: You yourself say that this needs to be examined. Who will enquire? You can't do it. They (government) will find out if the money is being paid or not.

Judges confer.
Bench asks ASG why the government is not conducting a special audit.

Upadhyay: A special audit has been done.
ASG: If it is in your favour, show it to the central registrar.

Upadhyay refers to the special audit.

Upadhyay: I must say that this special audit is not permitted.

Upadhyay reads the audit report.
#DelhiHighCourt #Sahara

Upadhyay: So far deposit part is concerned, it says the money has been accepted only from registered depositors.
ASG: This is from 2017. Hundreds and thousands of complaints are being received now.
#DelhiHighCourt #Sahara

Bench: What about expenditure? It is not there at all.

Upadhyay: In the special audit report, Section 64 is mentioned.

Upadhyay: The report says that society has deposited the money in equity share and securities as per the Section 64 of the Multi State Cooperative Societies Act.

Upadhyay: We can place even the Aamby valley order of the supreme court before my lords.
#DelhiHighCourt #Sahara

Judges discuss.
#DelhiHighCourt #Sahara

Upadhyay: Please see article 243 of the constitution.

Bench: We are not dealing with the situation referred in the constitution.

Upadhyay: I want to show the government letter as well. Kindly see it. This is about collection of funds by multi state cooperative societies.

The letter states that the government has no role to play in these societies.

Upadhyay: This was made very clear in the court's previous order as well. These letters are very important.

Bench: Is your submission that since people have been put to notice why should anyone bother?
Upadhyay: No.

Upadhyay: My submission is that the problems highlighted by the depositors are being addressed by the internal mechanism.
#DelhiHighCourt #Sahara

Bench: Are you in a position to pay your liabilities today? You have no difficulty in that?
Upadhyay: We are ready to clear the amount that has matured.

Upadhyay: Kindly give us two weeks' time and we will go through all the applications that are before your lordships.
J Chawla: The allegation against you is that you are renewing the deposits.

Upadhyay: No my lords, we are paying all those who come to us and say that their deposits have matured.

Bench suggests that it will appoint a retired judge to screen all the claims.
ACJ: Whatever has matured will be paid immediately?
Upadhyay: Yes. Absolutely yes.

Upadhyay: My submission is that if the society goes, how will the depositors get their money.
#DelhiHighCourt #Sahara

J Chawla: We will direct the exercise to be completed within two months. In the meantime we will say you will not take any further deposits.

Upadhyay: That can't be my lords. The money has to be in circulation.
J Chawla: We do not want new investors to face problems.

J Chawla: You show your bona fides.
Upadhay: I am saying whatever applications are before you, you can appoint a judicial officer and all of them will be paid. How will I survive if I can't take any more deposits? Don't kill us.

ASG: It is on record that Rs 2.5K crore belonging to common people have been taken away by one individual. We must approach equity with equity.

ASG: Kindly see their counter-affidavit. They have not even talked about it.
#DelhiHighCourt #Sahara

Upadhay: We have dealt with it in the rejoinder.

ASG: I will help my friend. Please come to your para-wise reply. You have not dealt with it at all.

Upadhyay says that the allegation has been denied.

Bench: How do you say there is denial? There is no denial. This was not in accordance with Section 64 no?

J Navin Chawla: Which is the order of the SC that directed the society to deposit this amount with SEBI. Your reply suggests that the SC directed it.

J Sanghi: What has the society got to do with the proceedings before SC? Did anybody value what your shared in the society were worth?

J Sanghi: for everything your answer is that you have no answer.

J Chawla: Today you are saying you do not have the money to pay the investors unless you are allowed to raise more money.

J Sanghi: The applications before us have given all the details. Why do you think they are before us if you are able to pay them.
Upadhyay: I will reply to them.

ASG: I think this is a case which calls for CBI inquiry including that audit report.
#DelhiHighCourt #Sahara

Judges again discuss among themselves.
#DelhiHighCourt #Sahara

J Sanghi: Mr Upadhyay, all these applications which are before us will be sent to a retired judicial officer. In the meantime you will not collect any payment.

Upadhyay: Sir, please then shorten the time. Make it 15 days.
J Sanghi: Who has filed these applications?
ASG: Let everything be before the central registrar. They may also have some complaints.

ASG: The infrastructure is already there. Instead of appointing a judicial officer, the registrar may look into it.

J Sanghi: Mr Sharma, the special audit report shakes our confidence.
ASG: That's why I am saying CBI inquiry.

Upadhyay says that central registrar is party to the writ petition and therefore biased.
Upadhyay: Let there be a judicial officer.

Judges confer.
#DelhiHighCourt #Sahara

J Sanghi: We are thinking of nominating a judicial officer. We will also provide all staff from court. Whatever is there is there. We would like you (government) to provide a office space for the staff to sit. let us see if the system can be worked out.

J Sanghi: These applications are itself substantial. We will at least get to know something.

ASG: The practical difficulty is the sheer volume of complaints. It may not be manageable despite all the infrastructure we provide. That's why I said there is already an officer performing judicial function. there is not allegation against him.

Upadhyay: He is a joint-secretary to government.
Bench: There is no personal bias there.

ASG: I think they should deposit at least Rs 20K crore in the meantime.

Upadhyay: I respectfully submit that there should be a retired judicial officer. We will provide the infrastructure.

Advocate Manish Miglani appears and says that the applicants before the court are those whose deposits have matured and they have not got their amount.

J Sanghi dictates order.

Order: We have heard the submissions. The challenge in these proceedings are to the show cause notice issued by central registrar under Section 86 of the multi state cooperative societies act.

Order:
The challenge is premised on the averment that the notices have been issued without conducting an audit or inquiry. To this, the ASG submits that the registrar has the power to suo motu issue notice under Section 86 of the said act.

Order:
In the rejoinder filed by the petitioner there is no denial of the fact that an amount of more than Rs 2000 crore were taken from the account of the society. The transaction, prima facie does not come under Section 64 of the multi state cooperative society act.

Order:
There are scores of IAs filed in the petition by investors alleging that their money invested has not been paid by the society. Mr Upadhyay argued that while dealign with proceedings under Section 86, the central registrar has passed orders restrainign them ....

... from collecting any further deposit which hampers their business and from servicing their obligations. he has also placed reliance on a special audit report in respect of Sahara Cooperative Society to submit that the report is in favour of the petitioner.

Order:
To this, Mr ASG has pointed out that the special auditor was not aware of hundreds of complaints received against the petitioner society. Mr Upadhyay has submitted that the petitioner society intends to repay all the investors.

Court is on mute.

HC has directed that the central registrar will examine the genuineness of all the complaints and the applications filed before the court alleging that the Sahara group societies have not paid them their deposits even after maturity of their investments.

Court has also directed that the societies will not accept any new deposits till the time a report is filed by the central registrar in the matters.
#DelhiHighCourt #Sahara