Supreme Court Orders Disbursement of ₹5000 Crores from Sahara-SEBI Refund Account to Sahara Cooperative Depositors (29 March 2023)

LEGAL ISSUE: Disbursement of funds from the Sahara-SEBI Refund Account to legitimate depositors of Sahara Group Cooperative Societies. CASE TYPE: Cooperative Law, Public Interest Litigation. Case Name: Pinak Pani Mohanty vs. Union of India and Ors. [Judgment Date]: 29 March 2023

Date of the Judgment: 29 March 2023
Citation: Not Available
Judges: M.R. Shah, J. and C.T. Ravikumar, J.
Can funds lying unutilized in a government-controlled account be used to repay dues to legitimate depositors of a cooperative society? The Supreme Court of India addressed this question in a recent order, directing the transfer of ₹5000 crores from the Sahara-SEBI Refund Account to the Central Registrar of Cooperative Societies for disbursement to genuine depositors of Sahara Group Cooperative Societies. This order aims to provide relief to numerous depositors who have been awaiting the return of their funds.

Case Background

The case revolves around a significant amount of money, ₹24,979.67 crores, lying unutilized in the “Sahara-SEBI Refund Account.” This account was created following earlier orders of the Supreme Court. The Union of India, through the Ministry of Cooperation, filed an application seeking the release of ₹5000 crores from this fund. This amount was intended to be disbursed to the legitimate depositors of the Sahara Group of Cooperative Societies. The Solicitor General of India, Shri Tushar Mehta, stated that ₹2253 crores of the amount in the Sahara-SEBI Refund Account was originally taken from Sahara Credit Cooperative Society Ltd. and deposited with SEBI due to a dispute involving Sahara Real Estate Limited. He argued that since the funds in the account included money belonging to the depositors of Sahara Group Cooperative Societies, a transfer of ₹5000 crores for disbursement would be just and equitable.

Timeline:

Course of Proceedings

The application was filed by the Union of India, Ministry of Cooperation, seeking directions to transfer ₹5,000 crores from the unutilized funds in the Sahara-SEBI Refund Account. The Solicitor General, Shri Tushar Mehta, represented the Union of India and argued for the disbursement of funds to the depositors of the Sahara Group of Cooperative Societies. There were a series of meetings with different authorities before this application was filed.

Legal Framework

The judgment does not explicitly mention any specific sections of any statute. However, the core issue revolves around the Supreme Court’s power to direct the disbursement of funds held in a court-controlled account for the benefit of depositors. The order is based on the court’s inherent powers to ensure justice and protect the interests of the public, particularly the depositors of cooperative societies.

Arguments

The arguments presented by the Union of India, through the Solicitor General, are as follows:

• The Solicitor General stated that a total amount of ₹24,979.67 Crores was lying unutilized in the “Sahara-SEBI Refund Account,” which was deposited pursuant to earlier directions of the Supreme Court.
• It was submitted that out of the total amount, ₹15,569.27 Crores was deposited by Sahara India Real Estate Corporation Limited and Sahara Housing Investment Corporation Limited.
• The Solicitor General pointed out that ₹2253 Crores was taken from Sahara Credit Cooperative Society Ltd. and deposited with SEBI due to a dispute related to Sahara Real Estate Limited. This amount, therefore, belongs to the depositors of the Sahara Group Cooperative Society.
• The Solicitor General argued that the amount in the “Sahara-SEBI Refund Account” is lying unutilized and includes the money of the depositors of the Sahara Group of Cooperative Societies.
• It was argued that transferring ₹5,000 Crores to the Central Registrar of Cooperative Societies for disbursement to the legitimate depositors would be just, proper, and equitable.
• The Solicitor General also stated that there is no charge or attachment by any other agency on the said amount.
• The application was filed after a series of meetings with different authorities and departments, aimed at serving the larger interest of the depositors of the Sahara Group of Cooperative Societies.
• The Solicitor General requested that the disbursement should be done in a transparent manner, with proper identification of genuine depositors and proof of deposits.
• The Solicitor General suggested that the disbursement be supervised by a former judge of the Supreme Court.

Submissions Table

Innovativeness of the argument: The argument was innovative in that it sought to utilize funds lying unutilized in a court-controlled account to provide immediate relief to depositors of cooperative societies, who were otherwise struggling to get back their money.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues. However, the core issue addressed was:

1. Whether ₹5,000 Crores could be transferred from the “Sahara-SEBI Refund Account” to the Central Registrar of Cooperative Societies for disbursement to the legitimate depositors of Sahara Group Cooperative Societies.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issue:

Authorities

The judgment does not cite any specific case laws or legal provisions. The decision is based on the court’s inherent power and its assessment of the facts and circumstances.

Authorities Table

Judgment

The Supreme Court disposed of the application with the following directions:

1. ₹5000 Crores to be transferred from the “Sahara-SEBI Refund Account” to the Central Registrar of Cooperative Societies.
2. The Central Registrar to disburse the amount to genuine depositors of the Sahara Group of Cooperative Societies.
3. Disbursement to be done transparently, with proper identification and proof of deposits.
4. Disbursement to be supervised by Justice R. Subhash Reddy, Former Judge of the Supreme Court, with the assistance of Shri Gaurav Agarwal, Advocate, as Amicus Curiae.
5. ₹15 lakhs per month to be paid to Justice R. Subhash Reddy and ₹5 lakhs per month to Shri Gaurav Agarwal as honorarium.
6. The disbursement to be completed within nine months, and any remaining amount to be transferred back to the “Sahara-SEBI Refund Account”.

Treatment of Submissions

How each authority was viewed by the Court?

There were no authorities cited in the judgment.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily driven by the need to provide relief to the genuine depositors of the Sahara Group of Cooperative Societies. The Court recognized that a substantial amount of money was lying unutilized in the “Sahara-SEBI Refund Account,” and a portion of it belonged to these depositors. The Court found it equitable and in the larger public interest to direct the transfer of funds for disbursement. The Court also emphasized the need for transparency and proper identification of the depositors to ensure that only genuine claimants receive their dues. The appointment of a former judge of the Supreme Court and an amicus curiae for supervision underscores the court’s commitment to ensuring a fair and efficient disbursement process.

Sentiment Analysis of Reasons

Fact:Law Ratio

Logical Reasoning

The court considered the fact that the funds were lying unutilized and that a portion of it belonged to the depositors. The court also considered the larger public interest and the need to provide relief to the depositors. Based on these considerations, the court ordered the disbursement of funds.

Key Takeaways

• ₹5000 Crores will be disbursed to genuine depositors of Sahara Group Cooperative Societies.
• The disbursement process will be transparent and supervised by a former judge of the Supreme Court.
• Depositors need to provide proper identification and proof of deposits to claim their dues.
• The disbursement is expected to be completed within nine months.

Directions

The Supreme Court issued the following directions:

• Transfer of ₹5000 Crores from the “Sahara-SEBI Refund Account” to the Central Registrar of Cooperative Societies.
• Disbursement of the amount to the genuine depositors of the Sahara Group of Cooperative Societies.
• The disbursement process shall be supervised and monitored by Justice R. Subhash Reddy, Former Judge of this Court with the able assistance of Shri Gaurav Agarwal, learned Advocate, who is appointed as Amicus Curiae.
• The disbursement to be completed within nine months.

Specific Amendments Analysis

There is no discussion of any specific amendments in the judgment.

Development of Law

The judgment does not lay down any new legal principle or change the existing law. The ratio decidendi of the case is that the Supreme Court can order the disbursement of funds lying unutilized in a court-controlled account to provide relief to the depositors of cooperative societies, especially when a portion of the funds belongs to them. This order reinforces the court’s commitment to ensuring justice and protecting the interests of the public.

Conclusion

The Supreme Court’s order to transfer ₹5000 crores from the Sahara-SEBI Refund Account to the Central Registrar of Cooperative Societies for disbursement to the legitimate depositors of Sahara Group Cooperative Societies is a significant step towards providing relief to thousands of depositors. This decision underscores the court’s commitment to ensuring that funds held in court-controlled accounts are utilized for the benefit of those who are entitled to them. The transparent and supervised disbursement process is expected to restore faith in the cooperative sector and provide much-needed financial relief to the affected depositors.