Subrata Roy Sahara v. Union of India
(2014) 8 SCC 470 : (2014) 3 SCC (Cri) 712 : (2014) 4 SCC (Civ) 424
In the Supreme Court of India
WP (Crl.) 57/2014
Before Justice K.S.P. Radhakrishnan and Justice J.S. Khehar
Decided on May 06, 2014

Relevancy of the case: Seeking recusal of the Supreme Court bench hearing the matter in a case involving online fundraising platforms, digital evidence in investigations, and jurisdictional challenges

Statutes and Provisions Involved

• The Constitution of India, 1950 (Article 21, 32, 136, 137, 124(6), 129, 142, 219, 226)
• The Advocates Act, 1962 (Section 16, 36)
• The Supreme Court Rules, 1966 (Order VII Rule 1, Order XIII Rule 6)
• The Contempt of Courts Act, 1971 (Section 2(b)
• The Code of Civil Procedure, 1908 (Section 51, Order XXI Rule 37, 40)

Relevant Facts of the Case

• In 2005, Sahara registered two companies, Sahara Indian Real Estate Corporation Limited (SIRECL) and Sahara Housing Investment Corporation (SHIC), under the Companies Act, 1956.
• Both companies raised funds totalling ₹24,029.73 crores through private placement of optionally fully convertible debentures (OFCD) from 30 million investors over three years.
• In 2009, SEBI noticed unusual fundraising activity and received a complaint alleging illegal means in the OFCD issuance by SHICL and SIRCL.
• SEBI launched an investigation into Sahara India, examining the fundraising activities and investor information of SHICL and SIRCL.
• Due to Sahara’s non-compliance, SEBI passed an interim order, concluding illegal activity and instructing SHICL and SIRCL to return the money to investors with interest.
• Sahara filed a court petition for a stay of the order, but the stay was eventually vacated, and SEBI passed the final order. The Securities Appellate Tribunal (SAT) approved the order after Sahara’s non-cooperation.
• Subsequently, Sahara filed a plea against the SEBI order in the Supreme Court, questioning jurisdiction and alleging a defamatory agenda by SEBI to destroy Sahara’s market reputation.

Prominent Arguments by the Advocates

The petitioner’s counsel:

• The pleadings of the present petition incorporate materials that would embarrass or discomfort the present bench of the Supreme Court.
• He further argued that the present bench held a bias against him. The bench had generated a reasonable apprehension in his mind that they had already arrived at a final resolve. His arguments and submissions on merit would not make any difference. Therefore, he could not expect any relief from them.
• His lack of confidence in the bench is sufficient reason to recuse them from hearing the case and request another Supreme Court bench to hear the matter.

The respondent’s counsel:

• The petition was not maintainable under the Constitution or any other law as it did not disclose any provision under which it had been filed.
• He submitted the petition to be carefully drawn to seek the withdrawal of the matter as five senior advocates of known prominence signed it.

The counsel, appearing on behalf of SEBI:

• He stressed the fallacious nature of the petitioner’s arguments. He further submitted that the details of the company’s refunds were not disclosed to them.

Opinion of the Bench

• The correction of an order cannot put the court to shame. Therefore, it is not a valid reason for the petitioner to change the bench.
• There is no escape from compliance with an order passed by the Supreme Court. The Supreme Court used its powers legitimately while passing the impugned orders.
• The court may order the detention of a judgment debtor during the execution of a decree for payment of money.
• The provisions of CPC do not apply to the proceedings of the SEBI Act. However, if the court passes an order in line with the requirements of CPC, it is safe to say that it followed the principles of natural justice.
• Therefore, the petition appears not maintainable under the existing laws.

Final Decision

• The bench dismissed the petition.

Adyasha Sahoo, an undergraduate student at the Institute of Law, Nirma University Ahmedabad, Khilansha Mukhija, an undergraduate student at the Institute of Law, Nirma University Ahmedabad, Ritesh Karale, an undergraduate student at Maharashtra National Law University, Mumbai, and Yagyanseni Acharya, an undergraduate student at VIT School of Law, Chennai, prepared this case summary during their internship with The Cyber Blog India in January/February 2024.