In a significant ruling, the Supreme Court of India has ordered the liquidation of assets belonging to the Sai Prasad Group of Companies to facilitate the refund of funds to investors. The decision comes after years of legal battles and multiple complaints regarding the illegal mobilization of funds by the company.
Background of the Case
The case involves Balasaheb Keshawrao Bhapkar and his family, who were the directors of various companies under the Sai Prasad Group, including Sai Prasad Properties Ltd. (SPPL), Sai Prasad Foods Ltd. (SPFL), Sai Prasad Corporation Ltd. (SPCL), and Shree Sai Space Creations Ltd. (SSSCL). Complaints against these companies began in 2010, alleging the illegal collection of funds from investors under collective investment schemes.
Legal Issues
The primary legal issues in this case included:
– Illegal Fund Mobilization: The companies were accused of illegally mobilizing funds from the public without proper authorization.
– Violation of SEBI Regulations: Multiple interim and final orders were issued by the Securities and Exchange Board of India (SEBI), restraining the companies from collecting further investments and directing them to refund the collected amounts.
– Attachment and Liquidation of Assets: SEBI and other authorities had attached various properties of the Sai Prasad Group to recover the mobilized funds and refund the investors.
Court’s Decision
The bench, comprising Justice Surya Kant and Justice K.V. Viswanathan, acknowledged the prolonged legal battle and the plight of investors who had been waiting for refunds for over a decade. The court emphasized the necessity of liquidating the attached assets in a time-bound manner to ensure justice for all parties involved.
Key Observations by the Court:
– “Innocent investors have been eagerly awaiting the refund of their hard-earned money for more than a decade.”
– “Despite its best intentions and commitment, SEBI is facing an uphill task in conducting public auctions in a time-bound manner.”
High-Powered Sale Committee (HPSC)
To expedite the liquidation process, the Supreme Court constituted a High-Powered Sale Committee (HPSC) chaired by Justice S. Ravindra Bhatt, former Judge of the Supreme Court. Other members include Dr. Justice Satish Chandra, former Judge of the High Court of Allahabad, a nominee from SEBI, and representatives from the states where the properties are located.
Responsibilities of HPSC
The HPSC is tasked with:
– Obtaining property documents and original title deeds from SEBI and other authorities.
– Creating a database of property documents and arranging for their safe storage and digitalization.
– Conducting property valuations and engaging e-auction service providers.
– Overseeing the auction process and ensuring the sale of properties free from encumbrances.
– Disbursing the proceeds from the sale to investors in a systematic and transparent manner.
Interim Bail for Petitioners
In a move to facilitate cooperation with the liquidation process, the court granted interim bail to Balasaheb Keshawrao Bhapkar and his wife, who had been in custody for over eight years. This decision was made under the court’s special powers granted by Article 142 of the Constitution of India.
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Case Details:
– Case Number: Writ Petition (Crl.) No. 546 of 2023
– Petitioners: Balasaheb Keshawrao Bhapkar & Ors.
– Respondent: Securities and Exchange Board of India (SEBI)
– Bench: Justice Surya Kant and Justice K.V. Viswanathan
– Date of Judgment: July 15, 2024
