Summary
In exceptional circumstances involving long-detained directors and delayed refunds to Sai Prasad Group investors, the Court constituted a High-Powered Sale Committee under Article 142 to sell attached assets and administer refunds. It prescribed valuation, auction, records, account and claim-verification procedures, required cooperation by the companies and States, and granted the first two petitioners interim bail across all FIRs to facilitate the process.
Issues
- What mechanism could expedite sale of attached company assets and refund investors.
- What powers, safeguards and responsibilities should govern the sale committee and claims process.
- Whether interim bail across the related FIRs was appropriate in these exceptional circumstances.
Provisions considered
- Article 142, Constitution of IndiaExceptional circumstances, including over eight years of undertrial custody and long-delayed investor refunds, supported constitution of the sale committee and case-specific interim bail across all FIRs. (¶¶ 6, 7, 17)
Held
- A High-Powered Sale Committee chaired by former Supreme Court Judge S. Ravindra Bhatt, with the specified judicial and SEBI members and support officers, was constituted to liquidate assets sufficient to meet investor claims and other statutory liabilities. Its constitution addressed practical obstacles to valuation and nationwide auctions. (¶¶ 3, 4, 5, 6, 7)
- The Committee must collect and digitise title records, create a property database, obtain certified valuations and conduct auctions through appropriate service providers. It was vested with civil-court powers; disposal decisions rest with it, and completed sales vest property in purchasers free of encumbrances. (¶ 7)
- The petitioners may assist, bring prospective buyers and offer suggestions, but cannot insist on their acceptance or litigate the Committee’s discretionary decisions on those suggestions. The MPID Court must decide pending objections to the forensic audit within two months and send its order to the Committee. (¶¶ 7(p), 7(q))
- Investor identification, admissible refund amounts, the recovery threshold for commencing refunds, categories of investors, supporting documents and payment methods are for the Committee to determine. Claims must be invited by widely publicised English and vernacular newspaper notices, with funds held in the designated interest-bearing escrow arrangement. (¶¶ 7(r), 8)
- The petitioners and companies must disclose assets and jewellery, deliver available original title documents and execute conveyances after confirmed sales and receipt of full consideration. For auction purposes the Committee may determine company rights in disputed properties, subject to legal impediments. (¶ 9)
- SEBI and the concerned States must provide infrastructure, records, revenue and police assistance. The Committee must establish a dedicated website, address claims and objections, fix timelines and endeavour to complete the process within one year. Costs and the prescribed sitting-day honoraria are payable from sale proceeds. (¶¶ 10, 12, 13, 14, 15, 16)
- To facilitate sales and distribution, and having regard to custody already undergone, petitioners 1 and 2 were granted interim bail to the satisfaction of the MPID Court, Mumbai. Under Article 142 and expressly on the special facts, this operated as interim bail in all FIRs. The Committee may seek further directions through its Member Secretary. (¶¶ 17, 18)
Result
High-Powered Sale Committee constituted with directions for asset sales, investor refunds, cooperation and expenses. Petitioners 1 and 2 granted interim bail in all FIRs on the special facts, to the satisfaction of the MPID Court, Mumbai; Committee permitted to seek further directions.