[Writ Petition (Criminal) No. 57 of 2014]
Jagdish Singh Khehar, J.
I. Should we be hearing this case? Would it not be better, for another Bench to hear this case?
1. In the present writ petition, the petitioner has made the following prayers:-
“(a) Declare the order dated 4.3.2014 as void, nullity and non-est in the eyes of law;
(b) Declare that the incarceration and the custody of the petitioner are illegal which should be terminated forthwith;
(c) Issue such other writ in the nature of Habeas (corpus) or other writs, order or direction for release of the petitioner from the illegal custody.
(d) Pass such further orders as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case.”
A perusal of the prayers made in the writ petition reveals, that in sum and substance the petitioner has assailed the order dated 4.3.2014 passed by us in Contempt Petition (Civil) nos. 412 and 413 of 2012 and Contempt Petition (Civil) no. 260 of 2013. To understand the exact purport of the prayers made in the writ petition, it is essential to extract herein the order dated 4.3.2014, which is subject matter of challenge through the present criminal writ petition:-
1. “Contemnors are personally present in the Court, including the fifth respondent, who has been brought to the Court by the U.P. Police, in due execution of our non-bailable warrant of arrest.
2. We have heard the Senior Counsel on various occasions and perused the various documents, affidavits, etc. We have heard the learned counsel and contemnors today as well. We are fully convinced that the contemnors have not complied with our directions contained in the judgment dated August 31, 2012, as well as orders dated December 5, 2012 and February 25, 2013 passed in Civil Appeal no. 8643 of 2012 and I.A. no. 67 of 2013 by a three Judge Bench of this Court.
3. Sufficient opportunities have been given to the contemnors to fully comply with those orders and purge the contempt committed by them but, rather than availing of the same, they have adopted various dilatory tactics to delay the implementation of the orders of this Court. Non-compliance of the orders passed by this Court shakes the very foundation of our judicial system and undermines the rule of law, which we are bound to honour and protect. This is essential to maintain faith and confidence of the people of this country in the judiciary.
4. We have found that the contemnors have maintained an unreasonable stand throughout the proceedings before SEBI, SAT, High Court and even before this Court. Reports/analysis filed by SEBI on 18.2.2014 make detailed reference to the submissions, documents, etc. furnished by the contemnors, which indicates that they are filing and making unacceptable statements and affidavits all through and even in the contempt proceedings. Documents and affidavits produced by the contemnors themselves would apparently falsify their refund theory and cast serious doubts about the existence of the so-called investors. All the fact finding authorities have opined that majority of investors do not exist. Preservation of market integrity is extremely important for economic growth of this country and for national interest. Maintaining investors’ confidence requires market integrity and control of market abuse. Market abuse is a serious financial crime which undermines the very financial structure of this country and will make imbalance in wealth between haves and have nots.
5. We notice, on this day also, no proposal is forthcoming to honour the judgment of this Court dated 31st August, 2012 and the orders passed by this Court on December 05, 2012 and February 25, 2013 by the three Judge Bench. In such circumstances, in exercise of the powers conferred under Articles 129 and 142 of the Constitution of India, we order detention of all the contemnors, except Mrs. Vandana Bhargava (the fourth respondent) and send them to judicial custody at Delhi, till the next date of hearing. This concession is being extended towards the fourth respondent because she is a woman Director, and also, to enable the contemnors to be in a position to propose an acceptable solution for execution of our orders, by coordinating with the detenues. Mrs. Vandana Bhargava, who herself is one of the Directors, is permitted to be in touch with the rest of the contemnors and submit an acceptable proposal arrived at during their detention, so that the Court can pass appropriate orders.
6. List on March 11, 2014 at 2.00 p.m. All the contemnors be produced in Court on that date. Mrs. Vandana Bhargava, the fourth respondent, to appear on her own. However, liberty is granted for mentioning the matters for preponement of the date, if a concrete and acceptable proposal can be offered in the meantime.”
2. When this matter came up for hearing for the first time on 12.3.2014, Mr. Ram Jethmalani, learned Senior Counsel appearing for the petitioner, sought liberty to make a frank and candid submission. He told us, that it would be embarrassing for him, to canvass the submissions which he is bound to raise in the matter before us, i.e., before the Bench as it was presently structured. It was also his submission, that hearing this matter would also discomfort and embarrass us as well. He therefore suggested, that we should recuse ourselves from hearing the case, and require it to be heard by another composition, not including either of us.
3. Mr. Arvind Datar, learned Senior Counsel, appearing for the respondents, vociferously implored us not to withdraw ourselves from hearing the case. It was his vigorous and emphatic contention, that the present petition was not maintainable, either under the provisions of the Constitution of India, or under any other law of the land. Inviting the Court’s attention to the heading of the petition, it was submitted, that it did not disclose any legal provision, whereunder the present writ petition had been filed. He submitted, that as per its own showing (ascertainable from the title of the petition), the present writ petition had been filed, under the power recognized and exercised by this Court, in A.R. Antulay v. R.S. Nayak, (1988) 2 SCC 602. It was the assertion of learned counsel, that the above judgment, has now been clarified by this Court. According to learned counsel, it has now been settled, that the above judgment did not fashion or create any such power or jurisdiction, as is sought to be invoked by the petitioner.
4. Besides the above purely legal submission, learned Senior Counsel for the respondents equally candidly submitted, that the filing of this petition was a carefully engineered device, adopted by the petitioner as a stratagem, to seek our withdrawal from the matter. In order to emphasise that this Bench was being arm twisted, learned counsel invited our attention to the foot of the last page of the petition, i.e., to the authorship of the petition, just under the prayer clause. The text, to which our attention was drawn, is set out below:- “Signed and approved by:- Mr. Ram Jethmalani, Sr. Adv. Dr. Rajeev Dhawan, Sr. Adv. Mr. Rakesh Dwivedi, Sr. Adv. Mr. S. Ganesh, Sr. Adv. Mr. Ravi Shankar Prasad, Sr. Adv.” According to learned counsel, this is the first petition he has seen in his entire professional career, which is settled by five Senior Counsel, all of them of recognized eminence.
5. It would be relevant to mention, that when the matter was taken up for hearing by us, for the first time on 12.3.2014 at 2.00 PM, it had been so listed on the directions of Hon’ble the Chief Justice in furtherance of a “mentioning for listing”, on the morning of the same day, i.e., 12.3.2014. We had therefore, no occasion to go through the pleadings of the present writ petition. After having heard submissions of rival counsel noticed above, we decided not to proceed with the matter, before going through the pleadings of the case. We therefore directed the posting of the case for hearing on the following day, i.e., 13.3.2014.
6. By the next date, we had an opportunity to determine, how exactly the matter was listed before us, as also, to ascertain whether the pleadings of the present criminal writ petition incorporated material which would embarrass us, as suggested by the learned counsel for the petitioner. So far as the filing and listing of the present petition is concerned, it was filed by the petitioner in the Registry of this Court on 11.3.2014. Thereafter, learned counsel for the petitioner, appeared before the Bench presided over by Hon’ble the Chief Justice, on the morning of 12.3.2014 to “mention for listing”, for the same day. The Court Master of the Bench presided over by Hon’ble the Chief Justice, recorded the following note:- “As directed list today i.e., 12.3.2014, if in order, in the mentioning list at 2.00 PM, before appropriate Bench.” For the concerned Bench before which the matter was to be posted, the noting file of the branch, reads as under:- “Apprised. May be listed before the Special Bench comprising Hon’ble Mr. Justice K.S. Radhakrishnan and Hon’ble Mr. Justice J.S. Khehar.” The above note was recorded on the directions of Hon’ble the Chief Justice. A perusal of the above sequence of events reveals, that even though our combination as a Bench did not exist for 12.3.2014, yet a Special Bench was constituted for listing the present writ petition, in its present arrangement. It is therefore reasonable to infer, that the present constitution of the Bench, was a conscious determination of Hon’ble the Chief Justice.
7. Now the embarrassment part. Having gone through the pleadings of the writ petition we were satisfied, that nothing expressed therein could be assumed, as would humiliate or discomfort us by putting us to shame. To modify an earlier order passed by us, for a mistake we may have committed, which is apparent on the face of the record, is a jurisdiction we regularly exercise under Article 137 of the Constitution of India. Added to that, it is open to a party to file a curative petition as held by this Court in Rupa Ashok Hurra v. Ashok Hurra, (2002) 4 SCC 388.
These jurisdictions are regularly exercised by us, when made out, without any embarrassment. Correction of a wrong order, would never put anyone to shame. Recognition of a mistake, and its rectification, would certainly not put us to shame. In our considered view, embarrassment would arise when the order assailed is actuated by personal and/or extraneous considerations, and the pleadings record such an accusation. No such allegation was made in the present writ petition. And therefore, we were fully satisfied that the feeling entertained by the petitioner, that we would not pass an appropriate order, if the order impugned dated 4.3.2014 was found to be partly or fully unjustified, was totally misplaced.
8. It is therefore, that we informed learned Senior counsel, that we would hear the matter. It seems that our determination to hear the matter marked to us by Hon’ble the Chief Justice, was not palatable to some of the learned counsel for the petitioner. For, Mr. Ram Jethmalani, learned Senior Counsel, was now more forthright. He told us, that we should not hear the matter, because “his client” had apprehensions of prejudice. He would, however, not spell out the basis for such apprehension. Dr. Rajeev Dhawan, came out all guns blazing, in support of his colleague, by posing a query: Has the Court made a mistake, serious enough, giving rise to a presumption of bias “… even if it is not there …”? It was difficult to understand what he meant.
But seriously, in the manner Dr. Rajeev Dhawan had addressed the Court, it sounded like an insinuation. Mr. Ram Jethmalani joined in to inform us, that the Bar (those sitting on the side he represented) was shell-shocked, that an order violating the petitioner’s rights under Article 21 of the Constitution of India, had been passed, and it did not seem to cause any concern to us. The petitioner had been taken into judicial custody, we were told, without affording him any opportunity of hearing.
Learned counsel asked the Bench, to accept its mistake in ordering the arrest and detention of the petitioner, and acknowledge the “human error” committed by the Court, while passing the impugned order dated 4.3.2014. Dr. Rajeev Dhawan, then informed the Court, that “… moments come in the profession, though rarely, when we tell the Judges of the Supreme Court, that you have committed a terrible terrible mistake, by passing an order which has violated the civil liberties of our client. … that the order passed is void …”. And moments later, referring to the order, he said, “… it is a draconian order …” The seriousness of the submissions apart, none of them, even remotely, demonstrated “bias”.
9. But Mr. C.A. Sundaram, another Senior Counsel representing the petitioner, distanced himself from the above submissions. He informed the Court, “… I am not invoking the doctrine of bias, as has been alleged …” We are of the view, that a genuine plea of bias alone, could have caused us to withdraw from the matter, and require it to be heard by some other Bench. Detailed submissions on the allegations constituting bias, were addressed well after proceedings had gone on for a few weeks, the same have been dealt with separately (under heading VIII, “Whether the impugned order dated 4.3.2014, is vitiated on account of bias?”). Based on the submissions advanced by learned counsel, we could not persuade ourselves in accepting the prayer for recusal.
10. We have recorded the above narration, lest we are accused of not correctly depicting the submissions, as they were canvassed before us. In our understanding, the oath of our office, required us to go ahead with the hearing. And not to be overawed by such submissions. In our view, not hearing the matter, would constitute an act in breach of our oath of office, which mandates us to perform the duties of our office, to the best of our ability, without fear or favour, affection or ill will. This is certainly not the first time, when solicitation for solicitation for recusal has been sought by learned counsel.
Such a recorded peremptory prayer, was made by Mr. R.K. Anand, an eminent Senior Advocate, before the High Court of Delhi, seeking the recusal of Mr. Justice Manmohan Sarin from hearing his personal case. Mr. Justice Manmohan Sarin while declining the request made by Mr. R.K. Anand, observed as under: “The path of recusal is very often a convenient and a soft option. This is especially so since a Judge really has no vested interest in doing a particular matter. However, the oath of office taken under Article 219 of the Constitution of India enjoins the Judge to duly and faithfully and to the best of his knowledge and judgment, perform the duties of office without fear or favour, affection or ill will while upholding the constitution and the laws. In a case, where unfounded and motivated allegations of bias are sought to be made with a view of forum hunting / Bench preference or brow-beating the Court, then, succumbing to such a pressure would tantamount to not fulfilling the oath of office.”
The above determination of the High Court of Delhi was assailed before this Court in R.K. Anand v. Delhi High Court, (2009) 8 SCC 106. The determination of the High Court whereby Mr. Justice Manmohan Sarin declined to withdraw from the hearing of the case came to be upheld, with the following observations: “The above passage, in our view, correctly sums up what should be the Court’s response in the face of a request for recusal made with the intent to intimidate the court or to get better of an ‘inconvenient’ judge or to obfuscate the issues or to cause obstruction and delay the proceedings or in any other way frustrate or obstruct the course of justice.”
(emphasis is ours)
11. In fact, the observations of the High Court of Delhi and those of this Court reflected, exactly how it felt, when learned counsel addressed the Court, at the commencement of the hearing. If it was learned counsel’s posturing antics, aimed at bench-hunting or bench-hopping (or should we say, bench-avoiding), we would not allow that. Affronts, jibes and carefully and consciously planned snubs could not deter us, from discharging our onerous responsibility. We could at any time, during the course of hearing, walk out and make way, for another Bench to decide the matter, if ever we felt that, that would be the righteous course to follow. Whether or not, it would be better for another Bench to hear this case, will emerge from the conclusions, we will draw, in the course of the present determination.
12. What is it that this Court had done through its order dated 31.8.2012 while upholding the earlier orders passed by the SEBI (FTM) (dated 23.6.2011) and the SAT (dated 18.10.2011)? We had merely confirmed the directions earlier issued to the two companies, to refund the moneys collected by them from investors, who had subscribed to their OFCD’s, by the SEBI (FTM) and by the SAT. The directions did not extend to funds contributed by the promoters, the directors or the other stakeholders. The refund did not include any business gains earned by the two companies during the subsistence of their enterprise.
According to the stance adopted by the two companies before this Court, all the investors’ money collected through OFCD’s, had mainly been invested with the other companies of the Sahara Group. This position was expressly reiterated, in the two separate affidavits filed by Sahara India Real Estate Corporation Limited (hereinafter referred to as ‘SIRECL’) and Sahara Housing Investment Corporation Limited (hereinafter referred to as ‘SHICL’) dated 4.1.2012, before this Court. It is now their case, that these properties were sold to other Sahara Group companies to redeem the OFCD’s. It is therefore all within the companies of the Sahara Group. That is how, sale transactions by way of cash have been explained. It is therefore apparent, that we had not directed a refund of any other amount, besides that which was collected from the investors themselves.
The petitioner herein – Mr. Subrata Roy Sahara, during the course of his personal oral hearing informed us, that most of the investments were made by petty peasants, labourers, cobblers, blacksmiths, woodcutters and other such like artisans, ranging mostly between Rs.2,000/- and Rs.3,000/-. Almost all the investors, according to the petitioner, did not even have a bank account. That was why, they had chosen to invest the same through OFCD’s, in the two companies. If the above position was/is correct, and the refund related only to deposits made by these petty poor citizens of this country, why are the two companies or the petitioner – Mr. Subrata Roy Sahara, in his capacity as promoter, and the other concerned directors, so agitated with our order. The findings against the two companies have been concurrent. At all levels, where issues raised by the two companies were considered and agitated, the determination has been in one voice, that the action of the two companies was unlawful and accordingly the moneys collected had to be refunded. There is not even a single order at any level, in favour of the two companies. The two companies were required to refund the money to its investors, because of the absolute illegality in its collection.
13. Because both the SEBI and the SAT were doubtful about the veracity of the receipt of the funds as alleged, they had directed the refund to the investors by way of cash “through” demand draft or pay order. During the course of final hearing of the appellate proceedings before this Court, submissions were heard over a period of three weeks during the summer vacation. We entertained a similar impression and suspicion. Firstly because, the two companies never made available any information sought from them. They always stonewalled all attempts to gather information by the SEBI, even by exerting influence from the Ministry of Corporate Affairs, and by raising purely technical pleas.
And also because, the little bits of information made available by the companies for evaluation, were found to be seriously doubtful. It is also important for us to record, that the pointed position adopted by the SEBI before this Court, during the disposal of Civil Appeal nos. 9813 and 9833 of 2011 was, that neither SIRECL, nor SHICL, ever provided details of its investors to the SEBI (FTM). They contested the proceedings initiated by the SEBI (FTM), only on technical grounds. We were told that even before the SAT, no details were furnished. The position remained the same, even before this Court. Based on the non disclosure of information sought from the two companies, it was not possible to record a firm finding, either ways. It is, therefore, that a different procedure was adopted by this Court while disposing the appeals preferred by the two companies, vide order dated 31.8.2012.
The companies were restrained from making direct refunds. They were directed to deposit all investor related funds (along with interest) with the SEBI. The SEBI was in turn directed, to make the refunds to the investors. In case the investors could not be identified, or were found to be non-existent or bogus, the remaining funds along with interest, were directed to be deposited with the Government of India. This seems to us, to be the reason, for all these twists and turns, in the aftermath of this Court’s order dated 31.8.2012. If the two companies were ready and willing to pay the money, as has been made out, on behalf of the two companies, there would be no cause for agitation.
14. One of the reasons for retaining the instant petition for hearing with ourselves was, that we had heard eminent Senior Counsel engaged by the two companies exclusively for over three weeks during the summer vacation of 2012. We had been taken through thousands of pages of pleadings. We had the occasion to watch the demeanour and defences adopted by the two companies and the contemnors from time to time, from close quarters. Writing the judgment, had occupied the entire remaining period of the summer vacation of 2012, as also, about two months of further time. The judgment dated 31.8.2012 runs into 269 printed pages. Both of us had rendered separate judgments, concurring with one another, on each aspect of the matter.
During the course of writing the judgment, we had the occasion to minutely examine numerous communications, exchanged between the rival parties. That too had resulted in a different kind of understanding, about the controversy. For any other Bench to understand the nuances of the controversy determined through our order dated 31.8.2012, would require prolonged hearing of the matter. Months of time, just in the same manner as we had taken while passing the order dated 31.8.2012, would have to be spent again. Possibly the submissions made by the learned counsel seeking our recusal, was consciously aimed at the above objective.
Was this the reason for the theatrics, of some of the learned Senior Counsel?
Difficult to say for sure.
But deep within, don’t we all understand? It was also for the sake of saving precious time of this Court, that we decided to bear the brunt and the rhetoric, of some of the learned Senior Counsel representing the petitioner. We are therefore satisfied, that it would not be better, for another Bench to hear this case.
II. Must judicial orders be obeyed at all costs? Can a judicial order be disregarded, if the person concerned feels, that the order is wholly illegal and void?
15. By the time a Judge is called upon to serve on the Bench of the Supreme Court of India, he understands his responsibilities and duties…..and also his powers and authority. A Judge has the solemn duty of deciding conflicting issues between rival parties. Rival parties inevitably claim diagonally opposite rights. The decision has however to be rendered in favour of one party (and against the other). That, however, is not a cause for much worry, because a Judge is to decide every dispute, in consonance with law.
If one is not free to decide in consonance with his will, but must decide in consonance with law, the concept of a Judge being an individual possessing power and authority, is but a delusion. The saving grace is, that only a few understand this reality. But what a Judge is taught during his arduous and onerous journey to the Supreme Court is, that his calling is based on, the faith and confidence reposed in him to serve his country, its institutions and citizens. Each one of the above (the country, its institutions and citizens), needs to be preserved. Each of them grows to prosper, with the others’ support.
Each of them has duties, obligations and responsibilities…..and also rights, benefits and advantages. Their harmonious glory, emerges from, what is commonly understood as, “the rule of law.” The judiciary as an institution, has extremely sacrosanct duties, obligations and responsibilities. We shall, in the succeeding paragraphs, attempt to express these, in a formal perspective.
16. The President of India is vested with executive power of the Union. All executive actions of the Government of India, are expressed to be taken in his name. The responsibility, and the power, which is vested in the President of India, is to be discharged/ exercised, in accordance with the provisions of the Constitution of India. For that, the President of India may even consult the Supreme Court, on a question of law or fact of public importance. And when so consulted, the Supreme Court is obliged to tender its opinion to the President. Furthermore, the Constitution of India contemplates, that law declared by the Supreme Court, is binding on all courts within the territory of India.
It also mandates, that an order made by the Supreme Court, is enforceable throughout the territory of India. But what is the scope of the law declared by the Supreme Court? And what are the kinds of orders it passes? The Supreme Court has been vested with the power to decide substantial questions of law, as also, to interpret the provisions of the Constitution of India. The Supreme Court exercises jurisdiction to determine, whether or not, laws made by Parliament or by a State Legislature, are consistent with the provisions of the Constitution of India. And in case any legislation is found to be enacted, in violation of the provisions of the Constitution of India, this Court is constrained to strike it down.
The resultant effect is, that a law enacted by the Parliament or by a State Legislature, is declared illegal or void. After a Court’s verdict has attained finality, not once, never and never, has any legislative body ever disobeyed or disrespected an order passed by a court, declaring a legislation, illegal or void. The Supreme Court also exercises original jurisdiction, to settle disputes between the Government of India and one or more States; or between the Government of India and any one State or more States on the one side, and one or more other States on the other; or between two or more States. In such disputes, the order could be in favour of (or against), the Government of India, and/or one or the other State Government(s) concerned.
Yet, the orders passed by the Supreme Court on the above disputes, have unfailingly been accepted and complied with, despite the seriousness of the consequences, emerging from such orders. The settlement of such disputes by the Supreme Court, has not ever earned scorn, disdain, disrespect or denigration of the parties concerned. The Supreme Court also enforces through its writ jurisdiction, fundamental rights of the citizens of this country. In case an individual’s fundamental rights (or other legal rights), are found to have been violated, the Government of India, or the concerned State Government, or the instrumentality/institution concerned, is directed to restore to the individual, what is due to him. The Government (or the instrumentality/institution) concerned, which is directed to extend benefits denied to an individual(s), has always honourably obeyed and implemented Court orders, gracefully. There are numerous institutions created to assist the executive government, in matters of governance. Some of them are constitutional authorities, others are creatures, either of a legislation or of the executive.
The object of executive governance, is to enforce duties, obligations and responsibilities, and also, to extend rights, benefits and advantages. Courts also exercise, the power of judicial review, over actions of such instrumentalities/institutions. While exercising the power of judicial review, Courts also pass orders and directions, to enforce legal rights. Courts are rarely confronted with a situation where an executive department of a government, or an instrumentality/institution, has denied compliance. Likewise, the Supreme Court is also vested with the responsibility to adjudicate private disputes between individuals (both civil and criminal), so as to render a determination of their individual rights. These too, are as a rule (almost) always complied with voluntarily and gracefully.
17. There is no escape from, acceptance, or obedience, or compliance of an order passed by the Supreme Court, which is the final and the highest Court, in the country. Where would we find ourselves, if the Parliament or a State Legislature insists, that a statutory provision struck down as unconstitutional, is valid? Or, if a decision rendered by the Supreme Court, in exercise of its original jurisdiction, is not accepted for compliance, by either the Government of India, and/or one or the other State Government(s) concerned? What if, the concerned government or instrumentality, chooses not to give effect to a Court order, declaring the fundamental right of a citizen? Or, a determination rendered by a Court to give effect to a legal right, is not acceptable for compliance?
Where would we be, if decisions on private disputes rendered between private individuals, are not complied with? The answer though preposterous, is not far fetched. In view of the functional position of the Supreme Court depicted above, non-compliance of its orders, would dislodge the cornerstone maintaining the equilibrium and equanimity in the country’s governance. There would be a breakdown of constitutional functioning. It would be a mayhem of sorts.
18. Before we advert to the question, whether this Court can order obedience of an order passed by it, it may be relevant to understand, the extent and width of jurisdiction, within the framework whereof this Court can pass orders. In this behalf reference may be made to the nine-Judge Constitution Bench judgment of this Court, in Naresh Sridhar Mirajkar v. State of Maharashtra, AIR 1967 SC 1, wherein it was held as under:-
“60. There is yet another aspect of this matter to which it is necessary to refer. The High Court is a superior Court of Record and under Article 215, shall have all powers of such a Court of Record including the power to punish contempt of itself. One distinguishing characteristic of such superior Courts is that they are entitled to consider questions of their jurisdiction raised before them. This question fell to be considered by this Court in Special Reference No. 1 of 1964, (1965) 1 S.C.R. 413 at p. 499. In that case, it was urged before this Court that in granting bail to Keshav Singh, the High Court had exceeded its jurisdiction and as such, the order was a nullity. Rejecting this argument, this Court observed that in the case of a superior Court of Record, it is for the Court to consider whether any matter falls within its jurisdiction or not. Unlike a court of limited jurisdiction, the superior court is entitled to determine for itself questions about its own jurisdiction.
That is why this Court did not accede to the proposition that in passing the order for interim bail, the High Court can be said to have exceeded its jurisdiction with the result that the order in question was null and void. In support of this view, this Court cited a passage from Halsbury’s Laws of England where it is observed that:- “prima facie, no matter is deemed to be beyond the jurisdiction of a superior court unless it is expressly shown to be so, while nothing is within the jurisdiction of an inferior court unless it is expressly shown on the face of the proceedings that the particular matter is within the cognizance of the particular Court.” (Halsbury’s Laws of England, Vol. 9, p. 349).”.
If the decision of a superior Court on a question of its jurisdiction is erroneous, it can, of course, be corrected by appeal or revision as may be permissible under the law; but until the adjudication by a superior Court on such a point is set aside by adopting the appropriate course, it would not be open to be corrected by the exercise of the writ jurisdiction of this Court.”
(emphasis is ours)
Just like High Courts, the Supreme Court is a superior Court of Record. This mandate is expressly contained in Article 129 of the Constitution of India. Since it is not the case of the petitioner before this Court, that there is some legislative or constitutional provision, curtailing the jurisdiction of this Court, to pass an order of the nature which is impugned through the instant writ petition, it stands acknowledged, that the above order has been passed by this Court, in legitimate exercise of its jurisdiction.
19. On the subject of obedience of orders passed by this Court, this Court recently in K.A. Ansari v. Indian Airlines Ltd., (2009) 2 SCC 164, observed thus: “The respondent Indian Airlines was obliged to obey and implement the … direction. If they had any doubt or if the order was not clear, it was always open to them to approach the court for clarification of the … order. Without challenging the … direction or seeking clarification, Indian Airlines could not circumvent the same, on any ground whatsoever. Difficulty in implementation of an order passed by the Court, howsoever grave its effect may be, is no answer for its non-compliance.”
It is therefore that Article 142 of the Constitution of India mandates that this Court “…in exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it, and any decree so passed or order so made shall be enforceable throughout the territory of India…” And it is also inter alia for the above enforcement, that Article 129 of the Constitution of India, vests in the Supreme Court the power, amongst other things, to enforce compliance of Court directions. The Supreme Court has the jurisdiction and power, to punish for its contempt. It is this dispensation, which authorizes the Supreme Court to enforce compliance of its orders. For, the power to punish, would serve no purpose, if the power to enforce compliance was lacking.
It was, therefore, that this Court in Maninderjit Singh Bitta v. Union of India, (2012) 1 SCC 273, with reference to its contempt jurisdiction observed, thus:- “26. It is also of some relevance to note that disobedience of court orders by positive or active contribution or non-obedience by a passive and dormant conduct leads to the same result. Disobedience of orders of the court strikes at the very root of rule of law on which the judicial system rests. The rule of law is the foundation of a democratic society. Judiciary is the guardian of the rule of law. If the Judiciary is to perform its duties and functions effectively and remain true to the spirit with which they are sacredly entrusted, the dignity and authority of the courts have to be respected and protected at all costs (refer T.N. Godavarman Thirumulpad vs. Ashok Khot, (2006) 5 SCC 1).
The proceedings before the highest court of the land in a public interest litigation, attain even more significance. These are the cases which come up for hearing before the court on a grievance raised by the public at large or public spirited persons. The State itself places matters before the Court for determination which would fall, statutorily or otherwise, in the domain of the executive authority. 27. It is where the State and its instrumentalities have failed to discharge its statutory functions or have acted adversely to the larger public interest that the courts are called upon to interfere in exercise of their extraordinary jurisdiction to ensure maintenance of the rule of law.
These are the cases which have impact in rem or on larger section of the society and not in personam simpliciter. Courts are called upon to exercise jurisdiction with twin objects in mind. Firstly, to punish the persons who have disobeyed or not carried out orders of the court i.e. for their past conduct. Secondly, to pass such orders, including imprisonment and use the contempt jurisdiction as a tool for compliance of its orders in future. This principle has been applied in the United States and Australia as well. 34. Having found them guilty under the provisions of the 1971 Act and under Article 129 of the Constitution of India, we punish the Secretary, Transport and Commissioner, State Road Transport Authority of the State of Haryana as under:
(i) They are punished to pay a fine of Rs.2,000/- each and in default, they shall be liable to undergo simple imprisonment for a period of fifteen days.
(ii) We impose exemplary cost of Rs.50,000/- on the State of Haryana, which amount, at the first instance, shall be paid by the State but would be recovered from the salaries of the erring officers/officials of the State in accordance with law and such recovery proceedings be concluded within six months. The costs would be payable to the Supreme Court Legal Services Committee.
(iii) In view of the principle that the courts also invoke contempt jurisdiction as a tool for compliance of its orders in future, we hereby direct the State Government and the Respondent/contemnor herein now to positively comply with the orders and implement the scheme within eight weeks from today.”
(emphasis is ours)
In this context, the following observations made by this Court, in Supreme Court Bar Association v. Union of India, (1998) 4 SCC 409, illustrate the point sought to be made:
“42. The contempt of court is a special jurisdiction to be exercised sparingly and with caution, whenever an act adversely effects the administration of justice or which tends to impede its course or tends to shake public confidence in the judicial institutions. This jurisdiction may also be exercised when the act complained of adversely effects the Majesty of Law or dignity of the courts. The purpose of contempt jurisdiction is to uphold the majesty and dignity of the Courts of law. It is an unusual type of jurisdiction combining “the jury, the judge and the hangman” and it is so because the court is not adjudicating upon any claim between litigating parties.
This jurisdiction is not exercised to protect the dignity of an individual judge but to protect the administration of justice from being maligned. In the general interest of the community it is imperative that the authority of courts should not be imperiled and there should be no unjustifiable interference in the administration of justice. It is a matter between the court and the contemner and third parties cannot intervene. It is exercised in a summary manner in aid of the administration of justice, the majesty of law and the dignity of the courts. No such act can be permitted which may have the tendency to shake the public confidence in the fairness and impartiality of the administration of justice.”
(emphasis is ours)
We are satisfied to hold, that the provisions referred to by us in the order dated 4.3.2014 (Articles 129 and 142 of the Constitution of India) vest in the Supreme Court, the power to persuade, and if necessary, compel obedience and observance, of judicial orders. It is not possible, to view this matter in any other perspective, in the background of the conclusion recorded by us hereinabove, namely, non-compliance of the orders of the Supreme Court, would dislodge the cornerstone maintaining the equilibrium and equanimity, in the governance of this country. This has been the manner of understanding, of the power of this Court. In case there has been any ambiguity, let it now be understood, that this Court has the unlimited power (in fact, the sacred obligation), to compel obedience and observance of its orders.
III. Facts reflecting the demeanour of the two companies, the petitioner, and other directors of SIRECL and SHICL, in the process of litigation, leading upto the passing of the order dated 31.8.2012.
20. During our entire careers as Advocates practicing before the High Court and before this Court, and as Judges of different High Courts, as Chief Justices of High Courts in different States, and also, as Judges of this Court, we have yet to experience a demeanour of defiance, similar to the one adopted by SIRECL or SHICL or their promoter and directors. The responsibility of the above defiance, which constituted a rebellious behaviour, challenging the authority of the SEBI, from investigating into the affairs of the two companies, required brazenness, flowing from unfathomable power and authority.
It is therefore essential to recapitulate, the demeanour adopted by the two companies, before the SEBI (FTM), which position remained unaltered, before the SAT. These need to be highlighted, to fully understand how a litigant can behave, to defeat the cause of justice. The responsibility for the above demeanour, would essentially fall, on the shoulders of the promoter, and the directors, of the two companies. As a matter of fact, Mr. Subrata Roy Sahara (the petitioner before this Court), Ms. Vandana Bhargava (the director exempted from arrest, in the impugned order dated 4.3.2014), Mr. Ravi Shankar Dubey and Mr. Ashok Roy Choudhary (the directors, whose arrest and detention was ordered by this Court, along with that of the petitioner, on 4.3.2014) were expressly named by the SEBI, and prohibitory orders were passed by the SEBI (FTM), against the afore-stated promoter and directors, expressly restraining them from carrying out various activities connected with the two companies.
It is also essential, to refer to the disposition of the two companies (under reference), in the proceedings initiated by them, before the High Court of Judicature at Allahabad, Lucknow Bench (hereinafter referred to as, ‘the High Court’). The above referred disposition, led to passing of strictures, and the vacation of an interim order passed by the High Court, in their favour. That too, would show their spirit of defiance. The impressions gathered by this Court, when the two companies appeared before this Court in Civil Appeal Nos. 9813 and 9833 of 2011, are also significant. Thus, the above details are being set out briefly, herein below.
21. A complaint was addressed by “Professional Group for Investors Protection” on 25.12.2009, alleging violation of the provisions of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as, ‘the SEBI Act’), against the companies under reference. On similar lines, another complaint was addressed to the SEBI by one “Roshan Lal” on 04.01.2010. In order to probe the authenticity of the allegations leveled in the complaints, the SEBI sought information from Enam Securities Private Limited – a merchant banker. In its response dated 21.2.2010, Enam Securities Private Limited asserted, that the OFCDs issued by SIRECL and SHICL, had been issued in conformity with all applicable laws. In sum and substance, the above merchant banker did not tender any reply, which could have been of help, to determine the authenticity of the allegations leveled in the complaints.
22. All the same, the SEBI again sought further details from Enam Securities Private Limited. The particulars of the information sought are being extracted herein below:
“a. details regarding the filing of RHP of the said companies with the concerned RoC.
b. date of opening and closing of the subscription list.
c. details regarding the number of application forms circulated after the filing of the RHP with RoC.
d. details regarding the number of applications received.
e. the number of allottees
f. list of allottees.
g. the date of allotment.
h. date of dispatch of debenture certificates etc.
i. copies of application forms, RHP, pamphlets and other promotional material circulated.” Enam Securities Private Limited, however, did not furnish the information sought.
23. The SEBI then directly sought the desired information from SIRECL and SHICL, through two separate letters dated 12.05.2010. Instead of furnishing the details of the information sought, the companies under reference, required the SEBI to furnish them the complaints, which had prompted it to seek the information.
24. The SEBI again addressed separate communications to the two companies, dated 21.5.2010, seeking the same information. Both companies adopted the same posture, yet again. This time, however, SIRECL, as well as, SHICL pointed out to the SEBI, that it had no jurisdiction to inquire into the affairs of the two companies, under the provisions of the SEBI Act.
25. The SEBI repeated its request to the two companies, for the required information, through two separate communications, dated 11.06.2010. On this occasion, the two companies addressed separate letters dated 16.06.2010 to the SEBI, informing it, that they had received a communication from the office of the Union Minister of State for Corporate Affairs, to the effect, that the jurisdictional issue raised by the two companies, was under the consideration of the Ministry of Corporate Affairs. Accordingly, the two companies informed the SEBI, that they would furnish the information sought, only upon the Ministry’s conclusion, that the SEBI had the jurisdiction in the matter.
26. In view of the posture adopted by the two companies, summons dated 30.8.2010 and 23.9.2010, were issued under Section 11C of the SEBI Act to them, to provide the following information:
“1. Details regarding filing of prospectus/Red-herring Prospectus with ROC for issuance of OFCDs. 2. Copies of the application forms, Red-Herring Prospectus, Pamphlets, advertisements and other promotional materials circulated for issuance of OFCDs.
3. Details regarding number of application forms circulated, inviting subscription for OFCDs. 4. Details regarding number of applications and subscription amount received for OFCDs.
5. Date of opening and closing of the subscription list for the said OFCDs.
6. Number and list of allottees for the said OFCDs and the number of OFCDs allotted and value of such allotment against each allottee’s name;
7. Date of allotment of OFCDs;
8. Copies of the minutes of Board/committee meeting in which the resolution has been passed for allotment;
9 Copy of Form 2 (along with annexures) filed with ROC, if any, regarding issuance of OFCDs or equity shares arising out of conversion of such OFCDs.
10. Copies of the Annual Reports filed with Registrar of Companies for the immediately preceding two financial years.
11. Date of dispatch of debenture certificate etc.” The aforesaid summons were responded to by the companies, through two separate communications dated 13.09.2010, wherein the companies again adopted the stance, that the SEBI had no jurisdiction in the matter, and further, that the matter of jurisdiction was being examined by the Ministry of Corporate Affairs. Based on the above response, the companies required the SEBI to withdraw the above summons (dated 30.8.2010 and 23.9.2010).
27. On 30.09.2010, through separate letters issued by SIRECL and SHICL, the companies adopted the stance, that they did not have the complete information sought by the SEBI. This was indeed a shocking disclosure, by two statutory entities, holding thousands of crores of rupees of investment funds, deposited by crores of investors. Such like absurdities, were routine defences, adopted by the two companies.
28. The Chief Financial Officer of the Sahara India Group of Companies sought an opportunity of personal hearing. The SEBI (FTM) afforded the above sought opportunity of hearing, on 03.11.2010. During the course of hearing, it was impressed upon the Chief Financial Officer, that he should furnish information solicited by the SEBI (through the aforesaid summons, dated 30.8.2010 and 23.9.2010), fully and accurately, without any delay. Despite the above, neither of the two companies, furnished the information sought.
29. On its own, the SEBI obtained a part of the information, from the MCA- 21 portal maintained by the Ministry of Corporate Affairs. This information had been furnished by SIRECL, to the Registrar of Companies, Uttar Pradesh and Uttarakhand; and by SHICL, to the Registrar of Companies, Maharashtra. By an order dated 24.11.2010, the SEBI (FTM) drew the following inferences/conclusions: “Firstly, neither SIRECL nor SHICL had denied their having issued OFCDs. Secondly, SIRECL as also SHICL acknowledged having filed RHPs in respect of the OFCDs issued by them with the concerned Registrar of Companies.
Thirdly, besides the dates of filing the RHPs with the respective Registrar of Companies, neither of the companies had furnished any other information/document sought from the companies by SEBI. Fourthly, the companies had adopted a stance, that they did not have complete details relating to the securities issued by them. This stance adopted by the two companies, according to the SEBI, was preposterous. Fifthly, SEBI had sought details of the number of application forms circulated, the number of application forms received, the amount of subscription deposited, the number and list of allottees, the number of OFCDs allotted, the value of allotment, the date of allotment, the date of dispatch of debenture certificates, copies of board/committee meetings, minutes of meetings during which the said allotment was approved.
According to SEBI, since the information sought was merely basic, the denial of the same by the companies amounted to a calculated and deliberate denial of information. Sixthly, information sought by the SEBI depicted at serial number fifthly hereinabove, was solicited to determine the authenticity of the assertion made by the companies, that the OFCDs had been issued by way of private placement. Whereas, it was believed by the SEBI that the companies had issued the OFCDs to the public. Seventhly, since the companies had adopted the position, that the OFCDs were issued by way of private placement to friends, associate group companies, workers/employees and other individuals who were associated/affiliated/connected to the Sahara Group of Companies, according to SEBI it was highly improbable, that the details and particulars of such friends, associate group companies, workers/employees and other individuals which were associated/affiliated/connected to the Sahara India Group of companies, was not available with them (for being passed over to SEBI).” wherein the following summary of inferences was recorded:
“i. The issue of OFCDs by the companies have been made to a base of investors that are fifty or more in number.
ii. The companies themselves tacitly admit the same as they have no case that funds have been mobilized from a group smaller than fifty.
iii. A resolution under section 81(1A) of the Act does not take away the ‘public’ nature of the issue.
iv. The filing of a prospectus under the Act signifies the intention of the issuer to raise funds from the public. Therefore, for the aforesaid reasons, the submission of the companies that their OFCD issues are made on private placement and do not fall under the definition of a public issue, is not tenable.
The instances discussed above would prima facie suggest that the offer of OFCDs made by the companies is “public” in nature .”
30. Based on the DIP Guidelines and the ICDR Regulations, the SEBI (FTM) found, that the two companies had committed, the following violations:
a) failure to file the draft offer document with SEBI;
b) failure to mention the risk factors and provide the adequate disclosures that is stipulated, to enable the investors to take a well-informed decision.
c) denied the exit opportunity to the investors.
d) failure to lock-in the minimum promoters contribution.
e) failure to grade their issue.
f) failure to open and close the issue within the stipulated time limit.
g) failure to obtain the credit rating from the recognized credit rating agency for their instruments.
h) failure to appoint a debenture trustee
i) failure to create a charge on the assets of the company.
j) failure to create debenture redemption reserve, etc.”
Based on the above conclusions, the SEBI (FTM) issued directions by way of an ad interim ex parte order, restraining SIRECL and SHICL from mobilizing funds under their respective RHPs, dated 13.03.3008 and 06.10.2009. The companies were also directed, not to offer their equity shares/OFCDs or any other securities, to the public and/or invite subscription in any manner whatsoever, either directly or indirectly, till further directions. The SEBI’s ad interim ex parte order dated 24.11.2010 expressly referred to Mr. Subrata Roy Sahara, Ms. Vandana Bhargava, Mr. Ravi Shankar Dubey and Mr. Ashok Roy Choudhary. They were named as promoter and directors, in the RHPs filed by the two companies, before the respective Registrar of Companies. The above named promoter and directors, were expressly prohibited from issuing prospectus, or any other offer document, or issuing advertisement for soliciting money, from the public for the issue of securities, in any manner whatsoever, either directly or indirectly, till further orders.
31. The SEBI’s order dated 24.11.2010 was challenged before the High Court through Writ Petition No.11702 (M/B) of 2010 on 29.11.2010. On 13.12.2010, the High Court stayed the operation of the order dated 24.11.2010. On an application filed by the SEBI, the High Court vacated its interim order. While vacating the interim order, the High Court observed, inter alia: “4. …..The petitioners were supposed to cooperate in the inquiry and their interest was protected by restraining the SEBI from passing any final orders. The matter was being heard finally under the expectation that the assurances given by the learned counsel for the petitioners would be honoured by the petitioners and the matter would be finished at the earliest. But the petitioners appear to have thought otherwise. The court’s order cannot be allowed to be violated or circumvented by any means. We, therefore, do not find any ground to continue with the interim order, which is hereby vacated for the own conduct of the petitioners and for which they have to thank their own stars.”
(emphasis is ours)
It is, therefore, apparent that the High Court had denied relief to the companies because of their non-cooperative attitude in the inquiry being conducted by the SEBI. It was also sought to be concluded against the two companies, that they had not honoured the commitments given to the Court. And further that, they were guilty of violating and circumventing Court’s orders. The order passed by the High Court, is yet another instance of the defiance of the two companies, in allowing their affairs to be investigated.
32. The SEBI issued yet another show cause notice dated 20.5.2011, to the two companies, principally on the same facts and grounds, as the earlier show cause notice dated 24.11.2010. The above notices were contested by both the companies, again on legal technicalities. Importantly, the companies yet again, did not furnish any factual details to the SEBI. The defiance continued.
33. On 23.6.2011, the SEBI(FTM), passed the following directions:-
“1. The two Companies, Sahara Commodity Services Corporation Limited (earlier known as Sahara India Real Estate Corporation Limited) and Sahara Housing Investment Corporation Limited and its promoter, Mr. Subrata Roy Sahara, and the directors of the said companies, namely, Ms. Vandana Bhargava, Mr. Ravi Shankar Dubey and Mr. Ashok Roy Choudhary, jointly and severally, shall forthwith refund the money collected by the aforesaid companies through the Red Herring Prospectus dated March 13, 2008 and October 6, 2009, issued respectively, to the subscribers of such Optionally Fully Convertible Debentures with interest of 15% per annum from the date of receipt of money till the date of such repayment.
2. Such repayment shall be effected only in cash through Demand Draft or Pay Order.
3. Sahara Commodity Services Corporation Limited (earlier known as Sahara India Real Estate Corporation Limited) and Sahara Housing Investment Corporation Limited shall issue public notice, in all editions of two National Dailies (one English and one Hindi) with wide circulation, detailing the modalities for refund, including details on contact persons including names, addresses and contact details, within fifteen days of this Order coming into effect.
4. Sahara Commodity Services Corporation Limited (earlier known as Sahara India Real Estate Corporation Limited) and Sahara Housing Investment Corporation Limited are restrained from accessing the securities market for raising funds, till the time the aforesaid payments are made to the satisfaction of the Securities and Exchange Board of India.
5. Further, Mr. Subrata Roy Sahara, Ms. Vandana Bhargava, Mr. Ravi Shankar Dubey and Mr. Ashok Roy Choudhary are restrained from associating themselves, with any listed public company and any public company which intends to raise money from the public, till such time the aforesaid payments are made to the satisfaction of the Securities and Exchange Board of India.”
(emphasis is ours)
34. The order of the SEBI (FTM) came to be assailed by the two companies, before the SAT. Even during the course of appellate proceedings, the companies did not disclose, the factual position. The companies, continued to contest the claim of the respondents, by relying on technicalities of law, i.e., on the same legal parameters, as had been adopted by them before the SEBI (FTM). The SAT by its order dated 18.10.2011 upheld the order passed by the SEBI (FTM) dated 23.6.2011. The SAT directed the appellant companies to refund the entire money collected from the investors, within six months (from the date of its order dated 18.10.2011).
35. Thereupon the matter was brought to this Court by way of appeals preferred by the two companies concerned, i.e., Civil Appeal nos. 9813 and 9833 of 2011. On 28.11.2011, this Court passed the following interim order:- “By the impugned order, the appellants have been asked by SAT to refund a sum of Rs.17,400 crores approximately on or before 28.11.2011. We extend the period upto 9.1.2012.” It is, therefore, that this Court while issuing the interim directions, merely permitted the two companies concerned to refund a sum of Rs.17,400 crores (approximately) as directed by the SEBI (FTM) and SAT, upto 9.1.2012.
It is, however, imperative to understand, that this Court while passing the above interim order, did not vary the manner of making refunds, in case the two companies concerned decided to make any refund to the investors. In this behalf it needs to be noticed, that in its order dated 23.6.2011, the SEBI (FTM) had clearly directed, that such repayment could only be made in cash through demand draft or pay order. No liberty was granted to the two companies, to convert the investment made by the holders of the OFCD’s, into similar investments, with the other companies. In other words, cash conv