REPORTABLE”
IN THE SUPREME COURT OF INDIA
CRIMINAL ORIGINAL JURISDICTION
WRIT PETITION (CRIMINAL) NO. 57 OF 2014
Subrata Roy Sahara …. Petitioner
versus
Union of India and others …. Respondents
J U D G M E N T
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 ad