Breather for Sahara, to present its case to RBI

New Delhi: Sahara India Finance Corporation (SIFCL) has got some reprieve from Supreme Court after it was pulled up by the Reserve Bank of India (RBI) for not protecting the interest of its investors.

The SC has given SIFCL another chance to present its case and directed the company to present itself before the RBI on June 12.

Hearing the case, the SC bench comprising Justice Arijit Pasayat and Justice PP Naolekar said that the interim order of Lucknow Bench of Allahabad High Court staying the RBI action against SIFCL will not be in operation.

Sahara's lawyer KK Lahiri said the company was on a strong wicket.

"I don't think anything should worry the depositors. We are law-abiding. We were not granted a fair hearing (by RBI). We had filed our reply on June 2 on RBI's showcause notice," Lahiri said.

When asked if depositors can withdraw their money, Lahiri replied that it depends on the schemes.

"Till the matter is disposed afresh by RBI, its order of June 4 will not be given effect and at the same time interim protection granted to Sahara India Financial Corporation by the High Court shall not be operative," the SC said.

While senior counsel Mukul Rohtagi appeared for SIFCL, PR Andhyarujina represented RBI.

"Since the entire matter has been disposed by this court, there will be no need for the High Court to deal with the matter," the bench said.

The bench, while passing the order, said, "We are of the view that in view of peculiar facts involved in the matter, RBI should give opportunity to SIFCL for personal hearing."

The RBI had earlier approached the SC, challenging the Allahabad High Court's stay on an order banning Sahara India Pariwar's para-banking company from taking fresh deposits or renewing old ones.

The apex bank had claimed that it wasn't even heard by the High Court on this issue.

Regarding their decision to ask SIFCL to stop taking fresh deposits or renewing old ones, RBI stated violations over maintenance of directed investments and payment of minimum interest rate etc.

The decision to restrain SIFCL was taken on June 4 and the very next day (June 5), Sahara Group Chairman Subroto Roy got a stay order against the RBI directive from the Allahabad High Court.

The RBI challenged the stay order in the SC on June 6.

SIFCL claims that it has about Rs 20,000 crore as deposits and an investor base of nearly 60 lakh.

(With inputs from Arunima)