SC orders fresh hearing of Sahara Finance Corp case

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New Delhi, Jun 9 (UNI) The Supreme Court today set aside both Allahabad High Court and Reserve Bank of India (RBI) rulings debarring Sahara India Finance Corporation Limited (SIFCL) from accepting deposits from investors, and directed RBI to give a fresh hearing to SIFCL.

A vacation bench comprising Justices Arijit Pasayat and P P Naolekar directed that the fresh hearing be held on June 12, and SIFCL should place all its arguments along with the entire material it wants to rely on before the competent authority appointed by RBI for giving fresh hearing.

The apex court in its order said, ''In view of the facts involved in the case, it will be appropriate that RBI gives them a fresh hearing. The respondent shall appear before RBI on June 12, 2008, and RBI shall pass a fresh order after hearing SIFCL. The impugned High Court order shall not be given effect to.'' Earlier, senior counsel T R Andhyaarjina, appearing for RBI, contended before the court that the respondent was issued a show-cause notice on May 9 and was given ample opportunity of hearing and the ban order was passed on June 2, after the RBI came to the conclusion that the company, a residuary non-banking unit belonging to Sahara Group, had violated RBI guidelines while accepting deposits from the public and the ban order was passed to protect the interest of a large number of investors in the company.

Senior counsel Mukul Rohatagi, appearing for the company, contended before the court that SIFCL had five crore investors across the country and about Rs 18000 crore as public deposits and the company had been debarred by the RBI from accepting deposits from the depositors without being given a fresh hearing which was violative of principle of natural justice and fair play.

UNI SC AM GC1404

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