Sahara to sue Mirach for gross criminal conduct after deal collapse

Sahara Group Chairman Subrata Roy gestures as he speaks during a news conference in Kolkata November 29, 2013. REUTERS/Rupak De Chowdhuri/Files

Indian conglomerate Sahara said on Thursday it was taking legal action against U.S.-based Mirach Capital Group after the collapse of talks between the two, intended to raise funds to pay the $1.6 billion bail of Sahara’s jailed boss Subrata Roy.

The talks involved a loan by Mirach secured against some of Sahara’s properties including New York’s Plaza hotel, but they collapsed acrimoniously. Sahara said it had found out a bank letter underpinning the proposed deal and supposed to confirm the existence of funds with Mirach was forged.

Sahara said in a statement on Thursday it was initiating civil and criminal legal action in India and the United States for “gross criminal conduct” by Mirach and its officials.

Mirach said it was preparing its own legal action against Sahara and a statement would be released later. It has rejected Sahara’s allegation it forged the bank letter and has accused Sahara of trying to “discredit and smear” its reputation.

Roy has been held in a New Delhi jail since March on contempt charges after he failed to comply with a court order to repay investors in a bond scheme that was later ruled to be illegal.

The bail money, the largest ever in India, reflects the scale of the illegal bond scheme. The court has said investors need to be repaid as much as $7 billion including accrued interest.

In an email sent on Wednesday to Sahara and some lawyers involved in the case, a copy of which was seen by Reuters, Mirach CEO Saransh Sharma said though the refinancing deal talks had been called off, the Supreme Court should allow it to buy the properties.

Mirach asserted it wanted to bring a “swift resolution” in favour of Sahara’s creditors, adding it had access to funds for the acquisition.

But Sahara said on Thursday it had discovered Mirach did not have its own funds and was trying to build a consortium to jointly finance the acquisition of its overseas hotels.

“As such, the financial capabilities of MCG (Mirach Capital Group) and Mr. Sharma are doubtful,” it said.

The Supreme Court on Wednesday asked Sahara to submit a fresh plan for raising funds, which will be used to repay Sahara investors.

The group said it was working on another deal with the aim of complying with that court order soon.