SC sends Roy to Tihar, seeks refund formula

Tags: News

Court accepts Sahara chief’s apology but slams his dilatory tactics; 2 directors also remanded

SC sends Roy to Tihar, seeks refund formula
The Supreme Court on Tuesday directed that the head of the Sahara conglomerate, Subrata Roy, remain in custody over the group’s failure to comply with its orders to repay investors in an outlawed investment scheme that raised thousands of crores of rupees from depositors.

Roy, 65, was arrested on Friday after he had failed to appear last week at a Supreme Court hearing — which he says he missed to attend to his ailing mother — in its long-running battle with the securities regulator.

Best known as the former main sponsor of the national cricket team as well as owner of New York’s PlazaHotel and London’s Grosvenor House, Sahara has a net worth of $11 billion and more than 36,000 acres of real estate, according to its website.

“Non-compliance of the orders passed by this court shakes the very foundation of our judicial system and undermines the rule of law,” the court said, ordering that Roy and two other directors be held until the next hearing on March 11 on charges of adopting ‘dilatory tactics’. A third director, Vandana Bhargava, was spared for being a woman. The court said the next appearance could be brought forward if an acceptable proposal is offered.

Sahara did not offer any comment after the hearing. Roy is prone to public shows of patriotism and full-page newspaper ads defending Sahara against the authorities.

He is often photographed with Bollywood stars and cricketers.

He was driven the roughly 500 km from Lucknow to appear on Tuesday at the court in New Delhi. When Roy arrived, a man threw ink on his face and was taken away by the police. The man, who identified himself as ‘Manoj Sharma, a lawyer from Gwalior’, called Roy a thief and accused him of stealing money from the poor.

With his face washed clean of the black ink, Roy, who was brought in police custody from Lucknow, appeared before the Supreme Court bench in a jam-packed room and tendered an unqualified apology with folded hands. The two-judge bench minced no words to tell him, “You pushed us to the corner. Had you been serious, this position would not have arisen.”

Roy begged for more time to comply with its order for depositing the money with market regulator Sebi by selling properties and providing bank guarantee. Wearing his trademark waistcoat and a tie with Sahara logo, Roy made allout efforts to convince the bench that he would abide by all its orders and sought more time to deposit the amount.

The group offered Sebi fresh bank guarantees for Rs 22,500 crore and help to verify investors, including those the group claims it has already refunded. Sahara said it can “depute hundreds of competent workers” to assist Sebi in collating the documents and other information for verification of documents, a bulk of which it has already submitted and some more it offered to submit.

But the court was in no mood to show mercy. At one stage, the court was livid with Roy when he told the bench “I am giving an assurance I will pay the money to you.” Justice Khehar shot back, “We don’t need anything from you.” Roy immediately apologised, saying it was a slip of the tongue.

Sebi brought contempt proceedings against Sahara for failure to comply with a 2012 court order to repay billions of rupees to investors. Sahara claims it repaid most investors and that its remaining liability was less than the Rs 5,120 crore that it deposited with Sebi.

The top court questioned the veracity of the investor documents provided by Sahara. “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,” it said. “All the fact-finding authorities have opined that majority of investors do not exist,” the court said in its order.

Sahara’s core business includes selling financial products, largely to small investors in towns and rural areas. It was two such products, later ruled illegal, that drew Sebi’s attention. Critics, including activist groups, argue Sahara’s investment products are designed to evade regulatory oversight and that they lack transparency on the source and use of funds.

Roy will be kept at the high-security Tihar prison where he will sleep on the floor and eat jail food like an ordinary prisoner. Roy, who calls himself the managing worker of Sahara India Pariwar, will be allowed to meet visitors only twice a week.

“Unlike other jails, where prisoners are categorised under A, B or C categories, we don’t have such a special class. So, he will be kept as an ordinary prisoner,” Tihar Jail spokesperson Sunil Gupta said. “We have two complexes, one at Tihar and the other in Rohini. We have decided to keep him at Tihar complex where he will be treated like any ordinary prisoner,” he said.

Once he reached Tihar, a doctor examined him for any medical condition. “He will be kept in a civil cell to save him from other prisoners,” Gupta said.

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