Supreme Court extends custody of Subrata Roy
Mar 04 2014 , Mumbai/New Delhi
Roy was arrested on Friday after failing to appear at a Supreme Court hearing - which he says he missed to attend to his ailing mother - related to a multi-billion-dollar Sahara investment scheme that was later ruled to be illegal.
Roy and unlisted Sahara have long been subjects of mystery. Roy is prone to public shows of patriotism and full-page newspaper ads defending Sahara against the authorities, and is often photographed with Bollywood stars and cricketers.
Sahara itself is best known as the former main sponsor of the national cricket team, as well as owner of New York's Plaza Hotel and London's Grosvenor House. It has a net worth of $11 billion and more than 36,000 acres of real estate, according to its website.
The Securities and Exchange Board of India (SEBI) says Sahara failed to comply with a 2012 court order to repay billions of dollars to investors. Sahara says it repaid most investors and that its remaining liability was less than the 51.2 billion rupees it deposited with SEBI.
"The question is money. Where is the money and when will it be paid," said Dushyant Dave, a Supreme Court lawyer who has represented Sahara in the past.
The Supreme Court, which has expressed frustration at Sahara's conduct, had ordered Sahara to disclose the details and source of funds from which it said it repaid investors, but a lawyer for the regulator told the court in late January that Sahara had not given the details.
Sahara had offered to give SEBI title deeds of properties it said were worth 200 billion rupees as security, but the regulator said the properties were far over-valued. The court also ordered that Sahara not sell any of its property.
SEBI declined to comment on the case on Monday and a Sahara spokesman did not reply to calls and emails seeking comment.
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 the company lacks transparency on the source and use of funds.
Police went looking for Roy on Thursday at his sprawling Sahara Shaher estate in Lucknow.
Roy turned himself in on Friday and denied he had been "absconding," saying he was meeting doctors over the condition of his 92-year-old mother, as well as a lawyer, and was taken to a government guest house in a forested area on the outskirts of Lucknow.
MAN OF MYSTERY
Roy started out from the city of Gorakhpur in the hardscrabble east of Uttar Pradesh and styles himself a man of the people, though he also makes a show of opulent living and is often photographed with celebrities.
Like many Indian business leaders, he is perceived to be close to politicians.
He is often described in the media as a billionaire, but last year said his assets were less than $1 million.
His titles at Sahara are chairman and managing worker, and he refers to himself as "guardian of the world's largest family" of more than one million employees and agents.
In interview with Reuters last May, he seemed relaxed, asking a visitor about his family and whether he's had lunch. "I'm a very happy person. I am never in tension," he said.
Roy, who often wears a white shirt, black waistcoat and black tie bearing a Sahara logo, last May dismissed the suggestion that he was relishing his headline-making dispute with SEBI.
"Nobody relishes battle," he said in May. "But I have learned one thing from my father right from childhood: that if somebody's good this much to you, be good double to him. If somebody's bad this much, be bad to them double. And he has very clearly taught us, don't accept injustice."