SC links release of Sahara's Subrata Roy to full payment of dues

Sahara to repay the full amount over 18 months in 9 instalments of Rs 3000 cr

A three-judge Supreme Court Bench headed by T S Thakur on Friday approved a format for a bank guarantee for Sahara group chief Subrata Roy’s bail, but linked the trigger point for its invocation to the payment of total dues of about Rs 36,000 crore.

It gave a detailed timeline and payment schedule to be followed by the group for Roy’s release. The court also said Roy couldn’t leave the country till the full payment was made. He, along with the other contemnors, has been directed to submit his passport to the court; movement within the country has to be reported to the police fortnightly.

The decision is likely to extend Roy’s stay at Tihar jail here, as Sahara lawyers indicated they would have to get into fresh negotiations for the bank guarantee. Lawyers said the earlier guarantor had backed out and a fresh bank guarantee had to be arranged, in accordance with the terms spelt out in Friday’s judgment. The court gave Roy eight more weeks in a special facility at Tihar jail, dismissing a separate application filed by him for parole.

According to a 2012 judgment of the apex court, Sahara group firms Sahara India Real Estate Corp and Sahara Housing Invest Corp were to deposit the Rs 24,029 crore they raised from 29.6 million investors to the Securities and Exchange Board of India (Sebi), along with an annual interest of 15 per cent. Of this, Sahara paid only Rs 5,120 crore within the prescribed time limit, claiming the rest was refunded directly to investors. In March 2014, the court rejected the ‘refund’ argument and sent Roy to Tihar jail for not complying with its directions. Subsequently, it allowed him bail on the condition that he deposit Rs 5,000 crore in bank guarantee and Rs 5,000 crore in cash.

The court also allowed Roy special negotiation facilities inside the jail to sell various group assets in India and abroad to raise the required sum.

After several attempts, the group came up with a format for a bank guarantee just before the summer vacation for courts began last month. It had paid about 80 per cent of the cash portion.

However, Sebi objected to the format, saying it didn’t clearly spell out the trigger point for the bank guarantee to be invoked in view of the total dues, which were swelling due to the interest component.

HARD TIMES
Key numbers spelt out in Friday’s judgment

• Total dues*: Rs 36,000 crore
• Deadline for full payment: 18 months from date of release of Roy
• Bi-monthly instalment amount: Rs 3,000 crore
• Number of instalments: 9
• Additional time given for negotiations: 8 weeks

Fresh conditions for Roy’s release

•  Can’t leave the country
• Needs to submit passport with court
• Report to Tilak Marg police station fortnightly
• Keep police informed of domestic movements
• Surrender on default of three instalments

*While Sebi has been quoting Rs 38,000 crore to Rs 40,000 crore in its arguments, the Supreme Court Bench mentions dues of Rs 36,000 crore

Considering this, the court has now spelt out specific conditions in its judgment. The bench said Sahara should arrange the payment of total dues in nine instalments in 18 months from the date of Roy’s release. Accordingly, the group has to pay Rs 3,000 crore every two months.

While the release will be upon submission of a Rs 5,000-crore bank guarantee and an equal amount in cash, the court said the guarantee would be invoked if Sahara defaulted on any two instalments, not necessarily consecutive.

If it defaults on three instalments (consecutive or otherwise), Roy has to surrender or will be arrested. During these 18 months, he and other contemnors have to submit their passports with the court and cannot leave the country.

Also, they have to report their movement within the country at the Tilak Marg police station here every fortnight.

Sahara lawyers pleaded that the payments made so far should be adjusted towards the principal and interest should be calculated on the remaining amount. The court agreed to consider this request and asked Sahara to file an application, detailing the calculations. This means there could be changes to the total amount due. While Sebi has been quoting Rs 38,000 crore to Rs 40,000 crore in its arguments, the Supreme Court Bench mentions dues of Rs  36,000 crore.

Sahara also indicated it might seek the court’s permission to reduce the bank guarantee amount by paying the shortfall in cash. The Bench agreed to consider this request, too.