SC asks Sahara firms why Roy should not be detained

Sebi counsel told the court the story of the Sahara bonds was getting 'curiouser and curioser'

The Supreme Court on Monday directed two Sahara group companies to explain within a week why their promoter Subrata Roy and two male directors should not be detained in civil prison and their passports impounded.

The Securities and Exchange Board of India (Sebi) has also asked the court to call Roy and directors to the court to answer its contempt of court petition. Sebi moved an application for these orders and the court posted the next hearing on May 2.

Sebi counsel Arvind Datar told the court that the story of the Sahara bonds was getting “curiouser and curioser”. The company has moved the Allahabad High Court against Sebi appellate tribunal order — against the Supreme Court order. Sebi pressed for contempt of court action against the two companies — Sahara India Real Estate Corporation and Sahara Housing Investment Corporation — that had collected Rs 24,000 crore from investors through optionally fully convertible debentures. According to Sebi, the scheme was illegal and, therefore, the money should be returned to investors.

The Bench, consisting of judges K S Radhakrishnan and J S Khehar, lashed out at the companies for “manipulating the courts”. There was a clear order to repay the investors, but  “you sit back and relax for months; then file appeals after appeals; it is strange,” the judges observed.

Sahara companies maintained they had repaid investors who wanted their money. The total money due was Rs 5,200 crore and it was paid. They blamed Sebi for claiming higher amounts. The judges countered and said their order of last year was to give the money to Sebi, which would return it to genuine investors.

When Sebi told the judges the investors could not be traced as addresses were incomplete, the judges asked Sebi to return the money to whoever came with documents. If there was an unclaimed amount, Sebi should give that to the government.
NOT THE FIRST TIME
SC has been closely monitoring the case for two years. Some key directions:

• Jan ‘11: Asks Sahara to share details of investors & amount raised via OFCD issues
• May ‘11: Directs Sebi to pass final order in the matter
• Jan ‘12: Directs Sahara to secure assets to cover refunds of over Rs 24,029 crore to investors
• Aug 31, ‘12: Justices K S Radhakrishnan and J S Khehar pass final order holding the OFCD issues illegal and direct full refund with 15% interest
• Oct 20, ‘12: Court raps Sebi and Sahara for “mutually agreeing to violate the order”; tells Sebi: “If they do not comply with it, take action as per law”
• Feb 7, ‘13: Slams Sebi for not taking coercive steps. “We wonder whether Sahara is committing contempt (of court) or you,” it tells Sebi
• Apr 22, ‘13: Slams Sahara for misleading the legal process by filing appeals in lower courts against directions of the apex court; asks why Subrata Roy and others should not be detained