Subrata Roy liable for contempt, Sebi tells SC

Refers to filings by companies saying he is the "promoter"

The Securities and Exchange Board of India (Sebi) on Tuesday told the Supreme Court that Sahara India chief Subrata Roy was liable for contempt of court proceedings in his capacity as promoter of Sahara India Real Estate and Sahara Housing Investment.

Sebi has moved contempt petitions against the companies, directors and Roy for allegedly willfully disobeying the order of the Supreme Court to deposit Rs 24,029 crore, along with interest of 15 per cent. On Tuesday, the court heard the arguments of Sebi with regard to contempt, as well as Roy’s role, and adjourned the matter to August 6.

Sebi counsel Arvind Datar told the court the Sahara firms had clearly violated court directions. “There could not be a clearer case of contempt. They ask for more time, and then they don’t comply. Then they say they have already paid and when this plea is dismissed, they again ask for more time, which is also dismissed. It must be taken that the court has not accepted their plea. Non-payment of money amounts to contempt,” Datar said.

He added the parties had violated Section 2(c), read with Article 129. “They have compounded the contempt by frustrating the orders of Sebi dated February 13, 2013 and March 26, 2013.”

On Roy, Datar said a Sebi whole-time member had issued a show-cause notice to him and had recorded specific findings against him in a June 2011 order. “By virtue of being promoter of the companies and by virtue of the findings of Sebi, Roy is in the same footing as the directors of the company,” he said. Therefore, Roy fell within the ambit of the term “officer in default” under the contempt proceedings, the Sebi counsel said.

He produced several filings with the Registrar of Companies, including the red herring prospectus of the optionally fully convertible debentures issue in which Roy was named promoter of Sahara India Real estate, with 70 per cent stake. In a different filing, he was referred to as an individual with “significant influence”.

In a statement issued quoting its counsel Keshav Mohan, the Sahara group said the court didn’t issue a notice of contempt against Subrata Roy on the second contempt petition. The statement said, “While referring to the affidavit filed by Sahara on January 4, 2012, Sebi argued in the said affidavit, an undertaking had been given, which had been violated. The Supreme Court also enquired with Sebi as to how the said other group companies, which were independent legal entities, were bound by the said affidavit, filed by the two Sahara companies. The Sebi counsel indicated this issue would be addressed by him separately.”

Sebi pointed to an advertisement in a newspaper on September 3 2012, terming it an instance of Sahara’s contemptuous conduct. “The court, on referring to the said publication, observed this didn’t amount to contempt and indicated Sebi may not read further advertisements,” the statement said.