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Supreme Court sends Subrata Roy to Tihar

Expresses doubts over 'existence of so-called investors'; custody till Sahara makes a concrete proposal

BS Reporter  |  New Delhi 

The Supreme Court on Tuesday ordered that Sahara chief Subrata Roy and two directors be kept in judicial custody in Delhi till the group came up with a “concrete proposal” to pay over Rs 20,000 crore to the Securities and Exchange Board of India (Sebi). A Supreme Court Bench accepted Roy’s apology for failing to appear last week and patiently heard arguments made personally by him. But it took exception to the group’s contrary stands over the past one and a half years and observed false statements had been made under sworn affidavits. Earlier, one Manoj Sharma, claiming to be a Sahara investor, threw ink on Roy’s face in the Court complex when the Sahara chief was being brought to be produced before the Bench. In a detailed order posted on its website, the Court said: “We notice, on this day also, no proposal is forthcoming to honour the judgment of this Court dated August 31, 2012, and the orders passed by this Court on December 5, 2012, and February 25, 2013, by a three-judge Bench. In such circumstances, in exercise of the powers conferred under Articles 129 and 142 of the Constitution of India, we order detention of all the contemnors, except Mrs Vandana Bhargava (the fourth respondent). They will be sent to judicial custody in Delhi till the next date of hearing.” The Bench, comprising judges K S Radhakrishnan and J S Khehar, pointed out that this concession was being extended towards the fourth respondent because she was a woman and “to enable the contemnors to be in a position to propose an acceptable solution for execution of our orders, by coordinating with the detenues.” “Mrs Vandana Bhargava, who herself is one of the directors, is permitted to be in touch with the rest of the contemnors and submit an acceptable proposal arrived at during their detention, so that the Court can pass appropriate orders,” the Court added.

ALSO READ: 10 things you need to know about Sahara row Soon after the order, Delhi police took custody of Roy, besides directors Ashok Roy Choudhry and Ravi Shankar Dubey. Tihar jail spokesperson Sunil Gupta confirmed Roy would be lodged in the capital’s high-security prison complex. “At present, he is in a hospital, undergoing check-ups. After his arrival, he is likely to be lodged in jail number 2 or 4,” he told Business Standard. Sebi counsel Arvind Datar presented the efforts made by Sebi to verify truckloads of documents and slammed the group for making several contradictory statements since the August 2012 order. “Every hearing they come with a new story; every time we disprove their story. They come with a new story,” he said accusing the group of wasting time. “This case has had well-advised periods and not-so-well-advised periods.

But what it did not have was a truthful period,” Datar said. In his concluding plea, Datar indicated the two proposals that might be agreeable to the regulator: The group has to either sell its assets and pay up the remaining amount or the entire group has to be put under receivership. The Court said that the contemnors had maintained an unreasonable stand throughout the proceedings before Sebi, the Securities Appellate Tribunal (SAT), the high court and the Supreme Court. “Reports/analyses filed by Sebi on February 18 make detailed reference to the submissions, documents, etc, furnished by the contemnors, which indicate they were filing and making unacceptable statements and affidavits all through and even in the contempt proceedings,” the order said. The Bench added the 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”. ALSO READ: High drama greets Subrata Roy at Supreme Court The Bench pointed out that all the fact-finding authorities had opined that a majority of investors did not exist. During the hearing, the judges said the money had to go to government coffers if the authenticity of investors were not established. Dismantling the group’s claims of financial inclusion, the order pointed out that its practices amounted to market abuse that threatened the financial structure of the country. “Preservation of market integrity is extremely important for economic growth of this country and for interest. Maintaining investors’ confidence requires market integrity and control of market abuse. Market abuse is a serious financial crime that undermines the very financial structure of this country and will make imbalance in wealth between haves and have nots,” the Bench said.

ALSO READ: The quirks and eccentricities of 'Saharasri' Subrata Roy

In a decision that followed two hours of intense courtroom drama that included several pleas by Roy himself, the Court made several stern observations on the group. When Sahara counsels pleaded the group was facing a liquidity issue in generating Rs 20,000 crore at short notice, Khehar said: “We have seen hundreds and thousands of crores of cash flow moving here and there in your submissions. There was money.” Radhakrishnan said Sahara’s theory that refund had been made directly to investors was “absolutely wrong”. The Bench was not impressed with the group’s proposal to set up a committee to sell the assets, documents of which had already been filed with Sebi. It also rejected last-minute pleas of senior counsels Ram Jethmalani, Ravi Shankar prasad and Rajiv Dhawan, who appeared for different group entities to relax the directions. Roy himself stood up to plead in the end: “What proposal you want sir?” But the court did not entertain him further.

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First Published: Wed, March 05 2014. 00:59 IST