Subrata Roy will remain in Tihar jail till next Tuesday when the court posted the matter for further hearing.
Supreme Court expressed displeasure that the Sahara group asked for assembling of the special bench to hear the matter but did not provide a proper proposal. "It's an insult to us," it observed.
The Sahara group submitted that it was ready to make a cash payment of Rs 2,500 crore within three days and gave an assurance that it will pay the rest of Rs 14,900 crore in five installments by the end of July, 2015.
A bench of justices K S Radhakrishnan and J S Khehar rejected the proposal after SEBI also opposed it on the ground that group is supposed to pay Rs 34,000 crore and not just Rs 17,400 crore which it today agreed to pay.
"It is not a proper proposal and the proposal should be honourable," the bench said.
"You make us assemble (sitting of the special bench) and then you are saying that you won't be able to pay the money.
It is a big insult to us. It is not proper in my view. You should not make us assemble if you don't have a proper proposal to make," Justice Khehar said.
Senior advocate C A Sundaram, who was accompanied by other senior lawyers, tried to convince the court that it is not possible at this stage to raise more money as the main person, Subrata Roy, is behind bars and his people have no access to him in judicial custody.
"The one person who can find money is not in a position to do it. He is the only one who can arrange money. He can work out if he is allowed to get out. We are also not allowed to access him," he pleaded.
At this, the bench said that it can make arrangements to allow Subrata Roy's financial consultants and lawyers to meet him in custody but made it clear that there is no way of getting away from paying the amount.
"For the last one and half years he (Roy) has been out and he has been behind only for the last few days," the bench said adding "We can arrange meetings but you must pay the amount".
The bench then ordered that financial consultants and lawyers of Subrata Roy will be allowed to meet him between 10 and 12 AM every day.
Another senior advocate Ravi Shankar Prasad claimed that not a single investor had filed any complaint against the group and the court should also consider that it is also a matter of livelihood for 14 lakh Sahara employees.
The bench then shot back saying "is there any real investor".
The matter was initially mentioned before a bench of Justices Radhakrishnan and Vikramajit Sen in the morning but it refused to look ito the proposal on the ground that SEBI was not given a copy of the proposal.
It directed the group to furnish the copy of the proposal to counsel of the market regulator and said that it would hear the matter at 11:30 am.
The lawyers again assembled at 11:30 AM and Justice Radhakrishnan then went through the proposal and agreed for assembling of the special bench to consider the proposal.
Justice Radhakrishnan said "the first installment looks attractive".
At 1:30 PM the special bench of justices Radhakrishnan and Khehar assembled but rejected the proposal after SEBI's counsel Pratap Venugopal strongly opposed the offer made by Sahara on the ground that the group was bound to pay Rs 34,000 crore and the proposal was only for Rs,17,400 crore.
He also pleaded that Sahara be not given a long time of 17 months to deposit the money.
The bench then accepted the plea of SEBI and rejected Sahara's proposal.
In the meantime, Sahara counsel submitted that Roy be sent to police custody as they would have better access to him. The bench, however, said that it will hear that plea on March 11.
SC rejects Sahara proposal, Roy to remain in Tihar Jail
(Reuters) Supreme Court on Friday rejected another proposal by the Sahara group to secure the release of its jailed chairman by refunding billions of dollars the company had raised from investors in a now outlawed bond scheme.
Sahara Chairman Subrata Roy, 65, was arrested last Friday for failing to appear at a hearing in the long-running case that pits the unlisted group against the securities regulator, the Securities and Exchange Board of India (SEBI).
SEBI had brought contempt proceedings against Subrata Roy and Sahara for failure to comply with a 2012 Supreme Court order to repay billions of dollars to investors. Sahara has said it repaid most investors and that its remaining liability was less than the 51.2 billion rupees ($836 million) it deposited with SEBI, a claim that has been disputed by the regulator and the court.
Roy was sent to jail on Tuesday. On Friday, lawyers for Sahara told the court the company was ready to pay 25 billion rupees initially, and then an additional 149 billion rupees in five instalments through July 2015, to secure Roy's release.
The court rejected the proposal as unsatisfactory and told Sahara to come up with another plan at the next hearing on March 11, Keshav Mohan, one of the lawyers representing Sahara in the case, told Reuters.
The final figure owed by Sahara is unclear because of interest accrued, as well as a dispute between the group and the regulator over the veracity of investors.
The court had on Tuesday rejected an offer by the lawyers to give bank guarantees for 225 billion rupees within three to six months.
Sahara is best known as the former main sponsor of India's 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. It also co-owns the Sahara Force India Formula One auto racing team with liquor baron Vijay Mallya.
($1 = 61.2500 Indian rupees)