The Sahara saga has had no ending ever since it launched an illegal scheme to raise Rs 24,000 crore from the public. The Sahara group, of late, has hogged the headlines for all wrong reasons, be it “manipulating courts” or non-compliance of court orders to repay small investors, which included cobblers, labourers, artisans, peasants, etc, through an “illegal” optional fully convertible debentures (OFCD) scheme. Its two group companies—Sahara India Real Estate Corporation Ltd and Sahara Housing Investment Corporation Ltd—have been in the dock over non-compliance of the Supreme Court orders since 2012.
Spelling no immediate relief for beleaguered Sahara group chief Subrata Roy and its two other directors, the Supreme Court last week set tougher terms for the group to secure the release of its jailed chief, saying the firm must repay the entire R36,000 crore, including interest, it owes to the investors within the next 18 months in nine instalments. If Sahara fails to deposit three instalments, Roy and others will have to go back to prison. The bank guarantee can be encashed in case Sahara defaults in payment of two instalments, consecutively or otherwise. In another stringent condition, Roy, on release from jail, would not be allowed to travel abroad and must mark his presence at the Tilak Marg police station in central Delhi once every fortnight. It, however, allowed Roy to use facilities like the conference room in Tihar Jail to hold negotiations with potential buyers to sell his three luxury hotels—Dream Downtown and The Plaza in New York and Grosvenor House in London—or from the real estate in India to secure his bail.
The necessity of “making the law work” even “compelled” the top court to put Roy behind bars in March last year even though the contempt case still remains pending before it. Justifying the arrest orders passed by Justices KS Radhakrishnan and JS Khehar in March last year, the bench headed by Justice TS Thakur candidly said that the arrest order was indeed “unprecedented but justifiable” (personal liberty) since it is “doing what comes naturally” approach to the problem at hand, which required such a drastic step.
“It is … an unprecedented situation of personal liberty of the three applicants on the one hand vis-a-vis majesty of law and ensuring larger public good, on the other hand. It is this sense of justice, in an unprecedented kind of situation, that has compelled the court to take such an extreme step. It is this legal realism which has compelled the court to adopt an approach which sounds more pragmatic. It is ‘doing what comes naturally’ approach to the problem at hand, which required such a drastic step … this case is a burning example where the true dictate of justice is difficult to discern, and the law needed to come down on the side of practical convenience,” the bench stated last Friday, while maintaining the conditions set in the March 2014 order that the company would require to deposit R10,000 crore (R5,000 crore in cash and balance by way of bank guarantee) with Sebi to secure the release of Roy and others.
It further pointed out that this could be categorised as a case where the law may not provide a definite answer but the guiding principle is that the “avowed objective of rule of law is to ensure that the orders of this court are respected and obeyed.”
“This court was virtually compelled to do so, going by the stubborn attitude of the contemnors (Roy) in taking the orders … for granted, as if those orders were only on paper and were not meant to be complied with,” the bench said.
Things have touched ground zero for Roy as fixing the liability at R36,000 crore has dented Sahara’s previous claims that it had repaid 95% of the amount due to the investors by way of cash. Failure to prove the refund of the amount by Sahara had given rise to an inference that the group had not refunded the amount to the real and genuine subscribers.
So many opportunities were given, showing all that leniency which could be extended—giving desired facilities in jail, lifting attachments in respect of properties chosen by Sahara itself for sale/encumbrances, allowing it to sell its properties that too at a reasonable market price—to enable the contemnors to comply with the court’s orders.
Despite giving all necessary stimulus to enable the Sahara group to raise money, major proposals have run into rough weather and had to be terminated midday for being unsatisfactory, yielding no tangible results.
In the event, the Sahara group has lost comprehensively. The financial and liquidity position of its group companies has been adversely affected and has resulted into mounting liabilities in the form of statutory liabilities, unpaid salary and wages, outstanding and overdue amounts payable to banks, etc.
The only way forward is to discharge the huge liability by depositing the same with the market regulator. Last week’s judgment has made amply clear that nothing can be done now until Roy chooses to pay up for the sake of attaining his own freedom. Detention cannot go on endlessly.