Over the past year, the Sahara Group chief has tried every trick in the book to defy the authorities but on Wednesday he incurred the wrath of the Supreme Court (SC) for failing to turn up in person despite a summons. Understandably enraged at his defiance — Roy’s lawyer claimed he was by his ailing mother’s bedside — the apex court ordered the issuing of a non-bailable arrest warrant.
Subrata Roy ultimately surrendered before the Lucknow Police on Friday morning and was remanded in police custody by a local court.
The Sahara chief, in the dock for having not returned Rs 24,000 crore raised by two companies in his group to investors despite orders from the Securities and Exchange Board of India (Sebi) and the SC to do so, will be produced before the apex court on Tuesday. Subrata Roy had issued an unqualified apology to the SC on Thursday for failing to appear before it.
Subrata Roy’s behaviour vis-a-vis the courts has been at the very least audacious. In April last year, the SC had pulled him up for failing to respond to a contempt plea filed against him and his group by Sebi, with whom he has had a running feud ever since the regulator restrained the two group companies — Sahara India Real Estate Corp and Sahara Housing Investment Corp — from raising funds through optionally fully convertible debentures (OFCDs).
Hiring a battery of the best lawyers — Ram Jethmalani appeared on his behalf in the SC on Wednesday — Roy had sought recourse to the law as early as December 2010, approaching the Allahabad HC and obtaining a stay against Sebi’s directive.
Subsequently, in early January, Sebi petitioned the SC which directed Sahara to furnish details of the OFCD investors. With the Allahabad High Court vacating the stay in April, 2011, Sahara moved the SC. Sebi’s directive to the group companies to refund Rs 24,000 crore in June 2011 was upheld by the Securities Appellate Tribunal (SAT) in October that year.
The Sahara chief has consistently sought public support through advertisements and has maintained in the court that the funds had been refunded. The Sahara Group also sent truckloads of documents to the Sebi headquarters in Mumbai in an ostensible attempt to confuse the authorities and delay the process.
While the Lucknow Police went to Roy’s residence at Sahara Shaher on Thursday evening, he was not to be found. The Sahara chief surfaced on Friday morning claiming he was not absconding but had gone to meet doctors in connection with his mother's health. He said he was willing to surrender and pleaded he be placed under house arrest till March 4 so that he could be with his mother.
Ordering that he be taken into police custody, the court of the chief judicial magistrate, Lucknow, said that the police could decide where to keep Roy till March 3, when he would be taken to New Delhi to appear before the apex court. Speaking to media persons, Sahara counsel Satish Kishanchandani reiterated that Subrata Roy intended to present himself before the SC on March 4.
According to sources, the options before the police are to keep Roy in the lock-up or in some police building under guard or in a state guest house. "The option of keeping Roy in his own home under house arrest can also be explored," said a source, requesting anonymity.
On Friday morning, Subrata Roy's counsel Ram Jethmalani informed the SC that his client was in police custody and pleaded that the court recall the non-bailable warrant.
He also requested that the special bench comprising justices Radhakrishnan and JS Khehar, which was hearing the case, be assembled to hear his application. However, justice Radhakrishnan, who sat with justice Vikramajit Sen, said that would not be possible.
The court had on February 20 come down heavily on the Sahara Group for not refunding Rs 20,000 crore of investors money despite its order and summoned Subrata Roy, Ravi Shankar Dubey, Ashok Roy Choudhary and Vandana Bhargava, directors of its firms Sahara India Real Estate and Sahara India Housing Investment to be personally present before it on February 26.
A day earlier, it had rejected Subrata Roy's plea for personal exemption stating: “It involves not only the integrity of the Supreme Court but judges and lawyers involved in the matter. It is said that the order of the Supreme Court is not being complied with. We may retire but we will ensure that our orders are complied with.”
Earlier in January, the apex court had barred Subrata Roy and other directors from leaving the country until the two group firms furnished all the relevant documents pertaining to the source of money they claimed to have repaid investors. It had also suggested Sebi take steps towards selling properties given as security to recover dues, irrespective of the value, and to initiate prosecution if the properties were not unencumbered.
The group has been under fire for claiming that it has refunded bulk of the amount to the investors and only around Rs 5,120 crore is left, for which it has furnished a bank draft to Sebi.
The bench had on August 31, 2012, directed the Sahara Group to refund Rs 24,000 crore by November end. The deadline was further extended and the companies on December 5, 2012, were directed to deposit Rs 5,120 crore immediately and Rs 10,000 crore in the first week of January 2013, and the remaining amount in the first week of February last year.