Sebi seeks max punishment for Sahara top brass for contempt

Written by fe Bureau | New Delhi | Updated: Jul 31 2013, 20:05pm hrs
Market regulator Sebi on Tuesday told the Supreme Court that Sahara chief Subrata Roy, along with three directors, should be punished for failing to comply with the apex courts directions to refund the balance R19,000 crore that it had collected from the public in 2008-09, violating investor protection norms.

Sebi senior counsel Arvind Dattar sought maximum punishment for Roy and others under Section 12 of the Contempt of Court Act, which provides a maximum punishment of a six-month jail term and a fine.

Refuting Roys contention that he being a shareholder cannot be penalised for non-refund by Sahara India Real Estate (SIREC) and Sahara India Housing Investment Corp (SHIC), the market regulator said that Roy held a 70% stake in the companies and was liable for contempt of court, punishable up to to six months imprisonment or fine.

There is wilful, deliberate and continuous disobedience of the courts three orders and he cant escape his liability by saying I am just a shareholder, Dattar argued, adding that they (Sahara) have told the Registrar of Companies that Subrata Roy wielded significant influence in the Sahara companies.

Contending that the Sahara Group was a single economic entity and Roy was managing it, and that he stood at the same footing as the other three directors, Sebi argued that Sahara has not contested its claim that Roy was central to the working of the group and directed its operations.

Keeping in mind the magnitude of the fund collected by the companies, it is a fit case for imposing maximum punishment on Roy and companies... there cannot be a clearer case of contempt. Non-payment of funds amounts to contempt, Dattar told a bench of justices KS Radhakrishnan and JS Khehar.

By virtue of being promoter of the companies, he holds the same position as that of directors of the companies and he is also liable for contempt. He is liable for punishment along with other directors of the companies, he added.

During the argument, the bench asked Sebi to address the court on whether the refund can be recovered from other group companies and adjourned the matter till August 6.

Sebi contended that action can be taken against other companies as the money collected was invested in other companies of the group, which is headed by Roy.

The apex court was hearing Sebis argument on its second contempt petition, which alleged the two firms had failed to pay the amount within the time-frame fixed by the apex court on December 5.