New Delhi, Mar 4:
The Supreme Court Tuesday sent Sahara chief Subrata Roy and two directors of his company to judicial custody till they present a concrete proposal to return the balance of Rs.19,000 crore they had collected from investors through optionally fully-convertible debentures.
The money through OFCD was mobilised by two Sahara Companies – Sahara India Real Estate Corp Ltd and Sahara Housing Investment Corp Ltd.
The court has fixed March 11 as the next date of hearing. Sahara in December 2012 had deposited Rs.5,120 crore with the Securities and Exchange Board of India (SEBI).
Directing the judicial detention of Subrata Roy and two other directors – Ashok Roy Choudhary and Ravi Shankar Dubey – the court noted that despite being given sufficient opportunities, there was no proposal to “honour” its Aug 31, 2012 judgment and the subsequent orders of Dec 5, 2012 and Feb 25, 2013, to return the investors’ money.
“In exercise of the powers conferred under articles 129 and 142 of the constitution, we order detention of all the contemnors, except Vandana Bhargava (the fourth respondent) and send them to judicial custody at Delhi, till the next date of hearing,” said the bench of Justice K.S. Radhakrishnan and Justice J.S. Khehar.
The court held that the “contemnors have maintained an unreasonable stand throughout the proceedings before SEBI, Securities Appellate Tribunal (SAT), high court and even before this court”.
The court said the concession to Bhargava was being extended “because she is a woman director, and also to enable the contemnors to be in a position to propose an acceptable solution for execution of our orders, by coordinating with the detenues”.
It said 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”.
“Preservation of market integrity is extremely important for economic growth of this country and for national interest,” the court said in its order.
It also said the Sahara claim that it had returned the investors’ money is “apparently” falsified by documents and affidavit submitted by Sahara companies.
“Maintaining investors’ confidence requires market integrity and market abuse is a serious financial crime which undermines the very financial structure of this country and will make imbalance in wealth between haves and have nots,” the court said in its order.
Pointing to the SEBI’s Feb 18 analysis of the submissions, documents etc. furnished by the contemnors, the court said it “indicates that they are filing and making unacceptable statements and affidavits all through and even in the contempt proceedings”.
“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. All the fact finding authorities have opined that majority of investors do not exist,” it said.
Passing the detention order, the court said: “Sufficient opportunities have been given to the contemnors to fully comply with those orders and purge the contempt committed by them but, rather than availing of the same, they have adopted various dilatory tactics to delay the implementation of the orders of this court.”
“Non-compliance of the orders passed by this court shakes the very foundation of our judicial system and undermines the rule of law, which we are bound to honour and protect. This is essential to maintain faith and confidence of the people of this country in the judiciary.”