Posted by Katharine TAN Pei Shi, Year 4 undergrad at the School of Accountancy, Singapore Management University
Unable to cough up Rs 10,000 crore to secure the release of its chief Subrata Roy since March 4 last year, the troubled Sahara group on Tuesday faced fresh setbacks in the Supreme Court which ordered Roy to be taken back to jail from the conference room inside Tihar and asked RBI to probe an alleged Rs 500 crore financial fraud by group company Sahara India Financial Corporation (SIFCL).
Appearing for RBI, senior advocate Parag Tripathi said the court had on June 14 last year relaxed its earlier freeze order on alienation of bonds, securities and fixed deposits to enable the group to sell these financial instruments and raise bail bond money to get Roy and two directors out of jail. Tripathi alleged that in the garb of the SC order, the Sahara group company liquidated its securities, bonds and fixed deposits, which were secured against repayment to investors and depositors, but diverted nearly Rs 500 crore to its sister concern Sahara India. However, only a little over Rs 3 crore was paid to investors and the company maintains that there are no claimants for Rs 1,000 crore deposits, he said.
A bench of Justices T S Thakur, A R Dave and A K Sikri was livid at Sahara group’s audacity to misuse the apex court orders for diversion of money and sarcastically said, “You are a very lucky group of companies. You take money from depositors and these depositors never come back to claim their money.” An identical stand was taken by Sahara Real Estate and Sahara Housing when the court had asked them to refund Rs 24,000 crore to nearly three crore investors through market regulator Sebi.
The bench permitted RBI to initiate proceedings against SIFCL and asked the central bank to submit a final report to the court in three weeks. “Your (Sahara group’s) problems are increasing and it is all your doing. All of them— income tax department, Sebi and RBI are here. You have to deal with them,” it said.
Roy and the two directors were allowed to stay in the Tihar Jail conference room to negotiate a deal with US-based Mirach group for raising over $1 billion. With the deal turning out to be a damp squib and resulting in acrimonious exchange between Sahara and Mirach, Roy’s counsel Rajeev Dhavan requested the court to allow him to stay in the conference room till March 31 to finalize two “exploratory proposals” with European Bank and Dutch Pension Fund.
Refusing to allow them to stay in the conference room any longer, it said, “It has really turned out to be a mirage. How could you not foresee such a thing, especially when you yourself are a mirage master? Why don’t you sell Aamby Valley properties, which you say is worth Rs 39,000 crore? For the last several hearings, nothing is moving. You don’t seem to be interested in earning your liberties. You seem to put your business over your liberties.”