SC vs Sahara: It's time to let Subrata Roy go and arrest his companies instead

The Sahara group’s lawyers, in a bid to save their client Subrata Roy from continuing in jail for contempt of the Supreme Court, are now in the process of criticising the court themselves.

On Wednesday, a bench comprising Justices KS Radhakrishnan and JS Khehar said Roy would get provisional bail if he paid up Rs 5,000 crore to Sebi, and offered a bank guarantee for another Rs 5,000 crore - but he said he didn’t have the cash. Roy actually has to dish out Rs 24,000 crore (plus interest), of which he has paid out only Rs 5,120 crore. So getting out of jail by paying just another Rs 5,000 crore is hardly unreasonable by any stretch of imagination.

Instead, his lawyers, Ram Jethmalani and Rajiv Dhavan, called the court’s orders unconstitutional and biased. A Business Standard report says that Dhavan called the court’s decision to keep Roy in jail as wrong as he did not have the capacity to pay.

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The lawyers also wanted another bench to hear the matter since this one was biased. They said the conduct of the judges was a “terrible, terrible mistake” and their order was a violation of Roy’s civil liberties.

There is surely some legal point to what Sahara’s counsel is claiming, but if anyone is to blame it is the Sahara boss himself. For a year and a half he not only stood openly in contempt of the Supreme Court verdict of 31 August 2012 ordering two Sahara companies to return around Rs 24,000 crore with interest, but also of adopting dilatory tactics to buy time.

Last month, when the Supreme Court finally lost its patience and ordered the Sahara boss to be present in court on 26 February, he again failed to appear, claiming he was attending to his sick mother. It was only when a non-bailable warrant was issued by the Supreme Court that he was finally arrested and brought to court. The court was simply too angry to let him go with an apology. It demanded that he pay up or stay in jail. His offer to pay up in instalments over a year did not cut much ice with the court, which has seen him buying time for 18 months now.

The case involves two Sahara companies - Sahara India Real Estate Corporation and Sahara Housing Investment Corporation - which had illegally raised Rs 24,000 crore through the issue of optionally fully convertible debentures (OFCDs) without Sebi scrutiny. Not only did the Saharas not comply with the Supreme Court’s order, but as of today they have paid up only Rs 5,120 crore, claiming the rest has been paid to investors. There is no proof of this as most of the investors have not surfaced. The Sahara documentation on investor details is dodgy at best.

Now that Sahara has flatly said it can’t pay, what are the court’s real options, assuming the matter does not go to another bench which will take a different view?

First, since the group has said it has already paid, and there are no real investors claiming they haven’t been paid, there is a clear possibility that the investors were not for real. The money could have been benami money, and hence it is worth setting up a special probe led by forensic experts to track down the real faces behind the investments. The anti-money laundering agencies need to be unleashed on the group. If we don’t know who those investors were, then the money may not have been legally raised.

Second, there may be no point keeping the Sahara boss in jail, but there is need to get to the bottom of the Sahara Group’s real purpose and shadowy operations and its ultimate investors. To protect both genuine employees of the Sahara Group and to prevent Subrata Roy and his top executives from doctoring their books and disposing of their property, the court may have to appoint an administrator to run the Sahara empire and freeze all bank accounts and properties.

It’s best to let Roy go and arrest the group’s companies to get to the bottom of the matter. There are few other options left.