Millions of small investors anxiously awaiting refund of their investments will be keenly watching as the Supreme Court takes up on Monday the Sahara Group’s fresh proposal to pay Rs. 10,000 crore as part of a condition to secure bail for its jailed chief Subrata Roy.
Analysts say that the case could set new contours for corporate governance in India.
Roy, facing contempt proceedings for failing to repay Rs. 20,000 crore to investors, has been in the maximum-security Tihar Jail since March 4, after he failed to appear at a hearing in a long-running legal battle between the group and market regulator Securities Exchange Board of India (Sebi).
Last Thursday, a day after the bench of Justice KS Radhakrishnan and Justice JS Kehar said it was willing to consider the company’s plea to defreeze bank accounts and permit it to sell properties to raise Rs. 10,000 crore, the company proposed to pay Rs. 2,500 crore within three working days of lifting the restriction. In addition, it said Roy should also be released.
The balance of Rs. 7,500 crore, of which Rs. 5,000 crore has to be in the form of bank guarantee, would be paid within the next 90 days, according to the proposal.
The court said it would consider the proposal on April 21, adding: "Improve the proposal if you want to."
Sahara has submitted the details of bank accounts to be de-frozen and a list of properties that can be sold immediately to raise the money.
The apex court had set tough conditions while granting bail to Roy, asking him to pay Rs. 5,000 crore in cash and another Rs. 5,000 crore in bank guarantee, which the Sahara Group pleaded inability to pay while seeking modification of the conditions.
Bank accounts of the company were frozen last year and the Supreme Court had restrained sale of any property without its approval.
Sahara has said raising money had become difficult with Roy and two senior directors in jail.
The company, in a statement on Sunday, said "Sahara group and its lakhs of employees are hopeful about the April 21 hearing in the Supreme Court, which is seized up to consider group’s fresh proposal to get him out forthwith."
Financial market analysts are keenly following the case, which they say will define stringent regulatory norms for offenders.
"In the absence of proper governance and widespread despair, one looks to alert courts with respect to save the country’s democracy. We all have to ensure that justice is not only done, but it should be seen as done and delivered," said Sudip Bandyopadhyay, MD, Destimoney Securities.