The Supreme Court on Tuesday sent Sahara group chairman Subrata Roy and two directors to judicial custody for failing to comply with its order to refund Rs 20,000 crore to its investors.
A bench of justice KS Radhakrishnan and justice JS Kehar ordered judicial custody of the 65-year-old Roy and Sahara directors Ravi Shankar Dubey and Ashok Roy Choudhary till March 11 after they failed to submit a “concrete proposal” to repay investors. The three were brought to the Capital’s Tihar jail at around 8.20pm.
The court had on August 31, 2012 said Sahara’s optionally fully-convertible debenture scheme violated Securities and Exchange Board of India (Sebi) rules and directed it to refund investors within three months. The company has so far refunded more than Rs 5,120 crore.
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“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,” the bench said as a packed courtroom heard in complete silence.
The bench had on February 26 issued non-bailable arrest warrants against Roy after he failed to appear in the court. Roy gave himself up to police in Lucknow after two days of hide and seek.
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The lone woman Sahara director Vandana Bhargava was spared jail. The court asked her to co-ordinate with Roy and the two directors to work out a concrete proposal to repay the investors. The hearing could be brought forward if an “acceptable” proposal was worked out, the bench said.
“This is the best award the country has given me,” said Roy while leaving Courtroom No. 7 at 7pm — three hours after the end of day’s proceedings.
Earlier, during the two-hour hearing Roy though accompanied by a battery of lawyers led by Ram Jethmalani chose to personally address the court, requesting it to be “sympathetic” and give him “one last chance” to prove that he intended to pay the investors.
His companies’ schemes were for the poor and not fraudulent as projected by the market regulator Sebi, Roy said. “It’s a beautiful human story. If you know about it, you will love us. You will pat my back,” the Sahara chief told the court.
“There is no fictitious investor. We have paid and given all the documents to Sebi. They have not verified it.” The money was returned in cash, he said.
But the court was not convinced. “We will love you if you pay back the money,” the bench shot back, saying Sahara filed false affidavits. “All the fact-finding authorities have opined that majority of investors do not exist,” the court noted in its order.
It also rejected Sahara’s offer to sell 70 properties to raise funds to repay investors, saying it was not a concrete proposal and asked why the group hadn’t given a bank guarantee to Sebi.
“Preservation of market integrity is extremely important for economic growth of this country and for national interest,” it said.
Earlier, there was high drama when a lawyer threw black ink on Roy’s face as he was entering the court premises at 12.45pm. The lawyer, identified as Manoj Sharma, was beaten up and his shirt torn by alleged Sahara supporters.