The Securities and Exchange Board of India has moved the Supreme Court seeking detention of Sahara Group Chief Subrata Roy and two Group directors. In its application placed before the court on Friday, SEBI also sought an order directing Roy and three others to deposit their passports with the court.
The SEBI application sought from the apex court an order permitting its Whole-Time Member to take measures for the arrest and detention in ‘civil prison’ of the Sahara promoter, Subrata Roy, and the two directors — Ashok Roy Choudhary and Ravi Shankar Dubey — after giving them reasonable opportunity for hearing.
The apex court Bench will hear the case in the first week of April.
The matter relates to the Supreme Court’s direction on August 31, 2012, to two Sahara Group companies — Sahara India Real Estate Corporation (SIRECL) and Sahara Housing Investment Corporation (SHICL) — to refund Rs 24,000 crore to their investors within three months with 15 per cent interest per annum, for raising the amount in violation of rules and regulations.
The regulator on February 13 seized the assets and properties of the two Sahara companies, besides freezing their bank accounts as also of their promoters and directors. The attached property includes Aamby Valley Ltd.
In a statement responding to SEBI’s application, Sahara questioned the regulator’s power to arrest Subrata Roy and challenged it to find or prove even one fictitious investor. “SEBI in its status report has asked for Civil Detention, knowing fully well that such provisions of Code of Civil Procedure (CPC), prescribing the same as a mode of execution of decree do not apply to SEBI, as under the SEBI Act, application of CPC is clearly barred and ruled out and also the fact that no question of any such non-compliance, on the part of Sahara officials do arise in view of the entire unpaid amount having been deposited with SEBI and the records of redemption made submitted to them for verification,” the Group said.
The Group also said it has deposited TDS (tax deducted at source) on the interest paid to the investors on behalf of the two Sahara companies with the Income Tax Authorities. The TDS deposited is more than Rs 700 crore, the statement said.
Justifying its demand for holding the passports of Subrata Roy and other Group directors, SEBI said: “Shockingly, although the two companies assured this Court that only Rs 351 crore is payable in the year ending March 31, 2013, and all the bonds, except one category, are not redeemable, it is now claimed that except Rs 2,620 crore, all other amounts have been refunded. In view of the open, continued and consistent defiance of the orders of this Court and the orders of SEBI, it is necessary that drastic measures are taken to protect the interest of three crore investors.”
In a parallel development, another Supreme Court Bench on Friday dismissed the Sahara Group’s plea seeking more time to refund Rs 24,000 crore to its investors. The Bench pulled up the Group for not complying with the court’s earlier order to return the money by the first week of February.