Why it's injustice to keep Subrata Roy in jail

Subrata Roy was peremptorily sent to jail on March 4, 2014, for contempt in not paying a remaining sum of Rs 10,000 crore. It was ordered that he will not be released until he brought in Rs 5,000 crore in cash and Rs 5,000 crore by way of bank guarantee.

On May 6, he and another colleague were allowed parole for four weeks till June 4, 2016, because of the death of his 95-year-old mother. Perhaps the last gift his mother gave him. On May 11, the court ordered release for a further period if he pays Rs 200 crore by July 11.

Rulings

Why was he put in jail when the punishment for contempt is a possible six months and a Rs 2,000 fine? A new continuing coercive contempt, traced to obscure rulings from Australia and America and unused in India, was created to order indefinite jail till compliance.

If this is the law, many civil servants, police, politicians, businessmen and others would be jailed every day. The original jail order was peremptorily passed without these rulings.

Justices Radhakrishnan and Kehar had gone over the top, even against the lawyers who argued his case forcefully. Privately, Radhakrishnan distanced himself from the tone of Kehar’s judgement.

Judicial irritation, exacerbated by long hearings, is never a good ground for severe indefinite incarceration. The Sahara case arises out of taking cash investments through two companies: Sahara Housing and Investments, to give, according to him, the small investor a chance to invest.

On August 31, 2012, the Supreme Court passed a huge order eventually asking (i) Sahara to make good the amount, and (ii) SEBI to verify payments.

SEBI steadfastly refuses to verify the payments made by Sahara although 40 trucks of material was sent to it and was later digitalised at Sahara’s expenses. In December 2012, Sahara made good Rs 5,000-odd crore promising to make good the rest of the principal amount, which he was not able to do.

On March 4, 2014, three directors were thrown in jail unless they produced another Rs 5,000 crore more in cheques and Rs 5,000 crore as bank guarantee.

By this time all major accounts and properties of the entire Sahara group were frozen. Sahara asked to sell 71 properties. But Justices Thakur, Dave and Sikri, permitted the sale of nine plus the three hotels abroad, including Grosvenor House in London and two in New York.

Up came SEBI’s counsel with a harbour rule that the properties must be sold at not less than five per cent of the valuation price.

Order

This was accepted peremptorily by the court, ignoring Sahara’s objections, but allowing future modifications of the order. Could these sales have been made in a falling market, with hungry predators looking for distress sales? The answer has to be no.

But, Sahara sold five out of the nine with difficulty. Had the court permitted Sahara to sell all 71 properties as distress sales, the problem would have been resolved. But the court was hugely suspicious, to which Sahara suggested independent auditors to monitor each sale.

SEBI’s lawyers countered every proposal, whether on instructions or not, I cannot say. Was SEBI interested in money or preventing Sahara’s release? This left the sale of the foreign hotels to arrange for the Rs 5,000 crore bank guarantee.

The hotels were heavily mortgaged, especially to the Bank of China. Running hotels and mortgaged properties are not easy to sell. Each attempt to sell the hotels failed. The Sultan of Brunei reneged. A young Indian adventurer from California seemed fraudulent. The Bank of China debt was bought off by European financers.

A further bid by a consortium defaulted, partly because of the Supreme Court’s conditions. In any event, no one can afford to have Rs 5000 crores locked up in an Indian bank to be cashed at will.

SEBI’s lawyers made every initiative more difficult.

Properties

Finally came a new proposal for SEBI to sell these properties. Earlier, they demurred. Now they have set up a system to sell 60 properties through e-auction on the basis of not less than 10 per cent of the circle rate.

SEBI’s affidavit against Sahara’s release application is vindictive in its adjectival vehemence allowing no latitude for release. Nor has the Amicus been objective by insisting on his ideas on what to sell.

SEBI steadfastly refuses to examine Sahara’s payment documentation even though the judgment of August 31, 2014 clearly requires this. It is sitting on huge sums claiming exorbitant interest not adjusted against the principal.

Subrata Roy's indefinite incarceration is an affront to civil liberties. He has committed no crime. He has had no trial. He had not been adjudged guilty by due process. Even criminals get bail and parole more easily.

Some people compare Roy with Lalit Modi and Mallya, with no shame to hide and no soul to damn. Corporate marauders and adventurers be treated with the full force of the law. Mallya has been advised to pay. Lalit Modi is in a class of his own.

Subrata does not want to be a refugee abroad. He wants to pay his properly quantified debts. If released he will accelerate payments, if given the leeway to do so. Keeping him in jail serves neither a pragmatic solution nor justice.

(Courtesy of Mail Today.)