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New Delhi: The Supreme Court refused to release Sahara group chief Subrata Roy, but allowed the group to sell its international assets so as to raise money for his bail.

The court added that it would allow Roy to negotiate the sale with interested buyers between 10 am and 4 pm every day under police supervision if Sahara approached it with a “concrete proposal" for the sale of its properties.

Sahara has to raise 10,000 crore for the bail of Roy and two directors of Sahara India Real Estate Corp. Ltd and Sahara Housing Investment Corp. Ltd.

The three were sent to judicial custody on 4 March after a non-bailable warrant was issued against them for failing to appear before the court in contempt of court proceedings initiated by the Securities and Exchange Board of India (Sebi), the capital market regulator. The 4 March order states that no proposal to return investor money was forthcoming.

That case came about from Sahara’s failure to follow an earlier ruling by the court to refund at least 20,000 crore of money to the capital market regulator which would then pass it on to people from whom it had been raised by two Sahara Group companies illegally.

On 26 March, the court asked Roy to deposit 5,000 crore in cash and another 5,000 crore as bank guarantees to secure bail.

On 4 June, the court allowed the group to sell nine domestic properties to raise the money and also unfroze its bank accounts. One of the group’s lawyers, Gaurav Bhatia, said in a statement on Tuesday that Sahara had deposited 3,117 crore from the sale of one property in Ahmedabad.

Some of the money raised from the foreign properties would go towards settling dues to the Bank of China (which loaned money for the purchase of these properties) and the rest would go to Sebi, Bhatia said. Sahara owed the Bank of China $812 million. The group’s foreign properties on the block include the Plaza hotel in New York and Grosvenor House in London.

On Tuesday, the court appointed Shekhar Naphade as an amicus curiae (friend of the court) in the case.

During the proceedings, senior lawyer Rajiv Dhavan, representing Roy, expressed his “deep pain" and “astonishment" at the court’s refusal to release the Sahara chief, who has been in custody for almost five months now.

Ramesh Vaidyanathan, managing partner of Advaya Legal, Mumbai, said that he was “not in support of such continued incarceration".

“Sale of assets requires an enabling environment. What the court has done doesn’t really provide that environment. Where bail is the rule, jail is the exception, how do you justify keeping him in jail? They could have given him a long rope of 45 days and put him to test on his word."

After it lost its original case, on the legality of its money raising efforts, to Sebi, Sahara was directed by the Supreme Court to refund around 33,000 crore to the investors, through Sebi.

Sahara paid a little over 5,120 crore to Sebi and said the rest of the money had already been returned to the investors. Sebi was unable to verify this, nor indeed, find any of the investors.

On Tuesday, Sahara stuck to this version.

“While we have not defaulted at all, meaning that no money is pending towards even a single depositor from our end, yet we have to sell or mortgage two of the most iconic hotels of the world. Every Indian who is aware of these hotels will share this pain. These were like feathers on our nation’s cap but now the two large Indian flags adorning these properties on overseas lands will be lowered and removed," Sahara lawyer Bhatia said.

Khushboo Narayan in Mumbai contributed to this story.

Sahara has filed a defamation case in a Patna court against Mint’s editor and some reporters over the newspaper’s coverage of the company’s dispute with Sebi. Mint is contesting the case.

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