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Business News/ Companies / News/  Subrata Roy bail: SC accepts bank guarantee format
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Subrata Roy bail: SC accepts bank guarantee format

The court directs Sahara group to pay the entire liability it owes to Sebi within 18 months from the time Roy is released

The court said Roy would have to go back to jail if Sahara failed to pay any of the three instalments. The `5,000 crore bank guarantee would be liable to be encashed by Sebi if Sahara failed to pay any two instalments. Photo: AFPPremium
The court said Roy would have to go back to jail if Sahara failed to pay any of the three instalments. The `5,000 crore bank guarantee would be liable to be encashed by Sebi if Sahara failed to pay any two instalments.
Photo: AFP

New Delhi: In a setback to jailed Sahara group chief Subrata Roy, the Supreme Court on Friday directed that the group will have to pay the 36,000 crore it owes market regulator Securities and Exchange Board of India (Sebi) within 18 months of his release.

In a 27-page verdict, the court, while accepting Sahara’s liability as 36,000 crore, noted that the group had “failed to give satisfactory proof of redemption of 17,400 crores by SIRECL (Sahara India Real Estate Corp. Ltd) and 5,442 crores by SHICL (Sahara Housing Investment Corp. Ltd)".

Sahara has consistently claimed that it has refunded nearly 17,000 crore to depositors directly.

However, in what could come as a measure of relief to Roy, the court accepted the format for the bank guarantee to be provided by Sahara. The court’s acceptance of the format brings Sahara a step closer to posting Roy’s bail.

Roy and two Sahara group directors—Ravi Shankar Dubey and Ashok Roy Choudhary—in judicial custody since 4 March 2014, also need to deposit 10,000 crore as bail, half in cash and the rest as a bank guarantee.

Justifying Roy and the directors’ 15-month incarceration, the court said, “It is an unprecedented situation of personal liberty of the three applicants on the one hand vis-à-vis the majesty of law and ensuring the larger public good, on the other. It is this sense of justice, in an unprecedented kind of situation, that has compelled the court to take such an extreme step."

The Sahara group declined to comment on Friday’s developments.

The bench of justices T.S. Thakur, Anil R. Dave and A.K. Sikri enumerated stiff conditions for the payment of the remaining liability of 36,000 crore by Sahara—it has to be done within 18 months and in nine instalments.

The instalment scheme requires Sahara to pay the first eight instalments of 3,000 crore every two months and the remaining sum as the ninth instalment.

The 5,000 crore bank guarantee will be liable to be encashed by Sebi if Sahara fails to pay any two instalments. It will also be encashable if Sahara fails to pay the entire sum within 18 months.

The court also said Roy would have to surrender to judicial custody if Sahara failed to pay any three instalments.

Roy can seek the court’s permission to sell any of Sahara’s properties frozen by the court earlier within 15 days of his release.

The court also directed Roy and the two directors to deposit their passports in the court within 15 days of Friday’s order or their release, whichever is earlier, “keeping in view the fact that a large amount remains to be deposited". They will also need the court’s permission to leave the country.

When Roy’s counsel Kapil Sibal informed the court that bankers had backed out of furnishing a bank guarantee, and asked for an extension of office-room facilities in the Tihar jail complex, the court granted an eight-week extension.

Sahara will be allowed to meet all its other statutory liabilities, tax dues, etc., only after depositing its dues to Sebi. The group had earlier sought to use some of the surplus cash arranged to take care of unpaid salaries and wages ( 198.22 crore), service and other taxes (roughly 339.23 crore), bank loans (nearly 2,250.33 crore), and commercial and other trade liabilities ( 617.24 crore).

“I think that the order is clear and in keeping with the rule of law. There has been no relaxation in paying the liabilities as the order does not allow them (Sahara) to get out of their liabilities. It is not harsh, it is in order with what the court laid down as bail conditions in March 2014. The court wants Sahara to settle its claims within 18 months of Roy’s release," said Lalit Kumar, partner at J Sagar Associates, a law firm.

In May, Sebi had told the court that Sahara has to refund nearly 39,000 crore to it. Sahara has disputed this sum. The group claims it has refunded 17,000 crore to about 30 million depositors directly.

Sahara has deposited 3,827 crore in cash so far with the Sebi Sahara Refund Account.

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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Published: 19 Jun 2015, 11:32 AM IST
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