SC Has Given A Long Rope To Subrata Roy; Time To Hand Sahara Over to SIT

Is the Supreme Court trying to wriggle out of its own hard line on Sahara Group boss Subrata Roy after keeping him in jail for more than two years? Roy was let out on parole last May to attend his mother’s funeral. He is still out and the court will decide on 16 September, when his current parole ends, if he has to go back to Tihar for failing to comply with its orders.

In May 2014, the Supreme Court also appointed a Special Investigation Team (SIT) to ferret out black money in the economy and broad. If anything, Roy’s Sahara Group is a fit case for investigation by SIT. One wonders why the bench never thought it fit to do this.

The apex court sent him to jail in March 2014 after Roy repeatedly flouted its orders dated 31 August 2012 to repay his investors in two illegal schemes floated without Sebi’s nod. Roy claimed he had already paid most of his investors before the Supreme Court told him to.

At the last hearing in the case in early September, the Supreme Court seemed eager to let him go if he could only provide the court with a good reason to show the source of the money used to pay his investors was legit. This is what the bench, headed by Chief Justice TS Thakur, told Roy’s counsel: “Though we don’t doubt the capacity of your client to pay crores of money to investors, that too in cash in two months, but the entire explanation of the episode is difficult to digest. Tell us the source of the cash and there will be no need to open the pandora’s box.”

The case, in brief, is this: the Supreme Court decided in August 2012 that Roy should repay over Rs 24,000 crore to investors in two of his companies with 15 percent interest. Non-payment would have bloated that amount by now to over Rs 37,000 crore. But Sebi, which was asked to collect the dues on behalf of investors, found that most of them did not exist. (For details on what Roy’s companies did wrong, read here).

Roy fought tooth-and-nail to avoid the payment between November 2012, when he was asked to repay the money, and February 2014. The Supreme Court finally ran out of patience and ordered his arrest in early March 2014.

The problem is that the Supreme Court gave Roy too long a rope, and probably took the contestable action of sending him to jail when the issue was payment of over Rs 24,000 crore to Sebi. It was not clear whether this was jail for contempt of court orders, or something else. Logically, it should have appointed an administrator for Sahara’s properties, and then got some of the assets sold to recover the dues, but instead it demanded payment of Rs 10,000 crore to get him out of jail. Roy spent two years in jail claiming he couldn’t raise the money to bail himself out.

This itself should have told the court that there was something fishy in the ownership of the assets; if they really belonged to the Sahara Group, not liquidating some of them to bail out the boss and two of its directors seemed a bit callous on the group’s part.

This is why the court asked Roy’s counsel this month whether it could show the source of the money used to pay his investors.

The bench observed: “You (Sahara Group) tell us what is the source of this money? Did you get the money from other companies or other schemes to the tune of Rs 24,000 crore? Withdrew it from bank accounts? Or sold property to get it? It should be any of the three alternatives. Money did not fall from the heavens. You have to show from where you have got the money.”

That it took the court more than two years to ask Roy to show where he got his money tells a tale in itself. Making this observation now, when Roy has been out of jail and free to fix things, shows that the court is eager to get it over with.

When the suspicion is that Roy may have benami investors or that there is a whiff of money laundering in his operations, the only sensible thing to do is to appoint an administrator for his assets so that we can arrive at the truth.

If Roy’s assets are beyond reproach, there is no point sending him to jail again. If they are not, there is no point keeping him out of it.

A Supreme Court-monitored Special Investigation Team (SIT) is investigating black money deals. One wonders why the Supreme Court never thought of giving the Roy assets over to the SIT for closer examination?

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