India’s top court sends Sahara chief to jail

NEW DELHI: Subrata Roy, the chief of the Sahara conglomerate, will spend the next seven days in Delhi’s Tihar Jail unless he can come up with a “concrete policy” to return investors’ balance of Rs.19,000 crore that they had collected through optionally fully-convertible debentures.
The raising of funds through optionally fully-convertible debentures was done by two companies — Sahara India Real Estate Corp. Ltd. and Sahara Housing Investment Corp. Ltd.
The apex court bench, headed by Justice K.S. Radhakrishnan, however, spared the third woman director Vandana Bhargava, saying she will negotiate with Roy and other two contemnors and make an acceptable concrete proposal.
Sending them to police custody, the court said: “We are not happy with your proposal. No concrete proposal has been made. No bank guarantee has been given.” The apex court said that after the proposal is finalized it can be communicated to the court so that a next hearing to consider the proposal could be held.
Earlier an assailant hurled black ink at the Indian tycoon, shouting “he has cheated and robbed us” outside the country’s highest court.
Subrata Roy was entering the Supreme Court building in New Delhi with scores of police and security guards when the man splashed him with ink, blackening his forehead and the side of his face.
“Subrata Roy is a thief. He has cheated and robbed us!” said the assailant, who was identified by Indian television channels as Manoj Sharma, a lawyer. Police detained Sharma and led him away.
India’s securities regulator has accused Sahara India of raising nearly 200 billion rupees ($3.2 billion) through bonds that were later found to be illegal.
On Tuesday, the Supreme Court ordered that Roy and two other directors of the company be sent to jail until further orders from the court. It fixed the next court date for March 11.
The court also directed Sahara India’s lawyers to come up with a proposal for how it would pay back the money it owes investors.
The court issued an arrest warrant for Roy last week after he missed a court date, saying his mother was ill. He surrendered to police Friday.
Roy apologized to the court on Tuesday for his absence.
Sahara is well known throughout India because it co-owns a Formula One team and sponsored the Indian cricket team until recently. It also sponsors the Indian hockey team.
Investors have grown increasingly angry at Roy and are upset over what they see as his pampered treatment in custody. Roy has been staying in a plush forest guesthouse since his arrest and traveled to New Delhi for the court hearing in a luxury sedan, escorted by half a dozen police cars.
His company was ordered to return billions of dollars to investors, many of whom are poor Indians who lost their life savings. Sahara India says its liability was much less and it already has repaid many investors directly.
Sahara has vast real estate holdings and interests in microfinance, media and entertainment companies and hotels, including the Plaza Hotel in New York and London’s Grosvenor House. The company says its net worth is $11 billion.